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EXHIBIT 4.20
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made and entered into as of
___________, 1999, between Aureal Semiconductor Inc., a Delaware corporation
(the "Company"), and TCW Special Credits ("TCW"), as agent and on behalf of the
funds and accounts listed under the heading "TCW Holders" on Schedule 1 hereto
(the "TCW Holders") and Oaktree Capital Management, LLC ("OCM"), as agent and on
behalf of the funds and accounts under the heading "Oaktree Holders" on Schedule
1 hereto (the "Oaktree Holders" and, together with the TCW Holders,
collectively, the "Holders").
R E C I T A L S
WHEREAS, on the date hereof, each Holder is the owner of the respective
number of shares of the Company's Common Stock, par value $.01 per share (the
"Common Stock"), and other securities of the Company convertible into shares of
Common Stock set forth opposite the name of such Holder on the Schedule 1
hereto;
WHEREAS, in connection with the Company's recapitalization, the Holders
have (i) acted as standby purchasers in connection with the Company's offering
to its stockholders of rights to purchase a pro rata portion of up 33,333,333
shares of Common Stock (the "Rights Shares") for an aggregate purchase price of
up to $20,000,000 and (ii) converted all of the shares of 8% Series B
Convertible Preferred Stock (the "Series B Stock") held by the Holders and
received an aggregate of ________ shares (the "Recapitalization Shares") in
connection therewith;
WHEREAS, the parties hereto desire to provide for the registration under
the Securities Act of 1933, as amended, and the rules and regulations thereunder
as in effect from time to time (the "Securities Act"), of the shares of Common
Stock owned or acquired by the Holders, on the terms and conditions set forth
herein; and
WHEREAS, a Special Committee of the Board of Directors of the Company has
authorized the officers of the Company to execute and deliver this Agreement in
the name of and on behalf of the Company.
NOW, THEREFORE, in consideration of the mutual covenants, promises,
representations, warranties and conditions set forth in this Agreement, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement, in addition to the
definitions set forth above and elsewhere herein, the following terms shall have
the following respective meanings:
"Affiliate" of a Holder shall mean a person who controls, is
controlled by or is under common control with such Holder or, the spouse or
children (or a trust exclusively for the benefit of a spouse and/or
children) of such Holder or, in the case of a Holder which is a trust, the
trustee and the beneficiaries of such trust.
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"Clearance Notice" shall have the meaning specified in the last
paragraph of Section 5.
"Commission" shall mean the United States Securities and Exchange
Commission and any successor agency thereto.
"Common Stock" shall have the meaning specified in the first Recital.
"Company" shall have the meaning specified in the Preamble.
"Demand Notice" shall have the meaning specified in Section 2(a).
"Demand Registration" shall have the meaning specified in Section
2(a).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
"Holder" shall mean a Holder or any transferee or assignee to whom the
rights under this Agreement are assigned in accordance with the provisions
of Section 10 hereof.
"Maximum Offering Size" shall have the meaning specified in Section
3(b)(ii).
"Occurrence Notice" shall have the meaning specified in the last
paragraph of Section 5.
"Person" shall mean an individual, partnership, corporation, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof, or other entity.
"Registrable Stock" shall mean: (i) the Common Stock beneficially
owned by the Holders on the date hereof (including, without limitation, the
Rights Shares and the Recapitalization Shares) or otherwise issuable upon
exercise, conversion or surrender of securities of the Company beneficially
owned by the Holders on the date hereof; (ii) any Common Stock issued as
(or issuable upon the conversion or exercise of any warrant, right, option
or other convertible security which is issued as) a dividend or other
distribution with respect to, or in exchange for, or in replacement of, the
Common Stock owned by the Holders on the date hereof, (iii) any Common
Stock or other securities of the Company acquired by any Holder after the
date hereof and (iv) any Common Stock issued by way of a stock split of the
Common Stock referred to in clauses (i), (ii) or (iii) above. For purposes
of this Agreement, any Registrable Stock shall cease to be Registrable
Stock when
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(x) a registration statement covering such Registrable Stock has been
declared effective and such Registrable Stock has been disposed of pursuant
to such effective registration statement or (y) such Registrable Stock is
sold or distributed pursuant to Rule 144 (or any similar or successor
provision (but not Rule 144A)) under the Securities Act.
"Requesting Holders" shall have the meaning specified in Section 2(a).
"Securities Act" shall have the meaning specified in the third
Recital.
"Shelf Registration" shall have the meaning specified in Section
2(b)(i).
"Shelf Registration Statement" shall have the meaning specified in
Section 2(b)(ii).
"Holder" or "Holders" shall have the meaning specified in the
Preamble.
"Underwritten Offering" or "Underwritten Registration" shall mean a
registration in which securities of the Company are sold to an underwriter
or underwriters for reoffering to the public.
2. DEMAND REGISTRATION.
(a) At any time commencing 180 days after the date of this Agreement,
the Holders of at least [10%] of the then outstanding Registrable Stock
(the "Requesting Holders") may request, in a written notice to the Company
(a "Demand Notice"), that the Company file a registration statement under
the Securities Act covering the registration of at least [10%] of the
Registrable Stock then outstanding in the manner specified in such notice
(a "Demand Registration"). Promptly following receipt of a Demand Notice
(such request to state the number of shares of Registrable Stock to be so
included and the intended method of distribution), the Company shall (x)
within twenty (20) days notify all other Holders of such request in writing
and (y) use its best efforts to cause to be registered under the Securities
Act all Registrable Stock that the Requesting Holders and such other
Holders have, within ten (10) days after the Company has given such notice,
requested be registered in accordance with the manner of distribution
specified in the Demand Notice by the Requesting Holders.
(b) (i) If any Demand Registration is requested to be a "shelf"
registration by the Requesting Holders of the Registrable Stock to be
included in such Demand Registration, the Company shall cause to be
filed pursuant to Rule 415 under the Securities Act a shelf
Registration Statement (a "Shelf Registration Statement") with respect
to the number of shares of Registrable Stock requested to be so
registered (a "Shelf Registration"). The Company shall keep such Shelf
Registration Statement continuously effective for a period of at least
two years following the date on which the Commission declares such
Shelf Registration Statement effective under the Securities Act
(subject to
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extension pursuant to Section 4(a) and the last paragraph of
Section 5 hereof), or such shorter period ending when all of the
shares of Registrable Stock covered by such Shelf Registration
Statement have been sold.
(ii) Upon the occurrence of any event that would cause the Shelf
Registration Statement (A) to contain a material misstatement or
omission or (B) to be not effective and usable for resale of
Registrable Securities during the period that such Shelf Registration
Statement is required to be effective and usable, the Company shall
promptly file an amendment to the Shelf Registration Statement, in the
case of clause (A), correcting any such misstatement or omission and,
in the case of either clause (A) or (B), use its best efforts to cause
such amendment to be declared effective and such Shelf Registration
Statement to become usable as soon as practicable thereafter.
(c) If the Requesting Holders intend to have the Registrable Stock
distributed by means of an Underwritten Offering, the Company shall include
such information in the written notice referred to in clause (x) of Section
2(a) above. In such event, the right of any Holder to include its
Registrable Stock in such registration shall be conditioned upon such
Holder's participation in such Underwritten Offering and the inclusion of
such Holder's Registrable Stock in the Underwritten Offering (unless
otherwise mutually agreed by a majority in interest of the Requesting
Holders and such Holder) to the extent provided below. All Holders
proposing to distribute Registrable Stock through such Underwritten
Offering shall enter into an underwriting agreement in customary form with
the underwriter or underwriters. Such underwriter or underwriters shall be
selected by a majority in interest of the Requesting Holders; provided,
that (i) all of the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such Holders of
Registrable Stock, (ii) any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement shall be
conditions precedent to the obligations of such Holders of Registrable
Stock, and (iii) no Holder shall be required to make any representations or
warranties to or agreements with the Company or the underwriters other than
representations, warranties or agreements regarding such Holder, the
Registrable Stock of such Holder and such Holder's intended method of
distribution and any other representations required by law or reasonably
required by the underwriter. If any Holder of Registrable Stock disapproves
of the terms of the underwriting, such Holder may elect to withdraw all its
Registrable Stock by written notice to the Company, the managing
underwriter and the Initiating Holders. The securities so withdrawn shall
also be withdrawn from registration and shall remain Registrable Stock.
(d) The Company shall not be obligated to effect more than three
Demand Registrations; provided, however, that a Demand Registration shall
not be deemed to have been effected for purposes of this Section 2(e)
unless: (i) it has been declared effective by the Commission; (ii) it has
remained effective for the
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period set forth in Section 5(a) and (iii) the offering of Registrable
Stock pursuant to such registration is not subject to any stop order,
injunction or other order or requirement of the Commission (other than any
such stop order, injunction or other requirement of the Commission prompted
by any act or omission of a Requesting Holder).
3. INCIDENTAL REGISTRATION.
(a) Subject to Section 8 and the other terms and conditions set forth
in this Section 3, if at any time the Company determines that it shall file
a registration statement under the Securities Act (other than a
registration statement on Form S-4 or S-8 or filed in connection with an
exchange offer or an offering of securities solely to the Company's
existing stockholders) on any form that would also permit the registration
of the Registrable Stock and such filing is to be on the Company's behalf
and/or on behalf of selling holders (including Requesting Holders) of its
securities for the sale of shares of Common Stock, the Company shall each
such time promptly give each Holder written notice of such determination
setting forth the date on which the Company proposes to file such
registration statement, which date shall be no earlier than 30 days from
the date of such notice, and advising such Holders of their right to have
Registrable Stock included in such registration. Upon the written request
of any Holder received by the Company no later than 30 days after the date
of the Company's notice, the Company shall use its best efforts to cause to
be registered under the Securities Act all of the Registrable Stock that
each such Holder has so requested to be registered.
(b) The Company's obligation to include Registrable Stock in a
registration statement pursuant to Section 3(a) above is subject to the
following limitations, conditions and qualifications:
(i) If, at any time after giving written notice of its
determination to register its securities and prior to the effective
date of any registration statement filed in connection with such
registration, the Company shall determine for any reason not to
register such securities, the Company may, at its election, give
written notice of such determination to the Holders and thereupon the
Company shall be relieved of its obligation to use any efforts to
register any Registrable Stock in connection with such aborted
registration; provided, that the provisions of this clause (i) shall
not affect the obligations of the Company with respect to a Demand
Registration.
(ii) If, in the written opinion of the managing underwriter, the
total amount of such securities to be so registered, including such
Registrable Stock, will exceed the maximum amount (the "Maximum
Offering Size") of the Company's securities that can be sold in such
offering, then the Company shall include in such registration, in the
following priority up to the Maximum Offering Size: (x) first, all of
the
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securities proposed to be registered for offer and sale by the
Company, (y) second, all of the Registrable Stock requested to be
included in such registration by the Holders pursuant to this Section,
allocated, if necessary for such offering not to exceed the Maximum
Offering Size, pro rata among the Holders requesting registration of
such Registrable Stock on the basis of the relative number of shares
of Registrable Stock each such Holder has requested to be included in
such registration, and (z) third, any other securities of the Company
requested to be registered by any other parties.
4. HOLDBACK AGREEMENTS.
(a) Each Holder of Registrable Stock agrees, if so required (pursuant
to a timely notice) by the Company or the managing underwriter in any
Underwritten Offering, not to effect any public sale of distribution of
securities of the Company of the same class as the securities included in
such Underwritten Registration, or any securities convertible into or
exchangeable to exercisable therefor, during the 7 days prior to and the 90
days after any Underwritten Registration pursuant to Section 2 or Section 3
has become effective, except as part of such Underwritten Registration;
provided, that no Holder shall be so required unless the officers and
directors of the Company and each holder of 5% or more (on a fully diluted
basis) of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, so agree. Notwithstanding
the foregoing sentence, each Holder of Registrable Stock subject to the
foregoing sentence shall be entitled to sell securities during the
foregoing period in a private sale. If a request is made pursuant to this
Section 4(a), then the time period during which a Shelf Registration is
required to remain continuously effective for such Holders of Registrable
Stock pursuant to the terms of this Agreement shall be extended 210 days.
None of the foregoing provisions of this Section 4(a) shall apply to
any Holder of Registrable Stock if such Holder is prevented by applicable
statute or regulation from entering into any such agreement; provided, that
any such Holder shall undertake not to effect any public sale or
distribution of the Registrable Stock unless such Holder has provided 15
days' prior written notice of such sale or distribution to the underwriter
or underwriters.
(b) The Company agrees (i) if so required by the managing underwriter
of any Underwritten Offering, not to effect any public sale or distribution
of securities of the same class as the securities included in such
Underwritten Registration or securities convertible into or exchangeable or
exercisable therefor during the 7 days prior to and the 90 days after any
Underwritten Registration pursuant to Section 2 or Section 3 has become
effective, except as part of such Underwritten Registration and except
pursuant to registrations on Form S-4 or S-8 or any successor form to such
Forms, and (ii) to use its best efforts to cause each holder of equity
securities included in any Underwritten Registration or any securities
convertible into or exchangeable or
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exercisable therefor, in each case purchased from the Company at any
time after the date of this Agreement (other than in a public offering) to
agree not to effect any public sale or distribution of or otherwise dispose
of shares of equity securities (or such other securities) during such
period except as part of such Underwritten Registration.
5. REGISTRATION PROCEDURES. Whenever required under Section 2 or Section 3
of this Agreement to use its best efforts to effect the registration of any
Registrable Stock, the Company shall, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement with
respect to such Registrable Stock and use its best efforts to cause such
registration statement to become and remain effective for the period of the
distribution contemplated thereby;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to comply with the provisions of
the Securities Act with respect to the disposition of all Registrable Stock
covered by such registration statement;
(c) furnish to each Holder such numbers of copies of the registration
statement and each prospectus included therein (including each preliminary
prospectus and any amendments or supplements thereto) in conformity with
the requirements of the Securities Act and such other documents and
information as they may reasonably request;
(d) use its best efforts to register or qualify the Registrable Stock
covered by such registration statement under the securities or blue sky
laws of such jurisdictions as shall be reasonably appropriate for the
distribution of the Registrable Stock covered by the registration
statement; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business in
or to file a general consent to service of process in any jurisdiction
wherein it would not but for the requirements of this paragraph (d) be
obligated to do so;
(e) promptly notify (but in any event within five business days) the
selling Holders of Registrable Stock, their counsel and the managing
underwriters, if any, and confirm such notice in writing, (i) when a
prospectus or any prospectus supplement has been filed and, with respect to
a registration statement or any post-effective amendment, when the same has
become effective, (ii) of any request by the Commission or any other
Federal or state governmental authority for amendments or supplements to a
registration statement or related prospectus or for additional information,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of a registration statement or of any order preventing or
suspending the use of any prospectus or the initiation of any proceedings
by any Person for that purpose, (iv) if at any time the
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representations and warranties of the Company contained in any
agreement (including any underwriting agreement) contemplated by Section
6(l) below ease to be true and correct, (v) of the receipt by the Company
of any notification with respect to the suspension of the qualification of
exempting from qualification of a registration statement or any of the
Registrable Stock for offer or sale under the securities or blue sky laws
of any jurisdiction, or the contemplation, initiation or threatening of any
proceeding for such purpose, (vi) of the happening of any event that makes
any statement made in such registration statement or related prospectus or
any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires the making of any changes
in such registration statement, prospectus or documents so that it will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made (in the case of the prospectus only) not misleading, and (vii) of the
Company's reasonable determination that a post-effective amendment to a
registration statement would be appropriate;
(f) furnish, at the request of any Holder requesting registration of
Registrable Stock pursuant to Section 2, if the method of distribution is
by means of an Underwritten Offering, on the date that the shares of
Registrable Stock are delivered to the underwriters for sale pursuant to
such registration, or if such Registrable Stock is not being sold through
underwriters, on the date that the registration statement with respect to
such shares of Registrable Stock becomes effective: (i) a signed opinion,
dated such date, of the independent legal counsel representing the Company
for the purpose of such registration, addressed to the underwriters, if
any, and if such Registrable Stock is not being sold through underwriters,
then to the Holders making such request, as to such matters as such
underwriters or the Holders holding a majority of the Registrable Stock
included in such registration, as the case may be, may reasonably request
and as would be customary in such a transaction and (ii) letters dated such
date and the date the offering is priced from the independent certified
public accountants of the Company, addressed to the underwriters, if any,
and if such Registrable Stock is not being sold through underwriters, then
to the Holders making such request (1) stating that they are independent
certified public accountants within the meaning of the Securities Act and
that, in the opinion of such accountants, the financial statements and
other financial data of the Company included in the registration statement
or the prospectus, or any amendment or supplement thereto, comply as to
form in all material respects with the applicable accounting requirements
of the Securities Act and (2) covering such other financial matters
(including information as to the period ending not more than five business
days prior to the date of such letters) as such underwriters or the Holders
holding a majority of the Registrable Stock included in such registration,
as the case may be, may reasonably request and as would be customary in
such a transaction;
(g) enter into customary agreements (including, if the method of
distribution is by means of an Underwritten Offering an underwriting
agreement in customary form) and take such other actions as are reasonably
required in order
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to expedite or facilitate the disposition of the Registrable Stock to
be so included in the registration statement;
(h) As promptly as practicable upon the occurrence of any event
contemplated by paragraph (e)(vi) above, prepare a supplement or
post-effective amendment to the registration statement or a supplement to
the related prospectus or any documents incorporated or deemed to be
incorporated therein by reference, or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable Stock
being sold thereunder, such prospectus will not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances;
(i) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission; and
(j) use its best efforts to list the Registrable Stock covered by such
registration statement with any securities exchange on which the Common
Stock of the Company is then listed.
For purposes of Sections 5(a) and 5(b), the period of distribution of
Registrable Stock in a firm commitment Underwritten Offering shall be deemed to
extend until each underwriter has completed the distribution of all securities
purchased by it, and the period of distribution of Registrable Stock in any
other registration shall be deemed to extend until the earlier of the sale of
all Registrable Stock covered thereby and one year after the effective date
thereof.
Each Holder of Registrable Stock agrees that, upon receipt of written
notice from the Company of the happening of any event of the kind described in
Section 5(e)(ii), 5(e)(iii), 5(e)(v), 5(e)(vi) or 5(e)(vii) (an "Occurrence
Notice"), such Holder will forthwith discontinue disposition of such Registrable
Stock covered by such registration statement or prospectus until such Holder's
receipt of the copies of the supplemented or amended registration statement or
prospectus contemplated by Section 5(h), or until it receives notice in writing
(a "Clearance Notice") from the Company that the use of the applicable
prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such prospectus, and, if so directed by the Company, such Holder
will deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Holder's possession, of the prospectus
covering such Registrable Stock current at the time of receipt of such notice.
If the Company shall deliver an Occurrence Notice in connection with any
registered sale of Registered Stock, the time periods mentioned in Section 2
hereof shall be extended by the number of days during such periods from and
including the date of delivery of such Occurrence Notice to and including the
date when each seller of Registrable Stock covered by such registration
statement receives (x) the copies of the supplemented or amended prospectus
contemplated by Section 5(h) hereof or (y) a Clearance Notice, as the case may
be.
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6. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement that
the Holders shall furnish to the Company such information regarding themselves,
the Registrable Stock held by them, and the intended method of disposition of
such securities as the Company shall reasonably request and as shall be required
in connection with the action to be taken by the Company.
7. EXPENSES OF REGISTRATION. All expenses incurred in connection with each
registration pursuant to Section 2 and Section 3 of this Agreement, excluding
underwriters' discounts and commissions, but including without limitation all
registration, filing and qualification fees, word processing, duplicating,
printers' and accounting fees (including the expenses of any special audits or
"cold comfort" letters required by or incident to such performance and
compliance), fees of the National Association of Securities Dealers, Inc. or
listing fees, messenger and delivery expenses, all fees and expenses of
complying with state securities or blue sky laws, fees and disbursements of
counsel for the Company, and the fees and disbursements of one counsel for the
selling Holders (which counsel shall be selected by the Holders holding a
majority in interest of the Registrable Stock being registered), shall be paid
by the Company. The Holders shall bear and pay the underwriting commissions and
discounts applicable to securities offered for their account in connection with
any registrations, filings and qualifications made pursuant to this Agreement.
8. UNDERWRITING REQUIREMENTS. In connection with any Underwritten Offering,
the Company shall not be required under Section 3 to include shares of
Registrable Stock in such Underwritten Offering unless the Holders of such
Registrable Stock accept the terms of the underwriting of such offering that
have been reasonably agreed upon between the Company and the underwriters
selected by the Company.
9. RULE 144 AND RULE 144A INFORMATION. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Registrable Stock to the public without
registration,
(a) at all times after ninety (90) days after any registration
statement covering a public offering of securities of the Company under the
Securities Act shall have become effective, the Company agrees to:
(i) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
(ii) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act; and
(iii) furnish to each Holder of Registrable Stock promptly upon
request a written statement by the Company as to its compliance with
the
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reporting requirements of such Rule 144 and of the Securities Act
and the Exchange Act, a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents so filed
by the Company as such Holder may reasonably request in availing
itself of any rule or regulation of the Commission allowing such
Holder to sell any Registrable Stock without registration; and
(b) at all times during which the Company is neither subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, nor
exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act, it
will provide, upon the written request of any Holder of Registrable Stock
in written form (as promptly as practicable and in any event within 15
business days), to any prospective buyer of such stock designated by such
Holder, all information required by Rule 144A(d)(4)(i) of the General
Regulations promulgated by the Commission under the Securities Act.
10. INDEMNIFICATION. In the event any Registrable Stock is included in a
registration statement under this Agreement:
(a) The Company shall indemnify and hold harmless each Holder and its
directors and officers, each person who participates in the offering of
such Registrable Stock, including underwriters (as defined in the
Securities Act), and each person, if any, who controls such Holder or
participating person within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, as incurred, to
which they may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or proceedings in
respect thereof) arise out of or are based on any untrue or alleged untrue
statement of any material fact contained in such registration statement on
the effective date thereof (including any prospectus filed under Rule 424
under the Securities Act or any amendments or supplements thereto) or arise
out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and shall reimburse each such Holder and
its directors and officers, such participating person or controlling person
for any legal or other expenses as reasonably incurred by them (but not in
excess of expenses incurred in respect of one counsel for all of them
unless there is an actual conflict of interest between any indemnified
parties, which indemnified parties may be represented by separate counsel)
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that subject to Section 10(e), the
indemnity agreement contained in this Section 10(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Company.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any such Holder, its directors and
officers, participating person or controlling person, and shall survive the
transfer of such securities by such Holder.
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(b) Each Holder requesting or joining in a registration shall,
severally and not jointly, indemnify and hold harmless the Company, each of
its directors and officers, each person, if any, who controls the Company
within the meaning of the Securities Act, and any underwriter against any
losses, claims, damages or liabilities, joint or several, to which the
Company or any such director, officer, controlling person or underwriter
may become subject, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or proceedings in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in such registration statement on
the effective date thereof (including any prospectus filed under Rule 424
under the Securities Act or any amendments or supplements thereto) or arise
out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity
with information furnished by or on behalf of such Holder expressly for use
in connection with such registration; and each such Holder shall reimburse
any legal or other expenses reasonably incurred by the Company or any such
director, officer, controlling person or underwriter (but not in excess of
expenses incurred in respect of one counsel for all of them unless there is
an actual conflict of interest between any indemnified parties, which
indemnified parties may be represented by separate counsel) in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that, subject to Section 10(e), the indemnity
agreement contained in this Section 10(b) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of such Holder, and provided,
further, that the liability of each Holder hereunder shall be limited to
the proportion of any such loss, claim, damage, liability or expense which
is equal to the proportion that the net proceeds from the sale of the
Registrable Stock sold by such Holder under such registration statement
bears to the total net proceeds from the sale of all securities sold
thereunder, but not in any event to exceed the net proceeds received by
such Holder from the sale of Registrable Stock covered by such registration
statement.
(c) Promptly after receipt by an indemnified party under this Section
10 of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against any indemnifying
party under this Section 10, notify the indemnifying party in writing of
the commencement thereof and the indemnifying party shall have the right to
participate in and assume the defense thereof with counsel selected by the
indemnifying party and reasonably satisfactory to the indemnified party;
provided, however, that an indemnified party shall have the right to retain
its own counsel, with all fees and expenses thereof to be paid by such
indemnified party, and to be apprised of all progress in any proceeding the
defense of which has been assumed by the indemnifying party. The failure to
notify an indemnifying party promptly of the commencement of any such
action shall relieve such indemnifying party of any liability to the
indemnified party under this Section to
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the extent such failure to so notify materially prejudices the
indemnifying party's ability to defend such action.
(d) To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified party in
connection with the actions which resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified party shall be
determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of material fact
or omission or alleged omission to state a material fact, has been made by,
or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount
paid or payable by a party as a result of the losses, claims, damages or
liabilities referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 10(d) were determined by pro rata
allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for reasonable fees
and expenses of counsel, such indemnifying party agrees that it shall be
liable for any settlement of the nature contemplated by Section 10(a) or
10(b) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of
the aforesaid request, (ii) such indemnifying party shall have received
notice of the terms of such settlement at least 30 days prior to such
settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request
prior to the date of such settlement.
11. TRANSFER OF REGISTRATION RIGHTS. The registration rights of any Holder
under this Agreement with respect to any Registrable Stock may be transferred to
(a) any transferee of such Registrable Stock who at any time acquires at least
ten per cent (10%) of such Holder's shares of Registrable Stock (adjusted for
stock splits and stock consolidations after the effective date of this
Agreement) or (b) any Affiliate of such Holder; provided, however that (i) the
transferring Holder shall give the Company written notice at or prior to the
time of such transfer stating the name and
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address of the transferee and identifying the securities with respect to
which the rights under this Agreement are being transferred; (ii) such
transferee shall agree in writing, in form and substance reasonably satisfactory
to the Company, to be bound as a Holder by the provisions of this Agreement; and
(iii) immediately following such transfer the further disposition of such
securities by such transferee is restricted under the Securities Act. Except as
set forth in this Section 11, no transfer of Registrable Stock shall cause such
Registrable Stock to lose such status.
12. SECURITIES HELD BY THE COMPANY OR ITS AFFILIATES. Whenever the consent
or approval of Holders of a specified percentage of Registrable Stock is
required hereunder, Registrable Stock held by the Company or its affiliates (as
such term is defined in Rule 405 under the Securities Act) (other than the
Holders) shall not be counted in determining whether such consent or approval
was given by the Holders of such required percentage.
13. SUCCESSORS AND ASSIGNS. Subject to Section 11, the terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns of the parties hereto. Except as expressly
provided in this Agreement, nothing in this Agreement, express or implied, is
intended to confer upon any person other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
15. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16. TITLES. The titles of the Sections of this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
17. NOTICES. Any notice required or permitted under this Agreement shall be
in writing and shall be delivered in person, by hand-delivery, mailed by
certified or registered mail, next-day air courier faxed:
(a) if to the Company, at
Aureal Semiconductor Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax:
Attention:
(b) to each Holder at the address set forth on Schedule 1 hereto, or
if such Holder shall not be listed on Schedule 1 hereto, at the address
therefor as set
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forth in the Company's records or, in any such case, at such other
address or addresses as shall have been furnished in writing by such party
to the others.
The giving of any notice required hereunder may be waived in writing by the
parties hereto. Every notice or other communication hereunder shall be deemed to
have been duly given or served on the date on which personally delivered, or on
the date actually received, if sent by mail or fax, with receipt acknowledged.
18. AMENDMENTS AND WAIVERS. Any provision of this Agreement may be amended
and the observance of any provision of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and each Holder of
Registrable Stock. Any amendment or waiver effected in accordance with this
Section 17 shall be binding upon each Holder of Registrable Securities, each
future Holder and the Company.
19. SEVERABILITY. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provisions shall be excluded from
this Agreement and the balance of this Agreement shall be interpreted as if such
provisions were so excluded and shall be enforceable in accordance with its
terms.
20. ENTIRE AGREEMENT. All prior agreements of the parties concerning the
subject matter of this Agreement are expressly superseded by this Agreement.
This Agreement contains the entire Agreement of the parties concerning the
subject matter hereof. Any oral representations or modifications of this
Agreement shall be of no effect.
[Signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
AUREAL SEMICONDUCTOR INC.
By:
---------------------------------------
Name:
Title:
TCW SPECIAL CREDITS, on behalf of and as
agent for the TCW Holders and not in its
individual capacity
By:
--------------------------------------
Name:
Authorized Signatory
OAKTREE CAPITAL MANAGEMENT, LLC, on behalf
of and as agent for the Oaktree Holders
and not in its individual capacity
By:
--------------------------------------
Name:
Authorized Signatory
17
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
AUREAL SEMICONDUCTOR INC.
By:
---------------------------------------
Name:
Title:
TCW SPECIAL CREDITS, on behalf of and as
agent for the TCW Holders and not in its
individual capacity
By:
--------------------------------------
Name:
Authorized Signatory
OAKTREE CAPITAL MANAGEMENT, LLC, on behalf
of and as agent for the Oaktree Holders
and not in its individual capacity
By:
--------------------------------------
Name:
Authorized Signatory
18
Schedule 1
[TO COME]