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Exhibit 4.9
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is entered into as of
June 5, 1998, by and among Aureal Semiconductor Inc., a corporation duly
incorporated and existing under the laws of the State of Delaware ("Company"),
and the subscribers (hereinafter referred to as "Subscribers") to the Company's
offering ("Offering") of up to Fifteen Million Dollars ($15,000,000) of Series C
Preferred Stock (the "Preferred Stock", or the "Convertible Securities")
pursuant to the Regulation D Subscription Agreement dated June 5, 1998 between
the Company and each of the Subscribers ("Subscription Agreement").
1. Definitions. For purposes of this Agreement:
(a) The terms "register," "registered," and "registration" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933 (the "Act"), and
pursuant to Rule 415 under the Act or any successor rule, and the declaration or
ordering of effectiveness of such registration statement or document.
(b) For purposes hereof, the term "Registrable Securities" means
the shares of the Company's Common Stock together with any capital stock issued
in replacement of, in exchange for or otherwise in respect of such Common Stock
(the "Common Stock") issued or issuable upon conversion of the Convertible
Securities
Notwithstanding the above:
1. Common Stock which would otherwise be deemed to be
Registrable Securities shall not constitute Registrable
Securities if those shares of Common Stock may be resold in a
public transaction without volume limitations or other material
restrictions without registration under the Act, including
without limitation, pursuant to Rule 144 under the Act; and
2. any Registrable Securities resold in a public transaction
shall cease to constitute Registrable Securities.
(c) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock which
have been issued or are issuable upon conversion of the Convertible Securities
at the time of such determination.
(d) The term "Holder" means any person owning or having the right
to acquire Registrable Securities or any permitted assignee thereof.
(e) The term "Due Date" means the date that is exactly four (4)
months after the Last Closing (as defined in the Subscription Agreement).
Capitalized terms not otherwise defined in this Agreement shall have the meaning
set forth in the Subscription Agreement or in the Certificate of Designation of
the Preferred Stock (the "Certificate").
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2. Required Registration.
(a) The Company shall, within two (2) calendar months after the
last Closing of the Offering, file a registration statement ("Registration
Statement") on Form S-3 or as an amendment of a previously filed Form S-3 (or
other suitable form at the Company's discretion, but subject to the reasonable
approval of Subscribers), covering the resale of all shares of Registrable
Securities then outstanding or issuable upon conversion of all then outstanding
Convertible Securities. Such Registration Statement shall initially cover that
number of shares equal to one hundred fifty percent (150%) of the number of
shares of Common Stock issuable to each Subscriber upon conversion of all
outstanding Convertible Securities at the Fixed Conversion Price determined as
of the last Closing date. The Company shall use its best efforts to have the
Registration Statement declared effective as soon as possible. In the event that
the Company determines, which determination shall be made by the Company within
five (5) business days after the last business day of each month after the
effective date of the Registration Statement or is notified at any time by a
Holder, that the Registration Statement does not cover a sufficient number of
shares of Common Stock to effect the resales of a number of shares of Common
Stock equal to one hundred fifty percent (150%) of the number of shares of
Common Stock issuable to each Subscriber upon conversion of all outstanding
Convertible Securities then eligible for conversion, at the Conversion Price (as
defined in the Certificate of Designation of the Series A Preferred Stock,
referred to herein as the "Certificate of Designation") in effect on the last
business day of such month (the "Assumed Conversion Price"), the Company shall,
within five (5) business days, amend the Registration Statement or file a new
Registration Statement (an "Amended" or "New" Registration Statement,
respectively), as appropriate, to add such number of additional shares as would
be necessary to effect the resales of a number of shares of Common Stock equal
to at least one hundred fifty percent (150%) of the number of shares of Common
Stock issuable to each Subscriber upon conversion of all outstanding Convertible
Securities then eligible for conversion, at the Assumed Conversion Price then in
effect. If the Registration Statement is not filed within two (2) calendar
months after the Last Closing of the Offering, Company shall pay the Subscribers
an amount equal to one percent (1%) per month of the aggregate amount of
outstanding Convertible Securities held by Subscriber, accruing daily until the
Registration Statement is filed, payable in cash or Common Stock at the
Subscriber's option, as set forth below ("Late Filing Payment"). If the
Registration Statement is not declared effective by the Due Date, or if any
other Amended or New Registration Statement required to be filed hereunder is
not declared effective within two (2) calendar months of the date it is required
to be filed, the Company shall pay the Subscribers an amount equal to one
percent (1%) per month of the aggregate amount of outstanding Convertible
Securities held by Subscriber, accruing daily until the Registration Statement
or a registration statement filed pursuant to Section 3 of this Agreement is
declared effective (the "Late Registration Payment"). Notwithstanding the above,
any Late Registration Payments otherwise due to a Subscriber shall be reduced by
the amount of any Late Filing Payments that have previously been paid in full to
such Subscriber. Any Late Filing Payment or Late Registration Payment shall be
payable in cash or Common Stock, at the Subscriber's option, as follows: If
Subscriber elects to be paid in cash, such Late Filing Payment or Late
Registration Payment shall be paid to such Subscriber by a cashiers check, no
later than ten (10) days after the end of (i) the month in which the Company
receives the Holder's cash
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payment request and (ii) any subsequent month(s) for which such amounts accrue.
If Subscriber elects to be paid in Common Stock, such number of shares shall be
determined as follows:
Upon conversion of each Convertible Security or any portion thereof,
the Company shall issue to the Subscriber the number of shares of
Common Stock determined as set forth in Section 5(a) of the
Certificate of Designation, plus an additional number of shares of
Common Stock attributable to such Convertible Securities (the
"Additional Shares") determined as set forth below:
Additional Shares = Late Registration Payment + Late Filing Payment
-----------------------------------------------
Conversion Price
With respect to the Preferred Stock, "Conversion Price" has the definition
ascribed to it in the Certificate of Designation.
Such Additional Shares shall also be deemed "Registrable Securities" as defined
herein. The Company covenants to use its best efforts to use Form S-3 for the
registration required by this Section during all applicable times contemplated
by this Agreement.
(b) The Registration Statement shall be prepared as a "shelf"
registration statement under Rule 415, and shall be maintained effective until
all Registrable Securities cease to exist.
(c) The Company represents that it is presently eligible to
effect the registration contemplated hereby on Form S-3 and will use its best
efforts to continue to take such actions as are necessary to maintain such
eligibility.
3. Piggyback Registration. If the Registration Statement described in
Section 2 is not effective by the Due Date, and if (but without any obligation
to do so) the Company proposes to register (including for this purpose a
registration effected by the Company for shareholders other than the Holders)
any of its Common Stock under the Act in connection with the public offering of
such securities solely for cash (other than a registration relating solely for
the sale of securities to participants in a Company stock plan or a registration
on Form S-4 or from S-8 promulgated under the Act or any successor or similar
form registering stock issuable upon a reclassification, upon a business
combination involving an exchange of securities or upon an exchange offer for
securities of the issuer or another entity), the Company shall, at such time,
promptly give each Holder written notice of such registration (a "Piggyback
Registration Statement"). Upon the written request of each Holder given by fax
within ten (10) days after mailing of such notice by the Company, the Company
shall cause to be included in such registration statement under the Act all of
the Registrable Securities that each such Holder has requested to be registered
("Piggyback Registration") to the extent such inclusion does not violate the
registration rights of any other securityholder of the company granted prior to
the date hereof; nothing, herein shall prevent the Company from withdrawing or
abandoning the registration statement prior to its effectiveness.
4. Limitation on Obligations to Register.
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(a) In the case of a Piggyback Registration on an underwritten
public offering by the Company, if the managing underwriter determines and
advises in writing that the inclusion in the registration statement of all
Registrable Securities proposed to be included would interfere with the
successful marketing of the securities proposed to be registered by the Company,
then the number of such Registrable Securities to be included in the
registration statement, to the extent such Registrable Securities may be
included in such Piggyback Registration Statement shall be allocated among all
Holders who had requested Piggyback Registration pursuant to the terms hereof,
in the proportion that the number of Registrable Securities which each such
Holder, seeks to register bears to the total number of Registrable Securities
sought to be included by all Holders. If required by the managing underwriter of
such an underwritten public offering, the Holders shall enter into a reasonable
agreement limiting the number of Registrable Securities to be included in such
Piggyback Registration Statement and the terms, if any, regarding the future
sale of such Registrable Securities.
(b) In the event the Company believes that shares sought to be
registered under Section 2 or Section 3 by Holders do not constitute
"Registrable Securities" by virtue of Section I (b) of this Agreement, and the
status of those shares as Registrable Securities is disputed, the Company shall
provide, at its expense, an Opinion of Counsel, reasonably acceptable to the
Holders of the Securities at issue (and satisfactory to the Company's transfer
agent to permit the sale and transfer) that those securities may be sold
immediately, without volume limitation, without registration under the Act, by
virtue of Rule 144 or similar provisions.
5. Obligations of the Company. Whenever required under this Agreement to
effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the Securities and Exchange Commission
("SEC") a registration statement with respect to such Registrable Securities and
use its best efforts to cause such registration statement to become effective.
(b) Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders of
the Registrable Securities covered by such registration statement, provided that
the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions.
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(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) As promptly as practicable after becoming aware of such
event, notify each Holder of Registrable Securities of the happening of any
event of which the Company has knowledge, as a result of which the prospectus
included in the registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and subject to Section
6 use its best efforts promptly to prepare a supplement or amendment to the
registration statement to correct such untrue statement or omission, and deliver
a number of copies of such supplement or amendment to each Holder as such Holder
may reasonably request.
(g) Provide Holders with written notice of the date that a
registration statement registering the resale of the Registrable Securities is
declared effective by the SEC, and the date or dates when the Registration
Statement is no longer effective.
(h) Provide Holders and their representatives the opportunity to
conduct a reasonable due diligence inquiry of Company's pertinent financial and
other records and make available its officers, directors and employees for
questions regarding such information as it relates to information contained in
the registration statement.
6. Black Out. In the event that, during the time that the Registration
Statement is effective, the Company reasonably determines, based upon advice of
counsel, that due to the existence of material non-public information,
disclosure of such material non-public information would be required to make the
statements contained in the Registration Statement not misleading, and the
Company has a bona fide business purpose for preserving as confidential such
material non-public information, the Company shall have the right to suspend the
effectiveness of the Registration Statement, and no Holder shall be permitted to
sell any Registrable Securities pursuant thereto, until such time as such
suspension is no longer advisable; provided, however, that such time shall not
exceed a period of sixty (60) days. As soon as such suspension is no longer
advisable, the Company shall, if required, promptly, but in no event later than
the date the Company files any documents with the Securities and Exchange
Commission ("SEC") referencing such material information, file with the SEC an
amendment to the Registration Statement disclosing such information and use its
best efforts to have such amendment declared effective as soon as possible.
In the event the effectiveness of the Registration Statement is
suspended by the Company pursuant hereto, the Company shall promptly notify all
Holders whose securities are covered by the Registration Statement of such
suspension, and shall promptly notify each such Holder as soon as the
effectiveness of the Registration Statement has been resumed. The Company shall
be entitled to effect no more than three (3) such suspensions during the one (1)
year period following the Last Closing, no more than two (2) of which shall
occur during the last six (6) months of such one year period.
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7. Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement with
regard to each selling Holder that such selling Holder shall furnish to the
Company such information regarding Holder, the Registrable Securities held by
it, and the intended method of disposition of such securities as shall be
required to effect the registration of its Registrable Securities or to
determine that registration is not required pursuant to Rule 144 or other
applicable provision of the Act.
8. Expenses. All expenses other than underwriting, discounts and
commissions and fees and expenses of counsel to the selling Holders incurred in
connection with registrations, filings or qualifications pursuant hereto,
including (without limitation) all registration, filing and qualification fees,
printers' and accounting fees, fees and disbursements of counsel for the
Company, shall be borne by the Company.
9. Indemnification. In the event any Registrable Securities are included
in a Registration Statement or a Piggyback Registration Statement under this
Agreement:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, the officers and directors of each Holder, any
underwriter (as defined in the Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the Act or the
Securities Exchange Act of 1934, as amended (the "1934 Act"), against any
losses, claims, damages, or liabilities joint or several) to which they may
become subject under the Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following: (i) any untrue
statement or alleged untrue statement of a material fact statements or omissions
contained in such registration statement, including any preliminary prospectus
or Final prospectus contained therein or any amendments or supplements thereto,
or (ii) 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 the Company will reimburse each such Holder, officer or
director, underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that (i) the
indemnity agreement contained in this subsection 9(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 (which consent shall
not be unreasonably withheld) and (ii) the Company shall not be liable in any
such case for any such loss, claim, damage, liability, or action to the extent
that it arises out of or is based upon a violation which occurs in reliance upon
and in conformity with written information furnished expressly for use in
connection with such registration by any such Holder, officer, director,
underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder,
severally and not jointly, will indemnify and hold harmless the Company, each of
its directors, each of its officers who have signed the registration statement,
each person, if any, who controls the Company within the meaning of the Act, any
underwriter and any other Holder selling securities in such registration
statement or any of its directors or officers or any person who controls such
Holder, against any losses, claims, damages, or liabilities joint or several) to
which the Company or any such director, officer, controlling, person, or
underwriter or controlling person, or other such
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Holder or director, officer or controlling person may become subject, under the
Act, the 1934 Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereto) arise out of or are
based upon any statement or omission in each case to the extent (and only to the
extent) that such statement or omission is made in reliance upon and in
conformity with written information furnished by such Holder expressly for use
in connection with such registration statement; and each such Holder will
reimburse any legal or other expenses reasonably incurred by the Company and any
such director, officer, controlling person, underwriter or controlling person,
other Holder, officer, director, or controlling person in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that (i) the indemnity agreement contained in this subsection
9(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 the Holder, which consent shall not be unreasonably withheld and (ii) the
total amount for which any Holder shall be liable under this Section 9(b) shall
not in any event exceed the net proceeds received by such Holder from the sale
of the Registrable Securities sold by such Holder in such Registration.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 9, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the reasonably incurred fees and
expenses of one such counsel to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential conflicting
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
9, but the omission so to deliver written notice to the indemnifying party will
not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 9.
(d) In the event that the indemnity provided in paragraph (a) or
(b) of this Section 9 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and each Holder agree to
contribute to the aggregate claims, losses, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which the Company and one or more of
the Holder may be subject in such proportion as is appropriate to reflect the
relative fault of the Company and the Holders in connection with the statements
or omissions which resulted in such Losses. Relative fault shall be determined
by reference to whether any alleged untrue statement or omission relates to
information provided by the Company or by the Holders. The Company and the
Holders agree that it would not be just and equitable if contribution were
determined by pro rata allocation or any other method of allocation which does
not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person
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guilty of fraudulent misrepresentation (within the meaning of Section 10(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this Section 9,
each person who controls a Holder of Registrable Securities within the meaning
of either the Securities Act or the Exchange Act and each director, officer,
partner, employee and agent of a Holder shall have the same rights to
contribution as such holder, and each person who controls the Company within the
meaning of either the Act or the Exchange Act and each director of the Company,
and each officer of the Company who has signed the registration statement, shall
have the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
(e) The obligations of the Company and Holders under this Section
9 shall survive the redemption and conversion, if any, of the Convertible
Securities, the completion of any offering of Registrable Securities in a
Registration Statement under this Agreement, and otherwise.
10. Reports Under Securities Exchange Act of 1934. With a view to making
available to the Holders the benefits of Rule 144 promulgated under the Act and
any other rule or regulation of the SEC that may at any time permit a Holder to
sell securities of the Company to the public without registration, the Company
agrees to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144;
(b) use its best efforts to file with the SEC in a timely manner
all reports and other documents required of the Company under the Act and the
1934 Act; and
11. Amendment of Registration Rights. Any provision of this Agreement
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company, the Holders of a majority of the Registrable
Securities and B III Capital Partners, L.P., provided that the amendment treats
all Holders equally. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each Holder, each future Holder, and the
Company.
12. Notices. All notices required or permitted under this Agreement
shall be made in writing signed by the party making the same, shall specify the
section under this Agreement pursuant to which it is given, and shall be
addressed if to (i) the Company at: Aureal Semiconductor Inc., 0000 Xxxxxxxxxx
Xxxxx, Xxxxxxx, XX 00000 Telephone No. (000) 000-0000, Facsimile No. (510)
252-4491 and (ii) the Holders at their respective last address as the party as
shown on the records of the Company. Any notice, except as otherwise provided in
this Agreement, shall be made by fax and shall be deemed given at the time of
transmission of the fax.
13. Termination. This Agreement shall terminate on the date all
Registrable Securities cease to exist; but without prejudice to (i) the parties'
rights and obligations arising from breaches of this Agreement occurring prior
to such termination (ii) other indemnification obligations under this Agreement.
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14. Assignment. No assignment, transfer or delegation, whether by
operation of law or otherwise, of any rights or obligations under this Agreement
by the Company or any Holder, respectively, shall be made without the prior
written consent of the majority in an interest of the Holders or the Company,
respectively; provided that the rights of a Holder may be transferred to a
subsequent holder of the Holder's Registrable Securities (provided such
transferee shall provide to the Company, together with or prior to such
transferee's request to have such Registrable Securities included in a Piggyback
Registration, a writing executed by such transferee agreeing to be bound as a
Holder by the terms of this Agreement); and provided further that the Company
may transfer its rights and obligations under this Agreement to a purchaser of
all or a substantial portion of its business if the obligations of the Company
under this Agreement are assumed in connection with such transfer, either by
merger or other operation of law (which may include without limitation a
transaction whereby the Registrable Securities are converted into securities of
the successor in interest) or by specific assumption executed by the transferee.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California applicable to agreements
made in and wholly to be performed in that jurisdiction, except for matters
arising under the Act or the Securities Exchange Act of 1934, which matters
shall be construed and interpreted in accordance with such laws.
16. Execution in Counterparts Permitted. This Agreement may be executed
in any number of counterparts, each of which shall be enforceable against the
parties actually executing such counterparts, and all of which together shall
constitute one (1) instrument.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
this 5th day of June, 1998.
AUREAL SEMICONDUCTOR INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxxxx, President - CEO
Address: Aureal Semiconductor Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
INVESTOR(S)
B III Capital Partners, L.P.
Investor's Name
By: DDJ Capital III, LLC, its General Partner
By: DDJ Capital Management, LLC, its Manager
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------
(Signature) Xxxxxx X. Xxxxxxx
Member
Address: c/o DDJ Capital Management, LLC
000 Xxxxxx Xxxxxx, Xxxxx 0
Xxxxxxxxx, XX 00000
