EXHIBIT 7
AUREAL SEMICONDUCTOR INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
UNIT PURCHASE AGREEMENT
THIS UNIT PURCHASE AGREEMENT is made as of August 6, 1997, by and among
AUREAL SEMICONDUCTOR INC., a Delaware corporation (the "Company"), and the
purchasers set forth on the Schedule of Purchasers attached hereto as EXHIBIT A
(the "Purchasers").
In consideration of the mutual promises, covenants and conditions
hereinafter set forth, the parties hereby agree as follows:
1. SALE OF UNITS.
1.1 SALE. Subject to the terms and conditions hereof, the Company
will issue and sell to each Purchaser, and each Purchaser will purchase from
the Company, at a Closing (as defined below), the number of Units set forth
opposite each Purchaser's name on EXHIBIT A. A "Unit" shall be composed of a
share of the Company's Common Stock ("Share"), and a warrant to purchase
one-half (0.5) of a share of Common Stock ("Warrant Share"). The exercise
price per Warrant Share shall be $2.00. A form of the warrant is attached as
EXHIBIT B ("Warrant"). The purchase price per Unit ("Unit Purchase Price")
shall be equal to $2.00. Each Warrant to purchase one (1) Warrant Share
shall be valued at $0.10.
2. CLOSING DATES; DELIVERY.
2.1 CLOSING DATES. Each of the closings of the purchase and sale
of the Units (collectively, the "Closings," and individually, a "Closing")
shall be held at the offices of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich, A Professional
Corporation, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ on the
dates as hereinafter provided (the "Closing Dates"):
(a) The First Closing for the purchase and sale of not less
than 1,000,000 Units (the "First Closing") shall be held on August 6, 1997,
or on such other date as the Purchasers and the Company may agree (the "First
Closing Date").
(b) If the full amount of the Units authorized for sale in
Section 1.1 above is not sold at the First Closing, the Company shall have
the right any time prior to the expiration of the 90 day period which shall
commence on the day immediately following the First Closing Date (the "Second
Closing"), to sell additional Units to one or more of the Purchasers or
additional investors as approved by the Company's Board of Directors, and
such investors shall be added to EXHIBIT A and be considered "Purchasers" for
purposes of this Agreement.
2.2 DELIVERY. Subject to the terms of this Agreement, at the Closing
the Company will deliver to the Purchasers the stock certificates representing
the Shares to be purchased by the Purchasers from the Company, against payment
of the purchase price
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therefor by delivery of funds via wire transfer. In addition, the Company
will deliver at the Closing a Warrant or Warrants to each Purchaser,
registered in the name of such Purchaser, based on the number of Units
purchased by such Purchaser.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth
in EXHIBIT C attached hereto, the Company hereby represents and warrants to
the Purchasers as follows:
3.1 ORGANIZATION AND STANDING; CERTIFICATE OF INCORPORATION AND
BYLAWS. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to carry on its business as now conducted and
as proposed to be conducted. The Company is presently qualified, licensed or
domesticated as a foreign corporation or partnership in all jurisdictions in
which the failure to be so qualified, licensed or domesticated would result
in material adverse consequences to the Company or its business.
3.2 CORPORATE POWER. The Company has now, or will have at the
Closing Date, all requisite legal and corporate power to enter into this
Agreement and all other agreements contemplated hereby, to sell the Shares,
Warrants and Warrant Shares hereunder, and to carry out and perform its
obligations under the terms of this Agreement and all other agreements
contemplated hereby, including the Warrants. This Agreement and all other
agreements contemplated hereby are valid and binding obligations of the
Company, except as the same may be limited by bankruptcy, insolvency,
fraudulent conveyance, moratorium, usury, reorganization, and other laws of
general application affecting the enforcement of creditors' rights.
3.3 CAPITALIZATION. The authorized capital stock of the Company
is 100,000,000 shares of Common Stock and no shares of Preferred Stock. As
of June 30, 1997, there were issued and outstanding 39,720,326 shares of the
Company's Common Stock. All such issued and outstanding shares have been
duly authorized and validly issued, are fully paid and non-assessable and
were issued in compliance with all applicable state and federal laws
concerning the issuance of securities. The Company maintains stock option
plans and has issued stock options and warrants as noted below:
(a) Shares of Common Stock reserved for issuance pursuant to
exercise of current or future outstanding options under the Company's 1995
Stock Option Plan and 1994 Stock Option Plan (collectively, the "Plans")
issued to employees or consultants to the Company: 9,323,530
(b) Shares of Common Stock reserved for issuance pursuant to
exercise of current or future outstanding options under the Crystal River
Engineering, Inc. ("CRE") Stock Option Plan: 2,144,069
(c) Shares of Common Stock reserved for issuance pursuant to
exercise of current or future outstanding options under the Company's Outside
Director Stock Option Plan: 200,000
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(d) Shares of Common Stock reserved for issuance pursuant to
exercise of two currently outstanding warrants (one to ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ for
50,000 shares, one to Financing for Science International for 50,000 shares):
100,000
(e) Shares of Common Stock reserved for issuance pursuant to
exercise of warrants to be issued to certain lenders in connection with the
expansion and restructuring of the Company's debt and extension thereof
through March 31, 2000, for 3,150,000 shares.
Other than the above noted reserved shares and the Warrant Shares to be
reserved for issuance pursuant to exercise of the Warrants, there are no
outstanding rights, options, warrants, conversion rights or agreements for
the purchase or acquisition from the Company of any shares of its capital
stock. The Company is not a party or subject to any agreement or
understanding between any persons or entities which affects or relates to the
voting or giving of written consents with respect to any securities or by any
director of the Company.
3.4 AUTHORIZATION.
(a) All corporate, federal and state action on the part of
the Company, its officers, directors and stockholders necessary for the sale
and issuance of the Shares, the Warrants and the Warrant Shares pursuant
hereto and the performance of the Company's obligations hereunder or
contemplated hereby has been taken or will be taken prior to the Closing.
(b) The Shares and the Warrants (and the Warrant Shares
issuable upon exercise of the Warrants), when issued in compliance with the
provisions of this Agreement or the Warrants, as the case may be, will be
validly issued, fully paid and nonassessable, and will be free of any liens
or encumbrances; provided, however, that the Shares, Warrants and Warrant
Shares may be subject to restrictions on transfer under state and/or federal
securities laws as set forth herein, and as may be required by future changes
in such laws.
(c) No person has any right of first refusal or any
preemptive rights in connection with the issuance of the Shares, Warrants or
Warrant Shares.
3.5 PATENTS, TRADEMARKS, ETC. Except as set forth in EXHIBIT C,
the Company owns and possesses or is licensed under all patents, patent
applications, licenses, trademarks, trade names, brand names, inventions,
processes, formulae and copyrights necessary for the operation of the
business of the Company as now conducted and as proposed to be conducted with
no known infringement of or conflict with the rights of others. Except as
contemplated in this Agreement, there are no outstanding options, licenses,
or agreements of any kind relating to the foregoing, nor is the Company bound
by or a party to any other options, licenses or agreements of any kind with
respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, proprietary rights and processes of any
other person or entity. Except as disclosed in the Company's Quarterly
Report on Form 10-Q for the period ended March 31, 1997 (the "10-Q"), the
Company has not received any communications alleging that it has violated or,
by conducting its business as
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proposed, would violate any of the patents, trademarks, service marks, trade
names, copyrights or trade secrets or other proprietary rights of any other
person or entity. The Company is not aware that any of its employees are
obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order
of any court or administrative agency, that would interfere with the use of
his or her best efforts to promote the interests of the Company or that would
conflict with the Company's business as proposed to be conducted or that
would prevent any such employee from assigning inventions to the Company.
Neither the execution nor delivery of this Agreement, nor the carrying on of
the Company's business as proposed, will, to the best of the Company's
knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any of such employees is now obligated. The Company
does not believe that it is or will be necessary for the Company to utilize
any inventions of any of its employees (or people it currently intends to
hire) made prior to their employment by the Company.
3.6 COMPLIANCE WITH OTHER INSTRUMENTS, NONE BURDENSOME, ETC.
Except as set forth in EXHIBIT C, the Company is not in violation of any term
of its Certificate of Incorporation or Bylaws, nor is the Company in
violation in any material respect of any mortgage, indenture, contract,
agreement, instrument, judgment or decree, and to the best of the Company's
knowledge, the Company is not in violation of any order, statute, rule or
regulation applicable to the Company. The execution, delivery and
performance of and compliance with this Agreement and the other agreements
contemplated hereby, and the issuance and sale of the Shares, Warrants and
Warrant Shares pursuant hereto, will not result in (a) any such violation, or
(b) be in conflict with or constitute a default under any such term or (c)
result in the creation of any mortgage, pledge, lien, encumbrance or charge
upon any of the properties or assets of the Company pursuant to any such
term. In addition, the execution, delivery and performance of and compliance
with this Agreement and the other agreements contemplated hereby, and the
issuance and sale of the Units and Warrants pursuant hereto, will not result
in a violation of any law, statute or regulation applicable to the Company.
3.7 EMPLOYEES. Each officer and key employee of the Company has
executed an Employee Proprietary and Confidential Information Agreement. The
Company, after reasonable investigation, is not aware that any of its
employees are in violation thereof, and the Company will use its best efforts
to prevent any such violation.
3.8 LITIGATION, ETC. Except as set forth on EXHIBIT C, there are
no actions, proceedings or investigations pending against the Company or its
officers, directors, or stockholders, or to the best of the Company's
knowledge, against employees or consultants of the Company (or, to the best
of the Company's knowledge, any basis therefor or threat thereof): (1) which
might result in (a) any material adverse change in the business, prospects,
conditions, affairs or operations of the Company, or in any of their
properties or assets, or (b) any material impairment of the right or ability
of the Company to carry on its business as now conducted or as proposed to be
conducted, or (c) any material liability on the part of the Company; or (2)
which questions the validity of this Agreement or any action taken or to be
taken in connection herewith. The Company does not currently plan to
initiate any litigation.
3.9 GOVERNMENTAL CONSENT, ETC. No consent, approval or authorization
of or
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designation, declaration or filing with any governmental authority on the
part of the Company is required in connection with: (a) the valid execution and
delivery of this Agreement; or (b) the offer, sale or issuance of the Shares,
Warrants and Warrant Shares; or (c) the obtaining of the consents, permits and
waivers specified in subsection 5.1(c) hereof; or (d) the consummation of any
other transaction contemplated hereby; except, if required, filings or
qualifications under the Securities Act of 1933, as amended (the "Securities
Act") and California Corporate Securities Law of 1968, as amended (the "Law"),
which filings or qualifications, if required, will have been timely filed or
obtained.
3.10 OFFERING. In reliance on the representations and warranties
of the Purchasers in Section 4 hereof, the offer, sale and issuance of the
Units in conformity with the terms of this Agreement will not result in a
violation of the requirements of Section 5 of the Securities Act or the
qualification requirements of the Law.
3.11 TAXES. The Company has timely filed all tax returns that are
required to have been filed with appropriate federal, state, county and local
governmental agencies or instrumentalities. The Company has paid or
established reserves for all income, franchise and other taxes due as
reflected on said returns. There is no pending dispute with any taxing
authority relating to any of such returns and the Company has no knowledge of
any proposed liability for any tax to be imposed upon the properties or
assets of the Company for which there is not an adequate reserve reflected in
the Company's financial statements contained in the 10-Q or the Company's
Annual Report on Form 10-K for the fiscal year ended December 29, 1996 (the
"10-K").
3.12 REGISTRATION RIGHTS. Except pursuant to the Registration
Rights Agreement, dated as of December 30, 1994, as amended (the "Rights
Agreement"), by and among the Company, TCW Special Credits, a California
general partnership as agent and nominee for the entities set forth on
Schedule I to the Rights Agreement, Appaloosa Management L.P., as agent for
the accounts listed on Schedule I to the Rights Agreement, the Copernicus
Fund, L.P., the Galileo Fund, L.P., and certain purchasers of the Company's
Common Stock, the Company is not obligated to register any of its presently
outstanding securities which may hereafter be issued.
3.13 DISCLOSURE. Neither this Agreement and the exhibits hereto,
nor any of the other statements or certificates furnished or to be furnished
to the Purchasers pursuant hereto or in connection with the transactions
contemplated hereby, including, the Company's Proxy Statement for the 1997
Annual Meeting of Stockholders, the 10-Q and the 10-K contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements contained herein and therein not misleading in
light of the circumstances under which such statements were made.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS AND
RESTRICTIONS ON TRANSFER IMPOSED BY THE SECURITIES ACT OF 1933.
4.1 REPRESENTATIONS, WARRANTIES AND COVENANTS BY THE PURCHASERS.
Each Purchaser represents, warrants and covenants to the Company as follows:
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(a) The Units to be received by the Purchaser will be
acquired for investment for the Purchaser's own account, for investment and
not with a view to, or for resale in connection with, any distribution or
public offering thereof within the meaning of the Securities Act and the Law.
The Purchaser has the full right, power and authority to enter into and
perform this Agreement and all other agreements contemplated hereby, and this
Agreement and all other agreements contemplated hereby constitute valid and
binding obligations of the Purchaser. The Purchaser acknowledges and
understands that the Units must be held indefinitely unless the Units are
subsequently registered under the Securities Act (see Section 6.2) and
qualified under the Law or an exemption from such registration and such
qualification is available.
(b) The Purchaser will not sell, negotiate, pledge or
otherwise dispose of any of the Units (other than in conjunction with an
effective registration statement for the Units under the Securities Act) in
the United States, its territories and possessions or any area subject to its
jurisdiction, or to any person who is a national or resident of the United
States (including any estate of such person or any corporation, partnership
or other entity created or organized therein) unless and until (i) the
Purchaser shall have notified the Company of the proposed disposition, and
(ii) the Purchaser shall have furnished the Company with an opinion of
counsel satisfactory in form and substance to the Company to the effect that
such disposition will not require registration under the Securities Act.
(c) The Purchaser has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of the Purchaser's prospective investment in the Units. The Purchaser
has the ability to bear the economic risks of the Purchaser's prospective
investment. The Purchaser has been furnished with and has had access to such
information as the Purchaser has considered necessary to make a determination
as to the purchase of the Units together with such additional information as
is necessary to verify the accuracy of the information supplied. The
Purchaser is fully aware of (i) the highly speculative nature of the
investment in the Units; (ii) the financial hazards involved; (iii) the lack
of liquidity of the Shares, Warrants and Warrant Shares, and the restrictions
on the transferability of the Shares, Warrants and Warrant Shares; and (iv)
the tax consequences of investment in the Units. The Purchaser has had all
questions which have been asked by the Purchaser satisfactorily answered by
the Company. The Purchaser has not been offered the Units by any form of
advertisement, article, notice or other communication published in any
newspaper, magazine, or similar media or broadcast over television or radio,
or any seminar or meeting whose attendees have been invited by any such media.
4.2 LEGENDS. Each certificate or other instruments representing
any of the Shares and Warrant Shares may be endorsed with the following
legends:
(a) THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS
MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES
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REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SUCH ACT.
(b) THE HOLDER WILL NOT SELL, HYPOTHECATE, PLEDGE, OR
OTHERWISE DISPOSE OF ANY INTEREST IN THE SHARES IN THE UNITED STATES, ITS
TERRITORIES AND POSSESSIONS OR ANY AREA SUBJECT TO ITS JURISDICTION, OR TO
ANY PERSON WHO IS A NATIONAL OR RESIDENT OF THE UNITED STATES (INCLUDING ANY
ESTATE OF SUCH PERSON OR ANY CORPORATION, PARTNERSHIP OR OTHER ENTITY CREATED
OR ORGANIZED THEREIN) UNLESS SUCH SHARES HAVE BEEN EITHER REGISTERED UNDER
THE SECURITIES ACT OR ARE EXEMPT, IN THE OPINION OF THE COMPANY'S COUNSEL,
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
(c) Any other legends required by the Law.
The Company need not register a transfer of legended Shares, Warrants or Warrant
Shares, and may also instruct its transfer agent not to register the transfer of
the Shares, Warrants or Warrant Shares unless the conditions specified in each
of the foregoing legends are satisfied.
4.3 REMOVAL OF LEGEND AND TRANSFER RESTRICTIONS. Any legend
endorsed on a certificate or other instrument pursuant to subsection 4.2(a)
and 4.2(b) and the stop transfer instructions with respect to such legended
securities shall be removed, and the Company shall issue a certificate
without such legend to the holder of such securities if such securities are
registered under the Securities Act and a prospectus meeting the requirements
of Section 10 of the Securities Act is available or if such holder satisfies
the requirements of Rule 144(k) and, where reasonably deemed necessary by the
Company, the holder provides the Company with an opinion of counsel for such
holder of the securities, reasonably satisfactory to the Company, to the
effect that (i) such holder meets the requirements of Rule 144(k) or (ii) a
public sale, transfer or assignment of such securities may be made without
registration.
4.4 RULE 144. The Purchaser is aware of the adoption of Rule 144
by the Securities and Exchange Commission (the "SEC") promulgated under the
Securities Act, which permits limited public resales of securities acquired
in a nonpublic offering, subject to the satisfaction of certain conditions.
The Purchaser understands that under Rule 144, the conditions include, among
other things: the availability, under certain conditions, of certain current
public information about the issuer and the resale occurring not less than
two years after the party has purchased and paid for the securities to be
sold. The Company covenants that (i) the Company will use its best efforts
to comply with the current public information requirements of Rule 144(c)(1)
under the Securities Act and (ii) at all such times as Rule 144 is available
for use by the Purchaser, the Company will furnish the Purchaser upon request
with all information within the possession of the Company required for the
preparation and filing of Form 144.
5. CONDITIONS TO CLOSING.
5.1 CONDITIONS TO THE PURCHASERS' OBLIGATIONS. The obligation of the
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Purchasers to purchase the Units at the Closing is subject to the fulfillment to
their satisfaction, on or prior to the Closing Date, of the following
conditions, any of which may be waived in accordance with the provisions of
subsection 7.1 hereof:
(a) REPRESENTATIONS AND WARRANTIES CORRECT; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company in
Section 3 hereof shall be true and correct when made, and shall be true and
correct in all material respects on the Closing Date with the same force and
effect as if they had been made on and as of said date. The Company's
business and assets shall not have been adversely affected in any material
way prior to the Closing Date. The Company shall have performed in all
material respects all obligations and conditions herein required to be
performed or observed by it on or prior to the Closing Date.
(b) OPINION OF COMPANY'S COUNSEL. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ &
Freidenrich, A Professional Corporation, counsel to the Company, shall have
delivered an opinion addressed to the Purchasers, dated the Closing Date,
substantially in the form as that attached hereto as EXHIBIT D.
(c) CONSENTS AND WAIVERS. The Company shall have obtained in
a timely fashion any and all consents, permits and waivers necessary or
appropriate for consummation of the transactions contemplated by this
Agreement.
(d) LEGAL INVESTMENT. At the time of the Closing, the
purchase of the Units hereunder shall be legally permitted by all laws and
regulations to which the Purchasers and the Company are subject.
(e) COMPLIANCE CERTIFICATE. The Company shall have delivered
a Certificate, executed by the President and the Chief Financial Officer of
the Company, dated the Closing Date, certifying to the fulfillment of the
conditions specified in subsections (a), (c) and (d) of this Section 5.1.
(f) EXECUTION OF AMENDMENT TO THE RIGHTS AGREEMENT. The
Company and the Purchasers shall have executed Amendment No. 3 to the
Registration Rights Agreement dated December 30, 1994, in the form attached
hereto as EXHIBIT E.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's
obligation to sell and issue the Units at the Closing is subject to the
fulfillment to the Company's satisfaction on or prior to the Closing Date of
the following conditions, any of which may be waived by the Company in
accordance with the provisions of subsection 7.1 hereof:
(a) REPRESENTATIONS AND WARRANTIES CORRECT. The
representations and warranties made by the Purchasers in Section 4 hereof
shall be true and correct when made, and shall be true and correct on the
Closing Date with the same force and effect as if they had been made on and
as of said date.
(b) CONSENTS AND WAIVERS. Each of the Purchasers shall have
obtained in a timely fashion any and all consents, permits and waivers
necessary or
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appropriate for consummation of the transactions contemplated by
this Agreement.
(c) SATISFACTION OF CONDITIONS. The conditions set forth in
subsections (c), and (d) of Section 5.1 shall have been fulfilled.
6. COVENANTS OF COMPANY.
6.1 USE OF PROCEEDS. The Company shall use the proceeds from
this financing for working capital purposes. This may include acquisition of
certain strategic technologies. In addition, the Company may use the
proceeds from this financing to temporarily paydown its line of credit with
TCW on an interim basis to reduce borrowing costs.
7. MISCELLANEOUS.
7.1 WAIVERS AND AMENDMENTS. This Agreement or any provision
hereof may be amended, waived, discharged or terminated only by a statement
in writing signed by the party against which enforcement of the amendment,
waiver, discharge or termination is sought.
7.2 GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of California without regard to conflict of
law principles.
7.3 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive the Closing of the transactions
contemplated hereby, notwithstanding any investigation made by the
Purchasers. All statements as to factual matters contained in any certificate
or other instrument delivered by or on behalf of the Company pursuant hereto
or in connection with the transactions contemplated hereby shall be deemed to
be representations and warranties by the Company hereunder as of the date of
such certificate or instrument.
7.4 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors and assigns of the parties hereto.
7.5 ENTIRE AGREEMENT. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and
supersede all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties with
respect thereto.
7.6 NOTICES, ETC. All notices and other communications required
or permitted hereunder shall be in writing and shall be delivered personally
or mailed by first class mail, postage prepaid, or via facsimile or
TWX/Telex, addressed (a) if to the Purchasers at the address set forth on
EXHIBIT A to this Agreement, or at such other address as the Purchasers shall
have furnished to the Company in writing, or (b) if to the Company, at its
address set forth at the beginning of this Agreement, or at such other
address as the Company
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shall have furnished to the Purchasers in writing, with a copy of any said
notice to be sent to ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq. Notices
that are mailed shall be deemed received ten (10) days after deposit in the
mail. In the event that the notice is sent by facsimile or TWX/Telex, notice
shall be deemed to have been received when sent and confirmed as to receipt.
7.7 SEVERABILITY. In case any provision of this Agreement shall
be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.
7.8 EXPENSES. The Company and the Purchasers shall each bear
their own expenses and legal fees in connection with this Agreement and the
transactions contemplated hereby. Notwithstanding the foregoing, the Company
shall pay the reasonable legal fees and related costs of B III Capital
Partners, L.P. up to an aggregate of $10,000.
7.9 TITLES AND SUBTITLES. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
7.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
7.11 DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to the Company or to the Purchasers shall
impair any such right, power or remedy of the Company or the Purchasers, nor
shall it be construed to be a waiver of any breach or default under this
Agreement, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any delay or omission to exercise any
right, power or remedy or any waiver of any single breach or default be
deemed a waiver of any other right, power or remedy or breach or default
theretofore or thereafter occurring. All remedies, either under this
Agreement, or by law otherwise afforded to the Company or the Purchasers,
shall be cumulative and not alternative.
AUREAL SEMICONDUCTOR INC.
By
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COUNTERPART SIGNATURE PAGE TO
UNIT PURCHASE AGREEMENT
DATED AS OF __________, 1997
"PURCHASER"
If you are an individual, Name (Please Print)
please sign and print your name
to the right ---------------------------------
---------------------------------
Signature
If you are signing on behalf of Name of Organization
an entity, please print the legal
name of the entity and sign to the
right, indicating your title ---------------------------------
Name (Please Print)
---------------------------------
Title:
--------------------------
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EXHIBIT A
SCHEDULE OF PURCHASERS
NAME AND ADDRESS UNITS PURCHASE PRICE
IT Asset Management 60,000 $120,000
▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇,
President Directeur General
B III Capital Partners, L.P. 750,000 $1,500,000
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Pequod Investments L.P. 100,000 $200,000
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Oaktree Capital Management, LLC, 500,000 $1,000,000
as investment manager of the Weyerhaeuser
Master Retirement Trust, separate account
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
TCW Special Credits 500,000 $1,000,000
as agent and on behalf
of certain funds and accounts
set forth in Schedule I attached hereto
Totals 1,910,000 $3,820,000
12
EXHIBIT B
FORM OF WARRANT
13
EXHIBIT C
SCHEDULE OF EXCEPTIONS
AUREAL SEMICONDUCTOR INC.
Pursuant to Section 3 of the Unit Purchase Agreement dated August 6,
1997 (the "Agreement"), by and among Aureal Semiconductor Inc., a Delaware
corporation (the "Company"), and the Purchasers set forth on EXHIBIT A
thereto, Company hereby delivers this Schedule of Exceptions to the Company's
representations and warranties given in the Agreement. The section numbers in
this schedule correspond to the section numbers in the Agreement. Any
information disclosed herein under any section, however, shall be deemed to
be disclosed and incorporated in any other section of the Agreement where
such disclosure would be appropriate. Capitalized terms used in this
schedule unless otherwise specified have the same meanings given them in the
Agreement.
SECTION 3.3. On July 25, 1994, the company and its then wholly-owned
subsidiary, Pellucid, Inc. ("Pellucid") filed separate voluntary petitions in
the United States Bankruptcy Court seeking protection under Chapter 11 of the
United States Bankruptcy Code. On December 19, 1994, the Bankruptcy Court
confirmed the companies' Second Amended Joint Plan of Reorganization (the
"Plan of Reorganization") which became effective December 30, 1994. Pursuant
to the Plan of Reorganization, certain shares of Common Stock were held in
escrow for the final satisfaction of claims pending against the Company.
There are currently approximately 48,000 shares of Common Stock held in
escrow. Pursuant to voting agreements between the Company and the escrow
holders, the escrow holders have agreed to vote all such shares in each
election of directors and with respect to other matters submitted to a
stockholder vote in the same proportions as the votes cast by the outstanding
shares of Common Stock not held in escrow.
The Company may increase the reserves under the Plans and the Outside
Director Stock Option Plan so that the reserves under such plans, in the
aggregate, equal twenty percent (20%) of the then fully diluted Common Stock
of the Company.
SECTION 3.5. As described in the Company's 1996 Form 10-K, Yamaha has
aggressively brought patent infringement actions against other companies
which have developed certain replacement FM synthesis chips. There can be no
assurance that Yamaha will not pursue the Company under similar theories.
The Company has sold its Media Vision retail trade names to a third party.
SECTION 3.8. See Section 3.5.
14
EXHIBIT D
FORM OF LEGAL OPINION
15
EXHIBIT E
AMENDMENT NO. 3 TO THE REGISTRATION RIGHTS AGREEMENT
16
