Well, we read the same document in very different ways. I read all of it except the warrant section (I shall read some other time). But here is my understanding. I may be TOTALLY wrong, but if so I am sure someone would correct me.
With this S-3 Amati is registering:
671,767 Common shares
300,000 Class A Warrants at $17.45 if & when exercised
300,000 Class B Warrants at $25.00 if & when exercised
There is a 5 year period for the purchasers to exercise the warrants (starting 12/17/96).
All the names you saw (Quantum, S-C Phoenix, Winstston Partners) are the participants in the private placement, not existing shareholders in the way you are thinking.
COMMON SHARES:
All of the common shares are registered immediately. When Amati decides to serve a 'PUT NOTICE' and the terms are ok (lots of details giving protections to the investors) the investors can immediatly sell the shares (no lockup period).
The purchasers do indeed have the right to short the stock at any time (before or after they are put).
Amati has 2 years to execute this agreement (put the shares to the investors).
There is lots of protection for investors on the common shares they may be 'PUT'. This section is the part I am a little not sure about, but here is what I got out of it:
INITIAL SHARE PRICE of stocks put to investors is to be at a 15% discount to the lower of the:
a) average during VALUATION PERIOD (High + Low divided by 2)
b) 1st put notice: the per share daily LOW during VALUATION PERIOD
2nd put notice: the per share LOW on PUT date
BUT the 1st 5MM of the 10MM cannot exceed the average of the closing prices for the 20 days preceeding 8/15/96
VALUATION PERIOD starts on the 1st trading day following a 'PUT NOTICE' and ends on that trading day during which the aggregate # of shares traded is at least 20 times the # of shares they were put!
Basically the valuation period is trying to guarantee that the investors have 'ease/liquidity' to exit the stock if they choose to do so. Another words "we need guarantees to be able to sell". There are lots of additional protections to the investors in defining the valuation period.
Another nice one is: If the average share price during the VALUATION PERIOD is less than the INITIAL SHARE PRICE (price they were put at) the investors will receive additional shares for free. Basically, they have downside price protection during the valuation period.
WARRANTS:
Although I haven't fully read the Warrants section, Amati has one minor protection with the warrants: if the average of 'averge of the per share daily low of the stock price over 90 day ending prior to ______,97 exceeds $50.00. The number of shares issuable under class B goes from 300,000 to 150,000. Another words if the price of Amati stock doesn't drop below $50 at any moment for 90 trading days prior to this date (day & month unknown, but '97). Amati can chose to issue only 1/2 of the class B warrants at $25.
On the other hand, if Amati does a future offering below the exercise price of the warrants ($17.45 & $25), then they will have to adjust the warrant exercise prices to the investors benefit.
ANOTHER INTERESTING POINT:
Item #15 - Indemnification of Officers & Directors - real generous conditions and apparently the SEC told them it was "against public policy and therefore unenforceable". Amati, in response, says "when the time comes, we will let the courts decide if it is or isn't enforceable". :)
I'll read the Class A & Class B Warrants details tomorrow to see if there is anything in there worth noting.
Now tell me if I got any of the above wrong. Techie |
