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Technology Stocks : The New QLogic (ANCR) -- Ignore unavailable to you. Want to Upgrade?

To: George Dawson who wrote (17954)	9/6/1998 6:28:00 PM
From: Greg Hull	Read Replies (1) \| Respond to of 29386

George, I have finally read the S-3 and was surprised to see the following statement on page 14: Except under certain limited circumstances, no holder of the Series C Preferred Stock or Agent Warrants is entitled to convert or exercise such Securities to the extent that the Shares to be received by such holder upon such conversion or exercise would cause such holder to beneficially own more than 5.00% of the Common Stock of the Company and Nelson Partners, Olympus Securities, Ltd. and Capital Ventures International may not convert or exercise such securities to the extent that the Shares to be received upon such conversion or exercise would cause such entity to beneficially own more than 4.9% of the Common Stock of the Company. Then on page 16: Pursuant to the terms of the Series C Preferred Stock, no holder thereof can convert or exercise any portion of such Series C Preferred Stock if such conversion would increase such holder's beneficial ownership of the Common Stock in excess of 5.0% and Nelson Partners, Olympus Securities, Ltd. and Capital Ventures International cannot convert or exercise any portion of its Series B Preferred Stock if such conversion would increase such entity's beneficial ownership of Common Stock in excess of 4.9%. (These limitations may be waived upon 61 days notice to the Company). Am I reading this correctly? It is the option of the Series C holders whether the 5% limit is waived? Greg

To: George Dawson who wrote (17954)	9/7/1998 9:06:00 PM
From: Greg Hull	Read Replies (1) \| Respond to of 29386

George, Another question. You wrote: All of the shorts need to cover before they convert and go long. As John G. pointed out this is usually done for a brief period of time to minimize the risk on the short side. That risk is not high enough the price stays depressed while they load up on shares with the conversion. I would guess the narrow price range is necessary if you want a substantial short position while converting at the same time. Could you walk me through this? Why do the shorts need to cover before they convert? I understand that they would want to short prior to converting, but why would they need to cover before converting? Since they are limited on the number of shares they can own long (actually, they are limited to a percentage of outstanding shares), they might have to sell shares before they are allowed to convert more preferred shares. I assume they can use the common shares they own long to cover their short position. Do you or anyone else know if my assumption is correct? Greg