<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 8, 1996.
REGISTRATION NO. 333-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AMATI COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 94-1675494
(State or other jurisdiction (I.R.S. employer
of identification
incorporation or organization) number)
</TABLE>
2043 SAMARITAN DRIVE, SAN JOSE, CALIFORNIA 95124 (408) 879-2000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
JAMES E. STEENBERGEN
AMATI COMMUNICATIONS CORPORATION
2043 SAMARITAN DRIVE, SAN JOSE, CALIFORNIA 95150
(408) 879-2000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
with copies of all orders, notices and communications to:
Richard A. Peers
Heller Ehrman White & McAuliffe
525 University Avenue, Palo Alto, California 94301 (415) 324-7000
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
registration statement for the same offering. / /
- ---------------
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
- ---------------
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $.20 par value......... 671,767 $21.69(2) $14,570,627(2) --
Common Stock, $.20 par value......... 300,000(1) $17.45(3) $5,235,000(3) --
Common Stock, $.20 par value......... 300,000(1) $25.00(3) $7,500,000(3) --
TOTAL $27,305,627 $8,275.00
</TABLE>
(1) In accordance with Rule 416 under the Securities Act of 1933, Common Stock
offered hereby shall also be deemed to cover additional securities to be
offered or issued to prevent dilution resulting from stock splits, stock
dividends or similar transactions.
(2) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended,
based on the average of the high and low prices of the Common Stock on the
Nasdaq National Market on October 2, 1996, as reported on THE WALL STREET
JOURNAL.
(3) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(g) under the Securities Act of 1933, as amended,
based on the exercise price per share of warrants pursuant to which such
shares may be issued by the Registrant.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION DATED OCTOBER , 1996
PROSPECTUS
1,271,767 SHARES OF COMMON STOCK, INCLUDING 671,767 SHARES OFFERED BY THE
SELLING STOCKHOLDERS AND 600,000 SHARES ISSUABLE ON EXERCISE OF OUTSTANDING
WARRANTS TO PURCHASE COMMON STOCK AT AN AVERAGE PRICE OF APPROXIMATELY $21.23
PER SHARE (THE "WARRANTS")
AMATI COMMUNICATIONS CORPORATION
Of the 1,271,767 shares (the "Shares") of Common Stock, $0.20 par value,
(the "Common Stock") of Amati Communications Corporation (the "Company") offered
by this prospectus (the "Prospectus"), 600,000 Shares may be sold by the Company
on exercise of warrants ("Warrants") to purchase Common Stock exercisable at any
time after December 17, 1996, and 671,767 Shares may be sold by the holders of
such Shares (collectively, the "Selling Stockholders") named in this Prospectus.
See "Selling Stockholders". The Company will not receive any proceeds from the
sale of Shares by the Selling Stockholders. The Company could receive up to
$12,735,000 on the exercise of the Warrants. See "Description of Capital Stock".
The Company has not made any underwriting arrangements with respect to the
Shares issuable upon exercise of the Warrants. The Company's Common Stock is
traded on the Nasdaq National Market under the symbol "AMTX". On October 2,
1996, the closing price for the Common Stock, as reported on the Nasdaq National
Market, was $21.375.
All or a portion of the Shares offered by this Prospectus by the Selling
Stockholders may be delivered and/or sold in transactions from time to time on
the over-the-counter market, on the Nasdaq National Market, in negotiated
transactions, or a combination of such methods of sale, at market prices
prevailing at the time, at prices relating to such prevailing prices or at
negotiated prices and/or may also be used to cover short positions. See "Plan of
Distribution." This Prospectus may be used by the Selling Stockholders or by any
broker-dealer who may participate in sales of securities covered hereby. The
Selling Stockholders and the brokers and dealers through whom such sales are
effected may be deemed to be underwriters under the Securities Act of 1933, as
amended (the "Securities Act"). The Selling Stockholders will pay all
commissions, and other expenses associated with the sales of securities by them.
Pursuant to an agreement with the Selling Stockholders, the Company has paid the
expenses of the preparation of this Prospectus. The Company has also agreed to
indemnify the Selling Stockholders against certain liabilities, including
liabilities arising under the Securities Act.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement under the Securities Act with respect to
the securities offered by this Prospectus. As permitted by the rules and
regulations of the Commission, this Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to the Company and the
securities offered hereby, reference is made to the Registration Statement and
the exhibits thereto, which may be examined without charge at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and copies of which may be obtained from
the Commission upon payment of the prescribed fees.
------------------------
SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
(See "RISK FACTORS" COMMENCING ON PAGE 3.)
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is , 1996
<PAGE>
No dealer, salesman, or any other person has been authorized to give any
information or to make any representations or projections of future performance
other than those contained in this Prospectus, and any such other information,
projections, or representations, if given or made, must not be relied upon as
having been so authorized. The delivery of this Prospectus or any sale hereunder
at any time does not imply that the information herein is correct as of any time
subsequent to its date. This Prospectus does not constitute an offer to sell or
a solicitation of an offer to buy any of the securities offered hereby in any
jurisdiction where, and to any person to whom, it is unlawful to make such offer
or solicitation.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act") and in accordance therewith
files reports, proxy statements and other information with the Commission. Such
Registration Statement, reports, proxy statements and other information can be
inspected and copied at public reference facilities maintained by the Commission
at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of
such material can be obtained at prescribed rates from the Public Reference
Section of the Commission at such address. Such reports, proxy statements and
other information can also be inspected at the Commission's regional offices at
7 World Trade Center, Suite 1300, New York, New York 10048 and 500 West Madison,
Chicago, Illinois 60661, and at the offices of the Nasdaq Stock Market at 9513
Key West Avenue, Rockville, Maryland 20850-3389. The Commission maintains a Web
site that contains reports, proxy and information statements and other
information regarding registrants, such as the Company, that file electronically
with the Commission and the address of such site is http://www.sec.gov.
DOCUMENTS INCORPORATED BY REFERENCE
There are hereby incorporated in this Prospectus by reference the following
documents filed pursuant to the 1934 Act: (i) the Company's Annual Report on
Form 10-K for the fiscal year ended July 29, 1995; (ii) the Company's Quarterly
Report on Form 10-Q for the fiscal quarters ended October 28, 1995, January 27,
1996, and April 27, 1996 and (iii) the description of the Company's Common Stock
contained in the registration statement filed under the 1934 Act registering
such Common Stock under Section 12 of the 1934 Act.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the 1934 Act after the date of this Prospectus and prior to the
termination of the offering of the securities offered hereby shall be deemed to
be incorporated by reference in this Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, upon the written or oral request of such person, a copy of any or all
of the documents referred to above which have been or may be incorporated in
this Prospectus by reference, other than exhibits to such documents which are
not specifically incorporated by reference into the information that this
Prospectus incorporates. Requests for such copies should be directed to: Amati
Communications Corporation, 2043 Samaritan Drive, San Jose, California 95124,
Attention: Investor Relations, Telephone (408) 879-2000.
2
<PAGE>
THE COMPANY
Incorporated under the laws of the State of Delaware in 1968 as Microform
Data Systems, Inc., the Company changed its name to ICOT Corporation in 1980. On
November 28, 1995, the Company and Amati Communications Corporation ("Old
Amati"), a privately held Mountain View, California based company completed a
merger (the "Merger") by which Old Amati became a wholly-owned subsidiary of the
Company. Effective as of the Merger, the Company's name was changed to Amati
Communications Corporation and its common stock began trading on the Nasdaq
National Market under the symbol "AMTX".
The Company is a developer of advanced transmission equipment utilizing
Discrete Multi-tone ("DMT") technology for Advanced Digital Subscriber Line
("ADSL") and Very High-Speed Digital Subscriber Line ("VDSL") markets. The
Company holds DMT and ADSL patents. The Company also provides network
connectivity systems for the internetworking and Original Equipment
Manufacturers ("OEM") markets. These products are used primarily in two
applications:
- International Business Machines Corporation ("IBM") compatible personal
computers ("PC") to IBM mainframe connectivity applications in Local Area
Networks ("LANs").
- Bridge products for interconnecting Token-Ring LANs, Token-Ring and
Ethernet LANs and Token-Ring LANs over Wide Area Networks ("WAN").
RISK FACTORS
The information about the Company included or incorporated by reference
herein contains forward looking statements that involve risks and uncertainties,
including the risks detailed below.The Shares of Common Stock offered hereby
involve a high degree of risk and prospective purchasers should carefully
consider the following factors.
HISTORY OF LOSSES. The Company had net income in the fiscal year ended July
29, 1995 of approximately $1,836,000 and has announced a net loss for the fiscal
year ended July 27, 1996 of approximately $34,078,000 (including a non-recurring
charge related to the Merger of approximately $31,554,000). Due in part to the
Merger, the Company is not expected to operate profitably in the forseeable
future as the Company continues research, development, production and marketing
activities. There can be no assurance that the Company will ever attain
profitability. Any long-term viability, profitability and growth from the
Company's technology will depend upon successful commercialization of products
resulting from its research and product development activities. Extensive
additional research and development will be required prior to commercialization
of certain products. There can be no assurance that the Company will be able to
develop commercially viable products from its technology, generate significant
revenues and/or achieve profitability.
NEED FOR ADDITIONAL CAPITAL. During 1996, the Company secured a line of
credit for $1,250,000 and a capital lease line of $1,500,000, and entered into
an Investment Agreement with the Selling Stockholders which provides to the
Company up to $15 million in equity financing. The Company's future capital
requirements will depend on many factors, including sales levels, progress in
research and development programs, the establishment of collaborative
agreements, and costs of manufacturing facilities and commercialization
activities. The Company may require funding in addition to that available under
its line of credit, capital lease line and the Investment Agreement. There can
be no assurance that such additional funding will be available on acceptable
terms, if at all. If additional funds are required and not available, the
Company could be required to curtail significantly or defer, temporarily or
permanently, one or more of its research and development programs or to obtain
funds through arrangements that may require the Company to relinquish certain
technology or product rights.
3
<PAGE>
MARKET FOR ADSL PRODUCTS STILL UNDER DEVELOPMENT; PRINCIPAL ADSL MARKET
OUTSIDE OF THE UNITED STATES. ADSL was developed to transmit digital video over
copper wire and also has application in providing access to the Internet over
copper wire. Although the current infrastructure in the local distribution
networks of telephone companies is based on copper wire, there can be no
assurance that telephone companies will pursue the deployment of ADSL systems
or, if deployment occurs, as to the volume and timing of such deployment.
Significant deployment may be prevented or delayed by a number of factors,
including cost, regulatory barriers, lack of programming content, lack of
consumer demand and the availability of alternative technologies. Access systems
with high performance broadband capability, such as the ADSL system, may be
attractive to telephone companies only to the extent that the telephone
companies plan to offer broadcast video, video-on-demand or Internet access
services which utilize the full features of a high performance local
distribution network. Substantial amounts of time, effort and money will be
required to develop such high performance services. There can be no assurance
that sufficient programming content for video services will be developed to
justify deploying digital video transmission systems, or that programming
content will be both attractive to consumers and offered at prices that will
create a mass market. If such high performance services are offered, and there
is demand for them, there can be no assurance that telephone companies will
select ADSL over competing technologies, such as fiber-to-the-curb, hybrid
fiber-coaxial ("HFC"), and wireless communications. Fiber-to-the curb, HFC and
wireless systems have greater bandwidth than the ADSL products being developed
by the Company. Although Internet access services may provide a market for ADSL
in the United States, because foreign telephone companies currently face less
competition from cable companies than telephone companies face in the United
States, the Company believes that its principal markets for ADSL video
applications will be outside the United States.
PRICE COMPETITIVENESS OF ADSL PRODUCTS. The Company believes that in order
to design and manufacture commercially acceptable ADSL products, cost
improvements beyond those available with current technology will be necessary.
The future success of the Company will depend, in part, on its ability to
develop ADSL products that compete effectively on the basis of price and
performance. Current prices are significantly higher than those that the Company
believes would be necessary for mass deployment of ADSL products. There can be
no assurance that the Company will be successful in developing ADSL products
that can be sold at prices which are viable in the market.
RAPID TECHNOLOGICAL CHANGE; COMPETITION IN THE TELECOMMUNICATION
TRANSMISSION BUSINESS. Competition from existing companies, including major
communications companies, is expected to increase. Most of the Company's
competitors in the communications industry are more established, benefit from
greater market recognition and have greater financial, technical, production and
marketing resources than the Company. Some competitors are developing alternate
access technologies, such as HFC, fiber-to-curb and wireless systems, that may
prove technologically superior or more cost effective than the Company's
technology. There can be no assurance that developments by others will not
render the Company's products or technologies obsolete or noncompetitive or that
the Company will be able to keep pace with new technological developments.
COMPETITION IN THE PC TO MAINFRAME CONNECTIVITY BUSINESS. The PC to
Mainframe Connectivity market is highly competitive and is characterized by
rapid advances in technology which frequently result in the introduction of new
products with improved performance characteristics, thereby subjecting the
Company's products to the risk of technological obsolescence. The Company's
ability to compete is dependent on several factors, including reliability,
product performance, quality, features, distribution channels, name awareness,
customer support, product development capabilities, and the ability to meet
delivery schedules. The Company competes, directly or indirectly, with a broad
range of companies in the PC-Connectivity business, many of whom have
significantly greater financial and other resources. In addition, the Company is
only competing for a limited and declining segment of the PC-Connectivity
market, which is itself declining and expected to continue to decline. The
Company expects revenues from its PC-Connectivity business to continue to
decline.
4
<PAGE>
COMPETITION FOR VDSL STANDARDS. The Company expects to apply its DMT
technology to the development of VDSL products for the transmission of digital
video service in connection with a fiber-optic backbone to cover the distance
from this platform or node to subscribers' homes over copper wire or coaxial
cable. American National Standards Institute (ANSI) has not yet awarded the
standard for VDSL technology, and the competition for the ANSI standard for VDSL
is expected to be intense. AT&T, as well as other companies with greater
resources than the Company, are expected to compete for these standards. There
is no assurance that the Company's DMT technology will be successful in
obtaining the ANSI VDSL standard.
DEPENDENCE ON COMPLEMENTARY PRODUCTS. Widespread use of ADSL and VDSL
products for digital video service will depend on the commercial availability of
other products and components, including the video content, digital switches,
video servers, encode/decode equipment, and set-top boxes in subscribers' homes.
There can be no assurance that other suppliers will develop and market these
complementary components effectively or that these components, when combined
with the Company's ADSL and VDSL products, will be a cost-effective means of
transmitting video-on-demand or video dialtone.
DEPENDENCE ON LARGE CUSTOMERS AND SYSTEMS INTEGRATORS. The Company expects
to sell many of its telecommunication transmission products to large
telecommunications service companies which serve as integrators for the various
component systems that make up a video-on-demand or multimedia system. These
systems integrators in turn sell the systems to telephone companies for
distribution to their subscribers. The Company is largely dependent on these
systems integrators for the introduction of its products to field trials. There
can be no assurance that systems integrators will select the Company's products
for field trials or, if they do initially select the Company's products, that
they will continue to use them. In addition, telephone companies are generally
reluctant to deploy new technologies available only from a single source,
especially when the supplier is as relatively small as the Company, and often
require the availability of alternative sources before deploying a new
technology. This reluctance may put the Company at a competitive disadvantage
relative to some of its competitors. Further, acceptance of the Company's
products by these customers may require the Company to relinquish rights to its
technology or products. There can be no assurance, however, that even if the
Company were to relinquish such rights to its technology or products, telephone
companies would deploy the Company's ADSL or VDSL products.
CUSTOMER CONCENTRATION; RELIANCE ON SALES TO IBM. Sales to IBM for PC to
Mainframe connectivity and related products accounted for approximately 62%, 65%
and 83% of the Company's net sales in fiscal 1993, 1994 and 1995, respectively
and 64% for the nine months ended April 27, 1996. Since IBM considers product
sales and market data confidential, the Company has very little ability to
anticipate future demands and IBM is not obligated to purchase any specified
amount of products. For its PC-Connectivity products, the Company is highly
dependent on sales to IBM and expects that quarterly and annual results could be
volatile due to its dependence on this dominant customer. In addition, there can
be no assurance that IBM will continue to distribute and support the Company's
products. The Company's principal contract with IBM expires in December 1996.
Further, IBM may terminate its agreements with the Company upon 30 days' notice
without a significant penalty.
INTERNATIONAL BUSINESS. The Company expects that sales outside of the
United States will represent a significant portion of its future sales,
especially of the Company's ADSL products. Operations outside of the United
States are subject to various risks, including exposure to currency
fluctuations, the imposition of governmental controls, the need to comply with a
wide variety of foreign and United States export laws, political and economic
instability, trade restrictions, changes in tariffs and taxes, and longer
payment cycles typically associated with international sales. The inability of
the Company to design products to comply with foreign standards or any
significant or prolonged delay in the Company's international sales could have a
material adverse effect on the Company's future business and results of
operations.
REGULATORY MATTERS. Telephone companies, which constitute the initial
primary market for the Company's telecommunication transmission products, and
cable television companies, which may become a
5
<PAGE>
future market for such products, are subject to extensive regulation by both the
federal and state governments in the United States and by foreign governments.
Many of these regulations have the effect of limiting the economic incentive of
telephone companies to deploy new technologies. Restrictions on telephone
companies and cable television companies may materially and adversely affect
demand for the products of the Company. Recent legislation passed by Congress
will significantly alter the regulations on telephone companies and cable
companies in the United States, and there can be no assurance that such
legislation will not adversely affect the commercialization of the Company's
products. In addition, both in the United States and abroad, rates for
telecommunications services are governed by tariffs or licensed carriers that
are subject to regulatory approval. These tariffs also could have a material
adverse affect on the demand for the Company's products.
DEPENDENCE ON SUPPLIERS AND THIRD-PARTY MANUFACTURERS. Certain key
components in the Company's products, such as integrated circuits, are currently
available only from single sources. The Company does not have any long-term
supply contracts with its sole source vendors and purchases these components on
a purchase order basis. In addition, certain components and subassemblies for
the Company's products have long lead times. While the Company seeks to
accurately forecast its requirements, inaccuracies in its forecast could result
in shortages or oversupplies of these components. The inability to obtain
sufficient quantities of sole source components or subassemblies as required, or
to develop alternative sources as required in the future, or inaccuracies in
forecasts for long lead time components or subassemblies could result in delays
or reductions in product shipments or product redesigns which would materially
and adversely affect the Company's business, operating results and financial
condition. In addition, increases in the prices of components for which the
Company does not have alternate sources could materially and adversely affect
the Company's operating results.
The Company intends to outsource its manufacturing operations to independent
third party manufacturers. There are risks associated with the use of
independent manufacturers, including unavailability of or delays in obtaining
adequate supplies of products and reduced control of manufacturing quality and
production costs. There can be no assurance that the Company's third party
manufacturers will provide adequate supplies of quality products on a timely
basis. The inability to obtain such products on a timely basis would have a
material adverse effect on the Company's business, operating results and
financial condition.
PATENTS AND TRADE SECRETS. There can be no assurance that any patents owned
or controlled by the Company will provide commercially significant protection of
the Company's technology or ensure that the Company may not be determined to
infringe valid patents of others. The Company's patents have not been tested in
court, and the validity and scope of the Company's proprietary rights could be
challenged. The Company has also received foreign patents, but since the patent
laws of foreign countries differ from those of the United States, the degree of
protection afforded by any foreign patents may be different from that available
under U.S. patent laws.
The Company also relies on trade secrets and proprietary know-how which it
seeks to protect by confidentiality agreements with its collaborators, employees
and consultants. There can be no assurance that these agreements will not be
breached, that the Company will have adequate remedies for any breach or that
the Company's trade secrets and proprietary know-how will not otherwise become
known or be discovered by competitors.
THE COMPANY'S RSI LAWSUIT. The Company is a defendant in a suit brought in
November 1993 alleging repetitive stress injuries ("RSI") resulting from the use
of the Company's products claiming $1 million in compensatory and $10 million in
punitive damages. The Company has tendered defense of the suit to its insurance
carriers, but there can be no assurance that the suit will not have a material
adverse effect on the financial position or results of operations of the
Company.
6
<PAGE>
POSSIBLE VOLATILITY OF STOCK PRICE; SHARES ELIGIBLE FOR FUTURE SALE. The
market price of the Company's Common Stock has been and may continue to be
highly volatile. Future events, many of which will be beyond the control of the
Company, as well as announcements related to technology and product development
and collaborative arrangements and expected quarterly fluctuations in revenues
and financial results, may have a significant impact on the market price of the
Company's Common Stock. Future sales of Shares by the Selling Stockholders or by
other current stockholders and by option holders and warrant holders who
exercise Company stock options or warrants could have a depressive effect on the
market price of the Company's Common Stock.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the Shares
by the Selling Stockholders. The Company could receive up to $12,735,000 if the
Warrants are exercised in full. No assurance can be given that any of the
Warrants will be exercised and the Warrants provide to the Selling Stockholders
a "net exercise" right which if utilized, will not result in any cash proceeds
to the Company. See "Description of Capital Stock--Warrants". The Company
expects that any net proceeds from the exercise of the Warrants will be used for
working capital and general corporate purposes, including product development
and marketing. Pending utilization, such funds will be invested in money market
and other short-term interest bearing obligations.
SELLING STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock by the Selling Stockholders as of
, 1996, including the Shares underlying the Warrants, and as adjusted
assuming the sale by Selling Stockholders of all Shares offered hereby by them.
Because the Selling Stockholders may sell some or all of the Shares offered by
them hereby, as well as any Shares acquired pursuant to the Warrants, and
because there are currently no agreements, arrangements or understandings with
respect to the sale of any of the Shares, no estimate can be given as to the
actual amount of Shares that will be held by the Selling Stockholders after
completion of such distribution. See "Plan of Distribution." The Shares issuable
upon exercise of the Warrants may be purchased from time to time by the Selling
Stockholders named below:
<TABLE>
<CAPTION>
COMMON STOCK COMMON STOCK
BENEFICIALLY OWNED BENEFICIALLY OWNED
PRIOR TO OFFERING(1) COMMON AFTER OFFERING
----------------------- STOCK ----------------------
NUMBER PERCENT TO BE SOLD NUMBER PERCENT
---------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
Quantum Industrial Partners LDC........................... 635,883(2) 3.5% 335,883 300,000(2) 1.7%
S-C Phoenix Holdings, L.L.C. ............................. 317,942(3) 1.8% 167,941 150,000(3) *
Winston Partners, L.P. ................................... 105,938(4) * 55,958 49,980(4) *
Winston Partners II LDC................................... 141,421(5) * 74,701 66,719(5) *
Winston Partners II L.L.C. ............................... 70,583(6) * 37,283 33,300(6) *
---------- ----- ----------- --------- -----
TOTAL................................................. 1,271,767(7) 671,767 600,000(7)
---------- ----- ----------- --------- -----
---------- ----- ----------- --------- -----
</TABLE>
- ------------------------
* Less than 1%
(1) Applicable percentage of ownership is based on 17,716,117 shares of Common
Stock outstanding as of October 3, 1996.
(2) Includes 300,000 Shares issuable upon exercise of Warrants exercisable after
December 17, 1996.
(3) Includes 150,000 Shares issuable upon exercise of Warrants exercisable after
December 17, 1996.
(4) Includes 49,980 Shares issuable upon exercise of Warrants exercisable after
December 17, 1996.
7
<PAGE>
(5) Includes 66,719 Shares issuable upon exercise of Warrants exercisable after
December 17, 1996.
(6) Includes 33,300 Shares issuable upon exercise of Warrants exercisable after
December 17, 1996.
(7) Includes 600,000 shares issuable upon exercise of Warrants exercisable after
December 17, 1996.
The Company and the Selling Stockholders entered into an Investment
Agreement dated October 3, 1996 (the "Investment Agreement") which provides to
the Company up to $15 million in equity financing. The 671,767 Shares offered
hereby by the Selling Stockholders as well as the Warrants relate to the initial
$10 million in equity financing to be provided under the Investment Agreement.
The prices per share paid by the Selling Stockholders for shares of Common Stock
to be acquired by them pursuant to the Investment Agreement represent a 15%
discount from market prices of the Common Stock over agreed upon pricing
periods. Under the Investment Agreement, each Selling Stockholder represented to
the Company that it was acquiring the Shares and the Warrants from the Company
without any present intention of effecting a distribution of those Shares.
However, in accordance with the Investment Agreement, the Company agreed to
register the sale of the Shares on exercise of the Warrants and the resale of
the Shares offered hereby by the Selling Stockholders to permit sales of such
Shares from time to time in the market or in privately-negotiated transactions.
The Company will prepare and file such amendments and supplements to the
registration statement as may be necessary in accordance with the rules and
regulations of the Securities Act to keep it effective for a period of
approximately two years. In addition, the Selling Stockholders have certain
demand and piggy-back registration rights provided to them in connection with
the Investment Agreement.
The Company has agreed to bear certain expenses (other than broker discounts
and commissions, if any) in connection with the registration statement.
PLAN OF DISTRIBUTION
All or a portion of the Shares offered hereby by the Selling Stockholders
may be delivered and/or sold in transactions from time to time on the
over-the-counter market, on the Nasdaq National Market, in negotiated
transactions, or a combination of such methods of sale, at market prices
prevailing at the time, at prices related to such prevailing prices or at
negotiated prices. After the effectiveness of the Registration Statement, of
which this Prospectus is a part, the Selling Stockholders may make short sales
of the Company's Common Stock and may use the Shares to cover the resulting
short positions. The Selling Stockholders may effect such transactions by
selling to or through one or more broker-dealers, and such broker-dealers may
receive compensation in the form of underwriting discounts, concessions or
commissions from the Selling Stockholders. The Selling Stockholders and any
broker-dealers that participate in the distribution may under certain
circumstances be deemed to be "underwriters" within the meaning of the
Securities Act, and any commissions received by such broker-dealers and any
profits realized on the resale of Shares by them may be deemed to be
underwriting discounts and commissions under the Securities Act. The Warrants
issued to the Selling Stockholders may also be deemed to represent underwriting
compensation. See "Selling Stockholders." In addition, any securities that
qualify for sale under Rule 144 may be sold pursuant to Rule 144 rather than
this Prospectus. The Selling Stockholders may agree to indemnify such
broker-dealers against certain liabilities, including liabilities under the
Securities Act. In addition, the Company has agreed to indemnify the Selling
Stockholders with respect to the Shares offered hereby against certain
liabilities, including, without limitation, certain liabilities under the
Securities Act, or, if such indemnity is unavailable, to contribute toward
amounts required to be paid in respect of such liabilities.
Any broker-dealer participating in such transactions as agent may receive
commissions from the Selling Stockholders (and, if they act as agent for the
purchaser of such Shares, from such purchaser). Broker-dealers may agree with
the Selling Stockholders to sell a specified number of Shares at a stipulated
price per share, and, to the extent such a broker-dealer is unable to do so
acting as agent for the Selling Stockholders, to purchase as principal any
unsold Shares at the price required to fulfill the broker-dealer
8
<PAGE>
commitment to the Selling Stockholders. Broker-dealers who acquire Shares as
principal may thereafter resell such Shares from time to time in transactions
(which may involve crosses and block transactions and which may involve sales to
and through other broker-dealers, including transactions of the nature described
above) in the over-the-counter market, in negotiated transactions or otherwise
at market prices prevailing at the time of sale or at negotiated prices, and in
connection with such resales may pay to or receive from the purchasers of such
Shares commissions computed as described above. To the extent required under the
Securities Act, a supplemental prospectus will be filed, disclosing (a) the name
of any such broker-dealers, (b) the number of Shares involved, (c) the price at
which such Shares are to be sold, (d) the commissions paid or discounts or
concessions allowed to such broker-dealers, where applicable, (e) that such
broker-dealers did not conduct any investigation to verify the information set
out or incorporated by reference in this Prospectus, as supplemented, and (f)
other facts material to the transaction.
Under applicable rules and regulations under the 1934 Act, any person
engaged in the distribution of the Shares may not simultaneously engage in
market making activities with respect to the Common Stock of the Company for a
period of two business days prior to the commencement of such distribution. In
addition and without limiting the foregoing, the Selling Stockholders will be
subject to applicable provisions of the 1934 Act, and the rules and regulations
thereunder, including, without limitation, Rules 10b-6 and 10b-7, which
provisions may limit the timing of purchases and sales of shares of the
Company's Common Stock by the Selling Stockholders.
The Selling Stockholders will pay all commissions, and other expenses
associated with the sale of securities by them. The Shares offered hereby are
being registered pursuant to contractual obligations of the Company, and the
Company has paid the expenses of the preparation of this Prospectus. The Company
has not made any underwriting arrangements with respect to the sale of Shares
offered hereby on exercise of the Warrants. Upon exercise of the Warrants, the
Shares will be issued by the Company directly to the persons exercising the
Warrants.
DESCRIPTION OF CAPITAL STOCK
As of the date of this Prospectus, the authorized capital stock of the
Company consists of 45,000,000 shares of Common Stock, $.20 par value ("Common
Stock"), and 5,000 shares of Preferred Stock, $100 par value ("Preferred
Stock").
COMMON STOCK
As of October 3, 1996, there were 17,716,117 shares of Common Stock
outstanding held of record by 1,623 stockholders. The holders of shares of
Common Stock are entitled to one vote per share on all matters to be voted on by
stockholders, except that holders may cumulate their votes in the election of
directors. Subject to preferences that may be applicable to any outstanding
Preferred Stock, holders of Common Stock are entitled to receive ratably such
dividends as may be declared by the Board of Directors in its discretion from
funds legally available therefor. In the event of a liquidation, dissolution, or
winding up of the Company, holders of Common Stock are entitled to share ratably
in all assets remaining after payment of liabilities and the liquidation
preference of any outstanding Preferred Stock. Holders of Common Stock have no
preemptive rights and have no rights to convert their Common Stock into any
other securities. The outstanding shares of Common Stock are fully paid and
nonassessable.
PREFERRED STOCK
The Board of Directors has the authority to issue up to 5,000 shares of
Preferred Stock in one or more series and to fix the rights, preferences,
privileges and restrictions thereof, including dividend rights, conversion
rights, voting rights, terms of redemption, liquidation preferences and the
number of shares constituting any series or the designation of such series,
without any further vote or action by the
9
<PAGE>
shareholders. The issuance of Preferred Stock may have the effect of delaying,
deferring or preventing a change in control of the Company or making removal of
management more difficult without further action by the shareholders and could
adversely affect the rights and powers, including voting rights, of the holders
of Common Stock. This could have the effect of decreasing the market price of
the Common Stock. The Company has no present plans to issue any additional
shares of Preferred Stock.
WARRANTS
Of the 1,271,767 Shares offered hereby, an aggregate of 600,000 Shares are
issuable upon exercise of Warrants to purchase Common Stock, 300,000 of which
are Class A Warrants and 300,000 of which are Class B Warrants. The Warrants
become exercisable on December 17, 1996 and will remain exercisable for five
years thereafter, except under certain circumstances.
The exercise price of the Class A Warrants is $17.45 per share. The exercise
price of the Class B Warrants is $25.00 per share; provided, however, if the
average of the per share daily low trading price of the Company's Common Stock
over any 90-day period ending prior to , 1997, exceeds $50.00 per
share, the number of shares issuable pursuant to the Class B Warrant shall be
reduced from 300,000 to 150,000.
The exercise price of the Warrants is payable as follows: (a) by payment to
the Company in cash, (b) by surrender to the Company for cancellation of
securities of the Company, including the Warrant having a market price equal to
the exercise price of the Warrant; or (c) by any combination thereof. In lieu of
exercising the Warrant, the holder may elect to receive a payment equal to the
difference between (i) the market price of the Shares issuable upon exercise of
the Warrant multiplied by the number of Shares as to which the payment is then
being elicited and (ii) the exercise price with respect to such Shares. Such
payment is payable by the Company to the holder only in Shares of Common Stock
of the Company valued at the market price on the date of exercise.
The Warrants may be exercised for less than the full number of shares of
Common Stock, in which case the number of Shares issuable upon exercise of the
Warrants as a whole, and the sum payable upon exercise of the Warrants as a
whole, shall be proportionately reduced.
The exercise price of each Warrant is subject to adjustment (i) in the event
there is a subdivision or combination of the outstanding shares of the Company
Common Stock, (ii) in the event there is a reorganization, reclassification,
consolidation, merger or sale of assets, (iii) if the Company declares dividends
on its Common Stock payable otherwise than out of earnings or earned surplus, or
(iv) except under certain circumstances, if the Company sells or issues any
shares of its Common Stock for consideration per share less than the Warrant
exercise price.
LEGAL MATTERS
The legality of the issuance of the securities being offered hereby is being
passed upon for the Company by Heller Ehrman White & McAuliffe, Palo Alto,
California.
EXPERTS
The audited financial statements and schedules of the Company at July 31,
1993, July 30, 1994 and July 29, 1995 and for each of the three years in the
period ended July 29, 1995 incorporated by reference herein and in the related
Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts.
10
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth various expenses in connection with the sale
and distribution of the securities being registered. All of the amounts shown
are estimates except for the Securities and Exchange Commission Registration
Fee.
<TABLE>
<CAPTION>
Securities and Exchange Commission Registration Fee................ $ 8,275
<S> <C>
NASDAQ Additional Listing Fee...................................... 20,000
Accounting Fees.................................................... 5,000
Legal Fees and Disbursements....................................... 10,000
Miscellaneous...................................................... 6,725
---------
TOTAL:......................................................... $ 50,000
---------
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Company has the power to indemnify its officers and directors against
liability for certain acts pursuant to Section 145 of the General Corporation
Law of the State of Delaware. The Restated Certificate of Incorporation of the
Company provides that a director of the Company, to the full extent permitted by
the Delaware General Corporation Law, shall not be liable to the Company or its
stockholders for monetary damage for breach of fiduciary duty as a director.
Article IX of the Company's Bylaws provides for the indemnification of
officers, directors, employees and agents of the Company. The Bylaws provide
that the Company shall indemnify its directors, officers, employees and agents
against expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by them in connection with any threatened, pending, or
completed action, suit or proceeding (other than an action by or in the right of
the corporation), if they acted in good faith and in a manner they reasonably
believe to be in or not opposed to the best interest of the corporation and had
no reasonable cause to believe the conduct was unlawful. In relation to a
proceeding by or in the right of the Company, a director, officer, employee or
agent shall be indemnified against expenses actually and reasonably incurred in
connection with the defense or settlement of such proceeding if the director,
officer, employee or agent acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his or her duty to the
corporation unless and only to the extent that the Delaware Court of Chancery
shall determine that such person is fairly and reasonably entitled to indemnity.
The Bylaws also provide that expenses incurred by a director, officer, employee
or agent may be advanced by the Company upon receipt of an undertaking by or on
behalf of the director, officer, employee or agent to repay such amount unless
it shall ultimately be determined that he or she is entitled to be indemnified
by the Company as authorized in the Bylaws.
II-1
<PAGE>
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------------------
<C> <S>
4.1 Investment Agreement among Registrant and the Selling Stockholders dated October 3, 1996
4.2 Form of Class A Warrant
4.3 Form of Class B Warrant
4.4 Registration Rights Agreement among Registrant and the Selling Stockholders dated October 3, 1996
5 Opinion of Heller Ehrman White & McAuliffe*
23.1 Consent of Heller Ehrman White & McAuliffe*
(included in Exhibit 5)
23.2 Consent of Arthur Andersen LLP
24 Power of Attorney (See Page II-4)
</TABLE>
- ------------------------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS.
A. The undersigned Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement;
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
Provided, however, that paragraphs (i) and (ii) shall not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
B. That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant to section 13(a)
or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offering therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE>
C. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted against the Registrant by such Director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in San Jose, State of California, on the 7th day of October, 1996.
AMATI COMMUNICATIONS CORPORATION
By: /s/ JAMES E. STEENBERGEN
--------------------------------------
James E. Steenbergen
DIRECTOR, PRESIDENT, CHIEF
EXECUTIVE
OFFICER AND CHIEF FINANCIAL
OFFICER
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James E. Steenbergen or Teresita O. Medel, or
either of them, with the power of substitution, her or his attorney in fact, to
sign any amendments to this Registration Statement (including post-effective
amendments), and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorney-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Director, President, Chief
/s/ JAMES E. STEENBERGEN Executive
---------------------------- Officer and Chief October 7, 1996
James E. Steenbergen Financial Officer
/s/ TERESITA O. MEDEL Chief Accounting Officer
---------------------------- (Principal Accounting October 7, 1996
Teresita O. Medel Officer)
/s/ DR. JOHN M. CIOFFI
---------------------------- Director October 7, 1996
Dr. John M. Cioffi
---------------------------- Director October 7, 1996
Dr. James F. Gibbons
---------------------------- Director October 7, 1996
Aamer Latif
/s/ DONALD L. LUCAS
---------------------------- Director October 7, 1996
Donald L. Lucas
II-4
<PAGE>
AMATI COMMUNICATIONS CORPORATION
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT DESCRIPTION PAGES
- --------- ------------------------------------------------------------------------------------------ -----------
<C> <S> <C>
4.1 Investment Agreement among Registrant and Selling Stockholders dated October 3, 1996
4.2 Form of Class A Warrant
4.3 Form of Class B Warrant
5 Opinion of Heller Ehrman White & McAuliffe*
4.4 Registration Rights Agreement among Registrant and the Selling Stockholders dated October
3, 1996
23.1 Consent of Heller Ehrman White & McAuliffe* (included in Exhibit 5)
23.2 Consent of Arthur Andersen LLP
24 Power of Attorney (See Page II-4)
</TABLE>
- ------------------------
* To be filed by amendment.
<PAGE>
INVESTMENT AGREEMENT
Between
AMATI COMMUNICATIONS CORPORATION,
QUANTUM INDUSTRIAL PARTNERS LDC,
S-C PHOENIX HOLDINGS, L.L.C.,
WINSTON PARTNERS, L.P.,
WINSTON PARTNERS II LDC
AND
WINSTON PARTNERS II L.L.C.
Dated as of October 3, 1996
<PAGE>
INVESTMENT AGREEMENT dated as of October 3, 1996 between Quantum Industrial
Partners LDC, S-C Phoenix Holdings, L.L.C., Winston Partners, L.P., Winston
Partners II LDC and Winston Partners II L.L.C. (collectively, the "Investors")
and Amati Communications Corporation, a corporation organized and existing under
the laws of the State of Delaware (the "Company").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Investors shall invest up to $15,000,000 in the
Company's Common Stock, par value $.20 per share (the "Common Stock").
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I.
PURCHASE AND SALE OF COMMON STOCK
Section 1.1. PURCHASE AND SALE OF COMMON STOCK. Upon the terms and
conditions set forth herein, the Company shall issue and sell to the Investors,
and the Investors shall purchase from the Company, in proportion to the
percentages set forth opposite the name of each Investor on Schedule I hereto
(the "Participation Schedule"), up to an amount of Common Stock valued in
accordance with the terms of this Agreement at $15,000,000.
Section 1.2. DELIVERY OF PUT NOTICES.
(a) At any time prior to the earlier of (i) the date which is two
years from the date hereof (the "Notice Termination Date") or (ii) termination
of this Agreement in accordance with Article V herein, the Company may deliver
written notices to the Investors (each such notice hereinafter referred to as a
"Put Notice") stating a dollar amount (the "Dollar Amount") of Common Stock
which the Company intends to sell to the Investors five business days following
the date (the "Put Notice Date") on which the Put Notice is given to the
Investors by the Company in accordance with Section 6.4 herein. "Business day"
shall mean any day on which the Nasdaq Stock Market's National Market is open
for trading. The Dollar Amount designated by the Company in the first Put
Notice given hereunder shall be an amount equal to $10,000,000 and the amount
designated by the Company in the second Put Notice given hereunder shall equal
$5,000,000 (the "Second Tranche"), in each case unless otherwise agreed in
writing by the Investors or limited by operation of the proviso contained in
this sentence, and, if so limited, shall be in increments of $500,000; provided
that if the Dollar Amount designated by the Company in a Put Notice would cause
the Valuation Period (as defined below) with respect to such Put Notice to
exceed 90 days (a "Valuation Period Default"), the Dollar Amount designated by
the Company and required to be purchased by the Investors shall be reduced by
that amount that would cause a Valuation Period Default. The Put Notice shall
-1-
<PAGE>
include a representation of the Company as to the Common Stock outstanding on
the Put Notice Date as determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") and the regulations
promulgated thereunder.
(b) Notwithstanding any of the foregoing, the Company may not deliver
a Put Notice if: (i) the reported last trading price of the Common Stock on the
Nasdaq Stock Market's National Market, American Stock Exchange or New York Stock
Exchange (whichever is the principal trading exchange for the Common Stock, the
"Principal Market"), as reported by the Principal Market, on the day of such Put
Notice was less than $10.00; (ii) if trading of the Common Stock on the
Principal Market is suspended or limited or the Common Stock is delisted from
the Principal Market, or trading in securities generally as reported by the
Principal Market, shall have been suspended or limited or minimum prices shall
have been established on securities whose trades are reported by the Principal
Market; (iii) if the Common Stock is not registered under the Exchange Act or if
the Registration Statement is no longer effective or is subject to a stop order
or is otherwise suspended; or (iv) if a Valuation Period is in progress. If any
of the events described in clauses (i) to (iii) above occurs after a Put Notice
is delivered but prior to the Closing associated with such Put Notice, such Put
Notice shall be null, void and of no force and effect and a new Put Notice shall
be required following the termination of any such events.
Section 1.3. DETERMINATION OF SHARE NUMBER; VALUATION PERIOD.
(a) The initial aggregate number of shares (an "Initial Share
Number") that the Company shall be obligated to issue and sell and the Investors
shall be obligated to purchase (in accordance with the Participation Schedule)
in connection with a Put Notice shall be equal to the number obtained by (i)
dividing (x) the Dollar Amount designated in such Put Notice by (y) 85% of the
closing price of the Common Stock on the Principal Market on the Put Notice
Date, as reported by the Principal Market (such closing trading price hereby
defined as the "Initial Share Price") and (ii) rounding to the nearest whole
number of shares.
(b) Subject to the extensions set forth in Section 1.3(c) below, the
"Valuation Period" in connection with each purchase of Common Stock shall
commence on the Trading Day immediately following the Put Notice Date with
respect to such purchase and shall end on that Trading Day during which the
aggregate number of shares of Common Stock traded on the Principal Market
(determined by reference to the sum of the actual daily trading volume of the
Common Stock, as reported in the Wall Street Journal for the applicable Trading
Days) subsequent to the Put Notice Date applicable to such purchase is at least
equal to twenty (20) times the applicable Initial Share
-2-
<PAGE>
Number; provided, however, that for purposes of determining whether a Valuation
Period Default has occurred, the "Valuation Period" shall be deemed to equal
that number of days determined by dividing (i) twenty (20) times the applicable
Initial Share Number by (ii) the Average Daily Trading Volume during the thirty
(30) Trading Days immediately preceding the Put Notice Date, rounded to the
nearest whole number of Trading Days. For purposes of this Agreement "Average
Daily Trading Volume" shall mean, with respect to any measuring period, the
average of the daily trading volumes, as published in the Wall Street Journal,
of the Common Stock on the Principal Market during such measuring period. For
purposes of this section "Trading Days" shall mean days on which the Common
Stock was traded on the Principal Market.
(c) (i) if the Average Daily Trading Volume during any Valuation
Period is less than the Average Daily Trading Volume during the thirty (30)
Trading Days immediately preceding the applicable Put Notice Date, the Investors
shall have an option with respect to each Put Notice, exercisable in their sole
discretion, to extend such Valuation Period to that number of days which would
have comprised the Valuation Period had the Valuation Period been calculated
using a factor of thirty (30) times the applicable Initial Share Number rather
than the factor of twenty (20) set forth in Section 1.3(b) above. Such election
shall be made by notifying the Company in writing, no later than three business
days following the last day of the Valuation Period of their election to so
extend such Valuation Period.
(ii) For each Trading Day during any Valuation Period (prior to
any extension pursuant to Section 1.3(c)(i) above) that the low trading price
per share of the Common Stock on the Principal Market, as reported by the
Principal Market, is less than 75% of the Initial Share Price (a "Price
Deficiency"), the Investors shall have the option, exercisable in their sole
discretion, to extend such Valuation Period by one day. Such election shall be
made by notifying the Company in writing, no later than three business days
following the Trading Day on which the Price Deficiency exists.
(d) Notwithstanding Section 1.3(a) above, and except as hereinafter
provided, if the Average Share Price (as defined below) during any Valuation
Period is less than the Initial Share Price of the Common Stock purchased in
connection with such Valuation Period, then the Company shall deliver to the
Investors at the applicable Final Closing (as defined below), at no additional
cost to the Investors, and in addition to the Initial Share Number associated
with such Valuation Period, the number of shares of Common Stock ("Additional
Shares") that is obtained by subtracting (x) such Initial Share Number from (y)
the quotient obtained by dividing the Dollar Amount by 85% of the Average Share
Price (rounded to the nearest whole number); provided that if such issuance of
Additional Shares would result in (i) the Investors being the beneficial owner
of 10% or more of the
-3-
<PAGE>
outstanding shares of Common Stock after taking into account all Warrant Shares
(as defined below) and all other shares of Common Stock beneficially owned or
deemed beneficially owned by the Investors (the "10% Limit") or (ii) the Company
issuing more than twice the Initial Share Number (the "Issuance Maximum"), then
in lieu of issuing such portion of Additional Shares as would cause the
Investors to meet or exceed the 10% Limit or the Issuance Maximum, the Company
shall pay at the applicable Final Closing and in accordance with the provisions
of Section 1.5(b) hereof in cash to the Investors an amount (the "Dollar Amount
Rebate") equal to the product of (A) the Average Share Price and (B) the Excess
Additional Shares. For purposes of this Section 1.3(d), "Excess Additional
Shares" shall mean, at the time of calculation, the difference between the
amount of Additional Shares to which the investor would otherwise be entitled
pursuant to this subsection 1.3(d) at such time and the greater of (x) the
number of Additional Shares, if any, which, when added to all other shares of
Common Stock beneficially owned by the Investors at such time, taking into
account the Warrant Shares, would equal 10% or more of the outstanding shares of
Common Stock at the time of calculation or (y) the number of Additional Shares,
if any, which exceed the Issuance Maximum.
(e) For purposes hereof, "Average Share Price" shall mean the lower
of (i) the average during the applicable Valuation Period of the average of the
high and low per share trading prices of the Company's Common Stock for each day
during the applicable Valuation Period, as reported by the Principal Market and
(ii) (x) in the case of the purchase and sale pursuant to the first Put Notice,
the per share daily low trading price of the Company's Common Stock on the date
hereof or (y) in the case of the purchase and sale pursuant to the second Put
Notice, the per share low trading price of the Company's Common Stock on the
applicable Put Notice Date; PROVIDED, HOWEVER, that the Average Share Price in
respect of the first $5,000,000 of the $10,000,000 in Dollar Amount to be
purchased and sold pursuant to the first Put Notice (such $5,000,000 in Dollar
Amount being referred to herein as the "First Tranche") shall not exceed the
average of the per share closing prices of the Company's Common Stock for the
twenty (20) Trading Days ending August 15, 1996.
(f) In the event that during a Valuation Period there is any stock
split, reverse split or combination, stock dividend or similar such event with
respect to the Common Stock, there shall be effected an appropriate adjustment
to the Initial Share Number, Initial Share Price, Average Share Price and
Additional Shares to place the Investors in the same position as they would have
been had such event not occurred, and in the event of any dispute in connection
with this paragraph, the adjustment shall be determined by arbitration before a
single arbitrator in New York, New York, in accordance with the prevailing rules
of the American Arbitration Association.
Section 1.4. INITIAL CLOSINGS.
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(a) Each initial closing of the purchase and sale of Common Stock (an
"Initial Closing") shall take place at the offices of the Investors, at 10:00
a.m., New York time, on the fifth business day following the Put Notice Date to
which such Initial Closing relates, or the earliest date thereafter on which all
conditions to Closing have been satisfied or waived in accordance with the terms
of this Agreement. Each date on which an Initial Closing occurs is referred to
herein as an "Initial Closing Date." Initial Closings and Final Closings are
sometimes referred to herein as a "Closing".
(b) (i) On each Initial Closing Date, the Company shall deliver to
the Investors in accordance with the Participation Schedule certificates
representing the Initial Share Number to be issued and sold to the Investors on
such date and registered in the name of the Investors or deposit such Initial
Share Number into the accounts designated by the Investors and (ii) on each
Initial Closing Date, the Investors shall in accordance with the Participation
Schedule deliver to the Company 50% of the Dollar Amount (the remaining 50% of
the Dollar Amount being referred to herein as the "Dollar Amount Balance") with
respect to such closing by cashier's check or wire transfer in immediately
available funds to such account as shall be designated in writing by the Company
no later than two business days prior to such Initial Closing Date. In
addition, each of the Company and the Investors shall deliver all documents,
instruments and writings required to be delivered by any of them pursuant to
this Agreement at or prior to each Closing.
Section 1.5. FINAL CLOSINGS; ADJUSTMENTS.
(a) Each final closing of the purchase and sale of Common Stock (a
"Final Closing") shall take place at the offices of the Investors, at 10:00
a.m., New York time, on the fifth business day following the end of the
Valuation Period to which such Final Closing relates, or the earliest date
thereafter on which all conditions to Closing have been satisfied or waived in
accordance with the terms of this Agreement. Each date on which a Final Closing
occurs is referred to herein as a "Final Closing Date".
(b) On each Final Closing Date, (i) to the extent the Investors are
entitled to the issuance of Additional Shares as provided in Section 1.3(d), the
Company shall deliver to the Investors one or more certificates representing the
Additional Shares so to be delivered in accordance with this Agreement,
registered in the name of the Investors, or deposit such Additional Shares into
accounts designated by the Investors and (ii) the Investors shall deliver to the
Company the excess, if any, of (x) the Dollar Amount Balance with respect to
such Final Closing over (y) the amount, if any, of the Dollar Amount Rebate with
respect to such Final Closing to which the Investors are entitled pursuant to
Section 1.3(d), by cashier's check or wire
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transfer in immediately available funds to such account as shall be designated
in writing by the Company no later than two business days prior to such Final
Closing Date; PROVIDED, HOWEVER, that to the extent that the Dollar Amount
Rebate with respect to such Final Closing exceeds the Dollar Amount Balance with
respect to such Final Closing, the Company shall refund and deliver to the
Investors, or accounts designated by the Investors, such excess by cashier's
check or wire transfer in immediately available funds to such account as shall
be designated in writing by the Investors no later than two business days prior
to such Final Closing Date.
Section 1.6. REGISTRATION.
(a) All shares (including Additional Shares) of Common Stock issued
to the Investors pursuant to this Agreement shall, at the time of such issuance
and for so long thereafter as is required by this Agreement, be subject to an
effective registration statement on Form S-3 or an equivalent thereof, covering
the resale or other disposition by the Investors of the Shares and Additional
Shares to be issued by the Company to the Investors hereunder at any time and
from time to time after each such issuance. In addition, all shares of Common
Stock issuable upon exercise of the Warrants ("Warrant Shares") shall, on the
earlier to occur of (i) 90 days following the date of this Agreement and (ii)
delivery to the Investors of the first Put Notice hereunder, be subject to an
effective registration statement on Form S-3 or an equivalent thereof covering
(x) the issuance of the Warrant Shares by the Company to any holder of a Warrant
(each a "Warrant Holder" and collectively, the "Warrant Holders") and (y) the
resale or other disposition thereof by any Warrant Holder at any time and from
time to time after each such issuance. The Initial Share Number, Additional
Shares and Warrant Shares shall be referred to collectively herein as the
"Shares". The registration statements described in this Section 1.6(a)
(together with all amendments and supplements thereto, a "Registration
Statement") shall, in accordance with Section 1.6(b) below, remain effective
pursuant to the provisions of Regulation 230.415 of the Securities Act of 1933,
as amended (the "1933 Act"), or successor provision, at all times during the
period commencing on the date of the first Put Notice and ending on the later to
occur of (1) the second anniversary of such date or (2) the 180th day following
the delivery by the Company to the Investors of (A) a notice indicating that the
Company will not deliver a Put Notice in respect of the Second Tranche or (B) a
Put Notice in respect of the Second Tranche (the "Registration Period"). Any
notice delivered by the Company pursuant to clause (A) above shall be
irrevocable and shall relieve the Investors from any obligation to purchase
Additional Shares under this Agreement.
(b) The Company shall, as expeditiously as reasonably possible and in
accordance with Section 1.6(a) herein:
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(i) Prepare and file with the Securities and Exchange
Commission ("SEC") 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 1933 Act with respect to the disposition of
all securities covered by such Registration Statement.
(ii) Furnish to the Investors or any Warrant Holder, as the
case may be, such numbers of copies of a prospectus, in conformity with the
requirements of the 1933 Act, and such other documents as the Investors or
Warrant Holder, as the case may be, may reasonably require in order to
facilitate the disposition of shares sold pursuant to this Agreement or issued
pursuant to the Warrants and owned by such Investors or Warrant Holder.
(iii) Insure that all Shares subject to the Registration
Statement shall at all times during the applicable Registration Period be
registered and qualified under such other securities or "Blue Sky" laws of such
jurisdictions as shall be reasonably requested by the Investors or the Warrant
Holders, as the case may be, provided that the Company shall not be required in
connection herewith or as a condition hereto to qualify to do business or to
file a general consent to service of process in any such states or jurisdictions
where the Company is not otherwise required to be so qualified.
(iv) Notify the Investors and/or any Warrant Holder of the
happening of any event or the existence of any circumstance (without any
obligation to disclose the specific actual event or circumstance) as a result of
which the prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing and either (A) as soon as
may be practicable, prepare and file with the SEC such amendments and
supplements to such Registration Statement and prospectus used in connection
therewith as may be necessary to eliminate or correct such untrue statement or
omission and otherwise to cause such registration statement and prospectus to
remain current and useable for the purposes intended hereunder, or (B) further
notify the Investors and/or the Warrant Holders, as the case may be, at the time
of any notification to Investors and/or the Warrant Holders, as the case may be,
pursuant to the foregoing provisions of this Section 1.6(b)(iv) of the Company's
election to suspend and extend for a period of up to thirty (30) calendar days
(a "Suspension Period") the Company's obligations pursuant to the preceding
clause (A) of this Section 1.6(b)(iv) or the Company's obligation to file or
maintain the effectiveness of a Registration Statement under the Registration
Rights Agreement; provided that the Company will, at or before the expiration of
any such Suspension Period, fully satisfy and discharge its obligations pursuant
to such preceding clause (A); and provided
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further that no Suspension Period may commence less than ninety (90) days after
the expiration of the then most recent Suspension Period, and the Company may
establish no more than two (2) Suspension Periods in any twelve (12) consecutive
months during which the Registration Statement is to remain effective pursuant
to Section 1.6(a). The Company, the Investors and the Warrant Holders understand
and acknowledge that, during any Suspension Period, the Company will be unable
to sell Common Stock to the Investors in accordance with or under the
Registration Statement and that Investors and/or the Warrant Holders may be
unable to sell or otherwise dispose of Shares of Common Stock theretofore
acquired by the Investors and/or the Warrant Holders hereunder or pursuant to
the Warrants in accordance with the Registration Statement or otherwise. The
foregoing shall not, however, limit or interfere in any way with the acquisition
or disposition by the Investors and/or the Warrant Holders of the Shares, or any
other shares or securities of the Company by other lawful means. Any Valuation
Period falling within any Suspension Period, in whole or in part, shall be
suspended during such Suspension Period and shall be extended by the entire
length of that portion of the applicable Suspension Period which occurred during
the original applicable Valuation Period.
(v) Make available for inspection by the Investors' designated
representatives, upon request from time to time, all SEC Documents (as defined
below), require the Company's officers and the Company's employees to supply all
information requested by the Investors or their designated representatives in
connection with the Registration Statement, require the Company's officers and
the Company's employees to meet with representatives of the Investors'
designated representatives, during normal business hours and on such basis as
the Investors' designated representatives may reasonably request, invite the
Investors' designated representatives to attend any and all meetings organized
by the Company for purposes of disseminating information about the Company to
securities analysts generally and make available to the Investors' designated
representatives, contemporaneously with the provision of such information, any
and all information about the Company provided by the Company to securities
analysts. In addition, the Company will permit Investors' designated
representatives access to the Company's premises and, personnel, consultants,
agents, attorneys, accountants, customers, suppliers, bankers, and others who
have significant relationships or agreements with the Company and the Company's
assets, books and records and the Company will provide Investors' designated
representatives with information (financial and otherwise) concerning the
Company to enable Investors' designated representatives to conduct ongoing due
diligence review of the Company. The Company will disseminate to the Investors'
designated representatives all press releases and public information
disseminated by the Company at the same time it disseminates such releases and
information to others. Notwithstanding anything herein to the contrary, and in
any event prior to any Closing, the Company will notify the Investors'
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designated representatives of any event or the existence of any circumstance
(without any obligation to disclose the specific event or circumstance)
constituting non-public information (whether or not requested of the Company
specifically or generally during the course of due diligence by the Investors'
designated representatives) which, if not disclosed in the prospectus included
in the Registration Statement required to be effective at the time of each
Closing would cause such prospectus to include a material misstatement or to
omit a material fact required to be stated therein in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading.
(vi) Except as required, in the opinion of the Company's
counsel, by law or consented to in advance by Investors (which consent shall not
be unreasonably withheld) refrain from using the name of Investors in the
Registration Statement or other regulatory filings (including SEC Documents).
(c) The Company, the Investors and certain other parties shall have
the rights to indemnification and contribution set forth in the Registration
Rights Agreement (as defined below).
(d) All fees, costs and expenses of and incidental to the
Registration Statement shall be borne by the Company. The fees, costs and
expenses of registration to be borne by the Company as provided in this
subsection (e) shall include, without limitation, all registration, filing and
NASD fees, printing expenses, fees and disbursements of counsel and accountants
for the Company, fees and expenses of one counsel for the Investors and Warrant
Holders and all legal fees and disbursements and other expenses of complying
with state securities or Blue Sky laws of any jurisdiction or jurisdictions in
which securities to be offered are to be registered and qualified.
Section 1.7. RESCHEDULING. If after the date of any Put Notice and prior
to the expiration of the Valuation Period relating to such Put Notice (a) the
Company shall distribute to its shareholders any property or assets outside the
ordinary course of business (including without limitation spin-offs and the
like) or (b) any person shall (x) publicly announce a tender offer or exchange
offer for the Company's Common Stock, or (y) publicly announce plans for a
merger, consolidation or potential change in control of the Company, the
Investors may in their sole discretion elect by written notice to the Company to
shorten the Valuation Period relating to such Put Notice so as to end on a date
which is either before or after the consummation of the record date for the
consummation of any such transaction, which election must be made prior to
consummation of any such transaction. For purposes of the foregoing, it is
understood and agreed that the Investors may, but shall not be required to,
reduce or entirely eliminate a Valuation Period pursuant to this Section 1.7.
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Section 1.8. DELISTING/DEREGISTRATION. If, during any Valuation Period or
within twenty (20) days after the end of such Valuation Period, (i) the Common
Stock is delisted from the Principal Market or (ii) the Common Stock is not
registered under the Exchange Act, Investors shall have the right, at their
option in their sole discretion, which right shall be exercised within twenty
(20) days of such delisting or deregistration, to sell to the Company, and the
Company agrees to buy, promptly upon the exercise of such right by Investors,
all or any part of the Initial Share Number and Additional Shares issued to and
then held by the Investors in connection with the most recent Put Notice at a
price equal to the Initial Share Price (if prior to the end of the Valuation
Period) and at a price equal to the Average Share Price (if subsequent to the
Valuation Period) for each such Share and Additional Share.
Section 1.9. SUSPENSION. In addition to, and not in any way in limitation
of the provisions contained in Section 1.6(b)(iv), if (i) during any Valuation
Period or within twenty (20) days after the end of such Valuation Period trading
of the Common Stock on the Principal Market is suspended or (ii) any
registration statement with respect to the Shares or Additional Shares
(including the Registration Statement) is no longer effective or subject to a
stop order or otherwise suspended by the Company or as a result of action or
inaction by the Company, then (A) the Valuation Period shall be suspended as
described in Section 1.6(b)(iv), (B) with respect to Shares then held by the
Investors (exclusive of the Warrant Shares) the following figures shall be
substituted for the 85% figure contained in Section 1.3(a)(y) above and (C) the
Company shall deliver to the Investors within two (2) business days of Investors
providing documentation of Shares (other than Warrant Shares) then held by
Investors, an amount in cash equal to the difference between that portion of the
total amount previously paid (or, in the case of a suspension following an
Initial Closing but prior to the applicable Final Closing, to be paid) by the
Investors to the Company for Shares (other than any Warrant Shares) issued to
and then held by the Investors and the total amount which the Investors should
have paid to the Company for such Shares, based on the figures listed below,
after giving effect to all prior payments made by the Company to the Investors
pursuant to this Section 1.9.
TIME PERIOD FROM SUSPENSION DATE PERCENT
----------------------------------- -----------
31-60 days after date of suspension 83%
61-90 days after date of suspension 81%
91-120 days after date of suspension 79%
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In addition to the foregoing, in the event of any suspension for more than
120 days, on the 120th day of such suspension the Company shall deliver to the
Investors, pursuant to Section 1.3(d), such number of Additional Shares as is
equal to the number of Additional Shares to which the Investors would be
entitled pursuant to Section 1.3(d) based on (a) the Average Share Price of the
Common Stock for the originally scheduled Valuation Period, assuming trading
occurred on the Principal Market during each day of such Valuation Period or (b)
if trading did not occur on the Principal Market on each day of the originally
scheduled Valuation Period, the Average Share Price for the number of days in
the originally scheduled Valuation Period on which trading on the Principal
Market did occur (in either case, a "Determination Date"). In the event that
trading of the Common Stock recommences after a suspension of 120 days or more,
the Valuation Period in progress at the time of such suspension shall recommence
and shall be redefined as the period (the "Post Suspension Valuation Period")
consisting of the number of days in the originally scheduled Valuation Period
which occurred prior to the relevant suspension plus the number of days in the
originally scheduled Valuation Period which occurred following the end of the
relevant suspension. Furthermore, on the 120th day of said suspension, for
purposes of determining the Average Share Price, the Investors shall elect, at
their option, to utilize either (a) the originally scheduled Valuation Period,
or in the event that trading did not occur on the Principal Market on each day
of the originally scheduled Valuation Period, the number of days of the
originally scheduled Valuation Period on which trading on the Principal Market
did occur, or (b) the Post Suspension Valuation Period. If the Investors elect
option (b) above, and if, based on the Average Share Price during the Post
Suspension Valuation Period, the Investors would be entitled, pursuant to
Section 1.3(d), to receive an amount of Additional Shares in excess of any
Additional Shares issued to the Investors on the 120th day following the
relevant suspension, Company shall deliver to the Investors, within two business
days of the last day of the Post-Suspension Valuation Period such excess amount
of Additional Shares. If, however, based on the Average Share Price during the
Post Suspension Valuation Period, the Investors would be entitled, pursuant to
Section 1.3(d) to fewer Additional Shares than the number of Additional Shares
issued to the Investors on the 120th relevant suspension, then the Investors
shall make a payment in cash to the Company such that the total dollar amount
paid to the Company with respect to the Shares issued in connection with the
relevant Put Notice equals the product of (a) 79% of the Average Share Price for
the relevant Post Suspension Valuation Period and (b) the Shares issued in
connection with the relevant Put Notice, such payment to be made within two
business days of the last day of the Post Suspension Valuation Period.
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ARTICLE II.
REPRESENTATIONS AND WARRANTIES
Section 2.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby makes the following representations and warranties to the Investors:
(a) ORGANIZATION AND QUALIFICATION. The Company is a corporation
duly incorporated and existing in good standing under the laws of the State of
Delaware, and has the requisite corporate power to own its properties and to
carry on its business as now being conducted. The Company does not have any
subsidiaries, except for those identified in the SEC Documents. Each of the
Company's subsidiaries is a corporation duly incorporated and existing in good
standing under the laws of its jurisdiction of organization. Each of the
Company and its subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except where the failure so to qualify would not have a Material
Adverse Effect. "Material Adverse Effect" means any adverse effect on the
operations, properties, prospects, or financial condition of the entity with
respect to which such term is used and which is material to such entity and
other entities controlling or controlled by such entity taken as a whole.
(b) AUTHORIZATION; ENFORCEMENT. (i) The Company has the requisite
corporate power and authority to enter into and perform this Agreement, the
Registration Rights Agreement and the Warrants and to issue all Shares and
Additional Shares in accordance with the terms hereof and thereof, (ii) the
execution and delivery of this Agreement, the Registration Rights Agreement and
the Warrants by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action, and no further consent or authorization of the Company or its
Board of Directors or Stockholders is required, (iii) this Agreement, the
Registration Rights Agreement and the Warrants have been duly executed and
delivered by the company, and (iv) this Agreement, the Registration Rights
Agreement and the Warrants constitute valid and binding obligations of the
Company enforceable against the Company in accordance with their terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors, rights and remedies or by
other equitable principles of general application.
(c) CAPITALIZATION. As of April 27, 1996, the authorized capital
stock of the Company and the shares thereof currently issued and outstanding are
as described in the Company's quarterly report on Form 10-Q for the period then
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ended. All of the outstanding shares of the Company's Common Stock have been
validly issued and are fully paid and nonassessable. No shares of Common Stock
are entitled to preemptive rights. The Company has furnished to the Investors
true and correct copies of the Company's Certificate of Incorporation as in
effect on the date hereof (the "Certificate"), and the Company's By-Laws, as in
effect on the date hereof (the "By-Laws").
(d) ISSUANCE OF SHARES. The issuance of all Shares and Additional
Shares has been duly authorized and all such Shares, when paid for or issued in
accordance with the terms hereof and pursuant to the Warrants, shall be validly
issued, fully paid and non-assessable. The Company has authorized and reserved
for issuance to Investors the requisite number of shares of Common Stock to be
issued pursuant to the Warrants. The issuance, sale and delivery of the Shares
and Additional Shares is not subject to any preemptive right of stockholders of
the Company arising under law or the Certificate or By-laws or to any
contractual right of first refusal or other right in favor of any person.
(e) AGREEMENTS. As of the date of this Agreement, there has been no
breach or default by the Company, or to the best of the Company's knowledge, by
any other party thereto, of any provisions of any material agreements to which
the Company is a party, and nothing has occurred which, with lapse of time or
the giving of notice of both, would constitute a breach or default by the
Company, or to the best of the Company's knowledge, by any other party thereto.
(f) BROKERS. None of the Investors shall be responsible for any fees
of any broker, finder, commission agent or other person incurred by the Company
in connection with this Agreement and the transactions contemplated hereby.
(g) NO CONFLICTS. The execution, delivery and performance of this
Agreement and the Registration Rights Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
do not and will not (i) result in a violation of the Company's Certificate or
By-Laws or (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company is a party and is still
in effect, or result in a violation of any federal, state, local or foreign law,
rule, regulation, order, judgment or decree (including Federal and state
securities laws and regulations) applicable to the Company, or by which any
property or asset of the Company is bound or affected (except for such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect or impair the Company's ability to
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consummate the transactions contemplated hereby). The business of the Company
is not being conducted in violation of any law, ordinance or regulations of any
governmental entity, except for possible violations which either singly or in
the aggregate do not have a Material Adverse Effect. The Company is not
required under Federal, state or local law, rule or regulation in the United
States to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or the
Registration Rights Agreement or issue and sell any Shares or Additional Shares
in accordance with the terms hereof and under the Warrants (other than any NASD
filings which may be required to be made by the Company subsequent to any
Closing, and the Registration Statement and compliance with applicable state
securities or "blue sky" laws).
(h) (i) SEC DOCUMENTS;, FINANCIAL STATEMENTS. The Common Stock of
the Company is registered pursuant to Section 12(g) of the Exchange Act and the
Company has filed all reports, schedules, forms, statements and other documents,
together with all exhibits, financial statements and schedules thereto required
to be filed by it with the SEC pursuant to the reporting requirements of the
Exchange Act, including material filed pursuant to Section 13(a) or 15(d), (all
of the foregoing, whether heretofore or hereafter filed with the SEC, and the
Registration Statement, when declared effective, being hereinafter referred to
herein as the "SEC Documents"). The Company has not provided to the Investors
any information which, according to applicable law, rule or regulation, should
have been disclosed publicly by the Company but which has not been so disclosed,
other than with respect to the transactions contemplated by this Agreement. As
of their respective dates, the SEC Documents complied in all material respects
with the requirements of the Exchange Act or the 1933 Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder and other
federal, state and local laws, rules and regulations applicable to such SEC
Documents, and none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of the date of
delivery by the Investors of the prospectus contained in the Registration
Statement in connection with sales of Shares by the Investors, such prospectus
will comply in all material respects with the requirements of the 1933 Act and
the rules and regulations of the SEC promulgated thereunder, and other federal,
state and local laws, rules and regulations applicable to such prospectus. The
financial statements of the Company included in the SEC Documents comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with generally
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accepted accounting principles applied on a consistent basis during the periods
involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto or (ii) in the case of unaudited interim statements, to the
extent they may not include footnotes or may be condensed or summary statements)
and fairly present in all material respects the financial position of the
Company as of the dates thereof and the results of operations and cash flows for
the periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).
(ii) The SEC has not issued an order preventing or suspending
the use of any prospectus relating to the offering of any Shares nor instituted
proceedings for that purpose.
(i) NO MATERIAL ADVERSE CHANGE. No event has occurred which has had
or is reasonably likely to have Material Adverse Effect with respect to the
Company since (i) in the case of the first Closing hereunder, the last day of
the period to which the Company's most recent Form 10-K or 10-Q, as the case may
be, filed by the Company with the SEC relates and (ii) in the case of subsequent
Closings hereunder, the last day of the period to which the Company's Form 10-K
or 10-Q, as the case may be, filed by the Company with the SEC most proximately
to the applicable Closing hereunder relates.
(j) NO UNDISCLOSED LIABILITIES. The Company has no liabilities or
obligations not disclosed in (i) in the case of the first Closing hereunder, the
Company's most recent Form 10-K or 10-Q, as the case may be, filed by the
Company with the SEC and (ii) in the case of subsequent Closings hereunder, the
last day of the period to which the Company's Form 10-K or 10-Q, as the case may
be, filed by the Company with the SEC most proximately to the applicable Closing
hereunder relates, other than those incurred in the ordinary course of the
Company's business and which, individually or in the aggregate, do not or would
not have a Material Adverse Effect on the Company.
(k) NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. No event or circumstance
has occurred or exists with respect to the Company or its business, properties,
prospects, operations or financial condition, which, would be required to be
disclosed by the Company under either the 1933 Act or the Exchange Act or other
applicable law but which has not been so publicly announced or disclosed.
(l) LITIGATION. Except as may be set forth in the SEC Documents,
there are no lawsuits or proceedings pending or to the best knowledge of the
Company threatened, against the Company, nor has the Company received any
written or oral notice of any such action, suit, proceeding or investigation,
which might have a Material Adverse Effect on the Company. Except as set forth
in the SEC Documents no judgment, order, writ, injunction or decree or award has
been issued by or, so far as is known by the
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Company, requested of any court, arbitrator or governmental agency which might
result in a Material Adverse Effect on the Company or which might impair the
Company's ability to consummate the transactions contemplated by this Agreement.
(m) INTELLECTUAL PROPERTY. To the best of its knowledge, the Company
and its subsidiaries validly own or have the right to use all material
copyrights, trademarks, patents and other intellectual property rights
(collectively, "Intellectual Property") material to the operation of their
business, and such Intellectual Property is not subject to any material
infringement, except as otherwise disclosed in the SEC Documents. Except as
disclosed in the SEC Documents, to the best of the Company's knowledge, the
Company is not in any way making any unlawful or wrongful use of any
Intellectual Property of any third party which might result in a Material
Adverse Effect on the Company or which might materially adversely affect the
transactions contemplated by this Agreement.
(n) PRINCIPAL MARKET. As of the date of this Agreement, the
Principal Market on which the shares of Common Stock are traded is the Nasdaq
Stock Market's National Market.
Section 2.2. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. The
Investors hereby make the following representations and warranties to the
Company:
(a) AUTHORIZATION; ENFORCEMENT. (i) The Investors have the requisite
power and authority to enter into and perform this Agreement and to purchase the
Shares to be sold hereunder, (ii) the execution and delivery of this Agreement
by the Investors and the consummation by them of the transactions contemplated
hereby have been duly authorized by all necessary corporate or partnership
action, as the case may be, and no further consent or authorization of the
Investors or their respective Boards of Directors, stockholders, or partners, as
the case may be, is required, (iii) this Agreement has been duly authorized,
executed and delivered by the Investors, and (iv) this Agreement constitutes a
valid and binding obligation of the Investors enforceable against the Investors
in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors,
rights and remedies or by other equitable principles of general application.
(b) CONSENTS. The Investors are not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement or purchase the Shares or the Additional Shares
in accordance with the terms hereof; provided that for purposes of the
representation made in this sentence, the Investors are
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assuming and relying upon the accuracy of the relevant representations and
agreements of the Company herein.
(c) OWNERSHIP; ACCESS TO INFORMATION. The Investors are duly
organized and validly existing under the laws of their respective jurisdiction
of organization and have been afforded, to the satisfaction of the Investors,
the opportunity to review the SEC Documents and obtain such additional publicly
available information concerning the Company and its business, and to ask such
questions and receive such answers (based upon publicly available information),
as the Investors deem necessary to make an informed investment decision.
(d) INVESTMENT REPRESENTATIONS. (i) EXPERIENCE; ACCREDITED
INVESTORS. Each of the Investors is experienced in evaluating and investing in
high technology companies. Each of the Investors understands and acknowledges
that its investment in the Shares is highly speculative and there are
substantial risks of loss incident to a purchase of the Shares. Each of the
Investors is familiar with the definition of "Accredited Investor" set forth in
Regulation D promulgated by the Commission under the 1933 Act and meets the
conditions required to qualify as an Accredited Investor.
(ii) INVESTMENT. Each of the Investors is acquiring the Shares
for investment for its own account and not with the view to, or for resale in
connection with, any distribution thereof in any transaction which would be a
violation by the Investors of the 1933 Act or any other securities laws of the
United States or any state. Each of the Investors understands that the sale of
the Shares to the Investors has not been registered under the 1933 Act, and that
the Shares are being sold pursuant to an exemption from the registration
requirements of the 1933 Act, the availability of which depends upon, among
other things, the bona fide nature of its investment intent as expressed herein.
Each of the Investors represents, warrants and agrees that it will not sell or
otherwise transfer any interest in the Shares without registration under the Act
or an exemption therefrom; PROVIDED, HOWEVER, that by making the representations
in this Section 2.2(d), the Investors do not agree to hold the Shares for any
minimum or other specific term and reserve the right to dispose of all Shares at
any time in accordance with Federal securities laws applicable to such
disposition.
(iii) LEGENDS. Each of the Investors understands that each
certificate representing the Shares shall bear the following legend and any
other legend required by applicable state securities law:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "ACT") AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT PURSUANT
TO AN EFFECTIVE
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REGISTRATION UNDER THE ACT OR IN A TRANSACTION WHICH, IN THE OPINION
OF COUNSEL REASONABLY SATISFACTORY TO AMATI COMMUNICATIONS
CORPORATION, QUALIFIES AS AN EXEMPT TRANSACTION UNDER THE ACT AND THE
RULES AND REGULATIONS PROMULGATED THEREUNDER.
A certificate shall not bear such legend if the Investors shall have
delivered to the Company an opinion of counsel reasonably satisfactory to the
Company to the effect that the securities being sold may be publicly sold
without registration under the Securities Act. The foregoing shall not be
deemed to affect the obligations of the Company under Section 1.6 hereof or the
Registration Rights Agreement.
ARTICLE III.
COVENANTS
Section 3.1. SECURITIES COMPLIANCE.
(a) The Company shall notify the SEC and the Principal Market and any
other applicable market in accordance with their requirements, of the
transactions contemplated by this Agreement, and shall take all other necessary
action and proceedings as may be required and permitted by applicable law, rule
and regulation, for the legal and valid issuance of all Shares to the Investors.
(b) The Company will cause its Common Stock to continue to be
registered under Sections 12(b) or 12(g) of the Exchange Act, will comply in all
respects with its reporting and filing obligations under said act, will comply
with all requirements related to the Registration Statement, and will not take
any action or file any document (whether or not permitted by said Act or the
rules thereunder) to terminate or suspend such Registration Statement or to
terminate or suspend its reporting and filing obligations under the Exchange
Act, except as permitted herein. The Company will take all action necessary to
continue the listing or trading of its Common Stock (including the Shares) on
the Principal Market including, taking all action necessary to cause the Shares
and the Additional Shares that are issuable under this Agreement and the Warrant
to be authorized for listing on the Principal Market, subject to official notice
of issuance; and will comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of the Principal Market.
Section 3.2. PRELIMINARY PUT NOTICE. In order to provide the Investors
adequate opportunity to conduct appropriate due diligence in connection with the
Second Put Notice, the Company shall deliver to the Investors, at least five (5)
business days prior to the delivery of the Second Put Notice, a Preliminary Put
Notice which Notice shall state that the Company is considering
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delivery of a Put Notice to the Investors five (5) or more business days
following delivery of the Preliminary Put Notice. In no event shall delivery of
a Preliminary Put Notice to the Investors obligate the Company to deliver any
Put Notice to the Investors, provided, however that if the Company fails to
deliver a Put Notice within thirty days of delivery of a Preliminary Put Notice,
then the Company shall pay the reasonable due diligence costs of the Investors
with respect to such Preliminary Put Notice.
Section 3.3. CERTAIN RESTRICTIONS. The Investors shall not engage in
short selling of the Common Stock prior to the effectiveness of the Registration
Statement in respect of the shares to be purchased and sold pursuant to the
first Put Notice.
ARTICLE IV.
CONDITIONS
Section 4.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO SELL
SHARES. The obligation hereunder of the Company to issue and/or sell the Shares
(other than the Warrant Shares) to the Investors is further subject to the
satisfaction, at or before the respective issuance and deliveries thereof, of
each of the following conditions set forth below. These conditions are for the
Company's sole benefit and may be waived by the Company at any time in its sole
discretion.
(a) ACCURACY OF THE INVESTORS REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Investors shall be true and correct in all
material respects as of the date when made and as of the date of such issuance
and delivery as though made at that time.
(b) PERFORMANCE BY THE INVESTORS. The Investors shall have
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Investors at or prior to such date.
(c) NO INJUNCTION. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
Section 4.2. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE INVESTORS TO
PURCHASE ANY SHARES. The obligation of the Investors hereunder to acquire and
pay for Shares other than Warrant Shares is subject to the satisfaction, at or
before each Closing of each of the following conditions set forth below.
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These conditions are for the Investors' sole benefit and may be waived by the
Investors at any time in its sole discretion.
(a) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company shall be true and correct in all
material respects as of the date when made and as of each Closing Date, as
though made at that time (except for (i) representations and warranties that
speak as of a particular date or refer to a particular point in time which shall
be true and correct as of such date or time and (ii) the representation and
warranty contained in Section 2.1(i)).
(b) PERFORMANCE BY THE COMPANY. The Company shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to such Closing.
(c) NO INJUNCTION. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(d) OPINION OF COUNSEL, ETC. At each Closing the Investors shall
have received an opinion of Heller, Ehrman, White & McAuliffe, counsel to the
Company, (in substantially the form of Exhibit A hereto), dated the effective
date of such Closing, and such other certificates, opinions of other counsel,
and documents as the Investors or their counsel shall reasonably require
incident to such Closing.
(e) EFFECTIVENESS OF REGISTRATION STATEMENT AND REGISTRATION RIGHTS
AGREEMENT. The Registration Statement shall be effective at the time of each
Closing and no stop order suspending the effectiveness of the Registration
Statement shall have been instituted or shall be pending. The Company and the
Investors shall have entered into the Registration Rights Agreement
substantially in the form of Exhibit B hereto (the "Registration Rights
Agreement"), and such Agreement shall be in full force and effect.
(f) ACCURACY OF REGISTRATION STATEMENT. At the time of each Closing,
the Registration Statement (including information or documents incorporated by
reference therein) and any amendments or supplements thereto shall 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, not misleading.
(g) COMFORT LETTER. The Investors, at each Initial Closing, shall
have received a comfort letter from the Company's
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independent auditors of the type customarily delivered to underwriters in
connection with a firm commitment underwritten public offerings.
(h) OFFICER'S CERTIFICATE. At each Closing the Investors shall have
received a certificate) from the CEO and/or CFO of the Company in substantially
the form of Exhibit C hereto.
(i) NO BANKRUPTCY FILING. There shall have been no filing of a
petition in bankruptcy, either voluntarily or involuntarily with respect to the
Company and there shall not have commenced any proceedings under any bankruptcy
or insolvency laws, or any laws relating to the relief of debtors, readjustment
of indebtedness or reorganization of debtors and there shall have been no
calling of a meeting of creditors of the Company or appointment of a committee
of creditors or liquidating agents or offering of a composition or extension to
creditors by, for, with or without the consent or acquiescence of the Company.
(j) PRINCIPAL MARKET LISTING. The Shares and any Additional Shares
to be issued at such Closing shall have been approved for listing on the
Principal Market, subject to official notice of issuance.
ARTICLE V.
TERMINATION
Section 5.1. OPTIONAL TERMINATION. This Agreement may be terminated at
any time by the mutual consent of the Company and the Investors, provided that
the provisions of Sections 1.3, 1.6, 1.8 and 1.9 and Article VI and the
representations, warranties and covenants contained in this Agreement shall
survive its termination for the period of any applicable statute of limitations,
and provided further that if a decision to terminate the Agreement is made
during any Valuation Period (including, without limitation, any suspended
Valuation Period), such termination shall not be effective until thirty (30)
days after such Valuation Period has elapsed.
Section 5.2. AUTOMATIC TERMINATION. This Agreement shall automatically
terminate without any further action of either party hereto when (a) the
Investors have invested an aggregate of $15,000,000 in the Common Stock of the
Company pursuant to this Agreement and (b) all Valuation Periods with respect to
all Put Notices have expired, and no further adjustments or payments must be
made pursuant to Section 1.3 herein provided that the provisions of Sections
1.3, 1.6, 1.8, and 1.9 and Article VI and the representations, warranties and
covenants contained in this Agreement shall survive the termination of this
Agreement for the period of any applicable statute of limitations.
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<PAGE>
All representations, warranties and covenants shall survive each Closing
and termination of this Agreement.
Section 5.3. CHANGE IN CONTROL. From and after the date hereof, upon any
Change of Control (as defined below), the Company shall no longer have the right
to deliver any Put Notice to the Investors. A "Change of Control" shall mean
any transaction or series of transactions which results in any person or
affiliated group of persons gaining control of 50% or more of the voting stock
of the Company or 50% or more of the Company's Board of Directors.
ARTICLE VI.
MISCELLANEOUS
Section 6.1. FEES AND EXPENSES; WARRANTS.
(a) The Company shall promptly pay all of the out-of-pocket fees and
expenses incurred (including legal fees and expenses) by the Investors in
connection with the due diligence preparation, negotiation, execution and
delivery of this Agreement and the transactions contemplated hereunder. The
Company shall pay all stamp and other taxes and duties levied in connection with
the issuance of any Shares issued pursuant hereto.
(b) Upon execution hereof, the Investors shall purchase from the
Company, and the Company shall deliver to the Investors warrants substantially
in the forms of Exhibits D and E hereto (the "Warrants") to purchase an
aggregate of 600,000 shares of the Common Stock.
Section 6.2 SPECIFIC ENFORCEMENT; CONSENT TO JURISDICTION.
(a) The Company and the Investors acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which either of them may be entitled by
law or equity.
(b) Each of the Company and each of the Investors (i) hereby
irrevocably submits to the exclusive jurisdiction of the United States District
Court and other courts of the United States sitting in Delaware for the purposes
of any suit, action or proceeding arising out of or relating to this Agreement
and (ii) hereby waives, and agrees not to assert in any such suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
such court, that the suit, action or
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proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. Each of the Company and each of the Investors
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing in this paragraph
shall affect or limit any right to serve process in any other manner permitted
by law.
Section 6.3. ENTIRE AGREEMENT; AMENDMENTS. Other than with respect to
matters set forth in the Warrants, this Agreement and the Registration Rights
Agreement contain the entire understanding of the parties with respect to the
transactions contemplated hereby and, except as specifically set forth herein,
neither the Company nor any of the Investors makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be waived or amended other than by a written instrument signed by
the party against whom enforcement of any such amendment or waiver is sought.
Section 6.4. NOTICES. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be effective upon
hand delivery or delivery by facsimile at the address or number designated below
(if delivered on a business day during normal business hours where such notice
is to be received), or the first business day following such delivery (if
delivered other than on a business day during normal business hours where such
notice is to be received). The addresses for such communications shall be:
to the Company:
Amati Communications Corporation
2043 Samaritan Drive
San Jose, CA 95124
Attn: James Steenbergen
Fax: (408) 879-2900
with copies to:
Heller, Ehrman, White & McAuliffe
525 University Avenue
Palo Alto, CA 94301
Attn: Richard A Peers
Fax: (415) 324-0638
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to the Investors:
The Chatterjee Group
888 Seventh Avenue - Suite 3000
New York, New York 10106
Attn: Peter Hurwitz
Fax: (212) 262-9637
Quantum Industrial Partners LDC
Kaya Flamboyan 9
Willemstad, Curacao
Netherlands Antilles
Attn: Ben Jansen
Fax: 011 599 9322 402
Winston Partners II LDC
Kaya Flamboyan 9
Willemstad, Curacao
Netherlands Antilles
Attn: Ben Jansen
Fax: 011 599 9322 402
with copies to:
Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
Attention: Christopher E. Manno
Fax: (212) 821-8111
Soros Fund Management
888 Seventh Avenue - Suite 3300
New York, New York 10106
Attn: Michael Neus
Fax: (212) 664-0544
Either party hereto may from time to time change its address for notices under
this Section 6.4 by giving written notice of such changed address to the other
party hereto.
Section 6.5. WAIVERS. No waiver by either party of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
either party to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter. The parties hereto waive any and
all rights to a jury trial in connection with any action or proceeding arising
under this Agreement, the Warrants or the transactions contemplated hereby or
thereby.
Section 6.6. HEADINGS. The headings herein are for convenience only, do
not constitute a part of this Agreement and
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shall not be deemed to limit or affect any of the provisions hereof.
Section 6.7. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and assigns. The
parties hereto may amend this Agreement without notice to or the consent of any
third party. Neither the Company nor the Investors shall assign this Agreement
or any rights or obligations hereunder without the prior written consent of the
other (which consent may be withheld for any reason in the sole discretion of
the party from whom consent is sought); provided, however, that the Company may
assign its rights and obligations hereunder to any acquirer of substantially all
of the assets or a controlling equity interest of the Company provided that such
assignment shall be subject to (i) the Change of Control provisions contained in
Section 5.3 above and (ii) Investors' prior written consent which consent may
not be unreasonably withheld. The assignment by a party of this Agreement or
any rights hereunder shall not affect the obligations of such party under this
Agreement.
Section 6.8. NO THIRD PARTY BENEFICIARIES. This Agreement is intended for
the benefit of the parties hereto and any Indemnified Party and their respective
permitted successors and assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
Section 6.9. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of Delaware without
regard to the principles of conflict of laws.
Section 6.10. EXECUTION. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event any signature is delivered by facsimile
transmission, the party using such means of delivery shall cause four additional
executed signature pages to be physically delivered to the other party within
five days of the execution and delivery hereof.
Section 6.11. PUBLICITY. The Company and the Investors shall consult and
cooperate with each other in issuing any press releases or otherwise making
public statements with respect to the transactions contemplated hereby, provided
the foregoing shall not interfere with the legal obligations of either party
with respect to public disclosure; and provided further, that neither the
Company nor the Investors shall be required to consult with the other if any
such press release or public statement does not specifically name the other.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the date hereof.
AMATI COMMUNICATIONS CORPORATION
By:
-----------------------------------
Name:
Title:
QUANTUM INDUSTRIAL PARTNERS LDC
By:
-----------------------------------
Name:
Title:
S-C PHOENIX HOLDINGS, L.L.C.
By:
-----------------------------------
Name:
Title:
WINSTON PARTNERS, L.P.
By: Chatterjee Fund Management,
its general partner
By:
------------------------------
Name:
Title:
WINSTON PARTNERS II LDC
By:
-----------------------------------
Name:
Title:
WINSTON PARTNERS II L.L.C.
By: Chatterjee Advisors L.L.C.,
its manager
By:
-------------------------------
Name:
Title:
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SCHEDULE I
PARTICIPATION SCHEDULE
Investor Participation
Quantum Industrial Partners LDC 50.00%
S-C Phoenix Holdings, L.L.C. 25.00%
Winston Partners, L.P. 8.33%
Winston Partners II LDC 11.12%
Winston Partners II L.L.C. 5.55%
--------
100.00%
<PAGE>
Exhibit A
(Date)
Quantum Industrial Partners LDC
S-C Phoenix Holdings, L.L.C.
Winston Partners I, L.P.
Winston Partners II LDC
Winston Partners II LLC
c/o The Chatterjee Group
888 Seventh Avenue
Suite 3000
New York, N.Y. 10106
Re: Investment in Amati Communications Corporation
Ladies and Gentlemen:
We have acted as counsel to Amati Communications Corporation, a Delaware
corporation (the "Company"), in connection with the proposed sale and issuance
of authorized but previously unissued shares of the Company's common stock,
$0.20 par value per share (the "Shares"), pursuant to the Investment Agreement
("Agreement") entered into on __________, 1996, between the Company and Quantum
Industrial Partners LDC, S-C Phoenix Holdings, L.L.C., Winston Partners I, L.P.,
Winston Partners II LDC and Winston Partners II LLC ("Investors"). Capitalized
terms used herein and not defined herein shall have the meanings ascribed
thereto in the Agreement.
[Additional Introduction]
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company has been duly incorporated and is validly existing and in
good standing under the laws of the State of Delaware and is in good standing
under the laws of the State of California. The Company has the requisite
corporate power to own its properties and to carry on its business as such
properties and business are described in the Company's Annual Report on Form 10-
K. The Company does not have any subsidiaries, except for those identified in
the SEC Documents. Each of the Company's subsidiaries has been duly
incorporated and is validly existing in good standing under the laws of its
jurisdiction of organization. Each of the Company and its subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure so to
qualify would not have a Material Adverse Effect.
A-1
<PAGE>
2. (i) The Company has the requisite corporate power and authority to
enter into and perform the Agreement, the Registration Rights Agreement and the
Warrants and to issue the Shares and the Warrants in accordance with the terms
of the Agreement and the Warrants, (ii) the Agreement, the Registration Rights
Agreement and the Warrants have been duly authorized by all necessary corporate
action on the part of the Company, (iii) the Agreement, the Registration Rights
Agreement and the Warrants have been duly executed and delivered by the Company,
and (iv) the Agreement, the Registration Rights Agreement and the Warrants are
valid and binding obligations of the Company enforceable against the Company in
accordance with their respective terms, subject as to enforcement, (i) to
bankruptcy, insolvency, reorganization, arrangement, moratorium, and other laws
of general applicability relating to, or affecting creditors' rights and (ii) to
general principles of equity whether such enforcement is considered in a
proceeding in equity or at law.
3. No shares of Common Stock are entitled to preemptive rights.
4. When delivered and paid for in accordance with the terms of the
Agreement or upon exercise of the Warrants, the Shares shall be duly authorized,
validly issued, fully paid and non-assessable. The Company has reserved for
issuance the requisite number of shares of Common Stock to be issued pursuant to
the Warrants.
5. Neither the execution and delivery of the Agreement, the Registration
Rights Agreement and the Warrants by the Company nor the consummation by the
Company of the transactions contemplated by the Agreement and the Warrants will
(i) conflict with any provision of the Company's Certificate of Incorporation or
By-laws, (ii) violate any law applicable to the Company or, (iii) to our
knowledge, result in a breach or violation of, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under
any agreement, indenture or instrument to which the Company is a party and which
has been filed as an exhibit in SEC Documents.
6. No governmental consents, approvals, authorizations, registrations,
declarations or filings are required for the execution and delivery of the
Agreement, the Registration Rights Agreement and the Warrants on behalf of the
Company and consummation by the Company of the transactions contemplated
thereunder except (i) such as have been obtained or made and (ii) if required,
the filing of a Form 10-C following the sale of Shares pursuant to the
Agreement. Assuming the representations and warranties given by the Investors
in the Investment Agreement are true and correct in all material respects, none
of the issuance, sale and delivery of the Shares, Additional Shares or the
Warrants to the Investors requires any registration under the Act.
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<PAGE>
7. Other than as described in the SEC Documents, we do not have knowledge
of any action, suit or proceeding pending or threatened in writing against the
Company.
8. Based on a letter from the staff of the Securities and Exchange
Commission (the "Commission") dated _____________, the Registration Statement
has become effective under the Securities Act of 1933 (the "Act"). We do not
know of the issuance of any stop order suspending the effectiveness of the
Registration Statement by the Commission or of any proceeding for that purpose
under the Act which has been instituted or threatened.
9. As of ______________, the Registration Statement and the Prospectus
complied as to form in all material respects with the requirements of the Act
and the published rules and regulations of the Commission thereunder.
In addition, we have participated in discussions with various
representatives of the Company and its independent public accountants, in which
the business and affairs of the Company and the contents of the Registration
Statement and the prospectus contained therein (the "Prospectus") were
discussed. No facts have come to our attention in the course of those
discussions that have led us to believe that, as of the date hereof, the
Registration Statement and the Prospectus taken together (other than the
financial statements, schedules and other financial data included therein and
information provided in writing by the Investors for inclusion therein, with
respect to which we express no view or belief) 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 under
which they were made, not misleading. However, we did not conduct an
independent verification of any factual matters, and do not assume
responsibility for the accuracy, completeness, or fairness of any of the
statements contained in the Registration Statement or the Prospectus.
The opinions expressed herein are given to you solely for your use in
connection with the Agreement and may not be relied upon by any other person or
entity or for any other purpose without our prior consent.
Very truly yours,
A-3
<PAGE>
EXHIBIT C
OFFICER'S CERTIFICATE
[NAME], the [OFFICE] and Chief Executive Officer of Amati Communications
Corporation (the "Company"), and [NAME), the [OFFICE) and Chief Financial
officer of the Company, do hereby certify that:
1. The representations and warranties of the Company contained in the
Investment Agreement dated __________, 1996, between the Company and the
Investors named therein (the "Agreement"), are true and correct in all material
respects, as if made at and as of the date hereof (except for representations
and warranties that speak as of a particular date or refer to a particular point
in time and except for the representation and warranty contained in Section
2.1(i) of the Agreement). The Company has complied with all the agreements, has
performed all the obligations and has satisfied all the conditions on its part
to be complied with, performed or satisfied at or prior to the date of this
Certificate specified in the Agreement. Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed thereto in the
Agreement.
2. The Registration Statement on Form S-3 (SEC No. _______________) (the
"Registration Statement") filed by the Company with the Securities and Exchange
Commission (the "Commission") has become and is currently effective, and to the
best knowledge of the respective signers, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceeding
for that purpose has been initiated or is threatened by the Commission.
3. All filings, if any, required by Rule 424(b) and Rule 415 of the
Securities Act of 1933, as amended, have been made.
4. The respective signers have each carefully examined the Registration
Statement and the prospectus contained therein (the "Prospectus"), and any
amendments or supplements thereto, and to the best of their knowledge the
Registration Statement and the Prospectus, and any amendments or supplements
thereto, contain all statements and information required to be included therein,
and all statements contained therein are true and correct, and neither the
Registration Statement nor Prospectus, nor any amendment or supplements thereto,
includes any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading (in the case of the Prospectus, in light of the circumstances
under which they were made) and, since the effective date of the Registration
Statement, there has occurred no event required to be set forth in an amendment
or supplemental Registration Statement or Prospectus which has not been so set
forth.
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IN WITNESS WHEREOF, the undersigned have executed this certificate on the
____ day of ________, 19 __, which is a Closing Date, as such term is defined in
the Agreement.
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Print Name:
Print Title:
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Print Name:
Print Title:
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FORM OF CLASS A WARRANT
THIS WARRANT AND THE SECURITIES ISSUABLE UPON ITS EXERCISE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAW, AND MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION UNDER THE ACT OR IN A TRANSACTION WHICH, IN THE OPINION OF COUNSEL
REASONABLY SATISFACTORY TO AMATI COMMUNICATIONS CORPORATION, QUALIFIES AS AN
EXEMPT TRANSACTION UNDER THE ACT AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER.
AMATI COMMUNICATIONS CORPORATION
COMMON STOCK PURCHASE WARRANT
AMATI COMMUNICATIONS CORPORATION, Delaware corporation (the
"Company"), hereby certifies that, for value received, [CHATTERJEE ENTITY]
(the "Holder"), or assigns, is entitled, subject to the terms set forth
below, to purchase from the Company, at any time and from time to time during
the period beginning on the seventy-fifth day following the date hereof and
ending on the fifth anniversary of such date in whole or in part, an
aggregate of THREE HUNDRED THOUSAND (300,000) fully paid and non-assessable
shares of the Common Stock of the Company at a purchase price, subject to the
provisions of Paragraph 3 hereof, equal to the Average Share Price in respect
of the First Tranche plus 20% (the "Purchase Price"). The Purchase Price and
the number and character of such shares are subject to adjustment as provided
below, and the term "Common Stock" shall mean, unless the context otherwise
requires, the stock or other securities or property at the time deliverable
upon the exercise of this Warrant. This Warrant is herein called the
"Warrant." Capitalized terms used but not defined herein shall have the
meanings ascribed thereto in the Investment Agreement, dated as of the date
hereof, between the Company and the Holder (the "Investment Agreement").
1. EXERCISE OF WARRANT. The purchase rights evidenced by this
Warrant shall be exercised by the holder surrendering this Warrant, with the
form of subscription at the end hereof duly executed by such holder, to the
Company at its executive offices accompanied by payment of an amount (the
"Exercise Amount") equal to the Purchase Price multiplied by the number of
shares being purchased pursuant to such exercise,
<PAGE>
payable as follows: (a) by payment to the Company in cash, by certified or
official bank check, or by wire transfer of the Exercise Amount, (b) by
surrender to the Company for cancellation of securities of the Company,
including this Warrant having a Market Price (as hereinafter defined) on the
date of exercise equal to the Exercise Amount; or (c) by a combination of the
methods described in clauses (a) and (b) above. In lieu of exercising the
Warrant, the holder may elect to receive a payment equal to the difference
between (i) the Market Price multiplied by the number of shares as to which the
payment is then being elected and (ii) the exercise price with respect to such
shares, payable by the Company to the Holder only in shares of Common Stock
valued at the Market Price on the date of exercise. For purposes hereof, the
term "Market Price" shall mean the average closing price of a share of Common
Stock for the 15 connective Trading Days preceding such day on the Principal
Market or, if the shares of Common Stock or securities are not publicly traded,
the Market Price for such day shall be the fair market value thereof determined
jointly by the Company and the holder of this Warrant; provided, however, that
if such parties are unable to reach agreement with a reasonable period of time,
the Market Price shall be determined in good faith by the independent investment
banking firm selected jointly by the Company and the holder of this Warrant or,
if that selection cannot be made within 15 days, by an independent investment
banking firm selected by the American Arbitration Association in accordance with
its rules.
1.1 PARTIAL EXERCISE. This Warrant may be exercised for less than
the full number of shares of Common Stock, in which case the number of shares
receivable upon the exercise of this Warrant as a whole, and the sum payable
upon the exercise of this Warrant as a whole, shall be proportionately reduced.
Upon any such partial exercise, the Company at it expense will forthwith issue
to the holder hereof a new Warrant or Warrants of like tenor calling for the
number of shares of Common Stock as to which rights have not been exercised,
such Warrant or Warrants to be issued in the name of the holder hereof or his
nominee (upon payment by such holder of any applicable transfer taxes).
2. DELIVERY OF STOCK CERTIFICATES ON EXERCISE. As soon as
practicable after the exercise of this Warrant and payment of the Purchase
Price, and in any event within ten (10) days thereafter, the Company, at its
expense, will cause to be issued in the name of and delivered to the holder
hereof a certificate or certificates for the number of fully paid and non-
assessable shares or other securities or property to which such holder shall be
entitled upon such exercise, plus, in lieu of any fractional share to which such
holder would otherwise be entitled, cash in an amount determined in accordance
with Paragraph 3.9 hereof. The Company agrees that the shares so purchased
shall be deemed to be issued to the holder hereof as the record owner of such
shares as of the close of business on
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the date on which this Warrant shall have been surrendered and payment made for
such shares as aforesaid.
3. ANTI-DILUTION PROVISIONS AND OTHER ADJUSTMENTS.
In order to prevent dilution of the right granted hereunder, the Purchase Price
shall be subject to adjustment from time to time in accordance with this
Paragraph 3. Upon each adjustment of the Purchase Price pursuant to this
Paragraph 3, the registered Holder of this Warrant shall thereafter be entitled
to acquire upon exercise, at the Purchase Price resulting from such adjustment,
the number of shares of the Company's Common Stock obtainable by multiplying the
Purchase Price in effect immediately prior to such adjustment by the number of
shares of the Company's Common Stock acquirable immediately prior to such
adjustment and dividing the product thereof by the Purchase Price resulting from
such adjustment.
3.1 ADJUSTMENT FOR ISSUE OR SALE OF COMMON STOCK AT LESS THAN
PURCHASE PRICE. Except as provided in Paragraph 3.2 or 3.5 below, if and
whenever on or after the date of issuance hereof the Company shall issue or
sell, or shall in accordance with subparagraphs 3.1(1) to (9), inclusive, be
deemed to have issued or sold, any shares of its Common Stock for a
consideration per share less than the Purchase Price in effect immediately prior
to the time of such issue or sale, then forthwith upon such issue or sale (the
"Triggering Transaction"), the Purchase Price shall, subject to subparagraphs
(1) to (9) of this Paragraph 3.1, be reduced to the Purchase Price (calculated
to the nearest tenth of a cent) determined by dividing:
(i) an amount equal to the sum of (x) the product derived by
multiplying the Number of Common Shares Deemed Outstanding immediately
prior to such Triggering Transaction by the Purchase Price then in
effect, plus (y) the consideration, if any, received by the Company
upon consummation of such Triggering Transaction, by
(ii) an amount equal to the sum of (x) the Number of Common
Shares Deemed Outstanding immediately prior to such Triggering
Transaction plus (y) the number of shares of Common Stock issued (or
deemed to be issued in accordance with subparagraphs 3.1(1) to (9)) in
connection with the Triggering Transaction.
For purposes of this Paragraph 3, the term "Number of Common Shares
Deemed Outstanding" at any given time shall mean the sum of (i) the number of
shares of the Company's Common Stock outstanding at such time, and (ii) the
number of shares of the Company's Common Stock deemed to be outstanding under
subparagraphs 3.1(1) to (9), inclusive, at such time.
For purposes of determining the adjusted Purchase Price under this
Paragraph 3.1, the following subsections (1) to (9), inclusive, shall be
applicable:
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<PAGE>
(1) In case the Company at any time shall in any manner grant
(whether directly or by assumption in a merger or otherwise) any
rights to subscribe for or to purchase, or any options for the
purchase of, Common Stock or any stock or other securities convertible
into or exchangeable for Common Stock (such rights or options being
herein called "Options" and such convertible or exchangeable stock or
securities being herein called "Convertible Securities"), whether or
not such Options or the right to convert or exchange any such Options
or the right to convert or exchange any such Convertible Securities
are immediately exercisable and the price per share for which the
Common Stock is issuable upon exercise, conversion or exchange
(determined by dividing (x) the total amount, if any, received or
receivable by the Company as consideration for the granting of such
Options, plus the minimum aggregate amount of additional consideration
payable to the Company upon the exercise of all such Options, plus, in
the case of such Options which relate to Convertible Securities, the
minimum aggregate amount of additional consideration, if any, payable
upon the issue or sale of such Convertible Securities and upon the
conversion of exchange thereof, by (y) the total maximum number of
shares of Common Stock issuable upon the exercise of such Options or
the conversion or exchange of such Convertible Securities) shall be
less than the Purchase Price in effect immediately prior to the time
of granting of such Option," then the total maximum amount of Common
Stock issuable upon the exercise of such Options, or, in the case of
Options for Convertible Securities, upon the conversion or exchange of
such Convertible Securities, shall (as of the date of granting of such
Options) be deemed to be outstanding and to have been issued and sold
by the Company for such price per share. No adjustment of the
Purchase Price shall be made upon the actual issue of such shares of
Common Stock or such Convertible Securities upon the exercise of such
Options, except as otherwise provided in subparagraph (3) below.
(2) In case the Company at any time shall in any manner issue
(whether directly or by assumption in a merger or otherwise) or sell
any Convertible Securities, whether or not the rights to exchange or
convert thereunder are immediately exercisable, and the price per
share for which Common Stock is issuable upon such conversion or
exchange (determined by dividing (x) the total amount received or
receivable by the Company as consideration for the issue or sale of
such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (y) the total maximum number of
shares of Common Stock
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<PAGE>
issuable upon the conversion or exchange of all such Convertible
Securities) shall be less than the Purchase Price in effect
immediately prior to the time of such issue or sale, then the total
maximum number of shares of Common Stock issuable upon conversion or
exchange of all such Convertible Securities shall (as of the date of
the issue or sale of such Convertible Securities) be deemed to be
outstanding and to have been issued and sold by the Company for such
price per share. No adjustment of Purchase Price shall be made upon
the actual issue of such Common Stock upon exercise of the rights to
exchange or convert under such Convertible Securities, except as
otherwise provided in subparagraph (3) below.
(3) If the purchase price provided for in any Options referred to
in subparagraph (1), the additional consideration, if any, payable
upon the conversion or exchange of any Convertible Securities referred
to in subparagraphs (1) or (2), or the rate at which any Convertible
Securities referred to in subparagraph (1) or (2) are convertible into
or exchangeable for Common Stock shall change at any time (other than
under or by reason of provisions designed to protect against dilution
of the type set forth in Paragraph 3.1 or 3.3), the Purchase Price in
effect at the time of such change shall forthwith be readjusted to the
Purchase Price which would have been in effect at such time had such
Options or Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or conversion rate,
as the case may be, at the time initially granted issued or sold. If
the purchase price provided for in any Option referred to in
subparagraph (1) or the rate at which any Convertible Securities
referred to in subparagraphs (1) or (2) are convertible into or
exchangeable for Common Stock, shall be reduced at any time under or
by reason of provisions with respect thereto designed to protect
against dilution, then in case of the delivery of Common Stock upon
the exercise of any such Option or upon conversion or exchange of any
such Convertible Security, the Purchase Price then in effect hereunder
shall forthwith be adjusted to such respective amount as would have
been obtained had such Option or Convertible Security never been
issued as to such Common Stock and had adjustments been made upon the
issuance of the shares of Common Stock delivered as aforesaid, but
only if as a result of such adjustment the Purchase Price then in
effect hereunder is hereby reduced.
(4) On the expiration of any Option or the termination of any
right to convert or exchange any Convertible Securities, the Purchase
Price then in
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<PAGE>
effect hereunder shall forthwith be increased to the Purchase Price
which would have been in effect at the time of such expiration or
termination had such Option or Convertible Securities, to the extent
outstanding immediately prior to such expiration or termination, never
been issued.
(5) In case any Options shall be issued in connection with the
issue or sale of other securities of the Company, together comprising
one integral transaction in which no specific consideration is
allocated to such Options by the parties thereto, such Options shall
be deemed to have been issued without consideration.
(6) In case any shares of Common Stock, Options or Convertible
Securities shall be issued or sold or deemed to have been issued or
sold for cash, the consideration received therefor shall be deemed to
be the amount received by the Company therefor. In case any shares of
Common Stock, Options or Convertible Securities shall be issued or
sold for a consideration other than cash, the amount of the
consideration other than cash received by the Company shall be the
fair value of such consideration as determined in good faith by the
Board of Directors of the Company. In case any shares of Common
Stock, Options or Convertible Securities shall be issued in connection
with any merger in which the Company is the surviving corporation, the
amount of consideration therefor shall be deemed to be the fair value
of such portion of the net assets and business of the non-surviving
corporation as shall be attributed by the Board of Directors of the
Company in good faith to such Common Stock, Options or Convertible
Securities, as the case may be.
(7) The number of shares of Common Stock outstanding at any given
time shall not include shares owned or held by or for the account of
the Company, and the disposition of any shares so owned or held shall
be considered an issue or sale of Common Stock for the purpose of this
Paragraph 3.1.
(8) In case the Company shall declare a dividend or make any
other distribution upon the stock of the Company payable in Options or
Convertible Securities, then in such case any Options or Convertible
Securities, as the case may be, issuable in payment of such dividend
or distribution shall be deemed to have been issued or sold without
consideration.
(9) For purposes of this Paragraph 3.1, in case the Company shall
take a record of the holders of its
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<PAGE>
Common Stock for the purpose of entitling them (x) to receive a
dividend or other distribution payable in Common Stock, Options or in
Convertible Securities, or (y) to subscribe for or purchase Common
Stock, Options or Convertible Securities, then such record date shall
be deemed to be the date of the issue or sale of the shares of Common
Stock deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the
granting of such right or subscription or purchase, as the case may
be.
3.2 DIVIDENDS NOT PAID OUT OF EARNINGS OR EARNED SURPLUS. In the
event the Company shall declare a dividend upon the Common Stock (other than
a dividend payable in Common Stock) payable otherwise than out of earnings or
earned surplus, determined in accordance with generally accepted accounting
principles, including the making of appropriate deductions for minority
interests, if any, in subsidiaries (herein referred to as "Liquidating
Dividends"), then, as soon as possible after the exercise of this Warrant,
the Company shall pay to the person exercising such Warrant an amount equal
to the aggregate value at the time of such exercise of all Liquidating
Dividends (including but not limited to the Common Stock which would have
been issued at the time of such earlier exercise and all other securities
which would have been issued with respect to such Common Stock by reason of
stock splits, stock dividends, mergers or reorganizations, or for any other
reason). For the purposes of this Paragraph 3.2, a dividend other than in
cash shall be considered payable out of earnings or earned surplus only to
the extent that such earnings or earned surplus are charged an amount equal
to the fair value of such dividend as determined in good faith by the Board
of Directors of the Company.
3.3 SUBDIVISIONS AND COMBINATIONS. In the case the Corporation
shall at any time (i) subdivide the outstanding Common Stock or (ii) issue a
stock dividend on its outstanding Common Stock, the Purchase Price in effect
immediately prior to such subdivision or dividend shall be proportionately
reduced by the same ratio as the subdivision or dividend. In case the
Corporation shall at any time combine its outstanding Common Stock, Purchase
Price in effect immediately prior to such combination shall be proportionately
increased by the same ratio as the combination.
3.4 REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE
OF ASSETS. If any capital reorganization or reclassification of the capital
stock of the Company, or consolidation or merger of the Company with another,
corporation, or the sale of all or substantially all of its assets to another
corporation shall be effected in such a way that holders of Common Stock shall
be entitled to receive stock, securities, cash or other property with respect to
or in exchange for Common Stock, then, as a condition of such reorganization,
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<PAGE>
reclassification, consolidation, merger or sale, lawful and adequate
provision shall be made whereby the holder of this Warrant shall have the
right to acquire and receive upon exercise of this Warrant such shares of
stock, securities, cash or other property issuable or payable (as part of the
reorganization, reclassification, consolidation, merger or sale) with respect
to or in exchange for such number of outstanding shares of the Company's
Common Stock as would have been received upon exercise of this Warrant at the
Purchase Price then in effect. The Company will not effect any such
consolidation, merger or sale, unless prior to the consummation thereof the
successor corporation (if other than the Company) resulting form such
consolidation or merger or the corporation purchasing such assets shall
assume by written instrument mailed or delivered to the holder of this
Warrant at the last address of such holder appearing on the books of the
Company, the obligation to deliver to such holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to purchase. If a purchase, tender or exchange offer
is made to and accepted by the holders of more than 50% of the outstanding
shares of Common Stock of the Company, the Company shall not effect any
consolidation, merger or sale with the person having made such offer or with
any Affiliate of such person, unless prior to the consummation of such
consolidation, merger or sale the holder of this Warrant shall have been
given a reasonable opportunity to then elect to receive upon the exercise of
this Warrant either the stock, securities or assets then issuable with
respect to the Common Stock of the Company or the stock, securities or
assets, or the equivalent, issued to previous holders of the Common Stock in
accordance with such offer. For purposes hereof the term "Affiliate" with
respect to any given person shall mean any person controlling, controlled by
or under common control with the given person.
3.5 NO ADJUSTMENT FOR EXERCISE OF CERTAIN OPTIONS, WARRANTS, ETC.
The provisions of this Section 3 shall not apply to any Common Stock issued,
issuable or deemed outstanding under subparagraphs 3.1(1) to (9) inclusive: (i)
to any person pursuant to any stock option, stock purchase or similar plan or
arrangement for the benefit of employees, consultants or directors of the
COmpany or its subsidiaries in effect on the date of issuance hereof, (ii)
pursuant to options, warrants and conversion rights in existence on the date of
issuance hereof, (iii) pursuant to the Investment Agreement or (iv) pursuant to
a firm commitment underwritten registered offering under the 1933 Act.
3.6 NOTICES OF RECORD DATE, ETC. In the event that:
(1) the Company shall declare any cash dividend upon its Common
Stock, or
(2) the Company shall declare any dividend upon its Common Stock
payable in stock or make any special
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<PAGE>
dividend or other distribution to the holders of its Common Stock, or
(3) the Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any
class or other rights, or
(4) there shall be any capital reorganization or reclassification
of the capital stock of the Company, including any subdivision or
combination of its outstanding shares of Common Stock, or
consolidation or merger of the Company with, or sale of all or
substantially all of its assets to, another corporation, or
(5) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in connection with such event, the Company shall give to the holder of
this Warrant:
(ii) at least twenty (20) days' prior written notice of the date on
which the books of the Company shall close or a record shall be taken for
such dividend, distribution or subscription rights or for determining
rights to vote in respect of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up; and
(iii)in the case of any such reorganization, reclassification,
consolidation, merger, sale dissolution, liquidation or winding up, at
least twenty (20) days' prior written notice of the date when the same
shall take place. Such notice in accordance with the foregoing clause (i)
shall also specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common Stock shall be
entitled thereto, and such notice in accordance with the foregoing clause
(ii) shall also specify the date on which the holders of Common Stock shall
be entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification consolidation,
merger, sale, dissolution, liquidation or winding up, as the case may be.
Each such written notice shall be given by the first class mail, postage
prepaid, addressed to the holder of this Warrant at the address of such
holder of this Warrant at the address of such holder as shown on the books
of the Company.
3.7 GRANT, ISSUE OR SALE OF OPTIONS, CONVERTIBLE SECURITIES, OR
RIGHTS. If at any time or from time to time on or after the date of issuance
hereof, the Company shall grant, issue or sell any Options, Convertible
Securities or rights to purchase property (the "Purchase Rights") pro rata to
the record holders of any class of Common Stock of the Company and such grants,
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<PAGE>
issuances or sales do not result in an adjustment of the Purchase Price under
Paragraph 3.1 hereof, then the holder of this Warrant shall be entitled to
acquire (within thirty (30) days after the later to occur of the initial
exercise date of such Purchase Rights or receipt by such holder of the notice
concerning Purchase Rights to which such holder shall be entitled under
Paragraph 3.6) and upon the terms applicable to such Purchase Rights either:
(i) the aggregate Purchase Rights which such holder could have
acquired if it had held the number of shares of Common Stock acquirable
upon exercise of this Warrant immediately before the grant, issuance or
sale of such Purchase Rights; provided that if any Purchase Rights were
distributed to holders of Common Stock without the payment of additional
consideration by such holders, corresponding Purchase Rights shall be
distributed to the exercising holder of this Warrant as soon as possible
after such exercise and it shall not be necessary for the exercising holder
of this Warrant specifically to request delivery of such rights; or
(ii) in the event that any such Purchase Rights shall have expired or
shall expire prior to the end of said thirty (30) day period, the number of
shares of Common Stock or the amount of property which such holder could
have acquired upon such exercise at the time or times at which the Company
granted, issued or sold such expired Purchase Rights.
3.8 ADJUSTMENT BY BOARD OF DIRECTORS. If any event occurs as to
which, in the opinion of the Board of Directors of the Company, the provisions
of this Section 3 are not strictly applicable or if strictly applicable would
not fairly protect the rights of the holder of this Warrant in accordance with
the essential intent and principles of such provisions, then the Board of
Directors shall make an adjustment in the application of such provisions, in
accordance with such essential intent and principles, so as to protect such
rights as aforesaid, but in no event shall any adjustment have the effect of
increasing the Purchase Price as otherwise determined pursuant to any of the
provisions of this Section 3 except in the case of a combination of shares of a
type contemplated in Paragraph 3.3 and then in no event to an amount larger than
the Purchase Price as adjusted pursuant to Paragraph 3.3.
3.9 FRACTIONAL SHARES. The Company shall not issue fractions of
shares of Common Stock upon exercise of this Warrant or scrip in lieu thereof.
If any fraction of a share of Common Stock would, except for the provisions of
this Paragraph 3.9, be issuable upon exercise of this Warrant, the Company shall
in lieu thereof pay to the person entitled thereto an amount in cash equal to
the current value of such fraction, calculated to the nearest one-hundredth
(1/100) of a share, to be computed (i) if
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the Common Stock is listed on any national securities exchange on the basis of
the last sales price of the Common Stock on such exchange (or the quoted closing
bid price if there shall have been no sales) on the date of conversion, or (ii)
if the Common Stock shall not be listed, on the basis of the mean between the
closing bid and asked prices for the Common Stock on the date of conversion as
reported by NASDAQ, or its successor, and if there are not such closing bid and
asked prices, on the basis of the fair market value per share as determined by
the Board of Directors of the Company.
3.10 OFFICERS' STATEMENT AS TO ADJUSTMENTS. Whenever the Purchase
Price shall be adjusted as provided in Section 3 hereof, the Company shall
forthwith file at each office designated for the exercise of this Warrant, a
statement, signed by the Chairman of the Board, the President, any Vice
President or Treasurer of the Company, showing in reasonable detail the facts
requiring such adjustment and the Purchase Price that will be effective after
such adjustment. The Company shall also cause a notice setting forth any such
adjustments to be sent by mail, first class, postage prepaid, to the record
holder of this Warrant at his or its address appearing on the stock register.
If such notice relates to an adjustment resulting from an event referred to in
Paragraph 3.6, such notice shall be included as part of the notice required to
be mailed and published under the provisions of Paragraph 3.6 hereof.
4. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment
of its charter or through reorganization, consolidation, merger, dissolution,
sale of assets or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder hereof against dilution or other impairment. Without
limiting the generality of the foregoing, the Company will not increase the par
value of any shares of stock receivable upon the exercise of this Warrant above
the amount payable therefor upon such exercise, and at all times will take all
such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and non-assessable stock upon the exercise
of this Warrant.
5. RESERVATION OF STOCK, ETC., ISSUABLE ON EXERCISE OF WARRANTS.
The Company shall at all times reserve and keep available out of its authorized
but unissued stock, solely for the issuance and delivery upon the exercise of
this Warrant and other similar Warrants, such number of its duly authorized
shares of Common Stock as from time to time shall be issuable upon the exercise
of this Warrant and all other similar Warrants at the time outstanding.
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6. REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to it, or (in the case of mutilation) upon surrender and
cancellation thereof, the Company will issue, in lieu thereof, a new Warrant of
like tenor.
7. REMEDIES. The Company stipulates that the remedies at the law of
the holder of this Warrant in the event of any default by the Company in the
performance of or compliance with any of the terms of this Warrant are not and
will not be adequate, and that the same may be specifically enforced.
8. NEGOTIABILITY, ETC. This Warrant is issued upon the following
terms, to all of which each taker or owner hereof consents and agrees:
(a) Subject to the legend appearing on the first page hereof, title
to this Warrant may be transferred by endorsement (by the holder
hereof executing the form of assignment at the end hereof
including guaranty of signature) and delivery in the same manner
as in the case of a negotiable instrument transferable by
endorsement and delivery.
(b) Any person in possession of this Warrant properly endorsed is
authorized to represent himself as absolute owner hereof and is
granted power to transfer absolute title hereto by endorsement
and delivery hereof to a bona fide purchaser hereof for value;
each prior taker or owner waives and renounces all of his
equities or rights in this Warrant in favor of every such bona
fide purchaser, and every such bona fide purchaser shall acquire
title hereto and to all rights represented hereby.
(c) Until this Warrant is transferred on the books of the Company,
the Company may treat the registered holder of this Warrant as
the absolute owner hereof for all purposes without being affected
by any notice to the contrary.
(d) Prior to the exercise of this Warrant, the holder hereof shall
not be entitled to any rights of a shareholder of the Company
with respect to shares for which this Warrant shall be
exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any
preemptive right, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
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<PAGE>
(e) The Company shall not be required to pay any Federal or state
transfer tax or charge that may be payable in respect of any
transfer involved in the transfer or delivery of this Warrant of
the issuance or conversion or delivery of this Warrant or the
issuance or conversion or delivery of certificates for Common
Stock in a name other than that of the registered holder of this
Warrant or to issue or deliver any certificates for Common Stock
upon the exercise of this Warrant until any and all such taxes
and charges shall have been paid by the holder of this Warrant or
until it has been established to the Company's satisfaction that
no such tax or charge is due.
9. SUBDIVISION OF RIGHTS. This Warrant (as well as any new
warrants issued pursuant to the provisions of this paragraph) is exchangeable,
upon the surrender hereof by the holder hereof, at the principal office of the
Company for any number of new warrants of like tenor and date representing in
the aggregate the right to subscribe for and purchase the number of shares of
Common Stock of the Company which may be subscribed for and purchased hereunder.
10 MAILING OF NOTICES, ETC. All notices and other communications
from the Company to the holder of this Warrant shall be mailed by first-class
certified mail, postage prepaid, to the address furnished to the Company in
writing by the last holder of this Warrant who shall have furnished an address
to the Company in writing.
11. HEADINGS, ETC. The headings in this Warrant are for the purposes
of reference only, and shall not limit or otherwise affect the meaning hereof.
12. CHANGE, WAIVER, ETC. Neither this Warrant nor any term hereof
may be changed, waived, discharged or terminated orally but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought.
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<PAGE>
13. GOVERNING LAW. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE
AMATI COMMUNICATIONS CORPORATION
By
-----------------------------
Dated: 199
-------- --,
Attest:
- ----------------------
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<PAGE>
[To be signed only upon exercise of Warrant]
To AMATI COMMUNICATIONS CORPORATION
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder,_________shares of Common Stock of AMATI COMMUNICATIONS
CORPORATION and herewith makes payment of $___________, whose address is
______________________.
Dated:
- ----------------------
-------------------------
(Signature must conform in all respects to name of Holder as specified on the
face of the Warrant)
--------------------------
Address
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<PAGE>
[To be signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto_________________________________________________the right represented by
the within Warrant to purchase the _____________ shares of the Common Stock of
AMATI COMMUNICATIONS CORPORATION to which the within Warrant relates, and
appoints____________________ attorney to transfer said right on the books of
AMATI COMMUNICATIONS CORPORATION with full power of substitution in the
premises.
Dated:
- -------------------------
(Signature must conform in all respects to name of Holder as specified on the
face of the Warrant)
-----------------------------
Address
In the presence of
- --------------------------
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<PAGE>
FORM OF CLASS B WARRANT
THIS WARRANT AND THE SECURITIES ISSUABLE UPON ITS EXERCISE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAW, AND MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION UNDER THE ACT OR IN A TRANSACTION WHICH, IN THE
OPINION OF COUNSEL REASONABLY SATISFACTORY TO AMATI COMMUNICATIONS
CORPORATION, QUALIFIES AS AN EXEMPT TRANSACTION UNDER THE ACT AND THE RULES
AND REGULATIONS PROMULGATED THEREUNDER.
AMATI COMMUNICATIONS CORPORATION
COMMON STOCK PURCHASE WARRANT
AMATI COMMUNICATIONS CORPORATION, Delaware corporation (the "Company"),
hereby certifies that, for value received, [CHATTERJEE ENTITY] (the
"Holder"), or assigns, is entitled, subject to the terms set forth below, to
purchase from the Company, at any time and from time to time during the
period beginning on the seventy-fifth day following the date hereof and
ending on the fifth anniversary of such date in whole or in part, an
aggregate of THREE HUNDRED THOUSAND (300,000) fully paid and non-assessable
shares (such number of shares for which this Warrant is exercisable are
sometimes referred to herein as the "Warrant Shares") of the Common Stock of
the Company at a purchase price, subject to the provisions of Paragraph 3
hereof, of $25.00 per share (the "Purchase Price"); PROVIDED, HOWEVER, that
if the the average of the per share daily low trading prices of the Company's
Common Stock on the Principal Market over any 90-day period ending prior to
the first anniversary of the date of the first Put Notice delivered under the
Investment Agreement, exceeds $50.00 per share, the number of Warrant Shares
shall be reduced from 300,000 to 150,000. The Purchase Price and the number
and character of such shares are subject to adjustment as provided below, and
the term "Common Stock" shall mean, unless the context otherwise requires,
the stock or other securities or property at the time deliverable upon the
exercise of this Warrant. This Warrant is herein called the "Warrant."
Capitalized terms used but not defined herein shall have the meanings
ascribed thereto in the Investment Agreement, dated as of the date hereof,
between the Company and the Holder (the "Investment Agreement").
<PAGE>
1. EXERCISE OF WARRANT. The purchase rights evidenced by this
Warrant shall be exercised by the holder surrendering this Warrant, with the
form of subscription at the end hereof duly executed by such holder, to the
Company at its executive offices accompanied by payment of an amount (the
"Exercise Amount") equal to the Purchase Price multiplied by the number of
shares being purchased pursuant to such exercise, payable as follows: (a) by
payment to the Company in cash, by certified or official bank check, or by
wire transfer of the Exercise Amount, (b) by surrender to the Company for
cancellation of securities of the Company, including this Warrant having a
Market Price (as hereinafter defined) on the date of exercise equal to the
Exercise Amount; or (c) by a combination of the methods described in clauses
(a) and (b) above. In lieu of exercising the Warrant, the holder may elect to
receive a payment equal to the difference between (i) the Market Price
multiplied by the number of shares as to which the payment is then being
elected and (ii) the exercise price with respect to such shares, payable by
the Company to the Holder only in shares of Common Stock valued at the Market
Price on the date of exercise. For purposes hereof, the term "Market Price"
shall mean the average closing price of a share of Common Stock for the 15
consecutive Trading Days preceding such day on the Principal Market or, if
the shares of Common Stock or securities are not publicly traded, the Market
Price for such day shall be the fair market value thereof determined jointly
by the Company and the holder of this Warrant; provided, however, that if
such parties are unable to reach agreement within a reasonable period of
time, the Market Price shall be determined in good faith by the independent
investment banking firm selected jointly by the Company and the holder of
this Warrant or, if that selection cannot be made within 15 days, by an
independent investment banking firm selected by the American Arbitration
Association in accordance with its rules.
1.1 PARTIAL EXERCISE. This warrant may be exercised for less than
the
full number of shares of Common Stock, in which case the number of shares
receivable upon the exercise of this Warrant as a whole, and the sum payable
upon the exercise of this Warrant as a whole, shall be proportionately
reduced. Upon any such partial exercise, the Company at its expense will
forthwith issue to the holder hereof a new Warrant or Warrants of like tenor
calling for the number of shares of Common Stock as to which rights have not
been exercised, such Warrant or Warrants to be issued in the name of the
holder hereof or his nominee (upon payment by such holder of any applicable
transfer taxes).
2. DELIVERY OF STOCK CERTIFICATES ON EXERCISE. As soon as
practicable
after the exercise of this Warrant and payment of the Purchase Price, and in
any event within ten (10) days thereafter, the Company, at its expense, will
cause to be issued in the name of and delivered to the holder hereof a
certificate or certificates for the number of fully paid and
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<PAGE>
non-assessable shares or other securities or property to which such holder
shall be entitled upon such exercise, plus, in lieu of any fractional share
to which such holder would otherwise be entitled, cash in an amount
determined in accordance with Paragraph 3.9 hereof. The Company agrees that
the shares so purchased shall be deemed to be issued to the holder hereof as
the record owner of such shares as of the close of business on the date on
which this Warrant shall have been surrendered and payment made for such
shares as aforesaid.
3. ANTI-DILUTION PROVISIONS AND OTHER ADJUSTMENTS. In order to
prevent dilution of the right granted hereunder, the Purchase Price shall be
subject to adjustment from time to time in accordance with this Paragraph 3.
Upon each adjustment of the Purchase Price pursuant to this Paragraph 3, the
registered Holder of this Warrant shall thereafter be entitled to acquire
upon exercise, at the Purchase Price resulting from such adjustment, the
number of shares of the Company's Common Stock obtainable by multiplying the
Purchase Price in effect immediately prior to such adjustment by the number
of shares of the Company's Common Stock acquirable immediately prior to such
adjustment and dividing the product thereof by the Purchase Price resulting
from such adjustment.
3.1 ADJUSTMENT FOR ISSUE OR SALE OF COMMON STOCK AT LESS THAN
PURCHASE PRICE. Except as provided in Paragraph 3.2 or 3.5 below, if and
whenever on or after the date of issuance hereof the Company shall issue or
sell, or shall in accordance with subparagraphs 3.1(1) to (9), inclusive, be
deemed to have issued or sold, any shares of its Common Stock for a
consideration per share less than the Purchase Price in effect immediately prior
to the time of such issue or sale, then forthwith upon such issue or sale (the
"Triggering Transaction"), the Purchase Price shall, subject to subparagraphs
(1) to (9) of this Paragraph 3.1, be reduced to the Purchase Price (calculated
to the nearest tenth of a cent) determined by dividing:
(i) an amount equal to the sum of (x) the product derived by
multiplying the Number of Common Shares Deemed Outstanding immediately
prior to such Triggering Transaction by the Purchase Price then in effect,
plus 9y) the consideration, if any, received by the Company upon
consummation of such Triggering Transaction, by
(ii) an amount equal to the sum of (x) the Number of Common
Shares Deemed Outstanding immediately prior to such Triggering Transaction
plus (y) the number of shares of Common Stock issued (or deemed to be
issued in accordance with subparagraphs 3.1(1) to (9)) in connection with
the Triggering Transaction.
For purposes of this Paragraph 3, the term "Number of Common
Shares Deemed Outstanding" at any given time shall mean the sum of (i) the
number of shares of the Company's Common Stock
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<PAGE>
outstanding at such time, and (ii) the number of shares of the Company's
Common Stock deemed to be outstanding under subparagraphs 3.191) to (9),
inclusive, at such time.
For purposes of determining the adjusted Purchase Price under this
Paragraph 3.1, the following subsections (1) to (9), inclusive, shall be
applicable:
(1) In case the Company at any time shall in any manner grant
(whether directly or by assumption in a merger or otherwise) any
rights to subscribe for or to purchase, or any options for the
purchase of, Common Stock or any stock or other securities convertible
into or exchangeable for Common Stock (such rights or options being
herein called "Options" and such convertible or exchangeable stock or
securities being herein called "Convertible Securities"), whether or
not such Options or the right to convert or exchange any such
Convertible Securities are immediately exercisable and the price per
share for which the Common Stock is issuable upon exercise, conversion
or exchange (determined by dividing (x) the total amount, if any,
received or receivable by the Company as consideration for the
granting of such Options, plus the minimum aggregate amount of
additional consideration payable to the Company upon the exercise of
all such Options, plus, in the case of such Options which relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the issue or sale of such
Convertible Securities and upon the conversion or exchange thereof, by
(y) the total maximum number of shares of Common Stock issuable upon
the exercise of such Options or the conversion or exchange of such
Convertible Securities) shall be less than the Purchase Price in
effect immediately prior to the time of the granting of such Option,"
then the total maximum amount of Common Stock issuable upon the
exercise of such Options, or, in the case of Options for Convertible
Securities, upon the conversion or exchange of such Convertible
Securities, shall (as of the date of granting of such Options) be
deemed to be outstanding and to have been issued and sold by the
Company for such price per share. No adjustment of the Purchase Price
shall be made upon the actual issue of such shares of Common Stock or
such Convertible Securities upon the exercise of such Options, except
as otherwise provided in subparagraph (3) below.
(2) In case the Company at any time shall in any manner issue
(whether directly or by assumption in a merger or otherwise) or sell
any Convertible Securities, whether or not the rights to exchange or
convert thereunder are immediately exercisable, and the price per
share for which Common Stock is issuable upon
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<PAGE>
such conversion or exchange (determined by dividing (x) the total
amount received or receivable by the Company as consideration for the
issue or sale of such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to the
Company upon the conversion or exchange thereof, by (y) the total
maximum number of shares of Common Stock issuable upon the conversion
or exchange of all such Convertible Securities) shall be less than the
Purchase Price in effect immediately prior to the time of such issue
or sale, then the total maximum number of shares of Common Stock
issuable upon conversion or exchange of all such Convertible
Securities shall ( as of the date of the issue or sale of such
Convertible Securities) be deemed to be outstanding and to have been
issued and sold by the Company for such price per share. No adjustment
of the Purchase Price shall be made upon the actual issue of such
Common Stock upon exercise of the rights to exchange or convert under
such Convertible Securities, except as otherwise provided in
subparagraph (3) below.
(3) If the purchase price provided for in any Options referred
to in subparagraph (1), the additional consideration, if any, payable
upon the conversion or exchange of any Convertible Securities referred
to in subparagraphs (1) or (2), or the rate at which any Convertible
Securities referred to in subparagraph (1) or (2) are convertible into
or exchangeable for Common Stock shall change at any time (other than
under or by reason of provisions designed to protect against dilution
of the type set forth in Paragraph 3.1 or 3.3), the Purchase Price in
effect at the time of such change shall forthwith be readjusted to the
Purchase Price which would have been in effect at such time had such
Options or Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or conversion rate,
as the case may be, at the time initially granted, issued or sold. If
the purchase price provided for in any Option referred to in
subparagraph (1) or the rate at which any Convertible Securities
referred to in subparagraphs (1) or (2) are convertible into or
exchangeable for Common Stock, shall be reduced at any time under or
by reason of provisions with respect thereto designed to protect
against dilution, then in case of the delivery of Common Stock upon
the exercise of any such Convertible Security, the Purchase Price then
in effect hereunder shall forthwith be adjusted to such respective
amount as would have been obtained had such Option or Convertible
Security never been issued as to such Common Stock and had adjustments
been made upon the issuance of the shares of Common Stock delivered as
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<PAGE>
aforesaid, but only if as a result of such adjustment the Purchase
Price then in effect hereunder is hereby reduced.
(4) On the expiration of any Option or the termination of any
right to convert or exchange any Convertible Securities, the Purchase
Price then in effect hereunder shall forthwith be increased to the
Purchase Price which would have been in effect at the time of such
expiration or termination had such Option or Convertible Securities,
to the extent outstanding immediately prior to such expiration or
termination, never been issued.
(5) In case any Options shall be issued in connection with the
issue or sale of other securities of the Company, together comprising
one integral transaction in which no specific consideration is
allocated to such Options by the parties thereto, such Options shall
be deemed to have been issued without consideration.
(6) In case any shares of Common Stock, Options or Convertible
Securities shall be issued or sold or deemed to have been issued or
sold for cash, the consideration received therefor shall be deemed to
be the amount received by the Company therefor. In case any shares of
Common Stock, Options or Convertible Securities shall be issued or
sold for a consideration other than cash, the amount of the
consideration other than cash received by the Company shall be the
fair value of such consideration as determined in good faith by the
Board of Directors of the Company. In case any shares of Common Stock,
Options or Convertible Securities shall be issued in connection with
any merger in which the Company is the surviving corporation, the
amount of consideration therefor shall be deemed to be the fair value
of such portion of the net assets and business of the non-surviving
corporation as shall be attributed by the Board of Directors of the
Company in good faith to such Common Directors of the Company in good
faith to such Common Stock, Options or Convertible Securities, as the
case may be.
(7) The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for the
account of the Company, and the disposition of any shares so owned or
held shall be considered an issue or sale of Common Stock for the
purpose of this Paragraph 3.1.
(8) In case the Company shall declare a dividend or make any
other distribution upon the stock of the Company payable in Options or
Convertible Securities,
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<PAGE>
then in such case any Options or Convertible Securities, as the case
may be, issuable in payment of such dividend or distribution shall be
deemed to have been issued or sold without consideration.
(9) For purposed of this Paragraph 3.1, in case the Company
shall take a record of the holders of its Common Stock for the purpose
of entitling them (x) to receive a dividend or other distribution
payable in Common Stock, Options or in Convertible Securities, or
Common Stock, Options or in Convertible Securities, or (y) to
subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of
the issue or sale of the shares of Common Stock deemed to have been
issued or sold upon the declaration of such dividend or the making of
such other distribution or the date of the granting of such right or
subscription or purchase, as the case may be.
3.2 DIVIDENDS NOT PAID OUT OF EARNINGS OR EARNED SURPLUS. In
the event the Company shall declare a dividend upon the Common Stock (other
than a dividend payable in Common Stock) payable otherwise than out of
earnings or earned surplus, determined in accordance with generally accepted
accounting principles, including the making of appropriate deductions for
minority interests, if any, in subsidiaries (herein referred to as
"Liquidating Dividends"), then, as soon as possible after the exercise of
this Warrant, the Company shall pay to the person exercising such Warrant an
amount equal to the aggregate value at the time such exercise of all
Liquidating Dividends (including but not limited to the Common Stock which
would have been issued at the time of such earlier exercise and all other
securities which would have been issued with respect to such Common Stock by
reason of stock splits, stock dividends, mergers or reorganizations, or for
any other reason). For the purposes of this Paragraph 3.2, a dividend other
than in cash shall be considered payable out of earnings or earned surplus
only to the extent that such earnings or earned surplus are charged an amount
equal to the fair value of such dividend as determined in good faith by the
Board of Directors of the Company.
3.3 SUBDIVISIONS AND COMBINATIONS. In case the Corporation
shall at any time (i) subdivide the outstanding Common Stock or (ii) issue a
stock dividend on its outstanding Common Stock, the Purchase Price in effect
immediately prior to such subdivision or dividend shall be proportionately
reduced by the same ratio as the subdivision or dividend. In case the
Corporation shall at any time combine its outstanding Common Stock, Purchase
Price in effect immediately prior to such combination shall be
proportionately increased by the same ratio as the combination.
3.4 REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE
OF ASSETS. If the capital reorganization or
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<PAGE>
reclassification of the capital stock of the Company, or consolidation or
merger of the Company with another corporation, or the sale of all or
substantially all of its assets to another corporation shall be effected in
such a way that holders of Common Stock shall be entitled to receive stock,
securities, cash or other property with respect to or in exchange for Common
Stock, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and adequate provision shall be made
whereby the holder of this Warrant shall have the right to acquire and
receive upon exercise of this Warrant such shares of stock, securities, cash
or other property issuable or payable (as part of the reorganization,
reclassification, consolidation, merger or sale) with respect to or in
exchange for such number of outstanding shares of the Company's Common Stock
as would have been received upon exercise of this Warrant at the Purchase
Price then in effect. The Company will not effect any such consolidation,
merger or sale, unless prior to the consummation thereof the successor
corporation (if other than the Company) resulting from such consolidation or
merger or the corporation purchasing such assets shall assume by written
instrument mailed or delivered to the holder of this Warrant at the last
address of such holder appearing on the books of the Company, the obligation
to deliver to such holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
purchase. If a purchase, tender or exchange offer is made to and accepted by
the holders of more than 50% of the outstanding shares of Common Stock of the
Company, the Company shall not effect any consolidation, merger or sale with
the person having made such offer or with any Affiliate of such person,
unless prior to the consummation of such consolidation, merger or sale the
holder of this Warrant shall have been given a reasonable opportunity to then
elect to receive upon the exercise of this Warrant either the stock,
securities or assets then issuable with respect to the Common Stock of the
Company or the stock, securities or assets, or the equivalent, issued to
previous holders of the Common Stock in accordance with such offer. For
purposes hereof the term "Affiliate" with respect to any given person shall
mean any person controlling, controlled by or under common control with the
given person,
3.5 NO ADJUSTMENT FOR EXERCISE OF CERTAIN OPTIONS WARRANTS, ETC.
The provisions of this Section 3 shall not apply to any Common Stock issued,
issuable or deemed outstanding under subparagraphs 3.1(1) to (9) inclusive:
(i) to any person pursuant to any stock option, stock purchase or similar
plan or arrangement for the benefit of employees, consultants or directors of
the Company or its subsidiaries in effect on the date of issuance hereof,
(ii) pursuant to options, warrants and conversion rights in existence on the
date of issuance hereof, (iii) pursuant to the Investment Agreement or (iv)
pursuant to a firm commitment underwritten registered offering under the
1933 Act.
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<PAGE>
3.6 NOTICES OF RECORD DATE, ETC. In the event that :
(1) the Company shall declare any cash dividend upon its Common
Stock, or
(2) the Company shall declare any dividend upon its Common Stock
payable in stock or make any special dividend or other distribution to
the holders of its Common Stock, or
(3) the Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any
class or other rights, or
(4) there shall be any capital reorganization or
reclassification of the capital stock of the Company, including any
subdivision or combination of its outstanding shares of Common Stock,
or consolidation or merger of the Company with, or sale of all or
substantially all of its assets to, another corporation, or
(5) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in connection with such event, the Company shall give to the holder of
this Warrant:
(ii) at least twenty (20) days' prior written notice of the
date on which the books of the Company shall close or a record shall be
taken for such dividend, distribution or subscription rights or for
determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger sale, dissolution, liquidation or
winding up; and
(iii) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at
least twenty (20) days' prior written notice of the date when the same
shall take place. Such notice in accordance with the foregoing clause (i)
shall also specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common Stock shall be
entitled thereto, and such notice in accordance with the foregoing clause
(ii) shall also specify the date on which the holders of Common Stock shall
be entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification consolidation,
merger, sale, dissolution, liquidation or winding up, as the case may be.
Each such written notice shall be given by first class mail, postage
prepaid, addressed to the holder of this Warrant at the address of such
holder as shown on the books of the Company.
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<PAGE>
3.7 GRANT, ISSUE OR SALE OF OPTIONS, CONVERTIBLE SECURITIES, OR
RIGHTS. If at any time or from time to time on or after the date of issuance
hereof, the Company shall grant, issue or sell any Options, Convertible
Securities or rights to purchase property (the "Purchase Rights") pro rata to
the record holders of any class of Common Stock of the Company and such grants,
issuances or sales do not result in an adjustment of the Purchase Price under
Paragraph 3.1 hereof, then the holder of this Warrant shall be entitled to
acquire (within thirty (30) days after the later to occur of the initial
exercise date of such Purchase Rights to which such holder shall be entitled
under Paragraph 3.6) and upon the terms applicable to such Purchase Rights
either:
(i) the aggregate Purchase Rights which such holder could have
acquired if it had held the number of shares of Common Stock acquirable
upon exercise of this Warrant immediately before the grant, issuance or
sale of such Purchase Rights; provided that if any Purchase rights were
distributed to holders of Common Stock without the payment of additional
consideration by such holders, corresponding Purchase Rights shall be
distributed to the exercising holder of this Warrant as soon as possible
after such exercise and it shall not be necessary for the exercising holder
of this Warrant specifically to request delivery of such rights; or
(ii) in the event that any such Purchase Rights shall have
expired or shall expire prior to the end of said thirty (30) day period,
the number of shares of Common Stock or the amount of property which such
holder could have acquired upon such exercise at the time or times at which
the Company granted, issued or sold such expired Purchase Rights.
3.8 ADJUSTMENT BY BOARD OF DIRECTORS. If any event occurs as to
which, in the opinion of the Board of Directors of the Company, the provisions
of this Section 3 are not strictly applicable or if strictly applicable would
not fairly protect the rights of the holder of this Warrant in accordance with
the essential intent and principles of such provisions, then the Board of
Directors shall make an adjustment in the application of such provisions, in
accordance with such essential intent and principles, so as to protect such
rights as aforesaid, but in no event shall any adjustment have the effect of
increasing the Purchase Price as otherwise determined pursuant to any of the
provisions of this Section 3 except in Paragraph 3.3 and then in no event to an
amount larger than the Purchase Price as adjusted pursuant to Paragraph 3.3.
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3.9 FRACTIONAL SHARES. The Company shall not issue fractions of
shares of Common Stock upon exercise of this Warrant or scrip in lieu thereof.
If any fraction of a share of Common Stock would, except for the provisions of
this Paragraph 3.9, be issuable upon exercise of this Warrant, the Company shall
in lieu thereof pay to the person entitled thereto an amount in cash equal to
the current value of such fraction, calculated to the nearest one-hundredth
(1/100) of a share, to be computed (i) if the Common Stock is listed on any
national securities exchange on the basis of the last sales price of the Common
Stock on such exchange (or the quoted closing bid price if there shall have been
no sales) on the date of conversion, or (ii) if the Common Stock shall not be
listed, on the basis of the mean between the closing bid and asked prices for
the Common Stock on the date of conversion as reported by NASDAQ, or its
successor, and if there are not such closing bid and asked prices, on the basis
of the fair market value per share as determined by the Board of Directors of
the Company.
3.10 OFFICERS' STATEMENT AS TO ADJUSTMENTS. Whenever the Purchase
Price shall be adjusted as provided in Section 3 hereof, the Company shall
forthwith file at each office designated for the exercise of this Warrant, a
statement, signed by the Chairman of the Board, the President, any Vice
President or Treasurer of the Company, showing in reasonable detail the facts
requiring such adjustment and the Purchase Price that will be effective after
such adjustment. The Company shall also cause a notice setting forth any such
adjustments to be sent by mail, first class, postage prepaid, to the record
holder of this Warrant at his or its address appearing on the stock register.
If such notice relates to an adjustment resulting from an event referred to in
Paragraph 3.6, such notice shall be included as part of the notice required to
be mailed and published under the provisions of Paragraph 3.6 hereof.
4. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of
its charter or through reorganization, consolidation, merger, dissolution, sale
of assets or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the holder hereof against dilution or other impairment. Without limiting the
generality of the foregoing, the Company will not increase the par value of any
shares of stock receivable upon the exercise of this Warrant above the amount
payable therefor upon such exercise, and at all times will take all such action
as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and non-assessable stock upon the exercise of this
Warrant.
5. RESERVATION OF STOCK, ETC., ISSUABLE ON EXERCISE OF WARRANTS.
The Company shall at all times reserve and keep
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<PAGE>
available out of its authorized but unissued stock, solely for the issuance and
delivery upon the exercise of this Warrant and other similar Warrants, such
number of its duly authorized shares of Common Stock as from time to time shall
be issuable upon the exercise of this Warrant and all other similar Warrants at
the time outstanding.
6. REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to it, or (in the case of mutilation) upon surrender and
cancellation thereof, the Company will issue, in lieu thereof, a new Warrant of
like tenor.
7. REMEDIES. The Company stipulates that the remedies at law of the
holder of this Warrant in the event of any default by the Company in the
performance of or compliance with any of the terms of this Warrant are not and
will not be adequate, and that the same may be specifically enforced.
8. NEGOTIABILITY, ETC. This Warrant is issued upon the following
terms, to all of which each taker or owner hereof consents and agrees:
(a) Subject to the legend appearing on the first page hereof, title
to this Warrant may be transferred by endorsement (by the holder
hereof executing the form of assignment at the end hereof
including guaranty of signature) and delivery in the same manner
as in the case of a negotiable instrument transferable by
endorsement and delivery.
(b) Any person in possession of this Warrant properly endorsed is
authorized to represent himself as absolute owner hereof and is
granted power to transfer absolute title hereto by endorsement
and delivery hereof to a bona fide purchaser hereof for value;
each prior taker or owner waives and renounces all of his
equities or rights in this Warrant in favor of every such bona
fide purchaser, and every such bona fide purchaser shall acquire
title hereto and to all rights represented hereby.
(c) Until this Warrant is transferred on the books of the Company,
the Company may treat the registered holder of this Warrant as
the absolute owner hereof for all purposes without being
affected by any notice to the contrary.
(d) Prior to the exercise of this Warrant, the holder hereof shall
not be entitled to any rights of a
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<PAGE>
shareholder of the Company with respect to shares for which this
Warrant shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as
provided herein.
(e) The Company shall not be required to pay any Federal or state
transfer tax or charge that may be payable in respect of any
transfer involved in the transfer or delivery of this Warrant or
the issuance or conversion or delivery of certificates for Common
Stock in a name other than that of the registered holder of this
Warrant or to issue or deliver any certificates for Common Stock
upon the exercise of this Warrant until any and all such taxes
and charges shall have been paid by the holder of this Warrant or
until it has been established to the Company's satisfaction that
no such tax or charge is due.
9. SUBDIVISION OF RIGHTS. This Warrant (as well as any new warrants
issued pursuant to the provisions of this paragraph) is exchangeable, upon the
surrender hereof by the holder hereof, at the principal office of the Company
for any number of new warrants of like tenor and date representing in the
aggregate the right to subscribe for and purchase the number of shares of Common
Stock of the Company which may be subscribed for and purchased hereunder.
10. MAILING OF NOTICES, ETC. All notices and other communications
from the Company to the holder of this Warrant shall be mailed by first-class
certified mail, postage prepaid, to the address furnished to the Company in
writing by the last holder of this Warrant who shall have furnished an address
to the Company in writing.
11. HEADINGS, ETC. The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect the meaning hereof.
12. CHANGE, WAIVER, ETC. Neither this Warrant nor any term hereof may
be changed, waived, discharged or terminated orally but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
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<PAGE>
13. GOVERNING LAW. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.
AMATI COMMUNICATIONS CORPORATION
By
------------------------------
Dated: ,199
---------- --
Attest:
- -----------------------
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<PAGE>
[To be signed only upon exercise of Warrant]
To AMATI COMMUNICATIONS CORPORATION
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, ________ shares of Common Stock of AMATI COMMUNICATIONS
CORPORATION and herewith makes payment of $______therefor, and requests that the
certificates for such shares be issued in the name of, and be delivered to
__________, whose address is __________________.
Dated:
- ----------------------
--------------------
(Signature must conform in all respects to name of Holder as specified on the
face of the Warrant)
--------------------
Address
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<PAGE>
[To be signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto AMATI COMMUNICATIONS CORPORATION the right represented by the within
Warrant to purchase the ______________ shares of the Common Stock of AMATI
COMMUNICATIONS CORPORATION to which the within Warrant relates, and appoints
______________ attorney to transfer said right on the books of AMATI
COMMUNICATIONS CORPORATION with full power of substitution in the premises.
Dated:
- --------------------------
(Signature must conform in all respects to name of Holder as specified on the
face of the Warrant)
------------------------------
Address
In the presence of
- ------------------------
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<PAGE>
AMATI COMMUNICATIONS CORPORATION
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of October 3, 1996, among the
investors listed on the signature pages hereto (the "Investors") and Amati
Communications Corporation, a Delaware corporation (the "Company").
R E C I T A L S
WHEREAS, the Investors have, pursuant to the terms of the Investment
Agreement, dated as of the date hereof, by and among the Company and the
Investors (the "Agreement"), agreed to purchase shares of Common Stock, par
value $0.20 per share, of the Company (the "Common Stock") and Warrants to
purchase shares of Common Stock; and
WHEREAS, the Company has agreed, as a condition precedent to the
Investors' obligations under the Agreement, to grant the Investors certain
registration rights; and
WHEREAS, the Company and the Investors desire to define the
registration rights of the Investors on the terms and subject to the conditions
set forth herein and in Section 1.6 of the Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms have the respective meaning
set forth below:
COMMISSION: shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act;
EXCHANGE ACT: shall mean the Securities Exchange Act of 1934, as
amended;
HOLDER: shall mean any holder of Registrable Securities;
INITIATING HOLDER: shall mean any Holder or Holders who in the
aggregate are Holders of more than 50% of the then outstanding Registrable
Securities;
<PAGE>
PERSON: shall mean an individual, partnership, joint-stock company,
corporation, trust or unincorporated organization, and a government or agency or
political subdivision thereof;
REGISTER, REGISTERED and REGISTRATION: shall mean to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act (and any post-effective amendments filed or required to be filed)
and the declaration or ordering of effectiveness of such registration statement;
REGISTRABLE SECURITIES: shall mean (A) shares of Common Stock issued
or issuable under the Agreement, (B) any additional shares of Common Stock
acquired by the Investors pursuant to the Warrants and (C) any stock of the
Company issued as a dividend or other distribution with respect to, or in
exchange for or in replacement of, the shares of Common Stock referred to in
clause (A) or (B);
REGISTRATION EXPENSES: shall mean all expenses incurred by the
Company in compliance with Sections 2(a) and (b) hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, fees and expenses of one counsel for
all the Holders, blue sky fees and expenses and the expense of any special
audits incident to or required by any such registration (but excluding the
compensation of regular employees of the Company, which shall be paid in any
event by the Company);
SECURITY, SECURITIES: shall have the meaning set forth in Section
2(1) of the Securities Act;
SECURITIES ACT: shall mean the Securities Act of 1933, as amended;
and
SELLING EXPENSES: shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities.
2. REGISTRATION RIGHTS
(a) REQUESTED REGISTRATION.
(i) REQUEST FOR REGISTRATION. If the Company shall receive from
an Initiating Holder, at any time following the time that the shelf
registration statements filed by the Company pursuant to Section 1.6 under
the Agreement (a "Shelf Registration Statement") are no longer in effect
with respect to all of the Registrable Securities, a written request that
the Company effect any registration covering the registration of 20% or
more of the Registrable Securities (or such lesser percent which (I) the
Company then owns or (II) results in an anticipated aggregate offering
price of $1,000,000 or more), the Company will:
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<PAGE>
(A) promptly give written notice of the proposed
registration, qualification or compliance to all other Holders; and
(B) as soon as practicable, use its diligent best efforts
to effect such registration (including, without limitation, the
execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable blue sky or other state
securities laws and appropriate compliance with applicable regulations
issued under the Securities Act) as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion
of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any
Holder or Holders joining in such request as are specified in a
written request received by the Company within 10 business days after
written notice from the Company is given under Section 2(a)(i)(A)
above; PROVIDED that the Company shall not be obligated to effect, or
take any action to effect, any such registration pursuant to this
Section 2(a):
(x) In any particular jurisdiction in which the
Company would be required to execute a general consent to service
of process in effecting such registration, qualification or
compliance, unless the Company is already subject to service in
such jurisdiction and except as may be required by the Securities
Act or applicable rules or regulations thereunder; or
(y) After the Company has effected three (3) such
registrations pursuant to this Section 2(a) and such
registrations have been declared or ordered effective and the
Company has satisfied its obligations under Section 2(d) hereof.
The registration statement filed pursuant to the request of the
Initiating Holders may not include other securities of the Company which are
held by Persons other than the Holders ("Other Stockholders"), without the prior
consent of Holders registering at least 50% of the Registrable Securities.
(ii) UNDERWRITING. If the Initiating Holder intends to
distribute the Registrable Securities covered by its request by means of an
underwriting, it shall so advise the Company as a part of its request made
pursuant to this Section 2(a), and the Company shall include such
information in the written notice referred to in Section 2(a)(i)(A). In
such event, the right of any Holder to include its Registrable Securities
in such registration shall be conditioned upon such Holder's participation
in such underwriting and the inclusion of such Holder's Registrable
Securities in the underwriting to the extent provided
-3-
<PAGE>
herein. All Holders proposing to distribute their securities through such
underwriting shall enter into an underwriting agreement in customary form
with the underwriter or underwriters selected for such underwriting by a
majority in interest of the Initiating Holder.
(iii) COMPANY'S RIGHT TO DEFER. Notwithstanding the foregoing,
if the Company shall furnish to the Initiating Holder a certificate signed
by the President of the Company stating that, in the good faith judgment of
the Board of Directors of the Company, it would be seriously detrimental to
the Company and its shareholders for such registration statement to be
filed in the near future and it is therefore essential to defer the filing
of such registration statement, the Company shall have the right to defer
such filing for a period of not more than 30 calendar days after receipt of
the request of the Initiating Holder (a "Suspension Period"); provided that
no Suspension Period may commence less than ninety (90) days after the
expiration of the then most recent Suspension Period, and the Company may
establish no more than two (2) Suspension Periods in any twelve (12)
consecutive months.
(iv) TRANSFER OF RIGHTS. The registration rights set forth in
this Section 2 may be transferred or assigned to a transferee or assignee
of any Registrable Securities not sold to the public acquiring at least
10,000 shares of Registrable Securities, equitably adjusted for any
recapitalization, stock split, combination and the like (hereinafter
referred to in this Section 2 as the "Transferee"); PROVIDED, HOWEVER,
that:
(A) the Company must receive written notice prior to the
time of said transfer, stating the name and address of the Transferee
and identifying the securities with respect to which such registration
rights are being transferred or assigned, and
(B) the Transferee must not be a person deemed by the Board
of Directors of the Company, in good faith, to be a competitor or
potential competitor of the Company.
Notwithstanding the limitation set forth in the foregoing sentence
respecting the minimum number of shares which must be transferred, any
Holder which is a partnership or limited liability company may transfer
such Holder's registration rights to such Holder's constituent partners or
members without restriction as to the number or percentage of shares
acquired by any such constituent partner or member.
(b) COMPANY REGISTRATION.
(i) If the Company shall determine to register any of its equity
securities either for its own account or
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<PAGE>
for the account of Other Stockholders, other than a registration relating
solely to employee benefit plans, or a registration relating solely to a
Commission Rule 145 transaction, or a registration on any registration form
which does not permit secondary sales or does not include substantially the
same information as would be required to be included in a registration
statement covering the sale of Registrable Securities, the Company will:
(A) promptly give to each of the Holders a written notice
thereof (which shall include a list of the jurisdictions in which the
Company intends to attempt to qualify such securities under the
applicable blue sky or other state securities laws); and
(B) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a
written request or requests, made by the Holders within fifteen (15)
days after receipt of the written notice from the Company described in
clause (i) above, except as set forth in Section 2(b)(ii) below. Such
written request may specify all or a part of the Holders' Registrable
Securities.
(ii) UNDERWRITING. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise each of the Holders as a part of the written notice
given pursuant to Section 2(b)(i)(A). In such event, the right of each of
the Holders to registration pursuant to this Section 2(b) shall be
conditioned upon such Holders' participation in such underwriting and the
inclusion of such Holders' Registrable Securities in the underwriting to
the extent provided herein. The Holders whose shares are to be included in
such registration shall (together with the Company and the Other
Stockholders distributing their securities through such underwriting) enter
into an underwriting agreement in customary form with the representative of
the underwriter or underwriters selected for underwriting by the Company.
Notwithstanding any other provision of this Section 2(b), if the
representative determines that marketing factors require a limitation on
the number of shares to be underwritten, the representative may (subject to
the allocation priority set forth below) limit the number of Registrable
Securities to be included in the registration and underwriting to not less
than twenty five percent (25%) (or ten percent (10%) with respect to the
first registered offering effected by the Company after the date hereof) of
the shares included therein (based on the number of shares). The Company
shall so advise all holders of securities requesting registration, and the
number of shares of securities that are entitled to be included in the
registration and underwriting shall be allocated in the following manner:
The securities of the Company held by officers, directors and Other
Stockholders of the Company
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<PAGE>
(other than Registrable Securities and other than securities held by
holders who by contractual right demanded such registration ("Demanding
Holders")) shall be excluded from such registration and underwriting to the
extent required by such limitation, and, if a limitation on the number of
shares is still required, the number of shares that may be included in the
registration and underwriting by each of the Holders and Demanding Holders
shall be reduced, on a pro rata basis (based on the number of shares held
by such Holder), by such minimum number of shares as is necessary to comply
with such limitation. If any of the Holders or any officer, director or
Other Stockholder disapproves of the terms of any such underwriting, he may
elect to withdraw therefrom by written notice to the Company and the
underwriter. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
(c) EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to this
Section 2 shall be borne by the Company, and all Selling Expenses shall be borne
by the Holders of the securities so registered pro rata on the basis of the
number of their shares so registered; provided, however, that if, as a result of
the withdrawal of a request for registration by any of the Holders, as
applicable, the registration statement does not become effective, the Holders
and Other Stockholders requesting registration may elect to bear the
Registration Expenses (pro rata on the basis of the number of their shares so
included in the registration request, or on such other basis as such Holders and
Other Stockholders may agree), in which case such registration shall not be
counted as a registration pursuant to Section 2(a)(i)(B)(y).
(d) REGISTRATION PROCEDURES. In the case of each registration
effected by the Company pursuant to this Section 2, the Company will keep the
Holders, as applicable, advised in writing as to the initiation of each
registration and as to the completion thereof. At its expense, the Company
will:
(i) keep such registration effective for a period of one
hundred twenty (120) days or until the Holders, as applicable, have
completed the distribution described in the registration statement relating
thereto, whichever first occurs; provided, however, that such 120-day
period shall be extended for a period of time equal to the period during
which the Holders, as applicable, refrain from selling any securities
included in such registration during a Suspension Period in accordance with
provisions in Section 1.6(b)(iv) of the Agreement; and
(ii) furnish such number of prospectuses and other documents
incident thereto as each of the Holders, as applicable, from time to time
may reasonably request.
(e) INDEMNIFICATION.
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<PAGE>
(i) The Company will indemnify each of the Holders, as
applicable, each of its officers, directors and partners, and each person
controlling each of the Holders, with respect to each registration which
has been effected pursuant to this Section 2 or pursuant to Section 1.6 of
the Agreement, and each underwriter, if any, and each person who controls
any underwriter, against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any
prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or any
violation by the Company of the Securities Act or the Exchange Act or any
rule or regulation thereunder applicable to the Company and relating to
action or inaction required of the Company in connection with any such
registration, qualification or compliance, and will reimburse each of the
Holders, each of its officers, directors and partners, and each person
controlling each of the Holders, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses
reasonably incurred in connection with investigating and defending any such
claim, loss, damage, liability or action, provided that the Company will
not be liable in any such case to the extent that any such claim, loss,
damage, liability or expense arises out of or is based on any untrue
statement or omission based upon written information furnished to the
Company by the Holders or underwriter and stated to be specifically for use
therein.
(ii) Each of the Holders will, if Registrable Securities held
by it are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each
of its directors and officers and each underwriter, if any, of the
Company's securities covered by such a registration statement, each person
who controls the Company or such underwriter, each Other Stockholder and
each of their officers, directors, and partners, and each person
controlling such Other Stockholder against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained
in any such registration statement, prospectus, offering circular or other
document made by such Holder, or any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to
make the statements by such Holder therein not misleading, and will
reimburse the Company and such Other Stockholders, directors, officers,
partners, persons, underwriters or control persons for any legal or any
other expenses reasonably incurred in connection with
-7-
<PAGE>
investigating or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such
untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering
circular or other document in reliance upon and in conformity with written
information furnished to the Company by such Holder and stated to be
specifically for use therein; provided, however, that the obligations of
each of the Holders hereunder shall be limited to an amount equal to the
net proceeds to such Holder of securities sold as contemplated herein.
(iii) Each party entitled to indemnification under this
Section 2(e) (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party") promptly
after such Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to assume
the defense of any such claim or any litigation resulting therefrom;
provided that counsel for the Indemnifying Party, who shall conduct the
defense of such claim or any litigation resulting therefrom, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld) and the Indemnified Party may participate in such defense at such
party's expense (unless the Indemnified Party shall have reasonably
concluded that there may be a conflict of interest between the Indemnifying
Party and the Indemnified Party in such action, in which case the fees and
expenses of counsel shall be at the expense of the Indemnifying Party), and
provided further that the failure of any Indemnified Party to give notice
as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 2 unless the Indemnifying Party is
materially prejudiced thereby. No Indemnifying Party, in the defense of
any such claim or litigation shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release
from all liability in respect to such claim or litigation. Each
Indemnified Party shall furnish such information regarding itself or the
claim in question as an Indemnifying Party may reasonably request in
writing and as shall be reasonably required in connection with the defense
of such claim and litigation resulting therefrom.
(iv) If the indemnification provided for in this Section 2(e)
is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any loss, liability, claim, damage or
expense referred to herein, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party hereunder, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such loss,
liability, claim, damage or expense in such proportion as is appropriate to
reflect the relative fault
-8-
<PAGE>
of the Indemnifying Party on the one hand and of the Indemnified Party on
the other in connection with the statements or omissions which resulted in
such loss, liability, claim, damage or expense, as well as any other
relevant equitable considerations. The relative fault of the Indemnifying
Party and of the Indemnified Party shall be determined by reference to,
among other things, whether the untrue (or alleged untrue) statement of a
material fact or the omission (or alleged omission) to state a material
fact relates to information supplied by the Indemnifying Party or by the
Indemnified Party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
(v) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with any underwritten
public offering contemplated by this Agreement are in conflict with the
foregoing provisions, the provisions in such underwriting agreement shall
be controlling.
(vi) The foregoing indemnity agreement of the Company and
Holders is subject to the condition that, insofar as they relate to any
loss, claim, liability or damage made in a preliminary prospectus but
eliminated or remedied in the amended prospectus on file with the
Commission at the time the registration statement in question becomes
effective or the amended prospectus filed with the Commission pursuant to
Commission Rule 424(b) (the "Final Prospectus"), such indemnity or
contribution agreement shall not inure to the benefit of any underwriter or
Holder if a copy of the Final Prospectus was furnished to the underwriter
and was not furnished to the person asserting the loss, liability, claim or
damage at or prior to the time such action is required by the Securities
Act.
(f) INFORMATION BY THE HOLDERS. It shall be a condition precedent
to the Company's obligation to file any registration statement pursuant to this
Registration Rights Agreement that each of the Holders holding securities
included in any registration shall furnish to the Company such information
regarding such Holder and the distribution proposed by such Holder as the
Company may reasonably request in writing and as shall be reasonably required in
connection with any registration, qualification or compliance referred to in
this Section 2 or Section 1.6 of the Agreement.
(g) RULE 144 REPORTING.
With a view to making available the benefits of certain rules and
regulations of the Commission which may permit the sale of restricted securities
to the public without registration, the Company agrees to:
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<PAGE>
(i) make and keep public information available as those terms
are understood and defined in Rule 144 under the Securities Act ("Rule
144"), at all times from and after ninety (90) days following the effective
date of the first registration under the Securities Act filed by the
Company for an offering of its securities to the general public;
(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 at any time after it has become
subject to such reporting requirements; and
(iii) so long as the Holder owns any Registrable Securities,
furnish to the Holder upon request, a written statement by the Company as
to its compliance with the reporting requirements of Rule 144 (at any time
from and after ninety (90) days following the effective date of the first
registration statement filed by the Company for an offering of its
securities to the general public), and of the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed as the Holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing the Holder to sell any such securities without
registration.
(h) TERMINATION. The registration rights set forth in this Section 2
shall not be available to any Holder if, in the opinion of counsel to the
Company, all of the Registrable Securities then owned by such Holder could be
sold in any 90-day period pursuant to Rule 144.
3. INTERPRETATION OF THIS AGREEMENT
(a) DIRECTLY OR INDIRECTLY. Where any provision in this Agreement
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether such action is taken
directly or indirectly by such Person.
(b) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed entirely within such State.
(c) SECTION HEADINGS. The headings of the sections and subsections
of this Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof.
4. MISCELLANEOUS
(a) NOTICES.
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<PAGE>
(i) All communications under this Agreement shall be in writing
and shall be delivered by hand or mailed by overnight courier or by
registered or certified mail, postage prepaid:
(A) if to the Company, at the address set forth in the
Agreement, or at such other address as it may have furnished in
writing to the Investors;
(B) if to the Investors, at the address set forth in the
Agreement or at such other address as may have been furnished to the
Company in writing.
(ii) Any notice so addressed shall be deemed to be given: if
delivered by hand, on the date of such delivery; if mailed by courier, on
the first business day following the date of such mailing; and if mailed by
registered or certified mail, on the third business day after the date of
such mailing.
(b) REPRODUCTION OF DOCUMENTS. This Agreement and all
documents relating thereto, including, without limitation, any consents, waivers
and modifications which may hereafter be executed may be reproduced by the
Investor by any photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and the Investors may destroy any original
document so reproduced. The parties hereto agree and stipulate that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by the Investors in the
regular course of business) and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
(c) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties.
(d) ENTIRE AGREEMENT; AMENDMENT AND WAIVER. This Agreement,
the Investment Agreement and the Warrants constitute the entire understanding of
the parties hereto and supersedes all prior understanding among such parties
with respect to the subject matter hereof. This Agreement may be amended, and
the observance of any term of this Agreement may be waived, with (and only with)
the written consent of the Company and the Investors holding a majority of the
then outstanding Registrable Securities.
(e) COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
-11-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first set forth above.
AMATI COMMUNICATIONS CORPORATION
By:
-------------------------------------
Name:
Title:
INVESTORS:
QUANTUM INDUSTRIAL PARTNERS LDC
By:
-------------------------------------
Name:
Title:
S-C PHOENIX HOLDINGS, L.L.C.
By:
-------------------------------------
Name:
Title:
WINSTON PARTNERS, L.P.
By: Chatterjee Fund Management, its
general partner
By:
--------------------------------
Name:
Title:
WINSTON PARTNERS II LDC
By:
-------------------------------------
Name:
Title:
WINSTON PARTNERS II L.L.C.
By: Chatterjee Advisors L.L.C., its
manager
By:
--------------------------------
Name:
Title:
-12-
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement of our report dated August 24, 1995,
included in ICOT Corporation's Form 10-K for the year ended July 29, 1995, and
to all references to our Firm included in this Registration Statement.
ARTHUR ANDERSEN LLP
San Jose, California
October 4, 1996
