The warrants hve a term I have not seen before but which was in the warrants issued in July 2006 offering. It provides that if there is a cash acquisition of the company, the warrant holder gets the Black-Scholes value of the warrant, based on Bloomberg values (using 100 days volatility as shown on the Bloomberg), I may find a Bloomberg terminal and compute the value and post it. So if there is an acqusition at, say, $1.50, the warrant holder gets not merely $1.50 - .87, but also the option premium over the remainder of the seven year term, which admittedly does decline as the option gets deeper in the money. Also, I don't see any right to force exercise even if the stock price sky rockets, increasing the value of the warrant and eliminating any chance that the warrants could be used to provide funding for the company inless than seven years. This too is consistent with the 2006 offering.
Fundamental Transaction. If, at any time while the warrant is outstanding, (1) we effect any merger or consolidation with or into another person or entity, (2) we effect any sale of all or substantially all of our assets in one or a series of related transactions, (3) any tender offer or exchange offer approved or authorized by our board of directors (whether by us or another person or entity) is completed pursuant to which holders of common stock are permitted to tender or exchange their shares for other securities, cash or property, or (4) we effect any reclassification of the common stock or any compulsory share exchange pursuant to which the common stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then the holder shall have the right thereafter to receive, upon exercise of the warrant, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of shares then issuable upon exercise of the warrant. Notwithstanding the foregoing, upon a Fundamental Transaction that is an all cash transaction, a transaction under Rule 13e-3 of the Securities Act of 1934, as amended, or involving a person or entity not traded on a national securities exchange, we or our successor shall pay within 30 days after the consummation of the Fundamental Transaction, cash in an amount equal to the value of the warrant as determined in accordance with the Black-Scholes Option Pricing Model obtained from the “OV” function on Bloomberg L.P. using the price on the day immediately preceding the Fundamental Transaction, a risk free interest rate, and an expected volatility equal to the 100 day volatility obtained from the “HVT” function on Bloomberg L.P. determined as of the trading day immediately following the public announcement of the applicable Fundamental Transaction.
