I agree; well laid out.
From a layman's point of view, there are two 16b issues I didn't see addressed:
Question 1. Doesn't 16b exclude securities associated with previously contracted debt? From the lawsuit, a large portion of the stock rights are associated with a rewrite, default or restructure of previous NeoMedia debt (after 2005).
"...unless such security or security- based swap agreement was acquired in good faith in connection with a debt previously contracted.."
Question 2. If 16b has a statute of limitations of two years (so January 2008), then doesn't the prior historical detail (back to 2001) seem to distract from the core issues of the case? I am sure there is a legal strategy here, but it makes it really difficult to understand the scope of the dilution associated with potential 16b violations. It could be the deals are so intrinsically linked through time, the historical timeline is necessary, but then that leads back to my question 1.
..."but no such suit shall be brought more than two years after the date such profit was realized..."
What was astounding was that NeoMedia shared general counsel (and PR agency) with YA Global. How does this get by a conflict check? It suggests gross negligence by both YA and NeoMedia counsel. If so, then clearly Kirkpattick & Lockhart had a conflict of interest which deprived NeoMedia of bona fide negotiations of the conversion caps.
The idea that an affiliate relationship with the escrow agent creates a beneficial ownership relationship was very interesting. That could affect thousands of deals. Those are generally very short Chinese walls.
The filing now includes 2010 transactions so it seems YA did not slow down for this speed bump. I have noticed on PACER that YA has enjoyed a long history of dismissals so it may be they are completely unaffected by such filings.
From our discussion this week about warrants, Klawonn identifies large warrant transactions that were bought and sold for dilution. For example:
"Stone Street intended to sell 40,000,000 shares of NeoMedia common stock under the January 2004 Warrant which it had been assigned from YA Global."
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