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that this triggered the antidilution provision of the NMG
warrants.17 That provision is:
if a purchase, tender or exchange offer shall have been
made to and accepted by the holders of more than 50% of
the outstanding shares of Capital Stock, and if the
holder of such Warrants so designates in a notice given
to the Company, the holder of such Warrants shall be
entitled to receive in lieu thereof, the highest amount
of securities or other property to which such holder
would actually have been entitled as a shareholder if
such holder had exercised such Warrants prior to the
expiration of such purchase, tender or exchange offer
and accepted such offer * * *
However, the letter of intent was not an offer; it was neither a
purchase, tender, or exchange offer as the antidilution provision
specifies. Further, Ewel Grossberg, Randolph K. Ginsberg, Jim
Cooper, and John Woodlock did not accept and agree to the
conditions stated in the letter of intent in their capacities as
shareholders of NMG. Instead, they did so in their capacities as
officers of NMG, thus obligating NMG to some of the preliminary
matters stated in the letter of intent. Moreover, the
antidilution provisions cannot be construed to legally bind the
warrantholders to sell their warrants to NMG or WCP. Those
provisions, on the contrary, protect the warrantholders and give
them the option of participating on the same terms as the
majority shareholders.
17Those individuals would continue to hold 68.69 percent of
NMG’s outstanding capital stock if all outstanding preferred were
treated as common shares and all NMG warrants were exercised.
Respondent contends that this approach would be consistent with
the antidilution provision in the NMG warrants.
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