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To: Edward Hardaway who wrote (4165)	1/5/1998 6:39:00 PM
From: Jon Tara	Respond to of 8581

Edward, while I haven't checked your math, I'm sure you did your homework. The big problem is the "if". "If" the price goes no lower than $0.50. That's a big "if". "No floor" means "no floor". And the problem with that is that it makes the debenture holders not care what price they convert at. Yes, there are some protections - holding periods - but that assumes that everyone plays nice and follows the rules. While you've got your calculator out, why don't you calculate the dilution at a stock price of, say, 3/8, 1/4, or 1/8. "Can't happen". "Impossible". Perhaps so. Perhaps not. Wouldn't hurt to know what the potential damage is if it does happen. These things tend to feed on themselves, unfortunately. The initial dilution at price "A" drives down the price. The lower price results in a lower conversion price and even more dilution, and the market prices the stock lower, to price "B". This, of course, lowers the conversion price, resulting in more dilution... The falacy is assuming a particular price at which this spiral ends.