This excerpt taken from the TZIX 8-K filed Dec 29, 2005.
2.4. Treatment of Company Preferred Stock and Options.
(a) Company Options. At the Effective Time, each outstanding Company Option shall, in accordance with the terms of such Company Option, become fully vested and exercisable upon consummation of the Merger and shall be converted into and shall become the right to receive, in full and complete satisfaction and cancellation thereof, one or more cash payments per Company Option, without interest, as set forth below. Prior to the Effective Time, the Company shall take all actions (including, if appropriate, amending the terms of any option plan or agreement) that are necessary to give effect to the transactions contemplated by this Section 2.4. The Parent, Merger Sub and the Company hereby acknowledge and agree that neither the Surviving Corporation nor Parent shall assume or continue any Company Options, or substitute any additional options for such Company Options. All payments to holders of Company Options pursuant to this Section 2.4 (collectively, Option Payments) shall be paid by Parent to the Representative on behalf of the holders of Company Options and the Representative shall be responsible for distributing such Option Payments to the holders of Company Options. Option Payments shall be determined and made on the Closing Date and each Contingent Payment Date, as applicable. The obligations of Parent and the Surviving Corporation to make the Option Payments shall be satisfied upon final and non-refundable payment to the Representative.
At the Effective Time, each outstanding Company Option, whether or not such Company Option has an exercise price that is greater than the Per Share Closing Date Payment, shall be converted into and shall become the right to receive one or more cash payments, each payment in an amount equal to the result of Xm minus Kn and minus the amount of any Option Payments made to date with respect to such Company Option if, and only if, Xm is greater than Kn, where:
(b) Company Preferred Stock. Each share of Company Preferred Stock shall be converted into Company Common Stock immediately prior to the closing.
(c) Merger Consideration Certificate. The capitalization of the Company, including outstanding Company Options and the terms thereof, immediately prior to the Effective Time shall be set forth on a Merger Consideration certificate to be delivered by the Company to the Parent at Closing (the Merger Consideration Certificate). Parent and the Surviving Corporation shall be entitled to rely on the Merger Consideration Certificate in connection with payment of the Merger Consideration pursuant to Section 2.1 and the Option Payments pursuant to Section 2.4. Should the actual number of shares of Company Common Stock or Company Options outstanding as of the Effective Time differ from that set forth on the Merger Consideration Certificate, the amount of Merger Consideration payable per share and the Option Payments shall be adjusted accordingly.