Justice Rolando Acosta
Warberg Opportunistic Trading Fund and its co-plaintiffs bought identical warrants in GeoResources’ shares. Each warrant specified an exercise price of $32.43 per share. Although §8(f) of the warrant contained a formula adjusting the exercise price if GeoResources issued or sold shares for less than $32.43, §8(h)’s “notwithstanding” clause prevented reduction of the exercise price below $32.43. Plaintiffs alleged contract breach after GeoResources twice sold shares for below $32.43 but invoked §8(h)’s “notwithstanding” clause to refuse adjustment of the exercise price or number of warrants. Appellate Division upheld supreme court’s refusal to dismiss plaintiffs’ breach action. Although §8(h)’s “notwithstanding” clause, rendering §8(f) inoperative, controlled plaintiffs’ evidence—June 2008 emails with an attached final form of the warrant having a §8(h) notwithstanding clause indicating that the exercise price could not be reduced below $28.07 per warrant share—indicated GeoResources’ alteration of the floor price, possibly due to a drafting error, such that Warberg and its co-plaintiffs should be permitted to proceed to discovery. Thus the motion court properly denied GeoResources motion to dismiss plaintiffs’ contract breach claim.
