I finally got my hands on a hard copy of

Lernout & Hauspie's


registration statement, filed

last week in the


public reference room -- not the electronic


system. The filing, which allows


(MSFT) - Get Report

to sell its stake in the Belgian voice-recognition software company, includes quite a few revelations, including the way Microsoft can sell the shares; it may happen in a way that will never be publicly disclosed.

According to the document, Microsoft "may enter into hedging transactions with broker-dealers." Those brokers, in turn, are permitted to short the stock. Microsoft itself is permitted to short the stock. It's not clear if through these hedging techniques the company would need to disclose any sale. "They don't owe it to anybody to show their hand," says vocal Lernout short-seller Marc Cohodes of

Rocker Partners


And this memo to those Lernoutians who have been emailing me from around the world (especially from Belgium): Don't deluge me with "you dummy, don't you know those are boilerplate warnings" missives. According to the original Microsoft/Lernout agreement, which was part of an SEC filing two years ago, Microsoft was far more restricted in the number of shares it could sell and when it could sell them. It was banned from selling any shares within one year of the agreement, and then it could sell no more than one-third of its shares within two years and no more than two-thirds within three years.

Which brings us to point No. 2: why the terms were changed.

According to the original agreement, Microsoft's restrictions would be lifted if Lernout co-Chairmen Jo Lernout and Pol Hauspie "directly or indirectly" sold a certain number of shares or warrants. As it turns out, according to the registration statement, they engaged in the "forward sale of contracts with unaffiliated investment funds" that expire Aug. 31, 2001, and cover an unspecified number of Lernout shares. This equity swap, as it is known, provides Messrs. Lernout and Hauspie "a degree of liquidity and diversification," according to an earlier SEC filing.

It's unknown how many shares are actually covered by the swap, but at least one earlier SEC filing shows that Messrs. Lernout and Hauspie have pledged to a bank or engaged in the forward sale of at least 49% of their 11.5 million-share Lernout stake. That's well beyond the amount Microsoft agreed not to sell in the original contract.

That in turn appears to have triggered the release of Microsoft from any restrictions on the sale of its Lernout stock.

Lernout, meanwhile, still hasn't responded to this column's requests for comment on earlier matters, nor has it answered questions posed publicly by this column.

Herb Greenberg writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at

herb@thestreet.com. Greenberg writes a monthly column for Fortune and provides commentary for CNBC.