payment (without interest) in an amount equal to the fraction to which the stockholder would otherwise be entitled multiplied by the closing price of the Common Stock, as reported on [The Nasdaq Global Market/The Nasdaq Capital Market](2), as of the date this Certificate of Amendment is filed with the Secretary of State of the State of Delaware.
(1)
As determined by the Board
(2)
As applicable at the time of the reverse stock split
BOARD DISCRETION TO IMPLEMENT THE REVERSE STOCK SPLIT AND DETERMINE THE RATIO
If the reverse stock split and the Reverse Split Amendment are approved by our stockholders, the Reverse Split Amendment will be filed, if at all, only upon a determination by the Board, on or prior to July 14, 2020, that the actions contemplated by the Reverse Split Amendment are in the best interests of the Company and our stockholders. Such determination will be based on certain factors, including the closing bid price for our common stock, the status of our compliance with Nasdaq listing rules, prevailing market conditions, existing and expected trading prices for our common stock, actual or forecasted results of operations, and the likely effect of such results on the market price of our common stock.
Notwithstanding approval by the stockholders of this Reverse Stock Split Proposal, the Board may determine not to effect the reverse stock split. If the Board elects not to implement the reverse stock split on or prior to July 14, 2020, stockholder approval would again be required prior to implementing any reverse stock split subsequent to July 14, 2020.
The ratio of the reverse stock split, if approved and implemented, will be not less than one-for-three and not more than one-for-twenty, as determined by the Board in its sole discretion.
For example, if a stockholder presently holds 100 shares of our common stock, he or she would hold 20 shares of common stock following a one-for-five reverse stock split, or 5 shares of common stock following a one-for-twenty reverse stock split, with an additional amount of cash in lieu of fractional shares as described below under “Treatment of Fractional Shares.”
As soon as practicable after the effective date of the reverse stock split, if effected, stockholders would be notified that the reverse stock split has been effected.
In determining the reverse stock split ratio, the Board will consider numerous factors, including:
■
the historical and projected performance of our common stock;
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the closing bid price for our common stock;
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existing and expected trading prices for our common stock;
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actual or forecasted results of operations, and the likely effects of such results on the market price of our common stock;
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prevailing market conditions;
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general economic and other related conditions prevailing in our industry and in the marketplace;
■
our capitalization (including the number of shares of common stock issued and outstanding);
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the prevailing trading price for our common stock, the volume level thereof and the status of our compliance with Nasdaq rules and requirements; and
■
the potential devaluation of our market capitalization as a result of the reverse stock split.
Our purpose for requesting authorization to implement the reverse stock split at a ratio to be determined by the Board, as opposed to a ratio that is fixed in advance, is to give the Board the flexibility to take into account then-current market conditions and changes in the price of our common stock and to respond to any other developments that may be relevant when considering the appropriate ratio.
PRINCIPAL EFFECTS OF THE REVERSE STOCK SPLIT
A reverse stock split refers to a reduction in the number of outstanding shares of a class of a corporation’s capital stock, which may be accomplished, as in this case, by reclassifying and combining all of our outstanding shares of common stock into a proportionately smaller number of shares. After the effective date of the proposed reverse stock split, each stockholder will own a reduced number of shares of common stock. However, the proposed reverse stock split will affect all stockholders uniformly and will not affect any stockholder’s percentage ownership interest in the Company (except to the extent that the reverse stock split would result in any stockholders receiving cash in lieu of fractional shares) or proportionate voting power as described below. All shares of common stock will remain validly issued, fully paid and non-assessable.
The proposed reverse stock split will also reduce the number of shares of common stock reserved for future awards under the Company’s 2018 Omnibus Incentive Plan and 2018 Employee Stock Purchase Plan. The per share exercise price of all outstanding option awards will be increased proportionately and the number of shares of common stock issuable upon the exercise of all outstanding option awards will be reduced proportionately. These adjustments will result in approximately the same aggregate exercise price being required to be paid