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results in any of the Company's shareholders owning a fractional
share. As described below, shareholders holding fractional shares are entitled to cash payments in lieu of fractional shares. The cash payments will reduce the number of post-split shareholders to the extent there are shareholders holding, as of the Effective Time, two or fewer shares. However, this was not the purpose of the reverse stock split. The Company continues to be subject to the periodic reporting requirements of the Securities Exchange Act of 1934, as amended, following the reverse stock split.
No scrip or fractional share certificates will be issued in connection with the reverse stock split. Shareholders who otherwise would be entitled to receive fractional shares because they hold a number of shares of the Common Stock not evenly
divisible by three will be entitled, upon surrender of certificate(s) representing such shares (to the extent in certificated form), to a cash payment in lieu thereof. The cash payment will equal the product obtained by multiplying (a) the fraction to which the shareholder would otherwise be entitled by (b) the per share closing sales price of the Common Stock on the trading day immediately preceding the effective date of the reverse stock split, as reported on The Nasdaq Capital Market, which was $0.56 ($1.68 on a post-reverse stock split basis). The ownership of a fractional interest will not give the holder thereof any voting, dividend or other rights except to receive the cash payment therefor.
Beginning at the Effective Time, each
certificate representing shares of the Common Stock before the reverse stock split will automatically be deemed for all corporate purposes to evidence ownership of one-third of the shares evidenced by such certificate immediately prior to the Effective Time rounded down to the nearest whole share. All shares issuable upon exercise of outstanding stock options, as well as the relevant exercise price per share, will also be automatically adjusted. Each outstanding preferred share purchase right (a "
Right
") pursuant to the Company's Rights Agreement, dated June 1, 2007, with BNY Mellon Shareowner Services (as successor to Mellon Investor Services LLC), as rights agent, shall also be proportionately adjusted as of the Effective Time so that, on and after the Effective Time, (a) one Right shall be associated with each outstanding share of Common Stock, (b) the number of shares of Series R Participating Cumulative Preferred Stock
("
Preferred Stock
") issuable upon exercise of a Right shall be one-thirty-third and one-third (1/33-⅓) of a share of Preferred Stock, (c) the purchase price with respect to each Right shall be $36.00 and (d) the redemption price with respect to each Right shall be $0.0075.
The Company's transfer agent, BNY Mellon Shareowner Services, will act as exchange agent for purposes of implementing the exchange of stock certificates. As soon as practicable after the Effective Time, shareholders of record will receive a letter of transmittal requesting that they surrender the stock certificates they currently hold for stock certificates reflecting the adjusted number of shares as a result of the
reverse stock split and cash in lieu of any fractional shares, if applicable. Persons who hold their shares in brokerage accounts, or "street name," will not be required to take any further actions to effect the exchange of their certificates. No new certificates will be issued to a shareholder until the shareholder has surrendered the shareholder's outstanding certificate(s), together with the properly completed and executed letter of transmittal, to the exchange agent. Until surrender, each certificate representing shares before the reverse stock split will continue to be valid and will represent the adjusted number of shares rounded down to the nearest whole share. Shareholders should not destroy any stock certificate and should not submit any certificates until they receive a letter of transmittal.
The press release announcing the reverse stock split is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Forward-Looking Statements
This Form 8-K contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including the Company's expectation that it can regain compliance with the Bid Price Requirement by effecting a reverse stock split. In some cases, you can identify forward-looking
statements by terminology such as "may," "will," "should," "expect," "plan," "intend," "anticipate," "believe," "estimate," "predict," "potential" or "continue," the negative of these terms or other terminology. Forward-looking statements are based on the opinions and estimates of management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to
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