No fee required.
March 24, 2017
Internet, if you received them by mail this year.
(3) to approve the amendment of our Amended and Restated Certificate of Incorporation to increase the number of authorized shares of common stock to 120,000,000;
(4) to approve the amendment of our Amended and Restated Certificate of Incorporation to effect a reverse stock split of the shares of our common stock at a ratio of not less than 1-for-2 and not greater than 1-for-20, with the exact ratio of, effective time of and decision to implement the reverse stock split to be determined by the Board of Directors (the “Reverse Stock Split”);
(5)
(6)
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be Held on Wednesday, April 26, 2017:May 23, 2018: The Proxy Statement and 20162017 Annual Report to Stockholders, which includes the Annual Report on Form 10-K for the year ended December 31, 2016,2017, are available atwww.proxyvote.com.The Annual Report, however, is not part of the proxy solicitation material.
April 13, 2018
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May 23, 2018
The Series D Preferred will vote together with the Common Stock on all matters to be voted upon at the Annual Meeting. Each holder of a share of Series D Preferred outstanding as of the close of business on the Record Date will be entitled to five hundred (500) votes for each share of Series D Preferred held of record (which represents the number of shares of Common Stock that each share of Series D Preferred is convertible into) with respect to each matter properly submitted at the Annual Meeting.
express or discretionary, to vote on a particular matter. Applicable rules no longer permit brokers to vote in the election of Directors if the broker has not received instructions from the beneficial owner. Accordingly, it is important that beneficial owners instruct their brokers how they wish to vote their shares.
Approval of Proposal No. 3 regarding the approval of the proposed amendment of the Company’s Amended and Restated Certificate of Incorporation to increase the number of authorized shares of Common Stock to 120,000,000 requires the affirmative vote of the majority of the outstanding shares of Common Stock entitled to vote on such amendment.Any shares not voted (whether by abstention, broker non-vote or otherwise) will have the same effect as a vote against this Proposal No. 3. Accordingly, it is important that beneficial owners instruct their brokers how they wish to vote their shares on this Proposal No 3.
Approval of Proposal No. 4 regarding the approval of an amendment of our Amended and Restated Certificate of Incorporation to effect a reverse stock split of the shares of our common stock at a ratio of not less than 1-for-2 and not greater than 1-for-20, with the exact ratio of, effective time of and decision to implement the reverse stock split to be determined by the Board of Directors, requires the affirmative vote of the majority of the outstanding shares of Common Stock entitled to vote on such amendment.Any shares not voted (whether by abstention, broker non-vote or otherwise) will have the same effect as a vote against this Proposal No. 4. Accordingly, it is important that beneficial owners instruct their brokers how they wish to vote their shares on this Proposal No 4.
Approval of Proposal No. 5 regarding the approval of the proposed amendment of the Company’s 2013 Equity Incentive Plan requires the affirmative vote of a majority of the votes cast at the Annual Meeting in person or by proxy. Any shares not voted (whether by abstention, broker non-vote or otherwise) will have no impact on this Proposal No. 5.
2.
holding shares of Common Stock or Series D Preferred on their behalf in order to obtain a “legal proxy”, which will allow them to vote in person at the meeting. Attendance at the Annual Meeting will not, by itself, revoke a proxy.
The 2016 Annual Report to Stockholders of the Company, including consolidated financial statements for the year ended December 31, 2016, is being mailed to stockholders of the Company concurrently with this Proxy Statement. The Annual Report, however, is not a part of the proxy solicitation material.
www.proxyvote.com. The Solicitation Agent forAnnual Report, however, is not part of the Annual Meeting is:
Morrow Sodali, LLC470 West Avenue – 3rd FloorStamford, CT 06902
Banks and Brokerage Firms, please call (203) 658-9400
STOCKHOLDERS, PLEASE CALL TOLL-FREE (877) 787-9239
DIRECTORS
At On March 29, 2018, Dr. James Shmerling was appointed to the recommendation ofBoard as a Class I director. Thomas H. Robinson will not stand for re-election at the Governance Committee, theAnnual Meeting.
The
Name | | | Age | | | Position with the Company | | | Director Since | |
Class I Director – Term expires 2020 | | | | | | | | | | |
James J. McGorry | | | 61 | | | CEO and Director | | | 2013 | |
James Shmerling, DHA, FACHE(1) | | | 63 | | | Director | | | 2018 | |
Class II Directors – Nominated to Serve a Term Expiring 2021 | | | | | | | | | | |
John J. Canepa*(1)(3) | | | 62 | | | Director | | | 2013 | |
Wei Zhang, MD, Ph.D.* | | | 46 | | | Director Nominee | | | N/A | |
Class II Director – Term expires 2018 | | | | | | | | | | |
Thomas H. Robinson(2)(3) | | | 59 | | | Director | | | 2012 | |
Class III Directors – Term expires 2019 | | | | | | | | | | |
Jason Jing Chen | | | 56 | | | Chairman | | | 2018 | |
Blaine H. McKee, Ph.D.(1) | | | 53 | | | Director | | | 2016 | |
Name | Age | Position with the Company | Director Since | |||||||||
Class I Director – Term expires 2017 Nominated to Serve a Term Expiring 2020 | ||||||||||||
James J. McGorry* | 60 | CEO and Director | 2013 | |||||||||
Class II Directors – Term expires 2018 | ||||||||||||
Thomas H. Robinson(2)(3) | 58 | Director | 2012 | |||||||||
John J. Canepa(1)(3) | 61 | Director | 2013 | |||||||||
Class III Directors – Term expires 2019 | ||||||||||||
John F. Kennedy(1)(2) | 68 | Chairman | 2012 | |||||||||
Blaine H. McKee, Ph.D.(1) | 51 | Director | 2016 |
Mr. Robinson has served as a member of our Board of Directors since December 3, 2012. Since September 2011, Mr. Robinson has served as a partner with RobinsonButler, an executive search firm. In 2010, Mr. Robinson served as managing director at Russell Reynolds Associates. From 1998 to 2010, Mr. Robinson served as managing partner of the North American medical technology practice, which includes the medical device, hospital supply/distribution and medical software areas, of Spencer Stuart, Inc., a global executive search firm. From 2002 to 2010, Mr. Robinson was a member of Spencer Stuart’s board services practice, which assists corporations to identify and recruit outside directors. From 1998 to 2000, Mr. Robinson headed Spencer Stuart’s North American biotechnology specialty practice. From 1993 to 1997, Mr. Robinson served as president of the emerging markets business at Boston Scientific Corporation, a global medical devices manufacturer. From 1991 to 1993, Mr. Robinson also served as president and chief operating officer of Brunswick Biomedical, a cardiology medical device company. Mr. Robinson currently serves on the Board
of Directors of Cynosure, Inc. He graduated from Brown University with a B.A. degree in mathematics and economics and holds an M.B.A. degree from Harvard Business School. We believe Mr. Robinson’s qualifications to sit on our Board of Directors include his executive leadership experience in, and knowledge of, the medical device and regenerative medicine industries, and his significant expertise in the areas of public company corporate governance and operations.
Mr. Canepa has served as a member of our Board of Directors since August 14, 2013. Mr. Canepa is the Chief Operating Officer and Chief Financial Officer of Asterand Bioscience, Inc. (formerly known as Stemgent, Inc.) a leading global provider of high quality, well characterized human tissue and human tissue-based research solutions to drug discovery scientists. From August 2005, Mr. Canepa served as the President and Chief Executive Officer of PathoGenetix, Inc., a venture capital backed life science company focused on commercializing proprietary DNA optical mapping technology for pathogen detection and strain identification. From 2001 to 2003, Mr. Canepa served as the Chief Financial Officer at Winphoria Networks. From 1978 to 2001, Mr. Canepa was a Senior Audit Partner in Arthur Andersen’s Boston Office Technology Practice with worldwide responsibility for Life Sciences Practice. Currently, Mr. Canepa is Co-Chairman of the Board of Trustees at Mt. Auburn Hospital and a member of the Board of Trustees and the Audit Committee at CareGroup. He graduated from Denison University with a B.A. degree and holds a Master’s Degree in Finance from Michigan State University. We believe Mr. Canepa’s qualifications to sit on our Board of Directors include his executive leadership experience, his significant operating, accounting and financial management expertise, including with respect to the life sciences, medical technology and biotechnology industries.
Mr. Kennedy has served as a member of our Board of Directors since December 3, 2012. From June 2006 until his retirement in October 2008, Mr. Kennedy served as President and Chief Financial Officer of Nova Ventures Corporation, the management company providing executive management services to the operating companies of Nova Holdings LLC, Nova Analytics Corporation and Nova Technologies Corporation. From 2002 to 2006, Mr. Kennedy served as the President and Chief Financial Officer of Nova Analytics Corporation, a worldwide supplier and integrator of analytical instruments. From 1999 to 2002, Mr. Kennedy served as the Senior Vice President, Finance, Chief Financial Officer and Treasurer of RSA Security Inc., an e-business security company. Prior to joining RSA Security, Mr. Kennedy was Chief Financial Officer of Decalog, NV, a developer of enterprise investment management software, from 1998 to 1999. From 1993 to 1998, Mr. Kennedy served as Vice President of Finance, Chief Financial Officer and Treasurer of Natural MicroSystems Corporation, a telecommunications company. Mr. Kennedy, a former CPA, also practiced as a public accountant at KPMG for six years. Mr. Kennedy currently serves on the Boards of Directors of Harvard Bioscience and Datacom Systems, Inc. Mr. Kennedy holds a B.S. in Mathematics from Lowell Technological Institute, now the University of Massachusetts Lowell, and an M.S.B.A. in Accounting from the University of Massachusetts Amherst. We believe Mr. Kennedy’s qualifications to sit on our Board of Directors include his executive leadership experience, his significant operating, accounting and financial management expertise and the knowledge and understanding of our Company and industry that he has acquired over 13 years of service on the Board of Directors of Harvard Bioscience.
Dr. McKeeShmerling has served as a member of our Board of Directors since March 10, 2016.29, 2018. Dr. McKeeShmerling has served as the President and Chief Executive Officer of Connecticut Children’s Medical Center since October 2015. Dr. Shmerling is a seasoned executive who has worked in leadership roles at several pediatric hospitals around the Senior Vice President, Head of Transactions at Shire PLC, a positionUnited States during his career. For over three decades, he has held since July 2014.served in management roles at children’s hospitals across the country and is nationally recognized as a leader in issues concerning children’s health and wellness. Prior to joining Shire,Connecticut Children’s, Dr. McKee servedShmerling spent eight years as the Chief Executive Vice PresidentOfficer of Children’s Hospital Colorado. Before that, he was the Executive Director and Chief BusinessExecutive Officer of 480 Biomedicalthe Monroe Carell Jr. Children’s Hospital at Vanderbilt from 20112002 to 2014, following 15 years2007. Dr. Shmerling is a Fellow in the American College of Health Care Executives (ACHE). He is an adjunct faculty member in the Hospital Administration programs, University of Alabama at Genzyme Corporation from 1996 to 2011, where he most recently served as Senior Vice President of Strategic Development, leading global business development for the Organ Transplant, Oncology and Multiple Sclerosis business units.Birmingham. Dr. McKee currently serves on the Boards of ArmaGen, Inc., OrbiMed Israel and the New York Pharma Forum. Dr. McKee holdsShmerling received a B.S. in Chemistry with distinctionHealth Education from Colorado Statethe University of Tennessee, a M.S. in Hospital and Health Administration from the University of Alabama in Birmingham, an M.B.A. in Finance from MIT Sloan SchoolSamford University and a Doctorate of Management and
a Ph.D.Health Administration from Massachusetts Institutethe Medical University of Technology.South Carolina. We believe Dr. McKee’sShmerling’s qualifications to sit on our Board of Directors include his extensive backgroundleadership experience at children’s hospitals and his status as a leader in science, financeissues concerning children’s health and strategy functions, including with respect to the life sciences industry.
2017.
2017.
2017. Because Mr. Robinson is not standing for re-election at the Annual Meeting, and in light of the transition following the December 2017 private placement, the Board of Directors will continue to evaluate the role of the Compensation Committee and to the extent advisable, will appoint additional directors to serve as members of the Compensation Committee.
The Compensation Committee Charter is available on the Corporate Governance page in the Investors section of our website atwww.biostage.com. Please note that the information contained on the website is not incorporated by reference in, or considered to be a part of, this Proxy Statement.
2017. Because Mr. Robinson is not standing for re-election at the Annual Meeting, and in light of the transition following the December 2017 private placement, the Board of Directors will continue to evaluate the role of the Governance Committee and to the extent advisable, appoint one or more additional directors to serve as members of the Governance Committee at or promptly following the expiration of Mr. Robinson’s term as Director.
Name and Principal Position | | | Year | | | Salary | | | Stock Awards(1) | | | Option Awards(2) | | | All Other Compensation | | | Total | | ||||||||||||||||||
James McGorry Chief Executive Officer | | | | | 2017 | | | | | $ | 338,942 | | | | | $ | 50,688 | | | | | $ | 71,931 | | | | | $ | 15,920(3) | | | | | $ | 477,481 | | |
| | | 2016 | | | | | $ | 375,000 | | | | | | — | | | | | $ | 168,720 | | | | | $ | 19,208(4) | | | | | $ | 562,928 | | | ||
Thomas McNaughton Chief Financial Officer | | | | | 2017 | | | | | $ | 279,289 | | | | | $ | 28,512 | | | | | $ | 40,461 | | | | | $ | 15,202(5) | | | | | $ | 363,464 | | |
| | | 2016 | | | | | $ | 309,000 | | | | | | — | | | | | $ | 84,360 | | | | | $ | 16,721(6) | | | | | $ | 410,081 | | | ||
Saverio LaFrancesca, M.D. Former President and Chief Medical Officer | | | | | 2017 | | | | | $ | 321,529 | | | | | $ | 41,183 | | | | | $ | 58,444 | | | | | $ | 1,000(7) | | | | | $ | 422,156 | | |
| | | 2016 | | | | | $ | 400,000 | | | | | | — | | | | | $ | 84,360 | | | | | $ | 1,238(8) | | | | | $ | 485,598 | | |
Name and Principal Position | Year | Salary | Option Awards(1) | All Other Compensation | Total | |||||||||||||||
James McGorry Chief Executive Officer | 2016 | $ | 375,000 | $ | 168,720 | $ | 19,208 (2) | $ | 562,928 | |||||||||||
2015 | $ | 173,077 | $ | 615,204 | $ | 4,327 (3) | $ | 792,608 | ||||||||||||
Thomas McNaughton Chief Financial Officer | 2016 | $ | 309,000 | $ | 84,360 | $ | 15,483 (4) | $ | 408,843 | |||||||||||
2015 | $ | 309,000 | $ | 201,790 | $ | 15,450 (5) | $ | 526,240 | ||||||||||||
Saverio LaFrancesca, M.D. President and Chief Medical Officer | 2016 | $ | 400,000 | $ | 84,360 | $ | — | $ | 484,360 | |||||||||||
2015 | $ | 400,000 | $ | 489,292 | $ | — | $ | 889,292 |
| |||||||||||||
| Restricted Stock Unit Awards (#) | | | Stock Option Awards (#) | | ||||||||
James McGorry Chief Executive Officer | | | | 6,600(1) | | | | | | 13,400(2) | | | |
Thomas McNaughton Chief Financial Officer | | | | 3,712(1) | | | | | | 7,537(2) | | | |
Saverio LaFrancesca, Ph.D. Former President and Chief Medical Officer | | | | 5,362(1)(3) | | | | | | 10,887(2)(3) | | |
Mr. McGorry may also be entitled to certain payments in the event of a change in control of our Company. If Mr. McGorry’s employment is terminated by us without cause or by Mr. McGorry for good reason within 18 months of a change in control of our Company, Mr. McGorry is entitled to receive a lump sum cash payment in an amount equal to the sum of Mr. McGorry’s current or most recent annual salary and his most recent cash incentive compensation. In addition, in the event of a change in control, all of Mr. McGorry’s stock options or stock-based awards shall accelerate and become immediately exercisable. We will continue to pay health insurance premiums for health insurance coverage for Mr. McGorry and his immediate family for a period of one year following his termination as a result of a change in control.
In connection with the closing of our December 2017 private placement that is described in more detail below under the heading “Change In Control,” Mr. McGorry entered into an agreement pursuant to which he acknowledged that he was not entitled to any compensation payable solely as a result of any change of control that may have resulted from such private placement.
would otherwise vest within the 18 month18-month period following such termination shall accelerate and become immediately exercisable. We shall continue to pay health insurance premiums for health insurance coverage for Mr. McNaughton and his immediate family for a period of one year following his termination without cause or for good reason.
In connection with the closing of our December 2017 private placement that is described in more detail below under the heading “Change In Control,” Mr. McNaughton entered into an agreement pursuant to which he acknowledged that he was not entitled to any compensation payable solely as a result of any change of control that may have resulted from such private placement.
Dr. LaFrancesca iswas eligible to receive cash incentive compensation as determined by the Board of Directors or the compensation committee, and iswas also eligible to participate in all of our employee benefit plans, including without limitation, retirement plans, stock option plans, stock purchase plans and medical insurance plans.
Each
Non-employee In 2017, at the time of such annual option grant, each non-employee director also received deferred stock awards of 912 shares (as adjusted from 18,250 shares following our reverse stock split in December 2017 at a ratio of 1-for-20 shares). The policy also provided that non-employee directors continue to be reimbursed for their expenses incurred in connection with attending Board of directors and committee meetings.
Name | | | Fees earned or paid in cash | | | Stock awards(1)(2) | | | Option awards(1)(3) | | | Total | | ||||||||||||
John J. Canepa | | | | $ | 30,000 | | | | | $ | 7,008 | | | | | $ | 6,338 | | | | | $ | 43,346 | | |
John F. Kennedy(4) | | | | $ | 30,000 | | | | | $ | 7,008 | | | | | $ | 6,338 | | | | | $ | 43,346 | | |
Blaine H. McKee | | | | $ | 30,000 | | | | | $ | 7,008 | | | | | $ | 6,338 | | | | | $ | 43,346 | | |
Thomas H. Robinson | | | | $ | 30,000 | | | | | $ | 7,008 | | | | | $ | 6,338 | | | | | $ | 43,346 | | |
Name(1) | Fees earned or paid in cash | Option awards(1)(2) | Total | |||||||||
John J. Canepa | $ | 30,000 | $ | 26,513 | $ | 56,513 | ||||||
John F. Kennedy | $ | 30,000 | $ | 26,513 | $ | 56,513 | ||||||
Blaine H. McKee | $ | 23,736 | $ | 55,378 | $ | 79,114 | ||||||
Thomas H. Robinson | $ | 30,000 | $ | 26,513 | $ | 56,513 | ||||||
David Green | $ | 12,115 | $ | 26,513 | $ | 38,628 |
2017
| | | Option Awards | | | Restricted Stock Unit Awards | | ||||||||||||||||||||||||
| | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Option Exercise Price ($) | | | Option Expiration Date | | | Number of Securities Underlying Restricted Stock Units | | |||||||||||||||
James McGorry | | | | | 1,250 | | | | | | — | | | | | $ | 85.80 | | | | | | 11/18/2023 | | | | | | — | | |
| | | | | 1,250 | | | | | | — | | | | | $ | 36.80 | | | | | | 5/29/2025 | | | | | | — | | |
| | | | | 16,785 | | | | | | 16,785(1) | | | | | $ | 27.60 | | | | | | 7/6/2025 | | | | | | — | | |
| | | | | 1,875 | | | | | | 5,625(2) | | | | | $ | 33.80 | | | | | | 3/22/2026 | | | | | | — | | |
| | | | | — | | | | | | 13,400(3) | | | | | $ | 7.68 | | | | | | 3/14/2027 | | | | | | — | | |
| | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,600(4) | | |
Thomas McNaughton | | | | | 277 | | | | | | — | | | | | $ | 58.00 | | | | | | 11/14/2018 | | | | | | — | | |
| | | | | 555 | | | | | | — | | | | | $ | 65.40 | | | | | | 5/21/2019 | | | | | | — | | |
| | | | | 138 | | | | | | — | | | | | $ | 115.80 | | | | | | 6/2/2021 | | | | | | — | | |
| | | | | 219 | | | | | | | | | | | $ | 73.40 | | | | | | 6/1/2022 | | | | | | — | | |
| | | | | 103 | | | | | | — | | | | | $ | 104.40 | | | | | | 5/31/2023 | | | | | | — | | |
| | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 13(5) | | |
| | | | | 2,418 | | | | | | 1,209(6) | | | | | $ | 85.80 | | | | | | 11/18/2023 | | | | | | — | | |
| | | | | 7,256 | | | | | | — | | | | | $ | 85.80 | | | | | | 11/18/2023 | | | | | | — | | |
| | | | | 2,125 | | | | | | 2,125(7) | | | | | $ | 36.80 | | | | | | 5/29/2025 | | | | | | — | | |
| | | | | 2,500 | | | | | | 2,500(8) | | | | | $ | 28.00 | | | | | | 8/31/2025 | | | | | | — | | |
| | | | | 937 | | | | | | 2,812(2) | | | | | $ | 33.80 | | | | | | 3/22/2026 | | | | | | — | | |
| | | | | — | | | | | | 7,537(3) | | | | | $ | 7.68 | | | | | | 3/14/2027 | | | | | | — | | |
| | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,712(4) | | |
Option Awards | Restricted Stock Units | |||||||||||||||||||
Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Securities Underlying Restricted Stock Units | ||||||||||||||||
James McGorry | 25,000 | — | $ | 4.29 | 11/18/2023 | — | ||||||||||||||
25,000 | — | $ | 1.84 | 5/29/2025 | — | |||||||||||||||
167,850 | 503,550 | (1) | $ | 1.38 | 7/6/2025 | — | ||||||||||||||
150,000 | (2) | $ | 1.69 | 3/22/2026 | — | |||||||||||||||
Thomas McNaughton | 75,000 | (3) | $ | 1.69 | 3/22/2026 | — | ||||||||||||||
25,000 | 75,000 | (4) | $ | 1.40 | 9/1/2025 | — | ||||||||||||||
21,250 | 63,750 | (5) | $ | 1.84 | 5/29/2025 | — | ||||||||||||||
108,844 | 36,282 | (6) | $ | 4.29 | 11/18/2023 | — | ||||||||||||||
48,375 | 24,188 | (7) | $ | 4.29 | 11/18/2023 | — | ||||||||||||||
1,546 | 515 | (8) | $ | 5.22 | 5/31/2023 | 268 | (9) | |||||||||||||
4,383 | $ | 3.67 | 6/1/2022 | — | ||||||||||||||||
2,769 | — | $ | 5.79 | 6/2/2021 | — | |||||||||||||||
11,108 | — | $ | 3.27 | 5/21/2019 | — | |||||||||||||||
5,544 | — | $ | 2.90 | 11/14/2018 | — | |||||||||||||||
Saverio LaFrancesca, M.D. | 50,000 | 50,000 | (10) | $ | 8.66 | 5/1/2024 | — | |||||||||||||
25,000 | 75,000 | (11) | $ | 4.08 | 3/4/2025 | — | ||||||||||||||
10,000 | 30,000 | (11) | $ | 1.84 | 5/29/2025 | — | ||||||||||||||
40,000 | 120,000 | (13) | $ | 1.40 | 8/31/2025 | — | ||||||||||||||
— | 75,000 | (14) | $ | 1.69 | 3/22/2026 | — |
| | | Shares Beneficially Owned by Title or Class of Securities | | | ||||||||||||||||||||
| | | Common Stock | | | Series D Preferred | | | |||||||||||||||||
Name and Address of Beneficial Owner(1) | | | Shares | | | Percent(2) | | | Shares | | | Percent(3) | | | |||||||||||
Greater than 5% Holders | | | | | | | | | | | | | | | | | | | | | | | | | |
Jinhui Liu | | | | | 368,318 | | | | 8.3%(4) | | | | | | | | | | | | | | | | |
DST Capital LLC and Affiliates | | | | | 4,365,722 | | | | 49.99%(5) | | | | | 3,000 | | | | | | 96.53% | | | | | |
Hong Yu | | | | | 300,000 | | | | 6.4%(6) | | | | | | | | | | | | | | | | |
Shunfu Hu | | | | | 240,000 | | | | 5.2%(7) | | | | | | | | | | | | | | | | |
Named Executive Officers | | | | | | | | | | | | | | | | | | | | | | | | | |
James J. McGorry | | | | | 42,742 | | | | 1.0%(8) | | | | | | | | | | | | | | | | |
Thomas W. McNaughton | | | | | 31,643 | | | | 0.7%(9) | | | | | | | | | | | | | | | | |
Non-Employee Directors | | | | | | | | | | | | | | | | | | | | | | | | | |
John J. Canepa | | | | | 6,774 | | | | *(10) | | | | | | | | | | | | | | | | |
Jason Jing Chen | | | | | 210,000 | | | | 4.6%(11) | | | | | 54 | | | | | | 1.74% | | | | | |
Blaine H. McKee | | | | | 4,662 | | | | *(12) | | | | | | | | | | | | | | | | |
Thomas H. Robinson | | | | | 8,412 | | | | *(13) | | | | | | | | | | | | | | | | |
James Shmerling | | | | | — | | | | — | | | | | | | | | | | | | | | | |
All current executive officers and directors, as a group (7 persons) | | | | | 304,233 | | | | 6.5%(14) | | | | | | | | | | | | | | | | |
Director Nominee | | | | | | | | | | | | | | | | | | | | | | | | | |
Wei Zhang | | | | | — | | | | — | | | | | | | | | | | | | | | | |
Common Stock Beneficially Owned | ||||||||
Name and Address of Beneficial Owner(1) | Shares | Percent(2) | ||||||
Greater than 5% Holders | ||||||||
Affiliates of Empery Asset Management, LP | 5,472,814 | 13.7 | %(3) | |||||
Named Executive Officers | ||||||||
James J. McGorry | 549,500 | 1.5 | %(4) | |||||
Thomas W. McNaughton | 466,574 | 1.2 | %(5) | |||||
Saverio LaFrancesca, M.D. | 212,748 | *(6) | ||||||
Non-Employee Directors | ||||||||
John J. Canepa | 92,241 | *(7) | ||||||
John F. Kennedy | 138,432 | *(8) | ||||||
Thomas H. Robinson | 125,000 | *(9) | ||||||
Blaine H. McKee | 50,000 | *(10) | ||||||
All current executive officers and directors, as a group (7 persons) | 1,634,495 | 4.3 | %(11) |
Plan Category | | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Restricted Stock Units, Warrants and Rights | | | Weighted Average Exercise Price of Outstanding Options, Warrants, and Rights | | | Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | | |||||||||
| | | (a) | | | (b) | | | (c) | | |||||||||
Equity compensation plans approved by security holders(1) | | | | | 182,349 | | | | | $ | 42.10 | | | | | | 311,803(2) | | |
Equity compensation plans not approved by security holders | | | | | — | | | | | | — | | | | | | — | | |
Total | | | | | 182,349 | | | | | $ | 42.10 | | | | | | 311,803 | | |
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Restricted Stock Units, Warrants and Rights | Weighted Average Exercise Price of Outstanding Options, Warrants, and Rights | Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | |||||||||
(a) | (b) | (c) | ||||||||||
Equity compensation plans approved by security holders(1) | 3,878,082 | $ | 2.80 | 2,036,994 (2) | ||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 3,878,082 | $ | 2.80 | 2,036,994 |
and Distribution Agreement to effect the separation and spin-off distribution and provide other agreements to govern our relationship with Harvard Bioscience after the spin-off; (ii) an Intellectual Property Matters Agreement, which governs various intellectual property related arrangements between our Company and Harvard Bioscience, including the separation of intellectual property rights between us and Harvard Bioscience, as well as certain related cross-licenses between the two companies; (iii) a Product Distribution Agreement, which provides that each company will become the exclusive distributor for the other party for products such other party develops for sale in the markets served by the other; (iv) a Tax Sharing Agreement, which governs the parties respective rights, responsibilities and obligations with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings and other matters regarding taxes for periods before, during and after the spin-off; (v) a Transition Services Agreement, which provided for certain services to be performed on a transitional basis by Harvard Bioscience to facilitate our transition into a separate public reporting company for time frames of limited length, which expired in 2014; and (vi) a Sublease of approximately 17,000 square feet of mixed use space of the facility located at 84 October Hill Road, Suite 11, Holliston, Massachusetts, which is our corporate headquarters.
As part of the Transition Services Agreement, and for up to one year following the spin-off date, Harvard Bioscience provided certain support services to us, including, among others, accounting, payroll, human resources and information technology services, with the charges for the transition services generally intended to allow Harvard Bioscience to fully recover the costs directly associated with providing the services, plus all out-of-pocket costs and expenses. In connection with the spin-off and in accordance with these agreements, Harvard Bioscience contributed capital of approximately $15.0 million to us to fund our operations, and transferred to us approximately $0.8 million in assets, made up primarily of property, plant and equipment. As these agreements evidence ongoing commercial arrangements which may involve varying amounts over time, we are unable to provide an approximate dollar value of the amount involved in the transaction. In fiscal 2015, we paid approximately $0.2 million to Harvard Bioscience with respect to the Transition Services Agreement, Sublease and related cost, and research and development supplies. With respect to such approximate amount paid during fiscal 2015, approximately $50,000 was paid during the period that Harvard Bioscience continued to be a related party. Neither Mr. Green nor Mr. McNaughton receive any amounts from the transactions with Harvard Bioscience relating to their roles as current or former executive officers, and a director as to Mr. Green, of our Company, and it is our understanding that neither Mr. Green nor Mr. McNaughton receive any direct amounts from such agreements and the transactions in relation to their former roles as executive officers of Harvard Bioscience, and Mr. Green’s continued role as a director of such company, and their interest is limited to benefits they may receive solely relating to their ongoing roles as executive officer, as to Mr. McNaughton, and director, as to Mr. Green, and stockholders of our Company. As a non-employee director of Harvard Bioscience, Mr. Green also is entitled to receive director compensation that all non-employee directors are entitled to receive under Harvard Bioscience’s director compensation programs.
Morrow Sodali LLC, 470 West Avenue, Stamford, Connecticut 06902, has been retained by the Company to assist in the solicitation of proxies, for a fee of $8,000 plus reimbursement of reasonable out-of-pocket expenses.
other than their regular compensation) may solicit proxies by telephone, telegram, personal interview, facsimile, e-mail or other means of electronic communication. Banks, brokerage houses, custodians, nominees and other fiduciaries have been requested to forward proxy materials to the beneficial owners of shares of Common Stock held of record by them as of the Record Date, and such custodians will be reimbursed for their expenses.
| | | 2016 | | | 2017 | | ||||||
Audit Fees(1) | | | | $ | 546,575 | | | | | $ | 251,220 | | |
Tax Fees(2) | | | | $ | 13,000 | | | | | $ | 15,000 | | |
All Other Fees(3) | | | | $ | 1,650 | | | | | $ | 1,780 | | |
Total Fees | | | | $ | 561,225 | | | | | $ | 268,000 | | |
2015 | 2016 | |||||||
Audit Fees(1) | $ | 275,814 | $ | 546,575 | ||||
Tax Fees(2) | $ | 8,000 | $ | 13,000 | ||||
All Other Fees(3) | $ | 1,650 | $ | 1,650 | ||||
Total Fees | $ | 285,464 | $ | 561,225 |
The Audit Committee of the Board of Directors has appointed KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017. KPMG LLP has served as our independent registered public accounting firm since our Company’s formation. The Audit Committee is responsible for the appointment, retention, termination, compensation and oversight of the work of our independent registered public accounting firm for the purpose of preparing or issuing an audit report or related work. To execute this responsibility, the Audit Committee engages in a comprehensive annual evaluation of the independent auditor’s qualifications, performance and independence and whether the independent registered public accounting firm should be rotated, and considers the advisability and potential impact of selecting a different independent registered public accounting firm.
Although ratification of the appointment of our independent registered public accounting firm is not required by our By-laws or otherwise, the Board is submitting the appointment of KPMG LLP to our stockholders for ratification because we value the views of our stockholders. In the event that our stockholders fail to ratify the appointment of KPMG LLP, the Audit Committee will reconsider the appointment of KPMG LLP. Even if the appointment is ratified, the ratification is not binding and the Audit Committee may in its discretion select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our stockholders.
A representative of KPMG LLP is expected to be present at the Annual Meeting. He or she will have an opportunity to make a statement, if he or she desires to do so, and will be available to respond to appropriate questions.
The affirmative vote of a majority of the votes cast by holders of shares of Common Stock present or represented by proxy and entitled to vote on the matter at the Annual Meeting is required for the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2017. PROPERLY AUTHORIZED PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED “FOR” THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP UNLESS INSTRUCTIONS TO THE CONTRARY ARE GIVEN.
Our Amended and Restated Certificate of Incorporation currently authorizes the issuance of 60,000,000 shares of Common Stock, par value $0.01 per share. On March 7, 2017, our Board of Directors approved a proposal to amend our Amended and Restated Certificate of Incorporation to increase the number of shares of Common Stock that we are authorized to issue from 60,000,000 shares to 120,000,000 shares, subject to stockholder approval.
Our Board of Directors believes the proposed amendment to be advisable and in the best interests of the Company and our stockholders and is accordingly submitting the proposed amendment to be voted on by the stockholders in order to give the Company more flexibility in considering the planning for and responding quickly to future corporate needs, including, but not limited to, capital raising transactions, grants under equity compensation plans, stock splits, potential strategic transactions, including mergers, acquisitions, stock dividends and other general corporate transactions. If the authorization of an increase in the available Common Stock is not approved, the delay and expense incident to obtaining future approval of stockholders could impair our ability to address those corporate needs.
As of March 1, 2017, of the 60,000,000 currently authorized shares of Common Stock, 37,116,570 were issued and outstanding. Additionally, 22,883,430 shares were reserved for issuance under our 2013 Equity Incentive Plan, our Employee Stock Purchase Plan and pursuant to the exercise of outstanding warrants (excluding shares of Common Stock reserved for issuance pursuant to the exercise of certain options and warrants that are not exercisable until the number of authorized shares of Common Stock is increased).
Based on these issued and reserved shares of Common Stock, we currently have no shares of Common Stock remaining available for issuance in the future for other corporate purposes.
Our Board of Directors proposes to amend the first sentence of Article IV of our Amended and Restated Certificate of Incorporation so that it would read in its entirety as follows:
“The total number of shares of capital stock which the Corporation shall have authority to issue is one hundred twenty-two million (122,000,000) shares, of which (i) one hundred twenty million (120,000,000) shares shall be a class designated as common stock, par value $0.01 per share (the “Common Stock”), and (ii) two million (2,000,000) shares shall be a class designated as undesignated preferred stock, par value $0.01 per share (the “Undesignated Preferred Stock”).”
The Certificate of Amendment attached hereto as Appendix B reflects the changes that will be implemented to our Amended and Restated Certificate of Incorporation if this Proposal No. 3 is approved by the stockholders.
Our Board of Directors is recommending this increase in the authorized Common Stock primarily to have additional shares available for use as our Board of Directors deems appropriate or necessary. As such, the primary purpose of the proposed amendment is to provide us with greater flexibility with respect to managing our Common Stock in connection with such corporate purposes as may, from time to time, be considered advisable by our Board of Directors.
The newly authorized shares of Common Stock would be issuable for any proper corporate purpose including flexibility in considering the planning for future corporate needs, including, but not limited to, capital raising transactions, grants under equity compensation plans, stock splits, potential strategic transactions, including mergers, acquisitions, stock dividends and other general corporate transactions.
Our Board of Directors has determined that having an increased number of authorized but unissued shares of Common Stock would allow us to take prompt action with respect to corporate opportunities that develop, without the delay and expense of convening a special meeting of stockholders for the purpose of approving an increase in our capitalization.
Any authorized shares of Common Stock, if and when issued, would be part of the Company’s existing class of Common Stock and would have the same rights and privileges as the shares of Common Stock currently outstanding. Current stockholders do not have pre-emptive rights with respect to Common Stock, nor do they have cumulative voting rights. Should the Board of Directors issue additional shares of Common Stock, existing Stockholders would not have any preferential rights to purchase any of such shares, and their percentage ownership of the Company’s then outstanding Common Stock could be reduced.
Future issuances of Common Stock could have a dilutive effect on the Company’s earnings per share, book value per share and the voting power and interest of current Stockholders. In addition, the availability of additional shares of Common Stock for issuance could, under certain circumstances, discourage or make more difficult any efforts to obtain control of the Company. The Board of Directors is not aware of any attempt, or contemplated attempt, to acquire control of the Company, nor is this Proposal being presented with the intent that it be used to prevent or discourage any acquisition attempt. However, nothing would prevent the Board from taking any such actions that it deems to be consistent with its fiduciary duties.
If the proposed amendment is adopted, it will become effective upon the filing of a certificate of amendment to our Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, which the Company expects to file promptly after the Annual Meeting. If the proposed amendment is not approved by the Company’s Stockholders, the number of authorized shares of Common Stock will remain unchanged.
The affirmative vote of the majority of the outstanding shares of Common Stock entitled to vote on such amendment is required for the approval of the proposed amendment to our Amended and Restated Certificate of Incorporation.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE PROPOSED AMENDMENT TO OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK TO 120,000,000. PROPERLY AUTHORIZED PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED “FOR” THE APPROVAL OF THE PROPOSED AMENDMENT UNLESS INSTRUCTIONS TO THE CONTRARY ARE GIVEN.
Our Board of Directors has unanimously approved, and recommended that our stockholders approve, an amendment (the “Certificate of Amendment”) to our Amended and Restated Certificate of Incorporation, to effect a reverse stock split at a ratio of not less than 1-for-2 and not greater than 1-for-20 (the “Reverse Stock Split”), with the final decision of whether to proceed with the Reverse Stock Split, the effective time of the Reverse Stock Split, and the exact ratio of the Reverse Stock Split to be determined by the Board of Directors, in its discretion. If the stockholders approve the Reverse Stock Split, and the Board of Directors decides to implement it, the Reverse Stock Split will become effective as of 12:01 a.m., Eastern Time on a date to be determined by the Board of Directors that will be specified in the Certificate of Amendment. If the Board of Directors does not decide to implement the Reverse Stock Split within twelve months from the date of the Annual Meeting, the authority granted in this proposal to implement the reverse stock split will terminate.
The Reverse Stock Split will be realized simultaneously for all outstanding Common Stock. The Reverse Stock Split will affect all holders of Common Stock uniformly and each stockholder will hold the same percentage of Common Stock outstanding immediately following the Reverse Stock Split as that stockholder held immediately prior to the Reverse Stock Split, except for immaterial adjustments that may result from the treatment of fractional shares as described below. The Reverse Stock Split will not change the par value of our Common Stock and will not reduce the number of authorized shares of Common Stock.
The principal reason for the reverse stock split is to increase the per share trading price of our Common Stock in order to help ensure a share price high enough to satisfy the $1.00 per share minimum bid price requirement for continued listing on The Nasdaq Capital Market, although there can be no assurance that the trading price of our Common Stock would be maintained at such level or that we will be able to maintain the listing of our Common Stock on The Nasdaq Capital Market.
As previously reported, on November 18, 2016, the Company received written notice (the “Notification Letter”) from the Nasdaq Capital Market (“Nasdaq”) notifying the Company that it was not in compliance with the minimum bid price requirements set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on The Nasdaq Capital Market, because the bid price of the Company’s Common Stock had closed below the minimum $1.00 per share for the 30 consecutive business days prior to the date of the Notification Letter. The Notification Letter indicated that we had been provided an initial period of 180 calendar days, or until May 17, 2017, in which to regain compliance. If we are unable to regain compliance with the bid price requirement by May 17, 2017, Nasdaq may grant an additional 180-day period to regain compliance.
If we do not regain compliance by the applicable deadline, the Nasdaq staff will provide written notice that our Common Stock is subject to delisting. The Board of Directors has considered the potential harm to the Company and our stockholders should Nasdaq delist our Common Stock. Delisting from Nasdaq would likely adversely affect our ability to raise additional financing through the public or private sale of equity securities and would significantly affect the ability of investors to trade our securities. Delisting would also likely negatively affect the value and liquidity of our Common Stock because alternatives, such as the OTC Bulletin Board and the pink sheets, are generally considered to be less efficient markets.
We believe that our best option to meet Nasdaq’s $1.00 minimum bid price requirement before the end of the 180-day grace period is to effect the Reverse Stock Split to increase the per-share trading price of our Common Stock. Given the volatility and fluctuations in the capital markets, the likelihood of our stock price increasing to meet the Nasdaq listing requirements within the 180-day grace period and an additional 180-day period, if applicable, without the Reverse Stock Split cannot be determined and we may have to take additional actions to comply with Nasdaq requirements.
In addition, we believe that the low per share market price of our Common Stock impairs its marketability to and acceptance by institutional investors and other members of the investing public and creates a negative impression of the Company. Theoretically, decreasing the number of shares of Common Stock outstanding should not, by itself, affect the marketability of the shares, the type of investor who would be interested in acquiring them, or our reputation in the financial community. In practice, however, many investors, brokerage firms and market makers consider low-priced stocks as unduly speculative in nature and, as a matter of policy, avoid investment and trading in such stocks. Moreover, the analysts at many brokerage firms do not monitor the trading activity or otherwise provide coverage of lower priced stocks. The presence of these factors may be adversely affecting, and may continue to adversely affect, not only the pricing of our Common Stock but also its trading liquidity. In addition, these factors may affect our ability to raise additional capital through the sale of stock.
Further, we believe that a higher stock price could help us establish business development relationships with other companies. Theoretically, decreasing the number of shares of Common Stock outstanding should not, by itself, affect our reputation in our business community. In practice, however, we believe that potential business development partners may be less confident in the prospects of a company with a low stock price, and are less likely to enter into business relationships with a company with a low stock price. If the Reverse Stock Split successfully increases the per share price of our Common Stock, we believe this may increase our ability to attract business development partners.
We further believe that a higher stock price could help us attract and retain employees and other service providers. We believe that some potential employees and service providers are less likely to work for a company with a low stock price, regardless of the size of the company’s market capitalization. If the Reverse Stock Split successfully increases the per share price of our Common Stock, we believe this increase will enhance our ability to attract and retain employees and service providers.
We hope that the decrease in the number of shares of our outstanding Common Stock as a consequence of the reverse stock split, and the anticipated increase in the price per share, will encourage greater interest in our Common Stock by the financial community and the investing public, help us attract and retain employees and other service providers, help us raise additional capital through the sale of stock in the future if needed, and possibly promote greater liquidity for our stockholders with respect to those shares presently held by them. However, the possibility also exists that liquidity may be adversely affected by the reduced number of shares which would be outstanding if the Reverse Stock Split is effected, particularly if the price per share of our Common Stock begins a declining trend after the Reverse Stock Split is effected.
The Board of Directors believes that stockholder adoption of a range of Reverse Stock Split ratios (as opposed to adoption of a single reverse stock split ratio or a set of fixed ratios) provides maximum flexibility to achieve the purposes of a reverse stock split and, therefore, is in the best interests of the Company. In determining a ratio following the receipt of stockholder adoption, the Board of Directors (or any authorized committee of the Board of Directors) may consider, among other things, factors such as:
The Board of Directors (or any authorized committee of the Board of Directors) reserves the right to elect to abandon the Reverse Stock Split, notwithstanding stockholder adoption thereof, if it determines, in its sole discretion, that the Reverse Stock Split is no longer in the best interests of the Company.
If the Reverse Stock Split is approved by the stockholders and the Board of Directors elects to implement it, the following paragraph shall be added after subsection (A) of ARTICLE IV of the Charter:
“Upon the effectiveness of this Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Corporation, each shares of Common Stock issued and outstanding at such time shall, automatically and without any further action on the part of the Corporation or the holder thereof, be combined into one (1) validly issued, fully paid and non-assessable share of Common Stock (the “Reverse Stock Split”). The par value of the Common Stock following the Reverse Stock Split shall remain $0.01 per share. No fractional shares shall be issued, and, in lieu thereof, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of a share of Common Stock, as determined by the Board of Directors. Each certificate that immediately prior to the Effective Time represented shares of Common Stock (an “Old Certificate”) shall thereafter represent that number of shares of Common Stock into which the shares of Common Stock represented by the Old Certificate shall have been combined, subject to the elimination of fractional share interests as described above.”
The Certificate of Amendment attached hereto asAppendix C reflects the changes that will be implemented to our Amended and Restated Certificate of Incorporation if the Reverse Stock Split is approved by the stockholders and the Board of Directors elects to implement it.
If the stockholders approve the proposal to authorize the Board of Directors to implement the Reverse Stock Split and the Board of Directors implements the Reverse Stock Split, we will amend the existing provision of Article IV of our Charter in the manner set forth above.
By approving this amendment, stockholders will approve the combination of any whole number of shares of Common Stock between and including two (2) and twenty (20), with the exact number to be determined by the Board of Directors, into one (1) share. The Certificate of Amendment to be filed with the Secretary of State of the State of Delaware will include only that number determined by the Board of Directors to be in the best interests of the Company and its stockholders. In accordance with these resolutions, the Board of Directors will not implement any amendment providing for a different split ratio.
As explained above, the Reverse Stock Split will be effected simultaneously for all issued and outstanding shares of Common Stock and the exchange ratio will be the same for all issued and outstanding shares of Common Stock. The Reverse Stock Split will affect all of our stockholders uniformly and will not affect any stockholder’s percentage ownership interests in the Company, except to the extent that the Reverse Stock Split results in any of our stockholders receiving a cash payment in lieu of owning a fractional share, as described in the section titled “Fractional Shares,” below. Common Stock issued pursuant to the Reverse Stock Split will remain fully paid and non-assessable. The Reverse Stock Split will not affect the Company’s continuing obligations under the periodic reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Following the Reverse Stock Split, our Common Stock will continue to be listed on The Nasdaq Capital Market, under the symbol “BSTG,” although it would receive a new CUSIP number.
Upon effectiveness of the Reverse Stock Split, the number of authorized shares of Common Stock that are not issued or outstanding will increase substantially, because the proposed amendment will not reduce the number of authorized shares, while it will reduce the number of outstanding shares by a factor of between and including two and twenty, depending on the exchange ratio selected by the Board of Directors.
The shares that are authorized but unissued after the Reverse Stock Split will be available for issuance, and, if we issue these shares, the ownership interest of holders of our Common Stock may be diluted. We may issue such shares to raise capital and/or as consideration in acquiring other businesses or establishing strategic relationships with other companies. Such acquisitions or strategic relationships may be effected using shares of Common Stock or other securities convertible into Common Stock and/or by using capital that may need to be raised by selling such securities. We do not have any agreement, arrangement or understanding at this time with respect to any specific transaction or acquisition for which the newly unissued authorized shares would be issued.
If the Reverse Stock Split is approved by the Company’s stockholders, and if at such time the Board of Directors still believes that a Reverse Stock Split is in the best interests of the Company and its stockholders, the Board of Directors will determine the ratio of the Reverse Stock Split to be implemented. The Reverse Stock Split will become effective as of 12:01 a.m., Eastern Time on the date specified in the Certificate of Amendment as filed with the office of the Secretary of State of the State of Delaware (the “effective time”). The Board of Directors will determine the exact timing of the filing of the Certificate of Amendment based on its evaluation as to when the filing would be the most advantageous to the Company and its stockholders. If the Board of Directors does not decide to implement the Reverse Stock Split within twelve months from the date of the Annual Meeting, the authority granted in this proposal to implement the Reverse Stock Split will terminate.
Except as described below under the section titled “Fractional Shares,” at the effective time, each whole number of issued and outstanding pre-reverse split shares that the Board of Directors has determined will be combined into one post-reverse split share, will, automatically and without any further action on the part of our stockholders, be combined into and become one share of Common Stock, and each certificate which, immediately prior to the effective time represented pre-reverse stock split shares, will be deemed for all corporate purposes to evidence ownership of post-reverse split shares.
No fractional shares will be issued in connection with the Reverse Stock Split. Stockholders of record at the effective time of the Reverse Stock Split who otherwise would be entitled to receive fractional shares because they hold a number of pre-split shares not evenly divisible by the number of pre-split shares for which each post-split share is to be exchanged, will, in lieu of a fractional share, be entitled, upon surrender to the exchange agent of certificate(s) representing such pre-split shares, to a cash payment in lieu thereof. The cash payment will equal the fraction to which the stockholder would otherwise be entitled multiplied by the closing price of the Common Stock, as reported by Nasdaq, on the last trading day prior to the effective date of the Reverse Stock Split.
Stockholders should be aware that, under the escheat laws of the various jurisdictions where stockholders reside, sums due for fractional interests that are not timely claimed after the effective time may be required to be paid to the designated agent for each such jurisdiction. Thereafter, stockholders otherwise entitled to receive such funds may have to seek to obtain them directly from the state to which they were paid.
We cannot predict whether the Reverse Stock Split will increase the market price for our Common Stock. The history of similar stock split combinations for companies in like circumstances is varied, and the market price of our Common Stock will also be based on our performance and other factors, some of which are unrelated to the number of shares outstanding. Further, there are a number of risks associated with the Reverse Stock Split, including:
If the Reverse Stock Split is effected, stockholders who hold uncertificated shares (i.e., shares held in book-entry form and not represented by a physical stock certificate), either as direct or beneficial owners, will have their holdings electronically adjusted automatically by our transfer agent (and, for beneficial owners, by their brokers or banks that hold in “street name” for their benefit, as the case may be) to give effect to the Reverse Stock Split. Stockholders who hold uncertificated shares as direct owners will be sent a statement of holding from our transfer agent that indicates the number of post-reverse stock split shares of our Common Stock owned in book-entry form.
As soon as practicable after the effective time of the Reverse Stock Split, stockholders will be notified that the Reverse Stock Split has been effected. We expect that our transfer agent will act as exchange agent for purposes of implementing the exchange of stock certificates. Holders of pre-split shares will be asked to surrender to the exchange agent certificates representing pre-split shares in exchange for certificates representing post-split shares in accordance with the procedures to be set forth in a letter of transmittal to be sent by us or our exchange agent. No new certificates will be issued to a stockholder until such stockholder has surrendered such stockholder’s outstanding certificate(s) together with the properly completed and executed letter of transmittal to the exchange agent. Any pre-split shares submitted for transfer, whether pursuant to a sale or other disposition, or otherwise, will automatically be exchanged for post-split shares. STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY CERTIFICATE(S) UNTIL REQUESTED TO DO SO.
As of the Record Date, there were outstanding stock options to purchase an aggregate of 3,799,479 shares of our Common Stock with a weighted average exercise price of $2.79 per share, and warrants to purchase an aggregate of 22,560,284 shares of common stock with a weighted average exercise price of $0.49 per share. When the Reverse Stock Split becomes effective, the number of shares of Common Stock covered by such rights will be reduced to between and including one-half and one-twentieth the number currently covered, and the exercise or conversion price per share will be increased by between and including two and twenty times the current exercise or conversion price, resulting in the same aggregate price being required to be paid therefor upon exercise or conversion thereof as was required immediately preceding the Reverse Stock Split.
In addition, the number of shares of Common Stock and number of shares of Common Stock subject to stock options or similar rights authorized under the Company’s equity incentive plan and employee stock purchase plan will be proportionately adjusted by the Compensation Committee for the reverse stock split ratio, such that fewer shares will be subject to such plans. Further, the Compensation Committee will proportionately adjust the per share exercise price under such plans to reflect the Reverse Stock Split.
The Reverse Stock Split will not affect the Common Stock capital account on our balance sheet. However, because the par value of our Common Stock will remain unchanged at the effective time of the split, the components that make up the Common Stock capital account will change by offsetting amounts. Depending on the size of the Reverse Stock Split the Board of Directors decides to implement, the stated capital component will be reduced proportionately based upon the Reverse Stock Split and the additional paid-in capital component will be increased with the amount by which the stated capital is reduced. Immediately after the Reverse Stock Split, the per share net income or loss and net book value of our Common Stock will be increased because there will be fewer shares of Common Stock outstanding. All historic share and per share amounts in our financial statements and related footnotes will be adjusted accordingly for the Reverse Stock Split.
The proposed amendment to our Amended and Restated Certificate of Incorporation will not affect the par value of our common stock, which will remain at $0.01 per share.
Notwithstanding the decrease in the number of outstanding shares following the proposed Reverse Stock Split, our Board of Directors does not intend for this transaction to be the first step in a “going private transaction” within the meaning of Rule 13e-3 of the Exchange Act.
Although the increased proportion of unissued authorized shares to issued shares could, under certain circumstances, have an anti-takeover effect (for example, by permitting issuances that would dilute the stock ownership of a person seeking to effect a change in the composition of the Board of Directors or contemplating a tender offer or other transaction for the combination of the Company with another company), the Reverse Stock Split proposal is not being proposed in response to any effort of which we are aware to accumulate shares of our Common Stock or obtain control of the Company, nor is it part of a plan by management to recommend a series of similar amendments to the Board of Directors and stockholders. Other than the Reverse Stock Split proposal, the Board of Directors does not currently contemplate recommending the adoption of any other actions that could be construed to affect the ability of third parties to take over or change control of the Company.
Under the Delaware General Corporation Law, the Company’s stockholders are not entitled to dissenters’ appraisal rights with respect to the Reverse Stock Split, and the Company will not independently provide stockholders with any such right.
The following is not intended as tax or legal advice. Each holder should seek advice based on his, her or its particular circumstances from an independent tax advisor.
The following is a summary of certain United States federal income tax consequences of the Reverse Stock Split generally applicable to beneficial holders of shares of our Common Stock but does not purport to be a complete analysis of all potential tax effects. This summary addresses only such stockholders who hold their pre-reverse stock split shares as capital assets and will hold the post-reverse stock split shares as capital assets. This discussion does not address all United States federal income tax considerations that may be relevant to particular stockholders in light of their individual circumstances or to stockholders that are subject to special rules, such as financial institutions, tax-exempt organizations, insurance companies, dealers in securities, and foreign stockholders. The following summary is based upon the provisions of the Code, applicable Treasury Regulations thereunder, judicial decisions and current administrative rulings, as of the date hereof, all of which are subject to change, possibly on a retroactive basis. Tax consequences under state, local, foreign, and other laws are not addressed herein. Each stockholder should consult its tax advisor as to the particular facts and circumstances which may be unique to such stockholder and also as to any estate, gift, state, local or foreign tax considerations arising out of the Reverse Stock Split.
This discussion is limited to holders of our Common Stock that are U.S. Holders. For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our Common Stock that, for U.S. federal income tax purposes, is or is treated as:
Furthermore, the following discussion does not address any tax consequences of transactions effectuated before, after or at the same time as the Reverse Stock Split, whether or not they are in connection with the Reverse Stock Split.
The Reverse Stock Split should constitute a “recapitalization” for U.S. federal income tax purposes. No gain or loss will be recognized by a stockholder upon such stockholder’s exchange of pre-reverse stock split shares for post-reverse stock split shares pursuant to the Reverse Stock Split, except to the extent of cash, if any, received in lieu of fractional shares, further described in “Cash in Lieu of Fractional Shares” below. The aggregate tax basis of the post-reverse stock split shares received in the Reverse Stock Split, including any fractional share deemed to have been received, will be equal to the aggregate tax basis of the pre-reverse stock split shares exchanged therefor, and the holding period of the post-reverse stock split shares will include the holding period of the pre-reverse stock split shares. Treasury Regulations provide detailed rules for allocating the tax basis and holding period of the shares of our Common Stock surrendered to the shares of our Common Stock received in a recapitalization pursuant to the Reverse Stock Split. U.S. Holders of shares of our Common Stock acquired on different dates and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares.
A holder of pre-reverse stock split shares that receives cash in lieu of a fractional share of post-reverse stock split shares should generally be treated as having received such fractional share pursuant to the Reverse Stock Split and then as having exchanged such fractional share for cash in a redemption by the Company. The amount of any gain or loss should be equal to the difference between the ratable portion of the tax basis of the pre-reverse stock split shares exchanged in the Reverse Stock Split that is allocated to such fractional share and the cash received in lieu thereof. In general, any such gain or loss will constitute a long-term capital gain or loss if the U.S. Holder’s holding period for such pre-reverse stock split shares exceeds one year at the time of the Reverse Stock Split. Deductibility of capital losses by holders is subject to limitations.
A U.S. Holder of our Common Stock may be subject to information reporting and backup withholding on cash paid in lieu of fractional shares in connection with the Reverse Stock Split. A U.S. Holder of our Common Stock will be subject to backup withholding if such holder is not otherwise exempt and such holder does not provide its taxpayer identification number in the manner required or otherwise fails to comply with applicable backup withholding tax rules.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or allowed as a credit against a U.S. Holder’s federal income tax liability, if any, provided the required information is timely furnished to the IRS. U.S. Holders should consult their tax advisors regarding their qualification for an exemption from backup withholding and the procedures for obtaining such an exemption.
Our directors and executive officers have no substantial interests, directly or indirectly, in the matters set forth in this proposal except to the extent of their ownership of shares of our Common Stock.
We reserve the right to not file the Certificate of Amendment and to abandon any reverse stock split without further action by our stockholders at any time before the effectiveness of the filing with the Secretary of the State of Delaware of the Certificate of Amendment, even if the authority to effect these amendments is approved by our stockholders at the annual meeting. By voting in favor of a reverse stock split, you are expressly also authorizing the Board of Directors to delay, not proceed with, and abandon, these proposed amendments if it should so decide, in its sole discretion, that such action is in the best interests of our stockholders.
The affirmative vote of the majority of the outstanding shares of Common Stock entitled to vote on such matter is required for the approval of the Certificate of Amendment to our Amended and Restated Certificate of Incorporation to effect the Reverse Stock Split of our Common Stock.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE CERTIFICATE OF AMENDMENT TO OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO EFFECT THE REVERSE STOCK SPLIT OF OUR COMMON STOCK. PROPERLY AUTHORIZED PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED “FOR” THE APPROVAL OF THE CERTIFICATE OF AMENDMENT UNLESS INSTRUCTIONS TO THE CONTRARY ARE GIVEN.
A summary of the material terms of the 2013 Plan, reflecting the changes pertaining to the Plan Amendment, is included below. Stockholders are urged to read the actual text of the 2013 Plan, as
either in absolute terms or as compared to any incremental increase or as compared to results of a peer group and, for financial measures, may be based on numbers calculated in accordance with U.S. generally accepted accounting principles or on an as adjusted basis. These performance criteria may be expressed in terms of overall company performance or the performance of a division, business unit, or an individual. The compensation committee will select the particular performance criteria within 90 days following the commencement of a performance cycle, and each performance cycle must be at least three months long. Subject to adjustments for stock splits and similar events, the maximum award of restricted stock or deferred stock or performance shares (or combination thereof) granted to any one individual that is intended to qualify as “performance-based compensation” under Section 162(m) of the Code will not exceed 1,000,000 shares, or $2,000,000 in the case of a performance-based award that is a cash-based award for any performance cycle, and options or stock appreciation rights with respect to no more than 1,000,000 shares may be granted to any one individual during any calendar year period.
In 2017, the Tax Cuts and Jobs Act of 2017 was enacted which, subject to a transition rule for agreements in effect on November 2, 2017, eliminated the exception under Code Section 162(m) for qualified performance-based compensation and commissions, so that all compensation paid to a covered employee in excess of $1 million, including performance-based compensation and commissions, is nondeductible.
Unrestricted Stock. The administrator may grant shares (at par value or for a purchase price determined by the administrator) that are free from any restrictions under the 2013 Plan. Unrestricted stock may be issued to participants in recognition of past services or other valid consideration, and may be issued in lieu of cash compensation to be paid to such individuals.
Amendments. Stockholder approval will be required to amend the 2013 Plan if the administrator determines that this approval is required to ensure that incentive stock options qualify as such under the Code, or that compensation earned under awards qualifies as performance-based compensation under the Code or as required under the applicable securities exchange or market system rules. Otherwise, the Board of Directors may amend or discontinue the 2013 Plan at any time, and the administrator may amend or cancel any outstanding award for the purpose of satisfying changes in law or for any other lawful purpose, provided that no such amendment may adversely affect the rights under any outstanding award without the holder’s consent.
Restricted Stock. A participant who receives a grant of restricted stock will not recognize any taxable income at the time of the award, provided the shares are subject to restrictions (that is, they are nontransferable and subject to a substantial risk of forfeiture). A participant’s rights in restricted stock awarded under the plan are subject to a substantial risk of forfeiture if the rights to full enjoyment of the shares are conditioned, directly or indirectly, upon the future performance of substantial services by the participant. However, the participant may elect under Section 83(b) of the Code to recognize compensation
our executive officers, directors who are not executive officers, and employees. Information about the number of shares granted to our Chief Executive Officer and other named executive officers can be found herein under the heading “Outstanding Equity Awards at Fiscal Year-End — 2016.2017.”
| | | Number of Stock Options Awards | | | Number of Restricted Stock Units Awards | | | Number of Shares Underlying All Awards | | |||||||||
James McGorry – Chief Executive Officer | | | | | 13,400 | | | | | | 6,600 | | | | | | 20,000 | | |
Thomas McNaughton – Chief Financial Officer | | | | | 7,537 | | | | | | 3,712 | | | | | | 11,249 | | |
Saverio LaFrancesca – Former Chief Medical Officer | | | | | 10,887 | | | | | | 5,362 | | | | | | 16,249 | | |
All executive officers as a group | | | | | 31,824 | | | | | | 15,674 | | | | | | 47,498 | | |
All directors who are not executive officers, as a group | | | | | 5,000 | | | | | | 3,648 | | | | | | 8,648 | | |
Employees as a group (excluding executive officers) | | | | | 55,500 | | | | | | — | | | | | | 55,500 | | |
Total | | | | | 92,324 | | | | | | 19,322 | | | | | | 111,646 | | |
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2013 EQUITY INCENTIVE PLAN
exchange or market for the Stock on such date, provided further that with respect to the Separation Grants and the initial Non-Employee Director grants described in Section 5(b)(i)(1), the Fair Market Value on the date of grant for such grants shall mean the arithmetic average of the daily dollar volume-weighted average price of the Stock (during the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time) for each of the ten (10) Trading Days immediately preceding the date of grant. If there is no trading on such date, the determination shall be made by reference to the last date preceding such date for which there was trading.
or any day that the Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time).
Awards and the vesting criteria. The Administrator may revoke or amend the terms of a delegation at any time but such action shall not invalidate any prior actions of the Administrator’s delegate or delegates that were consistent with the terms of the Plan.
Options or Stock Appreciation Rights that can be granted to any one individual grantee and the maximum number of shares that may be granted under a Performance-based Award, (iii) the number and kind of shares or other securities subject to any then outstanding Awards under the Plan, (iv) the repurchase price per share subject to each outstanding Restricted Stock Award, and (v) the price for each share subject to any then outstanding Stock Options and Stock Appreciation Rights under the Plan, without changing the aggregate exercise price (i.e., the exercise price multiplied by the number of Stock Options and Stock Appreciation Rights) as to which such Stock Options and Stock Appreciation Rights remain exercisable in a manner that will trigger tax under Section 409A. The adjustment by the Administrator shall be final, binding and conclusive. No fractional shares of Stock shall be issued under the Plan resulting from any such adjustment, but the Administrator in its discretion may make a cash payment in lieu of fractional shares.
acquisition by the Company or a Subsidiary of property or stock of the employing corporation. The Administrator may direct that the substitute awards be granted on such terms and conditions as the Administrator considers appropriate in the circumstances. Any substitute Awards granted under the Plan shall not count against the share limitation set forth in Section 3(a).
10 percent of the combined voting power of all classes of stock of the Company or any parent or subsidiary corporation and an Incentive Stock Option is granted to such employee, the term of such Stock Option shall be no more than five years from the date of grant.
(e)Waiver, Deferral and Reinvestment of Dividends.The Restricted Stock Award agreement may require or permit the immediate payment, waiver, deferral or investment of dividends paid on the Restricted Stock.
Control, is limited to ten percent (10%) of the maximum number of shares of Stock reserved and available for issuance under the Plan pursuant to Section 3(a).
Employee. The performance criteria used in performance goals governing Performance-based Awards granted to Covered Employees may include any or all of the following: (i) return on equity, assets, capital or investment; (ii) pre-tax or after-tax profit levels; (iii) cash flow, funds from operations or similar measure; (iv) total shareholder return; (v) changes in the market price of the
(b)Interest Equivalents.Any Award under this Plan that is settled in whole or in part in cash on a deferred basis may provide in the grant for interest equivalents to be credited with respect to such cash payment. Interest equivalents may be compounded and shall be paid upon such terms and conditions as may be specified by the grant.
purpose, but no such action shall adversely affect rights under any outstanding Award without the holder’s consent. Except as provided in Section 3(b) or 3(c), in no event may the Administrator exercise its discretion to reduce the exercise price of outstanding Stock Options or Stock Appreciation Rights or effect repricing through cancellation and regrants or by exchanging a Stock Option or Stock Appreciation Right for any other Award, without stockholder approval. If and to the extent determined by the Administrator to be required by the Code to ensure that Incentive Stock Options granted under the Plan are qualified under Section 422 of the Code or to ensure that compensation earned under Awards qualifies as performance-based compensation under Section 162(m) of the Code, if and to the extent intended to so qualify, and to the extent required under the applicable rules of The NASDAQ Stock Market, or such other securities exchange or market system on which the Stock is then principally listed, Plan amendments shall be subject to approval by the Company stockholders entitled to vote at a meeting of stockholders. Nothing in this Section 17 shall limit the Administrator’s authority to take any action permitted pursuant to Section 3(c).
of Directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board, including by reason of agreement intended to avoid or settle any such actual or threatened contest or solicitation, shall not be considered an Incumbent Director; or
United States mail, addressed to the grantee, at the grantee’s last known address on file with the Company, notice of issuance and recorded the issuance in its records (which may include electronic “book entry” records). Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates evidencing shares of Stock pursuant to the exercise of any Award, unless and until the Administrator has determined, with advice of counsel (to the extent the Administrator deems such advice necessary or advisable), that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any exchange on which the shares of Stock are listed, quoted or traded. All Stock certificates delivered pursuant to the Plan shall be subject to any stop-transfer orders and other restrictions as the Administrator deems necessary or advisable to comply with federal, state or foreign jurisdiction, securities or other laws, rules and quotation system on which the Stock is listed, quoted or traded. The Administrator may place legends on any Stock certificate to reference restrictions applicable to the Stock. In addition to the terms and conditions provided herein, the Administrator may require that an individual make such reasonable covenants, agreements, and representations as the Administrator, in its discretion, deems necessary or
21. EFFECTIVE DATE OF PLAN
Biostage, Inc., formerly known as Harvard Apparatus Regenerative Technology, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “Corporation”), hereby certifies as follows:
FIRST: The name of the Corporation is Biostage, Inc.
SECOND: The date on which the Certificate of Incorporation of the Corporation was originally filed with the Secretary of State of the State of Delaware is May 3, 2012, and was amended and restated by the Amended and Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware on March 28, 2013, as amended by a Certificate of Amendment to the Amended and Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware on March 30, 2016 and effective as of March 31, 2016 and a Certificate of Amendment to the Amended and Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware on May 26, 2016 and effective as of that date (as amended, the “Certificate”).
THIRD: The Corporation hereby amends the Certificate as follows:
The first paragraph of the section entitled “CAPITAL STOCK” in ARTICLE IV of the Certificate is hereby deleted in its entirety and amended to read as follows:
“The total number of shares of capital stock which the Corporation shall have authority to issue is one hundred twenty-two million (122,000,000) shares, of which (i) one hundred twenty million (120,000,000) shares shall be a class designated as common stock, par value $0.01 per share (the “Common Stock”), and (ii) two million (2,000,000) shares shall be a class designated as undesignated preferred stock, par value $0.01 per share (the “Undesignated Preferred Stock”).”
FOURTH: This Certificate of Amendment has been duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, Biostage, Inc. has caused this Certificate of Amendment to be signed by its chief executive officer this day of , 2017.
BIOSTAGE, INC.
Biostage, Inc., formerly known as Harvard Apparatus Regenerative Technology, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “Corporation”), hereby certifies as follows:
FIRST: The name of the Corporation is Biostage, Inc.
SECOND: The date on which the Certificate of Incorporation of the Corporation was originally filed with the Secretary of State of the State of Delaware is May 3, 2012, and was amended and restated by the Amended and Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware on March 28, 2013, as amended by (i) a Certificate of Amendment to the Amended and Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware on March 30, 2016 and effective as of March 31, 2016, (ii) a Certificate of Amendment to the Amended and Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware on May 26, 2016 and effective as of that date and (iii) a Certificate of Amendment to the Amended and Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware on , 2017 and effective as of that date (as amended, the “Certificate”).
THIRD: The Corporation hereby amends the Certificate as follows:
The section entitled “COMMON STOCK” in ARTICLE IV.A of the Certificate is hereby amended by adding the following paragraph at the end of such section:
“Upon the effectiveness of this Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Corporation, each shares of Common Stock issued and outstanding at such time shall, automatically and without any further action on the part of the Corporation or the holder thereof, be combined into one (1) validly issued, fully paid and non-assessable share of Common Stock (the “Reverse Stock Split”). The par value of the Common Stock following the Reverse Stock Split shall remain $0.01 per share. No fractional shares shall be issued, and, in lieu thereof, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of a share of Common Stock, as determined by the Board of Directors. Each certificate that immediately prior to the Effective Time represented shares of Common Stock (an “Old Certificate”) shall thereafter represent that number of shares of Common Stock into which the shares of Common Stock represented by the Old Certificate shall have been combined, subject to the elimination of fractional share interests as described above.”
FOURTH: This Certificate of Amendment has been duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
FIFTH: The Certificate of Amendment shall be effective on , 2017 at 12:01 am ET.
IN WITNESS WHEREOF, Biostage, Inc. has caused this Certificate of Amendment to be signed by its chief executive officer this day of , 2017.
BIOSTAGE, INC.