complete analysis of all potential tax consequences and is based on
the Internal Revenue Code of 1986, as amended, which we refer to as
the Code, U.S. Treasury Regulations promulgated thereunder,
judicial decisions, and published rulings and administrative
pronouncements of the U.S. Internal Revenue Service, which we refer
to as the IRS, in each case in effect as of the date of this Proxy
Statement. These authorities may change or be subject to differing
interpretations. Any such change or differing interpretation may be
applied retroactively in a manner that could adversely affect a
U.S. Holder. We have not sought and will not seek any rulings from
the IRS regarding the matters discussed below and there can be no
assurance the IRS or a court will not take a contrary position to
that discussed below regarding the tax consequences of the proposed
Reverse Stock Split.
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 (i) an individual who is a
citizen or resident of the United States; (ii) a corporation
(or any other entity or arrangement treated as a corporation)
created or organized under the laws of the United States, any state
thereof, or the District of Columbia; (iii) an estate, the
income of which is subject to U.S. federal income tax regardless of
its source; or (iv) a trust if (1) its administration is
subject to the primary supervision of a court within the United
States and all of its substantial decisions are subject to the
control of one or more “United States persons” (within the meaning
of Section 7701(a)(30) of the Code ), or (2) it has a
valid election in effect under applicable U.S. Treasury regulations
to be treated as a United States person.
This discussion is limited to U.S. Holders who hold our common
stock as a “capital asset” within the meaning of Section 1221 of
the Code (generally, property held for investment). This discussion
does not address all U.S. federal income tax consequences relevant
to the particular circumstances of a U.S. Holder, including the
impact of the Medicare contribution tax on net investment income.
In addition, it does not address consequences relevant to U.S.
Holders that are subject to special rules, including, without
limitation, financial institutions, insurance companies, real
estate investment trusts, regulated investment companies, grantor
organizations, dealers or traders in securities, commodities or
currencies, stockholders who hold our common stock as part of a
position in a straddle or as part of a hedging, conversion or
integrated transaction for U.S. federal income tax purposes,
persons whose functional currency is not the U.S. dollar, persons
who acquired their common stock pursuant to the exercise of
employee stock options or otherwise as compensation, or U.S.
Holders who actually or constructively own 10% or more of our
If a partnership (or other entity treated as a partnership for U.S.
federal income tax purposes) is the beneficial owner of our common
stock, the U.S. federal income tax treatment of a partner in the
partnership will generally depend on the status of the partner and
the activities of the partnership. Accordingly, partnerships (and
other entities treated as partnerships for U.S. federal income tax
purposes) holding our common stock and the partners in such
entities should consult their own tax advisors regarding the U.S.
federal income tax consequences of the proposed Reverse Stock Split
In addition, the following discussion does not address the U.S.
federal estate and gift tax, alternative minimum tax, or state,
local and non-U.S. tax law
consequences of the proposed Reverse Stock Split. Furthermore, the
following discussion does not address any tax consequences of
transactions effectuated before, after, or at the same time as the
proposed Reverse Stock Split, whether or not they are in connection
with the proposed Reverse Stock Split. This discussion should not
be considered as tax or investment advice, and the tax consequences
of the proposed Reverse Stock Split may not be the same for all
Each stockholder should consult his, her or its own tax advisors
concerning the particular U.S. federal tax consequences of the
proposed Reverse Stock Split, as well as the consequences arising
under the laws of any other taxing jurisdiction, including any
state, local or foreign tax consequences.
Tax Consequences to the Company. The proposed
Reverse Stock Split is intended to be treated as a
“recapitalization” pursuant to Section 368(a)(1)(E) of the
Code. As a result, we should not recognize taxable income, gain or
loss in connection with the proposed Reverse Stock Split.