EyePoint Pharmaceuticals, Inc.
Extract: Charter Amendment (Plain English Desc) from a DEF 14A on 04/28/2020   Download
SEC Document
SEC Filing

PROPOSAL 2

APPROVAL OF AMENDMENT TO THE

CERTIFICATE OF INCORPORATION

Our Certificate of Incorporation (the “Certificate of Incorporation”) currently authorizes the issuance of up to 150,000,000 shares of our common stock. On April 16, 2020, our Board unanimously adopted a resolution setting forth an amendment to Article 4 of the Certificate of Incorporation, subject to stockholder approval, to increase the number of shares of common stock that are authorized for issuance by 150,000,000 shares (the “Amendment”), bringing the total number of shares of our common stock authorized for issuance to 300,000,000. No change will be made to the other provisions of the Certificate of Incorporation. The additional authorized shares of common stock, if and when issued, will have the same rights and privileges as the shares of common stock previously authorized.

As of April 14, 2020, there were:

 

 

 

150,000,000 shares of our common stock authorized, of which 124,741,832 shares were issued and outstanding, and 5,000,000 shares of our preferred stock authorized, of which none were issued or outstanding;

 

14,204,662 shares of our common stock issuable upon exercise of options outstanding as of that date, which had a weighted exercise price of $2.19 per share at that date;

 

2,046,583 shares of our common stock issuable upon settlement of outstanding restricted stock units as of that date;

 

71,251 shares of our common stock issuable upon settlement of outstanding deferred stock units as of that date;

 

5,194,688 shares of our common stock that have been reserved for issuance in connection with future grants under the 2016 Long Term Equity Incentive Plan as of that date;

 

409,091 and 77,721 shares of our common stock issuable on exercise of warrants outstanding as of that date, respectively, which had a weighted average exercise price of $1.10 and $1.93, respectively, per share at that date;

 

938,340 shares reserved for future issuance under the 2019 Employee Stock Purchase Plan as of that date.

 

The full text of the Amendment is attached hereto as Annex A (the “Certificate of Amendment”). If the stockholders approve Proposal No. 2, the Certificate of Amendment will be filed with the Secretary of State of the State of Delaware (“DESOS”) and the amendment to the Certificate of Incorporation as described above will be effective upon the acceptance for record of the Certificate of Amendment by the Delaware Secretary of State.

The additional shares of common stock authorized by the proposed Amendment can be issued at the direction of our Board from time to time for any proper corporate purpose, including, without limitation, acquiring other businesses, raising additional capital for use in our business, a split of or dividend on then outstanding shares of capital stock or in connection with any employee stock plan or program. The holders of shares of our common stock do not presently have preemptive rights to subscribe for any of our securities and holders of our common stock will not have any such rights to subscribe for the additional common stock proposed to be authorized.

Our Board believes that an increase in the number of authorized shares of common stock is prudent because it will provide us flexibility in issuing additional shares of common stock determined by our Board to be advisable or necessary, without the expense and delay of soliciting stockholder approval or holding a special meeting of stockholders. Our Board believes that having the additional shares authorized and available for issuance will in the future permit greater flexibility in considering actions that may be desirable or necessary to accommodate our business plan and that involves the issuance of our common stock. These actions may include, among other things, capital raising, acquisitions and other strategic transactions. In addition, our Board believes it is appropriate to continue to have authorized capital stock available to issue such additional shares of common stock for general corporate purposes, including potential stock dividends or distributions, and equity awards or warrants.

The proposed increase in the number of authorized shares of common stock could have a number of effects on our stockholders depending upon the exact nature and circumstances of any actual issuances of authorized shares. The increase could have an anti-takeover effect, in that additional shares could be issued (within the limits imposed by applicable law) in one or more transactions that could make a change in control or takeover of us more difficult. For example, additional shares could be issued by us so as to dilute the stock ownership or voting rights of persons seeking to obtain control of us. Similarly, the issuance of additional shares to certain persons allied with our management could have the effect of making it more difficult to remove our current management by diluting the stock ownership or voting rights of persons seeking to cause such removal. The subsequent issuance of additional shares of common stock could result in dilution of net income per share and book value per share and the dilution of the voting rights of the holders of common stock. Our Board is not aware of any attempt, or contemplated attempt, to acquire control of us, and the proposed Amendment is not being presented with the intent that it be utilized as a type of anti-takeover device.

There are currently no definitive plans, arrangements, commitments or understandings for the issuance of the additional shares of common stock which are to be authorized.

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Except for shares of common stock reserved for issuance (i) upon exercise of outstanding stock options and outstanding warrants, (ii) under our 2016 Long Term Equity Incentive Plan, (iii) under our 2019 Employee Stock Purchase Plan and (iv) upon vesting and settlement of outstanding restricted and deferred stock units, our Board has no current plans to issue additional shares of common stock. However, our Board believes that the benefits of providing it with the flexibility to issue shares of common stock without delay for any proper business purpose outweigh the possible disadvantages of potential dilution of our outstanding common stock and discouragement of unsolicited business combination proposals, and that it is prudent and in the best interests of our stockholders to provide the advantage of greater flexibility which will result from the proposed Amendment.