This excerpt taken from the XIDE DEF 14A filed Jul 27, 2006.
Reasons for Soliciting Shareholder Approval
Our common stock trades on the Nasdaq Global Market. Under Nasdaq Marketplace Rules, we are required to obtain shareholder approval of the Standby Agreement and the transactions contemplated by such agreement, including the issuance of common stock pursuant to the Standby Agreement. Nasdaq requires shareholder approval in a transaction (other than a public offering) involving the issuance or potential issuance of common stock (or securities convertible into common stock) equal to 20% or more of the common stock outstanding before the issuance for less than the greater of book or market value and when our issuance of
common stock would result in a change of control. The Subscription Price is less than the book value of the common stock and depending on the number of shares purchased by existing holders in the Rights Offering, we could issue a number of shares of common stock pursuant to the Share Transaction that is greater than 20% of the currently outstanding shares of common stock. The Share Transaction could also result in a change of control of our company as defined under Nasdaqs rules. Accordingly, we are seeking shareholder approval of the Share Transaction.