This excerpt taken from the ZHNE DEF 14A filed Sep 11, 2008.
What effect will the Reverse Stock Split have on me?
On the date the amendment to our Restated Certificate of Incorporation effectuating the Reverse Stock Split is filed with the Secretary of State of the State of Delaware, referred to in this proxy statement as the effective date, the existing outstanding shares of our common stock would be combined into new shares of our common stock at an exchange ratio ranging from one-for-five to one-for-ten, with the exchange ratio to be determined by us. This means that you would receive one new share of our common stock for each five to ten shares of common stock that you currently hold, depending on the exchange ratio we determine. Our Board of Directors believes that stockholder approval granting us discretion to set the actual exchange ratio within the range from one-for-five to one-for-ten, rather than stockholder approval of a specified exchange ratio, provides us with maximum flexibility to react to then-current market conditions and volatility in the market price of our common stock in order to set an exchange ratio that is intended to result in a stock price in excess of the $1.00 per share minimum bid price required by Nasdaq, and therefore stockholder approval granting this discretion is in the best interests of Zhone and its stockholders. However, there can be no assurance that the Reverse Stock Split will result in our common stock trading above the per share minimum bid price required by Nasdaq. The Reverse Stock Split would affect all stockholders uniformly and would not affect any stockholders percentage ownership interest in Zhone, except to the extent that the Reverse Stock Split would result in some of our stockholders owning a fractional share. You would receive cash in lieu of any fractional share that would otherwise be issuable.