This is in response to your correspondence asking whether a proposed amendment to the company’s Equity Plan (the “Amendment”) would be considered a material amendment requiring shareholder approval under Listing
Rule 5635(c) (the “Rule”).
The Equity Plan, which was established prior to the company’s listing on the NASDAQ Stock Market, contains an annual award limit of 500,000 shares per person (the “Limit”). You indicated that the Limit is a plan feature used to preserve the deductibility
of compensation to certain employees. You indicated that the company interprets the Equity Plan to require the Limit to be adjusted proportionately for certain changes in the company’s capitalization, including, but not limited to, a reverse stock split.
Just prior to listing, the company effected a one-for-five reverse stock split and, as a result, the Limit was adjusted proportionately downward to 100,000 shares. According to the information you provided, the Amendment would restore the Limit to 500,000
shares. The Amendment would not prevent other adjustments to the Limit due to future changes to the company’s capitalization, including future reverse stock splits. You stated that the Amendment will not result in any increase in the total number of shares
available for issuance under the Equity Plan.
Following our review of the information provided, we have determined that the Amendment would not be a material amendment for purposes of the Rule. While the Amendment increases the Limit, there will be no increase to the maximum number of shares to be issued
under the Equity Plan. As such, while the Amendment may affect the timing of when certain awards could be made, it will not increase the overall dilution possible under the Equity Plan. Furthermore, the Amendment does not result in any material increase in
benefits to the participants or any material expansion in the class of participants eligible to participate in the plan. Finally, the Amendment does not result in any expansion in the types of awards provided under the Equity Plan.