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Frequently Asked Questions
  Staff Interpretation 2021-01
Identification Number 1793
This is in response to your correspondence asking if the establishment of an omnibus incentive plan in order to consolidate the Company’s three incentive plans would be considered a material amendment and, as a result, require shareholder approval under Listing Rule 5635(c) and IM-5635-1 (collectively, the “Rule”). 

The Cash Plan allows cash awards only and does not provide for the issuance of equity securities. The Stock Plan and the Stock Option Plan are equity compensation plans, which required shareholder approval under the Listing Rules and were approved by the shareholders. The Stock Plan provides for restricted stock awards for directors, officers and employees. The Stock Option Plan provides for grants of certain stock options for directors, officers, employees and consultants. 

You stated that the Company is contemplating consolidating these three incentive plans by the establishment of an omnibus incentive plan (the “Omnibus Plan”) that would serve as an “umbrella” over these plans, with each plan maintaining its original purpose and material terms. You stated that the consolidation of the plans would allow the Company to align defined terms and other common features of these plans and to streamline the administration of its incentive compensation program.

You further stated that the Company expects that these plans would function as sub-plans within the Omnibus Plan and the number of shares approved for issuance for the Stock Plan and the Stock Option Plan would remain unchanged. You also stated that the Company does not intend to take any action that would have the effect of providing any material increase in benefits to participants.  In that regard, the duration of each plan would not be extended and would remain as currently provided for under each plan.

You stated that although the class of participants eligible to receive awards under each plan are distinct, the Company does not intend to broaden eligibility across the plans or make any new class of participants under the Omnibus Plan eligible for a type of award for which they were not previously eligible under each plan. Specifically, consultants are only eligible to receive awards under the Stock Option Plan and, after the consolidation, stock options under the Stock Option Plan would still be the only type of award consultants are eligible to receive under the Omnibus Plan.

Following our review of the information provided, we have determined that the Company’s actions to consolidate these plans under the Omnibus Plan would not be a material amendment for purposes of the Rule. While under the Omnibus Plan certain terms and features of the plans will be amended, there will be no increase in the maximum number of shares to be issued under the plans. As such, the establishment of the Omnibus Plan will not increase the overall dilution possible under the plans. The establishment of the Omnibus Plan is not intended to and does not result in any material increase in benefits to the participants. The Amendment also does not result in any material expansion in the class of participants eligible to participate in the Omnibus Plan because these plans would function as sub-plans within the Omnibus Plan and the participants under the Omnibus Plan are eligible only for a type of award for which they were previously eligible under each plan. Finally, the consolidation of the plans does not result in any expansion in the types of awards provided under these plans.
Publication Date*: 6/25/2021 Mailto Link Identification Number: 1793
material_search_footer*The Publication Date reflects the date of first inclusion in the Reference Library, which was launched on July 31, 2012, or a subsequent update to the material. Material may have been previously available on a different Nasdaq web site.
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