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Frequently Asked Questions
  Staff Interpretation Letter 2009-16
Identification Number 734
This is in response to your correspondence regarding whether proposed amendments (the “Amendments”) to the Plans would require shareholder approval under Listing Rule 5635(c) and IM-5635-1 (collectively, the “Rule”).  The Amendments, as described below, would extend the period of time following the termination of certain optionee’s service with the company that outstanding vested stock options could be exercised (the “Post-termination Exercise Period”).
 
According to the information you provided, both Plans were approved by the company’s shareholders and provide for a limited Post-termination Exercise Period. Currently, unless the option agreement provides otherwise, the Post-termination Exercise Period is generally 90 days for executive officers and other employees and six months for non-employee members of the board of directors.
 
You stated that pursuant to the Amendments, the Post-termination Exercise Period would be extended for vested options held by executive officers and non-employee board members (“Officers and Directors”) because these individuals may from time to time be precluded from selling shares of the company’s stock as a result of being in possession of material, non-public information during the Post-termination Exercise Period. The Amendments would extend the Post-termination Exercise Period for Officers and Directors to 12 months, but in no event later than the expiration of the option as set forth in the option agreement. Both Plans currently authorize the plan administrator to extend the post-termination exercisability of stock options.
 
Following our review of the information you provided, we have determined that the Amendments would not require shareholder approval under the Rule. As a general matter, extending the term of an option is not a material amendment provided that the extension is not beyond the maximum term permissible under the plan. Moreover, the Plans specifically permit the extension of exercise periods. As set forth in IM-5635-1, if a plan permits a specific action without further shareholder approval, then no such approval would generally be required. In addition, the Amendments would not result in an increase in the number of shares available for issuance, a material increase in the benefits to participants, a material expansion of the class of eligible participants, or an expansion in the types of awards available. Accordingly, the Amendments are not material amendments, and, therefore, would not require shareholder approval under the Rule.
 
Publication Date*: 7/31/2012 Mailto Link Identification Number: 734
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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