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  Staff Interpretation Letter 2013-3  
Identification Number 1080
This is in response to your correspondence regarding whether the proposed amendments to outstanding options and warrants would be considered a material amendment requiring shareholder approval under Listing Rule 5635(c) (the “Rule”).

Prior to the Company's listing on NASDAQ, the Company's subsidiary sold units consisting of one share of common stock and one warrant to purchase additional shares of common stock to certain of its officers, a non-executive employee and current and former directors. Separately, following a holding company reorganization, the Company sold warrants at fair market value based on the Black-Scholes valuation model to certain members of senior management and to certain directors. Finally, the Company issued options to purchase common stock under a shareholder approved equity plan (“Equity Plan”) to two non-executive employees. The warrants and options, which are not publicly traded, are exercisable into the Company's listed common stock and are owned by current or former officers, non-executive employees and directors of the Company or the subsidiary.

The Company is proposing to amend the terms of the warrants and the Equity Plan to allow for the adjustment of the exercise price of the warrants and options upon the distribution of an extraordinary cash dividend by the Company (the “Amendments”). Any adjustment under the Amendments would be at the discretion of a committee of the board of directors, provided, however, that no adjustment could increase the intrinsic value of a warrant or option as measured before the ex-dividend date of the extraordinary cash dividend.

Following our review of the information provided, we have determined that the Amendments you described would not be a material amendment for purposes of the Rule. In that regard, we note that the proposed Amendments would not increase the intrinsic value of a warrant or option and, therefore, would not result in an increase in the benefits to the participants. In addition, the Amendments would not result in: a material expansion in the class of participants; an increase in the number of shares to be issued under the Equity Plan or upon exercise of the warrants; or an expansion in the types of awards available. As a result, shareholder approval is not required for the Amendments under the Rule.

Publication Date*: 5/20/2013 Mailto Link Identification Number: 1080
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