This is in response to your correspondence asking whether a proposed Exchange Transaction, as defined below, by the Company requires shareholder approval under Listing Rule 5635 (the "Rule") and whether it complies with voting rights requirements of Listing Rule 5640 and IM-5640 (the "Voting Rights Requirements").

Currently, the Company's authorized capital stock consists of three classes of common stock, High-vote common stock, Voting common stock and Non-voting common stock (collectively the "Common Stock"), each of which is listed on Nasdaq, and two series of preferred stock (Series X and Series Y convertible preferred stock, collectively, the "Preferred Stock"), which are closely-held and not publicly traded. The Substantial Shareholder currently has a greater than 20% voting and economic interest in the Company through its holding of all Series X and Series Y convertible preferred stock. Each share of Series X preferred stock is convertible into one share of Voting common stock and one share of Non-voting common stock. Each share of Series Y preferred stock is convertible into two shares Non-voting common stock.

You stated that so long as the Substantial Shareholder continues to hold a specified percentage, representing a supermajority, of the shares of Series X preferred stock ("Veto Rights Threshold"), the Company must obtain the consent of the Substantial Shareholder before the Company can take certain actions ("Veto Rights"), including effecting substantial acquisitions and increasing the size of the Company's board beyond a certain number ("Maximum Board Size"). In addition, Substantial Shareholder, as the holder of the Preferred Stock, has the right to elect the number of members of the Company's board of directors proportional to its voting interest in the Company. The Preferred Stock will automatically convert into the applicable series of Common Stock when the number of shares of Series X preferred stock is less than 80% of the Veto Rights Threshold.

You stated that the Substantial Shareholder is seeking additional liquidity and, to that end, the Company is proposing to issue Series X-1 and Series Y-1 (the "New Preferred Stock") in exchange for the Preferred Stock held by the Substantial Shareholder (the "Exchange Transaction"). The terms of the New Preferred Stock will mimic the terms of the Preferred Stock except that:

• New Series X-1 convertible preferred stock would be convertible only into Voting common stock and into the aggregate number of shares of Voting common stock into which the Series X preferred stock is currently convertible;
• New Series Y-1 convertible preferred stock would be convertible into the aggregate number of shares of Non-voting common stock into which the Preferred Stock is currently convertible;
• The Maximum Board Size may be adjusted to support the Potential Acquisition (as defined below); and
• In the event of future common stock dividends, the holders of the New Preferred Stock would participate on a pari passu basis with holders of common stock, whereas holders of Preferred Stock are entitled to the benefits of dividends by means of an adjustment to the conversion ratio.

You stated that the Substantial Shareholder indicated that an agreement to undertake the Exchange Transaction is one of the bases upon which it has agreed to support the Potential Acquisition; however, the Substantial Shareholder has already provided all consents under the Veto Rights necessary for the Company to proceed with the Potential Acquisition and the completion of the Exchange Transaction and the Potential Acquisition are not contingent on one another.

Following our review of the information you provided, we have determined that the Exchange Transaction does not require shareholder approval under the Rule and complies with the Voting Rights Requirements. Listing Rule 5635(a) requires shareholder approval in certain circumstances "prior to the issuance of securities in connection with the acquisition of the stock or assets of another company"; Listing Rule 5635(b) requires shareholder approval "prior to the issuance of securities when the issuance or potential issuance would result in a change of control of the company"; Listing Rule 5635(c) requires shareholder approval "prior to the issuance of securities when a stock option or purchase plan is to be established or materially amended or other equity compensation arrangement made or materially amended, pursuant to which stock may be acquired by officers, directors, employees, or consultants"; and Listing Rule 5635(d) requires shareholder approval "prior to the issuance of securities" in connection with certain transactions at a price below the greater of book or market value. Each of these rules predicates the need for shareholder approval on an issuance of securities by the company. In the Exchange Transaction, while the Company is providing New Preferred Stock (convertible into shares of Common Stock) in exchange for Preferred Stock, the aggregate number of shares of Voting common stock and Non-Voting common stock issuable upon conversion is the same for the Preferred Stock and the New Preferred Stock. Further, the potential adjustment to the Maximum Board Size and the mechanics of adjustments for future common stock dividends do not materially alter the economic and governance rights of the holders of the Preferred Stock and the Common Stock. As such, the Exchange Transaction would not be considered an issuance of the company's securities for purposes of the Listing Rules and such corporate action does not disparately reduce or restrict the voting rights of Common Stock holders.