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  Staff Interpretation Letter 2011-9
Identification Number 699
This is in response to your correspondence regarding whether an amendment to the Plan (the “Amendment”) would require shareholder approval under Listing Rule 5635(c) and IM-5635-1 (collectively, the “Rule”).
The company has two classes of common stock, one of which is voting (the “Voting Stock”) and the other is non-voting.  Both classes of common stock are listed on NASDAQ.
The Plan, which was approved by the company’s shareholders, provides for the issuance of equity awards to key employees, officers, consultants and advisors of the company.  While the Plan allows the issuance of both classes of the company’s common stock, awards with respect to the Voting Stock can be made only to the Former Recipient, who at the time the shareholders approved the Plan, was the company’s chairman of the board, president, chief executive officer (“CEO”), and the holder of a majority of the outstanding Voting Stock (the “Majority Stake”).  The Plan identifies the Former Recipient by name.
The Former Recipient has sold the Majority Stake to the Proposed Recipient and has stepped down from all positions with the company.  The Proposed Recipient is now the chairman of the board and CEO.
Pursuant to the Amendment, the name of the Proposed Recipient would replace the name of the Former Recipient in the Plan, such that the Proposed Recipient could receive awards with respect to the Voting Stock and the Former Recipient no longer could.
Following our review of the information you provided, we have determined that the Amendment would not be a material amendment for purposes of the Rule, and, therefore, would not require shareholder approval under the Rule.  The Amendment would not result in a material expansion in the class of participants because the Proposed Recipient, as CEO and holder of the Majority Stake, would have the same standing as that previously held by the Former Recipient. In addition, the Amendment would not result in an increase in the number of shares to be issued under the Plan, an increase in the benefits to participants, or an expansion in the types of awards available, which are given as examples of material amendments in IM-5635-1.   Please note that you have not asked us to reach, and we have not reached, a conclusion as to the applicability of the Rule to the Amendment other than as addressed herein.
Publication Date*: 7/31/2012 Mailto Link Identification Number: 699
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