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Frequently Asked Questions
  Staff Interpretation Letter 2009-3  
Identification Number 721
This is in response to your correspondence regarding the applicability of Marketplace Listing Rule 4350(i)(1)(A) and IM-4350-5 (collectively, the “Rule”) to the Plan if a proposed amendment (the “Amendment”) were to be adopted.  Under the Amendment, the Plan’s evergreen provision (the “Evergreen Provision”) would be eliminated.  The Evergreen Provision currently provides that the number of awards available under the Plan automatically increases annually by a specified percentage of the total shares of common stock outstanding, subject to an annual maximum.  Pursuant to the Rule, a plan that contains an evergreen provision cannot have a term in excess of ten years unless shareholder approval is obtained every ten years.  The Plan does not have an expiration date.
Pursuant to the Amendment, the Evergreen Provision would be eliminated prior to the ten-year anniversary of the date that shareholders last approved the Plan.  Following the effectiveness of the Amendment, the Plan would continue to operate without an expiration date, but with a fixed number of shares available for issuance.  No additional shares would be added to the Plan except pursuant to the Plan’s existing provisions relating to the forfeiture or termination of outstanding awards or the provisions relating to protection against dilution, such as adjusting for stock splits.
Following our review of the information you provided, we have determined that the Amendment is not a material amendment to the Plan under the Rule.  In that regard, we note that the Amendment would not provide (i) any increase in the number of shares to be issued under the Plan; (ii) any increase in the benefits available to participants; (iii) any expansion of the class of participants; or (iv) any expansion in the types of options or awards available.  As such, shareholder approval is not required under the Rule for either the Amendment or the Plan following the Amendment.  In addition, we have determined that following the Amendment, the Plan could continue to operate without a specific expiration date because it would then have a fixed number of shares available for issuance.  Finally, the Plan would continue to be considered a grandfathered Plan, not subject to the requirements of the Rule, following the Amendment because the Plan was adopted prior to June 30, 2003, and the Amendment is not a material amendment to the Plan.
Publication Date*: 7/31/2012 Mailto Link Identification Number: 721
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