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Frequently Asked Questions
  Staff Interpretation Letter 2007-27  
Identification Number 803
This is in response to your correspondence wherein you asked whether the company’s proposed issuances of securities in two transactions (the “Transactions”) would be aggregated for purposes of the shareholder approval requirements of Marketplace Listing Rule 4350(i)(1)(D)(ii) (the “Rule”).
According to the information you provided, the Transactions would consist of: (i) the sale of common stock to the Institutional Investor (the “Institutional Investment”) in a private placement and (ii) the issuance of common stock and warrants, as described below, in connection with the buy-out of the company’s obligation to make certain cash payments (the “Buy-Out Transaction”).  In the Buy-Out Transaction, the company would issue shares of its common stock and pay cash to the Payee in satisfaction of its obligation to make cash payments in connection with a royalty agreement originally entered into approximately six years ago.  In addition, in connection with the Buy-Out Transaction, the company would issue warrants to the providers of a debt facility, which the company would utilize to pay the cash portion of the Buy-Out Transaction.
You stated that the primary purpose for completing the Institutional Investment would be to fund the needs of the company’s operations as well as for other general corporate purposes including preparations for the anticipated launch of a new product in approximately one year.  None of the funds raised in the Institutional Investment would be used to fund the Buy-Out Transaction.  The Payee would not purchase shares in the Institutional Investment, and the Institutional Investor would not receive shares in the Buy-Out Transaction.  The Institutional Investor and the Payee are not affiliated with each other.  Neither of the Transactions is contingent on the other, although they may close concurrently.
Following our review of the information you provided, we have determined that the Transactions would not be aggregated for purposes of the Rule because they are for different purposes, there are no contingencies between the Transactions, and there is no commonality of investors.  As such, each would be evaluated separately to determine whether shareholder approval is required under Listing Rule 4350(i).
Publication Date*: 7/31/2012 Mailto Link Identification Number: 803
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