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  Staff Interpretation Letter 2007-30
Identification Number 806
This is in response to your correspondence regarding the applicability of the shareholder approval requirements to a proposed issuance of securities by the company in a private placement (the “Private Placement”) and to a tender offer for the company’s common stock.  Specifically, you asked whether Marketplace 4350(i)(1)(B) (the “Rule”) would require shareholder approval of the Private Placement or tender offer.  In addition, you asked whether the company could complete the Private Placement prior to the end of the 15-day notice period for the Listing of Additional Shares referenced in Marketplace Listing Rule 4310(c)(17)(D).
According to the information you submitted, in the Private Placement, the company would sell to the Investor shares of its common stock and a debenture convertible into additional shares of common stock. The debenture would be subject to anti-dilution provisions only for any reclassification, recapitalization, merger, stock splits or other similar transactions. The aggregate potential issuance of common stock in the Private Placement would be less than 20% of the pre-transaction outstanding shares, such that the Investor would own no more than approximately 17% of the company’s outstanding common shares as a result of the issuance. The Investor would not have any special right to representation on the company’s board of directors. Currently, the Investor has no ownership position in the company.
The company and the Investor have agreed that simultaneously with the completion of the Private Placement, the Investor will commence a tender offer for all of the outstanding shares of the company’s common stock (the “Tender Offer”). The Tender Offer will contain a minimum tender condition of 50.1% of the company’s outstanding shares exclusive of any shares purchased by the Investor in the Private Placement. If the minimum is not met, then no shares would acquired by the Investor in the Tender Offer.
Following our review of the information you submitted, we have concluded that given the size of the Investor’s ownership that could result from the Private Placement, the Rule will not require shareholder approval.  Any change of control that occurs will be as a result of the Tender Offer. However, the Rule does not require shareholder approval of the Tender Offer because the Tender Offer is not an issuance of securities by the company.  In reaching this conclusion, we have relied on your representation that for the Tender Offer to be completed, at least 50.1% of the outstanding shares will have to be tendered, without regard to any shares that the Investor purchases in the Private Placement. Lastly, because we have completed our review, the company may close the Private Placement prior to the end of the 15-day notice period referenced in Listing Rule 4310(c)(17) provided that the company submits to NASDAQ all required documentation prior to closing.
Publication Date*: 7/31/2012 Mailto Link Identification Number: 806
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