Once the company is listed on The NASDAQ Stock Market, it must comply with the quantitative and qualitative continued listing requirements, including the corporate governance provisions. NASDAQ's Listing Qualifications is responsible for monitoring continued compliance. This section addresses questions regarding these continued listing requirements.

Applicable Rules: Marketplace Rules 4300, IM-4300, 4310, IM-4310-2, 4320, 4330, 4340, 4350, 4351, 4420, 4450, 4470, 4500 and 4800.

What are NASDAQ's continued listing requirements?
The continued listing requirements for The NASDAQ Global Select Market, The NASDAQ Global Market and The NASDAQ Capital Market are provided in Listing Standards and Fees (PDF).

Does NASDAQ look to the underlying shares for American Depositary Receipts ("ADRs") and American Depositary Shares ("ADS") to determine compliance?
Excluding bid price, NASDAQ will look to the underlying shares if the ADRs or ADS do not qualify on their own merits. For NASDAQ Global Market companies, Marketplace Rule 4450(g) specifically addresses this issue. For NASDAQ Capital Market companies, Marketplace Rule 4320(e) specifically addresses this issue.

What happens if my company fails to meet the continued listing criteria?
A company listed on either the Global Select Market or the Global Market companies must comply with all the continued listing requirements under either Maintenance Standard 1 or 2. A Capital Market company must comply with all of the continued listing requirements for that marketplace. If the company is unable to maintain the continued listing criteria, it will be notified, in writing, of the nature of the deficiency and the action necessary to regain compliance. If the company receives a delisting letter, it will have the opportunity to appeal NASDAQ's determination to the Hearings Panel. See Hearings Process for additional information. The company should contact its Listing Qualifications analyst to discuss the specifics of its particular situation.

How does NASDAQ communicate that a company does not comply with a continued listing standard?
Since August 2005, NASDAQ has broadcast an indicator over its market data dissemination network, noting when a NASDAQ-listed company failed to submit its regulatory filings on time, failed to meet NASDAQ's continued listing standards, and/or filed for bankruptcy. The indicator will be displayed with quotation information related to the company's securities on NASDAQ.com, NASDAQTrader.com and by other third party providers of market data information. NASDAQ also posts a list of all non-compliant NASDAQ companies and the reason(s) for such non-compliance on our website. Click here to view the list.

Does NASDAQ publish a list of non-compliant companies?
Yes. Each trading day, NASDAQ publishes a list of companies that are non-compliant with its continued listing standards. In the event of a bankruptcy, or a delinquent or otherwise incomplete filing, a company is added to the list two business days after notification by NASDAQ. In all other instances of non-compliance, a company is added to the list five business days after notification. Companies are removed from the list one business day after NASDAQ determines that it has regained compliance, or the company no longer trades on NASDAQ. Click here to view the list.

In addition, NASDAQ will broadcast an indicator over its market data dissemination network noting the company's non-compliance. The indicator will be displayed with quotation information related to the company's securities on NASDAQ.com, NASDAQTrader.com and by other third-party providers of market data information.

Investors seeking further information may view the company's filings on the SEC and/or company's website. NASDAQ's continued listing standards can be viewed at Listing Standards and Fees (PDF).

My company's bid price has fallen below the minimum requirement. Will we be delisted?
Companies listed on NASDAQ are required to maintain a minimum closing bid price of $1.00 per share. NASDAQ uses the consolidated closing bid price to determine whether a company complies with this requirement. If a company trades for 30 consecutive business days below the $1.00 minimum closing bid price requirement, NASDAQ will send a deficiency notice to the company, advising that it has been afforded a "compliance period" of 180 calendar days to regain compliance with the applicable requirements.

Thereafter, Capital Market companies can receive an additional 180-day compliance period if they meet all initial inclusion requirements for the Capital Market, except for the bid price requirement. If a Global Select Market or Global Market company is unable to comply with the bid price requirement prior to the expiration of its 180-day compliance period, it may transfer to The NASDAQ Capital Market, so as to take advantage of the additional compliance period offered on that market, provided it meets all requirements for initial listing on The NASDAQ Capital Market, except for the bid price requirement. If the company does not demonstrate compliance within the compliance period, it will be issued a delisting letter, which it may appeal at that time. See Hearings Process for additional information.

How does NASDAQ measure the bid price of a security?
NASDAQ uses the consolidated closing bid price to determine whether a company complies with the bid price requirements for continued listing. A NASDAQ issuer can view its security's consolidated closing bid price by accessing "Trading History" on the www.nasdaq.net website.

How does a company regain compliance with the minimum bid price requirement?
NASDAQ uses the consolidated closing bid price to determine whether a company complies with the bid price requirements for continued listing. A NASDAQ issuer can view its security's consolidated closing bid price by accessing "Trading History" on the www.nasdaq.net website.

Although an automated computer system tracks each company's bid price on a daily basis, it is suggested that the company contact its Listing Qualifications analyst when it believes compliance has been achieved. NASDAQ will provide all compliance determinations, in writing, to the company.

Under certain circumstances, to ensure that the company can sustain long-term compliance, NASDAQ may require the closing bid price to equal or to exceed the $1.00 minimum bid price requirement for more than 10 consecutive business days before determining that a company complies. In determining whether to look beyond the 10 days, NASDAQ will consider, but is not limited to, the following factors:

• Margin of compliance (the amount by which the price is above the $1.00 minimum standard);
• Trading volume (a lack of trading volume may indicate a lack of bona fide market interest in the security at the posted bid price);
• The market maker montage (e.g., if only one of eight market makers is quoting at or above the minimum bid price and the quote is only for 100 shares, then added scrutiny may be appropriate); and
• The trend of the stock price (is it up or down?).

Does NASDAQ accept reverse stock splits as a method to regain compliance with the minimum bid price requirement?
Yes. NASDAQ views reverse stock splits as an acceptable method to regain compliance. If the company determines to implement a reverse stock split, it will need to provide certain information to NASDAQ. See the following Frequently Asked Question for additional information. Furthermore, to inform the market of the reverse stock split, NASDAQ will append a fifth character, "D", to the company's symbol for approximately 20 trading days following the reverse stock split.

How is market value of publicly held shares ("MVPHS") calculated?
MVPHS is calculated by multiplying the publicly held shares, which is total shares outstanding less any shares held by officers, directors, employee stock ownership plans, or beneficial owners of 10% or more, by the closing inside bid price.

My company's market value of publicly held shares ("MVPHS") has fallen below the minimum requirement. Will we be delisted?
If a NASDAQ-listed company trades below the applicable MVPHS requirement ($5,000,000 and $15,000,000 for Global Select Market and Global Market companies under Maintenance Standard 1 and 2, respectively, and $1,000,000 for Capital Market companies) for 30 consecutive business days, it will be notified of the deficiency and afforded a 90 calendar day compliance period to regain compliance with the applicable standard.

In order to achieve compliance with the market value of publicly held shares requirement, a company must demonstrate compliance with the applicable standard for a minimum of 10 consecutive business days. Although an automated computer system tracks each company's bid price and MVPHS on a daily basis, it is suggested that the company contact its Listing Qualifications analyst when it believes compliance has been achieved. NASDAQ will provide all compliance determinations, in writing, to the company.

If the compliance period expires without compliance being achieved, the company will be issued a delisting notification. The company may appeal NASDAQ's determination to delist at that time. See Hearings Process for additional information.

My company's market value of listed securities has fallen below the minimum requirement. Will we be delisted?
NASDAQ-listed companies not qualifying for continued listing based on market value of listed securities ("MVLS") are notified of a deficiency after 10 consecutive trading days of non-compliance with the applicable standard and are afforded a 30 calendar day compliance period to regain compliance.

In order to achieve compliance with the market value of listed securities requirement, a company must demonstrate compliance with the applicable standard for a minimum of 10 consecutive business days. Although an automated computer system tracks each company's bid price and MVLS on a daily basis, it is suggested that the company contact its Listing Qualifications analyst when it believes compliance has been achieved. NASDAQ will provide all compliance determinations, in writing, to the company.

If the compliance period expires without compliance being achieved, the company will be issued a delisting notification. The company may appeal NASDAQ's determination to delist at that time. See Hearings Process for additional information.

My company has less than the required number of market makers. Will we be delisted?
The company must have fewer than the minimum number of maker makers required for 10 consecutive trading days before NASDAQ sends an initial notification letter. The company will be provided 30 calendar days to regain compliance, which can be demonstrated by maintaining the minimum number of market makers for 10 consecutive trading days. If the 30-day compliance period expires, the company will be issued a delisting letter, which it may appeal at that time. See Hearings Process for additional information. Please note that an Electronic Communications Network ("ECN") is not considered a market maker for the purposes of this rule.

My company has fallen below the stockholders' equity, total assets and total revenue, net income from continuing operations, publicly held shares or round lot shareholders requirement. Will we be delisted?
Not immediately. Based on the company's periodic public filings, NASDAQ will determine if it is still in compliance with these requirements. If NASDAQ determines that the company no longer complies with an applicable requirement, then NASDAQ will issue a letter requesting that the company submit a plan of compliance within 15 calendar days. Upon review of the company's plan of compliance, NASDAQ will determine whether:

• It has regained compliance;
• An extension of time is warranted; or
• To delist the company's securities.

In each circumstance, NASDAQ will notify the company of the decision in writing. For further information, please see Marketplace Rule 4803 regarding Staff review of deficiencies. If NASDAQ determines to delist the securities, the company may appeal at that time. See Hearings Process for additional information.

What factors should our company consider when preparing the plan of compliance?
In your submission to the Listing Qualifications Staff, please note the following suggested guidelines:

• Your submission should be definitive, concise. and directly address your company's plan to regain compliance in the near term and maintain compliance over the long term. .

• The plan of compliance should discuss how the company intends to remedy the deficiency within the next 30-60 days and should evidence the company's ability to sustain compliance for the next six to twelve months.

• If the company's plan of compliance includes a private placement involving common stock, or any securities convertible or exercisable into common stock, a merger, a debt conversion, or other similar transactions, please ensure that the proposed action complies with NASDAQ's corporate governance requirements, particularly the shareholder approval rules, and other provisions of the Marketplace Rules. Please contact your Listing Analyst for further guidance on these matters.

• If a transaction is being contemplated to remedy the deficiency, please include a balance sheet and income statement evidencing the pro forma effect of the transaction. The financial statements should be based on historical financial information, not more than 45 days old. Please show three columns of data - historical, all adjustments, and the pro-forma totals.

• The submission should include projections, if available, for the next 12 months. Please include balance sheet and income projections. Clearly state all assumptions being made.

• Provide copies of all definitive or draft agreements or contractual arrangements for private placements, mergers, or other financial arrangements. Please include a list of investors for private placements. The company should file all applicable Notifications for Listing of Additional Shares.

• Plans relying on future projected revenues to comply with the equity requirement are generally not accepted unless the company has definitive contracts and the revenue will be received in the near term.

• NASDAQ will consider the company's net losses when reviewing a proposed equity-raising transaction to determine whether the plan is sufficient to regain and sustain compliance with the equity requirement.

• Please direct all questions to your Listing Analyst or contact Listing Qualifications at 301.978.8008 and ask to speak with a Continued Listing Analyst or Manager for further assistance.

What are some examples of plans of compliance that have been accepted by NASDAQ?
A Capital Market-listed company provided a definitive agreement for an asset sale, which would raise $50 million in the near term. Based on a pro forma balance sheet, after accounting for projected net losses, the company would have equity of more than $15 million immediately after the transaction and more than $10 million at the end of the fiscal year, in excess of the $2.5 million requirement.

A Global Market-listed company announced its intention to complete a public offering in the near term and provided a press release announcing the pricing of an underwritten firm commitment public offering. Net proceeds of the offering were expected to be approximately $40 million. Subsequently, the company filed a pro forma balance sheet, adjusted to reflect the public offering, showing stockholders equity of approximately $45 million, in excess of the $10 million requirement.

A Global Market-listed company stated that certain holders of the company's warrants had exercised 500,000 warrants for proceeds of $12 million. Staff had concerns with the company's ability to sustain compliance based on the company's history of losses. In that regard, the company provided definitive agreements from the warrant holders relating to the exercise of additional warrants, which when exercised, would result in proceeds to the company of $5,000,000. Based on the exercise, the company stated that stockholders equity had increased to approximately $22 million, on a pro-forma basis, in excess of the $10 million requirement.

A Global Market-listed company announced the acquisition of a target company shortly after receiving notice from NASDAQ that it was not in compliance with the $10 million minimum equity requirement. Therefore, the company believed that it has already achieved compliance with the minimum equity standard and anticipated that it would be able to file audited financial statements and pro forma financial information to reflect compliance within two weeks.

What is an example of a plan of compliance that has not been accepted by NASDAQ?
A Global Market-listed company stated that it was pursuing a potential convertible note offering of between $20 million and $30 million to be completed before the end of the year, followed by an equity offering of up to $30 million. The company was not able to complete the convertible note offering in the near term and did not provide definitive terms for either transaction.

What are my filing obligations with NASDAQ?
The company must comply with the SEC or other federal or state regulatory authority filing requirements. If the company does not submit its filings via the SEC's Electronic Data Gathering, Analysis and Retrieval ("EDGAR") system, then it is required to submit three copies of all documents to NASDAQ. The company should refer to Marketplace Rules 4310(c)(14) and 4350(b).

What are the repercussions if my company does not fulfill its filing obligations?
If the company is delinquent in its filing obligations, NASDAQ will issue a delisting letter, in which the company has the following choices:

• Accept the determination to delist;
• Submit the filing within seven (7) calendar days; or
• Appeal the determination by requesting a hearing. See Hearings Process for additional information.

In addition, NASDAQ will broadcast an indicator over its market data dissemination network noting the company's non-compliance. The indicator will be displayed with quotation information related to the company's securities on NASDAQ.com, NASDAQTrader.com and by other third-party providers of market data information. Also, NASDAQ posts a list of all non-compliant NASDAQ companies and the reason(s) for such non-compliance on our website. Click here to view the list. The company will be included in this list commencing two business days from the date of the delist letter.

What are the repercussions if my company's auditors did not review the quarterly financial statements as required under SAS 100?
If the company is required to have its interim financial statements reviewed under SAS 100 and does not comply, NASDAQ views the company to be delinquent in its filing obligations. NASDAQ will issue a delisting letter, in which the company has the following choices:

• Accept the determination to delist;
• Submit the filing within seven (7) calendar days; or
• Appeal the determination by requesting a hearing. See Hearings Process for additional information.

In addition, NASDAQ will broadcast an indicator over its market data dissemination network noting the company's non-compliance. The indicator will be displayed with quotation information related to the company's securities on NASDAQ.com, NASDAQTrader.com and by other third-party providers of market data information. Also, NASDAQ posts a list of all non-compliant NASDAQ companies and the reason(s) for such non-compliance on our website. Click here to view the list. The company will be included in this list commencing two business days from the date of the delist letter.

How long can a company remain listed if it becomes filing delinquent because of issues related to the accounting of stock options or other concerns?
When a company is late in filing a required periodic report with the SEC, NASDAQ Staff is required to immediately send a delisting letter to the company. The Staff does not have discretion to allow a company in this situation additional time to remain listed. However, the company may appeal the delisting determination letter to a Hearings Panel. A request for a hearing before the Panel will stay the delisting pending the Panel's decision.

The Panel has the discretion to grant the company additional time to remain listed, provided the company has a specific plan to regain compliance and is taking appropriate steps to deal with the circumstances which caused the delinquency. The Panel may not, however, grant an extension which would exceed 180 days from the date of the initial staff determination of deficiency.

A company may appeal a Panel decision to the NASDAQ Listing and Hearing Review Council. The Listing Council, which is comprised of individuals who are independent of NASDAQ, is charged with reviewing all decisions of the Panel and with advising the NASDAQ Board on questions relating to company listings. An appeal to the Listing Council does not stay the Panel's decision to delist the company's securities. See Appeals Process for additional information.

In addition, all Panel decisions are subject to a "call for review" by the Listing Council. In connection with a call for review, the Listing Council has the discretion to stay the Panel's decision. Should the Listing Council grant a stay, then the company would remain listed during the pendency of the Listing Council's review. If the Listing Council determines it is appropriate, it may grant the company additional time to regain compliance. This exception can be for a period of time not to exceed 360 days from the date of the initial staff determination of deficiency.

Finally, the NASDAQ Board of Directors has the ability to call any Listing Council decision for review. Like the Listing Council process, the Board has the discretion to stay the Listing Council's decision in connection with a call for review. Should the Board grant a stay, then the company would remain listed during the pendency of the Board's review. If the Board determines it is appropriate, it may grant the company additional time to regain compliance while listed. While the rules do not limit the maximum time the Board may provide, it should be noted that the Board has been unwilling to allow a company to remain listed for more than one year from the due date of the company's first delinquent annual report.

The Securities and Exchange Commission has reviewed NASDAQ's actions in connection with an appeal by a company that did not regain compliance in the time permitted by the NASDAQ Board. The Commission found that the company had not established a likelihood that it would succeed on the merits of its argument challenging the decision to delist the company if it remained delinquent one year after the due date of its first delinquent annual report. See In the Matter of Coherent, Inc. (December 18, 2007).

When might the Listing Council exercise its discretionary authority to stay a Panel decision?
Generally, the Listing Council will not exercise its discretion to stay a Panel delisting determination. However, with respect to companies that have become filing delinquent due to issues related to accounting for stock options, the Listing Council has determined that it may be appropriate to grant a stay. In that regard, the Listing Council recognizes that there are unique circumstances surrounding these issues: most issuers and their accounting firms were taken by surprise; the necessary investigation may require the thorough review of documents and processes surrounding hundreds or thousands of option grants over a period of time typically years ago; and these issues could have enormous effect on the company and the individuals involved.

In view of this, the Listing Council has determined that it may be appropriate to exercise its discretion on a case by case basis, balancing the need for timely financial reporting with the interests of shareholders and companies in maintaining a listing on a more transparent, liquid market. In determining whether to grant a stay, the Listing Council will, among other things, consider whether the company acted promptly and appropriately to address the problems that occasioned the filing delinquency, including whether the company commenced an independent investigation and took steps to deal directly with individuals who it determined engaged in misconduct; whether the company has adopted appropriate remedial measures to avoid a recurrence of these problems; and whether the company will be able to regain compliance within the maximum time afforded by NASDAQ's rules.

When might the NASDAQ Board exercise its discretionary authority to stay a Listing Council decision?
Generally, the Board will not exercise its discretion to stay a Listing Council decision to delist a company's securities. However, with respect to companies that have become delinquent in their periodic financial reports, the Board has determined that it may be appropriate to grant a stay. In that regard, the Board recognizes that there are unique circumstances surrounding these issues. In determining whether to grant a stay, the Board will, among other things, consider the underlying cause of the company's inability to file the required reports, whether the company acted promptly and appropriately to address the problems that occasioned the filing delinquency, including whether the company commenced an independent investigation and took steps to deal directly with individuals who it determined engaged in misconduct; whether the company has adopted appropriate remedial measures to avoid a recurrence of these problems; and the likelihood that the company will be able to regain compliance in the near term.

Public Reprimand Letters

What is a Public Reprimand letter?
A Public Reprimand letter is issued when NASDAQ Staff determines that a company has violated NASDAQ rules, but does not believe the circumstances warrant delisting the company. A Public Reprimand is generally issued to address inadvertent violations of NASDAQ's corporate governance rules.

A company that receives a Public Reprimand letter must publicly disclose receipt of the letter by issuing a press release and filing a Form 8-K.

A company that receives a Public Reprimand letter has the opportunity to appeal NASDAQ's determination to a Hearings Panel. See Hearings Process for additional information.

Under what circumstances may NASDAQ issue a Public Reprimand letter?
NASDAQ Staff will issue a Public Reprimand letter when it determines that a company has violated NASDAQ rules, but does not believe the circumstances warrant delisting the company. A Public Reprimand is generally issued to address inadvertent violations of NASDAQ's corporate governance rules.

Some of the factors NASDAQ will consider in determining whether to issue a Public Reprimand letter are as follows:

• Was the violation inadvertent;
• Did the violation have a material adverse impact on shareholders' interests;
• What was the scope of the violation;
• Upon discovery of the violation, was the violation cured and how quickly was it cured;
• Did the company reasonably rely on an independent advisor;
• Has the company demonstrated a pattern of rule violations; and
• Was the violation self reported to NASDAQ?

Examples of situations where NASDAQ has issued a Public Reprimand include:

Example 1: Marketplace Rules 4350(c)(3) and 4350(c)(4) - Failure to comply with Independent Committee requirements

The company's Proxy indicated that its Chief Executive Officer ("CEO") was a member of its Nominating Committee (the "Committee"). However, as an executive officer, the CEO is precluded from being an Independent Director. In that regard, the company violated the Rules since they require that executive compensation and director nominees must be selected or recommended, either by: (i) a majority of the independent directors; or, (ii) a committee comprised solely of independent directors. Staff was advised that after the company's CEO joined the Committee, it only met once. Upon Staff's notification to the company of the violations, it promptly regained compliance by having the CEO resign from the Committee.

Example 2: Marketplace Rules 4350(c) and 4350(d) - Failure to comply with Independent Committee and Controlled Company Exemption requirements

The company's Proxy stated that it was a "Controlled Company" because more than 50% of its voting power was held by a single entity and that it was relying on the Controlled Company exemption to allow a non-independent director to serve on both its Compensation and Nominating Committees. Staff determined that contrary to the disclosure in the Proxy, the company was no longer eligible to rely upon the Controlled Company exemption because an increase in its total shares outstanding had lowered the entity's voting control below 50%. Within a week of Staff bringing this issue to the company's attention, it acted to cure the violation by appointing another independent director to the Compensation and Nominating Committees. However, the company stated that the Board had determined to continue the committee service of the non-independent directors in reliance on the exceptional and limited circumstances exception contained in NASDAQ Marketplace Rules 4350(c)(3)(C) and 4350(c)(4)(C), which reliance was appropriately disclosed.

Example 3: Marketplace Rule 4350(i)(1)(A) - Shareholder Approval Violation

The company notified NASDAQ that as a result of a recent review of its Stock Incentive Plan (the "Plan"), it discovered that stock options had been granted in excess of the number of shares authorized under the shareholder approved plan. To regain compliance with the shareholder approval requirements, the company obtained written waivers from each officer and director holding such awards, pursuant to which they waived the right to exercise their options unless and until the shareholders of the company vote in favor of an increase in the number of shares authorized for issuance under the Plan. This approval would include the excess awards as well as additional equity incentives to provide for future grants. The company expects to solicit the vote of its shareholders at its next annual meeting.