The Nasdaq Stock Market has announced its intent to reinstate enforcement of requirements for minimum bid price and market value of public float for listed companies. The current emergency moratorium on enforcement of the minimum bid price and market value of public float requirements is scheduled to expire on January 2, 2002. This temporary relief was granted in response to extraordinary market conditions following the tragedy of September 11.

Nasdaq determined that the current 90-day grace period for Nasdaq National Market companies to regain compliance with the market value of public float and minimum bid price requirements is appropriate and commensurate with the stature of that market. Therefore, Nasdaq will maintain these requirements without adjustment.

Changes to the SmallCap Maintenance Requirements Proposed

Nasdaq has proposed a more flexible bid price grace period for meeting maintenance standards for the SmallCap market. The proposal would allow SmallCap companies up to one year to implement turnaround plans to regain compliance with the minimum bid requirement. Under this proposal, SmallCap companies could remain on the well-regulated and transparent SmallCap market instead of being forced onto the OTC Bulletin Board or other less transparent markets.

Details of the proposed adjustments to the SmallCap market grace period are as follows:

• Extend the 90-day grace period on the SmallCap market to 180 days. Following this grace period, issuers that demonstrate compliance with the core initial listing standards of the SmallCap market - that is, either net income of $750,000, stockholders' equity of $5 million or market capitalization of $50 million - will be afforded an additional 180-day grace period within which to regain compliance.
• If a National Market issuer phases down to the SmallCap market at the expiration of the 90-day National Market grace period, it will be afforded the SmallCap grace periods noted above.
• Former National Market issuers that demonstrate compliance with the $1 bid-price requirement for 30 consecutive trading days prior to the expiration of all SmallCap grace periods, as well as all National Market maintenance requirements (with the exception of bid price), at all times following their phase-down to SmallCap, would be eligible to phase-up to the National Market pursuant to the maintenance criteria.

The proposal must be approved by the SEC. In order to evaluate the effectiveness of these changes, Nasdaq plans to implement this proposal on a pilot basis until December 31, 2003.