The reverse stock split is intended to increase the per-share trading price, in order to satisfy the $1 minimum bid price requirement for continued listing on the NASDAQ Capital Market.

As a result of this reverse 10:1 stock split, the maximum number of shares available for grant under the firm’s stock option plan and restricted stock plan will be adjusted proportionately. This is an example of how an option plan can be amended in response to a stock split.

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Takeaway:

• Stock splits will affect option plans. Option holders should receive advice on what this may mean for them.