NASDAQ Proposes To Extend Minimum Bid Price Rule Compliance Periods - Measures Provide Option To Companies Meeting Heightened Financial Requirements

The NASDAQ Stock Market, Inc. (NASDAQ®) announced plans to extend a pilot program governing bid price rules for all NASDAQ National Market® and NASDAQ Small Cap® issuers. The proposal will allow issuers that meet heightened financial requirements to benefit from extended compliance periods for satisfying minimum bid price requirements.

"Extending the pilot program is a prudent and appropriate response to current economic conditions," commented Rick Ketchum, president and deputy chairman of NASDAQ. "Qualified companies in compliance with core listing criteria deserve a fair opportunity to execute business plans and demonstrate full compliance in a reasonable timeframe appropriate to this challenging financial environment."

First enacted a year ago, the pilot program provides issuers additional time to address bid price deficiencies that may be attributable to the continuing economic downturn and the related decline in the broad market averages. The extended grace periods are consistent with the rules of the other major U.S. markets, although no other market conditions its grace period on compliance with initial listing standards. Under the new proposal, NASDAQ will extend the program expiration from December 31, 2003 to December 31, 2004.

"The amendment will lessen potential disruption to investors, who will have more time to make informed investment decisions while continuing to trade in a regulated, liquid and transparent market," said Ginger Ehn Lew, a member of the NASDAQ Listing and Hearing Review Council and Chief Executive Officer and Managing Director of the Telecommunications Development Fund. "At the same time, the Council felt it was important that companies making use of the grace period option meet tougher overall financial requirements."

The proposed rule changes would:

• Extend the bid price grace period for all National Market issuers from 90 calendar days to 180 calendar days and provide an additional 180 calendar day grace period for those National Market issuers able to demonstrate compliance with the core National Market initial listing criteria.
• Maintain the initial 180 calendar day bid price grace period for all SmallCap issuers, but extend the bid price grace period for SmallCap issuers demonstrating compliance with the core SmallCap initial listing criteria from 180 to up to 540 days (approximately 18 months). Compliance with this standard will be verified every 180 days.
• Extend the pilot program expiration from December 31, 2003 to December 31, 2004.

The proposal, approved yesterday by the NASDAQ Board of Directors and today by the NASD Board of Directors, is the result of recommendations by the NASDAQ Listing and Hearing Review Council, an independent advisory panel.

NASDAQ will present the overall plan to the Securities and Exchange Commission for approval prior to implementing the proposed changes.

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