Proxy Proposals to Comply With NASDAQ Listing Rule 5635

Dialogic Inc. PRE14A on 6/11/12 (SEC file no. 1-33391)
Stereotaxis, Inc. DEF14A on 6/8/12 (SEC file no. 0-50884)
Authentidate Holding Corp. DEF14A on 5/21/12 (SEC file no. 0-20190)

Rule 5635(b) of the NASDAQ listing standards requires stockholder approval when any issuance or potential issuance will result in a change of control of the issuer.  NASDAQ has not adopted any rule on what constitutes a “change of control” for purposes of Rule 5635(b).  However, NASDAQ has previously indicated that the acquisition of, or right to acquire, by a single investor or affiliated investor group, as little as 20% of the common stock (or securities convertible into or exercisable for common stock) or voting power of an issuer could constitute a change of control.

Dialogic seeks approval to issue common shares upon the exercise of warrants issued pursuant to a subscription agreement, and to issue common shares upon the conversion of notes issued under a securities purchase agreement.  The full exercise of the warrants or the full conversion of the notes may result in the issuance of equity in an amount that may be deemed to exceed the share threshold constituting a change of control for purposes of Rule 5635(b).  As a result of certain anti-dilution provisions in the warrants, the exercise price is deemed to be below the market value of the common shares on the date the warrants were issued. 

Rule 5635(d) of the NASDAQ listing standards requires stockholder approval of any sale, issuance or potential issuance of common stock (or securities convertible into or exercisable for common stock) equal to 20% or more of the common stock outstanding or 20% or more of the voting power outstanding before such issuance for a price less than the greater of book or market value of the common stock at the time of such issuance.

Stereotaxis sold approximately $8.5 million in aggregate principal amount of unsecured, subordinated, convertible debentures to certain institutional investors under a Securities Purchase Agreement dated May 7, 2012.  For no additional consideration, purchasers of the debentures also received six-year warrants to purchase 25.2 million issuer common shares at an exercise price of $0.3361 per share.   As a condition to closing, Stereotaxis agreed to seek stockholder approval of being able to convert all of the convertible debentures and honor the exercise of all convertible debt warrants, even in excess of 20% of its pre-transaction capitalization, for purposes of Rule 5635(d).  The Board believes it is in the best interests of the company to have the flexibility to settle these obligations with common stock rather than repaying or settling them in cash.

Authentidate also seeks stockholder approval in compliance with NASDAQ Listing Rules 5635(b) and 5635(d) to issue securities in connection with a $5 million private placement of convertible redeemable preferred stock in October 2010 and a March 2012 financing of $4.05 million aggregate principal amount of senior secured promissory notes and warrants to purchase common stock for gross proceeds of $4.05 million.