[Federal Register Volume 63, Number 180 (Thursday, September 17, 1998)]
[Notices]
[Pages 49766-49795]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-24887]



[[Page 49765]]

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Part III





Securities and Exchange Commission





_______________________________________________________________________



Self-Regulatory Organizations: Proposed Rule Change Filing and American 
Stock Exchange, Inc. Amendment No. 1 Thereto Relating to the 
Combination of American Stock Exchange, Inc. and National Association 
of Securities Dealers, Inc. Changes; Notice

  Federal Register / Vol. 63, No. 180 / Thursday, September 17, 1998 / 
Notices  

[[Page 49766]]



SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40426; File No. SR-Amex-98-32]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment No. 1 Thereto by the American Stock Exchange, Inc. 
Relating to Changes to the Combination of the American Stock Exchange, 
Inc. and the National Association of Securities Dealers, Inc.

September 10, 1998.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Exchange Act'' or ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice 
is hereby given that on September 3, 1998, the American Stock Exchange, 
Inc. (``Amex'') filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') the proposed rule change as described in 
Items I, II and III below, which Items have been prepared by the self-
regulatory organization. Amex filed an amendment to the proposed rule 
change on September 8, 1998.\3\ The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Letter to Michael Walinskas, Deputy Associate Director, 
Commission, from William Floyd-Jones, Jr., Assistant General 
Counsel, Amex, dated September 4, 1998 (``Amendment No. 1''). 
Amendment No. 1 adds a definition of ``NASD Nominating Committee'' 
to the Constitution. It also corrects a change to Amex Rule 345 by 
clarifying that any one member of the Amex Adjudicatory Committee 
(``AAC'') may require a review of a Disciplinary Panel Decision by 
the full AAC. (Originally, the change to Amex Rule 345 erroneously 
provided that four members of the AAC were needed to call a 
disciplinary matter for review.)
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    Amex is proposing certain changes to its Constitution and Rules 
that will become effective at the time they become the Constitution and 
Rules of the American Stock Exchange LLC (referred to herein as ``New 
Amex'' or ``Exchange''). New Amex is a limited liability company that 
will assume the functions and succeed to the exchange registration of 
the Amex upon closing of the transaction among the Amex, the National 
Association of Securities Dealers, Inc. (``NASD'') and other parties 
specified in the Transaction Agreement, dated as of May 8, 1998. The 
text of the proposed rule change is available at the Office of the 
Secretary, the Amex and at the Commission.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of and basis for the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of these statements, including the 
proposed amendments to the Constitution and various rules attached here 
as Exhibits A and B, may be examined at the places specified in Item IV 
below. The self-regulatory organization has prepared summaries, set 
forth in sections A, B and C below, of the most significant aspects of 
such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of the proposed rule change is to implement changes to 
the current Constitution and Rules of the Amex that will become 
effective at the time they become the Constitution and Rules of New 
Amex at the time of the closing of the transaction (``the Closing'') 
among the Amex, the NASD and other parties specified in the Transaction 
Agreement, dated as of May 8, 1998, whereby the Amex will become a 
subsidiary of the NASD.\4\ By means of the proposed transaction, the 
NASD and the Amex desire to effect a combination to create a new more 
electronic, centralized floor based specialist auction market for 
equities and a more technologically competitive and efficient 
centralized market for standardized options.
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    \4\ In addition to the NASD and Amex, parties to the Transaction 
Agreement include NASD Market Holding Company, a wholly-owned 
subsidiary of the NASD; New Amex LLC, a Delaware Limited Liability 
Company; and the following subsidiaries of the Amex: American Stock 
Exchange Clearing Corporation; American Stock Exchange Realty 
Associates, Inc.; Amex Commodities Corporation; and PDR Services 
Corporation.
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    On March 18, 1998, the NASD and the Amex jointly announced that the 
NASD Board of Governors and the Amex Board of Governors approved an 
agreement in principle to bring the Amex into the NASD family of 
companies, subject to finalization of a definitive agreement and 
approval by Amex members. On April 8, 1998, the Amex Board approved the 
terms of that definitive agreement, which was signed by the NASD and 
the Amex as of May 8, 1998. In connection with Amex member approval of 
the agreement, the Amex sent to all 864 Amex Regular Members and 
Options Principal Members (referred to collectively as ``Members'') an 
Information Memorandum, dated May 14, 1998, describing the transaction 
in detail. Attached as exhibits to the Information Memorandum were the 
Restated Certificate of Incorporation and the new By-Laws of Amex Corp. 
(as hereinafter defined), and the Constitution of New Amex. Members 
also were provided with Transaction Documents relating to the 
transaction. These included, among other items, the Transaction 
Agreement and exhibits thereto, including the Limited Liability Company 
Agreement of New Amex (``LLC Agreement'') and the Technology Transfer 
and Development Agreement. At a Special Meeting of Members on June 25, 
1998, the Members approved the transaction by a vote of 622 to 206. On 
August 6, 1998, the NASD Board of Governors authorized filing of a rule 
change with the Commission to amend NASD By-Laws to provide that the 
NASD Board will include the Chief Executive Officer of New Amex and one 
Floor Governor from the New Amex Board, as required by the Transaction 
Agreement. Final action with respect to the proposed amendments to the 
NASD By-Laws will not occur until a vote of the NASD membership is 
completed. The proposed amendments have been filed pursuant to Rule 
19b-4 under the Act (SR-NASD-98-56), and were published for member vote 
on August 7, 1998, in NASD Notice to Members 98-64. The last day for 
member vote is September 14, 1998.
    Following the Closing, New Amex will be a national securities 
exchange registered under Section 6 of the Exchange Act operating a 
separate floor-based specialist auction market with its own members and 
listed securities.\5\ At the Closing, New Amex will succeed to the 
exchange registration of Amex, and New Amex will promptly file 
necessary amendments to the Exchange's registration as a national 
securities exchange on Form 1-A, pursuant to Rule 6a-1 under the Act. 
Current Amex rules will become the rules of New Amex on the date of the 
Closing, amended only as described herein. Any amendments to such rules 
proposed

[[Page 49767]]

after the Closing will be filed by New Amex pursuant to Rule 19b-4. New 
Amex will also succeed to any proposed rule change filed with the 
Commission by Amex before the Closing but not approved by the 
Commission by that time, and when ultimately approved such proposal 
will change the rules of New Amex.
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    \5\ The Information Memorandum referred to above notes that 
``[t]he NASD, as the parent company of New Amex, will bear ultimate 
responsibility to ensure that New Amex meets its statutory 
obligations and that the necessary and appropriate resources are 
available to New Amex's compliance department to meet the evolving 
demands of operating a regulatory and compliance program in an 
advanced marketplace.'' (Information Memorandum at p. 40.) The NASD 
has undertaken to make its own rule filing with the Commission to 
this effect pursuant to Rule 19b-4.
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    For tax planning and other technical reasons, Amex will continue to 
exist as a corporate entity, and after the Closing its name will be 
changed to The Amex Corporation (hereinafter, ``Amex Corp.''). The 
right to trade on the Exchange will continue to be embodied in 
Memberships which are in fact interests in Amex Corp., although New 
Amex will have the authority and responsibility to approve transfers of 
such Memberships and changes in the ``approved persons'' of a Member or 
Member Organization, and there is proposed herein no change in the 
rules and policies applicable to that process.\6\
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    \6\ The Exchange scrutinizes and must approve not only those 
seeking to be active on the Exchange trading floor, but also those 
who seek only to own a Membership which will then be leased to 
another. Article I, Section 3(g) of the Exchange Constitution 
defines an ``approved person'' to include, inter alia, ``a person 
who is the owner of a membership held or to be held subject to a 
special transfer agreement'' [i.e., a lease]. In addition, the rules 
of the Exchange, in the section entitled ``Admission of Members and 
Member Organizations'', state that:
    An individual or organization may purchase one or more regular 
or options principal memberships, and must file an application with 
Membership Services to become the owner of such membership(s) and 
either a member, member organization or approved person. Applicants 
desiring only to own a membership nonetheless shall be subject to 
the same requirements and procedures as are specified below for 
members or member organizations, as the case may be, except for the 
requirements to be registered as or associated with a broker-dealer 
and to pass the physical examination.
    Finally, the Restated Certificate of Incorporation of Amex 
Corp., which will come into effect on the Closing Date, provides in 
Section 4(6) thereof that no right to trade on New Amex shall be 
transferred or leased apart from the Membership in respect of which 
it was made available, and that the exercise, transfer and lease of 
such trading right is subject to the Constitution of New Amex.
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    Generally, after the Closing, all the voting power in New Amex 
concerning the operation of the Exchange will be vested in the NASD. 
However, under the Transaction Agreement there are certain actions 
affecting the Members that require their consent, including the 
creation and issuance of new memberships, and material market structure 
changes for certain periods of time, and the principal function of Amex 
Corp. will be to implement the votes necessary to obtain these 
consents. Amex Corp. will have its own Board, which will be comprised 
of the Floor Governors on the New Amex Board. (The Board structure of 
New Amex is discussed below.) After the Closing, Regular and Options 
Principal Members will have equal voting rights and will vote on 
matters together as a single class. Amex Corp. will have an otherwise 
nonvoting interest in New Amex with certain preferential liquidation 
rights, and the NASD will have a voting interest in New Amex. For tax 
consolidation reasons, the NASD will own its interest in New Amex and 
the Nasdaq Stock Market through NASD Market Holding Company, a wholly-
owned subsidiary of the NASD.
    The LLC Agreement will establish Amex Corp.'s and the NASD's rights 
and obligations as owners of New Amex and vest the New Amex Board with 
its management powers. The NASD may not amend the LLC Agreement except 
with the consent of Amex Corp., which may grant such consent with the 
approval of its Board, except for any amendment which would constitute 
a change otherwise requiring consent of Amex Corp. (as authorized by 
the Members) under the Transaction Documents.
    The Information Memorandum and Transaction Documents also describe 
the New Equity Market Structure which will be introduced on the 
Exchange after the Closing, initially as a pilot program, and which 
will provide a system for the automatic execution of electronically 
delivered orders as well as a new electronic order book. The New Equity 
Market Structure is not the subject of this filing, but, instead, will 
be the subject of one or more additional filings pursuant to Rule 19b-
4, which will be submitted to the Commission as soon as practicable. 
Until any such changes are approved by the Commission, the Exchange 
market structure for equities will remain unchanged and orders will be 
entered and executed as they are currently.
    New Amex Constitution and Rules. New Amex's Constitution will 
include amendments to the current Amex Constitution, which in large 
part reflect changes provided for under the Transaction Agreement. 
Otherwise, New Amex's Constitution and Rules will be essentially the 
same as the current Amex Constitution and Rules. The following is a 
summary of amendments made to the current Amex Constitution and Rules. 
Non-substantive and stylistic changes are not discussed. The text of 
the New Amex Constitution is attached hereto as Exhibit A. Amendments 
to the text of various Amex rules are attached hereto as Exhibit B.
    Article I--Title--Purposes--Definitions. Section .01 (Title) would 
replace ``Corporation'' with ``Company'' and ``American Stock Exchange, 
Inc.'' with ``American Stock Exchange LLC'' to reflect the new legal 
status of the Exchange as a Limited Liability Company.
    Section .02 (Purposes) would delete references to the Exchange 
functioning as a ``board of trade'' under current Section .02(b) \7\ 
and would provide under new Section .02(c) that the Exchange conducts 
its activities under Delaware Limited Liability Law.
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    \7\ ``Board of trade'' is a term utilized in the New York Not-
for-Profit Corporation Law (see Sec. 1410) and becomes unnecessary 
when the Exchange becomes a creature of Delaware law.
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    Section .03(c) defines ``Regular Member'' as a person holding a 
regular trading right issued by Amex Corp. The term ``regular trading 
right'' is defined as the right to transact business on the Floor of 
the Exchange generally.
    Section .03(d), which replaces current Article IV, Sec. 1(b)(4) of 
the Exchange Constitution, similarly defines the term ``options 
principal member'' as a person holding an options principal trading 
right issued by Amex Corp. Such right means ``the right to execute on 
the Floor of the Exchange transactions in options and other derivative 
products for the right holder's own account and to give proprietary 
orders in such securities to Regular Members for execution. The term 
``derivative product'' remains substantially the same as the definition 
in current Article IV, Sec. 1(b)(4).
    Paragraphs (s) and (r) define the terms ``NASD'' and ``Nasdaq,'' 
respectively. Paragraph (u) defines the ``Transaction Agreement,'' 
which is referenced earlier herein. Paragraph (v) defines ``Predecessor 
Corporation'' as the American Stock Exchange, Inc. prior to the date of 
the Transaction Agreement, and The Amex Corporation after that date. 
Paragraph (w) defines ``Amex Committee'' discussed below. Paragraph (x) 
defines the term ``Class A Interest'' as the limited liability company 
interest in the Exchange initially issued to Predecessor Corporation. 
Paragraph (y) defines ``Class B Interest'' as the limited liability 
company interest in the Exchange initially issued to NASD Market 
Holding Company, a wholly-owned subsidiary of the NASD. ``Class A 
Interest'' and ``Class B Interest'' are further referenced in Article 
II, discussed below. Paragraph (z) defines ``The Amex Corporation'' as 
the New York Not-for-Profit Corporation that holds the Class A Interest 
in the Exchange. Paragraph (aa) defines the term ``NASD Nominating 
Committee'' as the National Nominating Committee appointed pursuant to 
Article VII Section 9 of the NASD By-Laws.
    Article II (``Government and Administration''). Article II of the 
New

[[Page 49768]]

Amex Constitution (``Government and Administration'') would combine the 
subject matter currently addressed by Articles II and III of the 
current Amex Constitution. As a result, the New Amex Constitution would 
reserve Article III.
    Article II, Section 1 of the New Amex Constitution (``The Board of 
Governors `` Classification'') describes the New Amex Board and the 
selection of Board members. The New Amex Board would consist of 18 
persons: four Floor Governors (at least one of whom must be an equity 
specialist and at least one of whom must be a Registered Options Trader 
(``ROT'')),\8\ two Upstairs Industry Governors (i.e., members 
affiliated with broker-dealers that have substantial contact with 
public customers), eight Public Governors, the two most senior members 
of the New Amex staff and two representatives of the NASD staff.\9\ The 
NASD has undertaken to include as one of the two representatives of the 
NASD staff a person that meets the qualifications of Public Governor on 
the New Amex Board. The NASD will file this undertaking with the 
Commission pursuant to Rule 19b-4.
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    \8\ The Transaction Agreement provides that on the tenth 
anniversary of the closing date, one additional Floor Governor would 
be added to the New Amex Board. The fifth Floor Governor is intended 
to provide Members with additional representation on the Board upon 
the expiration of certain contractual provisions in the Transaction 
Agreement.
    \9\ As noted above, the NASD Board would include one Floor 
Governor from the New Amex Board and the Chief Executive Officer of 
New Amex. Such Floor Governor on the NASD Board would be selected by 
the New Amex Board, subject to approval by the NASD National 
Nominating Committee. These additions to the NASD Board would begin 
in January 1999.
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    The eight Public Governors and two Upstairs Industry Governors 
would be nominated and elected by the NASD. The four Floor Governors 
would be nominated by Amex Corp. and elected by the NASD.\10\ The NASD, 
however, may reject a Floor Governor nominee only if (i) the nominee is 
subject to a statutory disqualification, (ii) the nominee is subject to 
a proceeding or investigation which could result in a statutory 
disqualification, or (iii) the nominee has been disciplined by a 
securities SRO with respect to a matter involving fraud or a serious 
violation of U.S. securities laws. In the event the NASD rejects a 
Floor Governor nominee, the Amex Corp. has the right to select a 
substitute nominee. The procedure for nominating and electing Floor 
Governors has been designed to ensure that Members have the greatest 
possible discretion, consistent with sound regulatory policy, in 
selecting their representatives to the New Amex Board.
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    \10\ The NASD, acting through its Board or a Board 
representative, will cast the vote of the holder of the Class B 
Interest for all elected governors, including the four Floor 
Governors.
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    Governors would serve two year terms in office. The four Floor 
Governors would be divided into two classes of two each; the first 
class would include an equity specialist and the second class would 
include an ROT. The other elected governors also would be divided into 
two classes each consisting of one Upstairs Industry Governor and four 
Public Governors. The term of the first class would expire in 1999 and 
the term of the second class would expire in 2000. Elected governors 
would be eligible to serve no more than three consecutive two year 
terms, except that governors in the class of 1999 and any elected 
governor appointed to serve for one year or less by reason of a vacancy 
may be elected to serve three subsequent consecutive two year terms. 
Article II, Sec. .01(b) provides that all elected governors other than 
the four Floor Governors shall be nominated and elected by the holder 
of the Class B Interest (the NASD Market Holding Company). The term 
``elected governors'' does not encompass governors who are Exchange 
officers or representatives of the NASD staff, who are appointed by the 
Exchange or the NASD, respectively.
    Floor Governor nominees would be proposed either by the Amex 
Nominating Committee or by petition signed by 25 Members and would be 
selected by a plurality of the Regular and Options Principal Members 
voting together as a single class. The Amex Nominating Committee would 
consist of five persons: three floor Members and two persons having no 
affiliation with a registered broker or dealer (``Public Members''). 
Each of the three principal business activities on the floor, a 
registered specialist, a registered options trader, and a floor broker, 
would be represented on the Amex Nominating Committee. The composition 
of the Amex Nominating Committee and the criteria for Floor Governor 
nominees are intended to ensure representation of the principal floor 
business activities on the New Amex Board. While the existence and 
behavior of the Amex Nominating Committee is described in the New Amex 
Constitution, the Amex Nominating Committee is a committee of Amex 
Corp., under the By-Laws of Amex Corp.
    The Amex Nominating Committee would be divided into two classes: 
the first (terminating in 1999) would consist of a Public Member and 
specialist, and the second (terminating in 2000) would consist of a 
Public Member, a floor broker and an ROT. Persons on the Amex 
Nominating Committee could not serve consecutive terms. No one 
affiliated with a member of the Amex Nominating Committee would be 
eligible as a candidate for a ticket named by it. In addition to 
proposing Floor Governor nominees, the Amex Nominating Committee also 
would propose nominees for Trustees of the Gratuity Fund, the Amex 
Nominating Committee, and Amex Adjudicatory Council. Candidates for 
these positions can also be nominated through the independent petition 
process described above. Members of the Trustees of the Gratuity Fund, 
Amex Nominating Committee and the Amex Adjudicatory Council would be 
elected by a plurality of Members voting together as a single class.
    Section 2 of Article II of the New Amex Constitution concerns 
vacancies on the Board and in offices elected by the Board and 
generally tracks Article III, Section 9 of the current Amex 
Constitution. Whereas the old provision required simply a 
recommendation of the nominating committee, the new provision 
recognizes that the recommendation must come from Amex Corp., in the 
case of Floor Governors, and from the NASD in the case of all other 
Governors. The recommendation from Amex Corp. will be made by the Amex 
Corp. Nominating Committee and the recommendation from the NASD will be 
made by the NASD Nominating Committee. As with current Amex procedures, 
persons appointed to fill such vacancies will serve until the next 
annual election.
    Section 3 of Article II of the New Amex Constitution (``Powers, 
Duties and Procedures'') describes the powers of the New Amex Board and 
generally tracks Article II, Section 2 of the current Amex 
Constitution. A principal distinction between the two provisions arises 
from the requirement in the New Amex Constitution that the Board may 
not take any action that requires the consent of Amex Corp., the Amex 
Committee, or both under the terms of the Transaction Agreement without 
first obtaining such consent.
    Section 3 of Article II of the New Amex Constitution deletes 
language excepting the Nominating Committee from among the committees 
that may be dissolved by the New Amex Board. Such language is no longer 
necessary since, as noted above, the Amex Nominating Committee is a 
committee of Amex Corp., and hence could not in any event be dissolved 
by the New Amex Board.
    Section 3 of Article II (``Appeal'') deletes references to the 
Executive Committee. New Amex will not have an

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Executive Committee, at least at the outset, since it is anticipated 
that all necessary functions can be handled by the full Board, the Amex 
Adjudicatory Council (discussed within) and other special or standing 
committees. Note that Section 3 of Article II (``Delegation of 
Powers'') permits the New Amex Board to delegate such of its powers as 
it may determine consistent with the Constitution and applicable law to 
one or more committees composed either of governors or other persons.
    The elimination of the Executive Committee from the governance 
structure of New Amex requires a modest amendment to Section 1010 of 
the Amex Company Guide to provide that review of delisting 
recommendations by the Committee on Securities may be handled by a 
review committee appointed by the Board rather than by the Executive 
Committee. (Subsequent deletions of references to the Executive 
Committee in the text of the New Amex Constitution generally will not 
be further noted in this discussion.) Conforming proposed changes to 
Section 1010 of the Amex Company Guide are included in Exhibit B to 
this filing.
    Section 3 of Article II (``Delegation in Emergency'') was deleted 
as superfluous in view of Article XII (``Authority to Take Action Under 
Emergency or Extraordinary Market'').
    Section 3 of Article II (``Selection of Chairman'') would continue 
to provide that the Chief Executive Officer of the Exchange, who shall 
be Chairman of the Board, shall be elected by a majority of the entire 
Board. The section would be modified to provide for only one Vice 
Chairman and to require that this person be a Floor Governor. More than 
one Vice Chairman would be superfluous given the structure of New Amex 
as a subsidiary of the NASD. In addition, limiting the position of Vice 
Chairman to Floor Governors should enhance the representation of 
Members on the New Amex Board.
    The New Amex Constitution eliminates current Article II, Section 2 
(``Selection of General Counsel'') in its entirety. This provision 
contemplated the appointment of a single outside general counsel and 
such a provision is archaic and needlessly restrictive in this era of 
legal specialization. It also appears inconsistent with the structure 
of New Amex as a subsidiary of the NASD.
    Section 3 of Article II (``Members, Member Organizations and 
Approved Persons'') would delete reference to a requirement that only 
Regular Members may be specialists in view of the creation of Class C 
Trading Rights (discussed within). The prohibition on Options Principal 
Members and Limited Trading Permit Holders acting as specialists would 
be continued.
    Section 4 of Article II (``Officers of the Exchange'') corresponds 
to Article II, Section 3 of the current Amex Constitution and generally 
tracks its terms. Section 4(a) of Article II would be amended to 
eliminate the Chairman's status as an ex-officio member of all 
committees. This change clarifies that the Chairman is not a member of 
certain committees (e.g., the Amex Adjudicatory Council). Section 4(a) 
would be further amended to provide that the Chairman shall call a 
special meeting of the Board upon the written request of three rather 
than four governors (reflecting the reduced size of the Board). In 
addition, Section 4(a) has been further amended to eliminate the 
position of ``Executive Vice Chairman'' as unnecessary. This position 
has, in fact, never been occupied and no need was seen for it within 
the current governance structure. In addition, Section 4(a) would be 
amended to delete references to the Chairman's ability to call special 
meetings of regular members of the Exchange upon direction of the Board 
or upon the written request of 50 regular members. This amendment is 
appropriate because Amex members will no longer be corporate owners of 
Amex after the Closing. Instead, NASD Market Holding Company and Amex 
Corp. will be the corporate owners of New Amex. Any meetings of Members 
would be conducted under the By-Laws of Amex Corp. in the circumstances 
specified therein and would not be governed by the New Amex 
Constitution.
    Various changes are proposed to Section 4(b) of Article II (``Vice 
Chairman'') to reflect the fact that there would be only one Vice 
Chairman and to specify that the person occupying this position must be 
a Floor Governor.
    Section 5 of Article II of the New Amex Constitution 
(``Committees'') corresponds to Section 4 of Article II of the current 
Amex Constitution. As previously noted, the Executive Committee would 
be eliminated from the New Amex governance structure. There are no 
other substantive changes to Section 5.
    Section 5 of Article II of the current Amex Constitution 
(``Indemnification'') would be entirely eliminated from the 
Constitution of the New Amex. Indemnification by the Exchange of 
persons associated with it (e.g., Governors, officers and employees) is 
covered through the provisions in the LLC Agreement.
    Section 6 of Article II creates the ``Amex Adjudicatory Council,'' 
(``AAC'') to act for the full Board in reviewing appeals from 
disciplinary proceedings. Modeled on NASD Regulation's National 
Adjudicatory Council, the AAC would consist of six persons, three of 
whom would be Floor Governors and three of whom would be Public 
Governors. AAC members would be nominated by the Amex Nominating 
Committee or by independent petition signed by at least 25 Members and 
would be elected by the Regular and Options Principal Members voting 
together as a single class. AAC members would be divided into two 
classes. The first class (terminating in 1999) would consist of two 
Floor Governors and one Public Governor. The second class (terminating 
in 2000) would consist of one Floor Governor and two Public Governors. 
Apart from the members of the first class whose terms would expire in 
1999, AAC members would be elected to two year terms. Beginning with 
the class elected in 2000, no AAC member could serve more than two 
consecutive terms unless the member initially was appointed to fill a 
term of less than one year, in which case the member could serve up to 
two consecutive terms following the expiration of the initial term.
    A quorum of the AAC would be four persons. In the event of a tie 
vote, the decision that was the subject of the review would be upheld. 
The Board would have a discretionary right to review decisions of the 
AAC as set forth in Article V of the New Amex Constitution (described 
within).
    Article III (Reserved). As described above, Article III would be 
reserved in the New Amex Constitution.
    Article IV (``Membership''). Article IV of the New Amex 
Constitution concerns membership and corresponds to Article IV of the 
current Amex Constitution. Section 1(a)(1) would be amended to reduce 
the number of Regular Memberships from 675 to 661 to reflect the fact 
that only 661 Regular Memberships currently are outstanding. (675 
memberships had been authorized, but only 661 were issued.) Section 
1(a)(1) would be further amended to provide that the number of Regular 
Memberships may be increased only if such action is consented to by 
Amex Corp., which as noted earlier would require a Membership vote. A 
conforming change would be made to Section 1(b)(1) of Article IV 
regarding Options Principal Memberships. Sections 1(a)(2) and 1(b)(2) 
of Article IV also would be amended to confirm that NASD Market Holding 
Company may hold Regular and Options Principal

[[Page 49770]]

Memberships. This change will facilitate the ``Seat Market Program,'' 
which is described below. Note that under the Transaction Agreement, 
Memberships held by NASD Market Holding Company shall not be voted, 
either by NASD Market Holding Company or any lessee.
    Section 1(a)(3) of Article IV (``Signing Constitution'') would be 
amended to state that any regular member or lessee, by exercising any 
of the rights inherent in a regular trading right, shall be deemed to 
have pledged to abide by the New Amex Constitution. Section 1(b)(3) 
adds a similar provision applicable to options principal members or 
lessees. The purpose of these provisions is to clarify that existing 
Members will continue to be subject to the jurisdiction of New Amex.
    Section 1(b)(4) of Article IV of the current Amex Constitution 
defines the trading privileges of Options Principal Members and would 
be transferred without substantive change to Article I, Section 3(d) of 
the New Amex Constitution (the definition of ``Options Principal 
Member,'' ``Options Principal Trading Right'' and ``Derivative 
Products'').
    Section 1(e) of Article IV (``Exchange Liability'') would be 
amended to modernize the provision and to reflect the fact that the 
Exchange provides services as well as facilities to its members. The 
Commission recently reviewed and approved virtually identical language 
in connection with amendments to Chicago Board Options Exchange Rule 
6.7.\11\
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    \11\ Exchange Act Release No. 37421 (July 11, 1996), 61 FR 37513 
(July 18, 1996) (order approving SR-CBOE-96-02).
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    Section 1(g) of Article IV (``Approval of Membership Matters'') 
provides a procedure by which members may challenge determinations of 
the Exchange's administration made pursuant to Section 1 of Article IV. 
The appeal procedure would be clarified to eliminate the possibility of 
a review by an Exchange Disciplinary Panel which properly should 
consider only rule violations and not the Exchange staff determinations 
that are the subject of Section 1.
    Section 1(h) of Article IV of the current Amex Constitution which 
concerns ``fixed income security options trading permits'' and 
``options trading permits'' would be deleted in its entirety since both 
of these classes of trading permit have expired. Section 1(j) of 
Article IV of the current Amex Constitution (``Limited Trading 
Permits'') would be renumbered as Section 1(h) in the New Amex 
Constitution. The provisions regarding Limited Trading Permits 
(``LTPs'') would be amended to reduce the maximum number of such 
permits from 36 to 10 to reflect the fact that there currently are only 
10 outstanding.
    Section 1(i) of Article IV (``Class C Trading Rights'') is entirely 
new and provides for the creation of up to 25 trading rights that would 
allow holders to specialize in newly listed securities that they are 
responsible for bringing to the Exchange. Class C Trading Rights would 
have a limited life and would expire on the earlier of three years from 
the date of issuance or the fifth anniversary of the Closing. These 
permits are intended to attract firms that are not currently involved 
in specializing on the Exchange to bring substantial new listings to 
the Exchange. Accordingly, holders of Class C Trading Rights only would 
be eligible to be allocated securities that they brought to the 
Exchange, and they could not operate a joint book with a Regular 
Member. (A specialist holding a Limited Specialist Trading Right who 
then becomes a Regular Member shall be considered to have continued his 
registration as a specialist in the securities allocated to him without 
any need to submit to a further allocation process.) The New Amex Board 
would determine when and to whom to issue Class C Trading Rights, and 
the fees, dues and other charges that would be applicable. Class C 
Trading Rights would not be transferable except by reason of a business 
combination, reorganization or other transfer of all or substantially 
all of the assets from one member organization to another. Class C 
Trading Rights may be issued to qualified individuals or organizations 
who are instrumental in obtaining new listings of securities admitted 
to dealings on the Exchange that are judged by the Exchange to 
constitute demonstrable product. The Exchange will exercise its 
judgment in this matter based on both the quantity and quality of 
listings brought to the Exchange.
    Section 1(j) of Article IV of the New Amex Constitution (``New 
Trading Rights'') is entirely new and would prohibit the New Amex Board 
from issuing new forms of trading privileges, other than the 25 Class C 
Trading Rights authorized by Section 1(i), or grant materially new 
rights to the holders of existing privileges, without the consent of 
Amex Corp., which as noted above would require a vote of Members. This 
provision is intended to place limits on the ability of the New Amex 
Board to dilute the value of existing memberships through the 
unrestricted issuance of new trading rights.
    There are no substantive changes to Sections 2, 3 and 4 of Article 
IV of the New Amex Constitution.
    Section 5(a) of Article IV (``Reinstatement by Board'') would be 
amended to eliminate reference to the Executive Committee.
    There are no substantive changes to Sections 6 and 7 of Article IV.
    Article V (Discipline of Members). Article V of the New Amex 
Constitution corresponds to Article V of the current Amex Constitution. 
The principal change to the Exchange's disciplinary process concerns 
the creation of the AAC to review appeals of right from Disciplinary 
Panel decisions and the consequent elimination of the Board and 
Executive Committee from this function. This change is intended to 
ensure that Members will be fairly represented in the disciplinary 
process. The Board, however, will be able to review AAC decisions on a 
discretionary basis. In the absence of such discretionary review by the 
Board, a decision by the AAC will be the final action of the Exchange.
    Section 1(c) of Article V of the New Amex Constitution establishes 
the procedures for AAC review of Disciplinary Panel decisions and 
generally tracks the current procedures for Board review of 
Disciplinary Panel decisions. Respondents in contested disciplinary 
proceedings can take an appeal of right to the AAC, and any member of 
the AAC may require the review of a Disciplinary Panel decision by the 
full AAC. Proposed written decisions of the AAC in contested 
proceedings are provided to all members of the Board.
    Section 1(d) of the New Amex Constitution is based upon procedures 
currently in place at the NASD with respect to discretionary NASD Board 
review of National Adjudicatory Council decisions.\12\ Any four members 
of the New Amex Board may require Board review of an AAC decision. Ten 
governors would constitute a quorum at a meeting where a decision by 
the AAC is reviewed and a majority vote of the governors present at the 
meeting would be required to modify, reverse or remand the decision. If 
the Board does not call the matter for review, the decision would 
become the final action of the Exchange.
---------------------------------------------------------------------------

    \12\ NASD Manual--Code of Procedure Rule 9351 (``Discretionary 
Review by NASD Board'').
---------------------------------------------------------------------------

    Section 2 of Article V (``Stipulation of Facts and Consent to 
Penalty'') would be amended to provide that the AAC may review 
settlements of disciplinary proceedings that have been approved by a 
Disciplinary Panel. If the AAC rejects

[[Page 49771]]

the settlement, the matter would proceed before a Disciplinary Panel as 
if the settlement had never occurred. The AAC may reject a settlement 
or impose a lesser penalty upon a respondent; it cannot increase the 
penalty. AAC decisions to reject a settlement would not be subject to 
Board review but would proceed before a Disciplinary Panel as if the 
settlement had not occurred. AAC decisions with respect to settlements 
(other than rejections) would constitute the final action of the 
Exchange.
    Section 3(f) of Article V concerns hearings following the summary 
suspension of a member or member organization for financial or 
operational reasons and has been amended to eliminate reference to the 
Executive Committee.
    There are no material changes to Section 4 of Article V of the New 
Amex Constitution.
    Section 5(b) of Article V would be modified to state that 
Disciplinary Panel decisions would be sent to the AAC rather than to 
the Board.
    Article V only concerns the discipline of members and member 
organizations, and Exchange Rule 345 (``Determinations Involving 
Employees and Prospective Employees'') sets forth the procedures 
applicable to disciplinary proceeding against persons associated with 
members and member organizations. Article V and Exchange Rule 345 
largely parallel one another, and it accordingly is necessary to amend 
Rule 345 to provide for AAC review of disciplinary matters. The 
substitution of the AAC for the Board as the Exchange's appellate body 
also would require modest amendment to Rules 8 and 9 of the rules of 
procedure applicable to Exchange disciplinary proceedings, and Rule 590 
(``Minor Rule Violation Fine Systems''). Conforming proposed changes to 
Rules 345 (disciplinary proceedings against employees of members and 
member organizations), Rule 590 (Minor Rule Violation Fine System) and 
Rules 8 and 9 of the rules of procedure applicable to Exchange 
disciplinary proceedings are included in Exhibit B to this filing.
    Article VI. Article VI is intentionally omitted from the 
Constitution of New Amex. This Article in the current Amex Constitution 
had been rescinded effective May 1, 1976.
    Article VII (``Fees and Dues''). Article VII of the New Amex 
Constitution (``Fees and Dues'') corresponds to Article VII of the 
current Amex Constitution. Sections 1(a) and 1(b) would be amended to 
provide a flat rate initiation fee of $2,500 for Regular and Options 
Principal Members. This fixed initiation fee replaces the former 
graduated initiation fee schedule that has become obsolete with the 
increase in seat prices. (The old formula established a base initiation 
fee of $1,000 that increased to a maximum of $2,500 when seat prices 
rose above $20,000.) Two additional obsolete provisions also would be 
deleted from Section 1(a) (``Transfer of Chairman's membership'' and 
``Associate membership of Chairman''). These provisions dated from a 
time when the Chairman of the Board was chosen from among the Members 
of the Exchange.
    There are no substantive changes to Sections 2 and 3 to Article VII 
of the New Amex Constitution.
    Section 4 and Section 5 to Article VII of the New Amex Constitution 
would be amended to make explicit the implicit authority of the Board 
to set different charges for different services and securities. Such 
charges would be subject to filing with the Commission.
    Article VIII (``Arbitration Procedure''). Article VIII of the New 
Amex Constitution corresponds to Article VIII of the current Amex 
Constitution. Changes would be made to Article VIII to effect a gradual 
phase-out of the Exchange's arbitration program and the transfer of 
this program to NASD Regulation. NASD Regulation currently administers 
in excess of 6,000 arbitrations whereas the Amex currently administers 
approximately 50 such proceedings. The Exchange, accordingly, believes 
that it would be rational to consolidate all arbitrations under the 
NASD umbrella with NASD Regulation.
    There are no substantive changes to Section 1 of Article VIII 
(``Duty to Arbitrate'').
    Section 3 of Article VIII of the current Amex Constitution (``Rules 
of Arbitration'') would be deleted in its entirety and replaced by new 
Section 3 (``Proceeding Instituted Prior to Combination''). The new 
Section 3 would provide that any arbitration filed prior to the Closing 
would be conducted by means of the arbitration facilities and 
procedures that existed as of the date the arbitration was instituted. 
Section 2 of Article VIII (``Arbitration Forum'') has been amended to 
provide that actions filed subsequent to the Closing would be conducted 
pursuant to the NASD Code of Arbitration Procedure using the 
arbitration facilities of NASD Regulation, Inc. although the existing 
provision allowing use of the New York Stock Exchange arbitration 
procedures if all parties to the controversy are members there is 
preserved. Section 2(a) (which permitted the Board to decline to permit 
the use of the Exchange's arbitration facilities in particular cases) 
and Section 2(c) (which permitted arbitration before the American 
Arbitration Association in certain circumstances) would be deleted in 
view of the complete assumption by NASD Regulation of the Exchange's 
arbitration program and the adoption of the NASD Code of Arbitration 
Procedure. Section 4 (``Arbitrator's Decision Final'') also would be 
deleted due to the adoption of the NASD's Code of Arbitration Procedure 
and NASD Regulation's assumption of the arbitration program.
    Section 5 of Article VIII (``Penalties'') in the current Amex 
Constitution would be renumbered as Section 4. Section 4(b) would be 
amended to provide that New Amex may summarily suspend persons within 
its jurisdiction that fail to pay an arbitration award of an exchange 
or the NASD. Conforming proposed changes to the 600 series of current 
Amex rules relating to arbitrations are included in Exhibit B to this 
filing. Commentary would be added to the Rule 600 Series advising 
litigants that the Rule 600 series only would apply to arbitrations 
commenced prior to the Closing and would otherwise be of no force or 
effect. In addition, the Commentary would advise members and member 
organizations of the requirements of Article VIII, Section 2 of the 
Exchange Constitution (discussed above), and would state that any 
violation of the NASD Code of Arbitration Procedures by members and 
member organizations would be deemed a violation of Exchange rules and 
be subject to Exchange disciplinary procedures.
    Article IX (``Gratuity Fund''). Provisions relating to the Gratuity 
Fund will remain substantially unchanged from current provisions in 
Article IX, except for procedures relating to appointment of Gratuity 
Fund trustees. Section 7 (``Income of Fund'') adds new language 
providing for proportional credits to each participant in reduction of 
such participant's payments under Article IX in the event the Gratuity 
Fund receives any extraordinary payment from any source. Section 10 
(``Classification and Selection of Trustees'') would provide that 
Trustees of the Gratuity Fund shall be appointed by Amex Corp., based 
on the vote of the regular and OPM members of the Exchange. This will 
essentially maintain the current process by which trustees are 
nominated and elected in the same manner, and at the same time, as 
governors of the Exchange, pursuant to procedures in Article III. 
Section 11 would provide that in the event of a vacancy, the board of 
Amex Corp. shall

[[Page 49772]]

appoint a person qualified to serve as Trustee until the next meeting 
at which the Trustees to be appointed are selected. Currently, the Amex 
Board fills any vacancy, pending the next annual election. These 
procedures are consistent with procedures in the New By-Laws of Amex 
Corp. which provide for the election by members of Amex Corp. of 
Trustees of the Gratuity Fund, as well as the Amex Nominating 
Committee, Amex Adjudicatory Council, and nominees for Floor Governors 
to serve on the New Amex Board.
    Article X (``Clearing Organizations''). Article X of the New Amex 
Constitution corresponds to Article X of the current Amex Constitution. 
There are no substantive changes to Article X.
    Article XI (``Miscellaneous Provisions''). Article XI of the New 
Amex Constitution corresponds to Article XI of the current Amex 
Constitution. There are no substantive changes to Sections 1 through 4 
of Article XI. Section 5 of Article XI would be amended to conform to 
the current Amex employee trading policy, which allows employees to 
trade standardized options issued by the Options Clearing Corporation 
unless such option is on an underlying security listed on the Amex. 
Section 6 would be added to state that the New Amex Constitution shall 
be governed by, and construed in accordance with, Delaware law without 
regard to Delaware conflict of laws principles.
    Article XII (``Authority To Take Action Under Emergency or 
Extraordinary Market Conditions''). Article XII of the current Amex 
Constitution would be deleted in its entirety and replaced by a 
provision comparable to Article VII, Section 3 of the NASD's By-Laws. 
In addition, Article XII of the current Amex Constitution currently 
references emergency by-laws under Subdivision 17 of Section 12 of the 
New York State Defense Emergency Act and to the effectiveness of 
emergency by-laws of New York Corporations. These references would no 
longer be appropriate to New Amex, as a Delaware Limited Liability 
Company.
    Article XIII (``Amendments to the Constitution''). Article XIII of 
the New Amex Constitution corresponds to Article XIII of the current 
Amex Constitution. Article XIII would be substantially revised to 
reflect the status of New Amex as a subsidiary of the NASD. Section 1 
sets forth the basic principle that the New Amex Constitution may be 
amended by a majority of the Governors and the holder of the Class B 
Interest, NASD Market Holding Company, without any further procedures 
at the SRO level except where the change would require the consent of 
Amex Corp. or the Amex Committee. Thus, the NASD, via its wholly-owned 
subsidiary, NASD Market Holding Company, must approve, and has the 
power to veto, any proposed amendments to the New Amex Constitution. 
Historically, the corporate owners of the Amex have been required to 
approve amendments to the Amex Constitution (i.e., by-laws). It is 
appropriate that, in the new organization, the corporate owner of New 
Amex have the same ability.
    Sections 3 and 4 of Article XIII of the New Amex Constitution set 
forth the procedures for obtaining the consent of the Amex Corp. in 
circumstances where a vote of the members is required. The consent of 
Amex Corp. would be granted if it is authorized by a majority of 
Regular and Options Principal Members voting together as a single 
class.
    Section 2 (``Adoption by Board'') preserves the process in the 
current Amex Constitution whereby members may petition the Board to 
adopt amendments to the Constitution. The amendment would be approved 
upon the vote of a majority of governors then in office and the holder 
of the Class B Interest.
    Article XIV (Reserved). Article XIV of the New Amex Constitution 
has been reserved. In the current Amex Constitution this Article dealt 
with implementation of certain amendments previously adopted.
    Amex Committee. The Transaction Documents also establish a seven-
member Amex Committee (``Committee'') which has diverse powers detailed 
in the Transaction Agreement and provides representation of various 
Exchange constituencies, including specialists, registered options 
traders and floor brokers with respect to, among other areas, the 
operation of the equity and options market and the development of new 
trading facilities. The representation of the interests of the various 
business segments on the Exchange floor supplements the Floor 
representation on the New Amex Board provided under Article II of the 
New Amex Constitution (discussed above), and is intended to enhance the 
involvement and representation of diverse member groups in the 
administration of Exchange affairs in a number of significant areas. 
The Committee is required to exercise its powers in the best interests 
of Amex Corp. and the Members, and consists of (1) three Public 
Members, one of whom will serve as chairman; (2) one person who is not 
active on the floor of the Exchange but who is associated with a member 
organization of the Exchange; and (3) three ``floor members'' who are 
active on the floor of the Exchange, one whose principal business is as 
a specialist on the Equity Market or Options Market, one whose 
principal business is as a registered options trader and one whose 
principal business is as a floor broker.
    The initial three floor members will be nominated by the Floor 
Governors on Amex Corp.'s current Board, and agreed to by Amex Corp. 
and the NASD before the Closing. The other initial Amex Committee 
members will be designated by the NASD and agreed to by Amex Corp. and 
the NASD before the Closing. The chairman will be selected by the Amex 
Committee from among the Amex Committee Public Members, and the initial 
chairman will be Paul Volcker, former Chairman of the Federal Reserve 
System and formerly a member of the Amex Board of Governors.
    Amex Committee members will be divided into three classes with 
staggered three-year terms. No Amex Committee member may serve more 
than two consecutive three-year terms. Vacancies on the Amex Committee 
will be filled by a person of the same category as the vacating member. 
Replacements for floor members will be chosen by the Floor Governors on 
New Amex's Board. Replacement members for other Amex Committee members, 
including the chairman, will be chosen by a majority of the remaining 
members of the Amex Committee or, in some circumstances, by action of 
New Amex's Board (including the approval of at least two Floor 
Governors of New Amex). All replacements will be subject to the 
approval of the NASD's Chairman. All Amex Committee decisions will 
require a majority vote at a meeting at which at least five members are 
present. For a period of ten years from the Closing Date, New Amex will 
not make a material change to the equity or options market without the 
consent of the Amex Committee. From and after ten years from the 
Closing Date, an affirmative vote of two-thirds of the entire New Amex 
Board can override disapproval by the Amex Committee of a material 
change to the Equity Market structure, as described in Exhibit D to the 
Transaction Agreement, or to the options market.
    The Amex Committee also has a role in a number of other significant 
aspects of the transaction, including the acquisition by the NASD of 
other options or securities exchanges, the timing of the modernization 
of the New Amex trading facility, and the

[[Page 49773]]

monitoring of amounts spent by the NASD for new technology for New 
Amex.
    Limits on Floor Fee Increases. New Amex must give the floor members 
on the Amex Committee at least ten business days' prior notice before 
aggregate costs and fees to floor members and other floor participants 
on the Exchange can be increased by more than ten percent in any 
calendar year. A majority of those persons may vote to submit the 
matter to binding arbitration. Such arbitration will last no more than 
30 days and will determine whether the increases were reasonable and 
fair in light of all relevant factors, including the costs other major 
securities exchanges charge their members, the costs historically 
imposed by the Exchange, and changes in the expenses and overall 
economic performance of the Exchange (other than debt service in 
connection with the $110 million Development Program described below).
    Limits on Issuance of New Seats and Trading Rights. Regular and 
Options Principal Trading Rights. Following the Closing, Regular and 
Options Principal Members (as well as holders of Limited Trading 
Permits) will have the same privileges as they currently have with 
respect to the conduct of business on the floor of the Exchange. There 
is no plan to change the existing process of buying, selling and 
leasing Regular or Options Principal Memberships or Limited Trading 
Permits.
    If the New Amex Board believes that additional Regular or Options 
Principal Memberships should be issued, it must request Amex Corp. to 
do so. Upon receiving such a request, Amex Corp. must put the question 
to a vote of Members. Amex Corp. must grant such request only if 
authorized by the affirmative vote of a majority of the Regular 
Memberships and the Options Principal Memberships voted (as a single 
class) at a meeting called for the purpose of considering the request 
of New Amex. This requirement continues indefinitely.
    Any new Regular or Options Principal Memberships authorized in this 
manner must be issued by way of a rights offering to all of the then-
current Members. Each Member (or in the case of a leased Membership, 
the lessor) will receive a right or rights which, in combination with a 
specified number of other rights, may be surrendered for a newly issued 
membership. The rights will be transferable by their holders. Subject 
to membership qualification requirements, Amex Corp. will issue one new 
Regular or Options Principal Membership without charge (but subject to 
any initiation or other applicable fees) to each holder who has 
assembled the required number of rights. Any new Regular or Options 
Principal Membership issued in this manner will have the same rights 
and privileges as the Regular or Options Principal Memberships 
outstanding immediately before the issue.
    Limited Trading Permits; New Trading Rights. Existing Limited 
Trading Permits will remain in force after the Closing in accordance 
with the terms of the New Amex Constitution.
    Except for the Class C Trading Rights (described above), New Amex 
may not issue any new rights to trade on the floor of the Exchange or 
grant materially new rights to holders of existing trading privileges 
without the consent of Amex Corp. Amex Corp. must give its consent if 
and only if authorized by the affirmative vote of a majority of the 
Regular Memberships and Options Principal Memberships voted (as a 
single class) at a meeting called for considering the request of New 
Amex.
    Seat Market Program. Commitment.
    The Transaction Agreement provides that a Seat Market Program for 
Regular and Options Principal Memberships will begin immediately after 
the Closing. This program is intended to moderate possible downside 
volatility in seat prices following the Closing. The NASD has committed 
to fund this program, but no ``trust'' or other segregated fund will be 
created. Immediately after the Closing, the NASD will commit $30 
million for this program. On January 1, 1999, the NASD will increase 
its commitment by $10 million. The NASD may fund this $10 million 
increase itself or, to the extent the 1998 earnings of Amex Corp. and 
New Amex allow, from the assets of New Amex.
    In addition, the NASD will:
    * Increase its commitment by any after-tax net proceeds received 
from leasing Regular or Options Principal Memberships purchased under 
the program,
    * Increase or decrease its commitment, as the case may be, by the 
after-tax profit or loss realized from reselling such memberships,
    * Decrease its commitment by the payments or expenditures pursuant 
to the program (other than payments or expenditures for purchasing 
Memberships under the program), and
    * Increase its commitment by imputed interest at an annual interest 
rate of five percent:

    --On the amount of the commitment, for the first five years after 
the Closing; and
    --On the difference between the amount of the commitment and the 
aggregate purchase price of all Memberships purchased under the program 
during the period they are held by the NASD, after the fifth 
anniversary of the Closing.

    The liquidation, dissolution or winding up of New Amex will not 
affect the NASD's funding commitment under the Seat Market Program.
    Seat Committee. The Transaction Agreement provides for a six-member 
seat committee (the ``Seat Committee'') which will control the program. 
The Seat Committee will be composed of three Regular or Options 
Principal Members (at least one of whom is active on the floor of the 
Exchange and at least one of whom is not active on the floor of the 
Exchange), two Public Members and the NASD's Chairman (or his 
designee). The Regular or Options Principal Members on the Seat 
Committee will not be from large multi-service broker-dealer firms.
    The Floor Governors of New Amex will choose the Regular or Options 
Principal Members to serve on the Seat Committee, and will fill 
vacancies in those three positions, in each case subject to the 
approval of the NASD's Chairman. The other members of the Seat 
Committee will be chosen, and vacancies filled, by the NASD's Chairman.
    Purchases, Sales and Leasing. During the Seat Market Program, the 
NASD must purchase Regular and Options Principal Memberships, as and if 
directed by the Seat Committee. Memberships held or leased by the NASD 
may not be voted. The NASD may sell or lease Memberships purchased 
under the program, and net proceeds will be returned to the program.
    Other Applications of Funds. On or soon after the fifth anniversary 
of the Closing, the Seat Committee may recommend that the NASD apply up 
to $30 million of such funds in one or more of the following ways:
    * Distributions to Members,
    * Reductions in Exchange fees, or
    * Investments in technology for the Exchange (which will not count 
toward the $110 million Development Program, described below).
    The Seat Committee also may recommend that no fund amounts be spent 
on any of these choices. Every two years after the fifth anniversary of 
the Closing, the Seat Committee can recommend that the balance of the 
commitment be applied to one or more of the above choices.
    Each of these Seat Committee recommendations will require the 
consent of Amex Corp. Upon receiving

[[Page 49774]]

a Seat Committee recommendation, Amex Corp. must put the matter to a 
vote of Members. It must give its consent if, and only if, authorized 
by the affirmative vote of a majority of the Regular and Options 
Principal Memberships voted (as a single class) at a meeting called for 
the purpose of considering the Seat Committee's recommendation. If it 
receives Amex Corp.'s consent, the NASD must comply with the Seat 
Committee's recommendation. If the Seat Committee's recommendation is 
not approved, the Seat Committee must make a new recommendation.
    If the Seat Committee's recommendation is other than that funds be 
distributed to Members, and two or more Floor Governors of New Amex 
disagree with that recommendation, they may require Amex Corp. to call 
for a vote of Members. In this case, the Regular and Options Principal 
Members, voting as a single class, will decide between (i) approving 
the Seat Committee's recommendation and (ii) approving a distribution 
to Members with an allocation between Regular and Options Principal 
Members as proposed by the three Regular or Options Principal Members 
on the Seat Committee. If two-thirds of the Regular and Options 
Principal Memberships voted (as a single class) at a meeting called for 
the purpose of considering the matter approve the distribution, the 
Seat Committee will direct the NASD to make such distribution. In the 
case of any vote on the distribution of funds to Members, the Regular 
and Options Principal Members will vote as separate classes on whether 
to approve the proposed allocation of the distribution between Regular 
and Options Principal Members. If either class of Members fails to 
approve the proposed allocation, the Seat Committee will appoint an 
arbitrator to decide an equitable allocation between the two 
classes.\13\
---------------------------------------------------------------------------

    \13\ In Selma Philipson v. American Stock Exchange, et al., 98 
Civ 4219 (DC), United States District Court, Southern District of 
New York, filed as a class action, plaintiff challenged the 
transaction between the Amex and the NASD on several grounds. The 
NASD and the Amex have negotiated an agreement in principle for the 
settlement of this litigation which provides that the Seat Committee 
shall consider, 18 months and 36 months after the Closing, whether 
half of the NASD's initial $30 million commitment to the Member 
Equity Program should be distributed to owners of membership 
interests, used to reduce Exchange fees, or invested in technology 
for the Exchange, rather than continuing to be held for the purchase 
of seats. After five years, any remaining portion of the initial $30 
million commitment must be used for one of these three purposes. In 
addition, the agreement provides that the NASD shall contribute to a 
separate fund 15% of any amount by which New Amex's annual after-tax 
income in each of the first ten years after the Closing exceeds a 
specified base amount. A committee consisting of three members of 
the Exchange and the Chairman of the NASD will determine whether 
this fund shall be distributed to owners of membership interests, 
invested in technology for the Exchange, or used to fund pension or 
retirement benefits for owners of membership interests. The proposed 
settlement is subject to execution of a formal settlement 
stipulation, which will then be subject to court approval following 
notice to all members of the plaintiff class.
    It is the view of Amex that, once court approval is received, 
the terms of the settlement will be able to be implemented without 
the necessity of further amendment of the Transaction Agreement or 
any further approval from the Commission. Telephone Call between 
James Duffy, Executive Vice President and General Counsel, Amex, and 
Michael Walinskas, Deputy Associate Director, Commission, September 
10, 1998.
---------------------------------------------------------------------------

2. Basis
    Amex believes the proposed rule change is consistent with Section 
6(b) of the Act in general and furthers the objectives of Section 
6(b)(3) in particular in that the proposed provisions of the New Amex 
Constitution assure a fair representation of its members in the 
selection of its directors and administration of its affairs and 
provide that one or more directors shall be representative of issuers 
and investors and not be associated with a member of the exchange, 
broker, or dealer. The proposed amendments seek to promote fair 
representation of the various Exchange floor constituencies by 
providing meaningful, ongoing participation and input by such 
constituencies in the governance and operation of the Exchange equity 
and options markets, while, at the same time, providing appropriate 
input and oversight by the NASD as the parent corporation and the 
entity with ultimate responsibility for New Amex.
    Amex believes the composition of the New Amex Board ensures 
representation by both ``upstairs'' member organizations and the 
Exchange Floor. The New Amex Constitution (proposed Article II, Sec. 
.01(a)) provides for two ``Upstairs Industry Governors'' and four Floor 
Governors, with at least one of the Floor Governors required to be an 
equity specialist and at least one a registered options trader. 
Procedures for nominating Floor Governors ensures that the diverse 
interests of Floor members, as well as the public, are reflected in the 
nomination process. Proposed Article II, Sec. .01(c) provides that the 
Amex Nominating Committee consist of three active Floor Members, 
including a specialist, a registered options trader and a Floor broker, 
and two public representatives. The nominees of the Nominating 
Committee, or alternatively, a nominee or nominees proposed by a 
petition signed by at least twenty five regular and/or options 
principal members, are chosen by a vote of regular and OPM members 
voting together as a single class. The NASD (the holder of the Class B 
interest) may reject any such proposed nominee only for the specific 
regulatory reasons enumerated in proposed Article II, Sec. .01(b), 
namely, if such person is subject to a statutory disqualification or is 
subject to a proceeding or investigation which could result in a 
statutory disqualification, or if such person has been disciplined by a 
securities self-regulatory organization with respect to a matter 
involving fraud or a serious U.S. securities law violation.
    Amex believes the Board composition, together with the use of the 
Amex Nominating Committee, assure that members are represented fairly 
in the selection of the Board and thereby in the administration of 
Exchange affairs. Proposed Article II, Section 1 also provides that the 
New Amex Board shall include eight Public Governors, all of whom are 
nominated by the NASD Nominating Committee. In addition, the NASD has 
undertaken to include as one of the two representatives of the NASD on 
the New Amex Board a person that meets the qualifications of Public 
Governor on the New Amex Board. Thus, of the 18 New Amex Board members, 
nine will meet such Public Governor qualifications. Amex believes such 
proportion of public governors (who are not themselves and are not 
affiliated with, a securities broker or dealer) provides substantial 
and meaningful input by the public in Exchange governance.
    The AAC, provided for in proposed Article II, Sec. .06 establishes 
a mechanism for meaningful participation by Exchange members, as well 
as the public, in Exchange disciplinary processes, and promotes the 
equitable conduct of the Exchange's regulatory responsibilities.\14\ 
The AAC, which

[[Page 49775]]

includes three Public Governors and three Floor Governors, has 
authority to act for the Board subject to the Board's discretionary 
right of review in the areas specified in Article II, Sec. .06(a), 
including with respect to any appeal or review of a disciplinary 
proceeding, a statutory disqualification proceeding, or a membership 
proceeding. Article V, Sec. .01(c) provides for AAC review of Exchange 
Disciplinary Panel determinations, subject to discretionary right of 
review by the Board under Article V, Sec. .01(d). The AAC decision 
becomes final if not reviewed by the Board. Such decision may then be 
appealed only to the Commission.
---------------------------------------------------------------------------

    \14\ In its 1997 Concept Release relating to regulation of 
exchanges, the Commission interpreted the fair representation 
requirements under Section 6(b)(3) as follows:
    * * * fair representation of an exchange's members also serves 
to ensure that an exchange is administered in a way that is 
equitable to all market members and participants. Because a 
registered exchange is not solely a commercial enterprise, but also 
has significant regulatory powers with respect to its members, 
competition between exchanges may not be sufficient to ensure that 
an exchange carries out its regulatory responsibilities in an 
equitable manner. The fair application of an exchange's authority to 
bring and adjudicate disciplinary procedures may be particularly 
important in this respect, because these actions can have 
significant and far-reaching ramifications for broker-dealers. 
Accordingly, under the Exchange Act structure, it may be essential 
to give exchange participants equitable and enforceable input into 
disciplinary and other key processes to prevent them from being 
conducted in an inequitable, discriminatory, or otherwise 
inappropriate fashion.
    Exchange Act Release No. 38672 (May 23, 1997), at 66, 62 FR 
30485 (June 4, 1998) (``Concept Release'').
---------------------------------------------------------------------------

    As described above, the Amex Committee also has been established to 
provide for significant input by floor members, the public and member 
organizations not on the floor with respect to the administration of 
Exchange affairs, including the New Equity Market Structure.
    Amex believes the proposed rule change is consistent with Section 
6(b)(8) of the Act which requires that the rules of the Exchange do not 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The transaction between the 
Amex and the NASD promotes intermarket competition by providing 
significant additional financial resources to the Exchange to develop a 
New Equity Market Structure, including facilities for the automatic 
execution for electronically delivered orders and a new electronic 
order book. This initiative will enhance the primary auction market by 
improving efficiency and lowering costs, which will improve the 
competitiveness of the New Amex primary auction market and make it a 
more viable technologically-advanced alternative to other exchange 
auction markets, including the New York Stock Exchange, for listings 
and equity order flow. In addition, the NASD/Amex transaction will 
provide additional resources to permit the Exchange's options market to 
develop systems and facilities required to compete more effectively 
with other U.S. and foreign options markets.
    Amex believes the proposed rule change is also consistent with 
Section 6(b)(5) of the Act in that the proposed amendments are designed 
to prevent fraudulent and manipulative acts and practices, to promote 
just and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest; and are not designed to 
permit unfair discrimination between customers, issuers, brokers, or 
dealers, or to regulate by virtue of any authority conferred by the Act 
matters not related to the purposes of the Act or the administration of 
the exchange.

B. Self-Regulatory Organization's Statement on Burden on Competition

    Amex does not believe that the proposed rule change will impose any 
burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments on the proposed rule change were neither solicited 
nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) by order approve such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for inspection and copying in the 
Commission's Public Reference Room, located at the above address. 
Copies of such filing will also be available for inspection and copying 
at the principal office of the self-regulatory organization. All 
submissions should refer to File No. SR-Amex-98-32 and should be 
submitted by October 8, 1998.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.

EXHIBIT A--AMERICAN STOCK EXCHANGE, INC.

Proposed Rule Change

(Text in brackets indicates material to be deleted; italicized text 
indicates material to be added.)

A. Constitution

Article I. Title--Purposes--Definitions

Sec. 01. Title

    The title of this [Corporation] Company shall be [``American 
Stock Exchange, Inc.''] ``American Stock Exchange LLC'', hereinafter 
referred to as the ``Exchange.''

Article I. Title--Purposes--Definitions

Sec. 02. Purposes

    The purpose of the Exchange shall be:

Securities [market place] Market Place

    (a) to provide a securities market place where high standards of 
honor and integrity shall prevail and to promote and maintain just 
and equitable principles of trade and business;

[Board of Trade

(b) to conduct and carry on the functions of a ``board of trade'' 
within the meaning of that term in the New York Not-for-Profit 
Corporation Law;

An exchange] An Exchange

    [(c)] (b) to conduct and carry on the functions of an 
``exchange'' within the meaning of that term in the Securities 
Exchange Act of 1934; and

[New York Not-for-Profit Corporation] Delaware Limited Liability 
Company Law

    [(d)] (c) to conduct and carry on any and all activities 
incidental to the foregoing which may lawfully be conducted and 
carried on by a [corporation] company of its type formed under the 
[New York Not-for-Profit Corporation] Delaware Limited Liability 
Company Law.

[[Page 49776]]

Article I. Title--Purposes--Definitions

Sec. 03. Definitions

    The following terms as used in this Constitution and in the 
rules adopted pursuant thereto shall, unless the context otherwise 
indicates, be construed as follows:

Rules of the Exchange

    (a) The term ``rules of the Exchange'' shall include the 
Constitution and all rules and commentaries adopted pursuant 
thereto.

Member

    (b) The term ``member'', when not preceded by the word 
``regular'', ``options principal'', ``allied'', or ``associate'', 
shall include regular, options principal, allied and associate 
members.

[Allied member] Regular Member; Regular Trading Right

    [(c)] (c) The term ``regular member'' means a person holding a 
regular trading right issued by The Amex Corporation.
    The term ``regular trading right'' means the right to transact 
business on the Floor of the Exchange generally.

Options Principal Member; Options Principal Trading Right; 
Derivative Products

    (d) The term ``options principal member'' means a person holding 
an options principal trading right issued by The Amex Corporation.
    The term ``options principal trading right'' means the right to 
execute on the Floor of the Exchange transactions in options and 
other derivative products for the right holder's own account, and to 
give orders in options and other derivative products for his own 
account to regular members for execution. The holder of an options 
principal trading right may not execute agency transactions on the 
Floor either for customers or for regular, associate or allied 
members or other options principal members, may not be registered as 
a specialist, may not execute on the Exchange any orders, whether as 
agent or principal, in stocks, warrants, bonds or other securities 
(except principal transactions in options and other derivative 
products), and may not accept any orders from his member 
organization for execution.
    The term ``derivative products'' includes, in addition to 
standardized options, other securities which are issued by The 
Options Clearing Corporation or another limited purpose entity or 
trust, and which are based solely on the performance of an index or 
portfolio of other publicly traded securities. Notwithstanding the 
foregoing, the term ``derivative products'' shall not include 
warrants of any type or closed-end management investment companies.

Allied Member

    (e) No change. (Repositioned from former Art. I, Sec. .03(c)).

Member Organization

    (f) No change.

Approved Person

    (g) No change.

Publicly [held security; voting stock; non-voting stock] Held Security; 
Voting Stock; Non-Voting Stock

    (h) No change.

Security or [securities] Securities

    (i) No change.

Member Contracts

    (j) No change.

Exchange Contracts

    (k) The term ``Exchange Contracts'' shall include all ``Member 
Contracts'':
    (1) made on the Exchange; or
    (2) not made on the Exchange, unless made subject to the rules 
of another [Exchange] exchange or Nasdaq, or unless the parties 
thereto have expressly agreed that the same shall not be Exchange 
Contracts.

Date of [death] Death

    (l) No change.

Entire Board

    (m) No change.

He, Him, or His

    (n) No change.

Special Transfer

    (o) No change.

Lessor

    (p) No change.

Lessee

    (q) No change.

Nominee

    (r) No change.

NASD

    (s) The term ``NASD'' means the National Association of 
Securities Dealers, Inc.

Nasdaq

    (t) The term ``Nasdaq'' means The Nasdaq Stock Market, Inc.

Transaction Agreement

    (u) The term ``Transaction Agreement'' means the agreement dated 
as of May 8, 1998, between the American Stock Exchange, Inc. and 
certain other parties, including the NASD, pursuant to which 
substantially all of the assets of the American Stock Exchange, Inc. 
were transferred to the Exchange, as it may be amended from time to 
time. 

Predecessor Corporation

    (v) The term ``Predecessor Corporation'' means the American 
Stock Exchange, Inc. prior to the date of the Transaction Agreement, 
and The Amex Corporation after that date.

Amex Committee

    (w) The term ``Amex Committee'' means the committee by that name 
established pursuant to the Transaction Agreement.

Class A Interest

    (x) The term ``Class A Interest'' refers to the limited 
liability company interest in the Exchange initially issued to the 
Predecessor Corporation.

Class B Interest

    (y) The term ``Class B Interest'' refers to the limited 
liability company interest in the Exchange initially issued to NASD 
Market Holding Company, a wholly-owned subsidiary of the NASD.

Amex Corporation

    (z) The term ``The Amex Corporation'' means the New York Not-
for-Profit Corporation that holds the Class A Interest in the 
Exchange.

NASD Nominating Committee

    (aa) The term ``NASD Nominating Committee'' means the National 
Nominating Committee appointed pursuant to Article VII Section 9 of 
the NASD By-Laws.

Article II. Government and Administration Sec. 01. The Board of 
Governors--Classification

Classification

    (a) The Board of Governors shall be composed of:
    (1) [Twelve] Six regular, options principal, associate or allied 
members of the Exchange [having the following qualifications: (i) 
each] (i) two of whom shall be [a principal executive officer of a] 
affiliated with regular[, options principal] or associate member 
[corporation, or a principal partner of a regular, options principal 
or associate member firm, or a regular or options principal member 
of the Exchange who is not associated with any member organization; 
(ii) at least four of the twelve governors shall be principal 
executive officers of regular or associate member corporations or 
general partners of regular or associate member firms, which firms 
or corporations] organizations that engage in a business [involving] 
having substantial direct contact with public securities customers 
[; (iii) at least two of the four governors provided for in clause 
(ii) shall reside and have their principal place of business more 
than 100 miles from the City of New York; (iv) at least five, but 
not more than five, of the twelve governors shall ](``Upstairs 
Industry Governors''), and (ii) four of whom shall be persons who 
spend a substantial part of their time on the Floor of the Exchange 
[; and (v) at least two of the five governors provided for in clause 
(iv)](``Floor Governors''). At least one of the Floor Governors 
shall be principally engaged in business as a registered [as 
specialists;] equity specialist, and at least one shall be 
principally engaged in business as a registered options trader;
    (2) [Twelve]Eight representatives of the public (i) none of whom 
is, or is affiliated with, a broker or dealer in securities and (ii) 
[not less than three] all of whom are [principal executive officers 
of corporations whose securities are admitted to dealings on the 
Exchange] nominated by the NASD

[[Page 49777]]

Nominating Committee (``Public Governors''); and
    (3) The [Chief Executive Officer] two most senior officers of 
the Exchange, [who shall be the Chairman of the Board, and the 
Executive Vice-Chairman, if there be one, or if there is no 
Executive Vice-Chairman, the President, if there be one.] and
    [(b) The twelve regular, options principal, associate or allied 
member governors and the twelve public governors]
    (4) Two representatives of the staff of the NASD.
    (b) All elected governors other than the four Floor Governors 
shall be nominated[,] and elected by [vote of the regular members of 
the Exchange, in accordance with the provisions of Article III. The 
Chief Executive Officer of the Exchange] the holder of the Class B 
Interest. The four Floor Governors shall be nominated by the holder 
of the Class A Interest and elected by the [Board by the affirmative 
vote of the majority of the entire Board] holder of the Class B 
Interest. A nominee for Floor Governor may be rejected by the holder 
of the Class B Interest only if such person (i) is subject to a 
statutory disqualification within the meaning of Section 3(a)(39) of 
the Securities Exchange Act of 1934, (ii) is subject to a proceeding 
or investigation which could result in such a statutory 
disqualification, or (iii) has been disciplined by a securities 
self-regulatory organization with respect to a matter involving 
fraud or a serious violation of the U.S. securities laws. The holder 
of the Class A Interest shall have the right to submit a substitute 
nominee in the event of any such rejection. All governors shall be 
of equal standing and shall be entitled to one vote each at all 
meetings of the Board.
    (c) The [governors elected by the] nomination of the Floor 
Governors by the holder of the Class A Interest shall be 
accomplished in the following manner. The nominees shall be chosen 
by vote of the regular and options principal members voting together 
as a single class on candidates selected and proposed either by the 
Amex Nominating Committee or by petition signed by at least twenty-
five regular and/or options principal members. The Amex Nominating 
Committee shall consist of five persons, three of whom shall be 
members active on the Floor of the Exchange (``Floor Members''), and 
two of whom shall be representatives of the public having no 
affiliation with a broker or dealer in securities (``Public 
Members''). Of the three Floor Members, one shall be principally 
engaged in business as a registered equity specialist, one shall be 
principally engaged in business as a registered options trader, and 
one shall be principally engaged in business as a Floor broker on 
the Floor of the Exchange.
    (d) The two governors who are representatives of the staff of 
the NASD shall be appointed by the NASD and shall serve on the Board 
until their successors are appointed. The two most senior officers 
of the Exchange shall serve on the Board for as long as they hold 
such offices.
    (e) The Floor Governors shall be divided into [three classes, 
each class consisting of eight governors;] two classes. The first 
class shall include at least one governor who is an equity 
specialist. The second class shall include at least one governor who 
is a registered options trader.
    [(1)](f) The members of the Amex Nominating Committee shall be 
divided into two classes. The first class shall consist of one 
Public Member and the Floor Member who is a registered specialist, 
and the [(i) four regular, options principal, associate or allied 
members of the Exchange who meet the qualifications described in 
subsection (a)(1)(i) of this Section, at least two of whom meet the 
qualifications described in subsection (a)(1)(ii), at least one of 
which two meets the additional qualifications described in 
subsection (a)(1)(iii), and one, but not more than one, of whom 
meets the qualifications described in subsection (a)(1)(iv), and 
(ii) four representatives of the public who meet the qualifications 
described in subsection (a)(2)(i) of this Section, at least one of 
whom meets the additional qualifications described in subsection 
(a)(2)(ii);
    [(2) The] second class shall consist of [(i) four regular,] one 
Public Member, the Floor Member who is a registered options 
[principal, associate or allied members of the Exchange who meet the 
qualifications described in subsection (a)(1)(i) of this Section, at 
least one of whom meets the qualifications described in subsection 
(a)(1)(ii), and two, but not more than two, of whom meet the 
qualifications described in subsection (a)(1)(iv), and (ii) four 
representatives of the public who meet the qualifications described 
in subsection (a)(2)(i) of this Section, at least one of whom meets 
the additional qualifications described in subsection (a)(2)(ii); 
and] trader, and the Floor Member who is a Floor broker.
    [(3) The third class](g) The Upstairs Industry Governors and the 
Public Governors shall be divided into two classes, each of which 
shall consist of [(i) four regular, options principal, associate or 
allied members of the Exchange who meet the qualifications described 
in subsection (a)(1)(i) of this Section, at least one of whom meets 
the qualifications described in subsections (a)(1)(ii) and (iii) and 
two, but not more than two, of whom meet the qualifications 
described in subsection (a)(1)(iv), and (ii) four representatives of 
the public who meet the qualifications described in subsection 
(a)(2)(i) of this Section, at least one of whom meets the additional 
qualifications described in subsection (a)(2)(ii).] one Upstairs 
Industry Governor and four Public Governors.
    [(d)](h) The initial terms of the [governors of the first, 
second and third] Floor Governors, members of the Amex Nominating 
Committee, Upstairs Industry Governors, and Public Governors in the 
first and second classes shall terminate in [1982, 1983] 1999 and 
[1984,] 2000 respectively, upon the election of their successors [in 
accordance with the provisions of Article III. Subsequent to the 
initial terms of office, the governors of]. Thereafter, the persons 
in each class shall be elected for [three] two-year terms and shall 
hold office until their successors [have been elected in accordance 
with the provisions of Article III.] are elected.
    [(e) No person](i) No Floor, Upstairs Industry or Public 
Governor who has served [all or part of two] three consecutive 
elected terms as a governor shall be eligible for election [by the 
regular members] as a governor, except after an interval of two 
years[,]; provided, however, that [(i) the Nominating Committee may 
in its discretion nominate for election to a third] Governors in the 
first class whose term in office expires in 1999, and any other 
governor appointed to the Board for one year or less by reason of a 
vacancy, may subsequently be elected to serve three consecutive 
[term an incumbent governor who is serving the final year of his or 
her second elected term if the ]two-year terms.
    (j) No person shall serve for all or part of two consecutive 
terms as a member of the Amex Nominating Committee [determines that 
such governor has made an extraordinary contribution to the Exchange 
and that the interest of the Exchange will best be served by 
permitting such person to stand for reelection; and (ii) an 
incumbent governor]. No member of the Amex Nominating Committee, and 
no person having a business affiliation with a member of the Amex 
Nominating Committee, shall be eligible [for election to a third 
consecutive term if nominated by independent nomination as provided 
in Section 7(f) of Article III. Notwithstanding the foregoing 
provisions, at no time may more than four governors be serving a 
third consecutive term, and of those four governors, no more than 
three may be representatives of the public who meet the 
qualifications described in subsection (a)(2), no more than one may 
be] as a candidate for office on the ticket named by it. Any vacancy 
in the Amex Nominating Committee shall be filled by the remaining 
members thereof, who shall elect a person qualified to fill the 
vacancy.
    (k) Each governor that is not a regular[,] or options 
principal[, associate or allied member who meets the qualifications 
described in subsection (a)(1)(iv), and no more than one may be a 
regular, options principal, associate or allied member who meets the 
qualifications described in subsection (a)(1)(ii).
    [(f) Each non-regular member governor] member of the Exchange 
shall be deemed to have agreed to uphold the Constitution by 
acceptance of the office of governor. [Non-] Each governor that is 
not a regular [member governors and public governors] or options 
principal member of the Exchange shall have the right to go on the 
Floor of the Exchange but shall not have the right to transact 
business in securities thereon, and shall have no rights or 
obligations with respect to

[[Page 49778]]

contributions to, or benefits from, the Gratuity Fund.

Article II. Government and Administration

Sec. 02. Vacancies

    (a) A vacancy shall occur in the office of any governor if the 
Board of Governors shall determine, by the affirmative vote of a 
majority of the entire Board, that such office holder no longer 
satisfies the requirements pursuant to which he was elected or is no 
longer eligible within the classification to which he was elected to 
the Board.

Absence of Governor

    (b) If a governor shall have been absent from three consecutive 
regular meetings of the Board of Governors, without having been 
excused by the Chairman, the Board may, by the affirmative vote of a 
majority of the entire Board, remove such governor and declare the 
office theretofore held by him to be vacant.

Expulsion, Suspension or Insolvency

    (c) The expulsion, suspension or insolvency of a person holding 
office or of his member organization shall create a vacancy in the 
office held by such person.

Removal

    (d) In the event of the refusal, failure, neglect or inability 
of an officer approved or elected by the Board, or any governor, to 
discharge the duties of his office, or for any cause, of the 
sufficiency of which the Board of Governors shall be the sole judge, 
the Board shall have the power, by the affirmative vote of a 
majority of the entire Board, to remove such officer or governor and 
declare the position held by him to be vacant.

Vacancies in Board

    (e) All vacancies occurring in the offices of governors shall be 
filled by the Board by the appointment of persons recommended by the 
holder of the Class B Interest in the Exchange with respect to all 
governors other than Floor Governors, and by the holder of the Class 
A Interest in the Exchange with respect to Floor Governors, to serve 
until the next annual election.

Vacancies Among Officers Elected by the Board

    (f) In case any vacancy shall occur in any office to which the 
holder is elected by the Board, such vacancy shall be filled by 
election by the Board of a person eligible to serve in such office.

Article II. Government and Administration Sec. [02] 03. Powers, 
Duties and Procedures

Powers and [duties] Duties

    The Board of Governors shall be vested with all powers necessary 
for the government of the Exchange, the regulation of the business 
conduct of members and member organizations of the Exchange and of 
approved persons in connection with their conduct of the business of 
member organizations, provided, however, that the Board of Governors 
shall not take any action that requires the consent of The Amex 
Corporation, the Amex Committee, or both under the terms of the 
Transaction Agreement without first obtaining such consent.

Rules

    In the exercise of its powers, the Board may adopt, modify or 
rescind such rules, require such appearances and the filing of such 
reports, issue such orders and directions, and make such decisions 
as it may deem appropriate, which rules, requirements, orders, 
directions and decisions shall be binding upon members, member 
organizations and approved persons concerned.

Procedure

    The Board shall determine the manner and form by which its 
proceedings shall be conducted; shall make such appointments and 
perform such other duties as are required herein; shall remove any 
officer or dissolve any committee,[ except the Nominating 
Committee,] when in its opinion the public interest or the welfare 
of the Exchange so requires; and shall have original and supervisory 
jurisdiction over any and all subjects and matters referred to 
committees or officers, and may direct and control their actions or 
proceedings at any stage thereof.

Finances

    The Board shall have control of the property and finances of the 
Exchange. No purchase of real property shall be made by the 
Exchange, nor shall it sell, mortgage or lease real property, unless 
authorized by the affirmative vote of a majority of the entire 
Board. By the affirmative vote of a majority of the entire Board, it 
shall fix the amount of fees and compensation, if any, to be paid to 
governors, to members of committees, to Arbitrators, to Trustees of 
the Gratuity Fund and to members and other persons called to give 
information before the Board or any committee.

Delegation of [powers] Powers

    The Board of Governors by the affirmative vote of a majority of 
the entire Board, may delegate such of its powers as it may from 
time to time determine, subject to the provisions of the 
Constitution and applicable law, to such committee or committees 
[composed of Governors,] as the Board may from time to time 
authorize. The Board may assign such authority and duties to the 
Chairman and to other officers and employees of the Exchange in 
addition to those specified in the Constitution, as the Board may 
from time to time determine, subject to applicable law.
    The Board of Governors may also appoint such other committees, 
composed either of governors or other persons, with such powers 
other than those vested in the Board under the Constitution or 
applicable law, and for such terms as it may from time to time 
determine. Subject to the approval of the Board, and after seeking 
the advice of all segments of the membership, the Chairman shall 
from time to time appoint a number of regular, options principal, 
associate and allied members of the Exchange, and individuals who 
are employed by or associated with a member organization in a senior 
capacity, who shall be designated as Exchange Officials, to serve on 
such committees. In selecting such Exchange Officials, the Chairman 
shall give due consideration to the various phases of Exchange 
activities and member organization operations.

Appeal

    An appeal to the Board from a decision of any committee [other 
than the Executive Committee,] or from a decision of any officer or 
employee acting under authority granted by the Board may be taken by 
a member, member organization or approved person affected by such 
decision, by filing with the Secretary of the Exchange a written 
demand therefor within five business days after the decision has 
been rendered. A member of any such committee taking part in the 
hearing of a matter may, within two days after a decision has been 
made thereon, appeal therefrom to the Board by filing a written 
demand therefor with the Secretary of the Exchange. Any member or 
ex-officio member or additional member of any such committee from 
whose decision an appeal to the Board is taken pursuant hereto may 
participate in the hearing of such appeal, but shall not participate 
in the deliberation or determination of the Board thereon. The 
decision of the Board with respect to any such appeal shall be final 
and conclusive, except that the Board under its general power of 
delegation may authorize [the Executive Committee] a committee to 
consider any specific appeal or any class or type of appeals and in 
such case the decision of the [Executive Committee] committee with 
respect thereto shall be final and conclusive.

[Delegation in emergency

    Whenever it shall appear to the Board that an emergency exists, 
other than as provided for in Article XII, it may by resolution 
adopted by the affirmative vote of a majority of the entire Board 
delegate all of its powers which may lawfully be delegated, for such 
period as it may determine, to a Special Committee, to be composed 
of three or more governors, at least half of whom shall be regular, 
options principal, associate or allied members of the Exchange. The 
Board by such resolution may designate one or more governors who are 
regular, options principal, associate or allied members of the 
Exchange as alternates for the members of such committee who are 
regular, options principal, associate or allied members of the 
Exchange and one or more other governors as alternates for the 
members of such committee who are not regular, options principal, 
associate or allied members of the Exchange. Governors so designated 
may replace any absent member or members for whom they are 
alternates at any meeting of such committee.]

Meetings

    No change.

Written Consent to Action Without Meeting

    No change.

Quorum

    No change.

Contracts of Employment

    No change.

[[Page 49779]]

Selection of Chairman

    The Board shall, by the affirmative vote of a majority of the 
entire Board, elect the Chief Executive Officer of the Exchange, who 
shall be the Chairman of the Board, to serve for such period of time 
as the Board may determine, and the Board shall, by like vote, fix 
his compensation.
    At its annual meeting the Board shall elect from among its 
members who are regular[,] or options principal[, associate or 
allied] members of the Exchange[, one or more] a Vice-[Chairmen] 
Chairman of the Board to serve until the next annual meeting of the 
Board and until his successor has been elected and takes office.

[Selection of general counsel

    Subject to the approval of the Board by the affirmative vote of 
a majority of the governors then in office, the Chairman shall 
appoint independent general counsel for the Exchange, who shall 
consult with and advise the Board and the officers of the Exchange 
with respect to legal matters pertaining to the Exchange, and the 
Chairman, subject to like approval of the Board, may terminate such 
appointment. The Board shall fix the compensation of such counsel.

Trial of members, member organizations and approved persons] Trial of 
Members, Member Organizations and Approved Persons

    No change.

Transactions in Exchange [securities] Securities

    No change.

Penalties

    No change.

Contracts

    No change.

Admission of [securities] Securities

    The Board shall establish standards and requirements with 
respect to the listing or admission to unlisted trading on the 
Exchange of securities, contracts in securities ``when, as and if 
issued'' or ``when distributed'' and rights, warrants and similar 
privileges appertaining to securities, and with respect to the 
continued listing or admission to unlisted trading thereof or the 
suspension of trading therein or removal of the same from listing or 
unlisted trading. The Board may grant to the Chairman, or such 
officer or officers of the Exchange as he may designate, the 
authority to approve any such securities, contracts in securities, 
rights, warrants or privileges, for original listing or admission to 
unlisted trading upon the Exchange and to admit the same to dealings 
on an ``issued'', ``when issued'' or ``when distributed'' basis; to 
list or admit to dealings on an ``issued'', ``when issued'' or 
``when distributed'' basis securities of an issuer having securities 
already listed or admitted to unlisted trading on the Exchange, 
including certificates of deposit, rights to subscribe, and other 
securities issued in exchange for or growing out of such securities; 
to suspend dealings in such securities at any time, and without 
notice, when such action is deemed appropriate and to remove the 
same from listing or from unlisted trading; to make such 
certifications or file such notices with respect to the listing and 
registration of any such securities or the suspension of dealings or 
removal thereof from listing or unlisted trading as may be required 
by the Securities Exchange Act of 1934 and rules and regulations 
issued thereunder; and to take such other action as may be necessary 
or appropriate in connection with the listing, suspension of trading 
or removal from listing or unlisted trading of any such securities. 
Any company directly affected by a decision of the Chairman or such 
duly authorized officer of the Exchange with respect to the listing 
of its securities or the removal thereof from listing or unlisted 
trading, may appeal such decision to the Board. A committee 
designated by the Board shall conduct a hearing with respect to any 
such appeal and shall make recommendations to the Board with respect 
thereto. The decision of the Board with respect to any such appeal 
shall be final and conclusive, except that the Board under its 
general power of delegation may authorize [the Executive Committee] 
a committee to consider any or all such appeals and in such case the 
decision of the [Executive Committee] committee with respect thereto 
shall be final and conclusive.

Corners

    No change.

Invitation to [non-governors] Non-Governors

    No change.

Members, [member organizations and approved persons] Member 
Organizations and Approved Persons

    The Board shall have general supervision over members and member 
organizations, and shall have general supervision over approved 
persons in connection with their conduct of the business of member 
organizations. The Board may examine into and regulate the conduct 
and financial condition of members, member organizations and 
approved persons. It shall have supervision over and may adopt such 
rules as it may deem necessary or proper with respect to the 
formation of member organizations, the continuance thereof, the 
finances and capital requirements thereof, the types, terms, 
conditions and issuance of securities by member organizations and 
trading in such securities, the interest of members and other 
persons in member organizations, the partners, officers, directors, 
trustees, stockholders and employees of members and member 
organizations, the offices of members and member organizations, the 
business connections of members and member organizations, and their 
association with or domination by or over any organizations or 
persons engaged in the securities business. The Board, to the extent 
not inconsistent with the Securities Exchange Act of 1934, as 
amended, shall have supervision over all matters relating to the 
collection, dissemination and use of quotations and of reports of 
prices on the Exchange and may grant to the Chairman, or to such 
officer or officers of the Exchange as he may designate, the 
authority to approve or disapprove any application for ticker or 
quotation service to any non-member. The Board may grant to the 
Chairman, or such officer or officers of the Exchange as he may 
designate, the authority to approve or disapprove of any connection 
or means of communication with the Floor and to require at any time 
the discontinuance of any such connection or means of communication 
if such connection or means of communication has been or is being 
used to facilitate any violation of the Securities Exchange Act of 
1934, as amended, or rules thereunder, the Exchange Constitution or 
its Rules, or just and equitable principles of trade. The Board 
shall establish standards and requirements for the registration of 
[regular members as] specialists or odd-lot dealers in securities 
dealt in on the Exchange, and may grant to a committee or 
committees, the authority to (i) approve the registration of 
[regular members as] specialists or odd-lot dealers, (ii) revoke or 
suspend any such registration at any time, (iii) allocate to a 
registered specialist or odd-lot dealer any security dealt in on the 
Exchange, and (iv) revoke any such allocation, temporarily or 
permanently, at any time.
    The Board may by rule provide for facilities and establish the 
conditions under which members may transmit orders electronically 
from the Floor of the Exchange to other markets and receive orders 
transmitted electronically to the Floor of the Exchange from other 
markets for the purchase or sale of securities traded on the 
Exchange.

Personal [interest] Interest

    No change.

Interpretation

    No change.

Subsidiaries

    No change.

Group [hospitalization plan] Hospitalization Plan

    No change.

Article II. Government and Administration

Sec. [03] 04. Officers of the Exchange

Chairman

    (a) The Chairman of the Board shall be the Chief Executive 
Officer of the Exchange and shall have the care of all the interests 
of the Exchange. He shall be responsible to the Board for the 
management and administration of the affairs of the Exchange. He 
shall be the official representative of the Exchange and its 
spokesman in all public matters. He shall, during his incumbency, be 
a member and the presiding officer of the Board of Governors. [and 
ex-officio a member of the Executive Committee and a member of all 
committees authorized by the Board of Governors.] He shall preside 
at meetings of the members of the Exchange, or may designate the 
Vice-Chairman to preside at any such meetings.
    The Chairman shall have no affiliation with any member 
organization nor any other business interest during his incumbency. 
By his acceptance of the office of Chairman he shall be deemed to 
have agreed to uphold the Constitution of the Exchange.
    The Chairman may call special meetings of the [regular members 
of the Exchange and of

[[Page 49780]]

the] Board of Governors. He shall call special meetings of the 
[regular members of the Exchange upon the direction of the Board or 
upon the written request of 50 regular members, and special meetings 
of the] Board upon the written request of [four] three governors.
    The Chairman shall have power to examine, or to authorize any 
officers, employees or representatives of the Exchange to examine, 
the books, papers and records of any member, his employees, his 
member organization, or any partner, director, employee or approved 
person of his member organization, and the Chairman shall have power 
to order the production of such books, papers and records for 
examination either by him or by any officers, employees or 
representatives of the Exchange designated by him. The Chairman 
shall also have power to require any member to appear and testify 
before him or before any officers, employees or representatives of 
the Exchange designated by him, or to require any member to cause 
any of his employees, or any of the partners, directors, employees 
or approved persons of his member organization, to appear and 
testify before the Chairman or before any officers, employees or 
representatives of the Exchange designated by him, as to any matter 
or transaction pertaining to the business of such member, his 
employees, his member organization or of any partner, director, 
employee or approved person of his member organization, or to 
require any approved person to cause any of his or its employees to 
appear and testify before the Chairman or before any officers, 
employees or representatives of the Exchange designated by him as to 
any matter or transaction pertaining to the business of such 
approved person or of any employee or such approved person.
    Following each annual election the Chairman shall make such 
appointments, in the manner provided for herein, as may be required 
by the Constitution and shall fill any vacancy which occurs in any 
office to which he has made an appointment. Pending approval by the 
Board such appointments may be made ad interim.
    Subject to the approval of the Board by the affirmative vote of 
a majority of the entire Board, the Chairman shall appoint and may 
remove the members of [the Executive Committee and any other 
committees] any committee of the Board. Subject to the approval of 
the Board by the affirmative vote of a majority of the governors 
present at any meeting of the Board, the Chairman shall appoint and 
may remove the members of other committees which may from time to 
time be authorized by the Board to consider matters pertaining to 
the administration of the Exchange and to the rules and policies of 
the Exchange concerning members, member organizations and approved 
persons. The Chairman shall fill all vacancies in [the Executive 
Committee and in said other] said committees and may make any such 
appointment ad interim until the next regular meeting of the Board.
    Subject to the approval of the Board, the Chairman may appoint 
special committees to advise or consult with him or other officers 
of the Exchange, or to consider matters pertaining to the 
administration of the Exchange, and such committees appointed by the 
Chairman shall have such powers as may be delegated to them by the 
Board.
    Subject to approval by the affirmative vote of a majority of the 
entire Board, the Chairman may appoint [an Executive Vice-Chairman,] 
a President, one or more Vice-Presidents and such other officers of 
the Exchange (except the Vice-Chairman [or Vice-Chairmen] of the 
Board who [are] is appointed from the [Exchange members] Floor 
Governors on the Board), as he may from time to time determine are 
required for the efficient management and operation of the Exchange, 
and subject to like approval of the Board he shall appoint the 
Treasurer and the Secretary and shall fix the duties, 
responsibilities, terms and conditions of employment of such 
officers and, subject to the approval of the Board, he may terminate 
their employment at any time.
    The Chairman shall have power to appoint, dismiss and fix the 
salaries and wages of all other employees of the Exchange, including 
such expert or professional advisers as he may deem advisable. He 
shall determine the number and duties of all employees. He may 
require that officers, appointees or employees of the Exchange give 
good and sufficient bonds for the faithful performance of their 
duties.
    All salaried officers and employees of the Exchange shall be 
under the direction of and responsible to the Chairman.
    The Chairman, or such other officer as he may designate, shall 
prepare and present to the Board periodic reports concerning the 
finances, income and expenses of the Exchange, and prior to the 
beginning of each fiscal year of the Exchange shall present to the 
Board an estimate of the income of the Exchange and recommendations 
as to appropriations for expenses for such fiscal year. The Chairman 
may at any time recommend additional appropriations or the increase 
or decrease of any appropriations made by the Board and shall make 
reports and recommendations to the Board as to the financial policy 
of the Exchange.
    In the case of the absence or inability to act of the Chairman, 
such other person as the Board of Governors may designate shall 
assume all the functions and discharge all the duties of the 
Chairman, other than those which shall devolve upon the Vice-
Chairman [or Vice-Chairmen] as provided in subsection 3(b) of this 
Article II. In the absence of such designation by the Board, [the 
Executive Vice-Chairman, if there be one, or if there is no 
Executive Vice-Chairman, or in his absence or inability to act,] the 
President, if there be one, or if there is no President, or in his 
absence or inability to act, the senior ranking Vice-President 
available shall assume all such functions and discharge all such 
duties of the Chairman. In case a vacancy shall occur in the office 
of Chairman, the Board, by the affirmative vote of a majority of the 
governors then in office, shall fill such vacancy.
    The Chairman may vote the shares of stock or other securities of 
any corporation, association or other entity which may at any time 
be owned by the Exchange, may execute any shareholders' or other 
consents in respect thereof and may in his discretion delegate such 
powers by executing Proxies or otherwise, on behalf of the Exchange. 
The Board of Governors from time to time may confer like powers upon 
any other person or persons.

Vice-Chairman

    (b) [Each] The Vice-Chairman of the Board of Governors [(other 
than the Executive Vice-Chairman)] shall be a regular[,] or options 
principal[, associate or allied] member of the Exchange. [If there 
shall be two Vice-Chairmen, then one shall be a governor who meets 
the qualifications described in subsection (a)(1)(ii) of Section 1 
of this Article II, and the other shall be a governor who meets the 
qualifications described in subsection (a)(1)(iv).] In the case of 
the absence or inability to act of the Chairman, or in case of a 
vacancy in the office of Chairman, the Vice-Chairman of the Board 
shall exercise the powers and discharge the duties of the Chairman 
in calling and presiding at meetings of the Board of Governors. [and 
of members of the Exchange. If there shall be two] The Vice-
Chairman[, then unless the Board shall otherwise designate, the 
foregoing duty shall devolve first upon the one meeting the 
qualifications described in subsection (a)(1)(ii) of Section 1 of 
this Article, and in the case of his absence or inability to act, 
then upon the other. The Vice-Chairman or Vice-Chairmen] shall have 
such other functions and responsibilities as the Board of Governors 
may from time to time assign to him.
    In the absence or inability to act of both the Chairman and the 
Vice-Chairman[(or each of the Vice-Chairmen)], the members of the 
Board of Governors who are regular, options principal, associate or 
allied members of the Exchange, and in such order of priority as the 
Board may designate, or, in the absence of such designation, the 
senior available member in service on the Board of Governors who is 
a regular, options principal, associate or allied member of the 
Exchange, shall exercise the powers and discharge the duties of the 
Chairman in calling and presiding at meetings of the Board of 
Governors. [and of members of the Exchange.]
    In case a vacancy shall occur in the office of Vice-Chairman, 
the Board shall fill such vacancy by the election to such office of 
a governor who is a [regular, options principal, associate or allied 
member of the Exchange and, if there is more than one Vice-Chairman, 
who meets the further qualification specified above which is 
applicable to the vacant position] Floor Governor.

Treasurer

    No change.

Secretary

    No change.

Article II. Government and Administration Sec. [04] 05. Committees

[Executive Committee] Examination, Investigation, etc.

    [(a) Subject to the approval of the Board, by the affirmative 
vote of a majority of the entire Board, the Chairman shall appoint 
an Executive Committee to be composed of seven governors as follows: 
(i) the Chairman

[[Page 49781]]

of the Board, (ii) four regular, options principal, associate or 
allied member governors of whom two shall be principally engaged in 
office functions and two shall be members who spend a substantial 
part of their time on the Floor of the Exchange; provided, however, 
that among the four shall be included any member governor who is a 
Vice-Chairman of the Board, and (iii) two public governors. The 
members of this Committee other than the Chairman and the Vice-
Chairman or Vice-Chairmen, shall serve at the pleasure of the Board. 
The Chairman of the Board shall serve as chairman of the Executive 
Committee.
    The Executive Committee shall consult with and assist the 
Chairman and the other officers and employees of the Exchange in the 
administration and interpretation of the provisions of the 
Constitution, the rules of the Exchange and the policies promulgated 
by the Board. Subject to the provisions of the Constitution and 
applicable law, between meetings of the Board of Governors the 
Executive Committee shall have the authority to exercise all of the 
powers of the Board except to the extent that the Board may from 
time to time by resolution specifically reserve any such power or 
powers, but the Executive Committee shall have no power to change 
rules or policies adopted by the Board or to make new rules or 
policies.
    The Chairman may designate an officer or employee of the 
Exchange to act as secretary to the Executive Committee, and the 
person so designated shall keep records of the proceedings of the 
Committee and perform such other functions or duties as the 
Committee may from time to time determine.
    The Executive Committee, or any sub-committee thereof, shall 
have such other duties and may be delegated such other powers as the 
Board may from time to time determine.

Examination, investigation, etc.

    (b)](a) Any committee authorized by the Board or by the 
Constitution shall have power to examine, or to authorize any 
officers, employees or representatives of the Exchange to examine 
the books, papers and records of any member, his employees, his 
member organization, or any partner, director, employee or approved 
person of his member organization, and any such committee shall have 
power to order the production of such books, papers and records for 
examination either by such committee or by any officers, employees 
or representatives of the Exchange designated by such committee. Any 
such committee shall also have power to require any member to appear 
and testify before such committee or before any officers, employees 
or representatives of the Exchange designated by such committee, or 
to require any member to cause any of his employees, or any of the 
partners, directors, employees or approved persons of his member 
organization, to appear and testify before such committee or before 
any officers, employees or representatives of the Exchange 
designated by such committee, as to any matter or transaction 
pertaining to the business of such member, his employees, his member 
organization or of any partner, director, employee or approved 
person of his member organization, or to require any approved person 
to cause any of his or its employees to appear and testify before 
such committee or before any officers, employees or representatives 
of the Exchange designated by such committee, as to any matter or 
transaction pertaining to the business of such approved person or of 
any employee of such approved person.

Additional [committee members] Committee Members

    [(c)](b) The chairman of any committee authorized by the Board, 
other than a committee to which the Board has delegated powers 
vested in it pursuant to the Constitution or applicable law, shall, 
with the approval of the Chairman, be empowered to appoint any 
member associated with any member organization to serve on said 
committee for such time as the chairman of such committee, with the 
approval of the Chairman, may decide. Such appointees shall serve as 
additional members of the committee to which they may be appointed 
and shall be entitled to vote.
    [Indemnification shall be accorded by the Exchange, and related 
expenses may be advanced, in respect of members of any committee 
authorized by the Constitution or by the Board of Governors, Floor 
Officials, Arbitrators, Trustees of the Gratuity Fund, Trustees of 
any Special Trust Fund, employees of the Exchange and directors, 
officers and employees of any corporation a majority of the stock of 
which is held by the Exchange to the same extent as provided by law 
in respect of governors and officers. The foregoing right of 
indemnification shall not affect any rights to indemnification to 
which persons other than governors and officers of the Exchange may 
be entitled by contract or otherwise under law.]

Committee [rules] Rules

    [(d) The Executive Committee and any](c) Any committee 
authorized by the Board shall have power, subject to the provisions 
of the Constitution and applicable law, to make and require the 
observance of rules, regulations, requirements, rulings and orders 
pertaining to matters within its jurisdiction. In the absence of a 
designation by the Board, any committee authorized by the Board 
shall have power to appoint a member of such committee as its 
chairman.

Committee [procedure] Procedure

    [(e)](d) Except as herein otherwise prescribed, [the Executive 
Committee and] each committee authorized by the Board shall 
determine the manner and form in which its proceedings shall be 
conducted and shall make such regulations for its government as it 
shall deem proper and may act at a meeting, or without a meeting, 
and by a majority of its members or by such other vote of its 
members as such committee by a majority of its existing members may 
by rule determine, subject always to the control and supervision of 
the Board of Governors. No member of a committee shall participate 
in the deliberations of such committee, or in the determination by 
such committee, with respect to a matter in which he is personally 
interested. Any one or more members of any committee may participate 
in a meeting of such committee by means of a conference telephone or 
similar communications equipment allowing all persons participating 
in the meeting to hear each other at the same time. Participation by 
such means shall constitute presence in person at the meeting.
    Current Section 5 (Indemnification) is deleted in its entirety

Article II. Government and Administration [Sec. 05. 
Indemnification]Section 06. Amex Adjudicatory Council

Appointment and Authority

    (a) There shall be established an Amex Adjudicatory Council (the 
``Council'') which, subject to the Board's discretionary right of 
review, shall have authority to act for the Board with respect to 
any appeal or review of a disciplinary proceeding, a statutory 
disqualification proceeding, or a membership proceeding; any review 
of a written stipulation of facts and consent to penalty; the 
exercise of any exemptive authority; and such other proceedings or 
actions authorized by the rules of the Exchange.

Number of Members and Qualifications

    (b) The Council shall consist of six individuals, all of whom 
shall be nominated by the Amex Nominating Committee and elected by 
the regular and options principal members voting together as a 
single class. Three of the six Council members shall be Floor 
Governors (``Floor Council Members''). The other three Council 
members shall be Public Governors (``Public Council Members'').
    As soon as practicable following the initial election of 
members, the Council shall elect a Chair and a Vice-Chair from among 
its members. The Chair and Vice-Chair shall have such powers and 
duties as may be determined from time to time by the Council.

Term of Office

    (c) Except as otherwise provided in this subsection, each 
Council member shall hold office for a term of two years or until a 
successor is elected, except in the event of earlier termination 
from office by reason of death, resignation, removal, 
disqualification, or other reason.
    The Council members shall be divided into two classes. The first 
class shall consist of two Floor Council Members and one Public 
Council Member. The second class shall consist of one Floor Council 
Member and two Public Council Members. The initial terms of the 
Council members in the first and second classes shall terminate in 
1999 and 2000, respectively, upon the election of their successors. 
Subsequent to the initial terms of office, each class shall be 
elected for two-year terms and shall hold office until their 
successors have been elected.
    Beginning in 2000, no Council member may serve more than two 
consecutive terms, except that if a Council member is appointed to 
fill a term of less than one year, such member may serve up to two 
consecutive terms following the expiration of such member's initial 
term.

Resignation

    (d) A member of the Council may resign at any time upon written 
notice to the Board. Any such resignation shall take effect at the

[[Page 49782]]

time specified therein, or if the time is not specified, upon 
receipt thereof, and the acceptance of such resignation, unless 
required by the terms thereof, shall not be necessary to make such 
resignation effective.

Removal

    (e) Any or all of the members of the Council may be removed from 
office at any time for refusal, failure, neglect, or inability to 
discharge the duties of such office by a majority vote of the Board.

Disqualification

    (f) Notwithstanding subsection (c), the term of office of a 
Council member shall terminate immediately upon a determination by 
the Board, by a majority vote of the entire Board, that the Council 
member no longer fits the classification (Floor or Public Council 
Member) for which the member was elected.

Filling of Vacancies

    (g) If a position on the Council becomes vacant, whether because 
of death, disability, disqualification, removal or resignation, the 
board of directors of The Amex Corporation shall appoint a person 
within the same classification (Floor or Public Council Member) to 
fill the vacancy until the next annual election of Council members.
    In the event that a member of the Council is precluded from 
participating in the Council's consideration of a particular matter 
due to a conflict of interest, the board of directors of The Amex 
Corporation shall appoint a person within the same classification 
for the position as provided in subsection (b) of this Section to 
serve as a substitute for such Council member with respect to the 
particular matter. In the event that a person fitting the relevant 
classification is not available to serve as a substitute, the Board 
of Directors may appoint a person who would be qualified to serve as 
a governor within such classification.

Quorum and Voting

    (h) At all meetings of the Council, a quorum for the transaction 
of business shall consist of a majority of the Council, including at 
least two Public Council Members. In the absence of a quorum, a 
majority of the members present may adjourn the meeting until a 
quorum is present. In the event of a tie vote, the decision that was 
the subject of the Council's review shall stand.

Meetings

    (i) The members of the Council may participate in a meeting 
through the use of a conference telephone or similar communications 
equipment by means of which all persons participating in the meeting 
may hear one another, and such participation in a meeting shall 
constitute presence in person at that meeting for all purposes.

Article III. Reserved [Elections Nominations]

    Current Article III is deleted in its entirety.

Article IV. Membership

Sec. 01. Admission to Membership

Number of [regular memberships] Regular Memberships

    (a) (1) Regular membership--[The regular memberships shall 
consist of 675] There shall be 661 regular memberships[. Any change] 
in the Exchange. The number of regular memberships shall be [made by 
an amendment of the Constitution] increased only if the Board of 
Governors requests The Amex Corporation to issue additional regular 
memberships. Any such issuance of additional regular memberships 
shall require the approval of a majority of the regular and options 
principal members voting together as a single class at a meeting 
called for the purpose of considering the request that new regular 
memberships be issued.

Requirements

    (2) Every applicant for regular membership must be at least the 
minimum age of majority required to be responsible for his contracts 
in each jurisdiction in which he conducts business. An application 
for regular membership shall be in writing and shall be in such 
form, and contain such information, as the Exchange may from time to 
time prescribe. No person may be admitted to regular membership 
unless his application is approved by the Exchange in accordance 
with the provisions of Section 1(g) of this Article IV. Nothing in 
the Constitution shall be construed to prohibit NASD Market Holding 
Company from holding a regular membership.

Signing Constitution

    (3) No person whose application for regular membership has been 
approved by the Exchange shall be admitted to the privileges thereof 
until he shall have signed the Constitution of the Exchange. By such 
signature he pledges himself to abide by the Constitution as the 
same has been or shall be from time to time amended and by all rules 
and regulations adopted pursuant to the Constitution and all 
regulations, orders, directives or decisions adopted or made in 
accordance therewith. In addition, any regular member or lessee of a 
regular membership, by exercising any of the rights inherent in a 
regular trading right, shall be deemed to have pledged himself, as 
though he had signed the Constitution, to abide by the Constitution 
as the same has been or shall be from time to time amended and by 
all rules and regulations adopted pursuant to the Constitution and 
all regulations, orders, directives or decisions adopted or made in 
accordance therewith.

[Number of options principal memberships] Number of Options Principal 
Memberships

    (b)(1) Options principal membership--There shall be 203 options 
principal memberships in the Exchange. [Any change in the] The 
number of options principal memberships shall be [made by an 
amendment of the Constitution] increased only if the Board of 
Governors requests The Amex Corporation to issue additional options 
principal memberships. Any such issuance of additional options 
principal memberships shall require the approval of a majority of 
the regular and options principal members voting together as a 
single class at a meeting called for the purpose of considering the 
request that additional options principal memberships be issued.

Requirements

    (2) An applicant for options principal membership must be at 
least the minimum age of majority required to be responsible for his 
contracts in each jurisdiction in which he conducts business. An 
application for options principal membership shall be in writing and 
shall be in such form, and contain such information, as the Exchange 
may from time to time prescribe. Such applicant must agree that his 
primary occupation will be the transaction of business in options as 
principal on the Floor of the Exchange. No person may be admitted to 
options principal membership unless his application is approved by 
the Exchange in accordance with the provisions of Section 1(g) of 
this Article IV. Nothing in this Constitution shall be construed to 
prohibit NASD Market Holding Company from holding an options 
principal membership.

Signing Constitution

    (3) No person whose application for options principal membership 
has been approved by the Exchange shall be admitted to the 
privileges thereof until he shall have signed the Constitution of 
the Exchange. By such signature he pledges himself to abide by the 
Constitution as the same has been or shall be from time to time 
amended and by all rules and regulations adopted pursuant to the 
Constitution and all regulations, orders, directives or decisions 
adopted or made in accordance therewith. In addition, any [Trading 
Privileges
    (4) An] options principal member or lessee of an options 
principal membership, by exercising any of the rights inherent in an 
options principal trading right, shall be deemed to have pledged 
himself, as though he had signed the Constitution, to abide by the 
Constitution as the same has been or shall be from time to time 
amended and by all rules and regulations adopted pursuant to the 
Constitution and all regulations, orders, directives or decisions 
adopted or made in accordance therewith. [may execute on the Floor 
of the Exchange transactions in options and other derivative 
products initiated by him for his own account and may give orders in 
options and other derivative products for his own account to regular 
members for execution. Such member may not execute agency 
transactions on the Floor either for customers or for regular, 
associate or allied members or other options principal members, may 
not be registered as a specialist, may not execute on the Exchange 
any orders, whether as agent or principal, in stocks, warrants, 
bonds or other securities (except principal transactions in options 
and other derivative products) and may not accept any orders from 
his member organization for execution.
    Derivative products shall include, in addition to standardized 
options, other securities which are issued by the Options Clearing 
Corporation or another limited purpose entity or trust and which are 
based solely on the performance of an index or portfolio of other 
publicly traded securities.

[[Page 49783]]

Notwithstanding the foregoing, derivative products shall not include 
warrants of any type or closed-end mutual funds.]

Rights

    [(5)](4) No change.

Directory

    [(6)](5) No change.

Allied [membership] Membership

    (c) Allied membership--Any person not a regular, options 
principal or associate member of the Exchange, shall upon approval 
by the Exchange become an allied member of the Exchange by pledging 
himself to abide by the Constitution as it has been or shall be from 
time to time amended, and by all rules adopted pursuant to the 
Constitution, and by becoming either:
    [(i)](1) a general partner in a regular, options principal or 
associate member firm or an employee who controls such member firm;
    [(ii)](2) an employee of a regular, options principal or 
associate member corporation who is either: (1) a person who 
controls such corporation, or (2) a principal executive officer of 
such member corporation;
    [(iii)](3) a trustee of a regular or options principal member 
organization which is a pension plan or an employee who controls 
such organization; or
    [(iv)](4) an employee of any other entity permitted by the 
Exchange to become a member organization who controls such 
organization.
    No further change.

Associate [membership] Membership

    (d) Associate membership--The number of associate members shall 
be such as may be determined by the Board of Governors from time to 
time. Any person not less than the minimum age of majority required 
to be responsible for his contracts in each jurisdiction in which he 
conducts business either as a partner of a firm or as a director or 
executive officer of a corporation may make application for 
associate membership.
    An application for associate membership shall be in writing and 
shall be in such form, and contain such information, as the Exchange 
may from time to time prescribe. No person may be admitted to 
associate membership unless his application is approved by the 
Exchange, in accordance with the provisions of Section 1(g) of this 
Article IV. Any person admitted to associate membership in the 
American Stock Exchange, Inc. prior to September 4, 1962, as an 
individual or as a partner of a firm shall remain an associate 
member only so long as he is actively engaged in the business of 
buying and selling securities as broker or dealer. Any person 
admitted to associate membership in the Exchange or in the American 
Stock Exchange, Inc. after September 4, 1962, as a partner of a firm 
shall remain an associate member only so long as he remains a 
partner of such firm or of another firm continuing the business of 
the first firm or a director or executive officer of a corporation 
continuing the business of the first firm. Any person admitted to 
associate membership in the Exchange or in the American Stock 
Exchange, Inc., whether before or after September 4, 1962, as a 
director or executive officer of a corporation shall remain an 
associate member only so long as he remains a director or executive 
officer of such corporation or of another corporation continuing the 
business of the first corporation.
    No further change.

Visiting Floor

    No change.

Exchange [not liable to members or member organizations] Liability 

    [(e) The Exchange shall not be liable for any damages sustained 
by a member or a member organization growing out of the use or 
enjoyment by such member or member organization of the facilities 
afforded by the Exchange to members for the conduct of their 
business, except](e)
    Except insofar as the Board may specifically provide by rule 
with respect to Exchange facilities which implement the electronic 
transmission of orders for the purchase or sale of securities traded 
on the Exchange to the Floor of the Exchange or between the Floor of 
the Exchange and other markets, neither the Exchange nor any of its 
affiliates nor any of its or their respective officers, governors, 
committee members, employees or agents shall be liable to a member 
of the Exchange, a member organization, or a person associated with 
a member or a member organization for any loss, expense, damages or 
claims that arise out of the use or enjoyment of the facilities or 
services afforded by the Exchange, any interruption in or failure or 
unavailability of any such facilities or services, or any action 
taken or omitted to be taken in respect to the business of the 
Exchange except to the extent such loss, expense, damages or claims 
are attributable to the willful misconduct, gross negligence, bad 
faith or fraudulent or criminal acts of the Exchange or its 
officers, employees or agent acting within the scope of their 
authority.[.]

[Initiation fee] Initiation Fee

    (f) No change.

Approval of [membership matters] Membership Matters

    (g) Whenever pursuant to any of the provisions of this Section 
1, the approval, consent, permission, authorization or waiver of the 
Exchange is required, such approval, consent, permission, 
authorization or waiver may be granted by the Chairman or by any 
officer or employee of the Exchange to whom the Chairman has 
delegated such authority; except that no person who has been 
expelled from the Exchange or has been declared ineligible for 
reinstatement pursuant to Section 5(c) of this Article, may be 
readmitted as a regular, options principal, allied or associate 
member unless approved by the Board of Governors. If the Chairman or 
any such officer or employee shall refuse to grant such approval, 
consent, permission, authorization or waiver, the person or persons 
affected thereby shall have the right to a hearing on the matter 
[either (i)] before a committee authorized by the Board[, or (ii) 
before a panel selected in accordance with the provisions of Section 
1(b) of Article V, as the Chairman, or such officer designated by 
him for the purpose, shall determine]. Such committee [or panel, as 
the case may be,] shall have the authority to affirm or reverse the 
decision of the Chairman or of such duly authorized officer or 
employee, or to modify such decision or impose such conditions as it 
shall deem appropriate, and the decision of the committee [or panel] 
shall be final and conclusive.[, unless within twenty days after 
such decision is rendered the person or persons affected thereby 
shall file a written notice with the Secretary of the Exchange 
appealing such decision to the Board. The Board may consider any 
such appeal or, in its discretion, under its general powers of 
delegation, may authorize the Executive Committee to consider the 
same. The determination of the Board or of the Executive Committee, 
as the case may be, with respect to any such appeal shall be final 
and conclusive.]

[Options Trading Permits]

    [(i)] Deleted.

Limited Trading Permits

    [(j)](h) (1) There shall be [36] a maximum of ten limited 
trading permits [which may be issued to qualified individuals or 
member organizations with approved nominees (such individuals or the 
nominees of such organizations being for the purposes of this 
subsection (j) referred to as limited trading permit holders), as 
provided in a plan approved by the regular members of the Exchange 
providing for the offering of such limited trading permits (referred 
to for the purposes of this subsection (j) as the ``Plan'')]. 
Limited trading permits shall expire on May 14 in each year unless 
renewed by the holder thereof for such fee as may be established 
from time to time by the Board, which fee shall be not less than 
$2,000 nor more than $5,000 per annum.

Requirements for Issuance

    (2) A limited trading permit holder must: [(a)](i) be at least 
the minimum age of majority required to be responsible for his 
contracts in each jurisdiction in which he conducts business; 
[(b)](ii) agree that his primary occupation will be the transaction 
of business on the Floor of the Exchange in his capacity as a permit 
holder; and [(c)](iii) meet such other qualifications as may be 
specified in the [Plan or established by the ] plan approved by the 
regular members of the Exchange providing for the offering of such 
limited trading permits. Applications must be approved by the 
Exchange in accordance with the provisions of Section 1(g) of this 
Article IV.
    No person whose application for a permit has been approved by 
the Exchange shall be admitted to the privileges thereof until he 
shall have signed the Constitution of the Exchange. By such 
signature he shall pledge himself to abide by the Constitution as 
the same has been or shall be from time to time amended and by all 
rules, regulations, requirements, orders, directions or decisions 
adopted or made in accordance therewith.

Rights and Obligations

    (3) A limited trading permit holder may execute on the Floor of 
the Exchange transactions in options and other derivative products 
initiated by him for his own account and may give orders in options 
and

[[Page 49784]]

other derivative products for his own account to regular members for 
execution provided, however, that a limited trading permit holder 
may not trade in individual stock options listed on the Exchange.
    A limited trading permit holder may not execute agency 
transactions on the Floor either for customers or for regular, 
associate, allied or options principal members or other permit 
holders, may not be registered as a specialist, may not execute on 
the Exchange any orders, whether as agent or principal, in stocks, 
warrants, bonds or other securities (except principal transactions 
in options and other derivative products as described above) and may 
not accept any orders from his member organization for execution.
    Derivative products shall have the meaning described in [the 
second paragraph of subsection (b)(4) of this Section.] Section 3(d) 
of Article I.
    A limited trading permit holder shall not be entitled to vote in 
any election or on any amendment to the Constitution or on any other 
matter, to participate in the Gratuity Fund provided for in Article 
IX of the Constitution, to share in any distribution of the assets 
or funds of the Exchange in the event of any voluntary or 
involuntary final liquidation, dissolution, or winding up of the 
affairs of the Exchange, or to serve as a Governor of the Exchange. 
Except as provided above, a limited trading permit holder shall be 
considered a member of the Exchange for all purposes, and shall be 
subject to such obligations and duties (including the payment of 
dues, initiation fees and other fees and charges of the Exchange) as 
may be imposed on members by the Constitution as the same has been 
or shall be from time to time amended and by all rules, regulations, 
requirements, orders, directions and decisions adopted or made in 
accordance therewith. (To implement this provision, all provisions 
of the Constitution and the rules, regulations, requirements, 
orders, directions and decisions adopted or made in accordance 
therewith which by their terms are applicable to regular and options 
principal members shall be deemed to also apply to and include 
limited trading permit holders unless the application thereof shall 
be inconsistent with the specific provisions of this subsection 
[(j)](h) or unless the context shall otherwise require.)
    A limited trading permit may be transferred in the same manner 
and subject to the same terms and conditions as those applicable to 
the transfer of an options principal membership. Without limiting 
the foregoing, a limited trading permit may be leased pursuant to a 
special transfer agreement as provided in Section 4(b) of this 
Article IV. The transferee of a limited trading permit shall be 
subject to payment of an initiation fee equal to that payable by 
transferees of an options principal membership.
    An individual limited trading permit holder who is associated 
with a broker-dealer shall qualify such broker-dealer as a member 
organization of the Exchange. If the limited trading permit pursuant 
to which a member organization is thus qualified shall expire as 
provided in paragraph (1) of this subsection [(j)](h) such 
organization shall cease to be a member organization of the 
Exchange, unless a person who is a regular, associate or options 
principal member becomes associated therewith. Upon the expiration 
of a limited trading permit as provided in paragraph (1) of this 
subsection [(j)](h), all rights and privileges granted pursuant 
hereto shall terminate.

Class C Trading Rights

    (i) (1) For a period of five years beginning on the closing date 
of the Transaction Agreement, Class C Trading Rights may be issued 
to qualified individuals or organizations who are instrumental in 
obtaining new listings of securities admitted to dealings on the 
Exchange that are judged by the Exchange to constitute demonstrable 
product. The holder of a Class C Trading Right may be registered as 
a specialist in any such newly listed security, but may not be 
registered as a specialist in any other securities on the Exchange 
and may not operate a joint book with a regular member. The Board of 
Governors shall determine when and to whom to issue Class C Trading 
Rights and shall further determine the fees, dues, and other charges 
applicable to Class C Trading Right holders. Each Class C Trading 
Right shall expire three years after the date of its issuance, or at 
the end of the five year period referred to above, whichever first 
occurs, and no more than 25 Class C Trading Rights shall be 
outstanding at any time.
    A Class C Trading Right shall not entitle the holder (i) to vote 
in any election, (ii) to participate in the Gratuity Fund provided 
for in Article IX of the Constitution, (iii) to share in any 
distribution of the assets or funds of the Exchange in the event of 
any voluntary or involuntary final liquidation, dissolution, or 
winding up of the affairs of the Exchange, or (iv) to serve as a 
Governor of the Exchange. Except as provided above, a Class C 
Trading Right holder shall be considered a member of the Exchange 
for all purposes, and shall be subject to such obligations and 
duties as may be imposed on members by the Constitution as the same 
has been or shall be from time to time amended and by all rules, 
regulations, requirements, orders, directions and decisions adopted 
or made in accordance therewith. (To implement this provision, all 
provisions of the Constitution and the rules, regulations, 
requirements, orders, directions and decisions adopted or made in 
accordance therewith which by their terms are applicable to regular 
and options principal members shall be deemed to also apply to and 
include Class C Trading Right holders unless the application thereof 
shall be inconsistent with the specific provisions of this 
subsection (i) or unless the context shall otherwise require.)
    A Class C Trading Right may not be sold, leased or otherwise 
transferred, provided, however, that subject to the approval of such 
transfer by the Exchange, a Class C Trading Right may be sold or 
otherwise transferred in connection with a business combination, 
reorganization or other transfer of all or substantially all of the 
assets of one member organization to another. A specialist holding a 
Class C Trading Right who then becomes a regular member shall be 
deemed to have continued his registration as specialist in the 
securities allocated to him without any need for reallocation 
thereof.
    (2) A Class C Trading Right holder must be at least the minimum 
age of majority required to be responsible for his contracts in each 
jurisdiction in which he conducts business. No person whose 
application for a Class C Trading Permit has been approved by the 
Exchange shall be admitted to the privileges thereof until he shall 
have signed the Constitution of the Exchange. By such signature he 
shall pledge himself to abide by the Constitution as the same has 
been or shall be from time to time amended and by all rules, 
regulations, requirements, orders, directions or decisions adopted 
or made in accordance therewith.

New Trading Rights

    (j) The Board of Governors shall not authorize the issuance of 
any new forms of trading privileges not provided for in this 
Constitution, or grant materially new rights to the holders of 
existing privileges, without first obtaining the consent of The Amex 
Corporation in accordance with the terms of its amended and restated 
certificate of incorporation.

Article IV. Membership

Sec. 02. Members, Member Organizations and Membership Owners

Approval of [organizations] Organizations

    (a) No change.

Approval of [members and persons associated with member organizations] 
Members and Persons Associated with Member Organizations

    (b) No change.

Member [limited to one member organization] Limited to One Member 
Organization

    (c) No change.

Conditions of [approval of member organizations] Approval of Member 
Organizations

    (d) No change.
    (e) No change.

Withdrawal of [approval of member organizations] Approval of Member 
Organizations

    (f) No change.

Approval [revocable] Revocable

    (g) No change.

Withdrawal of [approval of certain stockholders] Approval of Certain 
Stockholders

    (h) No change.

Non-[voting common stock] Voting Common Stock

    (i) No change.

Approved [persons] Persons

    (j) No change.

Location

    (k) No change.

Registered [address] Address

    (l) No change.

[[Page 49785]]

Offices

    (m) No change.

Employees and [officers] Officers

    (n) No change.

Written [notification of proposed acts] Notification of Proposed Acts

    (o) No change.

Assignment of [membership or interest in member organization] 
Membership or Interest in Member Organization

    (p) No change.

Submission of [information] Information as to [proposed changes] 
Proposed Changes

    (q) No change.

Retirement from [member organization] Member Organization

    (r) No change.

Number of [partners] Partners

    (s) No change.

Suspended [members] Members, etc.

    (t) No change.

Continuing [relationship of member or member organization with 
suspended member or person expelled] Relationship of Member or Member 
Organization with Suspended Member or Person Expelled from Exchange

    (u) No change.

Required [vote] Vote of Exchange in [certain cases] Certain Cases

    (v) No change.

Article IV. Membership

Sec. 03. Member Representation

Governor and Exchange Official Representatives

    (a) No change.

Temporary [representatives] Representatives

    (b) No change.

Representation [while engaged in military or naval service or in public 
program for defense] While Engaged in Military or Naval Service or in 
Public Program for Defense of U.S.

    (c) No change.

Representation [while engaged in military or naval training service] 
While Engaged in Military or Naval Training Service

    (d) No change.

Withdrawal of [authorization] Authorization

    (e) No change.

Contracts by [representatives] Representatives

    (f) No change.

Article IV. Membership

Sec. 04. Transfer of Membership

Charges [pending] Pending

    (a) No change.

Special [transfer] Transfer and [designation] Designation of [nominee] 
Nominee

    (b) No change.

Election of [transferee] Transferee

    (c) No change.

Contracts [pending transfer] Pending Transfer

    (d) No change.

Closing [contracts] Contracts

    No change.

Transfer by Board

    No change.

Distribution of [proceeds] Proceeds

    (e) No change.

Exchange [charges] Charges

    No change.

Claims of [regular or options principal members or member 
organizations] Regular or Options Principal Members or Member 
Organizations

    No change.

Floor [contracts ]Contracts

    [(A)](1) Claims arising in the ordinary course of business from 
Exchange Contracts for the purchase, sale, borrowing or loaning of 
securities entered into on the Floor of the Exchange.

Other [ordinary business contracts] Ordinary Business Contracts

    [(B)](2) Claims arising from Exchange Contracts entered into in 
the ordinary course of business other than those included in the 
preceding paragraph.

Other [business contracts] Business Contracts

    [(C)](3) Claims arising from Exchange Contracts other than those 
included in the two preceding paragraphs, except those made for 
nonbusiness purposes.

Contracts [under rules of another exchange] Under Rules of Another 
Exchange

    [(D)](4) Claims arising from members' contracts made subject to 
the rules of another exchange.

Pro [rata distribution] Rata Distribution

    No change.

Unmatured [contracts] Contracts

    No change.

Contingent [claims] Claims

    No change.

Collateral

    No change.

Determination of [claims] Claims

    No change.

Surplus [after claims] After Claims

    No change.

Filing [claims] Claims

    (f) No change.
    Intra-[partnership or intra-corporation claims] Partnership or 
Intra-Corporation Claims
    (g) No change.

Disposal of [membership] Membership by Board

    (h) No change.

Rights of [creditors] Creditors

    (i) No change.

Rights of [creditor's estate] Creditor's Estate

    (j) No change.

Article IV. Membership

Sec. 05. Reinstatement

Reinstatement by Board

    (a) Every application for reinstatement by a member, member 
organization or owner of a membership suspended pursuant to Section 
3 of Article V shall be referred to [the Executive Committee, or 
such other] such committee as may be appointed by the Board of 
Governors for such purpose. A hearing shall be held by the committee 
with respect to such application and a record shall be kept. No 
application for reinstatement shall be considered with respect to a 
member, member organization or owner of a membership as to whom 
dues, fines, assessments or charges of the Exchange, or 
contributions to the Gratuity Fund (as provided in Article IX) are 
due and unpaid. If the committee shall determine to reinstate a 
member, member organization or owner of a membership suspended under 
the provisions of Section 3 of Article V, it may impose such 
conditions as it shall deem appropriate. If the committee shall 
determine not to reinstate such suspended member, member 
organization or owner of a membership, its determination shall be 
supported by a statement setting forth the specific grounds on which 
the application for reinstatement is denied.

Reinstatement by Chairman

    (b) Notwithstanding the foregoing provisions of this Section 5, 
whenever it shall appear to the Chairman:
    (1) that a member or member organization has been suspended 
pursuant to subsection (a) or (b) of Section 3 of Article V, and 
that the conditions resulting in such suspension no longer exist or 
the suspension of such member or member organization by another 
registered national securities exchange or national securities 
association has been terminated by such other exchange or securities 
association; and
    (2) that prompt reinstatement is advisable to avoid substantial 
loss to the public, to the Exchange or to the member or member 
organizations; and
    (3) that it is not practicable to convene a meeting of the Board 
of Governors immediately to act in the matter;

the Chairman may announce to the Exchange the reinstatement of such 
member or member organization. Any reinstatement pursuant to this 
subsection (b) shall be effective immediately, but shall be 
submitted to the Board of Governors as soon as reasonably 
practicable and unless approved by the Board such reinstatement 
shall forthwith terminate.

Denial for [irregularities] Irregularities 

    (c) Whenever an Exchange Disciplinary Panel shall determine that 
a member, member organization or owner of a membership suspended 
under the provisions of Section 3 of Article V, has been guilty of 
irregularities or unbusinesslike dealings, it may declare such 
member, member organization or owner of a membership ineligible for 
reinstatement. Any such determination shall be made only after the 
suspended member, member organization or owner of a membership has 
been given notice

[[Page 49786]]

and an opportunity to be heard by the Disciplinary Panel in 
accordance with the procedures specified in Section 1(b) of Article 
V and such determination shall be subject to review in accordance 
with the provisions of paragraph [(5)](7) of said Section.

Article IV. Membership

Sec. 06. Temporary Member Firms and Corporations

Death of [sole regular or options principal member associated with 
regular or options principal member organization] Sole Regular or 
Options Principal Member Associated with Regular or Options Principal 
Member Organization

    (a) No change.

Application [requirements] Requirements 

    (b) No change.

Provisions of [articles of partnership;] Articles of Partnership; Use 
and [proceeds of membership] Proceeds of Membership

    (1) No change.

Continuance in [business;] Business; Use and [proceeds of membership] 
Proceeds of Membership

    (2) No change.

Agreement to be [filed;] Filed; Subject to [rules] Rules

    (3) No change.

Capital

    (4) No change.

Application [requirements] Requirements

    (c) No change.

Continuance in [business] Business

    (1) No change.

Use and [proceeds of membership] Proceeds of Membership

    (2) No change.

Agreement to [be filed;] Be Filed; Subject to [rules] Rules

    (3) No change.

Capital

    (4) No change.

Rights and [privileges] Privileges

    (d) No change.

Exceptions

    No change.

Status [effective] Effective

    (e) No change.

Termination of [status] Status

    (f) No change.

Proceeds of [membership subject to claims] Membership Subject to Claims

    (g) No change.

Article IV. Membership

    Sec. 07. Disposal of [Regular] Regular Memberships by the Board 
Transfer to Chairman as [trustee] Trustee
    (a) No change.

Owner [ceases to be member on transfer of membership to trustee] Ceases 
to be Member on Transfer of Membership to Trustee

    (b) No change.

Purposes for [which membership is transferred to trustee] Which 
Membership is Transferred to Trustee

    (c) No change.

Prices at [which trusteed memberships shall be offered] Which Trusteed 
Memberships Shall be Offered No change.

Transfer to [applicant] Applicant for [membership] Membership

    No change.

Membership [may be reacquired by suspended member upon payment of 
amount due] May be Reacquired by Suspended Member Upon Payment of 
Amount Due No change.

Distribution of [proceeds] Proceeds of [sale] Sale

    No change.

If [applicant fails in election, disposal of membership] Applicant 
Fails in Election, Disposal of Membership is to be [recommenced] 
Recommenced

    No change.

Transfer to Exchange of [membership not sold or redeemed] Membership 
Not Sold or Redeemed

    No change.

Memberships [transferred] Transferred to Exchange to be [retired] 
Retired

    (d) No change.

Trustee [not liable] Not Liable

    (e) No change.

Notice to be [given] Given of [offering price] Offering Price

    (f) No change.

Article V. Discipline of Members

Sec. 01. [Procedure]Procedures

Assistance of [counsel permitted] Counsel Permitted

    (a) No change.

Hearing before Disciplinary Panel

    (b) Except as provided in Section 2 of this Article, Exchange 
disciplinary proceedings shall be conducted in the following manner:
    (1) Disciplinary Panel. In any disciplinary proceeding involving 
charges against a member, member organization, approved person, or a 
registered or non-registered employee or prospective employee of a 
member or member organization, a hearing shall be held with respect 
to such charges before an Exchange Disciplinary Panel. Such 
Disciplinary Panel shall consist of not less than three nor more 
than five persons: a hearing officer who shall be chairman of the 
Panel with the remainder of the Disciplinary Panel being members of 
the hearing board.
    (2) Hearing Board. The Chairman of the Board, subject to the 
approval of the Board, shall from time to time designate such number 
of Exchange Officials and shall appoint such number of additional 
persons to serve on the hearing board as he shall deem necessary for 
the purpose of conducting Exchange disciplinary proceedings. The 
qualifications of persons to be appointed to the hearing board shall 
be determined in accordance with such rules as may be adopted by the 
Board of Governors, except that members of the Board of Governors 
shall not be eligible for appointment to the hearing board or as 
hearing officers. Exchange Officials and other persons appointed to 
the hearing board as herein provided shall serve at the pleasure of 
the Board of Governors or until [the next annual election of the 
Exchange and] their successors are appointed and take office.
    (3) Hearing Officer. The Chairman of the Board, subject to the 
approval of the Board, shall designate one or more hearing officers 
who shall have no Exchange duties or functions relating to the 
investigation or preparation of disciplinary matters.
    (4) Composition of Disciplinary Panel. In any hearing at which a 
charge or charges against a member, member organization, or approved 
person are considered pursuant to this Article, the members of the 
hearing board serving on the Disciplinary Panel shall, except as 
hereinafter provided, be members of the Exchange.
    In any hearing at which a charge or charges against a registered 
or non-registered employee or prospective employee of a member or 
member organization are considered pursuant to this Article or 
pursuant to rules adopted by the Board of Governors, the members of 
the hearing board serving on the Disciplinary Panel shall include at 
least one registered employee or nonregistered employee of a member 
or member organization; in the discretion of the chairman of the 
Disciplinary Panel the remainder thereof may be members of the 
Exchange.
    In any hearing at which a charge or charges against both a 
registered or non-registered employee or prospective employee of a 
member or member organization and against a member, member 
organization or approved person are considered pursuant to this 
Article or pursuant to rules adopted by the Board of Governors, the 
members of the hearing board serving on the Disciplinary Panel shall 
include one registered employee or non-registered employee of a 
member or member organization and the remainder thereof shall be 
members of the Exchange.
    Subject to the foregoing provisions of this paragraph, the 
selection of the hearing officer to serve as the chairman of each 
Disciplinary Panel and the members of the hearing board to serve 
thereon shall be made in accordance with such rules as may be 
adopted by the Board of Governors. For all purposes of this Article, 
the decision of a majority of the members of a Disciplinary Panel 
shall be the decision of such Disciplinary Panel and shall be final 
and conclusive, except to the extent that such decision may be 
revised on review as provided in [paragraph (7) of this] Section 
[1(b)] 1(c).
    (5) The Board of Governors, in accordance with the provisions of 
Section 2 of Article II, shall adopt such rules and prescribe such 
procedures not inconsistent with the provisions of this Article as 
it may deem necessary or appropriate for the conduct of

[[Page 49787]]

Exchange disciplinary proceedings and investigations, and may from 
time to time amend, alter or repeal any such rules or procedures.
    (6) An accusation, charging a member, member organization or 
approved person before an Exchange Disciplinary Panel with having 
committed an offense, shall be in writing; it shall specify the 
charge or charges against such member, member organization or 
approved person with reasonable detail, and shall be signed by the 
person or persons making the charge or charges. A copy of such 
charge or charges, shall be served upon the accused member, member 
organization or approved person either personally, or by leaving the 
same during business hours at the office address of such member, 
member organization or approved person or by mailing it to such 
member, member organization or approved person at his or its office 
address or place of residence. The accused shall have twenty days 
from the date of such service to answer such charge or charges, or 
such further time as the Exchange in its discretion may deem proper. 
An answer shall be in writing, signed by or on behalf of the accused 
member, member organization or approved person and shall be filed 
with the Secretary of the Exchange. If so expressly required in the 
charge or charges, the answer shall specifically indicate which 
statements, or portions thereof, contained in the charge or charges 
are denied and which are admitted, and any such statements or 
portions thereof in the charge or charges which are not specifically 
denied shall be deemed to be admitted. The answer shall also contain 
in reasonable detail any affirmative defense which the accused 
wishes to submit and shall include any documents which the accused 
wishes to submit in support of the answer. Upon the answer being 
filed, or if the accused shall refuse or neglect to make answer as 
hereinbefore required, the Disciplinary Panel shall, at a hearing 
called for that purpose, proceed to consider the charge or charges. 
The Exchange shall cause copies of the charge or charges, and of the 
answer, if any, and of any documents submitted in support thereof by 
the accused, to be mailed or otherwise delivered to each member of 
the Disciplinary Panel at least five days before such hearing. 
Notice of such hearing shall be sent to the accused; the accused 
member, or any person associated with the accused member 
organization who is a member of the Exchange and is designated in 
writing by the accused member organization to represent it for all 
purposes at such hearing, or the accused approved person, shall be 
entitled to be present personally thereat, and shall be permitted to 
examine and cross-examine all of the witnesses produced before the 
Disciplinary Panel, and also to present such testimony, defense or 
explanation as may be deemed responsive to the charge or charges. 
Any witnesses produced by the accused shall be subject to cross 
examination. After hearing all the witnesses produced before the 
Disciplinary Panel and after hearing the accused the Disciplinary 
Panel shall determine whether or not the accused member, the accused 
member organization or the accused approved person is guilty of the 
offense or offenses charged. If it determines that the accused is 
guilty, the Disciplinary Panel may fix and impose the penalty. Any 
such determination shall be supported by a written statement setting 
forth (i) any act or practice in which such member, member 
organization or approved person is found to have engaged or which 
such member, member organization or approved person is found to have 
omitted, (ii) the specific provision of the Securities Exchange Act 
of 1934, as amended, the rules and regulations thereunder, the 
Constitution or the rules, procedures or policies of the Exchange, 
which any such act, practice or omission to act is deemed to 
violate, and (iii) the penalty imposed and the reasons therefore. 
Such written statement shall be served upon the accused in the 
manner hereinbefore provided, and a copy thereof shall be sent to 
each member of the [Board of Governors] Amex Adjudicatory Council. 
The determination of the Disciplinary Panel and any penalty imposed 
shall become final and conclusive twenty days after notification 
thereof to the accused, provided, however, that if a request for 
review of such determination or penalty, or both, is filed, as 
hereinafter provided, the penalty shall be stayed pending the result 
of such review.

Review by Amex Adjudicatory Council

    (c)[7] Any member, member organization or approved person 
determined to be guilty of a charge or charges before an Exchange 
Disciplinary Panel pursuant to this Article may require [a review 
of] that such determination [or of any] the penalty imposed by the 
Disciplinary Panel, or [of] both the determination and the penalty[. 
Upon the request of any four members of the Board of Governors, any 
determination by a Disciplinary Panel pursuant to this Article or 
any penalty imposed by such Disciplinary Panel, or both, shall be 
subject to review as hereinafter provided] be reviewed by the Amex 
Adjudicatory Council. A request for such review of [such] an 
Exchange Disciplinary Panel determination or penalty shall be made 
in writing and filed with the Secretary of the Exchange within 
twenty days after notification of the determination and penalty, if 
any, is served upon the accused member, member organization or 
approved person.
    [The review of a disciplinary proceeding by the Board shall be 
conducted at a regular or special meeting called for the purpose and 
notice of the object thereof shall be sent to the members of the 
Board. Fifteen governors shall be required to constitute a quorum 
for any meeting of the Board at which the Board shall review a 
disciplinary proceeding as herein provided, and any action shall 
pursuant to the vote of a majority of the governors present at such 
meeting shall be the action of the Board] An Exchange Disciplinary 
Panel determination or penalty shall also be subject to review by 
the Amex Adjudicatory Council upon a call for review by any member 
of the Council within thirty days after service of the Panel's 
determination.
    In connection with any such review[, the Board may affirm any] of 
an Exchange Disciplinary Panel determination [by the Disciplinary Panel 
or sustain any penalty imposed, or both, may ]or penalty, the Amex 
Adjudicatory Council may, as it deems appropriate, (i) affirm, modify 
or reverse [any such] the determination[, or may] made by the 
Disciplinary Panel; and (ii) sustain, decrease or eliminate any [such 
penalty] penalty imposed by the Disciplinary Panel, or impose any 
lesser penalty permitted under the provisions of this Article [, as it 
deems appropriate; or if the Board shall determine].
    If the Amex Adjudicatory Council determines that the 
Disciplinary Panel has not adequately considered all of the matters 
which should have been considered in connection with the charge or 
charges, or has improperly applied or interpreted the Constitution, 
rules, requirements and policies of the Exchange, or has imposed a 
penalty or penalties which the [Board] Council determines to be 
inadequate in light of all the circumstances, the [Board] Council 
may remand the matter to the Disciplinary Panel for further 
consideration consistent with such determination. Upon such remand, 
the Disciplinary Panel shall conduct a further hearing in accordance 
with the provisions of [this] subsection (b) and may as a result 
thereof modify, reverse or reaffirm its previous determination or 
impose any penalty permitted under this Article regardless of 
whether such penalty shall be greater than the penalty imposed as a 
result of the original hearing. Any determination or penalty imposed 
by the Disciplinary Panel as a result of a remand from the Amex 
Adjudicatory Council shall be subject to further review upon request 
as hereinabove provided.
    [If, upon review, the matter is not remanded to the Disciplinary 
Panel, the determination and penalty, if any,] The Amex Adjudicatory 
Council shall transmit its proposed written decision to each member 
of the Board [shall be final and conclusive] of Governors. The Board 
may call the proceeding for review pursuant to Section 2(d) of this 
Article. If the Board does not call the proceeding for review, the 
proposed written decision of the Amex Adjudicatory Council shall 
become final. Unless the Amex Adjudicatory Council remands the 
proceeding, the decision shall constitute the final action of the 
Exchange.

Discretionary Review by the Board of Governors

    (d) Upon the request of any four its members, the Board of 
Governors may review a proposed written decision of the Amex 
Adjudicatory Council. Such a request for review shall be made not 
later than the next meeting of the Board of Governors that is at 
least 15 days after that date on which the proposed written decision 
of the Amex Adjudicatory Council is transmitted to the Board. By a 
unanimous vote of the Board of Governors, the Board may shorten the 
period to less than 15 days. By an affirmative vote of the majority 
of the Board then in office,

[[Page 49788]]

the Board may, during the 15 day period, vote to extend the period 
to more than 15 days. The review by the Board of Governors shall 
occur not later than the next regularly scheduled meeting of the 
Board following the request for review. Ten governors shall be 
required to constitute a quorum for any meeting of the Board at 
which the Board shall review a disciplinary proceeding as herein 
provided, and any action taken pursuant to the vote of a majority of 
the governors present at such meeting shall be deemed to be the 
action of the Board.
    After review, the Board of Governors may affirm, modify, or 
reverse the proposed written decision of the Amex Adjudicatory 
Council. Alternatively, the Board of Governors may remand the 
proceeding with instructions. The decision of the Board of Governors 
shall constitute the final action of the Exchange, unless the Board 
remands the proceedings.

Disciplinary Fine Systems

    [(c)](e) The Board shall adopt such rules as it deems necessary 
or appropriate to implement disciplinary fine systems for the 
resolution of minor rule violations and shall delegate appropriate 
authority to officers and employees of the Exchange to properly 
administer such fine systems.

Discussing [charges prohibited ]Charges Prohibited

    [(d)](f) No person, firm or corporation under charges before a 
Disciplinary Panel shall discuss [with any member] the subject of 
such [Panel or] charges with any member of the [Board, nor shall 
any] Panel, the Amex Adjudicatory Council, or the Board of 
Governors. No member of the [Panel or any member of the Board] Board 
of Governors, the Amex Adjudicatory Council, or a Disciplinary Panel 
shall discuss charges made in a disciplinary proceeding with any 
[such] person, firm or corporation being charged, or with any one 
representing [him or it directly or indirectly, the subject of such 
charges. ]such person, firm or corporation.

Announcement of [results] Results

    [(e)](g) The Board of Governors shall adopt rules governing the 
announcement of the results of any disciplinary proceeding conducted 
pursuant to the provisions of this Article, provided, however, that 
no such announcement shall be permitted until there shall have been 
a final determination by the Exchange with regard to such 
disciplinary matter and the penalty, if any, to be imposed.

Article V. Discipline of Members

Sec. 02. Delegation of Disciplinary [Power] Powers

Stipulation of [facts] Facts and [consent] Consent to [penalty] 
Penalty

    In lieu of the procedures set forth in paragraph 6 of Section 
1(b) of this Article, a Disciplinary Panel, selected in accordance 
with the provisions of Section 1(b) of this Article, at a hearing 
called for that purpose may determine whether any member, member 
organization or approved person is guilty of having committed an 
offense or offenses on the basis of a written stipulation of facts 
and consent to a specified penalty entered into between such member, 
member organization or approved person and any officer of the 
Exchange, and may fix and impose the penalty agreed to in such 
stipulation and consent or any lesser penalty. A written notice of 
the result shall be served upon the member, member organization or 
approved person in the manner provided in subsection (b) of Section 
1 of this Article, and a copy thereof shall be sent to each member 
of the [Board of Governors] Amex Adjudicatory Council. The 
determination of the Disciplinary Panel and any penalty imposed 
shall become final and conclusive ten days after notification 
thereof to the accused, provided, however, that if a request for 
review by the [Board of Governors] Amex Adjudicatory Council of such 
determination or penalty, or both, is filed as hereinafter provided, 
the penalty shall be stayed pending the result of such review. If 
the Disciplinary Panel rejects the stipulation and consent to a 
specified penalty, the matter shall proceed as if the stipulation 
and consent had not been entered into, and such stipulation and 
consent shall be disregarded in any subsequent proceeding. A written 
notice of such rejection by the Disciplinary Panel shall be served 
upon the member, member organization or approved person in the 
manner provided in subsection (b) of Section 1 of this Article.
    Upon the request of any [four members of the Board of Governors, 
the Board or a committee of governors delegated by the Board] member 
of the Amex Adjudicatory Council, the Council shall review the 
determination of, or the penalty imposed by, a Disciplinary Panel in 
connection with a written stipulation of facts and consent to a 
specified penalty. Any such request for review of such determination 
or penalty shall be made in writing and filed with the Secretary of 
the Exchange within ten days after notification of the determination 
and penalty, if any, is served upon the accused member, member 
organization or approved person. Upon review, the [Board or the 
review committee] Amex Adjudicatory Council may fix and impose the 
penalty agreed to in such stipulation and consent, or impose a 
lesser penalty or reject such consent, as it deems appropriate. [The 
quorum and vote required for such action by the Board shall be the 
quorum and vote provided in Section 1(b)(7) of this Article.

Article V. Discipline of Members

Sec. 03. Suspension in View of Financial or Operating Conditions

Automatic [suspension] Suspension

    (a) No change.

Suspension by Chairman

    (b) Whenever it shall appear to the Chairman that a member or a 
member organization has failed to meet his or its engagements or is 
insolvent, or [the Chairman has been advised by the Executive 
Committee that such member or member organization is, in its 
opinion,] is in such financial or operating condition that he or it 
cannot be permitted to continue in business with safety to 
investors, his or its creditors, other members of the Exchange, or 
whenever it shall appear to the Chairman that a member or member 
organization has been suspended by another registered national 
securities exchange or national securities association for failure 
to meet his or its engagements, for insolvency or for being in such 
financial or operating condition that he or it cannot be permitted 
to continue in business with safety to investors, his or its 
creditors, other members, or such other exchange or securities 
association, the Chairman shall announce to the Exchange the 
suspension of such member or member organization, which suspension 
shall continue until such member or member organization has been 
reinstated as provided in Section 5 of Article IV.

Investigation by Exchange

    (c) No change.
    Sale of [regular or options principal membership and revocation 
of associate membership] Regular or Options Principal Membership and 
Revocation of Associate Membership
    (d) No change.

Failure to [pay dues] Pay Dues, etc.

    (e) No change.
    (f) Any member or member organization suspended under the 
provisions of subsections (a) or (b) of this Section 3 shall be 
granted promptly a hearing with regard to such suspension before the 
[Executive Committee,] Board or such [other] committee as may be 
appointed by the Board for such purpose. Any determination by the 
Board or such committee as a result of such hearing to affirm the 
suspension shall be supported by a statement setting forth the 
specific grounds on which the suspension is based.

Article V. Discipline of Members

Sec. 04. Suspension or Expulsion

Examination by [another exchange] Another Self-Regulatory Organization

    (a) If the Board of Governors shall deem that it is in the 
interest and welfare of the Exchange or in the public interest, or 
appropriate or necessary for the maintenance of just and equitable 
principles of trade, to facilitate the examination by the 
authorities of another [exchange] self-regulatory organization of 
any transaction in which a member or member organization of the 
Exchange has been concerned and that the testimony of such member or 
his employees or the testimony of such member organization or the 
members associated therewith, or approved persons or employees 
thereof or the books and papers of such member or member 
organization or the books and papers of any such persons are 
material to such examination and shall direct such member or member 
organization to appear and testify, or to cause any of such persons 
to appear and testify, or to produce such books and papers before 
the authorities of such other [exchange] self-regulatory 
organization, or any committee thereof, for the purposes of such 
examination, and the member or member organization of the Exchange 
shall refuse or fail to comply with any such direction, the member 
or the member organization may be adjudged guilty of an act 
detrimental to the interest and welfare of the Exchange.

[[Page 49789]]

Fraud

    (b) No change.

Fictitious [transactions] Transactions

    (c) No change.

Market [demoralization] Demoralization

    (d) No change.

Misstatements

    (e) No change.

Fraud [prior to election or approval] Prior to Election or Approval

    (f) No change.
    [Dealings on another exchange
    (g) Rescinded effective August 19, 1976.](g) [Reserved]

Violation of Constitution, [rules] Rules or [resolution] Resolution--
Inequitable [conduct] Conduct

    (h) No change.

Violation of Securities Exchange Act

    (i) No change.

Acts [detrimental] Detrimental to Exchange

    (j) No change.

Failure to [testify] Testify

    (k) No change.

Improper [conduct] Conduct

    (l) No change.

Betting

    (m) No change.
    Fines in [addition] Addition to or in [lieu of suspension or 
expulsion] Lieu of Suspension or Expulsion
    (n) No change.

Termination of [rights] Rights by [expulsion] Expulsion

    (o) No change.

Termination of [rights] Rights by [suspension] Suspension

    (p) No change.

Proceedings [against suspended member or member organization] Against 
Suspended Member or Member Organization

    (q) No change.

Responsibility for [acts] Acts of [others] Others

    (r) No change.

Suspension or [expulsion of members of suspended or expelled member, 
member organization] Expulsion of Members of Suspended or Expelled 
Member, Member Organization

    (s) No change.

Continued [failure] Failure to [pay fines, dues] Pay Fines, Dues, etc.

    (t) No change.

Article V. Discipline of Members

Sec. 05. Suspension, Expulsion or Bar by Another Regulatory 
Authority

    (a) No change.

Procedure

    (b) In any proceeding under this Section 5, the method of 
procedure required by Section 1(b) of this Article V shall not 
apply, but the accused shall be given not less than ten days' notice 
in writing that an Exchange Disciplinary Panel will conduct a 
hearing to determine whether or not to suspend or expel the accused, 
as the case may be, as provided in this Section 5. At the hearing 
before the Disciplinary Panel, the accused member, or any person 
associated with the accused member organization who is a member of 
the Exchange and is designated in writing by the accused member 
organization to represent it for all purposes at such hearing, shall 
be afforded an opportunity to explain why it would be inappropriate 
for the Disciplinary Panel to accept the finding of such other 
exchange, association or agency or to suspend or expel the accused, 
notwithstanding the suspension, expulsion or bar by such other 
exchange, association or agency. In the event that the Disciplinary 
Panel determines not to accept the finding of guilt by such other 
exchange, association or agency, it may order a proceeding under any 
other Section of this Article V. In the event that the accused fails 
or refuses to appear before the Disciplinary Panel, the Disciplinary 
Panel may nevertheless determine the matter and suspend or expel the 
accused as provided in this Section 5. If the Disciplinary Panel 
determines to accept the finding of guilt by such other exchange, 
association or agency and to suspend or expel the accused, such 
determination shall be supported by a written statement setting 
forth the specific grounds on which such action is based. Such 
written statement shall be served upon the accused in the manner 
provided by Section 1(b) of this Article V, and a copy thereof shall 
be sent to each member of the [Board of Governors] Amex Adjudicatory 
Council. Any action by an Exchange Disciplinary Panel pursuant to 
this Section 5 shall be subject to review in accordance with the 
procedures specified in [Section 1(b)] Sections 1(c) and (d) of this 
Article V. In the event no request for review is filed within twenty 
days after the accused is notified of the determination of the 
Disciplinary Panel, such determination shall become final and 
conclusive.
    (c) No change.

Article V. Discipline of Members

Sec. 06. Retention of Jurisdiction over Former Members

    If, during the period of one year immediately following (a) the 
termination of a person's status as a member or member organization, 
(b) receipt by the Exchange of written notification of such 
termination, or (c) receipt by the Exchange of any amendment to such 
termination notice, whichever occurs later, the Secretary of the 
Exchange gives written notice to such person that the Exchange is 
making inquiry into any specified matter or matters occurring prior 
to the termination of such person's status as a member or member 
organization, the Board of Governors, the Chairman or any committee 
authorized by the Board or the Constitution may thereafter require 
such person to submit to the Exchange books and papers relating to 
the matter or matters specified in such notice, or to furnish 
information to, or to appear and testify before, the Board, the 
Chairman, any such committee or such officers, employees or 
representatives of the Exchange as may be designated by the Chairman 
or such committee with respect to any such matter. Following the 
termination of such person's status as a member or member 
organization, provided such notice is given, such person may be 
charged with having refused or failed to comply with any such 
requirement or, as a result of the inquiry into the matter or 
matters specified in such notice, such person may be charged with 
having committed, prior to termination, any other offense with which 
such person might have been charged had such status not been 
terminated. Any charge against a former member or member 
organization may be brought before an Exchange Disciplinary Panel 
and determined as provided in Section 1(b) of this Article V in the 
case of a member or member organization. Whenever an Exchange 
Disciplinary Panel shall determine that any such former member or 
member organization is guilty of the offense or offenses charged, it 
may impose a fine, impose a censure, or direct that such person not 
be admitted or re-admitted as a member or member organization for a 
specified period of time; and, in the case of a former member, the 
Exchange may thereafter refuse to approve the employment of such 
person by a member or member organization:
    (a) for such period of time as the Exchange may determine, or
    (b) until such time as the Board, any committee authorized by 
the Board or the Constitution, or the Chairman or any officer, 
employee or representative of the Exchange designated by the 
Chairman, shall have completed the investigation of the matter with 
respect to which such former member or member organization refused 
or failed to submit books and papers, or to furnish information, or 
to appear and testify, and until the passage of such further period 
of time, if any, as the Exchange Disciplinary Panel shall have 
specified.

Article VI. Commissions

[Rescinded effective May 1, 1976.] Intentionally omitted.

Article VII. Fees and Dues

Sec. 01. Annual Membership Fees

Regular [members] Members

    [(a) Regular members--The initiation fee for regular membership 
shall be based upon the latest price at which a regular membership 
shall have been sold and transferred to an applicant for membership, 
otherwise than for a nominal consideration or through a private sale 
prior to the date when such initiation fee is due. Such initiation 
fee shall be $1,000, if such sale price shall have been $5,000 or 
less, and such fee shall be increased by $500 for each additional 
$5,000; but in no case shall such initiation fee exceed $2,500.
    Notwithstanding the foregoing provisions of this subsection,](a) 
Regular members--The initiation fee for regular membership shall be 
$2,500; provided, however, that if a regular member who is 
associated with a member organization transfers his membership to 
another person associated with such member organization and such 
organization continues to engage in the business of buying and 
selling securities as brokers or dealers

[[Page 49790]]

without interruption or change, other than such changes as may be 
occasioned by the death or retirement of the regular member whose 
membership is being transferred, the initiation fee payable in 
connection with such transfer shall be $1,500.
    Notwithstanding other provisions of the Constitution, an 
applicant for regular membership who is an associate member on the 
effective date of this amendment and continues to be such down to 
the date of the filing of his application for regular membership, or 
is a general partner or a director of a firm or corporation which 
was an associate member firm or corporation on the effective date of 
this amendment and continues to be an associate member firm or 
corporation down to the date of the filing by such applicant of his 
application for regular membership, shall not be required to pay any 
initiation fee.
    The above initiation fee shall be paid prior to the approval by 
the Exchange of an applicant for regular membership.

[Transfer of Chairman's membership

    [The Board may nevertheless permit the transfer, without payment 
of any initiation fee, of a regular membership of a person elected 
to the office of Chairman and of a regular membership transferred to 
a person who has ceased to be Chairman if such person transferred a 
regular membership formerly owned by him in order to qualify as 
Chairman.

[Associate membership of Chairman

    [Notwithstanding the provisions of this subsection the Exchange 
may approve as an associate member, without payment of an initiation 
fee, one who was a partner of the Chairman at the time of his 
election, but such associate membership shall continue only so long 
as such Chairman shall continue in office. The Exchange may also 
permit a former Chairman to become an associate member, without 
payment of any initiation fee, if he ceased to be an associate 
member of the Exchange by reason of his election to the office of 
Chairman.
    [(b) Options principal members--A person acquiring an options 
principal membership directly from the Exchange pursuant to a plan 
offering such memberships to qualified applicants, and paying to the 
Exchange the fee prescribed in such plan for an options principal 
membership, shall not be required to pay an initiation fee. In all 
other cases (except as hereinafter provided), the initiation fee for 
options principal membership shall be based upon the latest price at 
which an options principal membership shall have been sold and 
transferred to an applicant for membership, otherwise than for a 
nominal consideration or through a private sale, prior to the date 
when such initiation fee is due. Such initiation fee shall be 
$1,000, if such sale price shall have been $5,000 or less, and such 
fee shall be increased by $500 for each additional $5,000, or 
fraction thereof, by which such sale price shall have exceeded 
$5,000; but in no case shall such initiation fee exceed $2,500.
    [Notwithstanding the foregoing provisions of this 
subsection,](b) Options principal members--The initiation fee for 
options principal membership shall be $2,500; provided, however, 
that if an options principal member who is associated with a member 
organization transfers his membership to another person associated 
with such member organization and such organization continues to 
engage in the business of buying and selling securities as brokers 
or dealers without interruption or change, other than such changes 
as may be occasioned by the death or retirement of the options 
principal member whose membership is being transferred, the 
initiation fee payable in connection with such transfer shall be 
$1,500.
    The initiation fee required by this subsection shall be paid 
prior to the approval by the Exchange of an applicant for options 
principal membership.
    (c) No change.
    (d) No change.

Associate Members

    (e) No change.
    (f) No change.

Article VII. Fees and Dues

Sec. 02. Dues, Fines and Assessments

Payment of [dues] Dues

    (a) No change.

Apportionment of [dues] Dues

    No change.

Exchange to [return unexpired dues paid by transferor and collect from 
transferee]Return Unexpired Dues Paid by Transferor and Collect from 
Transferee

    (b) No change.

Unpaid [dues to date of transfer collectible from proceeds of sale]Dues 
to Date of Transfer Collectible from Proceeds of Sale

    (c) No change.

Liability for [dues] Dues until [transfer] Transfer

    (d) No change.
    (e) No change.

Article VII. Fees and Dues

Sec. 03. Associate Member Fees

Fee [where associate member becomes director or executive officer of 
corporation]Where Associate Member Becomes Director or Executive 
Officer of Corporation

    No change.

Article VII. Fees and Dues

Sec. 04. Special Charge

Exchange [may impose on members fees based on transactions] May Impose 
on Members Fees Based on Transactions

    The Board of Governors may impose upon regular, options 
principal and associate members and upon regular, options principal 
and associate member organizations a charge on each securities 
transaction effected through the facilities of the Exchange, and may 
change, remove, and reimpose such charge. In fixing the amount of 
such charge, the Board may establish different rates for 
transactions effected for non-members, for members and member 
organizations and for various categories of members, or may omit 
such charge for any category or categories of members or member 
organizations and may establish different rates for transactions 
effected in different securities or through different mechanisms. 
Such charges shall be payable at such times and shall be collected 
in such manner as the Board may determine, and the proceeds thereof 
shall be deposited among the general funds of the Exchange.

Article VII. Fees and Dues

Sec. 05. Options Transactions

    In lieu of the charge authorized by Sec. 4 of this Article VII, 
the Board of Governors may impose upon regular, options principal 
and associate members and upon regular, options principal and 
associate member organizations in respect of options transactions 
effected on the Exchange a charge for each such options transaction, 
and may from time to time change, remove, and reimpose such charge. 
In fixing the amount of such charge, the Board may establish 
different rates for options transactions effected for non-members, 
for members and member organizations and for various categories of 
members and may establish different rates for transactions effected 
in different securities or through different mechanisms. Such charge 
shall be applicable to both the writing and the purchase of options 
on the Exchange and shall be payable at such times and shall be 
collected in such manner as the Board may determine and the proceeds 
thereof shall be deposited among the general funds of the Exchange.

Article VIII. Arbitration Procedure[*]

Sec. 01. Duty to Arbitrate

    Members, member organizations, partners, officers and trustees 
of member organizations shall arbitrate all controversies arising in 
connection with their business between or among themselves or 
between them and their customers as required by any customer's 
agreement or, in the absence of a written agreement, if the customer 
chooses to arbitrate. Lessors and lessees shall arbitrate all 
controversies arising between them in connection with their special 
transfer agreement. Owners of memberships and their nominees shall 
arbitrate all controversies arising between them in connection with 
the membership and the business thereof.

[*Sections 1 to 5, together with Rules 600-609, were adopted effective 
June 8, 1964, to replace Sections 1 to 15 and amendments of September 
4, 1962.]

Article VIII. Arbitration Procedure[*]

Sec. 02. Arbitration Forum

    Arbitration shall be conducted pursuant to the NASD Code of 
Arbitration Procedure, except that [under the arbitration procedures 
of this Exchange, except as follows:
    [(a) the Board of Governors may decline in any case to permit 
the use of the arbitration facilities of this Exchange;
    (b)] if all parties to the controversy are members, allied 
members, member firms or member corporations of the New York Stock 
Exchange, any party may elect to arbitrate under the arbitration 
procedures of that exchange.[; or

[[Page 49791]]

    [(c) if any of the parties to a controversy is a customer, the 
customer may elect to arbitrate before the American Arbitration 
Association in the City of New York, unless the customer has 
expressly agreed, in writing, to submit only to the arbitration 
procedure of the Exchange.]

Article VIII. Arbitration Procedure[*]

Sec. 03. [Rules of Arbitration] Proceeding Instituted Prior to 
Combination

    [The Board of Governors shall prescribe rules regarding 
arbitration and the conduct of arbitration proceedings, and may from 
time to time amend, alter or repeal any rule so adopted. These rules 
may, without limitation, cover the designation of an Arbitration 
Director and Assistant Arbitration Director, requests for 
arbitration, answers and counterclaims, the selection of panels and 
arbitrators, the arbitrability of a controversy, instructions to 
arbitrators, fees and costs, and such other matters as the Board 
shall deem necessary or appropriate.] Any arbitration proceeding 
instituted with Predecessor Corporation prior to the closing date 
under the Transaction Agreement may continue to be conducted by 
means of the arbitration facilities of this Exchange and in 
accordance with Exchange arbitration rules and procedures in effect 
when such proceeding was instituted.

Article VIII. Arbitration Procedure[*]

[Sec. 04. Arbitrators' Decision Final

    [A majority of the arbitrators may determine any question and 
render an award. The decision of such majority shall be final and 
binding upon all parties to the arbitration, and there shall be no 
appeal therefrom to the Board of Governors. The decision and award 
of such majority shall be rendered to each party in writing, signed 
and acknowledged by the arbitrators rendering the decision.

[Article VIII. Arbitration Procedure*

[Sec. 05] Sec. 04. Penalties

    (a) Failure to arbitrate--No change.
    (b) Failure to pay award--Failure on the part of a member, 
member organization or owner of a membership to pay an award made 
pursuant to the [Exchange] arbitration [procedure] procedures of an 
exchange or the NASD shall be deemed a failure to meet his or its 
engagements and subject him or it to suspension under Article V, 
Section 3.

Article IX. The Gratuity Fund

Sec. 01. Participants Only

    (a) No change.

Sec. 02. Purpose

    No change.

Sec. 03. Contributions by New Participants

    No change.

Sec. 04. Contributions on Death of Participant

    No change.

Sec. 05. Payment of Benefits

    No change.

Additions to [principal] Principal

    No change.

Sec. 06. Beneficiaries Surviving Spouse

    No change.

Surviving Spouse and Issue

    No change.

Issue--No [surviving spouse] Surviving Spouse

    No change.

Adopted [children] Children

    No change.

No [issue] Issue--No [surviving spouse] Surviving Spouse

    No change.

No [relatives] Relatives

    No change.

Decision on [relationships] Relationships

    No change.

Sec. 07. Income of Fund

    There shall be credited annually to each Participant, in 
reduction of his payments under this Article, his proportion of the 
net income which has been received as interest on the Fund during 
each year, plus so much of his proportion of the principal of said 
Fund above two hundred fifty thousand dollars as the Trustees in 
their discretion may deem advisable.
    In the event any extraordinary payment shall be received by the 
Gratuity Fund from any source, there shall be credited to each then 
participant, in reduction of his payments under this Article, his 
proportion of such payment.

Sec. 08. Restriction to Participants

    No change.

Sec. 09. Management by Trustees

    No change.

Sec. 10. Classification and Selection of Trustees

    The Trustees of the [said] Gratuity Fund shall be [nominated and 
elected in the same manner, and at the same time, as governors of] 
appointed by The Amex Corporation, based on the vote of the regular 
and options principal members of the Exchange. The [said] Trustees 
shall be divided into three classes, each consisting of two 
Trustees. [Except as provided in Article XIV, said] Trustees shall 
hold office for three years from the date of their election and 
until Trustees are chosen and qualified in their stead.

Sec. 11. Vacancy Among Trustees

    In case of a vacancy among the Trustees, the [Board of 
Governors] board of The Amex Corporation shall appoint a person 
qualified to serve as Trustee until the next meeting at which the 
Trustees to be appointed are selected [at its next regular meeting 
thereafter, shall fill the vacancy, pending the next annual election 
of the Exchange].

Sec. 12. Investments

    No change.

Sec. 13. Officers of Fund

    No change.

Sec. 14. Meetings of Trustees

    No change.

Sec. 15. Report on Condition

    No change.

Sec. 16. Management

    It shall be the duty of the Secretary of the Fund to keep 
regular minutes of the proceedings of the Trustees, and to give 
notice of meetings.

Deposit of [funds;] Funds; Custody of [securities] Securities; Books

    No change.

Sec. 17. Payments to Minors

    No change.

Sec. 18. Beneficiary Not Located

    No change.

Sec. 19. Expenses

    No change.

Sec. 20. Vacancy Among Officers

    No change.

Sec. 21. Supervision of Finances

    No change.

Annual [audit] Audit

    No change.

Sec. 22. Discipline of Trustees

    No change.

Sec. 23. Transition Provisions

    No change.

Article X. Clearing Organizations

Sec. 01. Clearing Organizations

    No change.

Sec. 02. Settlement of Exchange Contracts

    No change.

Sec. 03. Exchange Contracts Include

    No change.

Article XI. Miscellaneous Provisions

Sec. 01. Rules of Exchange Included in Contract Terms

    No change.

Sec. 02. Securities Admitted by New York Stock Exchange

    Rescinded effective August 19, 1976.

Sec. 03. Keeping of Books

    No change.

Sec. 04. [and Sec. 05.] Controlled Corporations and Associations

Broker for [securities corporation] Securities Corporation

    No change.

Participation in [corporate commissions] Corporate Commissions

    No change.

Corporate [use] Use of [member office;] Member Office; Corporate [use] 
Use of [member name] Member Name

    No change.

[[Page 49792]]

Responsibility for [corporate subsidiary;] Corporate Subsidiary; Duty 
to [produce books] Produce Books

    No change.

Sec. 05. Options

    No employee of the Exchange and no employee of any corporation 
in which the Exchange owns the majority of the capital stock may 
purchase or sell for his own account or for any account in which he 
has a direct or indirect interest any option which entitles the 
purchaser to purchase or sell any security which is the subject of 
any option contract admitted to dealings on the Exchange; provided, 
however, that this prohibition shall not extend to a standardized 
option issued by The Options Clearing Corporation unless such option 
is on an underlying security which is listed on the Exchange.

Sec. 06. Rule of Construction

    This Constitution shall be governed by, and construed in 
accordance with, the laws of the State of Delaware, without regard 
to the principles of conflict of laws.

Article XII. Emergency Committee or Extraordinary Market Conditions

    Current Article XII is deleted in its entirety.

Sec. 01. Authority to Take Action Under Emergency or

Extraordinary Market Conditions

    The Board of Governors, or such person or persons as may be 
designated by the Board, in the event of an emergency or 
extraordinary market conditions, shall have the authority to take 
any action regarding the trading of any or all securities on the 
Exchange and the operation of any Exchange trading system or 
facility and the participation in any such system or facility by any 
or all persons, if in the opinion of the Board or the person or 
persons hereby designated, such action is necessary or appropriate 
for the protection of investors or the public interest or for the 
orderly operation of the Exchange or any Exchange system or 
facility.

Article XIII. Amendments To The Constitution

Sec. 01. Procedure

    The provisions of this Constitution may be amended or repealed, 
and new provisions may be adopted, only [by the regular members of 
]if approved by a majority of governors and by the holder of the 
Class B Interest in the Exchange in accordance with the procedure 
specified in this Article. The Board of Governors and the holder of 
the Class B Interest shall not approve any change to the 
Constitution that requires the consent of The Amex Corporation, the 
Amex Committee, or both under the terms of the Transaction Agreement 
without first obtaining such consent. The elimination of the 
foregoing sentence or any amendment thereto that would limit its 
effect shall also require the consent of The Amex Corporation.

Article XIII. Amendments To The Constitution

Sec. 02. Adoption by Board

    Amendments to the Constitution may be proposed by one or more 
members of the Board of Governors or by the signed petition of not 
less than 50 regular and options principal members of the Exchange 
setting forth the proposed amendment. Any such petition shall be 
filed with the Secretary of the Exchange who shall present it to the 
Board of Governors at its next regular meeting or within 30 days 
after the date such petition is filed.
    Every proposed amendment to the Constitution must be presented 
in writing to the Board of Governors at a regular meeting or at a 
special meeting expressly called for the purpose of receiving it. 
The Secretary of the Exchange shall promptly cause a copy of every 
proposed amendment to be transmitted to each governor. Action on any 
proposed amendment shall be taken or postponed at a regular meeting 
of the Board of Governors or at a special meeting expressly called 
for the purpose of acting thereon. The Board of Governors may make 
such changes in an amendment so proposed as it may deem necessary or 
appropriate in order to carry out the intention of such proposed 
amendment or in order to make it conform to other provisions of the 
Constitution or any applicable Federal or State Law. Subject to the 
requirements of Section 1 of this Article XIII, a proposed amendment 
shall be adopted if it is approved by the affirmative vote of the 
majority of governors then in office and by the holder of the Class 
B Interest in the Exchange.

Article XIII. Amendments To The Constitution

Sec. 03. [Proposal of Amendments] Voting by Membership

    [Amendments] In the event that a proposed amendment to the 
Constitution cannot be made without the consent of The Amex 
Corporation, based on the vote of regular and options principal [may 
be proposed in the following manner:
    [(a) By one or more] members of the Exchange, [Board of 
Governors: Any such proposed amendment when approved by the 
affirmative vote of a majority of the Governors then in office shall 
be posted on the bulletin board and submitted to the regular members 
for vote thereon at a special meeting of the regular members of the 
Exchange called for the purpose as hereinafter provided in Section 4 
of this Article XIII; or
    [(b) By the signed petition of not less than fifty regular 
members of the Exchange setting forth in the proposed amendment and 
filing the same with] the Secretary of the Exchange [who shall 
present it to the Board of Governors at its next regular] shall 
request that the Amex Corporation hold a special meeting [or within 
30 days after the date such petition is filed. The Board may direct 
that such amendment be posted on the bulletin board and submitted, 
with or without the approval of the Board, to the regular members 
for vote thereon as hereinafter provided in Section 4 of this 
Article XIII; provided, however, that in any case the Board of 
Governors shall, within eight weeks after] for the purpose of 
considering such proposed amendment. The Secretary shall furnish a 
copy of the proposed amendment with such request.

[has been presented to the Board, cause it to be posted on the 
bulletin board and submitted to the regular members for a vote as 
hereinafter provided.

Article XIII. Amendments To The Constitution

Sec. 04. [Voting by] Adoption of Amendments Requiring a Membership 
Vote

    In the event that [Promptly after the posting of] a proposed 
amendment[, notice of a special meeting] to the Constitution cannot 
be made without the consent of The Amex Corporation, based on the 
vote of the regular and options principal members of the Exchange 
[called pursuant to this Article shall be given by the Secretary of 
the Exchange to each regular member as provided in Section 8(e) of 
Article III. With the notice the Secretary shall furnish a copy of], 
the Predecessor Corporation shall grant such consent to the proposed 
amendment [and a form of proxy designating not less than three] if 
it is authorized to do so by a majority of the regular [or allied] 
and options principal members [of the Exchange selected by the Board 
of Governors to serve as a Proxy Committee authorized to act for 
regular members at ] voting as a single class at a duly convened 
meeting at which a quorum is present. If a quorum shall not be 
present, in person or by proxy, at the place and time fixed for the 
special meeting[. The proxy shall provide, by boxes or otherwise, 
means by which a regular member may specify that his vote be cast 
for or against] called to consider the proposed amendment[. The 
proxy shall further provide as to how it will be voted if not so 
specified. All proxies to the Proxy Committee shall, unless revoked, 
be voted as specified or otherwise provided thereon, and the votes 
thereunder may be cast by any one or more members of the Proxy 
Committee present], the meeting shall be adjourned to reconvene at 
the same time and place on the day two weeks thereafter or, if the 
Exchange is not open for business on that day, on the next 
succeeding business day. If a proposed amendment is not approved at 
the special meeting at the time fixed therefore or at such adjourned 
time, such amendment may not again be submitted to the membership 
for a period of ninety days.[. Any member except one who has 
executed an irrevocable proxy to a member organization as provided 
in Section 8(d) of Article III, may attend and vote in person or may 
designate one or more regular or allied members of the Exchange 
other than the members of the Proxy Committee to act for him by 
proxy at the special meeting.

Article XIII. Amendments To The Constitution

Sec. 05[. Adoption of Amendments

    [Except as otherwise required by law or by this Constitution, a 
proposed amendment shall be adopted if it is authorized by a 
majority of the votes cast at the special

[[Page 49793]]

meeting at which it is submitted, provided that a quorum is present, 
in person or by proxy. If a quorum shall not be present, in person 
or by proxy, at the place and time fixed for a special meeting of 
the regular members called pursuant to this Article, the meeting 
shall be adjourned to reconvene at the same time and place on the 
day two weeks thereafter or, if the Exchange is not open for 
business on that day, on the next succeeding business day. If a 
quorum shall not then be assembled, the meeting shall be dissolved 
and the proposed amendment shall not become effective. If a proposed 
amendment is not approved at the special meeting at the time fixed 
therefore or at such adjourned time, such amendment may not again be 
submitted to the regular membership for a period of ninety days.

[Sec. 06]. Provisions for Families of Deceased Members

    Notwithstanding the foregoing provisions of this Article, no 
amendment of Article IX shall ever be made which will impair, in any 
essential particular, the obligation of each regular member to 
contribute, not less than the sum of twenty-five dollars to the 
provision for the families of deceased members, unless such 
amendment shall be authorized by a unanimous vote, or by the written 
request, of all of the regular members of the Exchange.

Article XIV. Reserved [Implementation of Reclassification 
Amendments]

    Current Article XIV is deleted in its entirety.

EXHIBIT B--AMERICAN STOCK EXCHANGE, INC.

Proposed Rule Change

    (Text in brackets indicates material to be deleted; italicized 
text indicates material to be added.)

Rule 345. Determinations Involving Employees and Prospective Employees

    (a) through (d). No change.
    (e) Upon the answer being filed, or if the person charged shall 
refuse or neglect to make answer as hereinbefore required, the 
Disciplinary Panel shall, at a hearing called for that purpose, 
proceed to consider the charge or charges. The Exchange shall cause 
copies of the charge or charges and of the answer, if any, and of 
any documents submitted in support thereof by the person charged, to 
be mailed or otherwise delivered to each member of the Disciplinary 
Panel at least five days before such hearing. Notice of such hearing 
shall be sent to the person charged; he shall be entitled to be 
present personally at the hearing, and shall be permitted to examine 
and cross-examine all witnesses produced at the hearing and also to 
present such testimony, defense or explanation as may be deemed 
responsive to the charge or charges. Any witnesses produced by the 
person charged shall be subject to cross-examination. After hearing 
all witnesses produced at the hearing and after hearing the person 
charged, the Disciplinary Panel shall by a majority vote determine 
whether or not the employee or prospective employee is guilty of the 
offense or offenses charged. If it determines that the person 
charged is guilty, the Disciplinary Panel shall by a majority vote 
impose the penalty or prescribe the action to be taken by the 
Exchange in accordance with paragraph (a) or (b) of this rule. Any 
such determination shall be supported by a written statement setting 
forth (i) any act or practice in which such employee or prospective 
employee is found to have engaged or which such employee or 
prospective employee has been found to have omitted, (ii) the 
specific provision of the Securities Exchange Act of 1934, as 
amended, the rules and regulations thereunder, the Constitution or 
rules, procedures or policies of the Exchange, which any such act, 
practice or omission to act is deemed to violate and (iii) the 
penalty imposed or other action prescribed and the reasons 
therefore. Such written statement shall be served upon the person 
charged in the manner hereinbefore provided, and a copy thereof 
shall be sent to each member of the [Board of Governors] Amex 
Adjudicatory Council. The determination of the Disciplinary Panel 
and any penalty or other action prescribed shall become final and 
conclusive twenty days after notification thereof to the person 
charged, provided, however, that if a request for review of such 
determination, or of any penalty or other action prescribed by the 
Disciplinary Panel, is filed in writing with the Secretary of the 
Exchange as provided in paragraph (e) of this rule, the penalty or 
other action prescribed by the Disciplinary Panel shall be stayed 
pending the result of such review.
    (f) Any person determined to be guilty of a charge or charges 
before an Exchange Disciplinary Panel pursuant to this rule may 
obtain a review of such determination or of any penalty or other 
action prescribed by the Disciplinary Panel in accordance with 
paragraph (a) or (b) of this rule, or of both the determination and 
such penalty or other action. Upon the request of any [four] 
member[s] of the [Board of Governors] Amex Adjudicatory Council, any 
determination by a Disciplinary Panel pursuant to this rule or any 
penalty or other action prescribed by such Disciplinary Panel, or 
both, shall be subject to review as hereinafter provided. A request 
for review of such determination, penalty or other action shall be 
made in writing and filed with the Secretary of the Exchange within 
twenty days after notification of the determination and penalty, if 
any, is served upon the person charged. The review of any 
disciplinary proceeding as herein provided [may] shall be conducted 
by the Amex Adjudicatory Council [Board of Governors, or in its 
discretion may be delegated to a committee of governors appointed by 
the Chairman with the approval of the Board]. In connection with any 
such review, the Amex Adjudicatory Council [Board or the review 
committee, as the case may be,] may affirm any determination by the 
Disciplinary Panel or sustain any penalty or other action 
prescribed, or both, may modify or reverse any such determination, 
or may decrease or eliminate any penalty or other action prescribed 
in accordance with paragraph (a) or (b) of this rule, or impose any 
lesser penalty or prescribe any lesser action permitted under 
paragraph (a) or (b) of this rule, as it deems appropriate; or if 
the Amex Adjudicatory Council [Board or such review committee] shall 
determine that the Disciplinary Panel has not adequately considered 
all of the matters which should have been considered in connection 
with the charge or charges, or has improperly applied or interpreted 
the Constitution, rules, requirements and policies of the Exchange, 
or has prescribed action or has imposed a penalty or penalties which 
the Amex Adjudicatory Council [Board or such review committee] 
determines to be inadequate in light of all the circumstances, the 
Amex Adjudicatory Council [Board or such review committee] may 
remand the matter to the Disciplinary Panel for further 
consideration consistent with such determination. Upon such remand, 
the Disciplinary Panel shall conduct a further hearing in accordance 
with the provisions of this rule and may as a result thereof modify, 
reverse or reaffirm its previous determination or prescribe any 
action or impose any penalty permitted under paragraph (a) or (b) of 
this rule regardless of whether such action or penalty shall be 
greater than the action prescribed or penalty imposed as a result of 
the original hearing. Any determination, action prescribed or 
penalty imposed by the Disciplinary Panel as a result of a remand 
from the Amex Adjudicatory Council [Board or a review committee, as 
the case may be,] shall be subject to further review upon request as 
hereinabove provided. [If, upon review, the matter is not remanded 
to the Disciplinary Panel, the determination and the penalty or 
other action prescribed, if any, by the Board or the review 
committee, as the case may be, shall be final and conclusive.]
    The Amex Adjudicatory Council shall transmit its proposed 
written decision to each member of the Board of Governors. The Board 
may call the proceeding for review pursuant to paragraph (g) of this 
rule. If the Board does not call the proceeding for review, the 
proposed written decision of the Amex Adjudicatory Council shall 
become final. Unless the Amex Adjudicatory Council remands the 
proceeding, the decision shall constitute the final action of the 
Exchange.
    (g) Upon the request of any four of its members, the Board of 
Governors may review a proposed written decision of the Amex 
Adjudicatory Council. Such a request for review shall be made not 
later than the next meeting of the Board of Governors that is at 
least 15 days after that date on which the proposed written decision 
of the Amex Adjudicatory Council is transmitted to the Board. By a 
unanimous vote of the Board of Governors, the Board may shorten the 
period to less than 15 days. By an affirmative vote of the majority 
of the Board then in office, the Board may, during the 15 day 
period, vote to extend the period to more than 15 days. The review 
by the Board of Governors shall occur not later than the next 
regularly scheduled meeting of the Board following the request for 
review. Ten Governors shall be required to constitute a quorum for 
any meeting of the Board at which the Board shall review a 
disciplinary proceeding as herein provided, and any action taken 
pursuant to the vote of a majority of the Governors present at such 
meeting shall be deemed to be the action of the Board.

[[Page 49794]]

    After review, the Board of Governors may affirm, modify, or 
reverse the proposed written decision of the Amex Adjudicatory 
Council. Alternatively, the Board of Governors may remand the 
proceeding with instructions. The decision of the Board of Governors 
shall constitute the final action of the Exchange, unless the Board 
remands the proceedings.
    (h)[(g)] If any employee or prospective employee of a member or 
member organization is suspended or expelled from any other 
securities exchange or any national securities association, or is 
suspended or barred from being associated with any member of such 
exchange or association, or is suspended or barred by any 
governmental securities agency from dealing in securities or being 
associated with any broker or dealer in securities, the Exchange 
may, in view of such suspension, expulsion or bar, suspend or 
withdraw its approval of, or disapprove, his employment by a member 
or member organization, but no such suspension imposed by the 
Exchange shall commence before or expire after the suspension 
imposed by such other exchange, association or agency, and no such 
withdrawal of approval and no such disapproval shall be imposed by 
the Exchange unless such employee or prospective employee has been 
expelled or barred by such other exchange, association or agency. 
Nothing in this paragraph (h) [(f)] shall preclude any proceeding 
against any employee or prospective employee under the foregoing 
provisions of this Rule 345. In any proceeding under this paragraph 
(h) [(f)], the method of procedure required by paragraphs (c) and 
(d) of this rule shall not apply, but the employee or prospective 
employee shall be given not less than ten days' notice in writing of 
a hearing before an Exchange Disciplinary Panel to determine whether 
or not the Exchange shall suspend or withdraw its approval of, or 
disapprove, as the case may be, his employment by a member or member 
organization, as provided herein. At such hearing, the employee or 
prospective employee shall be afforded an opportunity to explain why 
it would be inappropriate for the Exchange to accept the finding of 
such other exchange, association or agency or to suspend or withdraw 
its approval of, or disapprove, his employment, notwithstanding his 
suspension, expulsion or bar by such other exchange, association or 
agency. The Disciplinary Panel shall thereupon on behalf of the 
Exchange determine the matter by a majority vote. In the event that 
the Disciplinary Panel determines that the Exchange should not 
accept the finding of guilt by such other exchange, association or 
agency, it may order a proceeding under any other paragraph of this 
rule. In the event that the employee or prospective employee fails 
or refuses to appear at such hearing, the Disciplinary Panel may 
nevertheless determine the matter and suspend or withdraw Exchange 
approval of, or disapprove, his employment or prospective employment 
as provided herein. If the Disciplinary Panel determines to accept 
the finding by such other exchange, association or agency and to 
suspend or withdraw its approval of, or disapprove, the employment 
of such employee or prospective employee by a member or member 
organization such determination shall be supported by a written 
statement setting forth the specific grounds for such action. Such 
written statement shall be served upon the employee or prospective 
employee in the manner hereinbefore provided by paragraph (c) of 
this rule and a copy thereof shall be sent to each member of the 
Amex Adjudicatory Council [Board of Governors]. Any action by an 
Exchange Disciplinary Panel pursuant to this paragraph (h) [(f)] 
shall be subject to review in accordance with the procedures 
specified in paragraphs (f) and (g) [(e)] of this rule. In the event 
no request for review is filed within twenty days after the employee 
or prospective employee is notified of the determination of the 
Disciplinary Panel, such determination shall become final and 
conclusive. Notwithstanding the foregoing, the employee or 
prospective employee may, nevertheless, consent to the penalty that 
the Exchange suspend or withdraw its approval of, or disapprove, his 
employment or prospective employment by a member or member 
organization solely by reason of the imposition of such penalty by 
such other exchange, association or agency, and without either the 
separate determination of an Exchange Disciplinary Panel as provided 
above in this paragraph (h) [(f)] or the procedure provided for in 
the foregoing paragraphs of this rule. Such consent shall be in 
writing, signed by the employee or prospective employee, and shall 
be delivered to the Exchange not later than two business days after 
the Exchange gives notice in writing to him that it intends to 
proceed under Rule 345(h) [(f)]. The consent shall take effect 
immediately upon approval by the Exchange.
    (i)[(h)] In accordance with rules adopted by the Board of 
Governors, the Exchange may publicly disclose its disapproval or 
suspension or withdrawal of approval of the employment of any 
employee or prospective employee of a member or member organization 
and it may publicly disclose any fine, censure or other 
determination, provided, however, that no such disclosure shall be 
permitted until there has been a final determination of the matter.
    (j)[(i)] Unless otherwise directed by the Amex Adjudicatory 
Council [Board of Governors], a copy of any accusation under 
paragraph (c) of this rule or a copy of any notice of hearing under 
paragraph (h) [(f)] of this rule served on an employee or a 
prospective employee of a member or member organization shall be 
furnished to his employer or prospective employer and a 
representative of the employer or prospective employer may be 
present at the hearing of the matter.
    (k)[(j)] In lieu of the procedures set forth in paragraph (d) of 
this rule, an Exchange Disciplinary Panel, selected in accordance 
with the provisions of Section[s] l(b)[(1) and l(b)(2)] of Article V 
of the Constitution, at a hearing called for that purpose may 
determine whether an employee or prospective employee of a member or 
member organization is guilty of having committed an offense or 
offenses on the basis of a written stipulation of facts and consent 
to a specified penalty entered into between such employee or 
prospective employee and any officer of the Exchange, and may fix 
and impose the penalty or prescribe such other action to be taken by 
the Exchange in accordance with paragraph (a) or (b) of this rule as 
shall be agreed to in such stipulation and consent, or impose any 
lesser penalty or prescribe any lesser action permitted under 
paragraph (a) or (b) of this rule. A written notice of the result 
shall be served upon the employee or prospective employee in the 
manner provided in paragraph (c) of this rule and a copy thereof 
shall be sent to each member of the Amex Adjudicatory Council [Board 
of Governors]. The determination of the Disciplinary Panel and any 
penalty or other action prescribed shall become final and conclusive 
ten days after notification thereof to the employee or prospective 
employee, provided, however, that if a request for review of such 
determination or, of any penalty or other action prescribed by the 
Disciplinary Panel, is filed as hereinafter provided, the penalty or 
other action prescribed by the Disciplinary Panel shall be stayed 
pending the result of such review. If the Disciplinary Panel rejects 
the stipulation and consent to a specified penalty, the matter shall 
proceed as if the stipulation and consent had not been entered into, 
and such stipulation and consent shall be disregarded in any 
subsequent proceeding. A written notice of such rejection by the 
Disciplinary Panel shall be served upon the employee or prospective 
employee in the manner provided in paragraph (c) of this rule.
    Upon the request of any [four] member[s] of the Amex 
Adjudicatory Council [Board of Governors], the Amex Adjudicatory 
Council [Board] shall review the determination of, or the penalty or 
other action prescribed by, a Disciplinary Panel in connection with 
a written stipulation of facts and consent to a specified penalty. A 
request for review by the Amex Adjudicatory Council [Board] of such 
determination, penalty or other action shall be made in writing and 
filed with the Secretary of the Exchange within ten days after 
notification of the determination and penalty, if any, is served 
upon the employee or prospective employee. Upon review, the Amex 
Adjudicatory Council [Board] may fix and impose the penalty or 
prescribe such action to be taken by the Exchange in accordance with 
paragraph (a) or (b) of this rule as shall have been agreed to in 
such stipulation and consent, impose any lesser penalty or prescribe 
any lesser action permitted under paragraph (a) or (b) of this rule, 
or reject each stipulation and consent, as it deems appropriate. The 
quorum and vote required for such action by the Amex Adjudicatory 
Council [Board] shall be the quorum and vote provided in Section 
6(h) of Article II [Section 1(b)(5) of Article V] of the 
Constitution.
    (k) renumbered as (l). No other change.
* * * * *

D. Office Rules

Minor Rule Violation Fine Systems

Rule 590. Minor Rule Violation Fine Systems

Part 1  General Rule Violations

    (a) & (b). No change.

[[Page 49795]]

    (c) If the person against whom a fine is imposed pays the fine, 
such payment will be deemed to be a waiver of such person's right to 
a hearing before an Exchange Disciplinary Panel and to an appeal to 
the Amex Adjudicatory Council [Board of Governors of the Exchange].
    (d) through (h). No change.

Part 2  Floor Decorum Violations

    (a) through (c). No change.
    (d) If the person against whom a fine is imposed pays the fine, 
such payment will be deemed to be a waiver of such person's right to 
a hearing before an Exchange Disciplinary Panel and to an appeal to 
the Amex Adjudicatory Council [Board of Governors of the Exchange].
    (e) through (g). No change.

Part 3  Reporting Violations

    (a) & (b). No change.
    (c) If the person against whom a fine is imposed pays the fine, 
such payment will be deemed to be a waiver of such person's right to 
a hearing before an Exchange Disciplinary Panel and to an appeal to 
the Amex Adjudicatory Council [Board of Governors of the Exchange].
    (d) through (g). No change.
    * * * Commentary. No change.
* * * * *

E. Arbitration

Arbitration Rules

Rule 600. Arbitration

    Commentary .01: Amex Rules 600 through 624 only apply to 
arbitrations commenced prior to (insert date of Closing) and are 
otherwise of no force or effect. Article VIII, Sec. 2 of the 
Exchange Constitution provides that arbitration shall be conducted 
pursuant to the NASD Code of Arbitration Procedure, except that, if 
all parties to the controversy are members, allied members or member 
corporations of the New York Stock Exchange, any party may elect to 
arbitrate under the arbitration procedures of that exchange. Any 
violation of the NASD Code of Arbitration Procedure by members or 
member organizations arbitrating thereunder would be deemed a 
violation of Exchange rules and subject the violator to Exchange 
disciplinary procedures.
    Rules 600 through 624. No change.
* * * * *

K. Exchange Disciplinary Proceedings

Rule 8. Record of Proceedings

    (a). No change.
    (b) Where a meeting of a Disciplinary Panel has been convened 
pursuant to Article V, Section 2 of the Exchange Constitution or 
Exchange Rule 345(k) [(i)] for the purpose of considering a written 
stipulation of facts and consent to a specified penalty, a record 
may be made by tape recording. Records of such meetings need not be 
transcribed except upon the request of a party to the proceeding, 
the Exchange or the Panel, or upon a request by the Amex 
Adjudicatory Council [Board of Governors] for review of the 
determination of the Panel.

Rule 9. Requests for Review

    A request by a party for review of a determination by a 
Disciplinary Panel shall state the specific decisions of the Panel 
with respect to which objection is made, and any decision of the 
Panel which is not expressly objected to in such request shall be 
deemed accepted by the party making the request. Upon the filing by 
a party of a request for review of a determination by a Disciplinary 
Panel, such party shall have twenty days thereafter in which to file 
with the Secretary of the Exchange any brief and supporting 
documents for submission to the Amex Adjudicatory Council [Board of 
Governors or review committee, as the case may be]. The 
representative of the Exchange shall have an additional twenty days 
thereafter in which to file an answering brief and supporting 
documents in connection with such review. If a request for review of 
a determination by a Disciplinary Panel is initiated by members of 
the Amex Adjudicatory Council [Board of Governors], all briefs and 
supporting documents to be submitted by the parties must be filed 
with the Secretary of the Exchange within twenty days after notice 
of such request is served upon them. The Amex Adjudicatory Council 
[Board of Governors or the review committee, as the case may be,] 
shall determine in each instance whether it will hear oral argument 
in connection with any such review.
* * * * *

Amex Company Guide Listing Standards--Policies--Requirements

Part 10. Suspension and Delisting--Suspension and Delisting 
Procedures

Sec. 1010. Delisting Procedures

    Whenever the Exchange determines that it is appropriate to 
consider removing a security from listing (or from unlisted trading) 
for other than routine reasons (such as redemptions, maturities, 
etc.), it will follow, insofar as practicable, the following 
procedures:
    (a) No change.
    (b) If, after such conference, the Exchange determines that the 
security should be removed, it will notify the company in writing, 
indicating the basis for such decision and the specific delisting 
policies and guidelines under which action will be taken. Such 
notice will also inform the company that it may appeal to the Board 
of Governors of the Exchange, or such committee or committees as the 
Board may authorize, and request a hearing.
    (c) through (f) No change.
    (g) After the conclusion of the company's presentation, the 
committee will determine whether or not to recommend to the Board of 
Governors that the security be removed from listing (or unlisted 
trading). If the committee determines to recommend removal of the 
security from listing (or unlisted trading), such recommendation 
shall be sent to the Board of Governors for its consideration. The 
Board of Governors may authorize a review committee [the Executive 
Committee] to consider any or all appeals from decisions of the 
Exchange, and in such case the decision of the review committee 
[Executive Committee] with respect thereto shall be final and 
conclusive. A governor who serves on the committee or is present at 
the hearing will not as a result thereof be prohibited from voting 
on the recommendation when it is considered by the Board of 
Governors or by the review committee [Executive Committee], as the 
case may be.
    (h) If the Board of Governors or the review committee [Executive 
Committee], as the case may be, shall approve the recommendation of 
the committee which has heard the matter, an application shall be 
submitted by the Exchange to the SEC to strike the security from 
listing (or unlisted trading) and a copy of such application shall 
be furnished to the issuer in accordance with Section 12 of the 
Securities Exchange Act of 1934 and the rules promulgated 
thereunder.
    The action required to be taken by the Exchange to strike a 
security from listing and registration for routine reasons, such as 
redemption, maturity and retirement, is set forth in Rule 12d2-2(a) 
promulgated under the Securities Exchange Act.
    The relevant portions of the Section and Rules under such Act 
pertaining to the suspension, removal or withdrawal of securities 
for all other reasons, and the requirements of the Exchange (Rule 
18) applicable in certain cases, are summarized below:
    (a) through the end of Section 1010. No change.

[FR Doc. 98-24887 Filed 9-16-98; 8:45 am]
BILLING CODE 8010-01-P