[Federal Register Volume 66, Number 228 (Tuesday, November 27, 2001)]
[Notices]
[Pages 59288-59292]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-29400]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45083; File No. SR-Phlx-2001-93]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 by the 
Philadelphia Stock Exchange, Inc. Relating to the Listing Agreement for 
Index-Linked Exchangeable Notes

November 19, 2001.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that an October 22, 2001, the Philadelphia Stock Exchange, Inc. 
(``Phlx'' or ``Exchange'') filed with the Securities and Exchange 
Commission (the ``Commission'') the proposed rule change is described 
in Items I, II, and III below, which Items have been prepared by the 
Exchange. Amendment No. 1 was filed on November 2, 2001.\3\ The 
Commission is publishing this notice to solicit comments on he 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 from John Dayton, Assistant Secretary and 
Counsel, Phlx, to Nancy Sanow, Assistant Director, Division of 
Market Regulation (``Division''), Commission, dated November 1, 2001 
(``Amendment No. 1''). In Amendment No. 1, the Phlx requested that 
the Commission waive the 30-day period under which the proposal 
would become operative under Rule 19b-4(f)(6)(iii). 17 CFR 240.19b-
4(f)(6)(iii).

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[[Page 59289]]

I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    Pursuant to Rule 19b-4 under the Act, the Phlx proposes to adopt a 
modified listing agreement for a new product to be known as index-
linked exchangeable notes.\4\
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    \4\ On October 4, 2001, the Exchange filed with the Commission 
SR-Phlx-2001-92, a proposed rule change requesting accelerated 
approval of new listing standards for index-linked exchangeable 
notes. This filing was approved November 19, 2001. The Exchange 
states that the listing standards in SR-Phlx-2001-92 are 
substantially identical to the listing standard adopted by the 
American Stock Exchange LLC for index-linked exchangeable notes. See 
Securities Exchange Act Release No. 44621 (July 30, 2001), 66 FR 
41064 (August 6, 2001).
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    The text of the proposed rule change appears below. New text is in 
italics.

Listing Agreement

    Nothing in the following agreement shall be so construed as to 
require the issuer to do any act in contravention of law or in 
violation of any rule or regulation of any public authority exercising 
jurisdiction of the Issuer. ________; (hereinafter called the 
``Corporation''), in consideration of the listing of its securities 
covered by this application, hereby agrees with the Philadelphia Stock 
Exchange (hereinafter called the ``Exchange''), as follows:

I. The Corporation Will

    1. promptly notify the Exchange as soon as it becomes aware that it 
does not meet the maintenance listing standards.
    2. promptly notify the Exchange of any change in the general 
character or nature of its business.
    3. promptly notify the Exchange of any changes of officers or 
directors.
    4. promptly notify the Exchange in the event that it or any company 
controlled by it shall dispose of any property or of any equity 
interest in any of its subsidiary companies.
    5. promptly notify the Exchange of any change in, or removal of, 
collateral deposited under any mortgage or trust indenture, under which 
listed securities of the Corporation have been issued.
    6. file two copies of all material mailed by the Corporation to its 
stockholders with respect to any amendment to its Certificate of 
Incorporation.
    7. file with the Exchange two copies of any amendment to the 
Certificate of Incorporation (one of which will be certified) as soon 
as the amendment has the approval of the appropriate state agencies.
    8. file with the Exchange two copies of any amendments to the By-
Laws of the Corporation (one if which will be certified) as soon as the 
amendment has the approval of the appropriate state agencies.
    9. disclose in its annual report for the Corporation's fiscal year:
    a. the number of unoptioned shares available at the beginning and 
at the close of the year for the granting of options under an option 
plan;
    b. any changes in the exercise price of outstanding options, 
through cancellation and reissuance or otherwise, except price changes 
resulting from the normal operation of anti-dilution provisions of the 
options; and
    c. any changes, cancellations or exercises of any options or 
warrants.
    10. notify the Exchange within ten business days following the end 
of the month in which the change occurred if the Corporation reacquires 
or disposes of, directly or indirectly, any of its previously listed 
stock.
    11. receive the approval of the Exchange before it purchases, 
directly or indirectly, any of its securities listed on the Exchange at 
a price in excess of its market value.
    12. not redeem any of its listed securities in a manner other than 
pro rata without prior approval of the Exchange. The Corporation will 
notify the Exchange at least fifteen days in advance of any such 
redemption and will provide any information requested in reference to 
such redemption to the Exchange in a prompt manner.
    13. promptly notify the Exchange of any corporate action which will 
result in the redemption, cancellation or retirement, in whole or in 
part, of any security of the Corporation listed on the Exchange as soon 
as the Corporation's management initiates such action.
    14. give the Exchange at least ten business days notice in advance 
of the closing of the transfer books, or of the taking of a record of 
its stockholders for any purpose.
    15. not make any change in the form or nature of any of its 
securities that are listed on the Exchange or in the rights or 
privileges of its holders, without having given twenty business days 
prior notice to the Exchange of the proposed change and having applied 
for the listing of the changed securities if required by the Exchange.
    16. furnish to the Exchange on demand any information concerning 
the Corporation as the Exchange may reasonably require.
    17. promptly notify the Exchange of any depletion in the supply of 
stock available for trading caused by the deposit of stock under any 
voting trust, tender offer or any other deposit agreement.
    18. apply to the Exchange for the listing of additional amounts of 
listed securities at least fifteen business days prior to their 
issuance in order to afford the Exchange adequate time to properly 
evaluate the application.

II. The Corporation Will

    1. publish and mail to the holders of listed securities (and file 
copies with the Exchange), at least ten business days before the annual 
meeting and not later than four months after the close of the fiscal 
year, an annual report containing audited financial statements prepared 
in conformity with the requirements of the Securities and Exchange 
Commission.
    2. establish and maintain an Audit Committee, which will consist of 
at least two independent directors. Such directors will not act as 
officers of the Corporation nor will they own more than ten percent of 
common shares outstanding.
    3. promptly notify the Exchange of any change of their designated 
independent auditors which regulatory audit the books and accounts of 
the Corporation.
    4. publish quarterly statements of earnings on the basis of the 
same degree of consolidation as in the Annual Report. Such statements 
will show net profits before and after Federal taxes and disclose any 
substantial items of unusual or nonrecurrent nature.

III. The Corporation Will

    1. maintain in accordance with the requirements of the Exchange:
    a. an office or agency where the principal of and interest on all 
bonds of the Corporation listed on the Exchange shall be payable and 
where any such bonds which are registerable as to principal of interest 
may be registered;
    b. an office or agency where:
    1. all stock of the Corporation listed on the Exchange shall be 
transferable;
    2. checks for dividends and other payments with respect to stock 
listed on the Exchange may be presented for immediate payment;
    3. scrip issued to holders of a security listed on the Exchange and 
representing a fractional interest in a security listed on the Exchange 
will, during the period provided for consolidation thereof, be accepted 
for such purpose; and
    4. a security listed on the Exchange which is convertible will be 
accepted for conversion.
    c. a registrar where stock of the Corporation listed on the 
Exchange shall be registerable. Such registrar shall be a bank or trust 
company not acting as transfer agent for the same security.

[[Page 59290]]

    If the transfer books for a security of the Corporation listed on 
the Exchange should be closed permanently, the Corporation will 
continue to split up certificates for such security into certificates 
of smaller denominations in the same name so long as that security 
continues to be dealt in on the Exchange.
    2. not add to the number of its transfer agencies nor make any 
change of a transfer agency, trustee or fiscal agent of any of the 
Corporation's listed securities without prior notice to the Exchange.
    3. not add to the number of registrants of its listed stock, nor 
change a registrar of that stock, without the prior approval of the 
Exchange.
    4. not select an officer or director of the Corporation as a 
trustee of a mortgage or other listed security.
    5. have on hand at all times a sufficient supply of certificates to 
meet the demands for transfer.
    6. promptly notify its security holders of any corporate action 
taken in connection to dividends or purchase rights listed on the 
Exchange. The Corporation will also contact the Exchange as to such 
developments.
    7. solicit proxies for all meetings of stockholders.
    8. pay when due any applicable Listing Fees established from time 
to time by the Exchange.
    9. promptly notify the Exchange whenever any other exchange or 
market place takes steps to remove their issues from trading.
    10. comply with Exchange rules, policies and procedures as in 
effect and as they may be amended from time to time.
The above agreement has been signed by me as
of--------------------------------------------------------------------
(Title)         (Name of Company) pursuant to authority granted me by 
resolution of the Board of Directors of--------------------------------
(Corporate Seal) said corporation adopted on       
Dated:        By:
    (2) Listing agreement for issuers of index-listed exchangeable 
notes

Listing Agreement

    Nothing in the following agreement shall be so construed as to 
require         (hereinafter called the ``Corporation) to do any act in 
contravention of law or in violation of any rule or regulation of any 
public authority exercising jurisdiction over the Corporation.
    The Corporation, in consideration of the listing of its      (its 
``Issue;), hereby agrees with the Philadelphia Stock Exchange 
(hereinafter called the ``Exchange), as follows:

I. The Corporation Will

    1. promptly notify the Exchange as soon as it becomes aware that it 
does not meet the maintenance listing standards;
    2. promptly notify the Exchange of any material change in the 
general character or nature of its business;
    3. promptly notify the Exchange of any changes of executive 
officers of the Corporation (as defined by Rule 3b-7 under the 
Securities Exchange Act of 1934) or directors;
    4. promptly notify the Exchange in the event that it or any company 
controlled by it makes a material disposition of any property or of any 
equity interest in any of its subsidiary companies;
    5. promptly notify the Exchange of any change in, or removal of, 
collateral deposited under any mortgage or trust indenture, under which 
the Issue of the Corporation have been issued;
    6. file two copies of all proxy statements mailed by the 
Corporation to its stockholders with respect to any amendment to its 
Certificate of Incorporation;
    7. file with the Exchange two copies of any amendment to the 
Certificate of Incorporation (one of which will be certified) as soon 
as the amendment has the approval of the appropriate state agencies;
    8. file with the Exchange two copies of any amendments to the By-
Laws of the Corporation (one of which will be certified) as soon as the 
amendment has the approval of the appropriate state agencies;
    9. disclose in its annual report for the Corporation's fiscal year:
    a. the number of unoptioned shares available at the beginning and 
at the close of the year for the granting of employee stock options 
under an employee stock option plan and
    b. changes, cancellations or exercises of any employee stock 
options;
    10. inform the Exchange within ten business days following the end 
of each month of the total amount of the Issue outstanding at the end 
of such month;
    11. receive the approval of the Exchange before it purchases, 
directly or indirectly, any of the Issue listed on the Exchange at a 
price in excess of its market value;
    12. not redeem any of the Issue in a manner other than pro rata 
without prior approval of the Exchange (the Corporation will notify the 
Exchange at least fifteen days in advance of any such redemption and 
will provide any information requested in reference to such redemption 
to the Exchange in a prompt manner);
    13. promptly notify the Exchange of any corporate action which will 
result in the redemption, cancellation or retirement, in whole or in 
part, of the Issue as soon as the Corporation's management initiates 
such action;
    14. not make any change in the form or nature of any of the Issue 
listed on the Exchange or in the rights or privileges of holders of the 
Issue, without having given twenty business days prior notice to the 
Exchange of the proposed changed and having applied for the listing of 
such changed securities if required by the Exchange;
    15. promptly furnish to the Exchange any other publicly available 
information concerning the Corporation as the Exchange may reasonably 
require;
    16. promptly notify the Exchange of any depletion in the supply of 
the listed Issued available for trading caused by the deposit of the 
listed Issue under any voting trust, tender offer or any other deposit 
agreement; and
    17. apply to the Exchange for the listing of additional amounts of 
the Issue as soon as reasonably practicable and at latest on the 
business day prior to listing.

II. The Corporation Will

    1. publish and file with [the entity or entities required to 
receive an annual report containing audited financial statements under 
the law or rules of the Commission], (and file copies with the 
Exchange) an annual report containing audited financial statements 
prepared in conformity with the requirements of the Securities and 
Exchange Commission (the ``Commission'') within fifteen days after the 
Corporation is required to file such annual report with the Commission;
    2. establish and maintain an Audit Committee which will consist of 
at least two independent directors (such directors will not act as 
officers of the Corporation nor will they own more than ten percent of 
common shares outstanding);
    3. promptly notify the Exchange of any change of their designated 
independent auditors which regularly audit the books and accounts of 
the Corporation and
    4. publish quarterly statements of earnings on the basis of the 
same degree of consolidation as in the Annual Report (such statements 
will show net profits before and after Federal taxes and disclose any 
substantial items of unusual or nonrecurrent nature).

III. The Corporation Will

    1. maintain in accordance with the requirements of the Exchange:
    a. an office or agency where the principal of, and interest on, all 
bonds of the Corporation listed on the

[[Page 59291]]

Exchange shall be payable and where any such bonds which are 
registerable as to principal of interest may be registered; 
    b. an office or agency where a security listed on the Exchange 
which is convertible will be accepted for conversion;
    2. not add to the number of its transfer agencies nor make any 
change of a transfer agency, trustee or fiscal agent of the Issue 
without prior notice to the Exchange;
    3. not select an officer or director of the Corporation as a 
trustee of a mortgage or in connection with the issuance of the Issue 
listed with the Exchange;
    4. have on hand at all times a sufficient supply of certificates to 
meet the demands for transfer;
    5. pay when due any applicable Listing Fees established from time 
to time by the Exchange;
    6. promptly inform the Exchange if the Corporation's common stock 
or Issue is delisted by the New York Stock Exchange, American Stock 
Exchange or Pacific Exchange and
    7. comply with Exchange rules, policies and procedures as in effect 
and as they may be amended from time to time. 
    The above agreement has been signed by me as      pursuant to 
authority granted me by resolution of the Board of Directors of said 
corporation adopted on [DATE].
(Corporate Seal)
Dated:       ; By: 

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 Exchange 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 may be examined at the places specified in 
Item IV below. The Exchange 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 this proposed rule change is to modify its present 
listing agreement to accommodate issuers of a new product to be known 
as index-linked exchangeable notes. Under Phlx Rule 803(f), the 
Exchange may approve for listing and trading securities which cannot be 
readily categorized under the listing criteria for common and preferred 
stocks, bonds, debentures, or warrants. The Phlx, in proposed rule 
change SR-Phlx-2001-92,\5\ proposed new Phlx Rule 803(m), creating 
listing standards for index-linked exchangeable notes that are intended 
to allow investors to hold a single, exchange-listed note exchangeable 
for the cash value of the underlying stocks of an index, and thereby to 
acquire--in a single security and a single trade--exposure to a 
specific index of equity securities.
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    \5\ See supra footnote number 4.
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    The Exchange intends to list at least one index-linked exchangeable 
note under these new proposed standards. In reviewing its listing 
materials, the Exchange decided to propose a modified listing agreement 
for issuers of index-linked exchangeable notes. The Exchange requires 
listing agreements with issuers to better ensure receipt of information 
from the issuer about the issue and the issuer itself.
    The proposed listing agreement is substantially similar to the 
current listing agreement with the following modifications. In Section 
I, the proposed agreement does not contain a reference to the closing 
of transfer books or the taking of a record of stockholders because 
index-linked exchangeable notes are debt instruments and consequently 
holders of the notes do not participate in issuer corporate governance.
    In Section II, the proposed agreement contains a provision that an 
annual report containing audited financial statements to be sent to 
those required to receive them under the law or rules of the 
Commission. Finally, in Section III, the proposed agreement does not 
include references to dividends and proxies for stockholder meetings, 
since these items are not applicable to these debt instruments.
    The Exchange notes that its proposed listing agreement retains the 
provision against construing the agreement in such a way as requiring 
the issuer to act in violation of law or regulation. Also, the proposed 
listing agreement retains the provision, in Section III, item 7, 
requiring the issuer to comply with Exchange rules, policies and 
procedures as in effect and as they may be amended from time to time.
    The Exchange believes that these modifications to its current 
listing agreement reflect the nature of the index-linked exchangeable 
note and issuer of such notes and do not require such issuers to 
provide or Exchange staff to receive non-applicable information. 
Nevertheless, the Exchange believes that the modifications retain the 
elements of the current agreement that apply universally to any 
Exchange issuer.
(2) Statutory Basis
    The exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act,\6\ in general, and furthers the 
objectives of section 6(b)(5),\7\ in particular, in that that an 
exchange have rules that are designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, 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.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any inappropriate burden on competition.

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

    No written comments were either solicited or received.

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

    The foregoing rule change has become effective pursuant to section 
19(b)(3)(A) of the Act \8\ and subparagraph (f)(6) of Rule 19b-4 \9\ 
thereunder because it does not: (i) Significantly affect the protection 
of investors or the public interest; (ii) impose any significant burden 
on competition; (iii) become operative for 30 days from the date on 
which it was filed, or such shorter time as the Commission may 
designate; and the Exchange has given the Commission written notice of 
its intention to file the proposed rule change at least five business 
days prior to filing. At any time within 60 days of the filing of such 
proposed rule change, the Commission may summarily abrogate such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise

[[Page 59292]]

in furtherance of the purposes of the Act.\10\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ For purposes of calculating the 60-day abrogation date, the 
Commission considers the 60-day period to have commenced on November 
2, 2001, the date the Phlx filed Amendment No. 1.
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    The Commission notes that under Rule 19b-4(f)(6)(iii), the proposal 
does not become operative for 30 days after the date of its filing, or 
such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest. The Exchange has 
requested that the Commission waive the 30-day operative date.\11\ 
Accelerating the operative date to October 22, 2001, will enable the 
Exchange to modify its listing agreement in order to begin to list its 
new product, index-linked exchangeable notes. For this reason, the 
Commission finds good cause to designate that the proposal become 
operative on October 22, 2001.\12\
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    \11\ See supra footnote 3.
    \12\ For purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
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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, NW., Washington, DC 20549-0609. 
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 Section. Copies of such filing will also 
be available for inspection and copying at the principal office of the 
Exchange. All submissions should refer to File No. SR-Phlx-2001-93 and 
should be submitted by December 18, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-29400 Filed 11-26-01; 8:45 am]
BILLING CODE 8010-01-M