[Federal Register Volume 67, Number 122 (Tuesday, June 25, 2002)]
[Proposed Rules]
[Pages 42914-42945]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-15706]



[[Page 42913]]

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Part IV





Securities and Exchange Commission





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17 CFR Parts 228, et al.



Additional Form 8-K Disclosure Requirements and Acceleration of Filing 
Date; Proposed Rule

  Federal Register / Vol. 67, No. 122 / Tuesday, June 25, 2002 / 
Proposed Rules  

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 228, 229, 240 and 249

[Release Nos. 33-8106; 34-46084; File No. S7-22-02]
RIN 3235-AI47


Additional Form 8-K Disclosure Requirements and Acceleration of 
Filing Date

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule.

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SUMMARY: We propose to add 11 new items that would require a company to 
file Form 8-K under the Securities Exchange Act of 1934. In addition, 
we propose to move two disclosure items currently required to be 
included in companies' annual and quarterly reports to Form 8-K and to 
amend several of the existing Form 8-K disclosure items. We also 
propose to shorten the filing deadline for Form 8-K to two business 
days after an event triggering the form's disclosure requirements. 
Currently, the filing deadline is five business days or 15 calendar 
days after the triggering event, depending on the nature of the event. 
Finally, we propose to create a new safe harbor for certain violations 
of the Form 8-K filing requirements and to grant an automatic two 
business day extension of the filing deadline to companies providing 
proper notice on Form 12b-25 of an inability to timely file a 
particular Form 8-K. We propose these amendments to provide investors 
with better and faster disclosure of important corporate events.

DATES: Comments should be received on or before August 26, 2002.

ADDRESSES: Comments should be submitted in triplicate to Jonathan G. 
Katz, Secretary, U.S. Securities and Exchange Commission, 450 Fifth 
Street, NW, Washington, DC 20549-0609. Comments also may be submitted 
electronically at the following e-mail address: [email protected]. 
All comment letters should refer to File No. S7-22-02; this file number 
should be included in the subject line if e-mail is used. Comment 
letters will be available for inspection and copying in the 
Commission's Public Reference Room, 450 Fifth Street, NW., Washington, 
DC 20549-0102. Electronically submitted comment letters will be posted 
on the Commission's Internet Web Site (http://www.sec.gov). We do not 
edit personal information, such as names or electronic mail addresses, 
from electronic submissions. You should submit only information that 
you wish to make available publicly.

FOR FURTHER INFORMATION CONTACT: Ray Be, Special Counsel, or N. Sean 
Harrison, Special Counsel, at (202) 942-2910, Division of Corporation 
Finance, U.S. Securities and Exchange Commission, 450 Fifth Street, 
NW., Washington, DC 20549-0312.

SUPPLEMENTARY INFORMATION: We are proposing amendments to Form 8-K,\1\ 
Form 10-K,\2\ Form 10-KSB,\3\ Form 10-Q,\4\ Form 10-QSB,\5\ Rule 13a-
11,\6\ Rule 15d-10,\7\ Rule 15d-11,\8\ Rule 12b-25 \9\ and Form 12b-25 
\10\ under the Securities Exchange Act of 1934,\11\ Item 10,\12\ Item 
601 \13\ and Item 701 \14\ of Regulation S-B \15\ and Item 10,\16\ Item 
601 \17\ and Item 701 \18\ of Regulation S-K.\19\
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    \1\ 17 CFR 249.308.
    \2\ 17 CFR 249.310.
    \3\ 17 CFR 249.310a.
    \4\ 17 CFR 249.308a.
    \5\ 17 CFR 249.308b.
    \6\ 17 CFR 240.13a-11.
    \7\ 17 CFR 240.15d-10.
    \8\ 17 CFR 240.15d-11.
    \9\ 17 CFR 240.12b-25.
    \10\ 17 CFR 249.322.
    \11\ 15 U.S.C. 78a et seq.
    \12\ 17 CFR 228.10.
    \13\ 17 CFR 228.601.
    \14\ 17 CFR 228.701.
    \15\ 17 CFR 228.10 et seq.
    \16\ 17 CFR 229.10 et seq.
    \17\ 17 CFR 229.601.
    \18\ 17 CFR 229.701.
    \19\ 17 CFR 229.
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I. Background

    The Exchange Act established a system of continuing disclosure 
about companies choosing to issue securities to the public. Congress 
recognized that the ongoing dissemination of accurate information by 
companies about themselves and their securities is essential to 
effective operation of the trading markets. The Exchange Act rules 
require public companies to make periodic disclosures at annual and 
quarterly intervals, with other important information reported on a 
more current basis. The Exchange Act specifically provides for current 
disclosure to maintain the currency and adequacy of information 
disclosed by companies.\20\
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    \20\ 15 U.S.C. 78m(a).
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    The Commission created Form 8-K in 1936 as the form to be used by 
companies to file ``current'' reports when specific extraordinary 
corporate events occur.\21\ As originally adopted, companies could file 
Form 8-K as late as 10 days after the end of the month in which an 
event requiring disclosure occurred. This meant that a company did not 
have to report a Form 8-K event occurring on the first day of a month 
until 40 days later. By today's standards, it would be very difficult 
to describe reports with such a delayed filing deadline as ``current'' 
reports.\22\
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    \21\ Release No. 34-925 (Nov. 11, 1936).
    \22\ See Release No. 34-8683 (Sept. 15, 1969) [35 FR 18512]. In 
that release, we noted that prompt reporting of an event within a 
few days of its occurrence appeared to be difficult to administer 
and unduly burdensome. This was in large part attributable to the 
state of technology at the time.
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    Since 1936, there have been several substantive changes to Form 8-
K. In 1977, we made significant amendments to create the general 
structure of the form that exists today, including the filing deadlines 
that require reporting of some corporate events within five business 
days after their occurrence and others within 15 calendar days after 
their occurrence.\23\ In the intervening years, we have amended Form 8-
K at various times to add or delete items. Form 8-K currently consists 
of nine disclosure items.\24\ Six of the items describe specific events 
that require companies to file Form 8-K. Those events are:
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    \23\ Release No. 34-13156 (Jan. 13, 1977) [42 FR 4424]. Item 7 
of Form 8-K states that financial statements required to be included 
on Form 8-K when a company acquires a business may be filed with the 
initial report or by amendment not later than 60 days after the date 
that the initial Form 8-K to report the acquisition must be filed. 
See Item 7(a)(3) of Form 8-K.
    \24\ On April 12, 2002, we proposed adding a tenth item to Form 
8-K that would require prompt disclosure by a company on Form 8-K of 
transactions by its officers and directors in the company's 
securities (Release No. 33-8090 (Apr. 12, 2002) [67 FR 19914]).
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     A change in control of the company;\25\
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    \25\ Current Item 1 of Form 8-K.
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     The company's acquisition or disposition of a significant 
amount of assets; \26\
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    \26\ Current Item 2 of Form 8-K.
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     The company's bankruptcy or receivership; \27\
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    \27\ Current Item 3 of Form 8-K.
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     A change in the company's certifying accountant; \28\
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    \28\ Current Item 4 of Form 8-K.
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     The resignation of a company director; \29\ and
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    \29\ Current Item 6 of Form 8-K.
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     A change in the company's fiscal year.\30\
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    \30\ Current Item 8 of Form 8-K.
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    A seventh item requires companies to furnish exhibits and to list 
any financial statements and pro forma financial information included 
as part of Form 8-K in connection with a business acquisition.\31\ 
Another item permits companies, at their option, to disclose events 
that they deem to be of importance to their shareholders.\32\ The

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ninth item permits companies to use Form 8-K as a non-exclusive method 
to satisfy their public disclosure requirements under Regulation 
FD.\33\
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    \31\ Current Item 7 of Form 8-K.
    \32\ Current Item 5 of Form 8-K.
    \33\ Current Item 9 of Form 8-K. We adopted Regulation FD in 
2000. See Release No. 33-7881 (Aug. 10, 2000) [65 FR 51716]. 
Regulation FD requires a company that discloses material nonpublic 
information to securities industry professionals, institutions or 
other persons who may buy or sell securities of the issuer on the 
basis of that information, to publicly disclose the information. A 
company choosing to publicly disclose the information on Form 8-K 
can elect either to furnish the information pursuant to Item 9, 
which is specifically designated for Regulation FD disclosure, or to 
file the information under Item 5, the general voluntary Form 8-K 
disclosure item. If an issuer elects to furnish the information 
under Item 9, that information is not considered filed under the 
Exchange Act. Alternatively, a company may comply with Regulation FD 
by disclosing the information through another method or combination 
of methods that is reasonably designed to effect broad, non-
exclusionary distribution of the information to the public.
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    In 1998, we published proposals to expand Form 8-K disclosure and 
shorten the filing date in a package of proposed revisions intended to 
effect comprehensive reform of the Securities Act offering system.\34\ 
Specifically, we proposed to add six disclosure items to Form 8-K \35\ 
and to shorten the Form 8-K filing deadline to five calendar days for 
some items and one business day for other items.\36\
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    \34\ Release No. 33-7606A (December 4, 1998) [63 FR 67174].
    \35\ The proposed disclosure items included the following: (1) 
Timely disclosure of annual and quarterly earnings results of 
domestic companies; (2) material modifications to the rights of 
security holders; (3) departure of a chief executive officer, 
president, chief financial officer or chief operating officer; (4) 
material defaults on senior securities; (5) notice from an auditor 
that the company no longer may rely on a prior audit report; and (6) 
corporate name changes.
    \36\ We proposed a one business day deadline for reports 
concerning: (1) a material default on a senior security; (2) a 
notice that a company's independent accountant has resigned, 
declined to stand for reelection or been replaced; and (3) the 
resignation of a director. We proposed a five calendar day deadline 
for all other Form 8-K items.
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    Comments on the substantive and timing changes to Form 8-K that we 
proposed in 1998 varied greatly and no consensus was reached as to the 
advisability of the changes.\37\ We did not adopt these proposals. As 
described more fully below, we are re-proposing the addition to Form 8-
K of four of the six items regarding which we previously solicited 
public comment,\38\ along with several new proposed disclosure items. 
We also again propose to shorten the Form 8-K filing deadline, but in a 
different manner than proposed in 1998.
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    \37\ With respect to the proposed changes in filing deadlines, a 
number of commenters, including several issuers and law firms 
indicated that, at least for some of the items, filing in two 
business days may be workable. See, for example, letters in File No. 
S7-30-98 from the Financial Executives Institute and the Association 
of the Bar of the City of New York.
    \38\ The four disclosure items that we are re-proposing are: (1) 
Material modifications to the rights of security holders; (2) 
departure of a chief executive officer, president, chief financial 
officer, or chief operating officer (the item that we re-propose 
also includes the departure of a company's chief accounting officer 
and the departure of any person serving an equivalent function as 
any officer included in the listing); (3) material defaults on 
senior securities; and (4) withdrawal of, or notice of non-reliance 
on, a previously issued audit report. Although we are not re-
proposing a disclosure item for material defaults on senior 
securities, such a requirement is subsumed by our proposed new item 
that would require disclosure of any event triggering a direct or 
contingent financial obligation that is material to the company. We 
are not re-proposing the item that would require timely disclosure 
of domestic companies' annual and quarterly earnings results. We 
also are not re-proposing a specific disclosure item regarding 
corporate name changes because we believe that a proposed new item 
that would require disclosure about changes to a company's articles 
of incorporation or bylaws generally would cover changes made to 
authorize a new corporate name.
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    The last few decades have been marked by significant advancements 
in communications technologies, including the Internet. Such 
technologies provide investors and securities markets with 
instantaneous access to a wide array of investment information with 
varying degrees of reliability. As a result, investors and the 
securities markets today demand and expect more ``real-time'' access to 
a greater range of reliable information concerning important corporate 
events that affect publicly traded securities. Although no disclosure 
regime can eliminate all fraud in the securities markets, more prompt 
disclosure by companies of significant events should reduce the 
opportunities for deception and manipulation that stem from delayed 
disclosure. Accordingly, we propose to expand the list of events that 
trigger a public company's obligation to file a current report on Form 
8-K under the Exchange Act. We have identified the following 
extraordinary events as specific disclosure items because we believe 
such events are presumptively of such importance to investors that 
prompt disclosure is necessary.\39\ In addition, we encourage companies 
to continue to use Form 8-K \40\ to disclose any other information that 
may be material or otherwise of importance to investors.
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    \39\ In identifying these events, we have considered the 
relative importance of different types of corporate events to 
investors. Specifically, we have considered various factors to 
gauge, among other things, the extent to which we believe investors 
would consider the event important in making an investment or voting 
decision, the frequency of occurrence of the event, the likely 
market reaction to the event, and the potential impact of the event 
on a company's operations and financial statements.
    \40\ Specifically, we encourage companies to file voluntary 
reports on Form 8-K pursuant to current Item 5, which we propose to 
renumber as Item 7.01 in this release.
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    We also propose to accelerate the Form 8-K filing deadline by 
requiring companies to file Form 8-K within two business days after the 
occurrence of a triggering event.\41\ In 1977, when we established the 
five business day and 15 calendar day deadlines, we had to consider 
potential problems associated with the delivery and filing of Form 8-K 
in paper, such as delays in the U.S. mail. For the past several years, 
the EDGAR electronic filing system has enabled domestic public 
companies to file their documents with the Commission from anywhere in 
the world within significantly shortened timeframes. These documents 
are now available to the public through EDGAR on a real-time basis.\42\
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    \41\ The proposed deadline change would not affect the timing 
requirements for Form 8-K disclosure made to satisfy the 
requirements under Regulation FD and also would not affect the 
timing requirement in Item 7(a)(3) of Form 8-K regarding the filing 
of financial statements when a company acquires a business. Form 8-K 
currently does not, and would not under the proposals, specify a 
deadline for companies' voluntary disclosure of events on the form. 
Finally, the proposed deadline changes would not affect the 
deadlines proposed by Release No. 33-8090 for reports disclosing 
transactions by a company's officers and directors in that company's 
securities.
    \42\ See Press Release No. 2002-75, dated May 30, 2002, 
available at our website at http://www.sec.gov.
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    In establishing the appropriate timeframe for filing Form 8-K, we 
must balance investors' need for timely access to information about the 
companies in which they have invested or as to which they are making 
investment decisions with the time needed by companies to prepare 
accurate and complete information. In light of advances in technology 
that make it possible for companies to capture, analyze and broadly 
disseminate information much more quickly than in 1977 and greater 
investor demand for timely information, we believe that the proposed 
changes are consistent with the statutory intent reflected in Section 
13(a) of the Exchange Act ``to keep reasonably current the information 
and documents required to be included in or filed with an application 
or registration statement filed pursuant to Section 12.'' \43\ These 
changes are part of the Commission's initiative to improve the delivery 
of timely, high-quality information to the securities markets to ensure 
that securities are traded on the basis of current information.\44\
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    \43\ 15 U.S.C. 13(a).
    \44\ This release is the fourth in a series of initiatives 
designed to significantly improve the timeliness and quality of 
disclosures by companies to the public. In April, we issued two 
proposing releases. The first would shorten the filing deadline of 
large issuers' annual reports on Form 10-K or 10-KSB from 90 to 60 
days and the filing deadline of their quarterly reports on Form 10-Q 
or 10-QSB from 45 to 30 days, as well as require these issuers to 
disclose whether they make their annual, quarterly and current 
reports available to investors on their websites (Release No. 33-
8089 (Apr. 12, 2002) [67 FR 19896]). The second set of proposals 
would require prompt disclosure by a company on Form 8-K of 
transactions by its officers and directors in the company's 
securities (Release No. 33-8090 (Apr. 12, 2002) [67 FR 19914]). In 
May, we issued a third release proposing disclosure regarding 
application of a company's critical accounting policies (Release No. 
33-8098 (May 10, 2002) [67 FR 35620]).

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II. Discussion of Proposed Changes

A. Proposed Form 8-K Changes

    We propose to add 11 new items to the list of events that require a 
company to file a current report on Form 8-K.\45\ In addition, we 
propose to make significant changes to existing Form 8-K items and to 
move two items from other Exchange Act reports to Form 8-K. Through our 
extensive experience with, and reviews of, filings,\46\ as well as 
comment letters from the public, we believe that these items represent 
events that presumptively have, or can have, such significance that 
timely disclosure is necessary for the market to perform properly and 
efficiently. The following is a list of the new disclosure items that 
we propose to add to Form 8-K:
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    \45\ On February 13, 2002, we announced by press release our 
intention to consider several changes to our corporate disclosure 
rules as the first in a series of steps designed to improve the 
corporate disclosure and financial reporting system. One of the 
planned initiatives described in the press release was an expansion 
of the types of information that companies must report on Form 8-K. 
See Press Release 2002-22, dated Feb. 13, 2002, available at our 
website at http://www.sec.gov. The press release identified 15 
disclosure items that we have evaluated for possible inclusion in 
Form 8-K reports. We already have proposed that a company report 
transactions by its executive officers and directors in the 
company's securities in Release No. 33-8090. We are deferring our 
consideration of a possible disclosure item about company waivers of 
corporate ethics and conduct rules until we have had the opportunity 
to fully review the changes proposed by the self-regulatory 
organizations to their corporate governance provisions. We also are 
deferring the possible addition of a new Form 8-K disclosure item 
regarding a material change in a company's accounting policy or 
estimate until we are able to evaluate public comment on our 
recently issued release that would require disclosure about a 
company's critical accounting policies. See Release No. 33-8098.
    \46\ In addition, in connection with this release, we reviewed 
the types of events currently being reported voluntarily on Form 8-
K. Based on our review of over 200 voluntary Form 8-K filings, it 
appears that some companies already are voluntarily disclosing under 
Item 5 of Form 8-K many of the events that would be covered by the 
proposals and consider such information to be important to their 
investors.
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     Entry into a material agreement not made in the ordinary 
course of business;
     Termination of a material agreement not made in the 
ordinary course of business;
     Termination or reduction of a business relationship with a 
customer that constitutes a specified amount of the company's revenues;
     Creation of a direct or contingent financial obligation 
that is material to the company;
     Events triggering a direct or contingent financial 
obligation that is material to the company, including any default or 
acceleration of an obligation; \47\
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    \47\ We concurrently propose to remove Item 3, Defaults Upon 
Senior Securities, from Part II of Forms 10-Q and 10-QSB. We believe 
that proposed Item 2.04 would subsume all events previously reported 
under this existing item.
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     Exit activities including material write-offs and 
restructuring charges;
     Any material impairment;
     A change in a rating agency decision, issuance of a credit 
watch or change in a company outlook;
     Movement of the company's securities from one exchange or 
quotation system to another, delisting of the company's securities from 
an exchange or quotation system, or a notice that a company does not 
comply with a listing standard;
     Conclusion or notice that security holders no longer 
should rely on the company's previously issued financial statements or 
a related audit report; and
     Any material limitation, restriction or prohibition, 
including the beginning and end of lock-out periods, regarding the 
company's employee benefit, retirement and stock ownership plans.
    We also propose to move the following two items from other Exchange 
Act reports to Form 8-K:
     Unregistered sales of equity securities by the company; 
\48\ and
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    \48\ This event is currently reported under Item 2(c) of Part II 
of Forms 10-Q and 10-QSB and Item 5 of Part II of Forms 10-K and 10-
KSB.
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     Material modifications to rights of holders of the 
company's securities.\49\
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    \49\ This event is currently reported under Item 2(a) and (b) of 
Part II of Forms 10-Q and 10-QSB.
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    Finally, we propose to expand the current Form 8-K item that 
requires disclosure about the resignation of a director \50\ to also 
require disclosure regarding the departure of a director for reasons 
other than a disagreement or removal for cause, the appointment or 
departure of a principal officer, and the election of new directors. We 
also would combine the current Form 8-K item regarding a change in a 
company's fiscal year with a new requirement to disclose any material 
amendment to a company's articles of incorporation or bylaws.
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    \50\ Current Item 6 of Form 8-K.
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    The substantive requirements included in two of the proposed 
disclosure items, Material Modifications to Rights of Security Holders 
and certain aspects of Events Triggering a Direct or Contingent 
Financial Obligation That Is Material to the Registrant, formerly had 
been included in Form 8-K.\51\ In 1977, we moved those items into Form 
10-Q.\52\ In light of the importance of such information to investors, 
we believe that it is appropriate to move these items back into Form 8-
K.
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    \51\ As stated elsewhere in this release, we expect that this 
proposed item would subsume the disclosure currently required by 
Item 3 of Form 10-Q, Defaults on Senior Securities.
    \52\ Release No. 34-13156 (Jan. 13, 1977) [42 FR 4424].
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    We expect to make these amendments prospective only if we decide to 
adopt them. Therefore, if any of the proposed disclosure events occurs 
before effectiveness of any final rule, then no report would be 
required for that event. We further expect that, if we decide to adopt 
these proposals, we would make the new requirements effective 60 days 
after adoption. We solicit comment as to whether 60 days would provide 
sufficient time for transition to the new requirements. Should the 
period be shorter, e.g., 30 days, or longer, e.g., 90 days?
1. Discussion of Proposed Revisions to Form 8-K Disclosure Items
    We propose to reorganize the Form 8-K disclosure items. We address 
the proposal to reorganize those items in more detail later in this 
release. This section of the release presents a discussion of the 
proposed changes to the Form 8-K items in the order that we expect them 
to appear if we adopt the proposals.

Section 1--Registrant's Business and Operations

Item 1.01  Entry Into a Material Agreement

    We propose to add a new Form 8-K item that would require disclosure 
whenever a company enters into an agreement that is material to the 
company and that is not made in the ordinary course of the company's 
business. The company also would have to disclose any material 
amendment to a material agreement.\53\ Under the proposed item, 
companies would have

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to disclose letters of intent and other non-binding agreements. 
Specifically, companies would have to file the agreement or letter as 
an exhibit to Form 8-K and disclose or provide the following 
information:
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    \53\ An instruction to the proposed item would clarify that a 
company must disclose a material amendment to a material agreement 
even if the underlying agreement previously has not been disclosed 
because it was entered into prior to effectiveness of proposed Item 
1.01, if it is adopted, and the company otherwise has not had to 
disclose it. In such a case, the company would have to file the 
underlying agreement, as well as the amendment to the agreement, as 
an exhibit to the report disclosing the amendment.
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     The identity of the parties to the agreement and a 
description of any material relationship between any of the parties 
other than in respect of the agreement;
     A brief description of the agreement;
     The rights and obligations of each party to the agreement 
that are material to the company;
     Any material conditions to the agreement becoming binding 
or effective; and
     The duration of the agreement and any material termination 
provisions.
    An instruction to the proposed item states that any material 
agreement not made in the ordinary course of the company's business 
must be disclosed under the proposed item. The proposed instruction 
also provides further guidance as to which agreements must be disclosed 
and filed under the item.\54\ Another instruction to the proposed item 
states that a company must provide disclosure under the proposed item 
if the company succeeds as a party to the agreement by assumption or 
assignment.
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    \54\ In particular, the proposed instruction states that an 
agreement would be deemed to be not made in the ordinary course of a 
company's business, and therefore would have to be disclosed under 
the proposed item, if the agreement is such as ordinarily 
accompanies the kind of business conducted by the company, if it 
involves the subject matter identified in Item 601(b)(10)(ii)(A)-(D) 
of Regulation S-K. An agreement involving the subject matter 
identified in Item 601(b)(10)(iii)(A) or (B) also would have to be 
disclosed unless Item 601(b)(10)(iii)(C) would not require a company 
to file a material contract involving the same subject matter as an 
exhibit.
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    We note that, although this proposed item would not require 
disclosure about agreements still under negotiation, there may be 
instances when a company is under some other duty to disclose contract 
negotiations.\55\ We do not intend to change current law as to when 
disclosure about these negotiations is required. Therefore, this 
release does not address this issue.
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    \55\ See In re Time Warner Securities Litigation, 9 F.3d 259 (2d 
Cir. 1993) and In re Healthcare Compare Corp. Securities Litigation, 
75 F.3d 276 (7th Cir. 1996).
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    We recognize that a company may need to report a given event under 
proposed Item 1.01 as well as other items, such as proposed Item 2.03. 
We note that General Instruction D to Form 8-K states that a company 
need only file one report listing all relevant item numbers. Therefore, 
the company could file a single Form 8-K and include the disclosure in 
a single place under the captions for both items.
Questions Regarding Proposed Item 1.01
     We seek comment as to whether the proposed disclosure only 
should be required with respect to definitive agreements which are 
unconditionally binding or binding subject only to conditions stated in 
the agreement.
     Should we require disclosure of letters of intent and 
other non-binding agreements? Would this cause any competitive harm or 
otherwise disrupt the ability of companies to negotiate agreements for 
the benefit of the company and its investors? Would this result in 
companies having to frequently file a Form 8-K? Are these types of non-
binding agreements not yet ripe for disclosure? Should we limit or 
expand the proposed disclosures about material agreements in any way, 
and if so, how?
     Because we believe that agreements can be material for 
reasons other than the monetary amount involved, we propose to require 
disclosure under this item based on a ``materiality'' standard and do 
not propose to tie the disclosure to a financial measure. We seek 
comment as to whether we should instead use a threshold that is tied to 
a financial measure, either for all agreements subject to disclosure or 
for specified types of agreements subject to disclosure.
     We solicit additional comment as to whether companies 
should have to disclose all material agreements not made in the 
ordinary course of business as proposed. Are there some material 
agreements that companies should have to file even if Item 601(b)(10) 
would permit a material contract pertaining to the subject matter not 
to be filed as an exhibit? Should the proposed item exclude certain 
types of material agreements not made in the ordinary course of 
business pertaining to the same subject matter as material contracts 
that must be filed as exhibits under Item 601(b)(10)?
     Conversely, should companies have to disclose a material 
agreement that accompanies the ordinary course of the company's 
business if Item 601(b)(10) of Regulation S-K would deem it to not be 
made in the ordinary course of business and therefore would require the 
agreement to be filed as an exhibit? Are there additional types of 
agreements that accompany a company's ordinary business that are so 
significant that we should deem them not to be made in the ordinary 
course of business for purposes of the proposed item?
     Should we require companies to file the material 
agreements that are the subject of the Form 8-K disclosure as exhibits 
to the Form 8-K? Should we require companies to file letters of intent 
and other non-binding agreements as exhibits?
     Is the proposed two business day filing deadline workable 
with respect to the disclosure that this item would require? Would the 
proposed deadline for filing disclosure about a company's entry into a 
material agreement give rise to any competitive advantages or 
disadvantages?
Considerations Regarding Business Combinations
    Proposed new Item 1.01 would require disclosure of business 
combination agreements and other agreements that relate to 
extraordinary corporate transactions. The filing of a Form 8-K for a 
business combination may require separate filings under Rule 165 \56\ 
under the Securities Act of 1933 \57\ and Rule 14d-2(b) \58\ or Rule 
14a-12 \59\ under the Exchange Act.\60\ In some circumstances, the 
filing of the Form 8-K may constitute the first ``public announcement'' 
of the business combination for purposes of Rule 165 and Rule 14d-2(b) 
and would trigger a filing obligation under those rules.
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    \56\ 17 CFR 230.165.
    \57\ 15 U.S.C. 77a et seq.
    \58\ 17 CFR 240.14d-2(b).
    \59\ 17 CFR 240.14a-12.
    \60\ Rule 165 provides an exemption from Section 5 of the 
Securities Act for communications relating to the business 
combination made before the filing of a registration statement for 
that business combination if all written communications are filed 
under Rule 425 [17 CFR 230.425]. Rule 14d-2(b) allows communications 
by the bidder before the commencement of the tender offer provided 
that all written communications are filed. Rule 14a-12 allows 
solicitations to be made before furnishing a proxy statement meeting 
the requirements of Rule 14a-3(a) [17 CFR 240.14a-3(a)] if the 
written solicitations are filed.
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    Under the current rules, the Commission staff has taken the 
position that a Form 8-K filing to disclose a merger agreement does not 
eliminate the need to file pursuant to Rule 165, Rule 14d-2(b) and Rule 
14a-12. Public information about the business combination should be 
located in the filings under Rule 165, Rule 14d-2(b) and Rule 14a-12 
for ease of reference for investors. However, to avoid the duplicative 
filing of the merger agreement, the staff has said that the filing 
under Rules 165, 14d-2(b) and 14a-12 can incorporate the merger 
agreement by reference to the Form 8-K.\61\ To simplify the filing 
obligations and avoid the need to make duplicative filings, should the 
Form 8-K include boxes on the cover page so that the filer

[[Page 42918]]

can indicate that the filing of the Form 8-K will also satisfy the 
filing obligation under Rule 165, Rule 14d-2(b) and/or 14a-12? \62\
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    \61\ See Q&A No. I.B.13, Manual of Publicly Available Telephone 
Interpretations, Third Supplement, July 2001.
    \62\ The Form 8-K filing would have to include the legends 
required by those rules. Also, the appropriate EDGAR tag 
(specifically, ``425'', ``TO-C'' or ``DEFA14A'') also would be 
necessary. The staff interpretation regarding incorporation by 
reference will not be necessary if we adopt the proposals and allow 
the Form 8-K to satisfy the filing obligation under Rules 165, 14d-
2(b) and 14a-12.
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Item 1.02  Termination of a Material Agreement

    The obvious converse to entry into a material agreement is the 
termination of a material agreement. If a material agreement not made 
in the ordinary course of business to which the company is a party is 
terminated, the company would have to furnish or provide the following: 
\63\
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    \63\ Because we propose that these proposals would apply 
prospectively only, a company may not have filed, under proposed 
Item 1.01, a material agreement entered into before the adoption 
date of that item. Nevertheless, proposed Item 1.02 would require 
disclosure if such an agreement is terminated after the adoption 
date. See Instruction 2 to proposed Item 1.02.
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     The identity of the parties to the agreement and a 
description of any material relationship between any of the parties 
other than in respect of the agreement;
     A brief description of the agreement;
     A description of the material circumstances surrounding 
the termination;
     Any material early termination penalty incurred by the 
company; and
     A discussion of management's analysis of the effect of the 
termination on the company.
    Although a company would be required to file a copy of the 
agreement being terminated as an exhibit to the Form 8-K, the company 
could satisfy this filing requirement by incorporating by reference a 
previous filing that includes the agreement. Under the proposed item, 
companies would not have to disclose negotiations or discussions 
regarding the termination of an agreement. If the company is not the 
terminating party, it would not have to disclose information until it 
receives a written termination notice from the terminating party, 
unless the agreement provides for notice in some other manner, and all 
material conditions to termination other than those within the control 
of the terminating party or the passage of time have been 
satisfied.\64\
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    \64\ Instruction 1 to proposed Item 1.02.
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Questions Regarding Proposed Item 1.02
     Are the standards for determining the point at which 
disclosure about termination of a material agreement would be required 
under the proposed item appropriate? The proposal states that no 
disclosure would be required until all material conditions to 
termination have occurred. Is this a workable standard? Would the 
standard cause difficulty when there is a legitimate dispute as to 
whether all material conditions to termination have occurred? Should 
the rules contain guidance as to when negotiations have ceased?
     Should we limit or expand the proposed disclosure in this 
item and, if so, how? For example, should we require the proposed 
disclosure for the expiration of a contract according to its terms?
     Does the proposal cover the proper scope of agreements and 
instruments?
     Would disclosure of the termination of a material 
agreement, the entry into which was not disclosed, impose an undue 
burden on a company? Would investors find such disclosure confusing or 
misleading?

Item 1.03  Termination or Reduction of a Business Relationship With a 
Customer

    This proposed new item would require disclosure when a company 
becomes aware that a customer terminates or reduces the scope of a 
business relationship with the company and the loss of revenues to the 
company from such termination or reduction equals 10% or more of the 
company's consolidated revenues during the company's most recent fiscal 
year. For purposes of the proposed item, a group of customers under 
common control or customers that are affiliates of each other would be 
regarded as a single customer. This test is similar to the test in Item 
101 of Regulation S-K.\65\ An instruction to the proposed item states 
that no disclosure is required if the company is in negotiations or 
discussions with a customer, or a suspension or reduction of orders 
occurs, unless and until an executive officer of the company is aware 
that the termination or reduction has occurred or will occur.
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    \65\ 17 CFR 229.101. See, in particular, Item 101(c)(1)(vii) of 
Regulation S-K [17 CFR 229.101(c)(1)(vii)].
---------------------------------------------------------------------------

Questions Regarding Proposed Item 1.03
     We solicit comment on the proposed 10% consolidated 
revenues threshold. Should the 10% test be higher or lower?
     Rather than the proposed 10% test, should we base the 
filing requirement on a materiality threshold?
     Should there be a different threshold for small business 
issuers than for larger companies?
     Should we use a measurement period other than the 
company's most recent fiscal year for determining whether the loss 
exceeds the 10% threshold? If so, please specify the period that would 
be more appropriate and explain why.
Question Regarding Proposed Section 1
    We solicit comment as to whether there are other types of highly 
significant corporate events that should be included within the 
proposed Section 1 category of disclosure items (``Registrant's 
Business and Operations'').

Section 2--Financial Information

Item 2.01  Completion of Acquisition or Disposition of Assets

    This proposed item would retain most of the substantive 
requirements included in Item 2 of existing Form 8-K. Item 2 currently 
requires disclosure if a company or any of its majority-owned 
subsidiaries has acquired or disposed of a significant amount of 
assets, otherwise than in the ordinary course of business. Under the 
proposed changes, a company would report its entry into a material 
agreement to acquire or dispose of assets under proposed new Item 1.01, 
Entry into a Material Agreement. However, we recognize that there may 
be a significant time lag between the entry into the acquisition or 
disposition agreement and the final closing of the transaction. During 
this period, substantial uncertainties may exist which could prevent or 
delay completion of the transaction. Such uncertainties are reflected 
in the market price of the parties' securities. Although termination of 
such agreements would be reported under proposed Item 1.02 of Form 8-K, 
Termination of a Material Agreement, we believe that investors would 
benefit from continued prompt reporting about the company's completion 
of its acquisition or disposition of a significant amount of assets.
    Proposed Item 2.01 would continue to require the same basic 
disclosure as required by existing Item 2, except that disclosure in 
existing Item 2(b) no longer would be required about the nature of the 
business in which the acquired assets were used and whether the company 
acquiring the assets intends to continue such use. Furthermore, the 
proposed new item would revise the wording regarding disclosure of the 
source of funds to make the requirements clearer. The

[[Page 42919]]

proposed wording would more closely track Item 3 of Schedule 13D,\66\ 
which presents the requirements in more detail. There are no 
substantive differences between the proposed disclosure requirements 
and the requirements in existing Item 2 of Form 8-K.
---------------------------------------------------------------------------

    \66\ 17 CFR 240.13d-101.
---------------------------------------------------------------------------

    We propose to retain the existing test for determining whether an 
acquisition or disposition involves a ``significant amount of assets'' 
because of companies' familiarity with this test. Under this standard, 
companies must disclose only acquisitions or dispositions of assets 
whose value or cost exceeds 10% of the company's total assets.
    Retention of the 10% test in this proposed item may, however, 
result in some incongruence between this item and proposed Item 1.01. 
Proposed Item 1.01 does not include a 10% threshold, but rather 
requires disclosure about any material agreement. This leaves open the 
possibility that a company could determine an agreement to acquire or 
dispose of assets whose value or cost is 10% or less of the company's 
total assets to be material.\67\ In this circumstance, under the 
proposals, the company would file a Form 8-K when it enters into the 
agreement, but would not file a Form 8-K when it completes the 
acquisition or disposition.
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    \67\ See, for example, TSC Industries, Inc. v. Northway, Inc., 
426 U.S. 438 (1976), Basic, Inc. v. Levinson, 485 U.S. 224 (1988), 
SEC v. Texas Gulf Sulphur Co., 401 F.2d 833 (2d Cir. 1968), and 
Ganino v. Citizens Utilities Co., 228 F.3d 154 (2d Cir. 2000).
---------------------------------------------------------------------------

Questions Regarding Proposed Item 2.01
     We solicit comment on whether we should modify Item 2 to 
existing Form 8-K in the manner proposed.
     Would investors benefit from disclosure about a company's 
completion of an acquisition or disposition if we require disclosure 
about the company's entry into the agreement underlying the 
transaction?
     Should we harmonize the thresholds for disclosure used in 
proposed Items 1.01, 1.02 and 2.01 with respect to agreements to 
acquire or dispose of assets? If so, should we extend the 10% test to 
proposed Items 1.01 and 1.02? Or should we tie proposed Item 2.01 to 
the more general ``materiality'' test used in proposed Items 1.01 and 
1.02?

Item 2.02  Bankruptcy or Receivership

    This proposed item would retain the basic substantive requirements 
included in Item 3 of existing Form 8-K. We propose only minor changes 
to make the item more readable, such as breaking out embedded lists 
from the text and moving some language currently included in the text 
into an instruction to the item.
Questions Regarding Proposed Item 2.02
     We solicit comment as to whether we should make any 
substantive changes to existing Item 3 of Form 8-K.
     Do the streamlining amendments make the item more 
understandable?

Item 2.03  Creation of a Direct or Contingent Financial Obligation That 
Is Material to the Registrant

    This proposed new item would require a company to disclose 
information whenever it or a third party enters into a transaction or 
agreement that creates any material direct or contingent financial 
obligation to which the company is subject.\68\ Disclosure would be 
required under this proposed item whether or not the company is a party 
to the agreement. For example, a loan agreement entered into by an 
affiliate of the company or third party that benefits from a pre-
existing guarantee or keepwell agreement of the company would trigger a 
disclosure requirement whether or not the company is a party to the 
loan agreement. Disclosure would be required only when the company or a 
third party enters into a definitive agreement that is unconditional or 
subject only to customary closing conditions.
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    \68\ Instruction 4 to proposed Item 2.03 specifies that the term 
``contingent financial obligation'' includes guarantees, co-obligor 
arrangements, obligations under keepwell agreements, obligations to 
purchase assets and any similar arrangements and all other 
obligations that exist or may arise under an agreement.
---------------------------------------------------------------------------

    Proposed Item 2.03 would require a company to file the document, if 
any, subjecting the company to the direct or contingent financial 
obligation as an exhibit to Form 8-K and disclose or provide:
     A brief description of the transaction or agreement, 
including an identification of the parties to the agreement;
     The nature and amount of the company's material direct or 
contingent financial obligation, including a description of events that 
may cause the obligation to arise, increase or become accelerated;
     If applicable, the name of any underwriters or placement 
or other agents for the transaction or any persons performing a similar 
function in the case of a private transaction, and the amount of any 
fee or other compensation paid to them, or the name of any lenders or 
other persons who are the beneficiaries of the obligation; and
     A discussion of management's analysis of the effect of the 
direct or contingent financial obligation on the company.
    This proposed item also is intended to require disclosure of the 
creation of other financial obligations, including direct obligations 
such as registered sales of debt securities, private placements and 
bank loans or credit facilities, and contingent obligations such as 
guarantees, keepwell agreements,\69\ obligations to purchase assets 
that are unconditional or conditioned on certain events, and similar 
financial obligations.
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    \69\ Instruction 4 to proposed Item 2.03 defines a ``keepwell 
agreement'' as any agreement or undertaking under which the company 
is, or would be, obligated to provide or arrange for the provision 
of funds or property to an affiliate or third party.
---------------------------------------------------------------------------

Questions Regarding Proposed Item 2.03
     This proposed item would cover a broad scope of 
obligations. We solicit comment on whether the scope of obligations 
covered by this proposed item is appropriate. Is it too broad? If so, 
how should we narrow it?
     Conversely, are there any obligations not covered by this 
item that should be? Should the item cover any non-financial 
obligations?
     Should we limit disclosure to obligations with respect to 
which a specified level of probability exists that a contingency would 
occur? For example, should we require disclosure only if the 
contingency is likely to occur? If there is a significant possibility 
that the contingency would occur? Should we not require disclosure if 
the possibility that the contingency would occur is remote? How would 
we define ``remote contingencies'' if we were to exclude them?
     Would the proposed item require too much, or too little, 
disclosure about such obligations?
     Is the meaning of ``direct financial obligation'' 
sufficiently clear? Would a definition of this term be helpful?
     Is the proposed definition of ``contingent financial 
obligation'' appropriate? If not, how should we change it? Note that 
the proposed list of examples of contingent obligations included in the 
proposed definition is not exclusive. Is there any example that we 
should remove from the list? Should we define ``contingent financial 
obligation'' in more detail? Is the proposed definition of ``keepwell 
agreement'' appropriate?
     As in the case of proposed Items 1.01 and 1.02, the 
disclosure in this

[[Page 42920]]

proposed item is tied to a ``materiality'' standard rather than a 
specific financial threshold. Because this item addresses financial 
obligations, would it be more appropriate to tie the proposed 
disclosure to a financial standard, such as a percentage of assets, 
equity, revenues or net income? If so, what should the standard be? 
Should the standard be 1%, 5%, 10% of assets, equity, revenues or net 
income? Or should it be some different percentage any of these? Should 
we use a different financial measure? If so, what?

Item 2.04  Events Triggering a Direct or Contingent Financial 
Obligation That Is Material to the Registrant

    This proposed new item would require a company to disclose events 
triggering a direct or contingent financial obligation that is material 
to the company. The proposed item would define a ``triggering event'' 
as an event, including an event of default, event of acceleration or 
similar event, that has occurred and as a consequence of which, either: 
(1) A material direct or contingent financial obligation of the company 
that is unconditional or subject to no condition other than the passage 
of time has arisen (including as a result of an increase in an 
obligation) or been accelerated; or (2) a party to the agreement 
obtains the unconditional right to cause such an obligation to arise or 
become accelerated, regardless of whether in either case the company is 
a defaulting party. The events requiring disclosure under this proposed 
item would include a default on a security that would subject the 
company to a material financial obligation.\70\
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    \70\ This would include defaults that currently are required to 
be disclosed under existing Item 3 of Form 10-Q.
---------------------------------------------------------------------------

    Under the proposed item, no triggering event would be deemed to 
have occurred while the company is negotiating or discussing with other 
relevant parties whether a triggering event has occurred, or whether 
such event could be cured by waiver, amendment or similar arrangement. 
Despite any ongoing negotiations, disclosure is required when a party 
to the agreement with the right to do so notifies the company or 
otherwise declares that the triggering event has occurred. Such notice 
must be in writing unless the agreement provides for notification in 
another manner.
    Under the proposals, if a triggering event occurs, the company 
would have to:
     Describe the agreement or agreements under which the 
triggering event occurred;
     Describe the triggering event;
     Disclose the nature and amount of the material direct or 
contingent financial obligation of the company that may arise, increase 
or become accelerated as a result of the triggering event, including 
obligations under cross-default, cross-acceleration or similar 
arrangements; and
     Discuss management's analysis of the effect on the company 
of the triggering event and of the obligation that has arisen, 
increased or been accelerated.
    Disclosure would be required under this proposed item regardless of 
whether the company is a party to the agreement under which the 
triggering event occurs. The company would be required to file as an 
exhibit to Form 8-K, by incorporation by reference or otherwise, a copy 
of the document under which the company is subject to the material 
direct or contingent financial obligation. For purposes of the proposed 
item, a contingent financial obligation includes: a guarantee, a co-
obligor arrangement, an obligation under a keepwell agreement, an 
obligation to purchase assets and any similar arrangement or obligation 
that exists or may arise under an agreement.\71\
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    \71\ Instruction 2 to proposed Item 2.04. This instruction also 
defines a ``keepwell agreement'' to mean any agreement or 
undertaking under which the registrant is, or would be, obligated to 
provide or arrange for the provision of funds or property to an 
affiliate or other third party.
---------------------------------------------------------------------------

    This proposed new item is intended to subsume all events that 
currently are reported under Item 3, Defaults Upon Senior Securities, 
in Part II of Forms 10-Q and 10-QSB. As discussed later in this 
release, we propose to delete Item 3 from Part II of Forms 10-Q and 10-
QSB if we adopt this proposed item.
Questions Regarding Proposed Item 2.04
     We solicit comment on the proposed definitions of the 
terms ``triggering event,'' ``contingent financial obligation'' and 
``keepwell agreement'' for purposes of proposed Item 2.04.
     We request additional comment on the specific disclosures 
that the proposed item would require. Are they sufficient? Would a 
company be able to provide the required disclosures within two business 
days?
     As in the case of proposed Items 1.01, 1.02 and 2.03, this 
proposed item would tie disclosure to a ``materiality'' standard rather 
than to a specific financial threshold. Would it be more appropriate to 
tie this proposed disclosure to a financial measure, such as a 
percentage of assets, equity, revenues or net income? If so, what 
should that measure be? Should the standard be 1%, 5%, 10% of assets, 
equity, revenues or net income? Or should it be some different 
percentage any of these? Should we use a different financial measure? 
If so, what?
     The proposed item would not require disclosure when the 
company is still negotiating waivers or amendments of triggering 
events. Should we require disclosure in such circumstances? If so, at 
what point in the negotiations? Is it important to investors to know 
that these negotiations are occurring? Would disclosure of such events 
frustrate the purpose of the negotiations or otherwise unduly harm the 
interests of the company?
     Should we delete Item 3 from Part II of Forms 10-Q and 10-
QSB if we adopt this proposed item? Is there any situation with respect 
to which Item 3 currently requires disclosure that would not be covered 
by the proposed new item?

Item 2.05  Exit Activities Including Material Write-Offs and 
Restructuring Charges

    This proposed new item would require disclosure when the board of 
directors or the company's officer or officers who are authorized to 
take such action, if board approval is not required, definitively 
commits the company to a course of action, including a plan to 
terminate or exit an activity, under which the company will incur a 
material write-off or restructuring charge under generally accepted 
accounting principles.\72\ Under the proposed item, a company would 
have to disclose:
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    \72\ See Emerging Issues Task Force (EITF) Issue 94-3, Liability 
Recognition for Certain Employee Termination Benefits and Other 
Costs to Exit an Activity (including Certain Costs Incurred in a 
Restructuring), which requires that companies recognize certain 
restructuring charges at the date management commits to a plan.
---------------------------------------------------------------------------

     The date on which such commitment was made;
     A description of the course of action and reasons for the 
write-off or restructuring charge;
     A description of the asset or assets subject to write-off;
     The estimated amount of the write-off or restructuring 
charge;
     The estimated amount of the write-off or restructuring 
charge that will result in future cash expenditures; and
     An analysis of the effect of the write-off or 
restructuring charge on the company, including the segment affected.
Questions Regarding Proposed Item 2.05
     Is the triggering event for this proposed item 
sufficiently clear? Is the

[[Page 42921]]

point at which the board of directors or its authorized officer or 
officers commit a company to a course of action such as a plan to 
terminate or exit an activity a workable trigger for the proposed 
disclosure? Is there a better point from which to measure the deadline 
for a company's reporting obligation? As an alternative, should this 
event be triggered when an appropriate party takes action to execute 
the commitment, rather than when the commitment to action is made?
     Are there other individuals or groups that may have the 
responsibility of taking the action that would trigger the proposed 
disclosure? For example, do audit committees take these actions for 
companies?
     Should we require disclosure only if the expected charge 
would represent a certain percentage, such as 1%, 5%, or 10%, of the 
company's assets, equity, revenues or net income? Should it be another 
percentage of these items? If so, what?
     Is the scope of events covered by this proposed item 
appropriate? Should we require disclosure of other related events as 
well?
     Is the scope of disclosure appropriate? Should we require 
companies to disclose any other information in the Form 8-K report? For 
example, should we require companies to disclose the information 
required by EITF 94-3? Would a company have sufficient time to gather 
the information required to be disclosed, including calculation of an 
estimate of the amount of the write-off or restructuring charge that 
the company will incur? Are there situations where the accounting 
treatment is determined more than two business days after the business 
decision to terminate or exit an activity? If so, how should we deal 
with this situation?
     Should we require a company to update its report on Form 
8-K if there is a material change in the amount or expected effect of 
the write-off or restructuring charge?

Item 2.06  Material Impairments

    This proposed new item would require disclosure when a company's 
board of directors or the company's officer or officers authorized to 
make the relevant conclusion, if board approval is not required, 
concludes that the company is required to record a material charge for 
impairment to one or more of its assets, including an impairment of 
securities or goodwill, under generally accepted accounting principles. 
Specifically, the company would have to disclose:
     The date on which the conclusion was reached;
     A description of the asset or assets subject to impairment 
and the facts and circumstances leading to the impairment;
     The estimated amount of the impairment charge; and
     An analysis of the effect of the impairment charge on the 
company, including the segment affected.
Questions Regarding Proposed Item 2.06
     Is the triggering event for this proposed item 
sufficiently clear? Is the point at which the board of directors or the 
authorized officer or officers conclude that the company is required to 
record a material charge for an impairment of an asset a workable 
trigger for the disclosure that would be required by this proposed 
item? Is there a better point from which to measure the deadline for a 
company's reporting obligation? As an alternative, should this event be 
triggered when the appropriate party actually records the charge rather 
than when a conclusion is drawn that the company must record the 
charge?
     Are there other individuals or groups that may have the 
responsibility of making the conclusion that would trigger the proposed 
disclosure? For example, do audit committees make these conclusions for 
companies?
     Should we require disclosure only if the expected charge 
would represent a certain percentage, such as 1%, 5%, or 10%, of the 
company's assets, equity, revenues or net income? Should it be another 
percentage of these items? If so, what?
     Is the scope of events covered by this proposed item 
appropriate? Should we require disclosure of other related events as 
well?
     Is the scope of disclosure appropriate? Should we require 
companies to disclose any other information in the Form 8-K report? For 
example, should we require disclosure of the asset's carrying value 
after the impairment charge? Would a company have sufficient time to 
gather the information required to be disclosed, including calculation 
of an estimate of the amount of the impairment charge? Are there 
situations where the accounting treatment is determined more than two 
business days after the conclusion is made to take an impairment 
charge? If so, how should we deal with this situation?
     Should we require a company to update its report on Form 
8-K if there is a material change in the expected effect of the event?
Question Regarding Proposed Section 2
    We solicit comment as to whether there are other types of highly 
significant corporate events that should be included within the 
proposed Section 2 category of disclosure items (``Financial 
Information'').

Section 3--Securities and Trading Market

Item 3.01  Rating Agency Decisions

    This proposed new item would require a company to file a report 
when it receives a notice or other communication from any rating agency 
to whom the company provides information to the effect that the 
organization has decided to:
     Change or withdraw the credit rating assigned to, or 
outlook on, the company or any class of debt or preferred security or 
other indebtedness of the company (including securities or obligations 
as to which the company is a guarantor or has a contingent financial 
obligation);
     Refuse to assign a credit rating to the company, to any 
class of its securities, or to any of its indebtedness after the 
company has requested the organization to do so;
     Place the company or any class of its securities or 
indebtedness on ``credit watch'' or similar status; or
     Take any similar action.
    Under the proposed item, the company would have to disclose the 
date that the company received the rating agency's notice or 
communication, the name of the rating agency, and the nature of the 
rating agency's decision. The company also would have to discuss 
management's analysis of the effect of the change or other decision on 
the company. Disclosure under this item would not be required until the 
rating organization notifies the company that the rating organization 
has made a decision to take one of the enumerated actions. If the 
company is still in negotiations or appealing a preliminary indication 
that a rating agency intends an action covered by the proposed item, no 
disclosure would be required. However, once all good faith negotiations 
and appeals cease, disclosure would be required.
    We note that there are many organizations that currently provide 
ratings of companies, their securities, and their indebtedness.\73\ 
Some of these ratings are solicited by the company, and others are not. 
This proposed item

[[Page 42922]]

does not distinguish between solicited and unsolicited ratings, except 
that a company only would have to disclose a rating agency's refusal to 
issue a rating if the company requested a rating. Because the proposed 
item would require disclosure only if the rating agency notifies or 
otherwise communicates with the company about its intended action and 
the company has provided information to the rating agency (other than 
annual reports or filings with the Commission), a company would not 
have to constantly monitor actions taken by all rating agencies to 
determine whether they are rating the company or its securities on an 
unsolicited basis. The issue of whether or not the company compensates 
the rating agency would be irrelevant under the proposed item. For 
purposes of the proposed item, a ``rating agency'' would mean an entity 
whose primary business is the issuance of credit ratings.\74\
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    \73\ We plan to engage in a thorough examination of the role of 
rating agencies in the U.S. securities markets.
    \74\ Instruction 3 to proposed Item 3.01. This term is used in 
the proposed item the same way that it is used in Rule 
100(b)(2)(iii) of Regulation FD [17 CFR 243.100(b)(2)(iii)].
---------------------------------------------------------------------------

    Rating organizations typically disclose rating changes publicly via 
press release at the same time or shortly after they notify affected 
companies of the changes. Therefore, investors already can rapidly 
obtain access to information about rating changes if they know where to 
find the press releases and are willing to routinely monitor these 
releases to find information about particular companies and securities. 
However, some investors may not routinely monitor all press releases 
issued by ratings organizations and therefore likely would benefit from 
disclosure about ratings changes filed by companies on Form 8-K.
    In 1994, we issued a proposal to require companies to disclose 
ratings changes in their Form 8-K reports.\75\ Although we did not 
adopt the proposal, we recognize that such rating changes can have a 
material impact on a company and its publicly traded securities. 
Therefore, such information can be useful to an investor in making 
investment and voting decisions. Although the Commission does not 
endorse the validity or accuracy of securities ratings, we recognize 
that investors find rating changes ``newsworthy.''
---------------------------------------------------------------------------

    \75\ Release No. 33-7086 (Aug. 31, 1994) [59 FR 46304].
---------------------------------------------------------------------------

Questions Regarding Proposed Item 3.01
     Is this proposed item necessary in view of the typical 
practice by rating organizations to promptly issue press releases about 
rating changes? Is current disclosure by rating agencies through press 
releases adequate? Would investors benefit from having companies 
disclose this information in a uniform place?
     Should we limit the disclosure to ratings by nationally 
recognized statistical rating organizations? Should we limit the 
disclosure to some other specified group of rating agencies? Is the 
definition of ``rating agency'' adequate?
     Should we require the proposed disclosure only if there is 
a contractual relationship between the rating agency and the company?
     Should we provide more guidance as to when a company has 
provided sufficient information to an agency to require disclosure?
     Do significant delays between a rating organization's 
decision to make a rating change and public announcement of the change 
frequently occur?
     We also solicit comment as to whether the types of actions 
that would trigger the proposed item are appropriate. Are there other 
actions by a rating organization that should trigger the proposed 
disclosure? For example, should we require disclosure when a rating 
agency changes an outlook on an entire industry group to which a 
company belongs?

Item 3.02  Notice of Delisting or Failure to Satisfy Listing Standards; 
Transfer of Listing

    This proposed new item would require a company to report any notice 
from the national securities exchange or national securities 
association that is the principal trading market for a class of the 
company's common stock or similar equity securities that the company or 
a class of its securities no longer satisfies the listing requirements 
or standards of the exchange or association, or that a class of the 
company's securities has been delisted by the exchange or 
association.\76\ Specifically, a company would have to file a copy of 
the notice, if in writing, and disclose or provide:
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    \76\ For example, Section 802.02 of the NYSE Listed Company 
Manual requires a domestic company to issue a press release stating 
that it has fallen below a continued listing standard of the 
exchange within 45 days after receiving notice from the NYSE.
---------------------------------------------------------------------------

     The date that it received the notice;
     The listing requirement or standard that the company 
failed to satisfy or the reason for the delisting as indicated by the 
exchange or association; and
     A discussion of the company's planned response to the 
notice and management's analysis of the effect of the delisting or 
failure to satisfy a listing standard on the company.
    This proposed item also would require a company to file a Form 8-K 
when the company has taken definitive action to terminate the listing 
of a class of its common stock or similar equity securities on the 
exchange or inter-dealer quotation system that is the principal trading 
market for those securities, including by reason of a transfer of the 
listing or quotation to another securities exchange or quotation 
system. In the Form 8-K, the company would have to describe the action 
taken and state the date of the action.
Questions Regarding Proposed Item 3.02
     Should the company have to file the notice as an exhibit 
to Form 8-K, as proposed, or is the required disclosure sufficient? 
Conversely, if the company has to file the actual notice, should we 
require less disclosure about the notice?
     Is the requirement to file a report upon receipt of a 
notice that the company no longer satisfies a listing requirement 
premature? Would such a filing adversely affect the liquidity of the 
company's securities so as to warrant removal of this requirement?
     Should we not require disclosure under this proposed item 
while the company is negotiating with or appealing a decision by an 
exchange or association regarding delisting or the company's failure to 
satisfy a listing standard following notice?
     Should we require disclosure only upon actual delisting, 
rather than when the company receives notice that its securities may be 
delisted? Should we require disclosure both when the company receives 
notice about a possible delisting and when the company's stock actually 
is delisted?

Item 3.03  Unregistered Sales of Equity Securities

    This proposed item would require a company to disclose the 
information in paragraphs (a) through (e) of Item 701 of Regulation S-K 
regarding the company's sale of equity securities in a transaction that 
is not registered under the Securities Act. This disclosure currently 
is required in Item 2(c) of Forms 10-Q and 10-QSB and Item 5(a) of 
Forms 10-K and 10-KSB.\77\ We propose to move this disclosure from 
companies' annual and quarterly reports to Form 8-K. We believe that 
more timely disclosure of this information will benefit investors due 
to the fact that unregistered sales of equity securities can have a 
significant dilutive effect on existing investors' holdings.
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    \77\ See 17 CFR 249.308a, 249.308b, 249.310 and 249.310a.

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[[Page 42923]]

Questions Related to Proposed Item 3.03
     We solicit comment as to whether we should move this 
disclosure to Form 8-K. Would investors benefit from more prompt 
disclosure of unregistered sales of a company's equity securities?
     Do we need to define the term ``sells in a transaction'' 
for purposes of this proposed item?
     Should the proposed item permit companies to aggregate 
sales occurring within a short period of time? If so, during what 
period should we permit aggregation?
     Even if we move this disclosure to Form 8-K as proposed, 
should we continue to require it in a company's quarterly and annual 
reports? Is there value to requiring an aggregate listing of sales made 
during the periods covered by these reports, even though the Form 8-K 
would report each sale as it occurs?
     Should we limit Form 8-K disclosure to only large 
unregistered sales? How should we define ``large''? Should it be based 
on a percentage, such as 1%, 5% or 10%, of the company's outstanding 
shares? Should it be based on a percentage, such as 1%, 5% or 10%, of 
the market float?

Item 3.04  Material Modifications to Rights of Security Holders

    This proposed item would require a company to disclose material 
modifications to the rights of holders of any class of the company's 
registered securities, and to briefly describe the general effect of 
such modifications on the company's security holders. In 1977, we moved 
this item from Form 8-K to Form 10-Q to lessen the burden on 
companies.\78\ Under current requirements, a reporting company must 
disclose the general effects of those modifications in the Form 10-Q or 
Form 10-QSB for the quarter in which the modifications occur. That 
requirement allows reporting companies to delay filing this information 
for up to four and a half months after security holder rights have been 
modified. That timing is unnecessarily long given the significance of 
these matters to security holders and the possibility that 
modifications to their rights could dramatically affect the value of 
the securities they own. The substance of the disclosure would be the 
same as currently required by Items 2(a) and (b) of Forms 10-Q and 10-
QSB.\79\
---------------------------------------------------------------------------

    \78\ See Release No. 34-13156 (Jan. 13, 1977) [42 FR 4424].
    \79\ See 17 CFR 249.308a and 249.308b.
---------------------------------------------------------------------------

Questions Regarding Proposed Item 3.04
     We solicit comment as to whether we should move this 
disclosure to Form 8-K. Would investors benefit from more prompt 
disclosure of these events?
     Even if we move this disclosure to Form 8-K as proposed, 
should we continue to require it in a company's quarterly reports?
     Should we require disclosure of such modifications only if 
the class of securities modified is registered or, in the case of 
unregistered debt, constitutes a certain percentage, such as 5%, of the 
company's assets?
Question Regarding Proposed Section 3
    We solicit comment as to whether there are other types of highly 
significant corporate events that should be included within the 
proposed Section 3 category of disclosure items (``Securities and 
Trading Market'').

Section 4--Matters Related to Accountants

Item 4.01  Changes in Registrant's Certifying Accountant

    This proposed item is substantively the same as Item 4 of existing 
Form 8-K. The only revision that we propose to make to the existing 
item is deletion of the phrase ``and the related instructions to Item 
304.'' We believe that it is implicit that a company will consider and 
comply with the instructions to our disclosure items. Therefore, we 
propose to delete this phrase as unnecessary.
Questions Regarding Proposed Item 4.01
     We solicit comment on whether we should make any changes 
to the substantive requirements imposed by Item 4 of existing Form 8-K.
     Should we require similar disclosure regarding a change in 
the auditor of a company's employment benefit plan if that auditor is 
different from the company's independent accountant?

Item 4.02  Non-Reliance on Previously Issued Financial Statements or a 
Related Audit Report

    This proposed new item would require a company to file a Form 8-K 
if and when its audit committee, or the board of directors in the 
absence of an audit committee, or the company's officer or officers 
authorized to take such action, concludes that any of the company's 
previously issued financial statements no longer should be relied upon. 
A company similarly would be required to file a Form 8-K if and when it 
receives notice from its current or a previously engaged independent 
accountant that the company should take action to prevent future 
reliance on a previously issued report related to any such financial 
statements.\80\ The financial statements and audit reports covered by 
this proposal are those required pursuant to Regulation S-X \81\ or 
Regulation S-B. This proposed item would require the company to file 
the notice, if it is in writing, and disclose or provide:
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    \80\ See Codification of Statements on Auditing Standards AU 
Sec. 561.06. In 1998, we proposed a similar item that would have 
required disclosure in situations covered by proposed Item 4.02 but 
also when the independent auditor notifies the company that the 
auditor will not consent to the use of its prior audit report in a 
filing with the Commission. We received comments noting that if we 
required such disclosure, we could elicit disclosure about events 
that do not implicate a problem with the report itself, such as when 
a company's independent accountant refuses to give its consent due 
to a fee dispute with the company. Therefore, the proposed 
disclosure is not triggered by an independent accountant's 
unwillingness to grant its consent to the company's use of a 
previously issued audit report.
    \81\ 17 CFR 210.1-01 et seq.
---------------------------------------------------------------------------

     The date on which the conclusion was reached or the 
registrant received the notice;
     A description of the events giving rise to the conclusion 
or notice related to the reliability of the financial statements;
     A statement of whether the audit committee, or the board 
of directors in the absence of an audit committee, discussed with the 
independent accountant the subject matter giving rise to the conclusion 
or notice; and
     A description of management's plans to alleviate the 
reliance issue.
    In addition, when the company files a Form 8-K in response to a 
notice from the independent accountant, the company would have to 
provide the independent accountant with the Form 8-K disclosure no 
later than the business day after it files and request that the 
accountant furnish a letter to the company as soon as possible stating 
whether the accountant agrees with the disclosure, and if not, the 
respects in which it disagrees. Within two business days after it 
receives a letter from the accountant, the company would have to file 
that letter as an exhibit by amendment to the relevant Form 8-K.
Questions Regarding Proposed Item 4.02
     Would the proposed item elicit disclosure about any events 
that do not relate to the validity of the financial statements or 
report itself?
     Are there other actions taken by an independent accountant 
with respect to a previously issued audit report that should be 
disclosed?
     Should we require disclosure of events relating to a 
company's quarterly financial statements?
     We request comment as to whether the company should have 
to describe

[[Page 42924]]

the events giving rise to the company's conclusion or the independent 
accountant's notice and whether the proposed disclosure regarding any 
discussions between the company's audit committee or board and the 
independent accountant regarding the subject matter of the notice is 
appropriate.
     Should the company have to furnish the disclosure required 
by the proposed item to the independent accountant? If so, should the 
company have to send the required disclosure to the independent 
accountant before it files the Form 8-K with the Commission? On the 
same day as the company files the Form 8-K?
     Should the independent accountant be asked to respond to 
the company's request for a letter by a specific date rather than ``as 
soon as possible'' after the company makes the request? Finally, should 
the company have to file the independent accountant's letter as an 
exhibit to the Form 8-K? If yes, should the company have to file the 
letter within two business days after the company receives it, as 
proposed? Should the proposed two business day period be shorter or 
longer?
Question Regarding Proposed Section 4
    We solicit comment as to whether there are other types of highly 
significant corporate events that should be included within the 
proposed Section 4 category of disclosure items (``Matters Related to 
Accountants'').

Section 5--Corporate Governance and Management

Item 5.01  Changes in Control of Registrant

    This proposed item is substantively the same as Item 1 of existing 
Form 8-K. We propose only to streamline this existing disclosure by, 
for example, breaking out lists and rearranging the requirements set 
forth in the item. Although the proposed item would continue to require 
disclosure regarding the source of funds used to effect a change in 
control, the proposed item would revise the wording regarding 
disclosure of the source of funds to make the requirements clearer. The 
proposed wording would more closely track Item 3 of Schedule 13D,\82\ 
which is more detailed. There are no substantive differences between 
the proposed disclosure requirements and the requirements in existing 
Item 1 of Form 8-K.
---------------------------------------------------------------------------

    \82\ 17 CFR 240.13d-101.
---------------------------------------------------------------------------

    We also propose to add an instruction to the item to clarify that 
responses may be made by incorporation by reference of disclosure from 
an earlier filing. Hence, if the change of control occurs as a result 
of a previously reported merger agreement, any relevant details of the 
agreement could be furnished by the company's incorporation by 
reference of that earlier report.
Questions Regarding Proposed Item 5.01
     We solicit comment as to whether the proposed change to 
the source of funds disclosure is appropriate.
     Should we make any substantive amendments to Item 1 of 
existing Form 8-K?
     Should companies be allowed to respond to certain of the 
disclosure requirements by incorporation by reference to an earlier 
report? Would it be more appropriate to require companies to repeat 
prior disclosure in the report so that investors need not search for 
the previously filed report?

Item 5.02  Departure of Directors or Principal Officers; Election of 
Directors; Appointment of Principal Officers

a. Disclosure Under Proposed Item 5.02(a) When a Director Resigns or 
Declines to Stand for Re-Election Due to a Disagreement or Is Removed 
for Cause
    This proposed item would be similar to Item 6 of existing Form 8-K 
in that both the proposed and existing items pertain to the resignation 
of a corporate director. However, the proposed item would add several 
new substantive requirements.
    Currently, Item 6 requires disclosure only if a director departs as 
a result of a disagreement, provides a letter to the company describing 
the disagreement and requests that the company publicly disclose the 
matter. Thus, the burden of knowing what actions are necessary to 
trigger disclosure pursuant to the item is placed solely on the 
director. If the director desires the company to disclose information 
about the disagreement, but is not aware that he or she must formally 
request the company to make such disclosure, no disclosure is required.
    Under the proposal, if a director has resigned or declined to stand 
for re-election to the board of directors since the date of the last 
annual meeting of shareholders because of a disagreement with the 
company, known to an executive officer of the company, on any matter 
relating to the company's operations, policies or practices, or if a 
director has been removed for cause from the board of directors, the 
company would have to disclose:
     The date of such resignation, declination to stand for re-
election, or removal;
     Any positions held by the director on any committee of the 
board of directors before the director's resignation, declination to 
stand for re-election, or removal; and
     The circumstances of the director's resignation, 
declination to stand for re-election or removal.
    If the director furnishes the company with any written 
correspondence concerning the circumstances surrounding his or her 
resignation, declination, or removal, the company would have to 
summarize the contents of that correspondence and file a copy of the 
correspondence as an exhibit to the report on Form 8-K regardless of 
whether the director requests disclosure of its contents. Furthermore, 
the company would have to provide the director with a copy of the 
disclosures it is making in response to this proposed item that the 
director would have to receive no later than the business day following 
the day that the company files the disclosures with the Commission. The 
company would have to request the director to furnish the company with 
a letter addressed to the Commission as soon as possible stating 
whether he or she agrees with the company's disclosures and, if not, 
stating the respects in which he or she does not agree. Finally, the 
company would have to file the director's letter with the Commission 
within two business days after receipt as an exhibit by amendment to 
the report on Form 8-K.
Questions Regarding Item 5.02(a)
     Is it appropriate to modify the existing disclosure 
requirements and disclosure trigger in the manner proposed when a 
director resigns or declines to stand for re-election or is removed for 
cause?
     Should the company have to file any written correspondence 
from a director regarding the director's resignation, declination or 
removal as a Form 8-K exhibit?
     Should the company have to describe the circumstances of 
the director's resignation, declination or removal? If so, should the 
company have to send the disclosure to the director? Should the company 
have to send the disclosure to the director before it files the Form 8-
K with the Commission? Should the company have to ask the director to 
furnish the company with a response? On the same day as the company 
files the Form 8-K?
     Should the director be asked to respond to the company's 
request for a letter by a specific date rather than ``as soon as 
possible'' after the company makes the request?

[[Page 42925]]

     Should the company have to file the director's letter as a 
Form 8-K exhibit? If yes, should the company have to file the letter 
within two business days after the company receives it as proposed? 
Should the proposed two day period be shorter or longer?
     Also, would the proposals provide sufficient time for the 
company to make the required disclosures? If not, how much time would 
be required? Why?
b. Disclosure Under Proposed Item 5.02(b) When Certain Officers Resign 
or Are Terminated From a Position and Disclosure When a Director 
Resigns, Is Removed or Declines To Stand for Re-Election for Any Reason 
Other Than as a Result of a Disagreement or for Cause
    Proposed Item 5.02(b) would require disclosure when the company's 
principal executive officer, president, principal financial officer, 
principal accounting officer, principal operating officer or any person 
serving in an equivalent position resigns or is terminated from that 
position. Therefore, if an officer is removed from one of the stated 
positions and reassigned elsewhere, disclosure would be required. The 
company would have to disclose the date that the event occurs and the 
reasons for the event. It also would require disclosure when a director 
resigns, is removed or declines to stand for re-election for any reason 
other than as a result of a disagreement or for cause.
    One important difference between the proposed disclosure under this 
Item 5.02(b) and the proposed disclosure about a director's departure 
because of a disagreement under proposed Item 5.02(a) is that if an 
officer resigns, is terminated or reassigned, as the result of a 
disagreement with the company, the company would not be obligated to 
disclose the reasons for, or seek the officer's explanation of, the 
departure as it would be if a director departed under similar 
circumstances. We believe that the nature of the relationship between a 
director and the company's security holders, including the security 
holders that elect directors, is sufficiently different to justify the 
expanded procedures for directors. The function of directors is to 
oversee the company for the shareholders to whom they are directly 
answerable.
Questions Regarding Proposed Item 5.02(b)
     Should the item impose an obligation on the company to 
describe any disagreement between a departing officer and the company? 
If so, should this be the case only with respect to certain types of 
disagreements, e.g., a disagreement over an accounting matter, or only 
with respect to certain types of officers, e.g., financial officers? 
Should the item impose an obligation on the company to solicit an 
explanation from the departing officer of the reasons for his or her 
departure?
     Should we require disclosure of the reasons for an 
officer's or director's departure in instances where there is no 
dispute between the officer or director and the company?
     Is the list of officers covered by the proposed item 
appropriate? Should we require disclosure regarding the departure of 
other officers as well? If so, which officers?
     With respect to the resignation of one of the listed 
officers, is the timing appropriate? Should we delay the disclosure 
requirement until the officer or the company otherwise publicly 
announces a planned departure?
c. Disclosure Under Proposed Item 5.02(c) and (d) When the Company 
Appoints Certain New Officers or a New Director Is Elected
    This proposed item also would require disclosure if the company 
appoints a new principal executive officer, president, principal 
financial officer, principal accounting officer, principal operating 
officer, or person serving an equivalent function. If such an event 
occurs, proposed Item 5.02(c) would require the company to disclose the 
officer's name, position, the date of the appointment, a brief 
description of any arrangement or understanding pursuant to which the 
officer was selected as an officer, the information required regarding 
the officer's background and certain related transactions with the 
company,\83\ and a brief description of the material terms of any 
employment agreement between the company and that officer.
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    \83\ Specifically, proposed Item 5.02(c) would require 
disclosure of the information required by Items 401(d), 401(e) and 
404(a) of Regulation S-K (17 CFR 229.401(d) and (e) and 229.404(a)).
---------------------------------------------------------------------------

    In addition, if a new director is elected to the board, except by a 
vote of security holders at an annual meeting, proposed Item 5.02(d) 
would require disclosure of the new director's name, the election date, 
a brief description of any arrangement or understanding pursuant to 
which the new director was selected as a director, any committees to 
which the new director has been, or at the time of the disclosure is 
expected to be, named, and information regarding certain related 
transactions between the new director and the company.\84\ Certain 
information required to be disclosed regarding new officers and 
directors would be permitted to be filed by amendment after the company 
determines this information.
---------------------------------------------------------------------------

    \84\ Specifically, proposed Item 5.02(d) would require 
disclosure of information required by Item 404(a) of Regulation S-K 
[17 CFR 229.404(a)].
---------------------------------------------------------------------------

Questions Regarding Proposed Items 5.02(c) and (d)
     Does this proposal require disclosure of an adequate 
amount of information about new officers and directors? Is there any 
other pertinent information regarding a new officer or director that 
should be disclosed when such a person joins a company? Does the 
proposal require too much disclosure?
     Is it necessary for all of the proposed information to be 
disclosed immediately? Can some of the disclosures be delayed until the 
company files its annual report? If so, which disclosure requirements 
could be delayed?

Item 5.03  Amendments to Articles of Incorporation or Bylaws; Change in 
Fiscal Year

    This proposed item would require a company to disclose any 
amendment to its articles of incorporation or bylaws if the amendment 
was not disclosed in a proxy statement or information statement filed 
by the company. Proposed Item 5.03 would require the company to 
disclose the effective date of the amendment and a description of the 
provision adopted or changed by amendment and, if applicable, the 
previous provision. If the amendment changed the company's fiscal year 
from that used in its most recent filing with the Commission, the 
company would have to state the date of the new fiscal year end and the 
form on which the report covering the transition period will be filed. 
If the company determines to change the fiscal year from that used in 
its most recent filing with the Commission by means other than a 
submission to a vote of security holders through the solicitation of 
proxies or otherwise, or by an amendment to its articles of 
incorporation or bylaws, the proposal would require the company to 
state the date of that determination, the date of the new fiscal year 
end, and the form on which the report covering the transition period 
will be filed.
    This would ensure that security holders are kept apprised of 
changes to these documents. Presumably, any amendment that is subject 
to security holder approval will be adequately disclosed in the 
company's proxy statement. We recognize that a company potentially 
would have to report changes to its articles of incorporation and 
bylaws that affect the rights of

[[Page 42926]]

security holders under both this proposed item and proposed Item 3.04, 
Material Modifications to Rights of Security Holders. However, General 
Instruction D to Form 8-K states that a company need only file one 
report listing all relevant item numbers. Therefore, the company could 
file a single Form 8-K and include the disclosure in a single place 
under the captions for both items.
Questions Regarding Proposed Items 5.03
     Should all amendments of the articles or bylaws require 
immediate disclosure?
     Should we limit the disclosure requirement to only 
particular types of amendments? If so, what should the criteria be?

Item 5.04  Material Events Regarding the Registrant's Employee Benefit, 
Retirement and Stock Ownership Plans

    This proposed new item would require a company to disclose any 
known event that would have the effect of materially limiting, 
restricting or prohibiting participants in an employee benefit, 
retirement or stock ownership plan from acquiring, disposing or 
converting their holdings, other than a periodic or other limitation, 
restriction or prohibition based on presumed or actual knowledge of or 
access to material non-public information if that plan is broadly 
available to the company's employees. This item would require a company 
to disclose the period or expected period of the limitation, the nature 
of the limitation, and the circumstances surrounding, or reasons for, 
the limitation. Such notice is important to investors who are plan 
participants in making financial decisions and who are entitled to the 
benefits of the disclosure regime of the U.S. securities laws.
    This proposed disclosure would not be necessary when a company 
imposes temporary trading ``black-outs'' on its senior officers and 
directors because they possess material non-public information, such as 
during the period surrounding the announcement of an earnings release 
or during negotiation of a merger agreement.
Questions Regarding Proposed Item 5.04
     Should we include this disclosure in Form 8-K? Is this 
information important to investors other than plan participants?
     Might investors who are not part of a relevant plan 
believe that the limitations apply to them, causing unjustified market 
reaction?
     If this information is only important to plan 
participants, is there a better means of ensuring that those plan 
participants get this information?
     Is it appropriate to carve-out trading black-outs 
applicable to those with presumed or actual knowledge of or access to 
material non-public information? Should we otherwise limit the item to 
events affecting ``all participants'' or ``a majority of the 
participants''? Would such a limitation exclude events that should be 
disclosed?
     We note that Congress currently is considering legislation 
that, among other things, would require companies to provide employees 
with 30 days notice prior to any lockout period.\85\ Would this 
legislation, if enacted, preempt the need for this proposed item? 
Should we delay our determination on this item until we can determine 
whether one of these bills will be enacted?
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    \85\ See H.R. 3762 and S. 1969.
---------------------------------------------------------------------------

Question Regarding Proposed Section 5
    We solicit comment as to whether there are other types of highly 
significant corporate events that should be included within the 
proposed Section 5 category of disclosure items (``Corporate Governance 
and Management'').
2. Boilerplate Explanations
    Throughout the proposed Form 8-K items, there are requirements that 
companies provide explanations on such issues as management's analysis 
of the expected effect of an event on the company. These proposals are 
designed to improve the disclosure made available to the public. 
General, boilerplate-type statements that an event may have a material 
adverse effect on the company, or similar statements, provide limited 
useful disclosure about a corporation.
    Therefore, if the proposals are adopted, we would expect responses 
to these items to be as specific as possible, and we would encourage 
companies to provide quantitative information whenever possible. We 
also would urge companies choosing to avail themselves of the safe 
harbors for forward-looking statements under the Private Securities 
Litigation Reform Act \86\ and the Commission's rules \87\ to tailor 
the required cautionary language to the specific forward-looking 
statements being made.
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    \86\ 15 U.S.C. 78u-5.
    \87\ See, for example, Securities Act Rule 175 [17 CFR 230.175].
---------------------------------------------------------------------------

3. Request for Comments Regarding Proposed Disclosure Items
     We solicit comment on whether we should add each of the 
proposed new items to Form 8-K. Are there any items that we should not 
adopt? Are there additional items about significant corporate events 
that we should add to Form 8-K? Are there any other disclosure items 
currently required to be disclosed in companies' annual and quarterly 
reports, such as disclosure of results of matters submitted to security 
holder vote, that would more appropriately be the subject of Form 8-K 
disclosure? If so, which items?
     Are any of the proposed disclosure items, or portions 
thereof, unnecessary? If so, why?
     Would adoption of the proposed Form 8-K disclosure items 
add value from an investor perspective? Do investors frequently review 
companies' Form 8-K reports?
     We are proposing to reorganize the items into sections 
based on subject matter of the item. Should we provide a general item 
under each of the proposed sections to solicit disclosure of other 
important events under that section? For example, under Section 1, 
Registrant's Business and Operations, should we include an item 
soliciting disclosure of other material events related to the company's 
business and operations? If so, should that item be voluntary or 
mandatory?
     Are the proposed new disclosure items sufficiently clear 
and detailed?
     Should we add any disclosure requirements to any of the 
proposed items? Should we modify or delete any of the proposed 
disclosure requirements within the proposed new items? If we should 
modify any, how?
     Does the cost of disclosure of any of the items listed 
above so outweigh the benefits to investors of such disclosure as to 
warrant exclusion of the item? If so, provide data to support this 
conclusion.
     Would any of the proposed disclosure requirements 
discourage a company from entering into transactions that would be 
beneficial to the company and its investors?
     Would the proposed addition of the new Form 8-K items make 
the form itself unwieldy or difficult to understand? How can we make 
the form itself more useful to investors?
     In lieu of, or in addition to, the current approach 
involving a list of specific disclosure items, should we adopt a broad 
principle requiring companies to report highly important corporate 
events, leaving the company to determine the trigger for and scope of

[[Page 42927]]

the necessary disclosure?\88\ If so, how should we define the types of 
events requiring disclosure?
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    \88\ For example, the Financial Executives Institute submitted a 
letter in response to our February 13, 2002 press release, 
suggesting that we adopt a rule containing a single broad principle 
with a few examples rather than a ``laundry list'' of items. Such a 
rule would require disclosure of any material event.
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     Would investors find such a system useful? Would companies 
be able to identify and disclose events in a timely fashion without 
strict guidelines? Would the open-ended obligation give companies too 
much discretion in setting the timing and scope of disclosure? Would 
such a system be more or less costly for companies to administer?
     Should we retain the proposed disclosure items but also 
require companies to disclose in the Form 8-K other highly significant 
events that occur within the identified general disclosure categories? 
If so, how should the category of events requiring disclosure be 
defined and what should be the triggering event for such disclosure?
     Some of the proposed new items may call for disclosure of 
forward-looking information regarding the effect of the triggering 
event. Do we need to consider modifying the current liability standards 
if we adopt a more generalized requirement for disclosure of material 
information, including trend information? If so, please explain why and 
how we should modify the standards.
     Would the requirements imposed by the new items be 
particularly burdensome to small business issuers? Which items in 
particular would impose such a burden on small business issuers? Should 
small business issuers be subject to fewer reporting requirements than 
larger companies? Should we create a separate form on which small 
business issuers would be required to disclose such extraordinary 
events on a current basis?
    In our February 13, 2002, press release, we indicated that we were 
considering adding several new Form 8-K items. As noted earlier in this 
release, we have not included two of these items in our proposals.\89\ 
These items would require disclosure of waivers of corporate ethics and 
conduct rules and of a material change in a critical accounting policy. 
We are continuing to evaluate these items and solicit public comment on 
the following questions to assist us in our evaluation.
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    \89\ See note 45.
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Questions Regarding Waivers of Corporate Codes of Conduct
     Regarding disclosure whenever a company waives one of its 
corporate ethics or conduct rules, we currently are reviewing possible 
changes by the self-regulatory organizations to their corporate 
governance provisions that would address similar issues. For example, 
the New York Stock Exchange is considering is a requirement that its 
listed companies adopt and disclose a code of business conduct and 
ethics for directors, officers and employees, and promptly disclose any 
waivers of the code for directors or executive officers.\90\ Each 
company could adopt its own code, but waivers would require board 
approval, and must be promptly disclosed.\91\ Should we propose a Form 
8-K item requiring disclosure of waivers of corporate ethics or conduct 
rules if the self-regulatory organizations adopt similar requirements? 
Should we propose an item even if they do not adopt such requirements? 
Although such a filing may appear duplicative, if we adopt such a 
requirement, failure to file would subject the company to liability 
under the securities laws, including Section 13(a) of the Exchange Act. 
Would this provide for greater assurance that investors can access this 
information and companies would comply with the requirements?
---------------------------------------------------------------------------

    \90\ Recommendation No. 10 in the Draft Report of the New York 
Stock Exchange's Corporate Accountability and Listing Standards 
Committee.
    \91\ In a rule filing submitted to the Commission on June 11, 
2002, Nasdaq proposed to expand its conflict of interest rule, Rule 
4350(h). The rule currently provides that an issuer must conduct an 
appropriate review of all related party transactions on an ongoing 
basis and use its audit committee or comparable body of the board of 
directors to approve, rather than merely review, related party 
transactions (the term ``related party transactions'' has a meaning 
consistent with the meaning given it in Regulation S-K Item 404(a) 
[17 CFR 229.404(a)]). See SR-NASD-2002-75.
---------------------------------------------------------------------------

     Should disclosure apply to a waiver for any officer or 
director, or a smaller group of individuals? Should disclosure apply to 
all waivers or are some more significant than others?
     If we propose a Form 8-K item to require disclosure 
regarding waivers, what should the triggering event be? Should it be 
the date on which the board of directors grants the waiver or some 
other point? Should we require disclosure only when the board approves 
a waiver request?
     If we propose waiver disclosure, should we require the 
company to describe the board's reasons for approving a waiver request?
     Should we limit disclosure to waivers of requirements 
regarding conflicts of interest between the company and one of its 
directors or executive officers?
Questions Regarding Critical Accounting Policies
     On May 10, 2002, we issued a release proposing disclosure 
about a company's application of its critical accounting policies.\92\ 
We are considering whether a change in a company's critical accounting 
policy should be disclosed on Form 8-K. If so, what should the 
triggering event be? What information should we require about the 
change in policy?
---------------------------------------------------------------------------

    \92\ See Release No. 33-8098 (May 10, 2002) [67 FR 35620].
---------------------------------------------------------------------------

4. Application to Foreign Private Issuers
    Foreign private issuers that are subject to the periodic reporting 
requirements under the Exchange Act are not required to file current 
reports on Form 8-K. Instead, foreign private issuers furnish reports 
on From 6-K.\93\ Form 6-K on its own does not require the disclosure of 
any specific information. Rather, Form 6-K requires a foreign private 
issuer to furnish publicly to the Commission any information:
---------------------------------------------------------------------------

    \93\ 17 CFR 249.306.
---------------------------------------------------------------------------

     That the foreign private issuer makes or is required to 
make public pursuant to the foreign private issuer's home country law,
     That is filed or required to be filed with a stock 
exchange and which is made public by the stock exchange, or
     That is distributed or is required to be distributed to 
its security holders.
    The information that is required to be furnished under Form 6-K is 
that information which is material with respect to an issuer and its 
subsidiaries. The form contains an illustrative list of matters that 
may be considered material. This list generally tracks the general 
subject matters that are contained in current Forms 8-K and 10-Q. We 
are not proposing to amend Form 6-K to require the disclosure of any 
specific information or to change the illustrative list of items.
     We solicit comment as to whether we should amend Form 6-K 
to require disclosure of specific information.
     Is there some information (such as, for example, a change 
of auditors or the filing of a bankruptcy petition) that, because of 
its high level of importance, should be required to be the subject of a 
filing on Form 6-K even if such disclosure is not required under the 
foreign private issuer's home country law or stock exchange rules?
     Would this type of mandatory requirement impose undue 
burdens on foreign companies that have chosen to

[[Page 42928]]

register their securities in the United States?
     Should we amend Form 6-K so that the list of illustrative 
matters which may be the subject of disclosure tracks the items 
proposed to be included in Form 8-K?
     Would this change provide better guidance to foreign 
private issuers on what information they should furnish under Form 6-K?

B. Shortened Filing Deadline for Form 8-K

    The proposed amendments would require domestic issuers that are 
subject to the reporting requirements of Section 13(a) and Section 
15(d) of the Exchange Act to file required current reports on Form 8-K 
within two business days of a triggering event.\94\ These amendments 
would not affect the filing deadline for disclosures under Regulation 
FD, voluntary disclosures or the proposed deadlines under recently 
proposed Item 10 of Form 8-K.\95\ This would shorten significantly the 
deadlines of five business days or 15 calendar days, depending on the 
nature of the event currently requiring a Form 8-K filing. Disclosure 
of all of the proposed new items also would have to be made within the 
two business day timeframe. We are proposing such changes given the 
significance of ``real time'' disclosure of these events to 
participants in the secondary markets.
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    \94\ Proposed Instruction B.2 to Form 8-K.
    \95\ With respect to the Regulation FD disclosure, see current 
Item 9 and proposed Item 6.01 of Form 8-K. We recently proposed new 
Item 10 to Form 8-K in Release No. 33-8090 (Apr. 12, 2002) [67 FR 
19914]. That release proposes different reporting deadlines for 
reports on Form 8-K related to transactions in a company's 
securities by its officers and directors. We do not propose to amend 
any aspect of the item proposed in Release No. 33-8090 in t his 
release, except to re-designate that item as Item 3.02 to conform to 
the Form 8-K numbering system proposed in this release.
---------------------------------------------------------------------------

    In 1998, we solicited comment on shortening the Form 8-K deadline 
to five business days for most items and one business day for several 
key items.\96\ As noted earlier, a number of commenters, including 
investor groups, issuers and law firms, indicated that two days may be 
workable at least for some items. A relatively equal number of 
commenters indicated that two business days would be insufficient. The 
proposals for which we sought comment were not exactly the same as 
those proposed in this release. Therefore, for many commenters, it is 
not possible to infer how they would have responded to a proposal of 
two business days for all items.
---------------------------------------------------------------------------

    \96\ Release No. 33-7606A (Dec. 4, 1998) [63 FR 67174].
---------------------------------------------------------------------------

Questions Regarding Proposed Shortening of Filing Deadline
     We seek comment on the proposed two business day deadline. 
Is this shortened deadline reasonable? Can companies compile the 
required information and file a Form 8-K with regard to these items 
within the proposed timeframe?
     Should the deadline be longer or shorter for any or all of 
the existing and proposed disclosure items? Should the deadline be the 
same business day as the event or one business day after the event for 
some or all of the items? Should the deadline be longer, such as three 
or five business days after the event for some or all of the items? 
Which Form 8-K items should have a longer or shorter deadline? Why 
should those items have such deadlines?
     Are there particular existing or proposed Form 8-K items 
that are more significant than others so as to warrant a same day 
filing requirement? If so, which items?
     Would companies incur added costs as a result of the 
shorter time periods? If so, what types of costs would they incur?
     Would the quality of Form 8-K disclosure be negatively 
affected as a result of the shorter time period for preparing these 
filings?
     Should we use business or calendar days as a measure?
     We always are concerned about the effect that our rules 
have on small business issuers.\97\ Would compliance with the two 
business day deadline be significantly more difficult for small 
business issuers? Why?
     Should the deadline for small business issuers be longer? 
If so, what should the deadline be? Would varying the deadlines for 
different issuers be confusing to the public?
     Should we exempt small business issuers from some or all 
of the proposed Form 8-K disclosure requirements?

C. Reorganization of Form 8-K Items

    Due to the limited number of disclosure items in existing Form 8-K 
and the discrete nature of those items, to date, there has been no 
compelling need to organize them in any particular fashion. Because we 
propose to add a significant number of new items to the form, it seems 
appropriate to organize them into logical categories. Therefore, we 
propose to number and arrange the items under the following section 
headings:

Section 1--Registrant's Business and Operations

    Item 1.01--Entry into a Material Agreement
    Item 1.02 Termination of a Material Agreement
    Item 1.03 Termination or Reduction of a Business Relationship with 
a Customer
---------------------------------------------------------------------------

    \97\ A small business issuer is defined as a company that has 
revenues of less than $25,000,000, is a U.S. or Canadian issuer, is 
not an investment company, does not have a public float of 
$25,000,000 or more, and if a majority owned subsidiary, the parent 
corporation is also a small business issuer. See Item 10 of 
Regulation S-B [17 CFR 228.10].
---------------------------------------------------------------------------

Section 2--Financial Information
    Item 2.01  Completion of Acquisition or Disposition of Assets
    Item 2.02  Bankruptcy or Receivership
    Item 2.03  Creation of a Direct or Contingent Financial Obligation 
That Is Material to the Registrant
    Item 2.04  Events Triggering a Direct or Contingent Financial 
Obligation That Is Material to the Registrant
    Item 2.05  Exit Activities Including Material Write-Offs and 
Restructuring Charges
    Item 2.06  Material Impairments
Section 3--Securities and Trading Market
    Item 3.01  Rating Agency Decisions
    Item 3.02  Notice of Delisting or Failure to Satisfy Listing 
Standards; Transfer of Listing
    Item 3.03  Unregistered Sales of Equity Securities
    Item 3.04  Material Modifications to Rights of Security Holders
    Item 3.05  [Currently reserved for reporting of insider 
transactions] \98\
---------------------------------------------------------------------------

    \98\ Release No. 33-8090 (Apr. 12, 2002) [67 FR 19914]. This 
item may be removed from Form 8-K if, as a result of the comment 
process, we determine to move the disclosures proposed by that 
release to a separate form.
---------------------------------------------------------------------------

Section 4--Matters Related to Accountants
    Item 4.01  Changes in Registrant's Certifying Accountant
    Item 4.02  Non-Reliance on Previously Issued Financial Statements 
or a Related Audit Report
Section 5--Corporate Governance and Management
    Item 5.01  Changes in Control of Registrant
    Item 5.02  Departure of Directors or Principal Officers; Election 
of Directors; Appointment of Principal Officers
    Item 5.03  Amendments to Articles of Incorporation or Bylaws; 
Change in Fiscal Year
    Item 5.04  Material Events Regarding the Registrant's Employee 
Benefit, Retirement and Stock Ownership Plans
Section 6--Regulation FD

[[Page 42929]]

    Item 6.01  Regulation FD Disclosure
Section 7--Other Events
    Item 7.01  Other Events
Section 8--Financial Statements and Exhibits
    Item 8.01  Financial Statements and Exhibits

    We propose to renumber the items in a way that avoids re-use of 
former item numbers to avoid confusion about the subject of particular 
item numbers. Rather than solely a single digit item number, each Form 
8-K item will be designated a three digit number containing a decimal 
point. For example, under the proposed system, an acquisition or 
disposition of assets, currently Item 2, would become proposed Item 
2.01. Therefore, anyone searching for such filings made before and 
after the change would search for Item 2 and Item 2.01. The designation 
``Item 2'' would not be reassigned to a new item to avoid confusion.
Questions Regarding Proposed Reorganization of Form 8-K Items
     Should we reorganize the Form 8-K items in this way? Is 
there a better way to reorganize the Form 8-K items?
     Is it preferable not to change the numbering and order of 
the existing Form 8-K items and to simply designate each of the 
proposed new disclosure requirements as a separate Form 8-K item 
without grouping them into disclosure categories?
     Would such rearrangement and the corresponding re-
numbering of items be confusing to investors who research these 
reports? If so, what would be a viable alternative for designating the 
items?
     On April 12, 2002, we proposed to add a new item to Form 
8-K that would require disclosure by a company of transactions by its 
officers and directors in the company's securities.\99\ We expect a 
substantial number of filings as a result of that proposed item on Form 
8-K. Should we create a separate form to disclose those transactions?
---------------------------------------------------------------------------

    \99\ See Release No. 33-8090 (Apr. 12, 2002) [67 FR 19914].
---------------------------------------------------------------------------

D. Liability Issues and the Proposed Safe Harbors

    Under the proposals, information on Form 8-K would continue to be 
considered ``filed'' under Section 18 of the Exchange Act, except for 
information provided pursuant to Regulation FD under proposed Item 6.01 
(currently Item 9), which is not deemed ``filed'' for purposes of 
Section 18. We believe that because most of the disclosures in the 
proposed new items relate to specific events that have occurred, 
providing that the information not be ``filed'' would be inappropriate. 
The efficiency of the securities markets relies not only on the amount 
and timeliness of information, but also on the quality of that 
information. Form 8-K items, other than the Regulation FD requirement, 
historically have been subject to liability under all relevant sections 
of the Exchange Act. By subjecting Form 8-K disclosure to the 
appropriate level of liability, we ensure that our rules promote the 
dissemination of high-quality, balanced disclosure. We do not believe 
that quality should be sacrificed for the sake of speed. We note, 
however, that to the extent that companies provide forward-looking 
statements, safe harbors may be available under the Exchange Act \100\ 
and the Commission's rules.\101\
---------------------------------------------------------------------------

    \100\ See Section 21E of the Exchange Act [15 U.S.C. Sec. 78u-
5].
    \101\ See, for example, Securities Act Rule 175 [17 CFR 
230.175].
---------------------------------------------------------------------------

    Similarly, we do not intend for these proposals, if adopted, to 
affect existing law regarding a determination of the materiality of 
information for purposes of other provisions of the securities laws, 
including Rule 10b-5 under the Exchange Act. The courts and the 
Commission have developed an extensive body of law concerning 
materiality standards,\102\ and these proposed amendments are not 
intended to change any aspect of that body of law.
---------------------------------------------------------------------------

    \102\ See, for example, TSC Industries, Inc. v. Northway, Inc., 
426 U.S. 438 (1976), Basic, Inc. v. Levinson, 485 U.S. 224 (1988), 
SEC v. Texas Gulf Sulphur Co., 401 F.2d 833 (2d Cir. 1968).
---------------------------------------------------------------------------

    To accommodate companies that do not file a report in a timely 
manner despite making a good faith effort to file such reports, we are 
proposing to create a safe harbor. The proposal would add a new 
paragraph to each of Rule 13a-11 \103\ and Rule 15d-11 \104\ under the 
Exchange Act. The proposed new paragraphs would provide a safe harbor 
for a company that fails to file a required Form 8-K in a timely manner 
if the company satisfies all of the safe harbor's conditions. Under the 
proposed safe harbor, a company would not be liable under Sections 13 
and 15(d) of the Exchange Act for such a failure to file if:
---------------------------------------------------------------------------

    \103\ 17 CFR 240.13a-11.
    \104\ 17 CFR 240.15d-11.
---------------------------------------------------------------------------

     On the Form 8-K due date, the company maintained 
sufficient procedures to provide reasonable assurances that the company 
is able to collect, process and disclose, within the specified time 
period the information required to be disclosed by Form 8-K; \105\ and
---------------------------------------------------------------------------

    \105\ In a separate release, we recently proposed to require a 
company's principal executive officer and principal financial 
officer to certify the information included in the company's 
quarterly and annual reports. The release also encourages companies 
to establish a committee to ensure that the company maintains 
adequate procedures to collect, process and disclose information 
required to be reported in the company's annual, quarterly and 
current reports. See Release No. 34-46079 (June 14, 2002).
---------------------------------------------------------------------------

     No officer, employee or agent of the company knew, or was 
reckless in not knowing, that a report on Form 8-K was required to be 
filed and once an executive officer of the company became aware of its 
failure to file a required Form 8-K, the company promptly (and not 
later than two business days after becoming aware of its failure to 
file) filed a Form 8-K with the Commission containing the required 
information and stating the date, or approximate date, on which the 
report should have been filed.
    A company that complies with these requirements would not be liable 
for a violation of Section 13(a) or 15(d). This safe harbor, however, 
would not provide protection for violations of other provisions of the 
securities laws. Accordingly, the obligation to disclose information on 
Form 8-K would not be affected by the safe harbor and thus would 
continue to exist for purposes of determining liability under Section 
10 and Rule 10b-5 under the Exchange Act and Sections 11, 12 and 17 of 
the Securities Act. In addition, this safe harbor would not apply to a 
company's eligibility to use short form registration statements.\106\
---------------------------------------------------------------------------

    \106\ This safe harbor also would not apply to new Item 10 of 
Form 8-K proposed in Release No. 33-8090, that if adopted, would 
require disclosure by a company of transactions by its officers and 
directors in the company's securities. See Release No. 33-8090 (Apr. 
12, 2002) [67 FR 19914]. That release provides for a separate safe 
harbor under that proposed item.
---------------------------------------------------------------------------

    Although compliance with the safe harbor would shield the company 
from liability under Section 13 and 15(d) for a late Form 8-K filing, 
that filing would not be considered timely unless filed within the time 
period required by Form 8-K. A company that fails to file a Form 8-K in 
a timely manner would not be eligible to use short form registration 
statements. In addition, a company could not use Form S-8 and its 
security holders could not rely on Rule 144 unless the company was 
current in its Exchange Act filings, including Form 8-K. As discussed 
later in this release, proposed amendments to Rule 12b-25 would afford 
relief with regard to the timeliness of filings and short form 
eligibility.
Questions Regarding the Proposed Safe Harbor
     Are the requirements of the proposed safe harbor 
appropriate?

[[Page 42930]]

     Should there be additional conditions to the safe harbor 
that would encourage good faith compliance with the disclosure 
requirements? Are any of the conditions in the proposed safe harbor 
unnecessary?
     Is our recommendation regarding creation of a committee to 
ensure that the company maintains adequate disclosure procedures 
appropriate? Is the suggested composition of the committee appropriate? 
Are there better ways to ensure maintenance of adequate disclosure 
procedures?
     Is it appropriate to condition the availability of the 
safe harbor on no officer, employee or agent knowing or being reckless 
in not knowing that a report on Form 8-K is required? Should the safe 
harbor instead be based on a negligence standard?
     Should we subject all of the new Form 8-K disclosure 
requirements to all liability provisions? Conversely, should we extend 
the safe harbor to any other liability provisions, such as Rule 10b-5 
under the Exchange Act or Section 11 of the Securities Act? What would 
the consequences be for the quality of disclosure if we expanded the 
safe harbor to provide more protection from liability?
     Should we permit companies to furnish, rather than file, 
Form 8-K for purposes of Section 18 of the Exchange Act? Are there 
particular items that should be furnished rather than filed?
     Should a company's short form eligibility continue to be 
conditioned on the company's timely filing of Form 8-K? Similarly, 
should we continue to condition a company's Form S-8 eligibility and 
resales of the company's securities under Rule 144 of the Securities 
Act on the currency of Exchange Act filings, including Form 8-K 
filings? Should companies have to file all required Forms 8-K, even if 
late, to effect a shelf takedown?

E. Amendments to Rule 12b-25 and Form 12b-25 Regarding Late Filing

    We also propose amendments to Rule 12b-25 \107\ and Form 12b-25 
\108\ to require a company to file a Form 12b-25 if the company will 
not be able to file a current report on Form 8-K in a timely manner. 
Currently, there is no means by which a company can file a Form 8-K 
late without affecting its eligibility to use short form registration 
statements. Under the proposal, a company would have to file the Form 
12b-25 one business day after the Form 8-K is due and file the Form 8-K 
within two business days after the original due date. If the company 
makes the appropriate representations that it was not able to file in a 
timely manner without unreasonable effort or expense, then the report 
would be deemed to be filed on the prescribed due date. A company that 
provides proper notice on Form 12b-25 would not lose its eligibility to 
use short form registration statements as the result of its inability 
to timely file a Form 8-K unless the company fails to file within the 
extended period permitted by Rule 12b-25.
---------------------------------------------------------------------------

    \107\ 17 CFR 240.12b-25.
    \108\ 17 CFR 249.322.
---------------------------------------------------------------------------

Questions regarding proposed Amendments to Rule 12b-25 and Form 12b-25
     Should we require companies to file a Form 12b-25 whenever 
they are unable to timely file a Form 8-K? Is this provision practical 
in light of the short timeframes involved? Instead of requiring 
companies to file a Form 12b-25 whenever they are unable to timely file 
a Form 8-K, should we permit companies to file the Form 12b-25 only 
when they need a two business day filing extension and reasonably 
expect that they will be able to file within the extended period?
     Should companies have to disclose in Form 12b-25 the 
reasons for their inability to timely file a Form 8-K?
     This amendment would effectively double the Form 8-K 
filing deadline to four business days. Should the extension period be 
longer or shorter than two business days? If so, what would an 
appropriate timeframe be?
     Should the proposed availability of Form 12b-25 apply with 
respect to Item 10 of Form 8-K that we proposed separately regarding 
disclosure of transactions by a company's officers and directors in the 
company's securities? \109\
---------------------------------------------------------------------------

    \109\ See Release No. 33-8090 (Apr. 12, 2002) [67 FR 19914].
---------------------------------------------------------------------------

     In light of our intent to make the required disclosures 
available to the public in a timely manner, should we provide such an 
extension at all?

F. Conforming Amendments

1. Amendments to Item 601 of Regulation S-B and Item 601 of Regulation 
S-K
    In connection with the proposed new Form 8-K disclosure items, we 
would require companies to file some documents as exhibits that 
previously have not been required to be filed under Item 601 of either 
Regulation S-B or Regulation S-K. Therefore, we propose to add entries 
describing these exhibits to the Item 601 exhibit table. These new 
exhibit entries would include: ``letters on departure of principal 
officers,'' ``notice of delisting or failure to satisfy listing 
standards,'' and ``notice from auditor regarding validity of audit or 
consent.'' We also would amend the existing entry captioned, ``letters 
on departure of director'' to incorporate the changes proposed in this 
release.
    We also propose amendments to Item 601 to footnote the ``8-K'' 
column in the Exhibit Table to clarify that a company need only file 
the exhibits marked in the ``8-K'' column of the table that are 
relevant to a particular report on Form 8-K. If a company previously 
has submitted an exhibit with another filing, it may incorporate that 
exhibit by reference into the Form 8-K report.
    Finally, we propose to make a corrective amendment to eliminate the 
reference in Item 601 to submission of Financial Data Schedules.\110\ 
We eliminated the requirement to file a Financial Data Schedule on May 
30, 2000.\111\
---------------------------------------------------------------------------

    \110\ See current Item 601(a)(1) of Regulation S-B and S-K [17 
CFR 228.601(a)(1) and 229.601(a)(1)].
    \111\ Release No. 33-7855 (Apr. 24, 2002) [65 FR 24788].
---------------------------------------------------------------------------

2. Elimination of Items in Forms 10-Q, 10-QSB, 10-K and 10-KSB
    We propose to eliminate several items in Forms 10-Q, 10-QSB, 10-K 
and 10-KSB. The disclosures called for in these items no longer would 
be required in quarterly and annual reports because they already would 
have been more promptly reported on Form 8-K. We propose to eliminate 
the following items in Part II of Forms 10-Q and 10-QSB:
    (a) Paragraphs (a) through (c) of Item 2, Changes in Securities and 
Use of Proceeds;
    (b) Item 3, Defaults upon Senior Securities;
    (c) Item 5, Other Information; and
    (d) Paragraph (b) of Item 6, Exhibits and Reports on Form 8-K.
    We are also proposing to make the following changes to Form 10-K:
    (a) Revise paragraph (a) of Item 5, Market for Registrant's Common 
Equity and Related Stockholder Matters;
    (b) Delete Item 9, Changes in and Disagreements With Accountants on 
Accounting and Financial Disclosure; and
    (c) Delete paragraph (b) of Item 14, Exhibits, Financial Statement 
Schedules, and Reports on Form 8-K.
    We propose to make the following changes to Form 10-KSB:
    (a) Revise paragraph (a) of Item 5, Market for Registrant's Common 
Equity and Related Stockholder Matters;
    (b) Delete Item 8, Changes in and Disagreements With Accountants on

[[Page 42931]]

Accounting and Financial Disclosure; and
    (c) Delete paragraph (b) of Item 14, Exhibits and Reports on Form 
8-K.
Questions Regarding the Proposed Elimination of Items From Annual and 
Quarterly Reports
     Is there any reason to keep any of these items in Forms 
10-Q, 10-QSB, 10-K and 10-KSB?
     Would it be helpful for investors to have companies 
provide a list of the current reports on Form 8-K that it filed during 
the reported quarter or fiscal year?
3. Other Proposed Conforming Amendments
    We also propose amendments to Item 10 of Regulation S-B and 
Regulation S-K.\112\ This item currently encourages companies to report 
material changes in credit ratings on Form 8-K. The proposals would 
make such disclosure mandatory. Therefore, if we adopt the proposals, 
this provision no longer would be necessary.
---------------------------------------------------------------------------

    \112\ 17 CFR 228.10 and 229.10.
---------------------------------------------------------------------------

    In addition, we propose to amend Item 701 of Regulation S-B and 
Regulation S-K.\113\ These items currently refer to disclosure of 
unregistered sales of securities in current reports, as well as annual 
and quarterly reports. We propose to move this disclosure out of the 
annual and quarterly reports. If we adopt these proposals, the 
references to Forms 10-QSB, 10-Q, 10-KSB and 10-K in this item no 
longer would be necessary.
---------------------------------------------------------------------------

    \113\ 17 CFR 228.701 and 229.701.
---------------------------------------------------------------------------

    Finally, we propose to amend the note at the end of Rule 15d-10 
regarding transition reports.\114\ The current note refers to Item 8 of 
Form 8-K. If the proposals are adopted, this item would be re-
designated as Item 5.03. Therefore, we propose to conform this 
reference accordingly.
---------------------------------------------------------------------------

    \114\ 17 CFR 240.15d-10.
---------------------------------------------------------------------------

G. General Request for Comment

    We request and encourage any interested person to submit comments 
regarding:
    (1) The proposed changes that are the subject of this release,
    (2) Additional or different changes, or
    (3) Other matters that may have an effect on the proposals 
contained in this release.
    We request comment from the point of view of registrants, investors 
and other users of information about the resale of restricted 
securities and securities owned by affiliates of the issuer. With 
regard to any comments, we note that such comments are of greatest 
assistance to our rulemaking initiative if accompanied by supporting 
data and analysis of the issues addressed in those comments.

III. Paperwork Reduction Act

    Exchange Act Form 8-K, Form 12b-25, Form 10-K, Form 10-KSB, Form 
10-Q, Form 10-QSB and Regulations S-K and Regulation S-B contain 
``collection of information'' requirements within the meaning of the 
Paperwork Reduction Act of 1995.\115\ We are submitting a request for 
approval of the proposed revisions to these requirements to the Office 
of Management and Budget (``OMB'') for review in accordance with 44 
U.S.C. 3507(d) and 5 CFR 1320.11. An agency may not conduct or sponsor, 
and a person is not required to respond to, a collection of information 
unless it displays a currently valid control number.
---------------------------------------------------------------------------

    \115\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

Form 8-K

    Form 8-K (OMB Control No. 3235-0060) prescribes information, such 
as material events or corporate changes, that a registrant must 
disclose. Form 8-K also may be used, at a registrant's option, to 
report any events that the registrant deems to be of importance to 
shareholders. Companies also may use the form to disclose the nonpublic 
information required to be disclosed by Regulation FD.\116\
---------------------------------------------------------------------------

    \116\ 17 CFR 243.100-103.
---------------------------------------------------------------------------

    We currently estimate that Form 8-K results in a total annual 
compliance burden of 528,300 hours and an annual cost of $71,477,000. 
We estimate the number of Form 8-K filers to be 13,200, based on the 
actual number of Form 10-K and 10-KSB filers during the 2001 fiscal 
year. For purposes of this analysis, we estimate that the number of 
reports on Form 8-K filed is 250,600.\117\ We estimate that each entity 
spends, on average, approximately 5 hours completing the form. We 
estimate that 75% of the burden is prepared by the company and that 25% 
of the burden is prepared by outside counsel retained by the company at 
an average cost of $300 per hour. The staff estimated the average 
number of hours each entity spends completing the form, and the average 
hourly rate for outside securities counsel, by contacting a number of 
law firms and other persons regularly involved in completing the forms.
---------------------------------------------------------------------------

    \117\ This number assumes adoption of the proposals in Release 
No. 33-8090 (April 12, 2002) [67 FR 19914]. If adopted, those 
proposals would cause companies to file estimated additional 215,500 
Form 8-K reports each year.
---------------------------------------------------------------------------

    Under the proposals, 11 new disclosure items would be added to Form 
8-K, two disclosure items would be moved from annual and quarterly 
reports to Form 8-K, two existing disclosure items would be 
substantially expanded, and all Form 8-K reports would be due no later 
than the second business day following the occurrence of events 
requiring disclosure. We believe that the proposed revisions are 
necessary to provide ``real time'' disclosure of significant corporate 
events to participants in the secondary trading markets and to bolster 
investor confidence in the securities markets.
    We estimate that, on average, completing and filing a Form 8-K if 
the proposed new disclosure items are adopted would require the same 
amount of time currently spent by entities completing the form--
approximately 5 hours. To determine the expected increase in the number 
of current reports on Form 8-K if the proposals are adopted, we 
reviewed two of the new proposed items: (1) Unregistered sales of 
equity securities and (2) movement or delisting of a company's 
securities. These were the only two proposed items for which we were 
able to obtain reliable data regarding both the number of events 
reported on Form 8-K as well as the number of events that actually 
occurred.
    First, we obtained a sample of 85 unregistered sales of equity 
securities by publicly traded companies. Fifty-three, or 62%, of these 
were reported voluntarily on Form 8-K. Next, we obtained a sample of 
333 companies that changed their primary trading markets or were 
delisted from an exchange or quotation system.\118\ Ninety, or 27%, of 
these reported the event voluntarily on Form 8-K.
---------------------------------------------------------------------------

    \118\ Data regarding voluntary changes of trading markets was 
obtained from a search of Dow Jones New Retrieval. Data regarding 
delisting of companies was obtained from CRSP, Center for Research 
in Securities Prices, data published by the University of Chicago.
---------------------------------------------------------------------------

    Then, we examined the extent to which the proposed events already 
are being filed under Item 5 of Form 8-K. In fiscal year 2001, 
companies filed 22,332 current reports on Form 8-K under Item 5, Other 
Events. We surveyed 220 of these reports and determined that 96 of 
them, or 43.6%, would be required, rather than voluntary, disclosures 
if the proposals are adopted. Based on this survey, we estimate that 
43.6%, or 9737, of the voluntary Form 8-Ks filed in 2001 would become 
mandatory filings under the proposals.
    Using the percentages of voluntarily reported unregistered sales of 
equity

[[Page 42932]]

securities and movements or delisting from exchanges and quotation 
systems, we assume that between 27% and 62% of events covered by the 
proposed disclosure items already are being voluntarily disclosed.
    To obtain the total expected increase in filings, we first divide 
the number of reports on Form 8-K currently being filed voluntarily 
that would be required reporting events under our proposal by the rate 
at which companies currently are reporting these events on a voluntary 
basis.
Based on unregistered sales: 9,737/0.62 = 15,705
Based on movements/delistings: 9,737/0.27 = 36,063
    We then subtract the number of events under the proposal that 
currently are being reported voluntarily from the total number filings 
expected to be required under the proposal.

Based on unregistered sales: 15,705 - 9,737 = 5,968
Based on movements/delistings: 36,063 - 9,737 = 26,326

    This is the number of additional filings that we expect as a result 
of the proposed items. Choosing the higher estimate of roughly 26,400 
additional filings per year, we estimate that, on average, we expect a 
company to file two additional reports on Form 8-K per year. Based on 
26,400 additional filings per year, we estimate that the total number 
of annual Form 8-K filings would be 277,000. The additional filings 
would result in an added annual burden of 99,000 hours (26,400 x 5 x 
.75 = 99,000) and a total annual burden of 627,300 hours (528,300 + 
99,000 = 627,300). We estimate that, if the proposals are adopted, the 
additional filings would result in an added annual cost of $9,900,000 
(26,400 x 5 x .25 x $300 = $9,900,000) and a total annual cost to 
issuers of $81,377,000 ($71,477,000 + $9,900,000 = $81,377,000).

Form 12b-25.

    Form 12b-25 (OMB Control No. 3235-0058) was adopted pursuant to 
Sections 13, 15, and 23 of the Exchange Act. Form 12b-25 provides 
notice to the Commission and the marketplace that a public company will 
be unable to file a required report in a timely manner. If certain 
conditions are met, the company will be granted an automatic filing 
extension.
    We currently estimate that Form 12b-25 results in a total annual 
compliance burden of 15,000 hours and an annual cost of $0.\119\ We 
estimate the number of Form 12b-25 filers to be 6,000, based on the 
fact that we received approximately 6,000 Form 12b-25 filings in the 
last fiscal year. We estimate that each entity spends, on average, 
approximately 2.5 hours completing the form. We estimate that 100% of 
the burden is prepared by the company. The staff estimated the average 
number of hours each entity spends completing the form, and the average 
hourly rate for outside securities counsel, by contacting a number of 
law firms and other persons regularly involved in completing the forms.
---------------------------------------------------------------------------

    \119\ We do not estimate a separate annual cost for Form 12b-125 
because we estimate that the company prepares the disclosure itself 
without the assistance of outside counsel.
---------------------------------------------------------------------------

    The proposed rules would require a company that is not able to 
timely file a Form 8-K to report this late filing on Form 12b-25. Based 
on a review of 271 Form 8-K filings, we determined that 31, or 11%, of 
those were filed late. Based on this percentage, we estimate that of 
the expected 61,500 \120\ filings for which Form 12b-25 would be 
available, 6,700 would be late, resulting in an added burden of 16,750 
hours and a total burden of 31,750 hours. This number is based on the 
current rate of late filings. We have no basis for estimating the 
number of additional filings that may be late as a result of the 
shortened deadline. However, we believe that companies that implement 
the procedures necessary to qualify for the proposed safe harbors would 
be file Form 8-K in a timely manner. In fact, based on a review of Form 
8-K reports, 25,500 out of 35,500 filings, or 72%, were filed in two 
calendar days or less. We believe a greater emphasis on these reports 
and the improved procedures may cause a decrease in late Form 8-K 
filings.
---------------------------------------------------------------------------

    \120\ 250,600 current estimate of Form 8-K filings--215,500 to 
which these provisions will not apply (proposed Item 10 (or Item 
3.05) reports) + 26,400 expected increase due to these proposals = 
61,500 reports.
---------------------------------------------------------------------------

Forms 10-K, 10-KSB, 10-Q, 10-QSB

    Form 10-K (OMB Control No. 3235-0063) prescribes information that a 
registrant must disclose annually to the market about its business. 
Form 10-KSB (OMB Control No. 3235-0420) prescribes information that a 
registrant that is a ``small business issuer'' as defined under our 
rules must disclose annually to the market about its business.
    Form 10-Q (OMB Control No. 3235-0070) prescribes information that a 
registrant must disclose quarterly to the market about its business. 
Form 10-QSB (OMB Control No. 3235-0416) prescribes information that a 
registrant that is a ``small business issuer'' as defined under our 
rules must disclose quarterly to the market about its business.
    We are proposing to eliminate several disclosure requirements from 
these forms and move those requirements to Form 8-K. Because these 
items are extraordinary events, companies are not always required to 
make disclosure about these events in their annual and quarterly 
reports. Therefore, we expect the decrease in overall burden to be 
minimal. We estimate that these changes would result in a decrease of 
one burden hour per company per filing in connection with preparing and 
filing each quarterly report on Form 10-Q and 10-QSB and the annual 
report on Form 10-K or 10-KSB.
    Based on a burden hour estimate of four hours per respondent per 
year,\121\ we estimate that, in the aggregate, the changes would result 
in a savings of 52,800 burden hours \122\ to comply with the proposed 
rules. The total burden hours of complying with Form 10-Q and Form 10-
QSB, revised to include the burden hours expected to be eliminated as a 
result of the proposed rules, is estimated to be 3,134,563 hours for 
Form 10-Q, a decrease of 28,152 hours \123\ from the current annual 
burden of 3,162,715 hours, and 1,291,631 hours for Form 10-QSB, a 
decrease of 11,367 hours \124\ from the current annual burden of 
1,302,998 hours. The total burden hours of complying with Form 10-K and 
Form 10-KSB, revised to include the burden hours expected to be 
eliminated as a result of the proposed rules, is estimated to be 
12,346,998 hours for Form 10-K, a decrease of 9,384 hours \125\ from 
the current annual burden of 12,356,382 hours, and 3,420,520 hours for 
Form 10-KSB, a decrease of 3,789 hours \126\ from the current annual 
burden of 3,443,254 hours.
---------------------------------------------------------------------------

    \121\ Three quarterly reports and one annual report x one hour 
each = 4 hours.
    \122\ 13,200 companies x four hours = 52,800 hours.
    \123\ 26,746 quarterly reports x one hour = 28,152 hours.
    \124\ 11,367 quarterly reports x one hour = 11,367 hours.
    \125\ 9,384 annual reports x one hour = 9,384 hours.
    \126\ 3,789 annual reports x one hours = 3,789 hours.
---------------------------------------------------------------------------

Item 601 of Regulation S-K and Item 601 of Regulation S-B

    Item 601 of Regulation S-K (OMB Control No. 3235-0071) prescribes 
the exhibits that a registrant must provide in filings under the 
Securities Act and the Exchange Act. Item 601 of Regulation S-B (OMB 
Control No. 3235-0417) prescribes the exhibits that a registrant that 
is a ``small business

[[Page 42933]]

issuer'' as defined under our rules must provide in filings under the 
Securities Act and the Exchange Act.
    The proposed changes to these items would amend the exhibit tables 
to identify exhibits that must be filed with Form 8-K. We have 
incorporated the burden of actual submitting those exhibits in the 
estimate of the burden to file Form 8-K. These items do not, separate 
from the form, require any additional filing and therefore do not add 
to the burden on companies. Therefore, we do not expect any change in 
the total annual burden of reporting under these items. We assign one 
burden hour and no cost to Regulations S-B and S-K for administrative 
convenience to reflect the fact that these regulations do not impose 
any direct burden on companies.
    Compliance with the revised disclosure requirements would be 
mandatory. There would be no mandatory retention period for the 
information disclosed, and responses to the disclosure requirements 
would not be kept confidential.
    Pursuant to 44 U.S.C. 3506(c)(2)(B), we solicit comments to: (i) 
evaluate whether the proposed collection of information is necessary 
for the proper performance of the functions of the agency, including 
whether the information will have practical utility; (ii) evaluate the 
accuracy of our estimate of the burden of the proposed collection of 
information; (iii) determine whether there are ways to enhance the 
quality, utility, and clarity of the information to be collected; and 
(iv) evaluate whether there are ways to minimize the burden of the 
collection of information on those who are to respond, including 
through the use of automated collection techniques or other forms of 
information technology.
    Persons submitting comments on the collection of information 
requirements should direct the comments to the Office of Management and 
Budget, Attention: Desk Officer for the Securities and Exchange 
Commission, Office of Information and Regulatory Affairs, Washington, 
DC 20503, and should send a copy to Jonathan G. Katz, Secretary, 
Securities and Exchange Commission, 450 Fifth Street, NW., Washington, 
DC 20549-0609, with reference to File No. S7-22-02. Requests for 
materials submitted to OMB by the Commission with regard to these 
collections of information should be in writing, refer to File No. S7-
22-02, and be submitted to the Securities and Exchange Commission, 
Records Management, Office of Filings and Information Services. OMB is 
required to make a decision concerning the collection of information 
between 30 and 60 days after publication of this release. Consequently, 
a comment to OMB is assured of having its full effect if OMB receives 
it within 30 days of publication.

IV. Costs and Benefits

    Recent developments in the securities markets have highlighted the 
need for companies to provide more timely disclosure of material events 
that affect them. The amendments proposed in this release seek to 
increase the amount of timely information that companies disclose 
publicly. Currently, Form 8-K requires that registrants disclose six 
enumerated events within five business days or 15 calendar days, 
depending on the event. We are proposing to decrease this filing 
deadline to two business days after the event occurs for all events, 
other than proposed Item 7.01 which has no deadline and proposed Item 
6.01 (current Item 9) relating to Regulation FD disclosures. We are 
also proposing to add 11 new events that would trigger a Form 8-K 
filing requirement, move two items in Forms 10-Q, 10-QSB, 10-K, and 10-
KSB to Form 8-K, and expand two existing items in Form 8-K. Finally, we 
are proposing to reorganize the Form 8-K items, create a safe harbor 
for unintentional violations of the Form 8-K filing requirements and 
create an automatic two business day extension of the filing deadline 
to companies providing proper notification. These changes will affect 
all companies reporting under Section 13(a) and 15(d) of the Exchange 
Act.

A. Benefits

    In combination, the proposed shortening of the Form 8-K filing 
deadline and increase in Form 8-K disclosure items would provide the 
securities markets with more information about companies in a more 
timely manner. By increasing the timeliness and the amount of 
information available, we expect the amendments to Form 8-K to enable 
the market to more accurately and quickly price securities.

B. Costs

    Although we expect that the proposed shortening of the filing 
deadline from five business days or 15 calendar days to two business 
days would increase to some extent the cost of filing a Form 8-K, we do 
not have data regarding the amount of that incremental cost increase. 
However, we did review approximately 35,500 Form 8-K filings. Of these, 
approximately 25,500 reports, or 72%, were filed within two calendar 
days of the reported event date. Similarly, of approximately 23,500 
filings made under current Item 5 of Form 8-K, approximately 11,500 
reports, or 49%, were filed within two calendar days of the reported 
event date. Although this review did not investigate whether filers 
reported the correct event date for each filing, it appears that many, 
if not most, companies are already filing their Form 8-K reports well 
before the current deadlines. Therefore, the reduction in the Form 8-K 
deadline should add little extra burden on these filers.
    Similarly, we expect that the addition of new Form 8-K items would 
increase the number of Forms 8-K that a company would make. Based on 
our estimates for purposes of the Paperwork Reduction Act, we expect 
approximately two additional filings per year per company if the 
proposals are adopted. This will cause a corresponding increase in 
filing costs.
    We are proposing a safe harbor for unintentional violations and a 
mechanism for obtaining an automatic two business day extension to help 
alleviate these costs. We are also eliminating any duplicative 
reporting requirements in annual and quarterly reports. In addition, 
developments such as EDGARLink that enable a company to file reports 
easily and directly, without the added costs of using third parties to 
submit filings, with the Commission over the Internet,\127\ and the 
industry's increased experience over the past several years using the 
EDGAR system should minimize companies' cost of filing more Form 8-K 
reports in a shorter timeframe.
---------------------------------------------------------------------------

    \127\ EDGARLink is downloadable free of charge to filers from 
our website at http:;//www.edgarfiling.sec.gov.
---------------------------------------------------------------------------

    We request comment on issues related to this cost-benefit analysis. 
In particular, are there any other costs that would be associated with 
either the shortening of the Form 8-K filing deadline or the increase 
in Form 8-K items? What would be the incremental added cost associated 
with filing Form 8-K reports within two business days instead of the 
current five business days or 15 calendar days? What would be the 
increase in cost as a result of the increased number of Form 8-K items? 
Are some new items more costly to report than others? How many more 
Form 8-K reports would a registrant expect to file within the course of 
a year if we adopt the proposed new Form 8-K items? Are companies in 
particular industries or of particular size likely to file more reports 
than others? Please provide any quantitative data on which you rely in 
formulating your comments.

[[Page 42934]]

    Would maintaining the current level of liability to which Form 8-K 
is subject add to companies' costs in light of the new disclosures that 
they would have to make? What data is available to support any 
predicted increase in costs? To the extent that a reduction in the 
level of liability would mitigate the cost of providing more 
information in a more timely manner, should we consider reducing 
liability for Form 8-K disclosures? Would a reduction in liability 
negatively affect the quality of the information reported?

V. Effect on Efficiency, Competition and Capital Formation

    Section 23(a)(2) \128\ of the Exchange Act requires us, when 
adopting rules under the Exchange Act, to consider the impact that any 
new rule would have on competition. In addition, Section 23(a)(2) 
prohibits us from adopting any rule that would impose a burden on 
competition not necessary or appropriate in furtherance of the purposes 
of the Exchange Act.
---------------------------------------------------------------------------

    \128\ 15 U.S.C. 78w(a)(2).
---------------------------------------------------------------------------

    The proposed amendments are intended to improve the amount and 
timeliness of current information available to investors and the 
financial markets. We anticipate that these proposals would enhance the 
proper functioning of the capital markets. This increases the 
competitiveness of companies participating in the U.S. capital markets. 
However, because only companies subject to the reporting requirements 
of Sections 13 and 15 of the Exchange Act would be required to make the 
disclosures in this proposal, competitors not subject to those 
reporting requirements potentially could gain an informational 
advantage. If the proposal to shorten filing deadlines increases the 
number of companies who file their reports late, this could reduce the 
number of companies eligible for short-form and delayed shelf 
registration.
    We request comment on whether the proposed amendments, if adopted, 
would impose a burden on competition. Commenters are requested to 
provide empirical data and other factual support for their views if 
possible.
    Section 2(b) \129\ of the Securities Act and Section 3(f) \130\ of 
the Exchange Act require us, when engaging in rulemaking where we are 
required to consider or determine whether an action is necessary or 
appropriate in the public interest, to consider, in addition to the 
protection of investors, whether the action will promote efficiency, 
competition, and capital formation. The proposed amendments would 
enhance our reporting requirements. The purpose of the amendments is to 
increase the amount and the timeliness of important information 
disclosed to investors. This should improve investors' ability to make 
informed investment and voting decisions. Informed investor decisions 
generally promote market efficiency and capital formation. As noted 
above, however, the proposals could have certain indirect consequences, 
such as precluding some companies from using short-form registration if 
they fail to comply with the abbreviated filing deadlines, which could 
adversely impact their ability to raise capital. The possibility of 
these effects and their magnitude if they were to occur are difficult 
to quantify.
---------------------------------------------------------------------------

    \129\ 15 U.S.C. 77b(b).
    \130\ 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

    We request comment on whether the proposed amendments, if adopted, 
would promote efficiency, competition, and capital formation. 
Commenters are requested to provide empirical data and other factual 
support for their views if possible.

VI. Initial Regulatory Flexibility Analysis

    This Initial Regulatory Flexibility Analysis has been prepared in 
accordance with 5 U.S.C. 603. It relates to proposed revisions to 
Exchange Act Form 8-K.

A. Reasons for the Proposed Action

    Exchange Act Form 8-K is used by companies for current reports 
under Section 13 or 15(d) of the Exchange Act that are filed pursuant 
to Exchange Act Rule 13a-11 or 15d-11, and for reports of nonpublic 
information required to be disclosed by Regulation FD. Currently, a 
company subject to these requirements must file a Form 8-K upon the 
occurrence of one or more of the following events:
     Change in control of the company
     Company's acquisition or disposition of a significant 
amount of assets, not in the ordinary course of business
     Bankruptcy or receivership
     Change in the company's certifying accountant
     Resignation of a director
     Change in the company's fiscal year
    Most Form 8-K reports must be filed within 15 calendar days after 
occurrence of the event to which the report relates, although reports 
concerning changes in the company's certifying accountant and 
resignation of directors are due within five business days after their 
occurrence. Companies also may use Form 8-K, at their option, to report 
events that the company deems important to shareholders. Additionally, 
a company may use the form to satisfy its Regulation FD disclosure 
requirements.\131\ We believe that investors and the securities markets 
need more timely access to a greater range of information concerning 
significant corporate events than currently required by Form 8-K. The 
proposed revisions to Form 8-K would: (1) significantly increase the 
list of events that trigger a Form 8-K filing requirement; and (2) 
require most Form 8-K reports to be filed no later than the second 
business day following occurrence of the event to which the report 
relates.\132\
---------------------------------------------------------------------------

    \132\ Form 8-K is not the exclusive means by which a company can 
comply with the requirements of Regulation FD. Alternatively, a 
company may comply with Regulation FD by disclosing the information 
through another method or combination of methods that is reasonably 
designed to effect broad, non-exclusionary distribution of the 
information to the public.
    \133\ Filings under current Item 5 for volunatary reporting have 
no deadline, while submissions under current Item 9 for Regulation 
FD disclosures are filed based on the requirements of Regulation FD.
---------------------------------------------------------------------------

B. Objectives

    The proposals would enhance investor confidence in the fairness and 
integrity of the securities markets by requiring companies to provide 
more current disclosure about several significant corporate events. In 
addition to accelerating the filing deadlines for events that already 
trigger the Form 8-K filing requirements, the proposals would expand 
the types of information covered by Form 8-K to include:
     Entry into a material agreement not made in the ordinary 
course of business;
     Termination of a material agreement not made in the 
ordinary course of business;
     Termination or reduction of business relationship with a 
customer;
     Creation of any direct or contingent financial obligation 
that is material to the company;
     Events triggering a direct or contingent financial 
obligation that is material to the company;
     Exit activities including material write-offs and 
restructuring charges;
     Any material impairment;
     A change in a rating agency decision, issuance of a credit 
watch or change in a company outlook;
     Movement of the company's securities from one exchange or 
quotation system to another, delisting of the company's securities from 
an exchange or quotation system, or a notice that a company does not 
comply with a listing standard;
     Conclusion or notice that security holders no longer 
should rely on the

[[Page 42935]]

company's previously issued financial statements or a related audit 
report; and
     Any material limitation, restriction, or prohibition, 
including the beginning and end of lock-out periods, regarding the 
company's employee benefit, retirement and stock ownership plans.
    We also are proposing to move the following items from other 
Exchange Act reports to Form 8-K:
     Unregistered sales of equity securities by the company; 
and
     Material modifications to rights of the company's security 
holders.
    Finally, we are proposing to expand the current Form 8-K item that 
requires disclosure about the resignation of a director to also require 
disclosure regarding the appointment or departure of a company's 
principal officers and newly elected directors. We would also combine 
the current Form 8-K item regarding changes in fiscal years with a 
requirement to disclose material amendments in a corporation's articles 
or bylaws. We believe that these proposals would provide for faster and 
more effective disclosure of important information by issuers to the 
investing public.

C. Legal Basis

    We are proposing the amendments to Form 8-K under the authority set 
forth in Sections 7, 10 and 19 of the Securities Act and Sections 12, 
13, 15, 23, and 36 of the Exchange Act.

D. Small Entities Subject to the Proposed Revisions

    The proposed changes to Form 8-K would affect issuers that are 
small entities. Exchange Act Rule 0-10(a)\133\ defines an issuer, other 
than an investment company, to be a ``small business'' or ``small 
organization'' if it had total assets of $5 million or less on the last 
day of its most recent fiscal year. As of February 20, 2002, we 
estimated that there were approximately 2,500 issuers, other than 
investment companies, that may be considered small entities. The 
proposed revisions to Form 8-K would apply to any small entity that is 
subject to Exchange Act reporting requirements.
---------------------------------------------------------------------------

    \133\ 17 CFR 240.0-10(a).
---------------------------------------------------------------------------

E. Reporting, Recordkeeping, And Other Compliance Requirements

    Form 8-K currently consists of nine disclosure items. The 
amendments would add 13 new disclosure items, including those being 
moved from annual and quarterly reports, and substantially expand two 
existing items. All small entities that are subject to the reporting 
requirements of 13(a) or 15(d) of the Exchange Act would be subject to 
these amendments. Because reporting companies already file Form 8-K for 
some events, no additional professional skills beyond those currently 
possessed by these filers would be necessary to prepare the form for 
the proposed new types of events. We expect that reporting of these new 
disclosure items would increase costs incurred by small entities 
because they would have to file Form 8-K more frequently. We have 
calculated for purposes of the Paperwork Reduction Act that each filer, 
including small entities, would be subject to an added annual reporting 
burden of approximately 3.75 hours and an estimated annual average cost 
of $3,375 for disclosure assistance from outside counsel as a result of 
the amendments.

F. Duplicative, Overlapping, or Conflicting Federal Rules

    The proposed Form 8-K disclosure would not duplicate, overlap, or 
conflict with other federal rules. Companies file Form 8-K to report 
significant events that occur between other required Exchange Act 
filings. Although limited Form 8-K disclosure and some exhibits 
attached to Form 8-K may have to be included as part of subsequent 
annual or quarterly reports filed by the company, most Form 8-K 
disclosure does not have to be repeated in another filing. We are 
proposing to eliminate from the annual and quarterly reports the items 
that we are proposing to move to Form 8-K. There are no other 
requirements that companies file or provide similar information at the 
time the events triggering Form 8-K occur.

G. Significant Alternatives

    The Regulatory Flexibility Act directs the Commission to consider 
significant alternatives that would accomplish the stated objective, 
while minimizing any significant adverse impact on small entity 
issuers. In connection with the proposed revisions to Form 8-K, we 
considered the following alternatives: (a) The establishment of 
differing compliance or reporting requirements or timetables that take 
into account the resources available to small entities; (b) the 
clarification, consolidation, or simplification of Form 8-K reporting 
requirements for small entities; (c) the use of performance rather than 
design standards; and (d) an exemption from coverage of the Form 8-K 
requirements, or any part thereof, for small entities.
    We believe that different compliance or reporting requirements or 
timetables for small entities would interfere with achieving the 
primary goal of making information about significant corporate events 
promptly available to investors and the public securities markets. We 
do, however, solicit comment on whether small business issuers, which 
is a broader category of issuers than small entities,\134\ should be 
subject to fewer Form 8-K disclosure requirements than other issuers. 
We also solicit comment as to whether small business issuers should be 
subject to longer Form 8-K filing deadlines. Although we generally 
believe that an exemption for small entities from coverage of the 
proposed revisions is not appropriate, we solicit comment on the 
propriety of a complete exemption from the requirements for small 
business issuers. We also think that the current and proposed Form 8-K 
disclosure requirements are clear and straightforward. They generally 
require brief disclosure indicating that a specific significant 
corporate event has occurred. Therefore, it does not seem necessary to 
develop separate requirements for small entities. We have used design 
rather than performance standards in connection with the proposed Form 
8-K revisions because we want this disclosure to appear in a specific 
type of disclosure filing so that investors will know where to find 
information about specific significant corporate events and that the 
form is comparable between large and small issuers. We also want the 
information to be filed electronically with us using the EDGAR filing 
system. We do not believe that performance standards for small entities 
would be consistent with the purpose of the proposed revisions.
---------------------------------------------------------------------------

    \134\ Item 10 of Regulation S-B (17 CFR 228.10) defines a small 
business issuer as a company that has revenues of less than $25 
million, is a U.S. or Canadian issuer, is not an investment company, 
and has a public float of less than $25 million. Also, if it is a 
majority owned subsidiary, the parent corporation also must be a 
small business issuer. Rule 0-10 of the Exchange Act (17 CFR 240.10) 
defines a small entity for purposes of the Regulatory Flexibility 
Act as a company that, on the last day of its most recent fiscal 
year, had total assets of $5 million or less.
---------------------------------------------------------------------------

H. Solicitation of Comments

    We encourage the submission of comments with respect to any aspect 
of this Initial Regulatory Flexibility Analysis. In particular, we 
request comments regarding: (i) The number of small entity issuers that 
may be affected by the proposed revisions; (ii) the existence or nature 
of the potential impact of the proposed revisions on small entity 
issuers discussed in the analysis; and (iii) how to quantify the impact 
of the proposed revisions. Commenters are asked to describe the nature 
of any impact and provide empirical data supporting the extent of

[[Page 42936]]

the impact. Such comments will be considered in the preparation of the 
Final Regulatory Flexibility Analysis, if the proposed revisions are 
adopted, and will be placed in the same public file as comments on the 
proposed amendments themselves.

VII. Small Business Regulatory Enforcement Fairness Act

    For purposes of the Small Business Regulatory Enforcement Fairness 
Act of 1996 (``SBREFA''),\135\ a rule is ``major'' if it has resulted, 
or is likely to result in:
---------------------------------------------------------------------------

    \135\ Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996).
---------------------------------------------------------------------------

     An annual effect on the economy of $100 million or more;
     A major increase in costs or prices for consumers or 
individual industries; or
     Significant adverse effects on competition, investment or 
innovation.
    Commenters should provide empirical data on (a) the annual effect 
on the economy; (b) any increase in costs or prices for consumers or 
individual industries; and (c) any effect on competition, investment or 
innovation. We request your comments on the reasonableness of this 
estimate.

VIII. Statutory Basis

    We are proposing the amendments to Securities Exchange Act Form 8-K 
pursuant to Sections 7, 10 and 19 of the Securities Act, as amended, 
and Sections 12, 13, 15 and 23 of the Securities Exchange Act, as 
amended.

Text of the Proposed Amendments

List of Subjects in 17 CFR Parts 228, 229, 240 and 249

    Brokers, Reporting and recordkeeping requirements, Securities.

    For the reasons set out above, we propose to amend title 17, 
chapter II of the Code of Federal Regulations as follows:

PART 228--INTEGRATED DISCLOSURE SYSTEM FOR SMALL BUSINESS ISSUERS

    1. The authority citation for Part 228 continues to read in part as 
follows:

    Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2, 
77z-3, 77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77jjj, 77nnn, 
77sss, 78l, 78m, 78n, 78o, 78u-5, 78w, 78ll, 78mm, 80a-8, 80a-29, 
80a-30, 80a-37 and 80b-11.


Sec. 228.10  [Amended]

    2. Amend Sec. 228.10 by removing paragraph (e)(1)(iii).
    3. Amend Sec. 228.601 by:
    a. Revising paragraph (a)(1);
    b. Adding new footnote ``*****'' to the caption ``Exchange Act 
Forms'' ``8-K'' in the Exhibit Table;
    c. Revising exhibit titles (6), (7) and (17) in the Exhibit Table;
    d. Removing ``N/A'' corresponding to exhibit titles (6) and (7) 
under all captions in the Exhibit Table;
    e. Adding an ``X'' corresponding to exhibit items (3), (6), (7) and 
(10), under the caption ``Exchange Act Forms'' ``8-K'' in the Exhibit 
Table; and
    f. Revising paragraphs (b)(6), (b)(7), and (b)(17).
    The revisions and additions read as follows:


Sec. 228.601  (Item 601)  Exhibits.

    (a) Exhibits and index of exhibits. (1) The exhibits required by 
the exhibit table generally must be filed or incorporated by reference.
* * * * *

Exhibit Table

* * * * *
(6) Notice of delisting or failure to satisfy listing standards
(7) Notice or letter on validity of audit or consent
* * * * *
(17) Letter on departure of director
* * * * *
    * * *A Form 8-K (Sec. 249.308 of this chapter) exhibit is required 
only if relevant to the subject matter of the Form 8-K. For example, if 
the Form 8-K pertains to the departure of a director, only the exhibit 
described in paragraph (b)(17) of this section need be filed. A 
required exhibit may be incorporated by reference from a previous 
filing.
    (b) Description of exhibits. * * *
    (6) Notice of delisting or failure to satisfy listing standards. 
Any written notice from a national securities exchange or national 
securities association that a class of securities of the small business 
issuer which is listed on the exchange or quoted in an inter-dealer 
quotation system of the national securities association does not 
satisfy a listing standard of, or has been delisted from, the exchange 
or association.
    (7) Notice or letter on validity of audit or consent. Any written 
notice from the small business issuer's current or previously engaged 
independent accountant that the independent accountant is withdrawing a 
previously issued audit report or that the small business issuer no 
longer may rely on a previously issued audit report covering one or 
more years for which the small business issuer is required to provide 
audited financial statements under Regulation S-X (part 210 of this 
chapter), and any letter from the independent accountant to the 
Commission stating whether the independent accountant agrees with the 
statements made by the small business issuer describing the events 
giving rise to the notice.
* * * * *
    (17) Letter on departure of director. Any written correspondence 
from a former director concerning the circumstances surrounding the 
former director's resignation, declination to stand for re-election, or 
removal, including a letter from the former director to the Commission 
stating whether the former director agrees with statements made by the 
small business issuer describing the former director's departure.
* * * * *
    4. Amend Sec. 228.701 to revise paragraph (e) to read as follows:


Sec. 228.701  (Item 701) Recent sales of unregistered securities; use 
of proceeds from registered securities.

* * * * *
    (e) If the information called for by this paragraph (e) is being 
presented on Form 8-K (Sec. 249.308 of this chapter) under the Exchange 
Act, and where the securities sold by the registrant are convertible or 
exchangeable into equity securities, or are warrants or options 
representing equity securities, disclose the terms of conversion or 
exercise of the securities.
* * * * *

PART 229--Standard Instructions for Filing Forms Under Securities 
Act of 1933, Securities Exchange Act of 1934 and Energy Policy and 
Conservation Act of 1975--Regulation S-K

    5. The authority citation for Part 229 continues to read in part as 
follows:

    Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2, 
77z-3, 77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77iii, 77jjj, 
77nnn, 77sss, 78c, 78i, 78j, 78l, 78m, 78n, 78o, 78u-5, 78w, 
78ll(d), 78mm, 79e, 79n, 79t, 80a-8, 80a-29, 80a-30, 80a-31(c), 80a-
37, 80a-38(a) and 80b-11, unless otherwise noted.
* * * * *


Sec. 229.10  [Amended]

    6. Amend Sec. 229.10 by redesignating paragraph (c)(2)(i) as 
paragraph (c)(2) and by removing paragraph (c)(2)(ii).
    7. Amend Sec. 229.601 by:
    a. Revising paragraph (a)(1);
    b. Adding new footnote 5 to the caption ``Exchange Act Forms'' ``8-
K'' in the Exhibit Table;
    d. Removing the ``reserved'' designation for exhibits (6) and (7) 
and adding titles to exhibits (6) and (7) in the Exhibit Table;

[[Page 42937]]

    e. Removing ``N/A'' corresponding to exhibit titles (6) and (7) 
under all captions in the table;
    f. Adding an ``X'' corresponding to exhibit items (3), (6), (7) and 
(10) under the caption ``Exchange Act Forms'' ``8-K'' in the Exhibit 
Table;
    g. Revising exhibit title (17) in the Exhibit Table;
    h. Adding the text of paragraphs (b)(6) and (b)(7); and
    h. Revising paragraph (b)(17).
    The revisions and additions read as follows:


Sec. 229.601  (Item 601) Exhibits.

    (a) Exhibits and index required. (1) Subject to Rule 411(c) 
(Sec. 230.411(c) of this chapter) under the Securities Act and Rule 
12b-32 (Sec. 240.12b-32 of this chapter) under the Exchange Act 
regarding incorporation of exhibits by reference, the exhibits required 
in the exhibit table shall be filed as indicated, as part of the 
registration statement or report.
* * * * *

Exhibit Table

* * * * *
(6) Notice of delisting or failure to satisfy listing standards
(7) Notice or letter on validity of audit or consent
* * * * *
(17) Letter on departure of director
* * * * *
    5. Form 8-K Exhibits. A Form 8-K (Sec. 249.308 of this chapter) 
exhibit is required only if relevant to the subject matter of the Form 
8-K. For example, if the Form 8-K pertains to the departure of a 
director, only the exhibit described in paragraph (b)(17) of this 
section need be filed. A required exhibit may be incorporated by 
reference from a previous filing.
    (b) Description of exhibits. * * *
    (6) Notice of delisting or failure to satisfy listing standards. 
Any written notice from a national securities exchange or national 
securities association that a class of securities of the registrant 
which is listed on the exchange or quoted in an inter-dealer quotation 
system of the national securities association does not satisfy a 
listing standard of, or has been delisted from, the exchange or 
association.
    (7) Notice or letter on validity of audit or consent. Any written 
notice from the registrant's current or previously engaged independent 
accountant that the independent accountant is withdrawing a previously 
issued audit report or that the registrant no longer may rely on a 
previously issued audit report covering one or more years for which the 
registrant is required to provide audited financial statements under 
Regulation S-X (part 210 of this chapter), including any letter from 
the independent accountant to the Commission stating whether the 
independent accountant agrees with the statements made by the 
registrant describing the events giving rise to the notice.
* * * * *
    (17) Letter on departure of director. Any written correspondence 
from a former director concerning the circumstances surrounding the 
former director's resignation, declination to stand for re-election, or 
removal, including a letter from the former director to the Commission 
stating whether the former director agrees with statements made by the 
registrant describing the former director's departure.
* * * * *
    8. Amend Sec. 229.701 to revise paragraph (e) to read as follows:


Sec. 229.701  (Item 701) Recent sales of unregistered securities; use 
of proceeds from registered securities.

* * * * *
    (e) Terms of conversion or exercise. If the information called for 
by this paragraph (e) is being presented on Form 8-K (Sec. 249.308 of 
this chapter) under the Exchange Act, and where the securities sold by 
the registrant are convertible or exchangeable into equity securities, 
or are warrants or options representing equity securities, disclose the 
terms of conversion or exercise of the securities.
* * * * *

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 
1934

    9. The authority citation for part 240 continues to read in part as 
follows:

    Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i, 
78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5, 
78w, 78x, 78ll, 78mm, 79q, 79t, 80a-20, 80a-23, 80a-29, 80a-37, 80b-
3, 80b-4 and 80b-11, unless otherwise noted.
* * * * *
    10. Amend Sec. 240.12b-25 by revising the heading and paragraphs 
(a) and (b)(2)(ii) to read as follows:


Sec. 240.12b-25  Notification of inability to timely file all or any 
required portion of a Form 10-K, 10-KSB, 20-F, 11-K, N-SAR, Form 10-Q, 
Form 10-QSB or Form 8-K.

    (a) If all or any required portion of an annual or transition 
report on Form 10-K, 10-KSB, 20-F, 11-K, or a quarterly or transition 
report on Form 10-Q or 10-QSB, or a current report on Form 8-K required 
to be filed pursuant to sections 13 or 15(d) of the Act and rules 
thereunder, or if all or any portion of a semi-annual, annual or 
transition report on Form N-SAR required to be filed pursuant to 
section 30 of the Investment Company Act of 1940 and the rules 
thereunder is not filed within the time period prescribed for such 
report, the registrant, no later than one business day after the due 
date for such report, shall file a Form 12b-25 (17 CFR 249.322) with 
the Commission which shall contain disclosure of its inability to file 
the report timely and the reasons therefor in reasonable detail.
    (b) * * *
    (1) * * *
    (2) * * *
    (i) * * *
    (ii) The subject annual report, semi-annual report or transition 
report on Form 10-K, 10-KSB, 20-F, 11-K or N-SAR, or portion thereof, 
will be filed no later than the fifteenth calendar day following the 
prescribed due date; or the subject quarterly report or transition 
report on Form 10-Q or 10-QSB, or portion thereof, will be filed no 
later than the fifth calendar day following the prescribed due date; or 
the subject current report on Form 8-K, or portion thereof, will be 
filed no later than the second business day following the prescribed 
due date and, in the case of Form 8-K, specifying the Item number or 
numbers to be included in the filing; and
* * * * *
    11. Amend Sec. 240.13a-11 by adding new paragraph (c) and a new 
note to read as follows:


Sec. 240.13a-11  Current reports on Form 8-K (Sec. 249.308 of this 
chapter).

* * * * *
    (c) A registrant that fails to file a Form 8-K that is required to 
be filed shall not be liable under Sections 13 and 15(d) of the 
Exchange Act for the failure to file in a timely manner if all of the 
following conditions are satisfied:
    (1) On the Form 8-K due date, the company maintained sufficient 
procedures to provide reasonable assurances that the registrant is able 
to collect process and disclose, within the specified time period, the 
information required to be disclosed by Form 8-K; and
    (2) No officer, employee or agent of the registrant knew, or was 
reckless in not knowing, that a report on Form 8-K was required to be 
filed and once an executive officer of the registrant became aware of 
its failure to file a required Form 8-K, it promptly (and not later 
than two business days after

[[Page 42938]]

becoming aware of its failure to file) filed a Form 8-K with the 
Commission containing the required information and stating the date, or 
approximate date, on which the report should have been filed.


    Note: This rule does not have any effect on a registrant's 
liability under any other provision of the securities laws, 
including without limitation Rule 10b-5 (Sec. 240.10b-5 of this 
chapter) under the Exchange Act and Section 11 of the Securities 
Act. This rule does not apply to Item 3.05 of Form 8-K.


    12. Amend Sec. 240.15d-10 by revising the note after paragraph (i) 
to read as follows:


Sec. 240.15d-10  Transition Reports.

* * * * *
    (i) * * *

    Note: In addition to the report or reports required to be filed 
pursuant to this section, every issuer, except a foreign private 
issuer or an investment company required to file reports pursuant to 
Rule 30b1-1 under the Investment Company Act of 1940, that changes 
its fiscal closing date is required to file a report on Form 8-K 
responding to Item 5.03 thereof within the period specified in 
General Instruction B.1. to that form.


    13. By amending Sec. 240.15d-11 by adding new paragraph (c) and a 
new note to read as follows:


Sec. 240.15d-11  Current reports on Form 8-K (Sec. 249.308 of this 
chapter).

* * * * *
    (c) A registrant that fails to file a Form 8-K that is required to 
be filed shall not be liable under Sections 13 and 15(d) of the 
Exchange Act for the failure to file in a timely manner if all of the 
following conditions are satisfied:
    (i) On the Form 8-K due date, the company maintained sufficient 
procedures to provide reasonable assurances that the registrant is able 
to collect, process and disclose, within the specified time period, the 
information required to be disclosed by Form 8-K; and
    (ii) No officer, employee or agent of the registrant knew, or was 
reckless in not knowing, that a report on Form 8-K was required to be 
filed and once an executive officer of the registrant became aware of 
its failure to file a required Form 8-K, it promptly (and not later 
than two business days after becoming aware of its failure to file) 
filed a Form 8-K with the Commission containing the required 
information and stating the date, or approximate date, on which the 
report should have been filed.


    Note: This rule does not have any effect on a registrant's 
liability under any other provision of the securities laws, 
including without limitation Rule 10b-5 (Sec. 240.10b-5 of this 
chapter) under the Exchange Act and Section 11 of the Securities 
Act. This rule does not apply to Item 3.05 of Form 8-K.

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

    14. The authority citation for part 249 continues to read in part 
as follows:

    Authority: 15 U.S.C. 78a, et seq., unless otherwise noted.
* * * * *
    15. By amending Form 8-K (referenced in Sec. 249.308) by revising 
General Instructions B.1, B.2, B.3, B.4 and B.5, and by revising all of 
the items appearing under the caption ``Information to Be Included in 
the Report'' after the General Instructions to read as follows:

    Note: The text of Form 8-K does not, and this amendment will 
not, appear in the Code of Federal Regulations.

Form 8-K

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
* * * * *

General Instructions

* * * * *

B. Events To Be Reported and Time for Filing of Reports

    1. A report on this form is required to be filed upon the 
occurrence of any one or more of the events specified in the items in 
Sections 1-5 of this form. A report is to be filed within two business 
days after occurrence of the event. If the event occurs on a Saturday, 
Sunday, or holiday on which the Commission is not open for business, 
then the two business day period shall begin to run on and include the 
first business day thereafter. A registrant either furnishing a report 
on this form under Item 6.01 (Regulation FD Disclosure) or electing to 
file a report on this form under Item 7.01 (Other Events) solely to 
satisfy its obligations under Regulation FD (Sec. 243.100 and 
Sec. 243.101 of this chapter) must furnish such report or make such 
filing in accordance with the requirements of Rule 100(a) of Regulation 
FD (Sec. 243.100(a) of this chapter).
    2. The information in a report furnished pursuant to Item 6.01 
(Regulation FD Disclosure) shall not be deemed to be ``filed'' for 
purposes of Section 18 of the Exchange Act or otherwise subject to the 
liabilities of that section, unless the registrant specifically states 
that the information is to be considered ``filed'' under the Exchange 
Act or incorporates it by reference into a filing under the Securities 
Act or the Exchange Act.
    3. If the registrant previously has reported substantially the same 
information as required by this form, the registrant need not make an 
additional report of the information on this form. To the extent that 
an item calls for disclosure of subsequent developments concerning a 
previously reported event or transaction, any information required in 
the new report about the previously reported event or transaction may 
be provided by incorporation by reference to the previously filed 
report. The term ``previously reported'' is defined in Rule 12b-2 
(Sec. 240.12b-2 of this chapter).
    4. When considering current reporting on this form, particularly of 
other events of material importance pursuant to Item 6.01 (Regulation 
FD Disclosure) and Item 7.01 (Other Events), registrants should have 
due regard for the accuracy, completeness and currency of the 
information in registration statements filed under the Securities Act 
which incorporate by reference information in reports filed pursuant to 
the Exchange Act, including reports on this form.
    5. A registrant's report under Item 6.01 (Regulation FD Disclosure) 
or Item 7.01 (Other Events) will not be deemed an admission as to the 
materiality of any information in the report that is required to be 
disclosed solely by Regulation FD.
* * * * *

Information To Be Included in the Report

Section 1--Registrant's Business and Operations

Item 1.01  Entry into a Material Agreement
    If the registrant has entered into an agreement that is material to 
the registrant and not made in the ordinary course of the registrant's 
business, or into any material amendment of such agreement, furnish the 
following information:
    (a) The identity of the parties to the agreement and a description 
of any material relationship between any of the parties other than in 
respect of the agreement;
    (b) A brief description of the agreement;
    (c) The rights and obligations of each party to the agreement that 
are material to the registrant;
    (d) Any material conditions to the agreement becoming binding or 
effective; and
    (e) The duration of the agreement and any material termination 
provisions.
    Instructions.
    1. For purposes of this Item 1.01, an ``agreement'' means any 
definitive agreement, whether unconditionally

[[Page 42939]]

binding or binding subject to stated conditions, any letter of intent 
or other non-binding agreement or any similar document.
    2. Any material agreement not made in the ordinary course of the 
registrant's business must be disclosed under this Item 1.01. An 
agreement is deemed to be not made in the ordinary course of a 
registrant's business, and therefore must be disclosed under this item, 
even if the agreement is such as ordinarily accompanies the kind of 
business conducted by the registrant, if it involves the subject matter 
identified in Item 601(b)(10)(ii)(A)-(D) of Regulation S-K. An 
agreement involving the subject matter identified in Item 
601(b)(10)(iii)(A) or (B) also must be disclosed unless Item 
601(b)(10)(iii)(C) would not require the registrant to file a material 
contract involving the same subject matter as an exhibit.
    3. A registrant must provide disclosure under this Item 1.01 if the 
registrant succeeds as a party to the agreement by assumption or 
assignment.
    4. Disclosure of a material amendment is required under this item 
even if the underlying agreement previously has not been disclosed 
because the agreement was entered into prior to the effective date of 
this Item 1.01. In such a case, the amendment and the underlying 
agreement must be filed as exhibits to the report disclosing the 
amendment.
Item 1.02  Termination of a Material Agreement
    If a definitive material agreement, or other material agreement or 
instrument, which was not made in the ordinary course of the 
registrant's business and to which the registrant is a party, is 
terminated and termination of the agreement is material to the 
registrant, provide the following:
    (a) the identity of the parties to the agreement and a description 
of any material relationship between any of the parties other than in 
respect of the agreement;
    (b) a brief description of the agreement;
    (c) a description of the material circumstances surrounding the 
termination;
    (d) any material early termination penalties incurred by the 
registrant; and
    (e) a discussion of management's analysis of the effect of the 
termination on the registrant.
    Instructions.
    1. No disclosure is required under this Item 1.02 during 
negotiations or discussions regarding termination of an agreement 
unless and until the agreement has been terminated or the registrant 
decides to terminate the agreement. If the registrant is not the 
terminating party, no disclosure is required until the terminating 
party has notified the registrant of the termination in writing, unless 
the agreement provides for notification in another manner, and all 
material conditions to termination other than those within the control 
of the terminating party or the passage of time have been satisfied.
    2. Disclosure of the termination of a material agreement is 
required under this item even if the agreement previously was not 
disclosed because the agreement was entered into prior to effectiveness 
of Item 1.01. In such a case, the terminated material agreement must be 
filed as an exhibit to the report disclosing the termination.
Item 1.03  Termination or Reduction of Business Relationship with 
Customer
    If the registrant becomes aware that a customer has terminated or 
reduced the scope of a business relationship with the registrant and 
the amount of loss of revenues to the registrant from such termination 
or reduction represents an amount equal to 10% or more of the 
registrant's consolidated revenues during the registrant's most recent 
fiscal year, identify the customer and discuss management's analysis of 
the effect of the loss or reduction on the registrant. For purposes of 
this item, a group of customers under common control or customers that 
are affiliates of each other would be regarded as a single customer.
    Instruction. No disclosure is required under this Item 1.03 during 
negotiations or discussions with a customer or group of related 
customers unless and until an executive officer of the registrant is 
aware that the termination or reduction required to be disclosed has 
occurred or will occur. A reduction or suspension of orders will not 
trigger a disclosure requirement unless and until an executive officer 
of the registrant is aware that a termination of reduction of a 
business relationship requiring disclosure has occurred.

Section 2--Financial Information

Item 2.01  Completion of Acquisition or Disposition of Assets
    If the registrant or any of its majority-owned subsidiaries has 
completed the acquisition or disposition of a significant amount of 
assets, otherwise than in the ordinary course of business, furnish the 
following information:
    (a) The date of completion of the transaction;
    (b) A brief description of the assets involved;
    (c) The nature and amount of consideration given or received for 
the assets and, if applicable, the formula or principle followed in 
determining the amount of such consideration;
    (d) The identity of the person(s) from whom the assets were 
acquired or to whom they were sold and the nature of any material 
relationship, other than in respect of the transaction, between such 
person(s) and the registrant or any of its affiliates, or any director 
or officer of the registrant, or any associate of any such director or 
officer; and
    (e) If the transaction being reported is an acquisition, the source 
and the amount of funds or other consideration used in making the 
purchases, and if any part of the purchase price is represented by 
funds or other consideration borrowed or otherwise obtained for the 
purpose of acquiring, holding, trading or voting the securities, a 
description of the transaction and the names of the parties to the 
transaction, except that if the source of all or any part of the funds 
is a loan made in the ordinary course of business by a bank, as defined 
in Section 3(a)(6) of the Exchange Act, the name of the bank shall not 
be made available to the public if the person at the time of filing the 
report so requests in writing and files such request, naming such bank, 
with the Secretary of the Commission.
    Instructions.
    1. No information need be given as to (i) any transaction between 
any person and any wholly-owned subsidiary of such person; (ii) any 
transaction between two or more wholly-owned subsidiaries of any 
person; or (iii) the redemption or other acquisition of securities from 
the public, or the sale or other disposition of securities to the 
public, by the issuer of such securities.
    2. The term ``acquisition'' includes every purchase, acquisition by 
lease, exchange, merger, consolidation, succession or other 
acquisition, except that the term does not include the construction or 
development of property by or for the registrant or its subsidiaries or 
the acquisition of materials for such purpose. The term ``disposition'' 
includes every sale, disposition by lease, exchange, merger, 
consolidation, mortgage, assignment or hypothecation of assets, whether 
for the benefit of creditors or otherwise, abandonment, destruction, or 
other disposition.
    3. The information called for by this item is to be given as to 
each transaction or series of related transactions of the size 
indicated. The acquisition or disposition of securities is deemed the 
indirect acquisition or disposition of the assets represented by such 
securities if

[[Page 42940]]

it results in the acquisition or disposition of control of such assets.
    4. An acquisition or disposition shall be deemed to involve a 
significant amount of assets:
    (i) If the registrant's and its other subsidiaries' equity in the 
net book value of such assets or the amount paid or received for the 
assets upon such acquisition or disposition exceeded 10% of the total 
assets of the registrant and its consolidated subsidiaries; or
    (ii) If it involved a business (see Sec. 210.11-01(d) of this 
chapter) that is significant (see Sec. 210.11-01(b) of this chapter).

Acquisitions of individually insignificant businesses are not required 
to be reported pursuant to this Item 2.01 unless they are related 
businesses (see Sec. 210.3-05(a)(3) of this chapter) and are 
significant in the aggregate.
    5. Attention is directed to the requirements in Item 8.01 
(Financial Statements and Exhibits) with respect to the filing of:
    (i) Financial statements of businesses acquired;
    (ii) Pro forma financial information; and
    (iii) Copies of the plans of acquisition or disposition as exhibits 
to the report.
Item 2.02  Bankruptcy or Receivership
    (a) If a receiver, fiscal agent or similar officer has been 
appointed for a registrant or its parent, in a proceeding under the 
Bankruptcy Act or in any other proceeding under State or Federal law in 
which a court or governmental authority has assumed jurisdiction over 
substantially all of the assets or business of the registrant or its 
parent, or if such jurisdiction has been assumed by leaving the 
existing directors and officers in possession but subject to the 
supervision and orders of a court or governmental authority, disclose 
the following:
    (1) The name or other identification of the proceeding;
    (2) The identity of the court or governmental authority;
    (3) The date that jurisdiction was assumed; and
    (4) The identity of the receiver, fiscal agent or similar officer 
and the date of his or her appointment.
    (b) If an order confirming a plan of reorganization, arrangement or 
liquidation has been entered by a court or governmental authority 
having supervision or jurisdiction over substantially all of the assets 
or business of the registrant or its parent, disclose the following;
    (1) The identity of the court or governmental authority;
    (2) The date that the order confirming the plan was entered by the 
court or governmental authority;
    (3) A summary of the material features of the plan and, pursuant to 
Item 8.01 (Financial Statements and Exhibits), a copy of the plan as 
confirmed;
    (4) The number of shares or other units of the registrant or its 
parent issued and outstanding, the number reserved for future issuance 
in respect of claims and interests filed and allowed under the plan, 
and the aggregate total of such numbers; and
    (5) Information as to the assets and liabilities of the registrant 
or its parent as of the date that the order confirming the plan was 
entered, or a date as close thereto as practicable.
    Instruction. The information called for in paragraph (b)(5) of this 
Item 2.02 may be presented in the form in which it was furnished to the 
court or governmental authority.
Item 2.03  Creation of a Direct or Contingent Financial Obligation That 
Is Material to the Registrant
    If the registrant or any third party enters into a transaction or 
agreement that creates any material direct or contingent financial 
obligation to which the registrant is subject, furnish the following 
information:
    (a) A brief description of the transaction or agreement, including 
an identification of the parties to the agreement;
    (b) The nature and amount of the material direct or contingent 
financial obligation created by the transaction or agreement, including 
a description of the events that may cause the obligation to arise, 
increase, or become accelerated;
    (c) If applicable, the names of any underwriters or placement or 
other agents for the transaction, or any persons performing a similar 
function in the case of a private transaction, and the amount of any 
fees or other compensation paid to them;
    (d) In the case of a transaction or agreement without underwriters 
or placement or other agents or persons performing a similar function, 
the names of any lenders or other persons who are the beneficiaries of 
the obligation described in paragraph (b) of this Item 2.03; and
    (e) A discussion of management's analysis of the effect of the 
direct or contingent financial obligation on the registrant.
    Instructions.
    1. Disclosure is required if the registrant becomes subject to the 
direct or contingent financial obligation, whether or not the 
registrant is a party to the agreement.
    2. No obligation to make disclosure under this Item 2.03 shall 
arise until a definitive agreement that is unconditional or subject 
only to customary closing conditions exists or, if there is no such 
agreement, when settlement of the transaction occurs.
    3. If the transaction or agreement has been or will be disclosed in 
a prospectus related to a registrant statement of the registrant filed 
in the required time period under Securities Act Rule 424 (Sec. 230.424 
of this chapter), disclosure may be made by reference to that 
prospectus to the extent the prospectus contains the required 
information.
    4. No disclosure is required with respect to the issuance of notes, 
drafts, acceptances, bills of exchange or other commercial instruments 
with a maturity of one year or less issued in the ordinary course of 
the registrant's business.
    5. For purposes of this item, the term ``contingent financial 
obligation'' includes guarantees, co-obligor arrangements, obligations 
under keepwell agreements, obligations to purchase assets and any 
similar arrangements and all other obligations that exist or may arise 
under an agreement. For purposes of this instruction, a ``keepwell 
agreement'' means any agreement or undertaking under which the 
registrant is, or would be, obligated to provide or arrange for the 
provision of funds or property to an affiliate or third party.
Item 2.04  Events Triggering a Direct or Contingent Financial 
Obligation That Is Material to the Registrant
    (a) If a triggering event as defined in paragraph (b) occurs, 
furnish the following information:
    (1) A description of the agreement or agreements under which the 
triggering event occurred;
    (2) A description of the triggering event;
    (3) The nature and amount of the material direct or contingent 
financial obligation of the registrant that may arise, increase or 
become accelerated as a result of the triggering event, including 
obligations under cross-default, cross-acceleration or similar 
arrangements; and
    (4) A discussion of management's analysis of the effect on the 
registrant of the triggering event and of the obligations that have 
arisen, increased or been accelerated.
    (b) For purposes of this Item 2.04, a ``triggering event'' shall be 
an event, including an event of default, event of acceleration or 
similar event, that has occurred and as a consequence of which, either 
(i) unconditionally, or

[[Page 42941]]

subject to no condition other than the passage of time, a material 
direct or contingent financial obligation of the registrant has arisen 
(including as a result of an increase in an obligation) or been 
accelerated, or (ii) a party to the agreement shall have the 
unconditional right to cause such an obligation to arise or be 
accelerated, in either case whether or not the registrant is a 
defaulting party; provided, however, that no triggering event shall be 
deemed to have occurred during negotiations or discussions to which the 
registrant is a party regarding a determination of whether a triggering 
event has occurred, a waiver of the triggering event, an amendment that 
would cure the triggering event or a similar arrangement, unless a 
party to the agreement with the right to do so notifies to the 
registrant or otherwise declares that the triggering event has 
occurred. Such notice or declaration must be in writing unless the 
agreement provides for notification in another manner.
    Instructions.
    1. So long as the registrant becomes, or will become, subject to a 
direct or contingent financial obligation as the result of the 
occurrence of a triggering event, a report under this item is required. 
The registrant need not be a party to the agreement under which the 
triggering event occurs.
    2. For purposes of this item, ``contingent financial obligations'' 
includes guarantees, co-obligor arrangements, obligations under 
keepwell agreements, obligations to purchase assets and any similar 
arrangements and all other obligations that exist or may arise under an 
agreement. For purposes of this instruction, a ``keepwell agreement'' 
means any agreement or undertaking under which the registrant is, or 
would be, obligated to provide or arrange for the provision of funds or 
property to an affiliate or other third party.
Item 2.05  Exit Activities Including Material Write-Offs and 
Restructuring Charges
    If the Board of Directors or the registrant's officer or officers 
authorized to take such action, if board approval is not required, 
definitively commits the registrant to a course of action, including, 
without limitation, a plan of termination or plan to exit an activity, 
under which material write-offs or restructuring charges will be 
incurred under generally accepted accounting principles applicable to 
the registrant, furnish the following information:
    (a) The date on which such commitment was made;
    (b) A description of the course of action and the reasons for the 
write-off or restructuring charge;
    (c) A description of the asset or assets subject to write-off;
    (d) The estimated amount of the write-off or restructuring charge;
    (e) The estimated amount of the write-off or restructuring charge 
that will result in future cash expenditures; and
    (f) An analysis of the effect of the write-off or restructuring 
charge on the company, including the segment affected.
Item 2.06  Material Impairments
    If the Board of Directors or the registrant's officer or officers 
authorized to make the relevant conclusion, if board approval is not 
required, concludes that the registrant is required to record a 
material charge for impairment to one or more of its assets, including, 
without limitation, impairments of securities or goodwill, under 
generally accepted accounting principles applicable to the registrant, 
furnish the following information:
    (a) The date on which the conclusion was reached;
    (b) A description of the asset or assets subject to impairment and 
the facts and circumstances leading to the impairment;
    (c) The estimated amount of the impairment charge; and
    (d) An analysis of the effect of the impairment charge on the 
registrant, including the segment affected.

Section 3--Securities and Trading Markets

Item 3.01  Rating Agency Decisions
    (a) Furnish the information required by paragraph (b) of this Item 
3.01 if the registrant is notified by, or receives any communication 
from, any rating agency to whom the registrant provides information 
(other than its annual report or reports filed with the Commission) to 
the effect that the organization has decided to:
    (1) Change or withdraw the credit rating assigned to, or outlook 
on, the registrant or any class of debt or preferred security or other 
indebtedness of the registrant (including securities or obligations as 
to which the registrant is a guarantor or has a contingent financial 
obligation);
    (2) Refuse to assign a credit rating to the registrant, to any 
class of the registrant's securities, or to any of the registrant's 
indebtedness after being requested to do so by the registrant;
    (3) Place the registrant or any class of the registrant's 
securities or indebtedness on ``credit watch'' or similar status; or
    (4) Take any similar action.
    (b) If the registrant has received any notification or other 
communication as described in paragraph (a) of this Item 3.01, file the 
notice as an exhibit to the report on Form 8-K and furnish the 
following information:
    (1) The date of the registrant received the notification or 
communication;
    (2) The name of the rating agency;
    (3) The nature of the rating agency's decision; and
    (4) A discussion of management's analysis of the effect of the 
change or other decision on the registrant.
    Instructions.
    1. No disclosure need be made under this Item 3.01 during any 
discussions between the registrant and any rating organization 
regarding any decision required to be disclosed unless and until the 
rating organization notifies the registrant that the rating 
organization has made a final decision to take such action.
    2. For purposes of this Item 3.01, the term ``rating agency'' means 
an entity whose primary business is the issuance of credit ratings.
    3. The term ``contingent financial obligation'' as used in this 
Item 3.01 has the same meaning as in the definition included in 
Instruction 4 to Item 2.03 of this Form.
Item 3.02  Notice of Delisting or Failure To Satisfy Listing Standards; 
Transfer of Listing
    (a) If the registrant has received notice from the national 
securities exchange or national securities association that is the 
principal trading market for a class of the registrant's common stock 
or similar equity securities to the effect that the registrant or a 
class of the registrant's securities does not satisfy the listing 
requirements or standards of the exchange or association, or that a 
class of the registrant's securities has been delisted from or by the 
exchange or association, furnish the following information:
    (1) The date that the registrant received the notice;
    (2) The listing requirement or standard that the registrant failed 
to satisfy or the reason for the delisting as indicated by the exchange 
or association; and
    (3) A discussion of the planned response of the registrant to the 
notice and management's analysis of the effect of the delisting or the 
failure to satisfy a listing standard on the registrant.
    (b) If the registrant has taken definitive action to cause the 
listing or quotation of a class of its common stock or similar equity 
securities to be terminated from the national securities

[[Page 42942]]

exchange or inter-dealer quotation system of a registered national 
securities association that is the principal trading market for that 
class of securities, including by reason of a transfer of the listing 
or quotation to another securities exchange or quotation system, 
furnish a description of the action taken and date of the action.
Item 3.03  Unregistered Sales of Equity Securities
    If the registrant sells equity securities in a transaction that is 
not registered under the Securities Act, furnish the information set 
forth in paragraphs (a) through (e) of Item 701 of Regulation S-K 
(Sec. 229.701(a) through (e) of this chapter). The registrant has no 
obligation to disclose the information required by this Item 3.03 until 
a definitive agreement for the sale of equity securities that is 
unconditional or subject only to customary closing conditions exists, 
or if there is no such agreement, when settlement of the sale occurs.
Item 3.04  Material Modification to Rights of Security Holders
    (a) If the constituent instruments defining the rights of the 
holders of any class of registered securities have been materially 
modified and such modification was not reported in a publicly filed 
definitive proxy statement or information statement under Section 14 of 
the Exchange Act, state the title of the class of securities involved 
and describe briefly the general effect of such modification upon the 
rights of holders of such securities.
    (b) If the rights evidenced by any class of registered securities 
have been materially limited or qualified by the issuance or 
modification of any other class of securities, state briefly the 
general effect of the issuance or modification of such other class of 
securities upon the rights of the holders of the registered securities.

Section 4--Matters Related to Accountants

Item 4.01  Changes in Registrant's Certifying Accountant
    (a) If an independent accountant who was previously engaged as the 
principal accountant to audit the registrant's financial statements, or 
an independent accountant upon whom the principal accountant expressed 
reliance in its report regarding a significant subsidiary, resigns (or 
indicates that it declines to stand for re-appointment after completion 
of the current audit) or is dismissed, provide the information required 
by Item 304(a)(1) of Regulation S-K, including compliance with Item 
304(a)(3) of Regulation S-K (Sec. 229.304(a)(1) and (a)(3) of this 
chapter).
    (b) If a new independent accountant has been engaged as either the 
principal accountant to audit the registrant's financial statements or 
as an independent accountant on whom the principal accountant is 
expected to express reliance in its report regarding a significant 
subsidiary, then provide the information required by Item 304(a)(2) of 
Regulation S-K (Sec. 229.304(a)(2) of this chapter).
    Instruction. The resignation or dismissal of an independent 
accountant, or its declination to stand for re-appointment, is a 
reportable event separate from the engagement of a new independent 
accountant. On some occasions, two reports on Form 8-K are required for 
a single change in accountants, the first on the resignation (or 
declination to stand for re-appointment ) or dismissal of the former 
accountant and the second when the new accountant is engaged. 
Information required in the second Form 8-K in such situations need not 
be provided to the extent that it has been reported previously in the 
first Form 8-K.
Item 4.02  Non-Reliance on Previously Issued Financial Statements or a 
Related Audit Report
    (a) If the audit committee, or the board of directors in the 
absence of an audit committee, or the company's officer or officers 
authorized to make such a conclusion, conclude that any previously 
issued financial statements, covering one or more years for which the 
registrant is required to provide audited financial statements under 
Regulation S-X or Regulation S-B, should no longer be relied upon, or 
if the registrant receives notice from its current or a previously 
engaged independent accountant that action should be taken to prevent 
future reliance on a previously issued report related to any such 
financial statements, furnish the following information:
    (1) The date on which the conclusion was reached or the registrant 
received the notice;
    (2) A description of the events giving rise to the conclusion or 
notice related to the reliability of the financial statements;
    (3) A statement of whether the audit committee, or the board of 
directors in the absence of an audit committee, discussed with the 
independent accountant the subject matter giving rise to the conclusion 
or notice; and
    (4) A description of management's plans to alleviate the issue.
    (b) In addition, the registrant must:
    (1) Provide the independent accountant with a copy of the 
disclosures it is making in response to this Item 4.02 that the 
independent accountant shall receive no later than the business day 
following the day that the registrant files the disclosures with the 
Commission;
    (2) Request the independent accountant to furnish the registrant as 
promptly as possible with a letter addressed to the Commission stating 
whether the independent accountant agrees with the statements made by 
the registrant in response to this Item 4.02 and, if not, stating the 
respects in which it does not agree; and
    (3) File the independent accountant's letter with the Commission 
within two business days after receipt as an exhibit by amendment to 
the report on Form 8-K.

Section 5--Corporate Governance and Management

Item 5.01  Changes in Control of Registrant
    (a) If, to the knowledge of management, a change in control of the 
registrant has occurred, furnish the following information:
    (1) The identity of the person(s) who acquired such control;
    (2) The date and a description of the transaction(s) which resulted 
in the change in control;
    (3) The basis of the control, including the percentage of voting 
securities of the registrant now beneficially owned directly or 
indirectly by the person(s) who acquired control;
    (4) The amount of the consideration used by such person(s);
    (5) The source and the amount of funds or other consideration used 
in making the purchases, and if any part of the purchase price is 
represented by funds or other consideration borrowed or otherwise 
obtained for the purpose of acquiring, holding, trading or voting the 
securities, a description of the transaction and the names of the 
parties to the transaction, except that if the source of all or any 
part of the funds is a loan made in the ordinary course of business by 
a bank, as defined in Section 3(a)(6) of the Exchange Act, the name of 
the bank shall not be made available to the public if the person at the 
time of filing the report so requests in writing and files such 
request, naming such bank, with the Secretary of the Commission;
    (6) The identity of the person(s) from whom control was assumed; 
and
    (7) Any arrangements or understandings among members of both

[[Page 42943]]

the former and new control groups and their associates with respect to 
election of directors or other matters.
    (b) Furnish the information required by Item 403(c) of Regulation 
S-K.
    Instructions. Responses to this Item 5.01 may be given by reference 
to any earlier filing with the Commission pursuant to its rules under 
the Exchange Act.
Item 5.02  Departure of Directors or Principal Officers; Election of 
Directors; Appointment of Principal Officers
    (a)(1) If a director has resigned or declined to stand for re-
election to the board of directors since the date of the last annual 
meeting of shareholders because of a disagreement with the registrant, 
known to an executive officer of the registrant, on any matter relating 
to the registrant's operations, policies or practices, or if a director 
has been removed for cause from the board of directors, the registrant 
must:
    (i) State the date of such resignation, declination to stand for 
re-election, or removal;
    (ii) State any positions held by the director on any committee of 
the board of directors before the director's resignation, declination 
to stand for re-election, or removal; and
    (iii) Briefly describe the circumstances of the director's 
resignation, declination to stand for re-election or removal.
    (2) If the director has furnished the registrant with any written 
document concerning the circumstances surrounding his or her 
resignation, declination, or removal, the registrant shall summarize 
the contents of that document and file a copy of the document as an 
exhibit to the report on Form 8-K.
    (3) The registrant also must:
    (i) Provide the director with a copy of the disclosures it is 
making in response to this Item 5.02, which the director shall receive 
no later than the business day following the day that the registrant 
files the disclosures with the Commission;
    (ii) Request the director to furnish the registrant as promptly as 
possible with a letter addressed to the Commission stating whether he 
or she agrees with the statements made by the registrant in response to 
this Item 5.02 and, if not, stating the respects in which he or she 
does not agree; and
    (iii) File the director's letter with the Commission within two 
business days after receipt as an exhibit by amendment to the report on 
Form 8-K.
    (b) If the registrant's chief executive officer, president, chief 
financial officer, chief accounting officer, chief operating officer, 
or any person serving an equivalent function, has resigned or been 
terminated from that position, or if a director has resigned, been 
removed, or declined to stand for re-election (except in circumstances 
described in paragraph (a) of this Item 5.02), furnish the following 
information:
    (1) The date when the event occurred; and
    (2) A description of the reasons for the event.
    (c) If the registrant appoints a new principal executive officer, 
president, principal financial officer, principal accounting officer, 
principal operating officer, or person serving an equivalent function, 
furnish the following information:
    (1) The name and position of the newly appointed officer and the 
date of the appointment;
    (2) A brief description of any arrangement or understanding between 
the newly appointed officer and any other persons, naming such persons, 
pursuant to which such officer was selected as an officer;
    (3) The information required by Items 401(d), 401(e) and 404(a) of 
Regulation S-K (Secs. 229.401(d) and (e) and Sec. 229.404(a) of this 
chapter); and
    (4) A brief description of the material terms of any employment 
agreement between the registrant and that officer.
    (d) If the registrant elects a new director, except by a vote of 
security holders at an annual meeting, furnish the following 
information:
    (1) The name of the newly elected director and the date of 
election;
    (2) A brief description of any arrangement or understanding between 
the new director and any other persons, naming such persons, pursuant 
to which such director was selected as a director;
    (3) The committees of the board of directors to which the new 
director has been, or at the time of this disclosure is expected to be, 
named; and
    (4) the information required by Item 404(a) of Regulation S-K 
(Sec. 229.404(a) of this chapter).
    Instruction. To the extent that any information called for in 
clauses (3) and (4) of paragraph (c) or clauses (3) and (4) of 
paragraph (d) of this Item 5.02 is undetermined at the time of the 
required filing, that fact shall be stated in the filing and the 
registrant shall make an amended filing under this Item 5.02 containing 
such information within two business days after the information is 
determined.
Item 5.03  Amendments to Articles of Incorporation or Bylaws; Change in 
Fiscal Year
    (a) If the registrant amends its articles of incorporation or 
bylaws and the amendment was not disclosed in a proxy statement or 
information statement filed by the registrant, furnish the following 
information:
    (1) The effective date of the amendment;
    (2) A description of the provision adopted or changed by amendment 
and, if applicable, the previous provision; and
    (3) In the event of an amendment to change the fiscal year of the 
registrant from that used in its most recent filing with the 
Commission, state the date of the new fiscal year end and the form (for 
example, Form 10-K, Form 10-KSB, Form 10-Q or Form 10-QSB) on which the 
report covering the transition period will be filed.
    (b) If the registrant determines to change the fiscal year from 
that used in its most recent filing with the Commission other than by 
means of:
    (1) A submission to a vote of security holders through the 
solicitation of proxies or otherwise; or
    (2) An amendment to its articles of incorporation or bylaws, state 
the date of such determination, the date of the new fiscal year end, 
and the form (for example, Form 10-K, Form 10-KSB, Form 10-Q or Form 
10-QSB) on which the report covering the transition period will be 
filed.
Item 5.04  Material Events Regarding the Registrant's Employee Benefit, 
Retirement and Stock Ownership Plans
    If the registrant becomes aware that an event will occur that will 
materially limit, restrict, or prohibit the ability of participants to 
acquire, dispose or convert assets in any employee benefit, retirement 
or stock ownership plan of the registrant, other than a periodic or 
other limitation, restriction or prohibition based on presumed or 
actual knowledge of, or access to, material non-public information, and 
that plan is broadly available to the registrant's employees, furnish 
the following information:
    (a) The period or expected period of the limitation;
    (b) A description of the nature of the limitation; and
    (c) A description of the circumstances surrounding, or reasons for, 
the limitation.

Section 6--Regulation FD

Item 6.01  Regulation FD Disclosure
    Unless filed under Item 7.01, report under this item only 
information that

[[Page 42944]]

the registrant elects to disclose through Form 8-K pursuant to 
Regulation FD (Secs. 243.100-243.103 of this chapter).

Section 7--Other Events

Item 7.01  Other Events
    The registrant may, at its option, report under this item any 
events, with respect to which information is not otherwise called for 
by this form, that the registrant deems of importance to security 
holders. The registrant may, at its option, file a report under this 
item disclosing the nonpublic information required to be disclosed by 
Regulation FD (Secs. 243.100-243.103 of this chapter).

Section 8--Financial Statements and Exhibits

Item 8.01  Financial Statements and Exhibits.
    List below the financial statements, pro forma financial 
information and exhibits, if any, filed as a part of this report.
    (a) Financial statements of businesses acquired.
    (1) For any business acquisition required to be described in answer 
to Item 2.01, financial statements of the business acquired shall be 
filed for the periods specified in Rule 3-05(b) of Regulation S-X 
(Sec. 210.3-05(b) of this chapter).
    (2) The financial statements shall be prepared pursuant to 
Regulation S-X except that supporting schedules need not be filed. A 
manually signed accountants' report should be provided pursuant to Rule 
2-02 of Regulation S-X [Sec. 210.2-02 of this chapter].
    (3) With regard to the acquisition of one or more real estate 
properties, the financial statements and any additional information 
specified by Rule 3-14 of Regulation S-X (Sec. 210.3-14 of this 
chapter) shall be filed.
    (4) Financial statements required by this item may be filed with 
the initial report, or by amendment not later than 60 days after the 
date that the initial report on Form 8-K must be filed. If the 
financial statements are not included in the initial report, the 
registrant should so indicate in the Form 8-K report and state when the 
required financial statements will be filed. The registrant may, at its 
option, include unaudited financial statements in the initial report on 
Form 8-K.
    (b) Pro forma financial information.
    (1) For any transaction required to be described in answer to Item 
2.01 above, furnish any pro forma financial information that would be 
required pursuant to Article 11 of Regulation S-X.
    (2) The provisions of (a)(4) above shall also apply to pro forma 
financial information relative to the acquired business.
    (c) Exhibits. The exhibits shall be furnished in accordance with 
the provisions of Item 601 of Regulation S-K (Sec. 229.601 of this 
chapter).
    Instructions. During the period after a registrant has reported a 
business combination pursuant to Item 2.01, until the date on which the 
financial statements specified by this Item 8.01 must be filed, the 
registrant will be deemed current for purposes of its reporting 
obligations under Section 13(a) or 15(d) of the Securities Exchange Act 
of 1934. With respect to filings under the Securities Act of 1933, 
however, registration statements will not be declared effective and 
post-effective amendments to registrations statements will not be 
declared effective unless financial statements meeting the requirements 
of Rule 3-05 of Regulation S-X (Sec. 210.3-05 of this chapter) are 
provided. In addition, offerings should not be made pursuant to 
effective registration statements or pursuant to Rules 505 and 506 of 
Regulation D (Secs. 230.501 through 506 of this chapter), where any 
purchasers are not accredited investors under Rule 501(a) of that 
Regulation, until the audited financial statements required by Rule 3-
05 of Regulation S-X (Sec. 210.3-05 of this chapter) are filed. 
Provided, however, that the following offerings or sales of securities 
may proceed notwithstanding that financial statements of the acquired 
business have not been filed:
    (a) Offerings or sales of securities upon the conversion of 
outstanding convertible securities or upon the exercise of outstanding 
warrants or rights;
    (b) Dividend or interest reinvestment plans;
    (c) Employee benefit plans;
    (d) Transactions involving secondary offerings; or
    (e) Sales of securities pursuant to Rule 144 (Sec. 230.144 of this 
chapter).
* * * * *
    16. Amend Form 10-Q (referenced in Sec. 249.308a) by:
    a. Deleting Items 2(a), 2(b), 2(c), 3, 4, 5 and 6(b) in Part II--
Other Information;
    b. Removing the paragraph (d) designation in Item 2;
    c. Re-designating Item 6 as Item 3;
    d. Deleting the words ``and Reports on Form 8-K (Sec. 249.308 of 
this chapter)'' from the caption to newly re-designated Item 3; and
    e. Removing the paragraph (a) designation in newly re-designated 
Item 3.
    17. Amend Form 10-QSB (referenced in Sec. 249.308b) by:
    a. Deleting Items 2(a), 2(b), 2(c), 3, 4, 5 and 6(b) in Part II--
Other Information;
    b. Removing the paragraph (d) designation in Item 2;
    c. Re-designating Item 6 as Item 3;
    d. Deleting the words ``and Reports on Form 8-K'' from the caption 
to newly re-designated Item 3; and
    e. Removing the paragraph (a) designation in newly re-designated 
Item 3.
    18. Amend Form 10-K (referenced in Sec. 249.310) by:
    a. Revising Items 5 and 9;
    b. Deleting paragraph (b) of Item 14;
    c. Revising the caption to Item 14 to read ``Exhibits and Financial 
Statement Schedules''; and
    d. Re-designating Items 14(c) and (d) as Items 14(b) and (c).
    The revisions and additions read as follows:

    Note: The text of Form 10-K does not, and this amendment will 
not, appear in the Code of Federal Regulations.

Form 10-K

Annual Report Pursuant to Section 13 or 15(d) of the Securities 
Exchange Act of 1934

* * * * *

Part II

Item 5  Market for Registrant's Common Equity and Related Stockholder 
Matters

    (a) Furnish the information required by Item 201 of Regulation S-K 
(Sec. 229.201 of this chapter).
* * * * *

Item 9  [Reserved]

* * * * *
    19. Amend Form 10-KSB (referenced in Sec. 249.310a) by:
    a. Revising Items 5 and 8;
    b. Deleting paragraph (b) of Item 13;
    c. Deleting the words ``and Reports on Form 8-K'' from the caption 
to Item 13;
    d. Removing the paragraph (a) designation in Item 13;
    e. Deleting Items 3, 4 and 6 in Part II of ``Information Required 
in Annual Report of Transitional Small Business Issuers''; and
    f. re-designating Item 5 in Part II of ``Information Required in 
Annual Report of Transitional Small Business Issuers'' as Item 3.
    The revisions and additions read as follows:

    Note: The text of Form 10-KSB does not, and this amendment will 
not, appear in the Code of Federal Regulations.


[[Page 42945]]



Form 10-KSB

(Check one)
[  ] Annual Report Pursuant to Section 13 or 15(d) of the Securities 
Exchange Act of 1934
* * * * *

Part II

Item 5  Market for Registrant's Common Equity and Related Stockholder 
Matters

    (a) Furnish the information required by Item 201 of Regulation S-B 
(Sec. 228.201 of this chapter).
* * * * *

Item 8  [Reserved]

* * * * *
    20. Amend Sec. 249.322 by revising paragraph (a) to read as 
follows:


Sec. 249.322  Form 12b-25--Notification of late filing.

    (a) This form shall be filed pursuant to Sec. 240.12b-25 of this 
chapter by issuers who are unable to file timely all or any required 
portion of an annual or transition report on Form 10-K and Form 10-KSB, 
20-F, or 11-K or a quarterly or transition report on Form 10-Q and Form 
10-QSB or a current report on Form 8-K pursuant to section 13 or 15(d) 
of the Act or a semi-annual, annual or transition report on Form N-SAR 
pursuant to section 30 of the Investment Company Act of 1940. The 
filing shall consist of a signed original and three conformed copies, 
and shall be filed with the Commission at Washington, DC 20549, no 
later than one business day after the due date for the periodic report 
in question. Copies of this form may be obtained from ``Publications'', 
Securities and Exchange Commission, 450 5th Street, NW, Washington, DC 
20549 and at our website at http://www.sec.gov.
* * * * *
    21. Amend Form 12b-25 (referenced in Sec. 249.322) by:
    a. Revising the preamble;
    b. Revising paragraph (b) of Part II; and
    c. Revising Part III to read as follows:

    Note: The text of Form 12b-25 does not, and this amendment will 
not, appear in the Code of Federal Regulations.

Form 12b-25

Notification of Late Filing

(Check One): -- Form 10-K -- Form 20-F -- Form 11-K -- Form 10-Q -- 
Form 8-K -- Form N-SAR
* * * * *

Part II--Rules 12B-25(b) and (c)

* * * * *
    (b) The subject annual report, semi-annual report, transition 
report on Form 10-K, Form 20-F, Form 11-K or Form N-SAR, or portion 
thereof, will be filed on or before the fifteenth calendar day 
following the prescribed due date; or the subject quarterly report or 
transition report on Form 10-Q, or portion thereof, will be filed on or 
before the fifth calendar day following the prescribed due date; or the 
subject current report on Form 8-K will be filed on or before the 
second business day following the prescribed due date; and
* * * * *

Part III--Narrative

    State below in reasonable detail why forms 10-K, 20-F, 11-K, 10-Q, 
8-K, N-SAR, or the transition report or portion thereof, could not be 
filed within the prescribed time period.
* * * * *

    Dated: June 17, 2002.

    By the Commission.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 02-15706 Filed 6-24-02; 8:45 am]
BILLING CODE 8010-01-P