not comprehended within the purposes of section 16 (b) of the Act, the disposition of a security, purchased in a transaction specified in paragraph (a), pursuant to a plan or agreement for merger or consolidation, or reclassification of the issuers' securities, or for the exchange of its securities for the securities of another person which has acquired its assets, where the terms of such plan or agreement are binding upon all stockholders of the issuer except to the extent that dissenting stockholders may be entitled, under statutory provisions or provisions contained in the certificate of incorporation, to receive the appraised or fair value of their holdings. (d) The exemptions provided by this rule shall not apply to any transaction made unlawful by section 16 (c) of the Act or by any rules and regulations thereunder. (e) The burden of establishing market price of a security for the purpose of this rule shall rest upon the person claiming the exemption. (f) The exemption granted pursuant to this rule shall apply to any liability under section 16 (b) existing at or after the effective date of this rule, but shall not be deemed to affect judgments rendered prior to that date. Rule 16b-7. Exemption From Section 16 (b) of Certain Acquisitions and Dispositions of Securities Pursuant to Mergers or Consolidations. (a) The following transactions shall be exempt from the provisions of section 16 (b) as not comprehended within the purpose of said subsection: (1) The acquisition of a security of a company, pursuant to a merger or consolidation, in exchange for a security of a company which, prior to said merger or consolidation, owned 85 percent or more of the equity securities of all other companies involved in the merger or consolidation except, in the case of consolidation, the resulting company; (2) The disposition of a security, pursuant to a merger or consolidation of a company which, prior to said merger or consolidation, owned 85 percent or more of the equity securities of all other companies involved in the merger or consolidation except, in the case of consolidations, the resulting company; (3) The acquisition of a security of a company, pursuant to a merger or consolidation, in exchange for a security of a company which, prior to said merger or consolidation, held over 85 percent of the combined assets of all the companies undergoing merger or consolidation, computed according to their book values prior to the merger or consolidation as determined by reference to their most recent available financial statements for a 12-month period prior to the merger or consolidation. (4) The disposition of a security, pursuant to a merger or consolidation, of a company which, prior to said merger or consolidation, held over 85 percent of the combined assets of all the companies undergoing merger or consolidation, computed according to their book values prior to the merger or consolidation, as determined by reference to their most recent available financial statements for a 12-month period prior to the merger or consolidation. (b) A merger within the meaning of this rule shall include the sale or purchase of substantially all the assets of one company by another in exchange for stock which is then distributed to the security holders of the company which sold its assets. (c) Notwithstanding the foregoing, if an officer, director or stockholder shall make any purchase (other than a purchase exempted by this rule) of a security in any company involved in the merger or consolidation and any sale (other than a sale exempted by this rule) of a security in any other company involved in the merger or consolidation within any period of less than 6 months during which the merger or consolidation took place the exemption provided by this rule shall be unavailable to such officer, director, or stockholder. Rule 16b-8. Exemption from Section 16 (b) of Certain Securities Received Upon Surrender of Similar Equity Securities. Any receipt by a person from an issuer of shares of stock of a class having general voting power and registered on a national securities exchange, upon the surrender by such person of an equal number of shares of stock of the issuer of a class which does not have general voting power and which is not so registered, pursuant to provisions of the issuer's certificate of incorporation, for the purpose of and accompanied simultaneously or followed immediately by the sale of the shares so received, shall be exempt from the operation of section 16 (b) as a transaction not comprehended within the purpose of said subsection, if the following conditions exist: (a) The person so receiving such shares is not an officer or director, or the beneficial owner, directly or indirectly, immediately prior to such receipt, of more than 10 percent of a registered equity security of the issuer; (b) The shares surrendered and the shares issued upon such surrender shall be of classes which are freely transferable and entitle the holders thereof to participate equally per share in all distributions of earnings and assets; (c) The surrender and issuance are made pursuant to provisions of a certificate of incorpora tion which require that the shares issued upon such surrender shall be registered upon issuance in the name of a person or persons other than the holder of the shares surrendered and may be required to be issued as of right only in connection with the public offering, sale and distribution of such shares and the immediate sale by such holder of such shares for that purpose, or in connection with a gift of such shares; (d) Neither the shares so surrendered nor any shares of the same class, nor other shares of the same class as those issued upon such surrender, have been or are purchased (otherwise than in a transaction exempted by this rule), by the person surrendering such shares, within six months before or after such surrender or issuance. EXEMPTION OF CERTAIN SECURITIES FROM SECTION 16 (c) Rule 16c-1. Exemption of Certain Securities Any security shall be exempt from the operation of section 16 (c) to the extent necessary to render lawful under such section the execution by a broker of an order for an account in which he has no direct or indirect interest. Rule 16c-2. Exemption From Section 16 (c) of Certain Transactions Effected in Connection With a Distribution. Any security shall be exempt from the operation of Section 16 (c) of the Act to the extent necessary to render lawful under such section any sale made by or on behalf of a dealer in connection with a distribution of a substantial block of securities, upon the following conditions: (a) The sale is represented by an over-allotment in which the dealer is participating as a member of an underwriting group, or the dealer or a person acting on his behalf intends in good faith to offset such sale with a security to be acquired by or on behalf of the dealer as a participant in an underwriting, selling or solicitingdealer group of which the dealer is a member at the time of the sale, whether or not the security to be so acquired is subject to a prior offering to existing security holders or some other class of persons; and (b) Other persons not within the purview of Section 16 (c) of the Act are participating in the distribution of such block of securities on terms at least as favorable as those on which such dealer is participating and to an extent at least equal to the aggregate participation of all persons exempted from the provisions of Section 16 (c) of the Act by this rule. However, the performance Rule 16c-3. Exemption of Sales of Securities (a) Whenever any person is entitled, as an incident to his ownership of an issued security and without the payment of consideration, to receive another security "when issued" or "when distributed," the security to be acquired shall be exempt from the operation of section 16 (c), provided that: (1) the sale is made subject to the same conditions as those attaching to the right of acquisition, and (2) such person exercises reasonable diligence to deliver such security to the purchaser promptly after his right of acquisition matures, and (3) such person reports the sale on the appropriate form for reporting transactions by person subject to section 16 (a). (b) This rule shall not be construed as exempting transactions involving both a sale of a security "when issued" or "when distributed" and a sale of the security by virtue of which the seller expects to receive the "when-issued" or "whendistributed" security, if the two transactions combined result in a sale of more units than the aggregate of those owned by the seller plus those to be received by him pursuant to his right of acquisition. ARBITRAGE TRANSACTIONS Rule 16d-1. Arbitrage Transactions Under Section 16. It shall be unlawful for any director, or officer of an issuer of an equity security which is registered on a national securities exchange to effect any foreign or domestic arbitrage transaction in any equity security of such issuer, whether registered or not, unless he shall include such transaction in the statements required by section 16 (a) and Rule 16a-1 and shall account to such issuer for the profits arising from such transaction, as provided in section 16 (b). The provisions of section 16 (c) shall not apply to such arbitrage transactions. The provisions of Rule 16a-1 and of section 16 shall not apply to any bona fide foreign or domestic arbitrage transaction insofar as it is effected by any person other than such director or officer of the issuer of such security. PRESERVATION OF RECORDS AND REPORTS OF CERTAIN Rule 17a-2. Reports on Stabilizing Activities. (b) Definitions.-Unless the context clearly indicates otherwise, for the purposes of this rule and the forms prescribed hereby, the following terms shall have the meanings indicated: (1) The term "manager" shall mean the person stabilizing for his sole account or for the account of a syndicate or group in which he is a participant. (2) The term "transfer" shall mean any change in the control of a position in a security unaccompanied by a change in ownership. (3) The term "offered security" shall include any security of the same class and series. (4) The term "exempted security" means an exempted security as defined in section 3 (a) (12) of the Act, including securities issued, or guaranteed both as to principal and interest, by the Inter national Bank for Reconstruction and Development. (c) Notifications by Managers.-Any person subject to this rule who effects one or more stabilizing purchases for his sole account or for the account of a syndicate or group shall: (1) Promptly notify the Commission of (A) the name and class of the security being stabilized, (B) the price, the date, and the time at which the first stabilizing purchase was effected and, (C) if the syndicate or group has then been formed, (i) the names and addresses of the members thereof and (ii) their respective commitments, or in the case of a standby or contingent underwriting the percentage participation of each member of the syndicate or group therein, except that in the case of a best-efforts underwriting only the total amount to be offered need be stated to meet the requirement of clause (C) (ii) or, (D) if the syndicate or group has not been formed at the time when the first stabilizing purchase is effected, the information called for by clause (C) above shall be furnished to the Commission promptly after the group is formed: provided, however, That if the information called for by clauses (C) or (D) of this subparagraph (1) has been or is to be filed with the Commission pursuant to the Securities Act of 1933 as amended or pursuant to an exemption from registration under Regulation A adopted under the Securities Act of 1933 then such information shall not be included in the notice furnished pursuant to this subparagraph (1) and, provided, further, That if such information has been otherwise filed with the Commission it may be incorporated by reference into such notice; and (2) Promptly furnish to each of the members of the syndicate or group the information (other than price) called for by clauses (A) and (B) of subparagraph (1) hereof; and (3) Promptly notify the Commission and the members of such syndicate or group of the date and time when stabilizing was terminated. (d) Reports as Manager.-Any person subject to this rule who effects one or more stabilizing purchases for his sole account or for the account of a syndicate or group shall: (1) Report to the Commission "as manager" on Form X-17A-1, not later than three business days following the day upon which the first stabilizing purchase was effected, all purchases, sales and transfers, in the stabilized and offered securities, and if the offering is a rights offering, in the rights, during the period beginning on the ninth business day prior to the first day upon which the offering was made or beginning on the business day prior to the day on which the first stabilizing purchase was effected, whichever date is earlier, and ending on the day upon which the first stabilizing purchase was effected; provided, however, That in the case of securities offered pursuant to an effective registration statement under the Securities Act of 1933 the distribution shall not be deemed to commence for purposes of this subparagraph (1) prior to the effective date of the registration statement; and (2) Until stabilizing is terminated. report to the Commission "as manager" on Form X-17A-1, not later than the next business day, all purchases, sales and transfers, effected on any day in the stabilized and offered securities. and in the rights; and (3) If such person has a short position in the stabilized or offered security when stabilizing is terminated, report to the Commission "as manager" on Form X-17A-1, not later than the next business day, all purchases, sales and transfers. effected on any day in such security, until such short position is covered. (4) Notwithstanding the provisions of subparagraphs (1), (2) and (3) of this paragraph (d), if the person stabilizing is stabilizing for the account of a syndicate or group, he shall report "as manager" only such transactions as are effected for the account of such syndicate or group. (e) Reports Not as Managers.-The manager and any other person subject to this rule who has a participation in an account for which a stabilizing purchase is effected (other than a person stabilizing for his sole account all of whose transactions are reported "as manager") shall report "not as manager" to the Commission on Form X-17A-1, not later than five business days following the day upon which stabilizing was terminated, all purchases, sales and transfers in the stabilized and offered securities, and if the offering is a rights offering, in the rights, during the period beginning on the ninth business day prior to the first day upon which the offering was made or on the business day prior to the day upon which the first stabilizing purchase was effected, whichever date is earlier, and ending on the day when stabilizing was terminated; provided, however, (i) that transactions reported "as manager" shall not again be reported "not as manager" and (ii) that in the case of securities offered pursuant to an effective registration statement under the Securities Act of 1933 the distribution shall not be deemed to commence for purposes of this paragraph (e) prior to the effective date of the registration statement. (f) Public Records. Reports filed pursuant to this rule will be available for public inspection after all of the required reports have been filed. Rule 17a-3. Records To Be Made by Certain Exchange Members, Brokers, and Dealers. (a) Every member of a national securities exchange who transacts a business in securities directly with others than members of a national securities exchange, and every broker or dealer who transacts a business in securities through the medium of any such member, and every broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934, as amended, shall make and keep current the following books and records relating to his business: (1) Blotters (or other records of original entry) containing an itemized daily record of all purchases and sales of securities, all receipts and deliveries of securities (including certificate numbers), all receipts and disbursements of cash and all other debits and credits. Such records shall show the account for which each such transaction was effected, the name and amount of securities, the unit and aggregate purchase or sale price (if any), the trade date, and the name or other designation of the person from whom purchased or received or to whom sold or delivered. (2) Ledgers (or other records) reflecting all assets and liabilities, income and expense and capital accounts. (3) Ledger accounts (or other records) itemizing separately as to each cash and margin account of every customer and of such member, broker or dealer and partners thereof, all purchases, sales, receipts, and deliveries of securities and commodities for such account and all other debits and credits to such account. (4) Ledgers (or other records) reflecting the following: (A) securities in transfer; (B) dividends and interest received; (C) securities borrowed and securities loaned; (D) monies borrowed and monies loaned (together with a record of the collateral therefor and any substitutions in such collateral); (E) securities failed to receive and failed to deliver. (5) A securities record or ledger reflecting separately for each security as of the clearance dates all "long" or "short" positions (including securities in safekeeping) carried by such member, broker, or dealer for his account or for the account of his customers or partners and showing the location of all securities long and the offsetting position to all securities short and in all cases the name or designation of the account in which each position is carried. (6) A memorandum of each brokerage order, and of any other instruction, given or received for the purchase or sale of securities, whether executed or unexecuted. Such memorandum shall show the terms and conditions of the order or instructions and of any modification or cancellation thereof, the account for which entered, the time of entry, the price at which executed and, to the extent feasible, the time of execution or cancellation. Orders entered pursuant to the exercise of discretionary power by such member, broker, or dealer, or any employee thereof, shall be so designated. The term "instruction" shall be deemed to include instructions between partners and employees of a member, broker, or dealer. The term "time of entry" shall be deemed to mean the time when such member, broker, or dealer transmits the order or instruction for execution or, if it is not so transmitted, the time when it is received. (7) A memorandum of each purchase and sale of securities for the account of such member, broker, or dealer showing the price and, to the extent feasible, the time of execution. (8) Copies of confirmations of all purchases and sales of securities and copies of notices of all other debits and credits for securities, cash, and other items for the account of customers and partners of such member, broker, or dealer. (9) A record in respect of each cash and margin account with such member, broker, or dealer containing the name and address of the beneficial owner of such account and, in the case of a margin account, the signature of such owner; provided that, in the case of a joint account or an account of a corporation, such records are required only in respect of the person or persons authorized to transact business for such account. (10) A record of all puts, calls, spreads, straddles, and other options in which such member, broker, or dealer has any direct or indirect interest or which such member, broker, or dealer has granted or guaranteed, containing, at least, an identification of the security and the number of units involved. (11) A record of the proof of money balances of all ledger accounts in the form of trial balances. Such trial balances shall be prepared currently at least once a month. (12) (A) A questionnaire or application for employment executed by each "associated person" (as hereinafter defined) of such member, broker or dealer, which questionnaire or application shall be approved in writing by an authorized representative of such member, broker or dealer and shall contain at least the following information with respect to such person: (1) his name, address, social security number, and the starting date of his employment or other association with the member, broker or dealer; (2) his date of birth; (3) the educational institutions attended by him and whether or not he graduated therefrom; (4) a complete, consecutive statement of all his business connections for at least the preceding ten years, including his reason for leaving each prior employment, and whether the employment was part-time or full-time; (5) a record of any denial of membership or registration, and of any disciplinary action taken, or sanction imposed, upon him by any federal or state agency, or by any national securities ex |