de on the condition that all or a specified amount the consideration paid for such security will promptly refunded to the purchaser unless (A)

of the securities being offered are sold at a cified price within a specified time, and (B) the pal amount due to the seller is received by him by specified date; or

(2) to the effect that the security is being offered sold on any other basis whereby all or part of re consideration paid for any such security will refunded to the purchaser if all or some of the curities are not sold, unless the security is part

an offering or distribution being made on the ›ndition that all or a specified part of the considration paid for such security will be promptly reanded to the purchaser unless (A) a specified umber of units of the security are sold at a specied price within a specified time, and (B) the total mount due to the seller is received by him by a pecified date.

(b) This rule shall not apply to any offer or sale of securities as to which the seller has a firm commitment from underwriters others (subject only to customary conditions precedent, including "market outs") for the purchase of all the securities being offered.

1 Rule 10b-13. Prohibiting Other Purchases During Tender Offer or Exchange Offer

(a) No person who makes a cash tender offer or exchange offer for any equity security shall, directly or indirectly, purchase, or make any arrangement to purchase, any such security (or any other security which is immediately convertible into or exchangeable for such security), otherwise than pursuant to such tender offer or exchange offer, from the time such tender offer or exchange offer is publicly announced or otherwise made known by such person to holders of the security to be acquired until the expiration of the period, including any extensions thereof, during which securities tendered pursuant to such tender offer or exchange offer may by the terms of such offer be accepted or rejected: Provided, however, That if such person is the owner of another security which is immediately convertible into or exchangeable for the security which is the subject of the offer, his subsequent exercise of his right of conversion or exchange with respect to such other security shall not be prohibited by this rule.

(b) The term "exchange offer" as used in this rule shall include a tender offer for, or request or

invitation for tenders of, any security in exchange

for any consideration other than for all cash.

(c) The provisions of this rule shall not apply to a purchase of a security of the same class as that which is the subject of a cash tender offer or exchange offer (or of any other security which is immediately convertible into or exchangeable for such security) if such purchase is made by the issuer, by participating employees of the issuer or the employees of its subsidiaries, or by the trustee or other person acquiring such security for the account of such employees, pursuant to (1) a stock option plan involving only "qualified stock options," or qualifying as an "employee stock purchase plan" as those terms are defined in sections 422 and 423 of the Internal Revenue Code of 1954, as amended, or "restricted stock options" as defined in section 424 (b) of the Internal Revenue Code of 1954, as amended: Provided, however, That for the purposes of this paragraph an option which meets all of the conditions of that section other than the date of issuance shall be deemed to be "restricted stock options"; or (2) a savings, investment, pension or other stock purchase plan providing for both (A) periodic payments (or payroll deductions) for acquisition of securities by or on behalf of participating employees and (B) periodic purchases of the securities by participating employees, or the person acquiring them for the account of such employees.

(d) This rule shall not prohibit any transaction or transactions if the Commission, upon written request or upon its own motion, exempts such transaction or transactions, either unconditionally or on specified terms or conditions, as not constituting a manipulative or deceptive device or contrivance or a fraudulent, or deceptive or manipulative act or practice comprehended within the purpose of this rule.

(Adopted Oct. 8, 1969, eff. Nov. 10, 1969, Release 34-8712.)

Rule 10b-16. Disclosure of Credit Terms in Margin Transactions

(a) It shall be unlawful for any broker or dealer to extend credit, directly or indirectly, to any customer in connection with any securities transaction unless such broker or dealer has established procedures to assure that each customer

(1) is given or sent at the time of opening the account, a written statement or statements disclosing (i) the conditions under which an interest

charge will be imposed; (ii) the annual rate or rates of interest that can be imposed; (iii) the method of computing interest; (iv) if rates of interest are subject to change without prior notice, the specific conditions under which they can be changed; (v) the method of determining the debit balance or balances on which interest is to be charged and whether credit is to be given for credit balances in cash accounts; (vi) what other charges resulting from the extension of credit, if any, will be made and under what conditions; and (v) the nature of any interest or lien retained by the broker or dealer in the security or other property held as collateral and the conditions under which additional collateral can be required: Provided, however, That the requirements of this paragraph (a) (1) will be met in any case where the account is opened by telephone if the information required to be disclosed is orally communicated to the customer at that time and the required written statement or statements are sent to the customer immediately thereafter: And provided, further, That in the case of customers to whom credit is already being extended on the effective date of this rule, the written statement or statements required hereunder must be given or sent to said customers within 90 days after the effective date of this rule; and

(2) is given or sent a written statement or statements, at least quarterly, for each account in which credit was extended, disclosing (i) the balance at the beginning of the period; the date, amount and a brief description of each debit and credit entered during such period; the closing balance; and, if interest is charged for a period different from the period covered by the statement, the balance as of the last day of the interest period; (ii) the total interest charge for the period during which interest is charged (or, if interest is charged separately for separate accounts, the total interest. charge for each such account), itemized to show the dates on which the interest period began and

ended; the annual rate or rates of interest cha and the interest charge for each such different a nual rate of interest: and either each difes debit balance on which an interest calculation. based or the average debit balance for the inter period, except that if an average debit balane used, a separate average debit balance must be de closed for each interest rate applied; and (ii): other charges resulting from the extension of cred in that account: Provided, however, That if the terest charge disclosed on a statement is for a p riod different from the period covered by t statement, there must be printed on the stateme appropriate language to the effect that it should retained for use in conjunction with the next star ment containing the remainder of the required formation: And provided further, That in the cas of "equity funding programs" registered unde the Securities Act of 1933, the requirements o this paragraph (a) (2) will be met if the broke or dealer furnishes to the customer, within 1 mont after each extension of credit, a written statemen or statements containing the information required to be disclosed under this paragraph (a)(2).

(b) It shall be unlawful for any broker or dealer to make any changes in the terms and con ditions under which credit charges will be made (as described in the initial statement made unde paragraph (a) of this rule), unless the customer shall have been given not less than thirty (30) days written notice of such changes, except that no such prior notice shall be necessary where such changes are required by law: Provided, however, That if any change for which prior notice would otherwise be required under this paragraph results in a lower interest charge to the customer than would have been imposed before the change, notice of such change may be given within a reasonable time after the effective date of the change.

(Adopted Dec. 8, 1969, eff. Apr. 1, 1970, Release 34-8773; extended eff. date, Mar. 18, from Apr. 1, to July 1, 1970, Release 34-8844.)

Rule 11a-1. Regulation of Floor Trading

(a) No member of a national securities exchange, while on the floor of such exchange, shall initiate, directly or indirectly, any transaction in any security admitted to trading on such exchange, for any account in which such member has an in:terest, or for any such account with respect to which such member has discretion as to the time of execution, the choice of security to be bought or sold, the total amount of any security to be bought or sold, or whether any such transaction shall be one of purchase or sale.

(b) The provisions of paragraph (a) of this rule shall not apply to:

(1) any transaction by a registered specialist in a security in which he is so registered on such exchange;

(2) any transaction for the account of an oddlot dealer in a security in which he is so registered on such exchange;

(3) any stabilizing transaction effected in compliance with Rule 10b-7 to facilitate a distribution of such security in which such member is participating;

(4) any bona fide arbitrage transaction;

(5) any transaction made with the prior approval of a floor official of such exchange to permit such member to contribute to the maintenance of a fair and orderly market in such security, or any purchase or sale to reverse any such transaction;

(6) any transaction to offset a transaction made in error; or

(7) any transaction effected in conformity with a plan designed to eliminate floor trading activities which are not beneficial to the market and which plan has been adopted by an exchange and declared effective by the Commission. For the purpose of this rule, a plan filed with the Commission by a national securities exchange shall not become effective unless the Commission, having due regard for the maintenance of fair and orderly markets, for the public interest, and for the protection of investors, declares the plan to be effective.

(c) For the purpose of this rule the term "on the floor of such exchange" shall include the trad

ing floor; the rooms, lobbies, and other premises immediately adjacent thereto for use of members generally; other rooms, lobbies and premises made available primarily for use by members generally; and the telephone and other facilities in any such place.

(d) Any national securities exchange may apply for an exemption from the provisions of this rule in compliance with the provisions of section 11(c) of the Act.

(Adopted June 2, eff. Aug. 3, 1964, Release 34-7330.) Rule 11b-1. Regulation of Specialists

(a) (1) The rules of a national securities exchange may permit a member of such exchange to register as a specialist and to act as a dealer. Any change in or addition to the rules of such exchange in the areas covered by paragraph (a) (2) of this rule made after this rule becomes applicable to such exchange shall be subject to the provisions of paragraph (a) (3) of this rule.

(2) The rules of a national securities exchange permitting a member of such exchange to register as a specialist and to act as a dealer shall include:

(i) Adequate minimum capital requirements in view of the markets for securities on such exchange;

(ii) Requirements, as a condition of a specialist's registration, that a specialist engage in a course of dealings for his own account to assist in the maintenance, so far as practicable, of a fair and orderly market, and that a finding by the exchange of any substantial or continued failure by a specialist to engage in such a course of dealings will result in the suspension or cancellation of such specialist's registration in one or more of the securities in which such specialist is registered;

(iii) Provisions restricting his dealings so far as practicable to those reasonably necessary to permit him to maintain a fair and orderly market or necessary to permit him to act as an odd-lot dealer;

(iv) Provisions stating the responsibilities of a specialist acting as a broker in stocks in which he is registered; and

(v) Procedures to provide for the effective and

374-863 O 70-3

systematic surveillance of the activities of specialists.

(3) Every national securities exchange not exempted from this rule shall file with the Commission copies of its rules in the areas covered by paragraph (a) (2) of this rule. Any change in or addition to such rules shall take effect in the manner provided for by the rules of such exchange and the provisions of the Act and rules and regulations thereunder, except that such change or addition shall not continue in effect after the Commission enters an order disapproving such change or addition; and the Commission shall enter an order disapproving such change or addition if the Commission finds that it is inadequate to achieve the purposes of the provisions set forth in paragraph (a) (2) of this rule or is inconsistent with the public interest or the protection of investors. The Commission will not disapprove any such change or addition unless it has given such exchange written notice of its intention to determine whether or not such change or addition should be disapproved and such notice shall be given within 30 days after the filing thereof. Within 60 days after such notice, such exchange shall have the opportunity to present to the Commission any evidence or arguments with respect to such change or addition. After consideration of all relevant material presented in writing or at a hearing, the Commission may enter an order disapproving such change or addition, or may permit such change or addition to continue in effect: Provided, however, That the validity, force or effect of any act or omission by an exchange or a member, officer or employee thereof in bona fide reliance on such change or addition prior to the entry of such an order of disapproval shall not be affected thereby. (b) If after appropriate notice and opportunity for hearing the Commission finds that a member

of a national securities exchange registered wit such exchange as a specialist in a specified stoc or stocks has, for any account in which he, h member organization, or any participant there has any beneficial interest, direct or indirect, ef fected transactions in such stock or stocks whic were not part of a course of dealings reasonably necessary to permit such specialist to maintain fair and orderly market, or to act as an odd-l dealer, in the stocks in which he is registered and were not effected in a manner consistent with the rules adopted by such exchange pursuant to parsgraph (a)(2)(iii) of this rule, the Commission may by order direct such exchange to cancel, or to suspend for such period as the Commission may determine, such specialist's registration in one or more of the securities in which such specialist is registered: Provided, however, If such exchange has itself suspended or canceled such specialist's registration in one or more of the securities in which such specialist is registered, no further sanetion shall be imposed pursuant to this paragraph (b) except in a case where the Commission finds substantial or continued misconduct by a specialist: And provided, further, That the provisions of this paragraph (b) shall not apply to a member of a national securities exchange exempted pursu ant to the provisions of paragraph (d) of this rule.

(c) For the purposes of this rule, the term "rules" of an exchange shall mean its constitution, articles of incorporation, by-laws, or rules or instruments corresponding thereto, whatever the name, and its stated policies.

(d) Any national securities exchange may ap ply for an exemption from the provisions of this rule in compliance with the provisions of section 11(c) of the Act.

(Adopted Nov. 23, 1964, eff. Jan. 4, 1965, Release 34 7465.)

Rule 11d1-1. Exemption of Certain Securities From Section 11(d)(1)

A security shall be exempt from the provisions of section 11(d) (1) with respect to any transaction by a broker and dealer who, directly or indirectly, extends or maintains or arranges for the extension or maintenance of credit on the security to or for a customer if

(a) The broker and dealer has not sold the security to the customer or brought the security for the customer's account; or

(b) The security is acquired by the customer in exchange with the issuer thereof for an outstanding security of the same issuer on which credit was lawfully maintained for the customer at the time of the exchange; or

or

(c) The customer is a broker or dealer or bank;

(d) The security is acquired by the customer through the exercise of a right evidenced by a warrant or certificate expiring within 90 days after issuance, provided such right was originally issued to the customer as a stockholder of the corporation issuing the security upon which credit is to be extended, or as a stockholder of a company distributing such security in order to effectuate the provisions of section 11 of the Public Utility

Holding Company Act of 1935. The right shall be deemed to be issued to the customer as a stockholder if he actually owned the stock giving rise to the right when such right accrued, even though such stock was not registered in his name; and in determining such fact the broker and dealer may rely upon a signed statement of the customer which the broker and dealer accepts in good faith; or

(e) Such broker and dealer would otherwise be subject to the prohibition of section 11(d) (1) with respect to 50 percent or less of all the securities of the same class which are outstanding or currently being distributed, and such broker and dealer sold the security to the customer or bought the security for the customer's account on a day when he was not participating in the distribution of any new issue of such security. A broker-dealer shall be deemed to be participating in a distribution of a new issue if (1) he owns, directly or indirectly, any undistributed security of such issue, or (2) he is engaged in stabilizing activities to facilitate a distribution of such issue, or (3) he is a party to any syndicate agreement under which such stabilizing activities are being or may be undertaken, or (4) he is a party to an executory agreement to purchase or distribute such issue.

any