25968 Federal Register / Vol. 65, No. 87 / Thursday, May 4, 2000 / Notices

Transmittal Memorandum No. 19, to the

extent that it provided last year’s A–76

related Federal pay raise and inflation

factor assumptions, is canceled. The

standard retirement cost factors for the

weighted average CSRS/FERS pension

and Federal retiree health cost numbers

and the post-retirement health costs also

provided by Transmittal Memorandum

No. 19, remain in effect. Transmittal 20,

with implemented the Federal Activities

Inventory Reform (FAIR) Act, remains

in effect. Current A–76 guidance can be

accessed at OMB’s Homepage at http://

www.whitehouse.gov/OMB/circulars/

index.html#numerical

Sylvia M. Mathews,

Deputy Director.

[FR Doc. 00–11156 Filed 5–3–00; 8:45 am]

BILLING CODE

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–24425; 812–11752]

Cohesion Technologies, Inc.; Notice of

Application

April 27, 2000.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for an

order under sections 6(c) and 6(e) of the

Investment Company Act of 1940 (the

‘‘Act’’).

SUMMARY OF APPLICATION: Applicant

requests an order exempting it from all

provisions of the Act, except sections 9,

17(e) (as modified in the application),

17(f) (as modified in the application),

and 37 through 53 of the Act, and the

rules and regulations under those

sections, from the date the requested

order is issued until the earlier of (a)

August 18, 2001 or (b) the date

applicant may no longer be deemed an

investment company.

Filing Dates: The application was filed

on August 18, 1999 and amended on

November 18, 1999. Applicant has

agreed to file an amendment, the

substance of which is reflected in this

notice, during the notice period.

Hearing or Notification of Hearing: An

order granting the requested relief will

be issued unless the SEC orders a

hearing. Interested persons may request

a hearing by writing to the SEC’s

Secretary and serving applicant with a

copy of the request, personally or by

mail. Hearing requests should be

received by the SEC by 5:30 p.m. on

May 22, 2000 and should be

accompanied by proof of service on

applicant, in the form of an affidavit or,

for lawyers, a certificate of service.

Hearing requests should state the nature

of the writer’s interest, the reason for the

request, and the issues contested.

Persons who wish to be notified of a

hearing may request notification by

writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

Street, N.W., Washington, DC 20549–

0609. Applicant, Cohesion Technology,

Inc., 2500 Faber Place, Palo Alto, CA

94303.

FOR FURTHER INFORMATION CONTACT:

Mary T. Geffroy, Senior Counsel, at

(202) 942–0553, or Nadya Roytblat,

Assistant Director, at (202) 942–0564

(Office of Investment Company

Regulation, Division of Investment

Management).

SUPPLEMENTARY INFORMATION: The

following is a summary of the

application. The complete application

may be obtained for a fee at the SEC’s

Public Reference Branch, 450 Fifth

Street, N.W., Washington, DC, 20549–

0102 (tel. 202–942–8090).

Applicant’s Representations

1. Applicant is a Delaware

corporation that is engaged in the

business of developing and

commercializing proprietary surgical

products. Applicant also is engaged

directly or indirectly through majorityowned subsidiaries in the development

and marketing of collagen-based

biomaterials. Applicant became a public

company on August 18, 1998, when it

was spun-off from Collagen Aesthetics,

Inc., formerly known as Collagen

Corporation (‘‘Collagen’’). Collagen was

engaged in the business of designing,

developing, manufacturing, and

marketing biomedical devices for the

treatment of defective, diseased,

traumatized or aging human tissues.

Collagen currently focuses on the

aesthetic and reconstructive cosmetic

business. In anticipation of the spin-off,

Collagen contributed several assets to

applicant. Among the assets contributed

to applicant by Collagen were minority

interests in Boston Scientific

Corporation (‘‘Boston Scientific’’),

Innovasive Devices, Inc. (‘‘Innovasive’’),

and Pharming, B.V. (‘‘Pharming’’).

2. Boston Scientific is a leading

manufacturer of catheter-based devices.

Collagen acquired its interest in Boston

Scientific in January 1988 as a result of

a joint venture between Collagen and Eli

Lilly and Company. Since then,

applicant has not acquired any

additional shares of Boston Scientific

and has continued to sell portions of its

holdings in Boston Scientific to fund

applicant’s research and development

activities. As of December 31, 1999,

approximately 29% of applicant’s total

assets on an unconsolidated basis

(exclusive of cash items and government

securities) consisted of the stock of

Boston Scientific. Applicant currently

owns less than 1% of Boston Scientific’s

common stock. Applicant also acquired

from Collagen certain rights and

undertook certain obligations pursuant

to various equity collar instruments to

protect against fluctuations in the

market value of its Boston Scientific

stock.

3. Collagen also transferred to

applicant a minority interest in

Innovasive, a company engaged in the

development, manufacture and

marketing of tissue and bone

reattachment systems. Collagen

acquired Innovasive stock in connection

with a joint venture (‘‘Innovasive

Agreements’’) between the two

companies to develop tissue fixation

devices. Applicant assumed Collagen’s

rights and obligations under the

Innovasive Agreements. As of December

31, 1999, applicant has an

approximately 9% ownership interest in

Innovasive, which represented

approximately 9.6% of applicant’s total

assets on an unconsolidated basis

(exclusive of cash items and government

securities).

4. Finally, Collagen transferred to

applicant a minority interest in

Pharming, a company engaged in

developing and commercializing human

health care produced in transgenic

animals. Collagen’s investment in

Pharming was made in connection with

a collaborative agreement between the

two companies for the development of

a product to produce collagen in the

milk of transgenic animals (‘‘Pharming

Agreement’’). Applicant assumed

Collagen’s rights and obligations under

the Pharming Agreement. As of

December 31, 1999, applicant had an

approximately 6% ownership interest in

Pharming, which represented

approximately 11.3% of applicant’s

total assets on an unconsolidated basis

(exclusive of cash items and government

securities).

Applicant’s Legal Analysis

1. Section 3(a)(1)(C) of the Act defines

‘‘investment company’’ to include any

issuer which is engaged or proposes to

engage in the business of investing,

reinvesting, owning, holding, or trading

in securities, and owns or proposes to

acquire investment securities having a

value exceeding 40% of the value of that

issuer’s total assets (exclusive of

Government securities and cash items)

on an unconsolidated basis. Under

section 3(a)(2), ‘‘investment securities’’

included all securities except

Federal Register / Vol. 65, No. 87 / Thursday, May 4, 2000 / Notices 25969

Government securities and securities

issued by employee’s securities

companies and certain majority-owned

subsidiaries.

2. Applicant’s investments in Boston

Scientific, Innovasive, and Pharming

constitute ‘‘investment securities’’

within the meaning of section 3(a)(2) of

the Act. Applicant states that as of

December 31, 1999, these investment

securities constituted more than 40% of

its total assets (exclusive of cash items

and government securities) on an

unconsolidated basis. Applicant,

therefore, is an investment company

within the meaning of section 3(a)(1)(C)

of the Act. Rule 3a–2 under the Act

generally provides that, for purposes of

section 3(a)(1)(C), an issuer will not be

deemed to be engaged in the business of

investing, reinvesting, owning, holding,

or trading in securities for a period not

to exceed one year if the issuer has a

bona fide intent to be engaged in a noninvestment company business.

Applicant relied on rule 3a–2 for the

period August 18, 1998 to August 18,

1999.

3. Section 6(c) of the Act permits the

SEC to exempt any person, security, or

transaction from any provision of the

Act, if and to the extent that the

exemption is necessary or appropriate

in the public interest and consistent

with the protection of investors and the

purposes fairly intended by the policy

and provisions of the Act. Section 6(e)

permits the SEC to require companies

exempted from registration

requirements of the Act to comply with

certain specified provisions of the Act

as though the company were a

registered investment company.

4. Applicant requests an exemption

under sections 6(c) and 6(e) from all

provisions of the Act except, sections 9,

17(e) (as modified below), 17(f) (as

modified below, and 37 through 53 of

the Act, and the rules and regulations

under those sections, from the date the

requested order is issued until the

earlier of August 18, 2001 or the date

applicant no longer may be deemed an

investment company (the ‘‘Exemption

Period’’). Applicant believes that within

the Exemption Period it will be able to

reduce its holdings of Boston Scientific

stock so that applicant would no longer

fall within the definition of investment

company under section 3(a)(1)(C).

5. Applicant contends that granting

the order under section 6(c) would be

appropriate in the public interest and

consistent with the protection of

investors. Applicant states that it is an

operating company that was not

designed to be regulated under the Act,

and that the requested temporary

exemption would enable applicant to

resolve its transient status under the

Act. As conditions to the requested

order, applicant also agrees to comply

with certain provisions of the Act while

the requested order is in effect.

6. Section 17(e) of the act generally

makes it unlawful for any ‘‘affiliated

person’’ of a registered investment

company, or any affiliated person of an

affiliated person, acting as agent, to

receive compensation (other than

regular salary or wages) for the purchase

and sale of any property to or from the

investment company or any company

controlled by the investment company,

or, acting as broker for the investment

company in the purchase or sale of

securities, to receive remuneration

exceeding certain amounts. Applicant

requests that the section 17(e)

restrictions apply only to those

employees of applicant who are also

officers and directors of applicant.

Applicant believes that it would be

overly burdensome for it to investigate

and identify all affiliations of its 82

employees. Further, applicant contends

that because the employees who are not

also officers or directors generally are

not in a position to determine or

influence applicant’s actions, no policy

reason would be served by requiring

those person to comply with section

17(e). Applicant also requests that the

provisions of section 17(e)(1) not apply

to the occasional receipt by its

employees, officers and directors of

modest gifts and other forms of gratuity

from third parties. Applicant contends

that this relief is appropriate because it

relates to routine business practices of

companies that are not investment

companies and because it involves

items of de minimis value, such as nonlavish entertainment, holiday gifts and

similar items. Applicant states that in

all other respects, it will comply with

section 17(e).

7. Under section 17(f) of the Act, a

registered investment company may

maintain custody of its securities and

similar investments with a member of a

national securities exchange, subject to

rule 17f–1 under the Act. Rule 17f–1

prohibits the assets of an investment

company held by a member of a

national securities exchange from being

subject to any lien or charge of any kind

in favor of the custodian or any persons

claiming through the custodian. With

respect to applicant’s assets that are

held by a member of a national

securities exchange, applicant requests

relief from the provisions of rule 17f–

1(b)(3) to permit the custodian to

continue to hold applicant’s securities

and similar assets as collateral in

connection with certain loans it grants

to applicant. Applicant believes that, for

the limited time during which applicant

would be subject to rule 17f–1, it would

neither be necessary nor cost effective

for applicant to establish an account

with a separate custodian solely for the

purpose of holding securities as

collateral for loans. Applicant states

that, in all other respects it will comply

with rule 17f–1.

Applicant’s Conditions

Applicant agrees that the order

granting the requested relief will be

subject to the following conditions:

a. Applicant will not purchase or

otherwise acquire any ‘‘investment

securities,’’ as that term is defined in the

Act, other than short-term investments

including U.S. Government securities,

money market funds, certificates of

deposit, and commercial paper rated A–

1/P–1 that are consistent with the

preservation of capital;

b. Applicant will not hold itself out as

being engaged primarily in the business

of investing, reinvesting, or trading in

securities;

c. Applicant will allocate and utilize

its accumulated cash and securities for

the purpose of funding its business of

developing and commercializing

proprietary surgical products and other

biomedical products;

d. Applicant will not sell any of its

investment securities (other than those

described in condition (a) above) to any

affiliated person of applicant, or any

affiliated person of an affiliated person

of applicant; and

e. While any order is in effect,

applicant’s Form 10–K, Form 10–Q and

annual reports to shareholders will state

that an exemptive order has been

granted under sections 6(c) and 6(e) of

the Act and that applicant, and other

persons in their transactions with

applicant, are subject to sections 9,

17(e), 17(f) and 37 through 53 of the Act,

and the rules and regulations under

these sections, with certain exceptions

as described in the application as if

applicant were a registered investment

company.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Jonathan G. Katz,

Secretary.

[FR Doc. 00–11080 Filed 5–3–00; 8:45 am]

BILLING CODE 8010–01–M