33384 Federal Register / Vol. 65, No. 100 / Tuesday, May 23, 2000 / Notices

6 15 U.S.C. 78f(b)(4).

7 15 U.S.C. 78s(b)(3)(A)(ii).

8 17 CFR 240.19b–4(f)(2).

9The Commission notes that the proposal may

raise questions concerning payment for order flow.

To the extent that it does raise such issues,

exchange members should consider best execution

and disclosure obligations they may have under the

federal securities laws in general, and particularly

under Rules 10b–10 and 11Ac1–3 under the Act. 17

CFR 240.10b–10 and 17 CFR 240.11Ac1–3,

respectively.

10 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

the most significant aspects of such

statements.

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

On October 29, 1999, the Exchange

implemented the E-Session, which

permits investors to submit limit orders

for execution until 5:30 p.m., Central

Time. To encourage members to seek

additional order flow during the ESession, the Exchange developed an ESession credit program, necessitating a

change to the Schedule. The proposal

amends the Schedule to provide

Exchange specialists and floor brokers

with a credit of $.25 per trade executed

during the E-Session through October 1,

2000.

2. Statutory Basis

The Exchange believes the proposed

rule change is consistent with Section

6(b)(4) of the Act 6 in that it provides for

the equitable allocation of reasonable

dues, fees and other charges among its

members.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange does not believe that

the proposed rule change will impose

any inappropriate burden on

competition.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

No written comments were solicited

or received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The proposed rule change has become

effective pursuant to Section

19(b)(3)(A)(ii) of the Act 7 and

subparagraph (f)(2) of Rule 19b–4

thereunder,8 because it involves a due,

fee, or other charge. At any time within

60 days of the filing of the proposed rule

change, the Commission may summarily

abrogate such rule change if it appears

to the Commission that such action is

necessary or appropriate in the public

interest, for the protection of investors,

or otherwise in furtherance of the

purposes of the Act.9

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing,

including whether the proposal is

consistent with the Act. Persons making

written submissions should file six

copies thereof with the Secretary,

Securities and Exchange Commission,

450 Fifth Street, NW, Washington, DC

20549–0609. Copies of the submission,

all subsequent amendments, all written

statements with respect to the proposed

rule change that are filed with the

Commission, and all written

communications relating to the

proposed rule change between the

Commission and any person, other than

those that may be withheld from the

public in accordance with the

provisions of 5 U.S.C. 552, will be

available for inspection and copying in

the Commission’s Public Reference

Room. Copies of such filing will also be

available for inspection and copying at

the principal office of the Exchange. All

submissions should refer to file number

SR–CHX–00–12, and should be

submitted by June 13, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.10

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–12928 Filed 5–22–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42790; File No. SR–NASD–

00–27]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the National Association of Securities

Dealers, Inc., Amending the Nasdaq

By-Laws and Restated Certificate of

Incorporation

May 16, 2000.

Pursuant to section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’) 1 and Rule 19b–4 thereunder, 2

notice is hereby given that on May 11,

2000, the National Association of

Securities Dealers, Inc. (‘‘NASD’’ or

‘‘Association’’), through its wholly

owned subsidiary The Nasdaq Stock

Market, Inc. (‘‘Nasdaq’’) filed with the

Securities and Exchange Commission

(‘‘SEC’’ or ‘‘Commission’’) the proposed

rule change as described in Items I, II,

and III below, which Items have been

prepared by Nasdaq. The Commission is

publishing this notice to solicit

comments on the proposed rule change

from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

Nasdaq is proposing to amend its ByLaws and Restated Certificate of

Incorporation. Additions are italicized,

deletions are bracketed.

By-Laws of the NASDAQ Stock Market,

Inc.

Article I Definitions

When used in these By-Laws, unless

the context otherwise requires, the term:

* * * * *

(i) ‘‘Director’’ means a member of the

Board[, excluding the Chief Executive

Officer of the NASD];

(j) ‘‘Industry Director’’ or ‘‘Industry

member’’ means a Director (excluding

the President or the Chief Executive

Officer) or Nasdaq Listing and Hearing

Review Council or committee member

who (1) is or has served in the prior

three years as an officer, director, or

employee of a broker or dealer,

excluding an outside director or a

director not engaged in the day-to-day

management of a broker or dealer; (2) is

an officer, director (excluding and

outside director), or employee of an

entity that owns more than ten percent

of the equity of a broker or dealer, and

the broker or dealer accounts for more

than five percent of the gross revenues

received by the consolidated entity; (3)

owns more than five percent of the

equity securities of any broker or dealer,

whose investments in brokers or dealers

exceed ten percent of his or her net

worth, or whose ownership interest

otherwise permits him or her to be

engaged in the day-to-day management

of a broker or dealer; (4) provides

professional services to brokers or

dealers, and such services constitute 20

percent or more of the professional

revenues received by the Director or

member or 20 percent or more of the

gross revenues received by the

Director’s or member’s firm or

partnership; (5) provides professional

services to a director, officer, or

employee of a broker, dealer, or

corporation that owns 50 percent or

more of the voting stock of a broker or

dealer, and such services relate to the

director’s, officer’s, or employee’s

professional capacity and constitute 20

Federal Register / Vol. 65, No. 100 / Tuesday, May 23, 2000 / Notices 33385

percent or more of the professional

revenues received by the Director or

member or 20 percent or more of the

gross revenues received by the

Director’s or members’s firm or

partnership; or (6) has a consulting or

employment relationship with or

provides professional services to the

NASD, NASD Regulation, Nasdaq, or

Amex (and any predecessor) or has had

any such relationship or provided any

such services at any time within the

prior three years;

* * * * *

(q) ‘‘Non-Industry Director’’ or ‘‘NonIndustry member’’ means a Director

(excluding the President or the Chief

Executive Officer) or Nasdaq Listing and

Hearing Review Council or committee

member who is (1) a Public Director or

Public member; (2) an officer or

employee of an issuer of securities listed

on Nasdaq or Amex, or traded in the

over-the-counter market; or (3) any other

individual who would not be an

Industry Director or Industry member;

* * * * *

(s) ‘‘Public Director’’ or ‘‘Public

member’’ means a Director or Nasdaq

Listing and Hearing Review Council or

committee member who has no material

business relationship with a broker or

dealer or the NASD, NASD Regulation,

or Nasdaq; [and]

(t) ‘‘Rules of the Association’’ or

‘‘Rules’’ means the numbered rules set

forth in the NASD Manual beginning

with the rule 0100 Series, as adopted by

the NASD Board pursuant to the NASD

By-Laws, as hereafter amended or

supplemented [.];

* * * * *

(w) ‘‘Amex’’ means American Stock

Exchange LLC; and

(x) ‘‘Amex Board’’ means the Board of

Governors of Amex [;].

Article III Meetings of øThe

Stockholder¿ Stockholders

Action by Consent of Stockholder

øSec. 3.1 Any action required or

permitted by law to be taken at any

meeting of the stockholder of Nasdaq

may be taken without a meeting,

without prior notice and without a vote,

if a consent in writing, setting forth the

action so taken, is signed by the holder

of the outstanding stock.]

Annual Meetings of Stockholders

Sec. 3.1 (a) Nominations of persons

for election to the Board and the

proposal of business to be considered by

the stockholders may be made at an

annual meeting of stockholders only (i)

pursuant to Nasdaq’s notice of meeting

(or any supplement thereto), (ii) by or at

the direction of the Board or the

National Nominating Committee or (iii)

by any stockholder of Nasdaq who was

a stockholder of record of Nasdaq at the

time the notice provided for in this

Section 3.1 is delivered to the Secretary

of Nasdaq, who is entitled to vote at the

meeting and who complies with the

notice procedures set forth in this

Section 3.1.

(b) For nominations or other business

to be properly brought before an annual

meeting by a stockholder pursuant to

Section 3.1(a)(iii), the stockholder must

have given timely notice thereof in

writing to the Secretary of Nasdaq and

any such proposed business other than

the nominations of persons for election

to the Board must constitute a proper

matter for stockholder action. To be

timely, a stockholder’s notice shall be

delivered to the Secretary at the

principal executive offices of Nasdaq

not later than the close of business on

the ninetieth day nor earlier than the

close of business on the one hundred

twentieth day prior to the first

anniversary of the preceding year’s

annual meeting (provided, however, that

in the event that the date of the annual

meeting is more than thirty days before

or more than seventy days after such

anniversary date, notice by the

stockholder must be so delivered not

earlier than the close of business on the

one hundred twentieth day prior to such

annual meeting and not later than the

close of business on the later of the

ninetieth day prior to such annual

meeting or the tenth day following the

day on which public announcement of

the date of such meeting is first made

by Nasdaq). For purposes of the first

annual meeting of stockholders of

Nasdaq held after 2000, the first

anniversary of the 2000 annual meeting

of stockholders shall be deemed to be

lll, 2001. In no event shall the

public announcement of an

adjournment or postponement of an

annual meeting commence a new time

period (or extend any time period) for

the giving of a stockholder’s notice as

described above. Such stockholder’s

notice shall set forth: (i) as to each

person whom the stockholder proposes

to nominate for election as a director all

information relating to such person that

is required to be disclosed in

solicitations of proxies for election of

directors in an election contest, or is

otherwise required, in each case

pursuant to Regulation 14A under the

Act and Rule 14a–11 thereunder (and

such person’s written consent to being

named in the proxy statement as a

nominee and to serving as a director if

elected); (ii) as to any other business

that the stockholder proposes to bring

before the meeting, a brief description of

the business desired to be brought

before the meeting, the text of the

proposal or business (including the text

of any resolutions proposed for

consideration and in the event that such

business includes proposal to amend

the By-Laws of Nasdaq, the language of

the proposed amendment), the reasons

for conducting such business at the

meeting and any material interest in

such business of such stockholder and

the beneficial owner, if any, on whose

behalf the proposal is made; and (iii) as

to the stockholder giving the notice and

the beneficial owner, if any, on whose

behalf the nomination or proposal is

made (A) the name and address of such

stockholder, as they appear on Nasdaq’s

books, and of such beneficial owner, (B)

the class and number of shares of

capital stock of Nasdaq which are

owned beneficially and of record by

such stockholder and such beneficial

owner, (c) a representation that the

stockholder is a holder of record of

stock of Nasdaq entitled to vote at such

meeting and intends to appear in person

or by proxy at the meeting to propose

such business or nomination, and (D) a

representation whether the stockholder

or the beneficial owner, if any, intends

or is part of a group which intends (1)

to deliver a proxy statement and/or form

of proxy to holders of at least the

percentage of Nasdaq’s outstanding

capital stock required to approve or

adopt the proposal or elect the nominee

and/or (2) otherwise to solicit proxies

from stockholders in support of such

proposal or nomination. Nasdaq may

require any proposed nominee to

furnish such other information as it may

reasonably require to determine the

eligibility of such proposed nominee to

serve as a director of Nasdaq.

(c) Notwithstanding anything in the

second sentence of Section 3.1(b) to the

contrary, in the event that the number

of directors to be elected to the Board

at an annual meeting is increased and

there is no public announcement by

Nasdaq naming the nominees for the

additional directorships at least one

hundred days prior to the first

anniversary of the preceding year’s

annual meeting, a stockholder’s notice

required by this Section 3.1 shall also be

considered timely, but only with respect

to nominees for the additional

directorships, if it shall be delivered to

the Secretary at the principal executive

offices at Nasdaq not later than the

close of business on the tenth day

following the day on which such public

announcement is first made by Nasdaq.

Special Meetings of Stockholders

Sec. 3.2 Only such business shall be

conducted at a special meeting of

33386 Federal Register / Vol. 65, No. 100 / Tuesday, May 23, 2000 / Notices

stockholders as shall have been brought

before the meeting pursuant to Nasdaq’s

notice of meeting. Nominations of

persons for election to the Board may be

made at a special meeting of

stockholders at which directors are to be

elected pursuant to Nasdaq’s notice of

meeting (a) by or at the direction of the

Board or the National Nominating

Committee or (b) provided that the

Board has determined that directors

shall be elected at such meeting, by any

stockholder of Nasdaq who is a

stockholder of record at the time the

notice provided for in this Section 3.2 is

delivered to the Secretary of Nasdaq,

who is entitled to vote at the meeting

and upon such election and who

complies with the notice procedures set

forth in this Section 3.2. In the event

Nasdaq calls a special meeting of

stockholders for the purpose of electing

one or more directors to the Board, any

such stockholders entitled to vote in

such election may nominate a person or

persons (as the case may be) for election

of such position(s) as specified in

Nasdaq’s notice of meeting, if the

stockholders’s notice required by

Section 3.1(b) shall be delivered to the

Secretary at the principal executive

offices of Nasdaq not earlier than the

close of business on the one hundred

twentieth day prior to such special

meeting and not later then the close of

business on the later of the ninetieth

day prior to such special meeting or the

tenth day following the day on which

public announcement is first made of

the date of the special meeting and of

the nominees proposed by the Board to

be elected at such meeting. In no event

shall the public announcement of an

adjournment or postponement of a

special meeting commerce a new time

period (or extend any time period) for

the giving of a stockholder’s notice as

described above.

General

Sec. 3.3 (a) Only such persons who

are nominated in accordance with the

procedures set forth in this Article III

shall be eligible to be elected at an

annual or special meeting of

stockholders of Nasdaq to serve as

directors and only such business shall

be conducted at a meeting of

stockholders as shall have been brought

before the meeting in accordance with

the procedures set forth in this Article

III. Except as otherwise provided by law,

the chairman of the meeting shall have

the power and duty (a) to determine

whether a nomination or any business

proposed to be brought before the

meeting was made or proposed, as the

case may be, in accordance with the

procedures set forth in this Article III

(including whether the stockholder or

beneficial owner, if any, on whose

behalf the nomination or proposal is

made solicited (or is part of a group

which solicited) or did not so solicit, as

the case may be, proxies in support of

such stockholder’s nominee or proposal

in compliance with such stockholder’s

representation as required by Section

3.1(b)(iii)(D)) and (ii) if any proposed

nomination or business was not made or

proposed in compliance with this

Article III, to declare that such

nomination shall be disregarded or that

such proposed business shall not be

transacted. Notwithstanding the

foregoing provisions of this Article III, if

the stockholder (or a qualified

representative of the stockholder) does

not appear at the annual or special

meeting of stockholders of Nasdaq to

present a nomination or business, such

nomination shall be disregarded and

such proposed business shall not be

transacted, notwithstanding that proxies

in respect of such vote may have been

received by Nasdaq.

(b) For purposes of this Article III,

‘‘public announcement’’ shall include

disclosure in a press release reported by

the Dow Jones News Service, Associated

Press or comparable national news

service or in a document publicly filed

by Nasdaq with the Commission

pursuant to Section 13, 14, or 15(d) of

the Act.

(c) Notwithstanding the foregoing

provisions of this Article III, a

stockholder shall also comply with all

applicable requirements of the Act and

the rules and regulations thereunder

with respect to the matters set forth in

this Article III. Nothing in Article III

shall be deemed to affect any rights (i)

of stockholders to request inclusion of

proposals in Nasdaq’s proxy stateement

pursuant to Rule 14a–8 under the Act or

(ii) of the holders of any series of

Preferred Stock to elect directors

pursuant to any applicable provisions of

the Restated Certificate of Incorporation.

Conduct of Meetings

Sec. 3.4 The date and time of the

opening and the closing of the polls for

each matter upon which the

stockholders will vote at a meeting shall

be announed at the meeting by the

person presiding over the meeting. The

Board may adopt by resolution such

rules and regulations for the conduct of

the meeting of stockholders as it shall

deem appropriate. Except to the extent

inconsistent with such rules and

regulations as adopted by the Board, the

person presiding over any meeting of

stockholders shall have the right and

authority to convene and to adjourn the

meeting, to prescribe such rules,

regulations and procedurs and to do all

such acts as, in the judgment of such

chairman, are appropriate for the

proper conduct of the meeting. Such

rules, regulations or procedures,

whether adopted by the Board or

prescribed by the presiding officer of the

meeting, may include, without

limitation, the following: (a) the

establishment of an agenda or order of

business for the meeting; (b) rules and

procedures for maintaining order at the

meeting and the safety of those present;

(c) limitations on attendance at or

participation in the meeting to

stockholders of record of Nasdaq, their

duly authorized and constituted proxies

or such other persons as the chairman

of the meeting shall determine; (d)

restrictions on entry to the meeting after

the time fixed for the commencement

thereof; and (e) limitations on the time

allotted to questions or comments by

participants. Unless and to the extent

determined by the Board or the person

presiding over the meeting, meetings of

stockholders shall not be required to be

held in accordance with the rules of

parliamentary procedure.

Article IV Board of Directors

General Powers

Sec. 4.1 No change.

Number of Directors

Sec. 4.2 The [Board shall consist of

no fewer than five and no more than ten

Directors, the exact number to] exact

number of members of the Board shall

be determined by resolution adopted by

the [stockholder of Nasdaq from time to

time. Notwithstanding the preceding

sentence, the number of Directors shall

equal the number of Directors on the

NASD Regulation Board] Board from

time to time. Any new Director position

created as a result of an increase in the

size of the Board shall be filed [pursuant

to Section 4.4] in accordance with the

Restated Certificate of Incorporation.

Qualifications

Sec. 4.3 Directors need not be

stockholders of Nasdaq. [Only

Governors of the NASD Board shall be

eligible for election to the Board. The

President of Nasdaq shall be a Director.]

The number of Non-Industry Directors,

including at least one Public Director

and at least one issuer representative,

shall equal or exceed the number of

Industry Directors, plus the President

and the Chief Executive Officer (if they

are elected Directors), unless the Board

consists of ten or more Directors. In

such case at least two Directors shall be

issuer representatives. [The Chief

Executive Officer of the NASD shall be

an ex-offico non-voting member of the

Board] At least two Industry Directors

Federal Register / Vol. 65, No. 100 / Tuesday, May 23, 2000 / Notices 33387

and two Non-Industry Directors shall be

drawn from candidates proposed to the

National Nominating Committee by a

majority of the non-NASD stockholders

of Nasdaq.

Election

Sec. 4.4 Except as otherwise

provided by law, these By-Laws, or the

Delegation Plan, after the first meeting

of Nasdaq at which Directors are

elected, a class of Directors of Nasdaq

shall be elected each year at the annual

meeting of the [stockholder]

stockholders, or at a special meeting

called for such purpose in lieu of the

annual meeting. If the annual election of

Directors is not held on the date

designated therefore, the Directors shall

cause such election to be held as soon

thereafter as convenient.

Resignation

Sec. 4.5 Any Director may resign at

any time either upon written notice of

resignation to the Chair of the Board, the

Chief Executive Officer, the President, or

the Secretary. Any such resignation

shall take effect at the time specified

therein or, if the time is not specified,

upon receipt thereof, and the acceptance

of such resignation, unless required by

the terms thereof, shall not be necessary

to make such resignation effective.

Removal

Sec. 4.6 Any or all of the Directors

may be removed from office at any time,

[with or without cause, only by a

majority vote of the NSDA Board] but

only for cause, by the affirmative vote of

at least 662⁄3 percent of the total voting

power of the outstanding shares of

capital stock of Nasdaq entitled to vote

generally in the election of directors,

voting together as a single class.

Disqualification

Sec. 4.7 The term of office of a

Director shall terminate immediately

upon a determination by the Board, by

a majority vote of the remaining

Directors, that: (a) [The] the Director no

longer satisfies the classification for

which the Director was elected; and (b)

the Director’s continued service as such

would violate the compositional

requirements of the Board set forth in

Section 4.3. If the term of office of a

Director terminates under this Section,

and the remaining term of office of such

Director at the time of termination is not

more than six months, during the period

of vacancy the Board shall not be

deemed to be in violation of Section 4.3

by virtue of such vacancy.

Filling of Vacancies

Sec. 4.8 If a Director position

becomes vacant, whether because of

death, disability, disqualification,

removal, or resignation, the National

Nominating Committee shall nominate,

and the [NASD] Board shall elect by

majority vote, a person satisfying the

classification (Industry, Non-Industry,

or Public Director) for the directorship

as provided in Section 4.3 to fill such

vacancy, except that if the remaining

term of office for the vacant Director

position is not more than six months, no

replacement shall be required.

Quorum and Voting

Sec. 4.9 (a) At all meetings of the

Board, unless otherwise set forth in

these By-Laws or required by law, a

quorum for the transaction of business

shall consist of a majority of the Board[,

including not less than 50 percent of the

Non-Industry Directors]. On the absence

of a quorum, a majority of the Directors

present may adjourn the meeting until

a quorum be present.

(b) Except as provided [in Section

4.14(b)] herein or by applicable law, the

vote of a majority of the Directors

present at a meeting at which a quorum

is present shall be the act of the Board.

Regulation

Sec, 4,10 No change.

Meetings

Sec. 4.11 (a) An annual meeting of

the Board shall be held for the purpose

of organization, election of officers, and

transaction of any other business. If

such meeting is held promptly after and

at the place specified for the annual

meeting of the [stockholder]

stockholders, no notice of the annual

meeting of the Board need be given.

Otherwise, such annual meeting shall be

held at such time and place as may be

specified in a notice given in

accordance with Section [4.13] 4.12.

(b) No change.

(c) Special meetings of the Board may

be called by the Chair of the Board, by

the Chief Executive Officer, by the

President, or by at least one-third of the

Directors then in office. Notice of any

special meeting of the Board shall be

given to each Director in accordance

with Section 4.12.

(d) No change.

Notice of Meetings; Waiver of Notice

Sec. 4.12 (a) No change.

(b) No change.

(c) Any meeting of the Board shall be

a legal meeting without any prior notice

if all Directors then in office shall be

present thereat, Except when a Director

attends the meeting for the express

purpose of objecting at the beginning of

the meeting to the transaction of any

business because the meeting is not

lawfully called or convened.

Committees

Sec. 4.13 (a) The Board may, by

resolution or resolutions adopted by a

majority of the whole Board, appoint

one or more committees. Except as

herein provided, vacancies in

membership of any committee shall be

filled by the vote of a majority of the

whole Board. The Board may designate

one or more Directors as alternate

members of any committee, who may

replace any absent or disqualified

member at any meeting of the

committee. In the absence or

disqualification of any member of a

committee, the member or members

thereof present at any meeting and not

disqualified from voting, whether or not

such member or members constitute a

quorum, may unanimously appoint

another Director to act at the meeting in

the place of any such absent or

disqualified member. Members of a

committee shall hold office for such

period as may be fixed by a resolution

adopted by a majority of the whole

Board. Any member of a committee may

be removed from such committee only

after a majority vote of the whole Board,

after appropriate notice[, for refusal,

failure, neglect, or inability to discharge

such committee member’s duties].

(b) No change.

(c) Except as otherwise provided by

applicable law, no committee shall have

the power or authority of the Board with

regard to: amending the Restated

Certificate of Incorporation or the ByLaws of Nasdaq; adopting an agreement

of merger or consolidation;

recommending to the [stockholder]

stockholders the sale, lease, or exchange

of all or substantially all Nasdaq’s

property and assets; or recommending

to the [stockholder] stockholders a

dissolution of Nasdaq or a revocation of

a dissolution. Unless the resolution of

the Board expressly so provides, no

committee shall have the power or

authority to authorize the issuance of

stock.

(d) The Board may appoint an

Executive Committee, which shall, to

the fullest extent permitted by Delaware

Law and other applicable law, have and

be permitted to exercise all the powers

and authority of the Board in the

management of the business and affairs

of Nasdaq between meetings of the

Board, and which may authorize the

seal of Nasdaq to be affixed to all papers

that may require it. The Executive

Committee shall consist of three or four

Directors, including at least one Public

Director. The [President] Chief

Executive Officer of Nasdaq shall be a

member of the Executive Committee.

The number of Non-Industry committee

members shall equal or exceed the

number of Industry committee members

plus the [President] Chief Executive

Officer. An Executive Committee

33388 Federal Register / Vol. 65, No. 100 / Tuesday, May 23, 2000 / Notices

member shall hold office for a term of

one year. At all meetings of the

Executive Committee, a quorum for the

transaction of business shall consist of

a majority of the Executive Committee[,

including not less than 50 percent of the

Non-Industry committee members]. In

the absence of a quorum, a majority of

the committee members present may

adjourn the meeting until a quorum is

present.

(e) The Board may appoint a Finance

Committee. The Finance Committee

shall advise the Board with respect to

the oversight of the financial operations

and conditions of Nasdaq, including

recommendations for Nasdaq’s annual

operating and capital budgets and

proposed changes to the rates and fees

charged by Nasdaq. The Finance

Committee shall consist of three or four

Directors. The [President] Chief

Executive Officer of Nasdaq shall serve

as a member of the Committee. A

Finance Committee member shall hold

office for a term of one year.

(f) No change.

(g) No change.

(h) Upon request of the Secretary of

Nasdaq, each prospective committee

member who is not a Director shall

provide to the Secretary such

information as is reasonably necessary

to serve as the basis for a determination

of the prospective committee member’s

classification as an Industry, NonIndustry, or Public committee member.

The Secretary of Nasdaq shall certify to

the Board each prospective committee

member’s classification. Such

committee members shall update the

information submitted under this

Section at least annually and upon

request of the Secretary of Nasdaq, and

shall report immediately to the

Secretary any change in such

[classification] information.

Conflicts of Interest; Contracts and

Transactions Involving Directors

Sec. 4.14 (a) No change.

(b) No contract or transaction between

Nasdaq and one or more of its Directors

of officers, or between Nasdaq and any

other corporation, partnership,

association, or other organization in

which one or more of its Directors or

officers are directors or officers, or have

a financial interest, shall be void or

voidable solely for this reason if: (i) the

material facts pertaining to such

Director’s or officer’s relationship or

interest and the contract or transaction

are disclosed or are known to the Board

or the committee, and the Board or

committee in good faith authorizes the

contract or transaction by the

affirmation vote of a majority of the

disinterested Directors, even though the

disinterested Directors be less than a

quorum; (ii) the material facts are

disclosed or become known to the Board

or committee after the contract or

transaction is entered into, and the

Board or committee in good faith ratifies

the contract or transaction by the

affirmative vote of a majority of the

disinterested Directors, even though the

disinterested Directors be less than a

quorum; or (iii) the material facts

pertaining to the Director’s or officer’s

relationship or interest and the contract

or transaction are disclosed or are

known to the [stockholder] stockholders

entitled to vote thereon, and the

contract or transaction is specifically

approved in good faith by vote of the

[stockholder. Only disinterested

Directors may be counted in

determining the presence of a quorum at

the portion of a meeting of the Board or

of a committee that authorizes the

contract or transaction. This subsection

shall not apply to a contract or

transaction between Nasdaq and: the

NASD, NASD Regulation, NasdaqAmex, or Amex] stockholders.

* * * * *

Article V NASDAQ Listing and

Hearing Review Council

Appointment and Authority

Sec. 5.1 No change.

Number of Members and

Qualifications

Sec. 5.2 No change.

Nomination Process

Sec. 5.3 The Secretary of Nasdaq

shall collect from each nominee for the

office of member of the Nasdaq Listing

and Hearing Review Council such

information as is reasonably necessary

to serve as the basis for a determination

of the nominee’s qualifications and

classification as an Industry or NonIndustry member, and the Secretary

shall certify to the National Nominating

Committee each nominee’s

qualifications and classification. After

appointment to the Nasdaq Listing and

Hearing Review Council, each member

shall update such information at least

annually and upon request of the

Secretary, and shall report immediately

to the Secretary any change in such

[qualifications or classification]

information.

* * * * *

Article VII Officers, Agents, and

Employees

Principal Officers

Sec. 7.1 The principal officers of

Nasdaq shall be elected by the Board

and shall include a Chair, a Chief

Executive Officer, a President, a

Secretary, a Treasurer, and such other

officers as may be designated by the

Board. One person may hold the offices

and perform the duties of any two or

more of said principal offices, except

the offices and duties of President and

Vice President or of President and

Secretary. None of the principal officers,

except the Chair of the Board and the

[President] Chief Executive Officer, need

be Directors of Nasdaq.

Election of Principal Officers; Term

of Office

Sec. 7.2 No change.

Subordinate Officers, Agents, or

Employees

Sec. 7.3 In addition to the principal

officers, Nasdaq may have one or more

subordinate officers, agents, and

employees as the Board may deem

necessary, each of whom shall hold

office for such period and exercise such

authority and perform such duties as the

Board, the Chief Executive Officer, the

President, or any officer designated by

the Board, may from time to time

determine. Agents and employees of

Nasdaq shall be under the supervision

and control of the officers of Nasdaq,

unless the Board, by resolution,

provides that an agent or employee shall

be under the supervision and control of

the Board.

Delegation of Duties of Officers

Sec. 7.4 No change.

Resignation and Removal of Officers

Sec. 7.5 (a) Any officer may resign at

any time upon written notice of

resignation to the Board, the Chief

Executive Officer, the President, or the

Secretary. Any such resignation shall

take effect upon receipt of such notice

or at any later time specified therein.

The acceptance of a resignation shall

not be necessary to make the resignation

effective.

(b) No change.

Bond

Sec. 7.6 No change.

Chair of the Board

Sec. 7.7 The Chair of the Board shall

preside at all meetings of the Board and

stockholders at which the Chair is

present. The Chair shall exercise such

other powers and perform such other

duties as may be assigned to the Chair

from time to time by the Board.

[President] Chief Executive Officer

Sec. 7.8 The Chief Executive Officer

shall, in the absence of the Chair of the

Board, preside at all meetings of the

Board and stockholders at which the

Chief Executive Officer is present. The

Chief Executive Officer shall be the chief

executive officer of Nasdaq and shall

have general supervision over the

business and affairs of Nasdaq. The

Chief Executive Officer shall have all

Federal Register / Vol. 65, No. 100 / Tuesday, May 23, 2000 / Notices 33389

powers and duties usually incident to

the office of the Chief Executive Officer,

except as specifically limited by a

resolution of the Board. The Chief

Executive Officer shall exercise such

other powers and perform such other

duties as may be assigned to the Chief

Executive Officer from time to time by

the Board.

President

Sec. [7.8]7.9 The President shall, in

the absence of the Chair of the Board

and the Chief Executive Officer, preside

at all meetings of the Board and

stockholders at which the President is

present. The President [shall be the

Chief Executive Officer of Nasdaq and]

shall have general supervision over the

business and affairs of Nasdaq. The

President shall have all powers and

duties usually incident to the office of

the President, except as specifically

limited by a resolution of the Board. The

President shall exercise such other

powers perform such other duties as

may be assigned to the President from

time to time by the Board.

Vice President

Sec. [7.9] 7.10 The Board shall elect

one or more Vice Presidents. In the

absence or disability of the President or

if the office of President becomes

vacant, the Vice Presidents in the order

determined by the Board, or if no such

determination has been made, in the

order of their seniority, shall perform

the duties and exercise the powers of

the President, subject to the right of the

Board at any time to extend or restrict

such powers and duties or to assign

them to others. Any Vice President may

have such additional designations in

such Vice President’s title as the Board

may determine. The Vice Presidents

shall generally assist the President in

such manner as the President shall

direct. Each Vice President shall

exercise such other powers and perform

such other duties as may be assigned to

such Vice President from time to time

by the Board, the Chief Executive Officer

or the President. The term ‘‘Vice

President’’ used in this Section shall

include the positions of Executive Vice

President, Senior Vice President, and

Vice President.

Secretary

Sec. [7.10] 7.11 The Secretary shall

act as Secretary of all meetings of the

[stockholder] stockholders and of the

Board at which the Secretary is present,

shall record all the proceedings of all

such meetings in a book to be kept for

that purpose, shall have supervision

over the giving and service of notices of

Nasdaq, and shall have supervision over

the care and custody of the corporate

records and the corporate seal of

Nasdaq. The Secretary shall be

empowered to affix the corporate seal to

documents, the execution of which on

behalf of Nasdaq under its seal, is duly

authorized, and when so affixed, may

attest the same. The Secretary shall have

all powers and duties usually incident

to the office of Secretary, except as

specifically limited by a resolution of

the Board. The Secretary shall exercise

such other powers and perform such

other duties as may be assigned to the

Secretary from time to time by the

Board, the Chief Executive Officer or the

President.

Assistant Secretary

Sec. [7.11] 7.12 In the absence of the

Secretary or in the event of the

Secretary’s inability or refusal to act,

any Assistant Secretary, approved by

the Board, shall exercise all powers and

perform all duties of the Secretary. An

Assistant Secretary shall also exercise

such other powers and perform such

other duties as may be assigned to such

Assistant Secretary from time to time by

the Board or the Secretary.

Treasurer

Sec. [7.12] 7.13 The Treasurer shall

have general supervision over the care

and custody of the funds and over the

receipts and disbursements of Nasdaq

and shall cause the funds of Nasdaq to

be deposited in the name of Nasdaq in

such banks or other depositories as the

Board may designate. The Treasurer

shall have supervision over the care and

safekeeping of the securities of Nasdaq.

The Treasurer shall have all powers and

duties usually incident to the office of

Treasurer except as specifically limited

by a resolution of the Board. The

Treasurer shall have all powers and

duties usually incident to the office of

Treasurer except as specifically limited

by a resolution of the Board. The

Treasurer shall exercise such other

powers and perform such other duties

as may be assigned to the Treasurer

from time to time by the Board, the

Chief Executive Officer or the President.

Assistant Treasurer

Sec. [7.13] 7.14 In the absence of the

Treasurer or in the event of the

Treasurer’s inability or refusal to act,

any Assistant Treasurer, approved by

the Board, shall exercise all powers and

perform all duties of the Treasurer. An

Assistant Treasurer shall also exercise

such other powers and perform such

other duties as may be assigned to such

Assistant Treasurer from time to time by

the Board or the Treasurer.

Article VIII Indemnification

Indemnification of Directors,

Officers, Employees, Agents,

Nasdaq Listing and Hearing

Review Council and Committee

Members

Sec. 8.1 (a) No change.

(b) Nasdaq shall advance expenses

(including attorneys’ fees and

disbursements) reasonably and actually

incurred in defending any action, suit,

or proceeding in advance of its final

disposition to persons described in

subsection (a); provided, however, that

the payment of expenses incurred by

such person in advance of the final

disposition of the matter shall be

conditioned upon receipt of a written

undertaking by that person to repay all

amounts advanced if it should be

ultimately determined that the person is

not entitled to be indemnified under

this Section or otherwise.

* * * * *

Article IX Capital Stock

[Sole Stockholder] Certificates

[Sec. 9.1 The NASD shall be the sole

stockholder of the capital stock of

Nasdaq.] Certificates

[See 9.2 The] Sec. 9.1 Each

stockholder shall be entitled to a

certificate or certificates in such form as

shall be approved by the Board,

certifying the number of shares of

capital stock in Nasdaq owned by [the]

such stockholder.

Signatures

Sec. [9.3] 9.2 (a) Certificates for

shares of capital stock of Nasdaq shall

be signed in the name of Nasdaq by two

officers with one being the Chair of the

Board, the Chief Executive Officer, the

President, or a Vice President, and the

other being the Secretary, the Treasurer,

or such other officer that may be

authorized by the Board. Such

certificates may be sealed with the

corporate seal of Nasdaq or a facsimile

thereof.

(b) If any such certificates are

countersigned by a transfer agent other

than Nasdaq or its employee, or by a

registrar other than Nasdaq or its

employee, any other signature on the

certificate may be a facsimile. In the

event that any officer, transfer agent, or

registrar who has signed or whose

facsimile signature has been placed

upon a certificate shall cease to be such

officer, transfer agent, or registrar before

such certificate is issued, such

certificate may be issued by Nasdaq

with the same effect as if such person

were such officer, transfer agent, or

registrar at the date of issue.

Stock Ledger

Sec. [9.4] 9.3 (a) A record of all

certificates for capital stock issued by

Nasdaq shall be kept by the Secretary or

any other officer, employee, or agent

33390 Federal Register / Vol. 65, No. 100 / Tuesday, May 23, 2000 / Notices

designated by the Board. Such record

shall show the name and address of the

person, firm, or corporation in which

certificates for capital stock are

registered, the number of shares

represented by each such certificate, the

date of each such certificate, and in the

case of certificates which have been

canceled, the date of cancellation

thereof.

(b) Nasdaq shall be entitled to treat

the holder of record of shares of capital

stock as shown on the stock ledger as

the owner thereof and as the person

entitled to vote such shares and to

receive notice of meetings, and for all

other purposes. Nasdaq shall not be

bound to recognize any equitable or

other claim to or interest in any share

of capital stock on the part of any other

person, whether or not Nasdaq shall

have express or other notice thereof.

Transfers of Stock

Sec. [9.5] 9.4 (a) The Board may

make such rules and regulations as it

may deem expedient, not inconsistent

with law, the Restated Certificate of

Incorporation, or these By-Laws,

concerning the issuance, transfer, and

registration of certificates for shares of

capital stock of Nasdaq. The Board may

appoint, or authorize any principal

officer to appoint, one or more transfer

agents or one or more transfer clerks and

one or more registrars and may require

all certificates for capital stock to bear

the signature or signatures of any of

them.

(b) Transfers of capital stock shall be

made on the books of Nasdaq only upon

delivery to Nasdaq or its transfer agent

of: (i) a written direction of the

registered holder named in the

certificate or such holder’s attorney

lawfully constituted in writing; (ii) the

certificate for the shares of capital stock

being transferred; and (iii) a written

assignment of the shares of capital stock

evidenced thereby.

Cancellation

Sec. [9.6] 9.5 Each certificate for

capital stock surrendered to Nasdaq for

exchange or transfer shall be canceled

and no new certificate or certificates

shall be issued in exchange for any

existing certificate other than pursuant

to Section [9.7] 9.6 until such existing

certificate shall have been canceled.

Lost, Stolen, Destroyed, and Multilated

Certificates

Sec. [9.7] 9.6 In the event that any

certificate for shares of capital stock of

Nasdaq shall be multilated, Nasdaq

shall issue a new certificate in place of

such multilated certificate. In the event

that any such certificate shall be lost,

stolen, or destroyed, Nasdaq may, in the

discretion of the Board or a committee

appointed thereby with power so to act,

issue a new certificate for capital stock

in the place of any such lost, stolen, or

destroyed certificate. The applicant for

any substituted certificate or certificates

shall surrender any multilated

certificate or, in the case of any lost,

stolen, or destroyed certificate, furnish

satisfactory proof of such loss, theft, or

destruction of such certificate and of the

ownership thereof. The Board or such

committee may, in its discretion, require

the owner of a lost or destroyed

certificate, or the owner’s

representatives, to furnish to Nasdaq a

bond with an acceptable surety or

sureties and in such sum as will be

sufficient to indemnify Nasdaq against

any claim that may be against it on

account of the lost, stolen, or destroyed

certificate or the issuance of such new

certificate. A new certificate may be

issued without requiring a bond when,

in the judgment of the Board, it is

proper to do so.

Fixing of Record Date

Sec. [9.8] 9.7 The Board may fix a

record date in accordance with

Delaware law.

Article X Miscellaneous Provisions

Corporate Seal

Sec. 10.1 No change.

Fiscal Year

Sec. 10.2 No change.

Waiver of Notice

Sec. 10.3 (a) Whenever notice is

required to be given by law, the Restated

Certificate of Incorporation, or these ByLaws, a written waiver thereof, signed

by the person or persons entitled to

such notice, whether before or after the

time stated therein, shall be deemed

equivalent to notice. Neither the

business to be transacted at, nor the

purpose of, any regular or special

meeting of the [stockholder]

stockholders, Directors, or members of a

committee of Directors need be

specified in any written waiver of

notice.

* * * * *

Article XI Amendments; Emergency

By-Laws

By [Stockholder] Stockholders

Sec. 11.1 These By-Laws may be

altered, amended, or repealed, or new

By-Laws may be adopted, at any

meeting of the [stockholder]

stockholders by the affirmative vote of

the holders of at least 662⁄3 percent of

the voting power of the then outstanding

stock entitled to vote, voting together as

a single class, provided that, in the case

of a special meeting, notice that an

amendment is to be considered and

acted upon shall be inserted in the

notice or waiver of notice of said

meeting.

By Directors

Sec. 11.2 No change.

Emergency By-Laws

Sec. 11.3 The Board may adopt

emergency By-Laws subject to repeal or

change by action of the [stockholder]

stockholders which shall,

notwithstanding any different provision

of law, the Restated Certificate of

Incorporation, or these By-Laws, be

operative during any emergency

resulting from any nuclear or atomic

disaster, an attack on the United States

or on a locality in which Nasdaq

conducts its business or customarily

holds meetings of the Board or the

[stockholder] stockholders, any

catastrophe, or other emergency

condition, as a result of which a quorum

of the Board or a committee thereof

cannot readily be convened for action.

Such emergency By-Laws may make any

provision that may be practicable and

necessary under the circumstances of

the emergency.

* * * * *

Restated Certificate of Incorporation of

the Nasdaq Stock Market, Inc.

The undersigned, lllll[Joan C.

Conley, Corporate Secretary], the of The

Nasdaq Stock Market, Inc. (‘‘Nasdaq’’), a

Delaware corporation, does hereby

certify:

First: That the name of the

corporation is The Nasdaq Stock

Market, Inc. The date of the filing of its

original Certificate of Incorporation with

the Secretary of State of the State of

Delaware was November 13, 1979. The

name under which Nasdaq was

originally incorporated was ‘‘NASD

Market Services, Inc.’’

Second: That the Certificate of

Incorporation of Nasdaq [has been] is

hereby amended and restated to read in

its entirety as follows:

Article First

The name of the corporation is The

Nasdaq Stock Market, Inc.

Article Second

The address of Nasdaq’s registered

office in the State of Delaware is 1209

Orange Street, City of Wilmington,

County of New Castle, Delaware 19801.

The name of Nasdaq’s registered agent

at such address is The Corporation Trust

Company.

Article Third

The nature of the business or

purposes to be conducted or promoted

is to engage in any lawful act or activity

for which corporations may be

Federal Register / Vol. 65, No. 100 / Tuesday, May 23, 2000 / Notices 33391

organized under the General

Corporation Law of the State of

Delaware, and, without limiting the

generality of the foregoing business or

purposes to be conducted or promoted,

shall include, to the extent applicable to

Nasdaq, the responsibilities and

functions set forth in the ‘‘Plan of

Allocation and Delegation of Functions

by NASD to Subsidiaries,’’ as approved

by the Securities and Exchange

Commission, as amended from time to

time.

Article Fourth

[Nasdaq shall be authorized to issue a

total of 2,000 shares of common stock

with no par value.

Article Fifth

Nasdaq shall be governed by the

Board of Directors of such number and

having such qualifications, powers, and

duties as shall be provided in the ByLaws. The Board shall be selected in

such manner, and shall serve for such

term, as shall be stated in the By-Laws.

The Board of Directors shall have the

power to adopt, alter, or repeal the ByLaws of Nasdaq at any meeting at which

a quorum is present] A. The total

number of shares of stock which Nasdaq

shall have the authority to issue is Three

Hundred Thirty Million (330,000,000),

consisting of Thirty Million (30,000,000)

shares of Preferred Stock, par value $.01

per share (hereinafter referred to as

‘‘Preferred Stock), and Three Hundred

Million (300,000,000) shares of Common

Stock, par value $.01 per share

(hereinafter referred to as ‘‘Common

Stock’’).

B. The Preferred Stock may be issued

from time to time in one or more series.

The Board of Directors of Nasdaq (the

‘‘Board’’) is hereby authorized to

provide for the issuance of shares of

Preferred Stock in one or more series

and, by filing a certificate pursuant to

the applicable law of the State of

Delaware (hereinafter referred to as

‘‘Preferred Stock Designation’’), to

establish from time to time the number

of shares to be included in each such

series, and to fix the designation,

powers, preferences and rights of the

shares of each such series and the

qualifications, limitations and

restrictions thereof. The authority of the

Board with respect to each series shall

include, but not limited to,

determination of the following:

(1) The designation of the series,

which may be by distinguishing number,

letter or title.

(2) The number of shares of the series,

which number the Board may thereafter

(except where otherwise provided in the

Preferred Stock Designation) increase or

decrease (but not below the number of

shares thereof then outstanding).

(3) The amounts payable on, and the

preferences, if any, of shares of the

series in respect of dividends, and

whether such dividends, if any, shall be

cumulative or noncumulative.

(4) Dates at which dividends, if any,

shall be payable.

(5) The redemption rights and price or

prices, if any, for shares of the series.

(6) The terms and amount of any

sinking fund provided for the purchase

or redemption of shares of the series.

(7) The amounts payable on, and the

preferences, if any, of shares of the

series in the event of any voluntary or

involuntary liquidation, dissolution or

winding up of the affairs of Nasdaq.

(8) Whether the shares of the series

shall be convertible into or

exchangeable for shares of any other

class or series, or any other security, of

Nasdaq or any other corporation, and,

if so, the specification of such other

class or series or such other security, the

conversion or exchange price or prices

or rate or rates, any adjustments thereof,

the date or dates at which such shares

shall be convertible or exchangeable

and all other terms and conditions upon

which such conversion or exchange may

be made.

(9) Restrictions on the issuance of

shares of the same series or of any other

class or series.

(10) The voting rights, if any, of the

holders or shares of the series.

C. 1. Except as may otherwise be

provided in this Restated Certificate of

Incorporation (including any Preferred

Stock Designation) or by applicable law,

each holder of Common Stock, as such,

shall be entitled to one vote for each

share of Common Stock held of record

by such holder on all matters on which

stockholders generally are entitled to

vote, and no holder of any series of

Preferred Stock, as such, shall be

entitled to any voting powers in respect

thereof.

2. Notwithstanding any other

provision of this Restated Certificate of

Incorporation, but subject to

subparagraph 6 of this paragraph C. of

this Article Fourth, in no event shall any

record owner of any outstanding

Common Stock which is beneficially

owned, directly or indirectly, as of any

record date for the determination of

stockholders entitled to vote on any

matter, by a person (other than an

Exempt Person) who beneficially owns

shares of Common Stock (‘‘Excess

Shares’’) in excess of five percent (5%)

of the then-outstanding shares of

Common Stock, be entitled or permitted

to vote any Excess Shares. For all

purposes hereof, any calculation of the

number of shares of Common Stock

outstanding at any particular time,

including for purposes of determining

the particular percentage of such

outstanding shares of Common Stock of

which any person is the beneficial

owner, shall be made in accordance

with the last sentence of Rule 13d–

3(d)(1)(i) of the General Rules and

Regulations under the Securities

Exchange Act of 1934, as amended (the

‘‘Exchange Act’’), as in effect on the

date of filing this Restated Certificate of

Incorporation.

3. The following definitions shall

apply to this paragraph C. of this Article

Fourth:

(a) ‘‘Affiliate’’ shall have the meaning

ascribed to that term in Rule 12b–2 of

the General Rules and Regulations

under the Exchange Act, as in effect on

the date of filing this Restated

Certificate of Incorporation.

(b) A person shall be deemed the

‘‘beneficial owher’’ of, shall be deemed

to have ‘‘beneficial ownership’’ of and

shall be deemed to ‘‘beneficially own’’

any securities:

(i) which such person or any of such

person’s Affiliates is deemed to

beneficially own, directly or indirectly,

within the meaning of Rule 13d–3 of the

General Rules and Regulations under

the Exchange Act as in effect on the

date of the filing of this Restated

Certificate of Incorporation;

(ii) which such person or any such

person’s Affiliates has (A) the right to

acquire (whether such right is

exercisable immediately or only after

the passage of time) pursuant to any

agreement, arrangement or

understanding (other than customary

agreements with and between

underwriters and selling group members

with respect to a bona fide public

offering of securities), or upon the

exercise of conversion rights, exchange

rights, rights, warrants or options, or

otherwise; provided however, that a

person shall not be deemed the

beneficial owner of, or to beneficially

own, securities tendered pursuant to a

tender or exchange offer made by or on

behalf of such person or any of such

person’s Affiliates until such tendered

securities are accepted for purchase; or

(B) the right to vote pursuant to any

agreement, arrangement or

understanding; provided, however, that

a person shall not be deemed the

beneficial owner of, or to beneficially

own, any security by reason of such

agreement, arrangement or

understanding if the agreement,

arrangement or understanding to vote

such security (1) arises solely from a

revocable proxy or consent given to such

33392 Federal Register / Vol. 65, No. 100 / Tuesday, May 23, 2000 / Notices

person in response to a public proxy or

consent solicition made pursuant to,

and in accordance with, the applicable

rules and regulations promulgated

under the Exchange Act and (2) is not

also then reportable on Schedule 13D

under the Exchange Act (or any

comparable or successor report); or

(iii) which are beneficially owned,

directly or indirectly, by any other

person and with respect to which such

person or any of such person’s Affiliates

has any agreement, arrangement or

understanding (other than customary

agreements with and between

underwriters and selling group members

with respect to a bona fide public

offering of securities) for the purpose of

acquiring, holding, voting (except to the

extent contemplated by the proviso to

(b)(ii)(B) above) or disposing of such

securities;

provided, however, that (A) no person

who is an officer, director or employee

of an Exempt Person shall be deemed,

solely by reason of such person’s status

or authority as such, to be the

‘‘beneficial owner’’ of, to have

‘‘beneficial ownership’’ of or to

‘‘beneficially own’’ any securities that

are ‘‘beneficially owned’’ (as defined

herein), including, without limitation, in

a fiduciary capacity, by an Exempt

Person or by any other such officer,

director or employee of an Exempt

Person, and (B) the Voting Trustee, as

defined in the Voting Trust Agreement

by and among Nasdaq, the National

Association of Securities Dealers, Inc., a

Delaware corporation (the ‘‘NADS’’, and

The Bank of New York, a New York

banking corporation, as such may be

amended from time to time (the ‘‘Voting

Trust Agreement’’), shall not be deemed,

solely by reason of such person’s status

or authority as such, to be the

‘‘beneficial owner’’ of, to have

‘‘beneficial ownership’’ of or to

‘‘beneficially own’’ any securities that

are governed by and held in accordance

with the Voting Trust Agreement.

(c) A ‘‘person’’ shall mean any

individual, firm, corporation,

partnership, limited liability company

or other entity.

(d) ‘‘Exempt Person’’ shall mean

Nasdaq or any Subsidiary of Nasdaq, in

each case including, without limitation,

in its fiduciary capacity, or any

employee benefit plan of Nasdaq or of

any Subsidiary of Nasdaq, or any entity

or trustee holding Common Stock for or

pursuant to the terms of any such plan

or for the purpose of funding any such

plan or funding other employee benefits

for employees of Nasdaq or of any

Subsidiary of Nasdaq.

(e) ‘‘Subsidiary’’ of any person shall

mean any corporation or other entity of

which securities or other ownership

interests have ordinary voting power

sufficient to elect a majority of the board

of directors or other persons performing

similar functions are beneficially

owned, directly or indirectly, by such

person, and any corporation or other

entity that is otherwise controlled by

such person.

(f) The Board shall have the power to

construe and apply the provisions of

this paragraph C. of this Article Fourth

and to make all determinations

necessary or desirable to implement

such provisions, including, but not

limited to, matters with respect to (1) the

number of shares of Common Stock

beneficially owned by any person, (2)

whether a person is an Affiliate of

another, (3) whether a person has an

agreement, arrangement or

understanding with another as to the

matters referred to in the definition of

beneficial ownership, (4) the application

of any other definition or operative

provision hereof to the given facts, or (5)

any other matter relating to the

applicability or effect of this paragraph

C. of this Article Fourth.

4. The Board shall have the right to

demand that any person who is

reasonably believed to hold of record or

beneficially own Excess Shares supply

Nasdaq with complete information as to

(a) the record owner(s) of all shares

beneficially owned by such person who

is reasonably believed to own Excess

Shares, and (b) any other factual matter

relating to the applicability or effect of

this paragraph C. of this Article Fourth

as may reasonably be requested of such

person.

5. Any constructions, applications, or

determinations made by the Board,

pursuant to this paragraph C. of this

Article Fourth, in good faith and on the

basis of such information and

assistance as was then reasonably

available for such purpose, shall be

conclusive and binding upon Nasdaq

and its stockholders.

6. Notwithstanding anything herein to

the contrary, subparagraph 2 of this

paragraph C. of this Article Fourth shall

not be applicable to any Excess Shares

beneficially owned by (a) the NASD or

its Affiliates until such time as the

NASD beneficially owns five percent

(5%) or less of the outstanding shares of

Common Stock or (b) any other person

as may be approved for such exemption

by the Board prior to the time such

person beneficially owns more than five

percent (5%) of the outstanding shares

of Common Stock. The Board, however,

may not approve an exemption under

this Section 6(b): (i) for a registered

broker or dealer or an Affiliate thereof

(provided that, for these purposes, an

Affiliate shall not be deemed to include

an entity that either owns ten percent or

less of the equity of a broker or dealer,

or the broker or dealer accounts for one

percent or less of the gross revenues

received by the consolidated entity); or

(ii) an individual or entity that is subject

to a statutory disqualification under

Section 3(a)(39) of the Exchange Act.

The Board may approve an exemption

for any other stockholder if the Board

determines that granting such

exemption would (A) not reasonably be

expected to diminish the quality of, or

public confidence in, The Nasdaq Stock

Market or the other operations of

Nasdaq, on the ability to prevent

fraudulent and manipulative acts and

practices and on investors and the

public, and (B) promote just and

equitable principles of trade, foster

cooperation and coordination with

persons engaged in regulating, clearing,

settling, processing information with

respect to and facilitating transactions

in securities or assist in the removal of

impediments to or perfection of the

mechanisms for a free and open market

and a national market system.

7. In the event any provision (or

portion thereof) of this paragraph C. of

this Article Fourth shall be found to be

invalid, prohibited or unenforceable for

any reason, the remaining provisions (or

portions thereof) of this paragraph C. of

this Article Fourth shall remain in full

force and effect, and shall be construed

as if such invalid, prohibited or

unenforceable provision (or portion

hereof) had been stricken herefrom or

otherwise rendered inapplicable, it

being the intent of Nasdaq and its

stockholders that each such remaining

provision (or portion thereof) of this

paragraph C. of this Article Fourth

remains, to the fullest extent permitted

by law, applicable and enforceable as to

all stockholders, including stockholders

that beneficially own Excess Shares,

notwithstanding any such finding.

Article Fifth

A. The business and affairs of Nasdaq

shall be managed by, or under the

direction of, the Board. The total

number of directors constituting the

entire Board shall be fixed from time to

time by the Board.

B. The Board (other than those

directors elected by the holders of any

series of Preferred Stock provided for or

fixed pursuant to the provisions of

Article Fourth hereof, (the ‘‘Preferred

Stock Diectors’’)) shall be divided into

three classes, as nearly equal in number

as possible, designated Class I, Class II

and Class III. Class I directors shall

initially serve until the first annual

meeting of stockholders following the

Federal Register / Vol. 65, No. 100 / Tuesday, May 23, 2000 / Notices 33393

effectiveness of this Restated Certificate

of Incorporation; Class II directors shall

initially serve until the second annual

meeting of stockholders following the

effectiveness of this Restated Certificate

of Incorporation; and Class III directors

shall initially serve until the third

annual meeting of stockholders

following the effectiveness of this

Restated Certificate of Incorporation.

Commencing with the first annual

meeting of stockholders following the

effectiveness of this Restated Certificate

of Incorporation, directors of each class

the term of which shall then expire shall

be elected to hold office for a three-year

term and until the election and

qualification of their respective

successors in office. In case of any

increase or decrease, from time to time,

in the number of directors (other than

Preferred Stock Directors), the number

of directors in each class shall be

apportioned as nearly equal as possible.

C. Subject to the rights of the holders

of any one or more series of Preferred

Stock then outstanding, newly created

directorships resulting from any

increase in the authorized number of

directors or any vacancies in the Board

resulting from death, resignation,

retirement, disqualification, removal

from office or other cause shall only be

filled by the Board. Any director so

chosen shall hold office until the next

election of the class for which such

directors shall have been chosen and

until his successor shall be elected and

qualified. No decrease in the number of

directors shall shorten the term of any

incumbent director.

D. Except for Preferred Stock

Directors, any director, or the entire

Board, may be removed from office at

any time, but only for cause and only by

the affirmative vote of [the majority of

the whole Board of Directors.] at least

662⁄3% of the total voting power of the

outstanding shares of capital stock of

Nasdaq entitled to vote generally in the

election of directors (‘‘Voting Stock’’),

voting together as a single class.

E. During any period when the

holders of any series of Preferred Stock

have the right to elect additional

directors as provided for or fixed

pursuant to the provisions of Article

Four hereof, then upon commencement

and for the duration of the period

during which such right continues: (i)

the then otherwise total authorized

number of directors of Nasdaq shall

automatically be increased by such

specified number of directors, and the

holders of such Preferred Stock shall be

entitled to elect the additional directors

so provided for or fixed pursuant to said

provisions, and (ii) each such additional

director shall serve until such director’s

successor shall have been duly elected

and qualified, or until such director’s

right to hold such office terminates

pursuant to said provisions, whichever

occurs earlier, subject to his earlier

death, disqualification, resignation or

removal. Except as otherwise provided

by the Board in the resolution or

resolutions establishing such series,

whenever the holders of any series of

Preferred Stock having such right to

elect additional directors are divested of

such right pursuant to the provisions of

such stock, the terms of office of all

such additional directors elected by the

holders of such stock, or elected to fill

any vacancies resulting from death,

resignation, disqualification or removal

of such additional directors, shall

forthwith terminate and the total

authorized number of directors of

Nasdaq shall automatically be reduced

accordingly.

Article Sixth

A. A director of Nasdaq shall not be

liable to Nasdaq or its stockholders for

monetary damages for breach of

fiduciary duty as a director, except to

the extent that such exemption from

liability or limitation thereof is not

permitted under the General

Corporation Law of the State of

Delaware as the same exists or may

hereafter be amended.

B. Any repeal or modification of [the

foregoing] paragraph A. shall not

adversely affect any right or protection

of a director of Nasdaq existing

hereunder with respect to any act or

omission occurring prior to such repeal

or modification.

Article [Sixth] Seventh

[Nasdaq reserves the right to amend,

alter, change, or repeal any provisions

contained in this Restated Certificate of

Incorporation, in the manner now or

hereafter prescribed by statute, and all

rights conferred herein are granted

subject to this reservation.] No action

that is required or permitted to be taken

by the stockholders of Nasdaq at any

annual or special meeting of

stockholders may be effected by written

consent of stockholders in lieu of a

meeting of stockholders.

[Article Seventh] Article Eighth

In furtherance of, and not in

limitation of, the powers conferred by

law, the Board is expressly authorized

and empowered to adopt, amend or

repeal the By-Laws of Nasdaq: provided,

however, that the By-Laws adopted by

the Board under the powers hereby

conferred may be amended or repealed

by the Board or by the stockholders

having voting power with respect

thereto, provided further that,

notwithstanding any other provision of

this Restated Certificate of

Incorporation or any provision of law

which might otherwise permit a lesser

vote or no vote, but in addition to any

affirmative vote of the holders of any

particular class or series of the stock

required by law or this Restated

Certificate of Incorporation, the

affirmative vote of the holders of at least

662⁄3% percent of the total voting power

of the outstanding Voting Stock, voting

together as a single class, shall be

required in order for the stockholders to

adopt, alter, amend or repeal any ByLaw.

Article Ninth

Nasdaq reserves the right to amend,

alter, change, or repeal any provisions

contained in this Restated Certificate of

Incorporation, in the manner now or

hereafter prescribed by statute, and all

rights conferred herein are granted

subject to this reservation; provided,

however, that the affirmative vote of the

holders of at least 662⁄3% of the voting

power of the outstanding Voting Stock,

voting together as a single class, shall be

required to amend, repeal or adopt any

provision inconsistent with paragraph

C. of Article Fourth, Article Fifth, Article

Seventh, Article Eighth or this Article

Ninth.

Article Tenth

Nasdaq shall have perpetual

existence.

Article Eleventh

In light of the unique nature of

Nasdaq and its operations and in light

of Nasdaq’s status as a self-regulatory

organization, the Board of Directors,

when evaluating (A) any tender or

exchange offer or invitation for tenders

or exchanges, or proposal to make a

tender or exchange offer or request or

invitation for tenders or exchanges, by

another party, for any equity security of

Nasdaq, (B) any proposal or offer by

another party to (1) merge or

consolidate Nasdaq or any subsidiary

with another corporation or other entity,

(2) purchase or otherwise acquire all or

a substantial portion of the properties or

assets of Nasdaq or any subsidiary, or

sell or otherwise dispose of to Nasdaq or

any subsidiary all or a substantial

portion of the properties or assets of

such other party, or (3) liquidate,

dissolve, reclassify the securities of,

declare an extraordinary dividend of,

recapitalize or reorganize Nasdaq, (C)

any action, or any failure to act, with

respect to any holder or potential holder

of Excess Shares subject to the

limitations set forth in subparagraph 2

of paragraph C. of Article Fourth, (D)

any demand or proposal, precatory or

33394 Federal Register / Vol. 65, No. 100 / Tuesday, May 23, 2000 / Notices

otherwise, on behalf of or by a holder or

potential holder of Excess Shares

subject to the limitations set forth in

subparagraph 2 of paragraph C. of

Article Fourth or (E) any other issue,

shall, to the fullest extent permitted by

applicable law, take into account all

factors that the Board of Directors

deems relevant, including, without

limitation, to the extent deemed

relevant, (i) the potential impact thereof

on the integrity, continuity and stability

of The Nasdaq Stock Market and the

other operations of Nasdaq, on the

ability to prevent fradulent and

manipulative acts and practices and on

investors and the public, and (ii)

whether such would promote just and

equitable principles of trade, foster

cooperation and coordination with

persons engaged in regulating, clearing,

settling, processing information with

respect to and facilitating transactions

in securities or assist in the removal of

impediments to or perfection of the

mechanisms for a free and open market

and a national market system.

Third: That such Restated Certificate

of Incorporation has been duly adopted

by [the stockholder of] Nasdaq in

accordance with the applicable

provisions of Sections 242 and 245 of

the General Corporation Law of the

State of Delaware and in accordance

with Section 228 of the General

Corporation Law of the State of

Delaware (by the written consent of its

sole stockholder).

In witness whereof, the undersigned

[have] has executed this certificate this

ll [24th day of November, 1997] day

of llll, ll.

THE NASDAQ STOCK MARKET, INC.

By:lllll

(signature)

[Joan C. Conley] [Corporate Secretary]

lllll

(printed name)

(title)

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

Nasdaq included statements concerning

the purpose of, and basis for, the

proposed rule change and discussed any

comments it received on the proposed

rule change. The text of these statements

may be examined at the places specified

in Item IV below. Nasdaq has prepared

summaries, set forth in Sections A, B,

and C below, of the most significant

aspects of such statements.

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

The purpose of the proposed rule

change is to amend Nasdaq’s By-Laws

and Restated Certificate of Incorporation

(‘‘Certificate’’) in accordance with the

Restructuring Plan (the ‘‘Restructuring’’)

approved by NASD members on April

14, 2000, with 3,423 members voting in

favor and 652 against the Restructuring.

The Restructuring involves broadening

the ownership in Nasdaq (which is

currently 100 percent owned by the

NASD) through a two-phase private

placement of common stock and

warrants to NASD members, Nasdaq

issuers, institutional investors and

strategic partners. In order to implement

the Restructuring, Nasdaq must amend

its By-Laws and Certificate. The

proposed rule change, as described

below, includes amendments needed to

implement Phase I of the Restructuring.

During this Phase, Nasdaq will continue

to operate under the Plan of Allocation

and Delegation of Functions by the

NASD to its Subsidiaries (the

‘‘Delegation Plan’’), as approved by the

Commission. Nasdaq will submit an

Application For, and Amendments to

Application For, Registration as a

National Securities Exchange or

Exemption from Registration Pursuant

to Section 5 of the Exchange Act (Form

1) to obtain exchange registration. After

exchange registration, Nasdaq will no

longer operate under the Delegation

Plan.

By-Laws

Article I

Nasdaq proposes to amend the

definitions in Article I(i), (j), and (q) to

reflect the newly created Chief

Executive Officer position. See Article

VII, Section 7.8. Nasdaq also proposes

conforming amendments in Article IV,

Sections 4.5, 4.11(c), 4.13(d) and (e);

Article VII, Sections 7.1, 7.3, 7.5, 7.9,

7.10, 7.11, and 7.13; and Article IX,

Section 9.2.

Article III

Nasdaq proposes procedures for

annual and special meetings of

stockholders, including procedures for a

stockholder to nominate persons for

election to the Board or to propose

business to be considered at an annual

meeting.

Article IV

Nasdaq proposes to amend Section

4.2 to permit the Board to determine the

number of Directors. Currently, this

Section requires that the number of

Nasdaq Directors equal the number of

NASD Regulation Directors. This

provisions was designed to balance the

roles of the subsidiaries in the current

interlocking Board structure and is no

longer applicable under the new

structure. Under the proposed rule

change, any increase in the size of the

Board would be filled in accordance

with the Certificate, as described below.

Under Section 4.3, Nasdaq proposes

to remove the requirement that all

Directors also be Governors of the NASD

Board. As part of the Restructuring, the

non-NASD shareholders will have the

right to nominate four Directors who

will not be NASD Governors. These four

Directors must be proposed to the NASD

National Nominating Committee by a

majority of non-NASD stockholders of

Nasdaq. The number of Non-Industry

Directors would continue to equal or

exceed the number of Industry

Directors, plus the newly created Chief

Executive Officer and the Nasdaq

President (if they are elected to be

Directors). To maintain this balance, the

four new Nasdaq Director positions will

be evenly split between Industry and

Non-Industry Directors.

Nasdaq proposes to amend Section

4.6 by deleting the provision that

permits a Director to be removed with

or without cause by a majority vote of

the Board. Under the proposed rule

change, a Director could only be

removed for cause by an affirmative vote

of at least 662⁄3 percent of the total

voting power of the outstanding shares

of capital stock of Nasdaq entitled to

vote generally in the election of

directors, voting together as a single

class. The Certificate contains a similar

provision. See Article Fifth, Paragraph

D, Certificate.

Nasdaq proposes to amend Section

4.8 to authorize the Nasdaq Board,

rather than the NASD Board, to fill

vacancies on the Nasdaq Board. See also

Article Fifth, Paragraph C, Certificate.

Nasdaq proposes to amend Section

4.9 to provide that a quorum for the

transaction of business at a Board

meeting shall consist of a majority of the

Board. The requirement that the quorum

also include not less than 50 percent of

the Non-Industry directors is

eliminated, on the advice of NASD’s

Delaware Counsel that these provisions

would be deemed, under Delaware’s

General Corporation Law (‘‘Delaware

Law’’), to confer special voting powers

on the non-industry members: Section

141(d) of Delaware Law permits such

disparity only where the Directors are

elected by separate classes of stock, and

such disparity of directors is delineated

in the certificate of incorporation.

Federal Register / Vol. 65, No. 100 / Tuesday, May 23, 2000 / Notices 33395

Nasdaq proposes to amend Section

4.13(a) to eliminate a provision that the

Board may remove a committee member

only for refusal, failure, neglect, or

inability to discharge the committee

member’s duties. Removal of a

committee member would still require a

majority vote of the whole Board and

notice to the committee member.

Nasdaq proposes to amend Section

4.14(b), which concerns interested party

transactions, to permit the authorization

or ratification of an interested party

transaction by a majority of

disinterested Directors, even if the

number of such Directors does not

constitute a quorum. The Section is

further amended by eliminating a

provision that excludes from

application of the Section any contracts

or transactions among the NASD

companies. The amended Section will

not apply to contracts or transactions

among stockholders.

Article IX

The text of Section 9.1, which states

that the NASD shall be the sole

stockholder of Nasdaq, is deleted. The

remainder of Article IX is renumbered

accordingly. References to a single

stockholder throughout the By-Laws are

amended to refer to ‘‘stockholders.’’

Article XI

Currently, as sole stockholder of

Nasdaq, the NASD may amend the

Nasdaq By-Laws. Nasdaq proposes to

amend Section 11.1 to eliminate this

authority and provide that the Nasdaq

By-Laws may be amended by an

affirmative vote of the holders of at least

662⁄3 percent of the voting power of the

then outstanding stock entitled to vote,

voting together as a single class. As

under the current By-Laws, the Nasdaq

Board also may amend the By-Laws. See

also Article Eighth, Certificate.

Certificate

Nasdaq is amending the Certificate to

conform it to the changes described

above,, as well as to make the following

changes.

Article Fourth

Number of Shares: The Certificate

currently authorizes Nasdaq to issues

2,000 shares of common stock. The

authorization is increased to 330 million

shares.

Blank Check Preferred Stock: Under

Delaware Law, a certificate of

incorporation of a corporation can

authorize the issuance of shares of

preferred stock, the terms of which are

not set forth in the certificate of

incorporation but may be fixed by the

board of directors in the future. The

Certificate authorizes the issuance of

such shares and confers upon the

Nasdaq Board such authority.

Scaled Voting: Paragraph C of Article

Fourth contains a ‘‘scaled voting’’

provision. Pursuant to this provision,

beneficial owners of Nasdaq common

stock have their voting power capped.

Specifically, any person who benefically

owns shares of common stock in excess

of five percent of the then-outstanding

shares of common stock (‘‘Excess

Shares’’) will not be entitled or

permitted to vote any such Excess

Shares. This provision is not, however,

applicable to: (1) the NASD or its

affiliates until such time as NASD

beneficially owns five percent of less of

the outstanding shares of Nasdaq

common stock; or (2) any other person

approved by the Board for such an

exemption before such person owns

more than five percent of the

outstanding shares of Nasdaq common

stock. The purpose of this latter

exemptive provision is to allow some

flexibility should Nasdaq seek to enter

into a business combination in which it

would want to utilize shares of common

stock in the transaction. The Nasdaq

Board may not approve an exemption

for a registered broker or dealer or an

affiliate (with certain exceptions for

affiliates as defined in the provision) or

an individual or entity that is subject to

a statutory disqualification under

Section 3(a)(39) of the Act. The Nasdaq

Board may grant an exemption to any

other shareholder if the Board

determines that granting an exemption

would: (1) not reasonably be expected to

diminish the quality of, or public

confidence in, The Nasdaq Stock Market

or the other operations of Nasdaq, on

the ability to prevent fraudulent and

manipulative acts and practices and on

investors and the public, and (2)

promote just and equitable principles of

trade, foster cooperation and

coordination with persons engaged in

regulating, clearing, settling, processing

information with respect to and

facilitating transactions in securities or

assist in the removal of impediments to

or perfection of the mechanisms for a

free and open market and a national

market system.

Article Fifth

Board Size: Under Delaware Law, the

number of directors must be fixed by, or

in the manner provided in, the by-laws

unless the certificate of incorporation

fixes the number of directors, in which

case a change in the number of directors

shall be made only by amendment to the

certificate of incorporation. The

Certificate vests the Board with the

exclusive authority to fix the number of

directors of Nasdaq.

Staggered Board: Delaware Law

permits a corporation, either in its

certificate of incorporation or in a

stockholder-adopted by-law, to divide

its board of directors into three classes,

with the term of office of one-third of

the directors expiring each year. A

staggered or classified board of directors

provides for continuity of membership

and limits an acquiror’s ability to effect

a rapid change in control of a

corporation and/or its management,

since it will take at least two

stockholder meetings, instead of one, for

majority control of the board to shift.

The Certificate contains such a

provision. Under the amended

Certificate, Directors elected to the

classified board may be removed only

for cause and by affirmative vote of at

least 662⁄3% of the total voting power of

the outstanding shares of capital stock

of Nasdaq entitled to vote generally in

the election of directors, voting together

as a single class. See also Article IV,

Section 4.4, Bylaws.

Filling Vacancies on the Board and

Newly-Created Directorship: Under

Delaware Law, unless otherwise

provided in the certificate of

incorporation or by-laws, (i) vacancies

and newly-created directorships may be

filled by a majority of the directors then

in office, although less than a quorum,

or by a sole remaining director, or (ii)

if holders of any class or classes of stock

are entitled to elect one or more

directors, vacancies and newly-created

directorships of such class or classes

may be filled by a majority of the other

directors elected by such class or

classes. The Certificate vests the Board

with the exclusive authority to fill

vacancies on the Board and newlycreated directorships.

Article Seventh

Limitations on Stockholder Actions

Without Meetings: Unless otherwise

provided in the certificate of

incorporation, stockholders of a

Delaware corporation may take action

without meetings, without prior notice

and without a vote if a consent or

consents in writing setting forth the

action taken is signed by the holders of

that number of shares that would be

required to authorize the taking of such

action at a meeting at which all shares

were present. The Certificate prohibits

stockholder action by written consent.

Articles Eighth and Ninth

Power of Board to Amend By-Laws:

Under Delaware Law, stockholders have

the power to adopt, amend, or repeal bylaws. However, the certificate of

incorporation can also confer this power

upon the directors. The Certificate vests

33396 Federal Register / Vol. 65, No. 100 / Tuesday, May 23, 2000 / Notices

3 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

the Nasdaq Board with such concurrent

authority.

Supermajority Voting Requirements

for By-Law or Certificate Amendments:

Delaware Law permits the certificate of

incorporation to require a supermajority

vote of stockholders for particular

corporate action. The Certificate

requires the approval of 662⁄3% of the

outstanding voting power for

stockholder approval of amendments to

certain provisions of the Certificate and

for stockholders to amend the Nasdaq

By-Laws.

Article Eleventh

The amended Certificate includes a

new constituency provision that reflects

the unique nature of the Nasdaq and its

operations and status as a self-regulatory

organization. To the fullest extent

permitted by applicable law, this

provision requires the Board to take into

account certain factors in evaluating

tender or exchange offers, mergers or

consolidations, voting exemptions

pursuant to Article Fourth, and other

issues. These factors include, but are not

limited to: (i) the potential impact

thereof on the integrity, continuity and

stability of The Nasdaq Stock Market

and the other operations of Nasdaq, on

the ability to prevent fraudulent and

manipulative acts and practices and on

investors and the public, and (ii)

whether such would promote just and

equitable principles of trade, foster

cooperation and coordination with

persons engaged in regulating, clearing,

settling, processing information with

respect to and facilitating transactions

in securities or assist in the removal of

impediments to or perfection of the

mechanisms for a free and open market

and a national market system.

2. Statutory Basis

Nasdaq believes that the proposed

rule change is consistent with the

provisions of Section 15A(b)(6) of the

Act, which requires, among other

things, that the Association’s rules must

be designed to prevent fraudulent and

manipulative acts and practices, to

promote just and equitable principles of

trade, and, in general, to protect

investors and the public interest.

Nasdaq believes that the voting

limitations and constituency provision

in Articles Fourth and Eleventh of the

Certificate will serve the public interest

by ensuring that certain individuals or

entities cannot gain under influence

over the operations of the Nasdaq Stock

Market.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

Nasdaq does not believe that the

proposed rule change will result in any

burden on competition that is not

necessary or appropriate in furtherance

of the purposes of the Act.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

Nasdaq neither solicited nor received

comments on the proposed rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the date of

publication of this notice in the Federal

Register or within such longer period (i)

as the Commission may designate up to

90 days of such date if it finds such

longer period to be appropriate and

publishes its reasons for so finding or

(ii) as to which the self-regulatory

organization consents, the Commission

will:

A. By order approve the proposed rule

change; or

B. Institute proceedings to determine

whether the proposed rule change

should be disapproved.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing,

including whether the proposed rule

change is consistent with the Act.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street NW,

Washington, DC 20549–0609. Copies of

the submission, all subsequent

amendments, all written statements

with respect to the proposed rule

change that are filed with the

Commission, and all written

communications relating to the

proposed rule change between the

Commission and any person, other than

those that may be withheld from the

public in accordance with the

provisions of 5 U.S.C. 552, will be

available for inspection and copying in

the Commission’s Public Reference

Room. Copies of such filing will also be

available for inspection and copying at

the principal office of the NASD. All

submissions should refer to File No.

SR–NASD–00–27 and should be

submitted by June 13, 2000.

For the Commission, by the Division

of Market Regulation, pursuant to

delegated authority.3

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–12926 Filed 5–22–00; 8:45 am]

BILLING CODE 8010–01–W

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42785; International Series

Release No. 1223; File No. SR–NYSE–00–

23]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the New York Stock

Exchange, Inc., Relating to the Trading

of the Ordinary Shares of UBS AG

May 15, 2000.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’);1 and Rule 19b–4 thereunder,2

notice is hereby given that on May 15,

2000, the New York Stock Exchange,

Inc. (the ‘‘Exchange’’ or the ‘‘NYSE’’)

filed with the Securities and Exchange

Commission (‘‘Commission’’) the

proposed rule change as described in

Items I, II and III below, which Items

have been prepared by the Exchange.

The Commission is publishing this

notice to solicit comments on the

proposed rule change from interested

persons and to approve the proposal on

an accelerated basis.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Exchange is proposing to adopt

an interpretation under its rules to

accommodate the trading of UBS AG

(‘‘UBS’’). UBS is a stock corporation

incorporated under the laws of

Switzerland with a single class of

common stock—ordinary shares with a

par value of 20 Swiss Francs each—that

will trade on both the NYSE and the

Swiss Exchange, as well as on other

exchanges around the world.

UBS will solicit proxies in a manner

that combines characteristics of both the

Swiss and U.S. markets. This rule

change interprets Paragraphs 401.03 and

402 of the Exchange’s Listed Company

Manual (‘‘Manual’’) to accept UBS’s

proposed proxy procedures.