[Federal Register Volume 70, Number 19 (Monday, January 31, 2005)]
[Rules and Regulations]
[Pages 4988-5019]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-1679]



[[Page 4987]]

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Part VII





Federal Trade Commission





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16 CFR Parts 801, 802 and 803



Premerger Notification; Reporting and Waiting Period Requirements; 
Final Rule Revised Jurisdictional Thresholds for Section 7A of the 
Clayton Act; Notice

Federal Register / Vol. 70, No. 19 / Monday, January 31, 2005 / Rules 
and Regulations

[[Page 4988]]


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FEDERAL TRADE COMMISSION

16 CFR Parts 801, 802 and 803


Premerger Notification; Reporting and Waiting Period Requirements

AGENCY: Federal Trade Commission.

ACTION: Final rule.

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SUMMARY: The Commission is amending the premerger notification rules 
(``the rules'') to reflect adjustment and publication of reporting 
thresholds as required by the 2000 amendments \1\ to Section 7A of the 
Clayton Act, 15 U.S.C. 18a, as added by the Hart-Scott-Rodino Antitrust 
Improvements Act of 1976, Public Law 94-935, 90 Stat. 1390 (``the 
Act.''). The Act requires all persons contemplating certain mergers or 
acquisitions, which meet or exceed the jurisdictional thresholds in the 
Act, to file notification with the Federal Trade Commission (``the 
Commission'') and the Assistant Attorney General in charge of the 
Antitrust Division of the Department of Justice (``the Assistant 
Attorney General'') and to wait a designated period of time before 
consummating such transactions. The reporting and waiting period 
requirements are intended to enable these enforcement agencies to 
determine whether a proposed merger or acquisition may violate the 
antitrust laws if consummated and, when appropriate, to seek a 
preliminary injunction in Federal court to prevent consummation.
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    \1\ 15 U.S.C. 18a(a). See Pub. L. 106-553, 114 Stat. 2762.

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DATES: These final rules are effective March 2, 2005.

FOR FURTHER INFORMATION CONTACT: Marian R. Bruno, Assistant Director, 
Karen E. Berg, Attorney, Malcolm L. Catt, Attorney, B. Michael Verne, 
Compliance Specialist, or Nancy M. Ovuka, Compliance Specialist, 
Premerger Notification Office, Bureau of Competition, Room 303, Federal 
Trade Commission, Washington, DC 20580. Telephone: (202) 326-3100.

SUPPLEMENTARY INFORMATION:

Statement of Basis and Purpose

    The 2000 amendments to section 7A require the Commission to revise 
the Act's jurisdictional and filing fee thresholds annually, based on 
the change in gross national product, in accordance with section 
8(a)(5) for each fiscal year beginning after September 30, 2004. The 
Commission, with the concurrence of the Assistant Attorney General, is 
adopting these final rules to reflect the revised thresholds in the 
examples contained in the rules and to provide a method for future 
adjustments as required by the 2000 amendments. These final rules will 
also adjust references to the notification and filing fee thresholds 
and other limitations in the rules and the Antitrust Improvements Act 
Notification and Report Form and its Instructions to remain consistent 
with the revised jurisdictional and filing fee thresholds.
    The Commission notes that the effective date of the new thresholds 
does not affect or void the waiting period expressly required under 
section 7A(b)(1) of the Act, which provides that the waiting period 
shall begin with the date the Commission and the Antitrust Division of 
the Department of Justice (collectively ``the Agencies'') receive the 
filing, and shall not end until thirty days after that date, absent 
early termination under section 7A(b)(2). Accordingly, the 30-day 
statutory waiting period shall continue to apply to all proposed 
transactions filed with the Agencies for review, even in cases where 
the Agencies receive a filing before the effective date of the new 
thresholds but the waiting period for that filing does not expire until 
after that date.

Implementing the Threshold Changes in Examples to the Rules

    Rather than attempt to revise the examples annually, a 
parenthetical ``(as adjusted)'' has been added where necessary 
throughout the rules to notify the filer where such a change in 
statutory threshold value occurs. The term ``as adjusted'' is then 
defined in new subsection 801.1(m) and refers to a table of the 
adjusted values published in the Federal Register notice titled 
``Revised Jurisdictional Thresholds for Section 7A of the Clayton 
Act.'' The notice will also contain a table showing adjusted values for 
the rules. This Federal Register notice will be published in January of 
each year and the values contained therein will be effective as of the 
effective date published in the Federal Register notice and will remain 
effective until superceded in the next calendar year. The notice will 
also be available at http://www.ftc.gov. For ease of application, such 
adjusted values will be rounded up to the next highest $100,000.
    In addition to the revisions to the examples throughout the rules 
as a result of the mandatory adjustments to the thresholds in the Act, 
the Commission will adjust the notification thresholds and certain 
limitations contained in the exemptions as discussed below. The 
notification thresholds and other limitations will be implemented in 
the same way as in the changes to the examples as discussed above (i.e. 
by adding the parenthetical ``(as adjusted)'' following the relevant 
threshold or limitation).

Non-Mandatory Revisions

Section 801.1(h) Definition of Notification Threshold

    The HSR statute provides that an acquisition is reportable if, as a 
result of the acquisition, the acquirer will hold voting securities of 
the acquired person valued in excess of $50 million. Under the statute, 
once an acquirer holds voting securities valued at more than $50 
million, any additional purchase of even one voting share is 
reportable. As the antitrust agencies recognized in the original 
rulemaking proceeding in 1978,\2\ this provision would result in far 
more filings than are needed for effective antitrust review. At the 
same time, as the acquirer's holding in the company continue to 
increase in size through subsequent transactions, the agencies must 
have some opportunities to review the later transactions. That is, 
there must be some points (thresholds) where these additional 
acquisitions become reportable.
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    \2\ 43 FR 33487 (July 31, 1978).
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    Section 801.1(h) defines the term ``notification threshold'' and 
sets forth five reporting thresholds. Failing to adjust these 
thresholds to correspond to adjusted thresholds for filing fees would 
create two different sets of thresholds, one for fees and another for 
notification requirements, creating confusion and difficult 
administrative problems. Therefore, the notification thresholds will be 
adjusted annually to correspond to the adjusted filing fee thresholds. 
Although adjustment of the $1 billion limitation associated with the 25 
percent threshold is not mandated on this basis, this limitation will 
also be adjusted annually, by the same percentage as the other 
notification thresholds, in order to avoid its eventually coming too 
close to the $500 million notification threshold as it is adjusted. The 
Commission believes that such changes are consistent with Congressional 
intent and with encouraging efficient antitrust review.

Section 801.40 Formation of Joint Venture or Other Corporations

    Section 801.40 provides a special size-of-person test in the 
formation of new corporations. The values used to determine whether the 
transaction satisfies this test are the same as the jurisdictional 
size-of-person thresholds

[[Page 4989]]

and will therefore be adjusted to remain identical to them.

Section 802.4 Acquisitions of Voting Securities of Issuers Holding 
Certain Assets the Direct Acquisition of Which Is Exempt

    Section 802.4 exempts the acquisition of voting securities of 
issuers that hold certain assets the direct acquisition of which is 
exempt under the act or the rules, and do not hold other non-exempt 
assets with an aggregate fair market value of more than $50 million. 
The rationale for this rule is that the applicability of an exemption 
should not depend on the form the acquisition takes, since the 
antitrust analysis would be the same whether voting securities or 
assets are being acquired. The statute does not mandate adjustment to 
this $50 million limitation. However, since this threshold functions in 
the same manner as the size-of-transaction test in an asset 
acquisition, this limitation is adjusted to remain consistent with 
mandated adjustments to the $50 million jurisdictional threshold.

Section 802.21 Acquisitions of Voting Securities Not Meeting or 
Exceeding Greater Notification Threshold (as Adjusted)

    The annual adjustment of notification thresholds can make it 
difficult for filing parties to determine which notification thresholds 
are applicable for purposes of this exemption. For example, where a 
notification threshold increases after a party files but before a year 
has passed, a question may arise as to whether the notification 
threshold in place at the time it filed or the adjusted notification 
threshold would apply. Section 802.21 is amended to provide an 
acquiring person with a one year period to reach the notification 
threshold in place at the time that they filed, even though the 
notification threshold may have subsequently been adjusted during that 
year. Note, however, that an acquiring person may then acquire up to 
the next greater adjusted notification threshold (as opposed to the 
next notification threshold in place at the time of filing) during the 
five years following expiration of the waiting period. This is 
illustrated in two new examples to section 802.21.

Sections 802.50 and 802.51 Acquisitions of Foreign Assets or Voting 
Securities of a Foreign Issuer

    The adjustment statute does not require adjustment of the 
limitations contained in sections 802.50 and 802.51 regarding 
acquisitions of foreign assets and voting securities. The Commission 
nonetheless is amending the rules to make such adjustments, inasmuch as 
the Commission has previously amended these limitations to correspond 
to changes to thresholds in the Act. For example, in 2002,\3\ the 
Commission amended the limitations in these sections by adopting the 
$50 million size-of-transaction threshold established in the 2000 
amendments to the act.\4\ In doing so, the Commission noted that the 
principle underlying sections 802.50 and 802.51 was that the 
acquisitions of foreign assets or voting securities should not be 
subject to the reporting requirements unless the assets or voting 
securities being acquired have sufficient impact on U.S. commerce. The 
Commission noted that the $50 million threshold amount established in 
the 2000 legislation provided an appropriate measure of such an impact. 
The Commission also referenced the 1978 SBP which explained that the 
$110 million limitation contained in the sections was adopted to 
approximate the size-of-person criteria of the act. Therefore, the $50 
million limitations in these exemptions will be adjusted annually to 
remain in sync with the adjusted size-of-transaction threshold. 
Similarly, the $110 million limitation on combined U.S. sales or assets 
of the acquiring and acquired person will be adjusted in sync with the 
annual adjustments to the size-of-person test amounts.
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    \3\ 67 FR 11898 (March 18, 2002)
    \4\ See Pub. L. 106-553, 114 Stat. 2762.
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Appendix: Premerger Notification and Report Form

    Item 2(c) of the Form and Instructions requires the acquiring 
person to indicate the notification threshold that it will meet or 
exceed in an acquisition of voting securities. This item will be 
amended to add ``(as adjusted)'' to the appropriate notification 
thresholds on the Form and in the Instructions.

Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601-612, requires that the 
agency conduct an initial and final regulatory analysis of the 
anticipated economic impact of the proposed amendments on small 
businesses, except where the Commission certifies that the regulatory 
action will not have a significant economic impact on a substantial 
number of small entities. 5 U.S.C. 605.
    Because of the size of the transactions necessary to invoke a Hart-
Scott-Rodino filing, the premerger notification rules rarely, if ever, 
affect small businesses. Indeed, the 2000 amendments to the Act were 
intended to reduce the burden of the premerger notification program by 
exempting all transactions valued at $50 million or less. Further, none 
of the proposed rule amendments expands the coverage of the premerger 
notification rules in a way that would affect small business. 
Accordingly, the Commission certifies that these proposed rules will 
not have a significant economic impact on a substantial number of small 
entities. This document serves as the required notice of this 
certification to the Small Business Administration.

Paperwork Reduction Act

    Paperwork Reduction Act of 1995, 44 U.S.C. 3501-3518, requires 
agencies to submit requirements for ``collections of information'' to 
the Office of Management and Budget (``OMB'') and obtain clearance 
prior to instituting them. Such collections of information include 
reporting, recordkeeping, or disclosure requirements contained in 
regulations. The HSR premerger notification rules and Form contain 
information collection requirements, as defined by the Paperwork 
Reduction Act, that have been reviewed and approved by the Office of 
Management and Budget under OMB Control No. 3084-0005 through May 31, 
2007. As noted earlier, these final rules implement amendments to 
Section 7A of the Clayton Act that require annual adjustments to the 
jurisdictional thresholds.
    There were 1,104 transactions requiring notification in FY 2003. 
FTC staff estimates that 45 of these transactions would not have 
required notification had the thresholds been adjusted by the average 
percentage change in the gross national product over the fifteen years 
that the thresholds in Section 8 have been annually adjusted. 
Generally, each transaction involves two filings (because each party to 
the transaction is required to file). The existing OMB clearance is 
premised on the staff's estimate that each of these filings requires 39 
hours to complete. Accordingly, staff estimates that the final rule 
changes will result in a reduction in the hours burden of 3,510 hours 
per year (45 transactions x 2) x 39 hours. This estimate is based on 
fiscal year 2003 filings,\5\ and constitutes approximately a 4% 
reduction from the previous burden estimate of 87,530 hours. Thus, the 
total burden hours under the HSR rules as revised will be 84,020 hours. 
Similarly, staff estimates the total labor costs under the final rules 
to be $35,708,000 (rounded to the nearest thousand), a decrease of

[[Page 4990]]

$1,492,000 from the previous estimate of $37,200,000.\6\
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    \5\ FY 2003 is the latest fiscal year for which statistics have 
been published in the Annual Report to Congress.
    \6\ The reduction of approximately $1,492,000 in labor costs is 
based on an estimated average of $425 per hour for executives' and 
attorneys' wages (3,510 hours x $425/hour = $1,491,750).
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    On January 11, 2005, the Office of Management and Budget approved 
the new burden estimates resulting from these final rule changes.

Administrative Procedure Act

    These final amendments are technical and non-substantive, to the 
extent they make conforming rule changes that merely incorporate by 
reference the adjusted filing thresholds to be published elsewhere in 
the Federal Register, or merely clarify the application of the existing 
rules under the adjusted thresholds, without amending the existing 
rules in any other way. Accordingly, the Commission has determined that 
these amendments are not subject to the public notice and comment 
procedures of the Administrative Procedure Act. See 5 U.S.C. 553(b)(A).

List of Subjects in 16 CFR Parts 801, 802 and 803

    Antitrust.

0
For the reasons stated in the preamble, the Federal Trade Commission 
amends 16 CFR parts 801, 802 and 803 as set forth below:

PART 801--COVERAGE RULES

0
1. The authority citation for part 801 continues to read as follows:

    Authority: 15 U.S.C. 18a(d).


0
2. Amend Sec.  801.1 by revising paragraph (h) and adding paragraph (n) 
to read as follows:


Sec.  801.1  Definitions.

* * * * *
    (h) Notification threshold. The term ``notification threshold'' 
means:
    (1) An aggregate total amount of voting securities of the acquired 
person valued at greater than $50 million (as adjusted) but less than 
$100 million (as adjusted);
    (2) An aggregate total amount of voting securities of the acquired 
person valued at $100 million (as adjusted) or greater but less than 
$500 million (as adjusted);
    (3) An aggregate total amount of voting securities of the acquired 
person valued at $500 million (as adjusted) or greater;
    (4) Twenty-five percent of the outstanding voting securities of an 
issuer if valued at greater than $1 billion (as adjusted); or
    (5) Fifty percent of the outstanding voting securities of an issuer 
if valued at greater than $50 million (as adjusted).
* * * * *
    (n) (as adjusted). The parenthetical ``(as adjusted)'' refers to 
the adjusted values published in the Federal Register notice titled 
``Revised Jurisdictional Threshold for Section 7A of the Clayton Act.'' 
This Federal Register notice will be published in January of each year 
and the values contained therein will be effective as of the effective 
date published in the Federal Register notice and will remain effective 
until superseded in the next calendar year. The notice will also be 
available at http://www.ftc.gov. Such adjusted values will be 
calculated in accordance with Section 7A(a)(2)(A) and will be rounded 
up to the next highest $100,000.

0
3. Amend Sec.  801.2(d) by revising Examples 2 and 3; by removing 
Example 4; and by redesignating Example 5 as Example 4 to read as 
follows.


Sec.  801.2  Acquiring and acquired persons.

* * * * *
    (d) * * *

    Examples:
* * * * *
    2. In the above example, suppose the consideration for Y 
consists of $8 million worth of the voting securities of A. With 
regard to the transfer of this consideration, ``B'' is an acquiring 
person because it will hold voting securities it did not previously 
hold, and ``A'' is an acquired person because its voting securities 
will be held by B. Since these voting securities are worth less than 
$50 million (as adjusted), the acquisition of these securities is 
not reportable. ``A'' will therefore report as an acquiring person 
only and ``B'' as an acquired person only.
    3. In the above example, suppose that, as consideration for Y, A 
transfers to B a manufacturing plant valued in excess of $50 million 
(as adjusted). ``B'' is thus an acquiring person and ``A'' an 
acquired person in a reportable acquisition of assets. ``A'' and 
``B'' will each report as both an acquiring and an acquired person 
in this transaction because each occupies each role in a reportable 
acquisition.
* * * * *

0
4. Amend Sec.  801.4(b) by revising Examples 1 and 5 to read as 
follows:


Sec.  801.4  Secondary acquisitions.

* * * * *
    (b) * * *

    Examples:
    1. Assume that acquiring person ``A'' proposes to acquire all 
the voting securities of corporation B. This section provides that 
the acquisition of voting securities of issuers held but not 
controlled by B or by any entity which B controls are secondary 
acquisitions by ``A.'' Thus, if B holds more than $50 million (as 
adjusted) of the voting securities of corporation X (but does not 
control X), and ``A'' and ``X'' satisfy Sections 7A (a)(1) and 
(a)(2), ``A'' must file notification separately with respect to its 
secondary acquisition of voting securities of X. ``X'' must file 
notification within fifteen days (or in the case of a cash tender 
offer, 10 days) after ``A'' files, pursuant to Sec.  801.30.
* * * * *
    5. In previous Example 4, suppose the consideration paid by A 
for the acquisition of B is in excess of $50 million (as adjusted) 
worth of the voting securities of A. By virtue of Sec.  801.2(d)(2), 
``A'' and ``B'' are each both acquiring and acquired persons. A will 
still be deemed to have acquired control of B, and therefore the 
resulting acquisition of the voting securities of X is a secondary 
acquisition. Although ``B'' is now also an acquiring person, unless 
B gains control of A in the transaction, B still makes no secondary 
acquisitions of stock held by A. If the consideration paid by A is 
the voting securities of one of A's subsidiaries and B thereby gains 
control of that subsidiary, B will make secondary acquisitions of 
any minority holdings of that subsidiary.
* * * * *

0
5. Amend Sec.  801.11(e) by revising Examples 1, 3 and 4 to read as 
follows:


Sec.  801.11  Annual net sales and total assets.

* * * * *
    (e) * * *

    Examples: * * *
    1. A will borrow $105 million in cash and will purchase assets 
from B for $100 million. In order to establish whether A's 
acquisition of B's assets is reportable, A's total assets are 
determined by subtracting the $100 million that it will use to 
acquire B's assets from the $105 million that A will have at the 
time of the acquisition. Therefore, A has total assets of less than 
$10 million (as adjusted) and does not meet any size-of-person test 
of Section 7A(a)(2).
* * * * *
    3. Assume that company A will make a $150 million acquisition 
and that it must pay a loan origination fee of $5 million. A borrows 
$161 million. A does not meet the size-of-person test in Section 
7A(a)(2) because its total assets are less than $10 million (as 
adjusted). $150 million is excluded because it will be consideration 
for the acquisition and $5 million is excluded because it is an 
expense incidental to the acquisition. Therefore, A is only a $6 
million person. Note that if A were making an acquisition valued at 
over $200 million (as adjusted), the acquisition would be reportable 
without regard to the sizes of the persons involved.
    4. Assume that ``A'' borrows $195 million to acquire $100 
million of assets from ``B'' and $60 million of voting securities of 
``C.'' The balance of the loan will be used for working capital. To 
determine its size for purposes of its acquisition from ``B,'' ``A'' 
subtracts the $100 million that it will use for that acquisition. 
Therefore, A has total assets of $95 million for purposes of its 
acquisition from ``B.'' To determine its size with respect

[[Page 4991]]

to its acquisition from ``C,'' ``A'' subtracts the $60 million that 
will be paid for ``C's'' voting securities. Thus, for purposes of 
its acquisition from ``C'', ``A'' has total assets of $135 million. 
In the first acquisition ``A'' meets the $10 million (as adjusted) 
size-of-person test and in the second acquisition ``A'' meets the 
$100 million (as adjusted) size-of-person test of Section 7A(a)(2).


0
6. Amend Sec.  801.13(a) by revising Examples 1 and 4 to read as 
follows:


Sec.  801.13  Voting securities or assets to be held as a result of 
acquisition.

* * * * *
    (a) * * *

    Examples:
    1. Assume that acquiring person ``A'' holds in excess of $50 
million (as adjusted) of the voting securities of X, and is to 
acquire another $1 million of the same voting securities. Since 
under paragraph (a) of this section all voting securities ``A'' will 
hold after the acquisition are held ``as a result of'' the 
acquisition, ``A'' will hold in excess of $50 million (as adjusted) 
of the voting securities of X as a result of the acquisition. ``A'' 
must therefore observe the requirements of the act before making the 
acquisition, unless the present acquisition is exempt under Section 
7A(c), Sec.  802.21 or any other rule.
* * * * *
    4. On January 1, company A acquired in excess of $50 million (as 
adjusted) of voting securities of company B. ``A'' and ``B'' filed 
notification and observed the waiting period for that acquisition. 
Company A plans to acquire $1 million of assets from company B on 
May 1 of the same year. Under Sec.  801.13(a)(3), ``A'' and ``B'' do 
not aggregate the value of the earlier acquired voting securities to 
determine whether the acquisition is subject to the act. Therefore, 
the value of the acquisition is $1 million and it is not reportable.
* * * * *

0
7. Amend Sec.  801.14(b) by revising Examples 1 and 2 to read as 
follows:


Sec.  801.14  Aggregate total amount of voting securities and assets.

* * * * *
    (b) * * *

    Examples:
    1. Acquiring person ``A'' previously acquired less than $50 
million (as adjusted) of the voting securities (not convertible 
voting securities) of corporation X. ``A'' now intends to acquire 
additional assets of X. Under paragraph (a) of this section, ``A'' 
looks to Sec.  801.13(a) and determines that the voting securities 
are to be held ``as a result of'' the acquisition. Section 801.13(a) 
also provides that ``A'' must determine the present value of the 
previously acquired securities. Under paragraph (b) of this section, 
``A'' looks to Sec.  801.13(b)(1) and determines that the assets to 
be acquired will be held ``as a result of'' the acquisition, and are 
valued under Sec.  801.10(b). Therefore, if the voting securities 
have a present value which when combined with the value of the 
assets would exceed $50 million (as adjusted), the asset acquisition 
is subject to the requirements of the act since, as a result of it, 
``A'' would hold an aggregate total amount of the voting securities 
and assets of ``X'' in excess of $50 million (as adjusted) .
    2. In the previous example, assume that the assets acquisition 
occurred first, and that the acquisition of the voting securities is 
to occur within 180 days of the first acquisition. ``A'' now looks 
to Sec.  801.13(b)(2) and determines that because the second 
acquisition is of voting securities and not assets, the asset and 
voting securities acquisitions are not treated as one transaction. 
Therefore, the second acquisition would not be subject to the 
requirements of the act since the value of the securities to be 
acquired does not exceed the $50 million (as adjusted) size-of-
transaction test.


0
8. Amend Sec.  801.15(c) by revising Examples 1, 4, 6 and 7 to read as 
follows:


Sec.  801.15  Aggregation of voting securities and assets the 
acquisition of which was exempt.

* * * * *
    (c) * * *

    Examples:
    1. Assume that acquiring person ``A'' is simultaneously to 
acquire in excess of $50 million (as adjusted) of the convertible 
voting securities of X and less than $50 million (as adjusted) of 
the voting common stock of X. Although the acquisition of the 
convertible voting securities is exempt under Sec.  802.31, since 
the overall value of the securities to be acquired is greater than 
$50 million (as adjusted), ``A'' must determine whether it is 
obliged to file notification and observe a waiting period before 
acquiring the securities. Because Sec.  802.31 is one of the 
exemptions listed in paragraph (a)(2) of this section, ``A'' would 
not hold the convertible voting securities as a result of the 
acquisition. Therefore, since as a result of the acquisition ``A'' 
would hold only the common stock, the size-of-transaction tests of 
Section 7A(a)(2) would not be satisfied, and ``A'' need not observe 
the requirements of the act before acquiring the common stock. 
(Note, however, that the value of the convertible voting securities 
would be reflected in ``A's'' next regularly prepared balance sheet, 
for purposes of Sec.  801.11).
* * * * *
    4. Assume that acquiring person ``B,'' a United States person, 
acquired from corporation ``X'' two manufacturing plants located 
abroad, and assume that the acquisition price was in excess of $50 
million (as adjusted). In the most recent year, sales into the 
United States attributable to the plants were less than $50 million 
(as adjusted), and thus the acquisition was exempt under Sec.  
802.50(a)(2). Within 180 days of that acquisition, ``B'' seeks to 
acquire a third plant from ``X,'' to which United States sales were 
attributable in the most recent year. Since under Sec.  
801.13(b)(2), as a result of the acquisition, ``B'' would hold all 
three plants of ``X,''if the $50 million (as adjusted) limitation in 
Sec.  802.50(a)(2) would be exceeded, under paragraph (b) of this 
section, ``B'' would hold the previously acquired assets for 
purposes of the second acquisition. Therefore, as a result of the 
second acquisition, ``B'' would hold assets of ``X'' exceeding $50 
million (as adjusted) in value, would not qualify for the exemption 
in Sec.  802.50(a)(2), and must observe the requirements of the act 
and file notification for the acquisition of all three plants before 
acquiring the third plant
* * * * *
    6. ``X'' acquired 55 percent of the voting securities of M, an 
entity controlled by ``Z,'' six months ago and now proposes to 
acquire 50 percent of the voting stock of N, another entity 
controlled by ``Z.'' M's assets consist of $150 million worth of 
producing coal reserves plus less than $50 million (as adjusted) 
worth of non-exempt assets and N's assets consist of a producing 
coal mine worth $100 million together with non-exempt assets with a 
fair market value of less than $50 million (as adjusted). ``X's'' 
acquisition of the voting securities of M was exempt under Sec.  
802.4(a) because M held exempt assets pursuant to Sec.  802.3(b) and 
less than $50 million (as adjusted) of non-exempt assets. Because 
``X'' acquired control of M in the earlier transaction, M is now 
within the person of ``X,'' and the assets of M need not be 
aggregated with those of N to determine if the subsequent 
acquisition of N will exceed the limitation for coal reserves or for 
non-exempt assets. Since the assets of N alone do not exceed these 
limitations, ``X's'' acquisition of N also is not reportable.
    7. In previous Example 6, assume that ``X'' acquired 30 percent 
of the voting securities of M and proposes to acquire 40 percent of 
the voting securities of N, another entity controlled by ``Z.'' 
Assume also that M's assets at the time of ``X's'' acquisition of 
M's voting securities consisted of $90 million worth of producing 
coal reserves and non-exempt assets with a fair market value of less 
than $50 million (as adjusted), and that N's assets currently 
consist of $60 million worth of producing coal reserves and non-
exempt assets with a fair market value which when aggregated with 
M's non-exempt assets would exceed $50 million (as adjusted). Since 
``X'' acquired a minority interest in M and intends to acquire a 
minority interest in N, and since M and N are controlled by ``Z,'' 
the assets of M and N must be aggregated, pursuant to Secs. 
801.15(b) and 801.13, to determine whether the acquisition of N's 
voting securities is exempt. ``X'' is required to determine the 
current fair market value of M's assets. If the fair market value of 
M's coal reserves is unchanged, the aggregated exempt assets do not 
exceed the limitation for coal reserves. However, if the present 
fair market value of N's non-exempt assets also is unchanged, the 
present fair market value of the non-exempt assets of M and N when 
aggregated is greater than $50 million. Thus the acquisition of the 
voting securities of N is not exempt. If ``X'' proposed to acquire 
50 percent or more of the voting securities of both M and N in the 
same acquisition, the assets of M and N must be aggregated to 
determine if the acquisition of the voting securities of both 
issuers is exempt. Since the fair market value of the aggregated 
non-exempt assets exceeds $50 million (as

[[Page 4992]]

adjusted), the acquisition would not be exempt.
* * * * *


Sec.  801.20  [Amended]

0
9. Amend Sec.  801.20(c) by removing Examples 1 and 2.

0
10. Amend Sec.  801.30(b) by revising Example 2 to read as follows:


Sec.  801.30  Tender offers and acquisitions of voting securities from 
third parties.

* * * * *
    (b) * * *

    Examples:
* * * * *
    2. Acquiring person ``A'' proposes to acquire in excess of $50 
million (as adjusted) of the voting securities of corporation X on a 
securities exchange. The waiting period begins when ``A'' files 
notification. ``X'' must file notification within 15 calendar days 
thereafter. The seller of the X shares is not subject to any 
obligations under the act.
* * * * *

0
11. Amend Sec.  801.31 by revising the Example to read as follows:


Sec.  801.31  Acquisitions of voting securities by offerees in tender 
offers.

* * * * *
    Example: Assume that ``A,'' which has annual net sales exceeding 
$100 million (as adjusted), makes a tender offer for voting 
securities of corporation X. The consideration for the tender offer 
is to be voting securities of A. ``S,'' a shareholder of X with 
total assets exceeding $10 million (as adjusted), wishes to tender 
its holdings of X and in exchange would receive shares of A valued 
in excess of $50 million (as adjusted). Under this section, ``S's'' 
acquisition of the shares of A would be an acquisition separately 
subject to the requirements of the act. Before ``S'' may acquire the 
voting securities of A, ``S'' must first file notification and 
observe a waiting period--which is separate from any waiting period 
that may apply with respect to ``A'' and ``X.'' Since Sec.  801.30 
applies, the waiting period applicable to ``A'' and ``S'' begins 
upon filing by ``S,'' and ``A'' must file with respect to ``S's'' 
acquisition within 15 days pursuant to Sec.  801.30(b). Should the 
waiting period with respect to ``A'' and ``X'' expire or be 
terminated prior to the waiting period with respect to ``S'' and 
``A,'' ``S'' may wish to tender its X-shares and place the A-shares 
into a nonvoting escrow until the expiration or termination of the 
latter waiting period.


0
12. Amend Sec.  801.32 by revising the Example to read as follows:


Sec.  801.32  Conversion and acquisition.

* * * * *
    Example: Assume that acquiring person ``A'' wishes to convert 
convertible voting securities of issuer X, and is to receive common 
stock of X valued in excess of $50 million (as adjusted). If ``A'' 
and ``X'' satisfy the criteria of Section 7A(a)(1) and Section 
7A(a)(2)(B)(ii), then ``A'' and ``X'' must file notification and 
observe the waiting period before ``A'' completes the acquisition of 
the X common stock, unless exempted by Section 7A(c) or the 
regulations in this part. Since Sec.  801.30 applies, the waiting 
period begins upon notification by ``A,'' and ``X'' must file 
notification within 15 days.


0
13. Amend Sec.  801.40 by revising paragraphs (c)(1) and (2) and 
Examples 1 and 2 to read as follows:


Sec.  801.40  Formation of joint venture or other corporations.

* * * * *
    (c) * * *
    (1)(i) The acquiring person has annual net sales or total assets of 
$100 million (as adjusted) or more;
    (ii) The joint venture or other corporation will have total assets 
of $10 million (as adjusted) or more; and
    (iii) At least one other acquiring person has annual net sales or 
total assets of $10 million (as adjusted) or more; or
    (2)(i) The acquiring person has annual net sales or total assets of 
$10 million (as adjusted) or more;
    (ii) The joint venture or other corporation will have total assets 
of $100 million (as adjusted) or more; and
    (iii) At least one other acquiring person has annual net sales or 
total assets of $10 million (as adjusted) or more.
* * * * *

    Examples:
    1. Persons ``A,'' ``B,'' and ``C'' agree to create new 
corporation ``N,'' a joint venture. ``A,'' ``B,'' and ``C'' will 
each hold one third of the shares of ``N.'' ``A'' has more than $100 
million (as adjusted) in annual net sales. ``B'' has more than $10 
million (as adjusted) in total assets but less than $100 million (as 
adjusted) in annual net sales and total assets. Both ``C's'' total 
assets and its annual net sales are less than $10 million (as 
adjusted). ``A,'' ``B,'' and ``C'' are each engaged in commerce. 
``A,'' ``B,'' and ``C'' have agreed to make an aggregate initial 
contribution to the new entity of $18 million in assets and each to 
make additional contributions of $21 million in each of the next 
three years. Under paragraph (d) of this section, the assets of the 
new corporation are $207 million. Under paragraph (c) of this 
section, ``A'' and ``B'' must file notification. Note that ``A'' and 
``B'' also meet the criterion of Section 7A(a)(2)(B)(i) since they 
will be acquiring one third of the voting securities of the new 
entity for in excess of $50 million (as adjusted). N need not file 
notification; see Sec.  802.41.
    2. In the preceding example ``A'' has over $10 million (as 
adjusted) but less than $100 million (as adjusted) in sales and 
assets, ``B'' and ``C'' have less than $10 million (as adjusted) in 
sales and assets. ``N'' has total assets of $500 million. Assume 
that ``A'' will acquire 50 percent of the voting securities of ``N'' 
and ``B'' and ``C'' will each acquire 25 percent. Since ``A'' will 
acquire in excess of $200 million (as adjusted) in voting securities 
of ``N'', the size-of-person test in Sec.  801.40(c) is inapplicable 
and ``A'' is required to file notification.


0
14. Amend 801.90 by revising Examples 1 and 2 to read as follows:


Sec.  801.90  Transactions or devices for avoidance.

* * * * *

    Examples:
    1. Suppose corporations A and B wish to form a joint venture. A 
and B contemplate a total investment of over $100 million (as 
adjusted) in the joint venture; persons ``A'' and ``B'' each have 
total assets in excess of $100 million (as adjusted). Instead of 
filing notification pursuant to Sec.  801.40, A creates a new 
subsidiary, A1, which issues half of its authorized shares to A. 
Assume that A1 has total assets of $3000. ``A'' then sells 50 
percent of its A1 stock to ``B'' for $1500. Thereafter, ``A'' and 
``B'' each contribute in excess of $50 million (as adjusted) to A1 
in exchange for the remaining authorized A1 stock (one-fourth each 
to ``A'' and ``B''). A's creation of A1 was exempt under Sec. 
802.30; its $1500 sale of A1 stock to ``B'' did not meet the size-
of-transaction filing threshold in Section 7A(a)(2)(B); and the 
second acquisition of stock in A1 by ``A'' and ``B'' was exempt 
under Sec.  802.30 and Sections 7A(c)(3) and (10). Since this scheme 
appears to be for the purpose of avoiding the requirements of the 
act, the sequence of transactions will be disregarded. The 
transactions will be viewed as the formation of a joint venture 
corporation by ``A'' and ``B'' having over $10 million (as adjusted) 
in assets. Such a transaction would be covered by Sec.  801.40 and 
``A'' and ``B'' must file notification and observe the waiting 
period.
    2. Suppose ``A'' wholly owns and operates a chain of twenty 
retail hardware stores, each of which is separately incorporated and 
has assets of less than $10 million. The aggregate fair market value 
of the assets of the twenty store corporations is in excess of $50 
million (as adjusted). ``A'' proposes to sell the stores to ``B'' 
for in excess of $50 million (as adjusted). For various reasons it 
is decided that ``B'' will buy the stock of each of the store 
corporations from ``A.'' Instead of filing notification and 
observing the waiting period as contemplated by the act, ``A'' and 
``B'' enter into a series of five stock purchase-sale agreements for 
$12 million each. Under the terms of each contract, the stock of 
four stores will pass from ``A'' to ``B''. The five agreements are 
to be consummated on five successive days. Because after each of 
these transactions the store corporations are no longer part of the 
acquired person (Sec.  801.13(a) does not apply because control has 
passed, see Sec.  801.2), and because $12 million is below the size-
of-transaction filing threshold of Section 7A(a)(2)(B), none of the 
contemplated acquisitions would be subject to the requirements of 
the act. However, if the stock of all of the store corporations were 
to be purchased in one transaction, no exemption would be 
applicable, and the act's requirements would have to be met. Because 
it appears that the purpose of making five separate contracts is to 
avoid the

[[Page 4993]]

requirements of the act, this section would ignore the form of the 
separate transactions and consider the substance to be one 
transaction requiring compliance with the act.

PART 802--EXEMPTION RULES

0
15. The authority citation for part 802 continues to read as follows:

    Authority: 15 U.S.C. 18a(d).


0
16. Amend Sec.  802.1 by revising Examples 1 through 7, 9 and 10, to 
read as follows:


Sec.  802.1  Acquisitions of goods and realty in the ordinary course of 
business.

* * * * *

    Examples:
    1. Greengrocer Inc. intends to sell to ``A'' all of the assets 
of one of the 12 grocery stores that it owns and operates throughout 
the metropolitan area of City X. Each of Greengrocer's stores 
constitutes an operating unit, i.e., a business undertaking in a 
particular location. Thus ``A's'' acquisition is not exempt as an 
acquisition in the ordinary course of business. However, the 
acquisition will not be subject to the notification requirements if 
the acquisition price or fair market value of the store's assets 
does not exceed $50 million (as adjusted).
    2. ``A,'' a manufacturer of airplane engines, agrees to pay in 
excess of $50 million (as adjusted) to ``B,'' a manufacturer of 
airplane parts, for certain new engine components to be used in the 
manufacture of airplane engines. The acquisition is exempt under 
Sec.  802.1(b) as new goods as well as under Sec.  802.1(c)(3) as 
current supplies.
    3. ``A,'' a power generation company, proposes to purchase from 
``B,'' a coal company, in excess of $50 million (as adjusted) of 
coal under a long-term contract for use in its facilities to supply 
electric power to a regional public utility and steam to several 
industrial sites. This transaction is exempt under Sec.  802.1(c)(2) 
as an acquisition of current supplies. However, if ``A'' proposed to 
purchase coal reserves rather than enter into a contract to acquire 
output of a coal mine, the acquisition would not be exempt as an 
acquisition of goods in the ordinary course of business. The 
acquisition may still be exempt pursuant to Sec.  802.3(b) as an 
acquisition of reserves of coal if the requirements of that section 
are met.
    4. ``A,'' a national producer of canned fruit, preserves, jams 
and jellies, agrees to purchase from ``B'' for in excess of $50 
million (as adjusted) a total of 20,000 acres of orchards and 
vineyards in several locations throughout the U.S. ``A'' plans to 
harvest the fruit from the acreage for use in its canning 
operations. The acquisition is not exempt under Sec.  802.1 because 
orchards and vineyards are real property, not ``goods.'' If, on the 
other hand, ``A'' had contracted to acquire from ``B'' the fruit and 
grapes harvested from the orchards and vineyards, the acquisition 
would qualify for the exemption as an acquisition of current 
supplies under Sec.  802.1(c)(3). Although the transfer of orchards 
and vineyards is not exempt under Sec.  802.1, the acquisition would 
be exempt under Sec.  802.2(g) as an acquisition of agricultural 
property.
    5. ``A,'' a railcar leasing company, will purchase in excess of 
$50 million (as adjusted) of new railcars from a railcar 
manufacturer in order to expand its existing fleet of cars available 
for lease. The transaction is exempt under Sec.  802.1(b) as an 
acquisition of new goods and Sec.  802.1(c), as an acquisition of 
current supplies. If ``A'' subsequently sells the railcars to ``C,'' 
a commercial railroad company, that acquisition would be exempt 
under Sec.  802.1(d)(2), provided that ``A'' acquired and held the 
railcars solely for resale or leasing to an entity not within 
itself.
    6. ``A,'' a major oil company, proposes to sell two of its used 
oil tankers for in excess of $50 million (as adjusted) to ``B,'' a 
dealer who purchases oil tankers from the major U.S. oil companies. 
``B's'' acquisition of the used oil tankers is exempt under Sec.  
802.1(d)(1) provided that ``B'' is actually acquiring beneficial 
ownership of the used tankers and is not acting as an agent of the 
seller or purchaser.
    7. ``A,'' a cruise ship operator, plans to sell for in excess of 
$50 million (as adjusted) one of its cruise ships to ``B,'' another 
cruise ship operator. ``A'' has, in good faith, executed a contract 
to acquire a new cruise ship with substantially the same capacity 
from a manufacturer. The contract specifies that ``A'' will receive 
the new cruise ship within one month after the scheduled date of the 
sale of its used cruise ship to ``B.'' Since ``B'' is acquiring a 
used durable good that ``A'' has contracted to replace within six 
months of the sale, the acquisition is exempt under Sec.  
802.1(d)(3).
* * * * *
    9. Three months ago ``A,'' a manufacturing company, acquired 
several new machines that will replace equipment on one of its 
production lines. ``A's'' capacity to produce the same products 
increased modestly when the integration of the new equipment was 
completed. ``B,'' a manufacturing company that produces products 
similar to those produced by ``A,'' has entered into a contract to 
acquire for in excess of $50 million (as adjusted) the machinery 
that ``A'' replaced. Delivery of the equipment by ``A'' to ``B'' is 
scheduled to occur within thirty days. Since ``A'' purchased new 
machinery to replace the productive capacity of the used equipment, 
which it sold within six months of the purchase of the new 
equipment, the acquisition by ``B'' is exempt under Sec.  
802.1(d)(3).
    10. ``A'' will sell to ``B'' for in excess of $50 million (as 
adjusted) all of the equipment ``A'' uses exclusively to perform its 
billing requirements. ``B'' will use the equipment to provide 
``A's'' billing needs pursuant to a contract which ``A'' and ``B'' 
executed 30 days ago in conjunction with the equipment purchase 
agreement. Although the assets ``B'' will acquire make up 
essentially all of the assets of one of ``A's'' management and 
administrative support services divisions, the acquisition qualifies 
for the exemption under Sec.  802.1(d)(4) because a company's 
internal management and administrative support services, however 
organized, are not an operating unit as defined by Sec.  802.1(a). 
Management and administrative support services are not a ``business 
undertaking'' as that term is used in Sec.  802.1(a). Rather, they 
provide support and benefit to the company's operating units and 
support the company's business operations. However, if the assets 
being sold also derived revenues from providing billing services for 
third parties, then the transfer of these assets would not be exempt 
under Sec.  802.1(d)(4), since the equipment is not being used 
solely to provide management and administrative support services to 
``A''.

* * * * *


0
17. Amend Sec.  802.2 by revising examples 2 through 7, 9, 10, and 12 
to read as follows:


Sec.  802.2  Certain acquisitions of real property assets.

* * * * *

    Examples:
* * * * *
    2. ``B,'' a subsidiary of ``A,'' a financial institution, 
acquired a newly constructed power plant, which it leased to ``X'' 
pursuant to a lease financing arrangement. ``A's'' acquisition of 
the plant through B was exempt under Sec.  802.63(a) as a bona fide 
credit transaction entered into in the ordinary course of ``A's'' 
business. ``X'' operated the plant as sole lessee for the next eight 
years and now proposes to exercise an option to buy the plant for in 
excess of $50 million (as adjusted). ``X's'' acquisition of the 
plant is exempt pursuant to Sec.  802.2(b). The plant is being 
acquired from B, the lessor, which held title to the plant for 
financing purposes, and the purchaser, ``X,'' has had sole and 
continuous possession and use of the plant since its construction.
    3. ``A'' proposes to acquire a tract of wilderness land from 
``B'' for consideration in excess of $50 million (as adjusted). 
Copper deposits valued in excess of $50 million (as adjusted) and 
timber reserves valued in excess of $50 million (as adjusted) are 
situated on the land and will be conveyed as part of this 
transaction. During the last three fiscal years preceding the sale, 
the property generated $50,000 from the sale of a small amount of 
timber cut from the reserves two years ago. ``A's'' acquisition of 
the wilderness land from ``B'' is exempt as an acquisition of 
unproductive real property because the property did not generate 
revenues exceeding $5 million during the thirty-six months preceding 
the acquisition. The copper deposits and timber reserves are by 
definition unproductive real property and, thus, are not separately 
subject to the notification requirements.
    4. ``A'' proposes to purchase from ``B'' for in excess of $200 
million (as adjusted) an old steel mill that is not currently 
operating to add to ``A's'' existing steel production capacity. The 
mill has not generated revenues during the 36 months preceding the 
acquisition but contains equipment valued in excess of $50 million 
(as adjusted) that ``A'' plans to refurbish for use in its 
operations. ``A's'' acquisition of the mill and the land on which it 
is located is exempt as unproductive

[[Page 4994]]

real property. However, the transfer of the equipment and any assets 
other than the unproductive property is not exempt and is separately 
subject to the notification requirements of the act.
    5. ``A'' proposes to purchase two downtown lots, Parcels 1 and 
2, from ``B'' for in excess of $50 million (as adjusted). Parcel 1, 
located in the southwest section, contains no structures or 
improvements. A hotel is located in the northeast section on Parcel 
2, and it has generated $9 million in revenues during the past three 
years. The purchase of Parcel 1 is exempt if it qualifies as 
unproductive real property, i.e., it has not generated annual 
revenues in excess of $5 million in the three fiscal years prior to 
the acquisition. Parcel 2 is not unproductive real property, but its 
acquisition is exempt under Sec.  802.2(e) as the acquisition of a 
hotel.
    6. ``A'' plans to purchase from ``B,'' a manufacturer, a newly-
constructed building that ``B'' had intended to equip for use in its 
manufacturing operations. ``B'' was unable to secure financing to 
purchase the necessary equipment and ``A'', also a manufacturer, 
will be required to invest in excess of $50 million (as adjusted) in 
order to equip the building for use in its production operations. 
This building is not a new facility under Sec.  802.2 (a), because 
it was not constructed or held by ``B'' for sale or resale. However, 
the acquisition of the building qualifies for exemption as 
unproductive real property pursuant to Sec.  802.2(c)(1). The 
building is not yet a manufacturing facility since it does not 
contain equipment and requires significant capital investment before 
it can be used as a manufacturing facility.
    7. ``A'' proposes to purchase from ``B,'' for in excess of $50 
million (as adjusted), a 100 acre parcel of land that includes a 
currently operating factory occupying 10 acres. The other 90 
adjoining acres are vacant and unimproved and are used by ``B'' for 
storage of supplies and equipment. The factory and the unimproved 
acreage have an aggregate fair market value of in excess of $50 
million (as adjusted). The transaction is not exempt under Sec.  
802.2(c) because the vacant property is adjacent to property 
occupied by the operating factory. Moreover, if the 90 acres were 
not adjacent to the 10 acres occupied by the factory, the 
transaction would not be exempt because the 90 acres are being used 
in conjunction with the factory being acquired and thus are not 
unproductive property.
* * * * *
    9. ``A'' intends to acquire three shopping centers from ``B'' 
for a total of in excess of $200 million (as adjusted). The anchor 
stores in two of the shopping centers are department stores, the 
businesses of which ``A'' is buying from ``B'' as part of the 
overall transaction. The acquisition of the shopping centers is an 
acquisition of retail rental space that is exempt under Sec.  
802.2(h). However, ``A's'' acquisition of the department store 
businesses, including the portion of the shopping centers that the 
two department stores being purchased occupy, are separately subject 
to the notification requirements. If the value of these assets 
exceeds $50 million (as adjusted), ``A'' must comply with the 
requirements of the act for this part of the transaction.
    10. ``A'' wishes to purchase from ``B'' a parcel of land for in 
excess of $50 million (as adjusted). The parcel contains a race 
track and a golf course. The golf course qualifies as recreational 
land pursuant to Sec.  802.2(f), but the race track is not included 
in the exemption. Therefore, if the value of the race track is more 
than $50 million (as adjusted), ``A'' will have to file notification 
for the purchase of the race track.
* * * * *
    12. ``A'' proposes to purchase the prescription drug wholesale 
distribution business of ``B'' for in excess of $50 million (as 
adjusted). The business includes six regional warehouses used for 
``B's'' national wholesale drug distribution business. Since ``A'' 
is acquiring the warehouses in connection with the acquisition of 
``B's'' prescription drug wholesale distribution business, the 
acquisition of the warehouses is not exempt.


0
18. Amend Sec.  802.3 by revising Examples 2 and 3 to read as follows:


Sec.  802.3  Acquisitions of carbon-based mineral reserves.

* * * * *

    Examples:
* * * * *
    2. ``A,'' an oil company, proposes to acquire for $180 million 
oil reserves currently in production along with field pipelines and 
treating and metering facilities which serve such reserves 
exclusively. The acquisition of the reserves and the associated 
assets are exempt. ``A'' will also acquire from ``B'' for in excess 
of $50 million (as adjusted) a natural gas processing plant and its 
associated gathering pipeline system. This acquisition is not exempt 
since Sec.  802.3(c) excludes these assets from the exemption in 
Sec.  802.3 for transfers of associated exploration or production 
assets.
    3. ``A,'' an oil company, proposes to acquire a coal mine 
currently in operation and associated production assets for $90 
million from ``B,'' an oil company. ``A'' will also purchase from 
``B'' producing oil reserves valued at $100 million and an oil 
refinery valued at $13 million. The acquisition of the coal mine and 
the oil reserves is exempt pursuant to Sec.  802.3. Although Sec.  
802.3(c) excludes the refinery from the exemption in Sec.  802.3 for 
transfers of associated exploration and production assets, ``A's'' 
acquisition of the refinery is not subject to the notification 
requirements of the act because its value does not exceed $50 
million (as adjusted).
* * * * *

0
19. Amend Sec.  802.4 by revising paragraph (a) and Examples 1 and 2 to 
read as follows:


Sec.  802.4  Acquisitions of voting securities of issuers holding 
certain assets the direct acquisition of which is exempt.

    (a) An acquisition of voting securities of an issuer whose assets 
together with those of all entities it controls consist or will consist 
of assets whose purchase would be exempt from the requirements of the 
act pursuant to Section 7A(c)(2) of the act, Sec.  802.2, Sec.  802.3 
or Sec.  802.5 of this part is exempt from the reporting requirements 
if the acquired issuer and all entities it controls do not hold other 
non-exempt assets with an aggregate fair market value of more than $50 
million (as adjusted).
* * * * *
    (c) * * *

    Examples:
    1. ``A,'' a real estate investment company, proposes to purchase 
100 percent of the voting securities of C, a wholly-owned subsidiary 
of ``B,'' a construction company. C's assets are a newly 
constructed, never occupied hotel, including fixtures, furnishings 
and insurance policies. The acquisition of the hotel would be exempt 
under Sec.  802.2(a) as a new facility and under Sec.  802.2(d). 
Therefore, the acquisition of the voting securities of C is exempt 
pursuant to Sec.  802.4(a) since C holds assets whose direct 
purchase would be exempt under Sec.  802.2 and does not hold non-
exempt assets exceeding $50 million (as adjusted) in value.
    2. ``A'' proposes to acquire 60 percent of the voting securities 
of C from ``B.'' C's assets consist of a portfolio of mortgages 
valued at $55 million and a small manufacturing plant valued at $26 
million. The manufacturing plant is an operating unit for purposes 
of Sec.  802.1(a). Since the acquisition of the mortgages would be 
exempt pursuant to Section 7A(c)(2) of the act and since the value 
of the non-exempt manufacturing plant is less than $50 million (as 
adjusted), this acquisition is exempt under Sec.  802.4(a).
* * * * *


0
20. Amend Sec.  802.5 by revising Example 2 to read as follows:


Sec.  802.5  Acquisitions of investment rental property assets.

* * * * *

    Examples:
* * * * *
    2. ``X'' intends to buy from ``Y'' a development commonly 
referred to as an industrial park. The industrial park contains a 
warehouse/distribution center, a retail tire and automobile parts 
store, an office building, and a small factory. The industrial park 
also contains several parcels of vacant land. If ``X'' intends to 
acquire this industrial park as investment rental property, the 
acquisition will be exempt pursuant to Sec.  802.5. If, however, 
``X'' intends to use the factory for its own manufacturing 
operations, this exemption would be unavailable. The exemptions in 
Sec.  802.2 for warehouses, rental retail space, office buildings, 
and undeveloped land may still apply and, if the value of the 
factory is $50 million (as adjusted) or less, the entire transaction 
may be exempted by that section.


0
21. Amend Sec.  802.9 by revising Example 1 to read as follows:


Sec.  802.9  Acquisition solely for the purpose of investment.

* * * * *


[[Page 4995]]


    Examples:
    1. Suppose that acquiring person ``A'' acquires 6 percent of the 
voting securities of issuer X, valued in excess of $50 million (as 
adjusted). If the acquisition is solely for the purpose of 
investment, it is exempt under Section 7A(c)(9).
* * * * *

0
22. Amend Sec.  802.21 by revising the heading, paragraph (a)(3), and 
Examples 1 through 4 following paragraph (a); by adding new Examples 5 
and 6 to paragraph (a) to read as follows; and by removing paragraph 
(c).


Sec.  802.21  Acquisitions of voting securities not meeting or 
exceeding greater notification threshold (as adjusted).

    (a) * * *
    (3) The acquisition will not increase the holdings of the acquiring 
person to meet or exceed a notification threshold (as adjusted) greater 
than the greatest notification threshold met or exceeded in the earlier 
acquisition.

    Examples:
    1. In 2004, Corporation A acquired $53 million of the voting 
securities of corporation B and both ``A'' and ``B'' filed 
notification as required, indicating the $50 million threshold. 
Within five years of the expiration of the original waiting period, 
``A'' acquires additional voting securities of B but not in an 
amount sufficient to meet or exceed $100 million (as adjusted) or 50 
percent of the voting securities of B. No additional notification is 
required.
    2. In 2004, Corporation A acquired $53 million of the voting 
securities of corporation B and both ``A'' and ``B'' filed 
notification as required, indicating the $50 million threshold. 
Suppose that in year three following the expiration of the waiting 
period, the $50 million notification threshold has been adjusted to 
$56 million pursuant to Section 7A(a)(2)(a) of the Act. ``A'' now 
intends to acquire an additional $5 million of the voting securities 
of B. ``A'' is not required to file another notification even though 
it now holds voting securities in excess of the $56 million 
notification threshold (which is greater than the $50 million 
notification threshold indicated in its filing), because it has not 
met or exceeded a notification threshold (as adjusted) greater than 
the notification threshold exceeded in the earlier acquisition (i.e. 
$100 million (as adjusted) or 50% notification thresholds).
    3. Same facts as in Example 2 above except now the five year 
period has expired. Suppose that, the $50 million notification 
threshold has been adjusted to $57 million pursuant to Section 
7A(a)(2)(a) of the Act. ``A'' now holds $58 million of voting 
securities of B. Because Sec.  802.21(a)(2) is no longer satisfied, 
the acquisition of any additional voting securities of B will 
require a new filing because ``A'' will hold voting securities 
valued in excess of the $57 million notification threshold. If, 
however, the $50 million notification threshold had been adjusted to 
$60 million at the end of the five-year period, A could acquire up 
to that threshold without a new filing.
    4. This section also allows a person to recross any of the 
threshold notification levels that were in effect at the time of 
filing notification any number of times within five years of the 
expiration of the waiting period following notification. Thus, if in 
Example 1, ``A'' had disposed of some voting securities so that it 
held less than $50 million of the voting securities of B, and 
thereafter had increased its holdings to more than $50 million but 
less than $100 million or 50 percent of B, notification would not be 
required if the increase occurred within 5 years of the expiration 
of the original waiting period.
    5. A files notification at the $50 million notification 
threshold and acquires $51 million of the voting securities of B in 
the year following expiration of the waiting period. The next 
greater notification threshold at the time of filing was $100 
million. In year three, the $100 million notification threshold has 
been adjusted to $106 million. A can now acquire up to, but not meet 
or exceed, voting securities of B valued at $106 million. As the 
original $100 million threshold is adjusted upward in years four and 
five, A can acquire up to those new thresholds as the adjustments 
are effected.
    6. A files notification at the $50 million threshold in January 
of year one. In February of year one, the $50 million threshold is 
adjusted to $52 million. A only needs to acquire in excess of $50 
million of voting securities of B, not in excess of $52 million, to 
have exceeded the threshold which was filed for in the year 
following expiration of the waiting period (see Sec.  803.7). It may 
then acquire up to the next greater notification threshold (as 
adjusted) during the five years following expiration of the waiting 
period.


0
23. Amend Sec.  802.35 by revising Examples 1 and 2 to read as follows:


Sec.  802.35  Acquisitions by employee trusts.

* * * * *

    Examples:
    1. Company A establishes a trust for its employees that meets 
the qualifications of section 401 of the Internal Revenue Code. 
Company A has the power to designate the trustee of the trust. That 
trust then acquires 30% of the voting securities of Company A for in 
excess of $50 million (as adjusted). Later, the trust acquires 20% 
of the stock of Company B, a wholly-owned subsidiary of Company A, 
for in excess of $50 million (as adjusted). Neither acquisition is 
reportable.
    2. Assume that in the example above, ``A'' has total assets of 
$100 million (as adjusted). ``C'' also has total assets of $100 
million (as adjusted) and is not controlled by Company A. The trust 
controlled by Company A plans to acquire 40 percent of the voting 
securities of Company C for in excess of $50 million (as adjusted). 
Since Company C is not included within ``A,'' ``A'' must observe the 
requirements of the act before the trust makes the acquisition of 
Company C's shares.


0
24. Amend Sec.  802.41 by revising Examples 1 and 2 to read as follows:


Sec.  802.41  Joint venture or other corporations at time of formation.

* * * * *

    Examples:
    1. Corporations A and B, each having sales of in excess of $100 
million (as adjusted), each propose to contribute in excess of $50 
million (as adjusted) in cash in exchange for 50 percent of the 
voting securities of a new corporation, N. Under this section, the 
new corporation need not file notification, although both ``A'' and 
``B'' must do so and observe the waiting period prior to receiving 
any voting securities of N.
    2. In addition to the facts in Example 1 of this section, A and 
B have agreed that upon creation N will purchase 100 percent of the 
voting securities of corporation C for in excess of $50 million (as 
adjusted). Because N's purchase of C is not a transaction in 
connection with N's formation, and because in any event C is not a 
contributor to the formation of N, ``A,'' ``B'' and ``C'' must file 
with respect to the proposed acquisition of C and must observe the 
waiting period.

0
25. Amend Sec.  802.50 by revising paragraphs (a), (b)(2) and (b)(3) 
and Examples 2 through 4 to read as follows:


Sec.  802.50  Acquisitions of foreign assets.

    (a) The acquisition of assets located outside the United States 
shall be exempt from the requirements of the act unless the foreign 
assets the acquiring person would hold as a result of the acquisition 
generated sales in or into the U.S. exceeding $50 million (as adjusted) 
during the acquired person's most recent fiscal year.
    (b) * * *
    (2) The aggregate sales of the acquiring and acquired persons in or 
into the United States are less than $110 million (as adjusted) in 
their respective most recent fiscal years;
    (3) The aggregate total assets of the acquiring and acquired 
persons located in the United States (other than investment assets, 
voting or nonvoting securities of another person, and assets included 
pursuant to Sec.  801.40(d)(2) of this chapter) are less than $110 
million (as adjusted) ; and
* * * * *

    Examples:
* * * * *
    2. Sixty days after the transaction in example 1, ``A'' proposes 
to sell to ``B'' a second manufacturing plant located abroad; sales 
in or into the United States attributable to this plant, when 
combined with the sales into the United States of the first plant, 
totaled in excess of $50 million (as adjusted) in the most recent 
fiscal year. Since ``B'' would be acquiring the second plant within 
180 days of the first plant, both plants would be considered assets 
of ``A'' held by ``B'' as a result of the second acquisition (see 
Sec.  801.13(b)(2) of this chapter). Since the total sales in or 
into the United States exceed $50 million (as adjusted), the 
acquisition of the second plant would not be exempt under this 
paragraph (a) of this section.
    3. Assume that ``A'' and ``B'' are foreign persons with 
aggregate sales in or into the

[[Page 4996]]

United States of in excess of $110 million (as adjusted). If ``A'' 
acquires only foreign assets of ``B,'' and if those assets generated 
$50 million (as adjusted) or less in sales in or into the United 
States, the transaction is exempt.
    4. Assume that ``A'' and ``B'' are foreign persons with 
aggregate sales in or into the United States and assets located in 
the United Sates of less than $110 million (as adjusted). If ``A'' 
acquires only foreign assets of ``B,'' and those assets generated in 
excess of $50 million (as adjusted) in sales in or into the United 
States during the most recent fiscal year, the transaction is exempt 
from reporting if the assets are valued at $200 million (as 
adjusted) or less, but is reportable if valued at greater than $200 
million (as adjusted).


0
26. Amend Sec.  802.51 by revising paragraphs (a), (b), (c)(2) and 
(c)(3) and Examples 1 through 3 to read as follows:


Sec.  802.51  Acquisitions of voting securities of a foreign issuer.

    (a) By U.S. persons. (1) The acquisition of voting securities of a 
foreign issuer by a U.S. person shall be exempt from the requirements 
of the act unless the issuer (including all entities controlled by the 
issuer) either: holds assets located in the United States (other than 
investment assets, voting or nonvoting securities of another person, 
and assets included pursuant to Sec.  801.40(d)(2) of this chapter) 
having an aggregate total value of over $50 million (as adjusted); or 
made aggregate sales in or into the United States of over $50 million 
(as adjusted) in its most recent fiscal year.
    (2) If interests in multiple foreign issuers are being acquired 
from the same acquired person, the assets located in the United States 
and sales in or into the United States of all the issuers must be 
aggregated to determine whether either $50 million (as adjusted) 
limitation is exceeded.
    (b) By foreign persons. (1) The acquisition of voting securities of 
a foreign issuer by a foreign person shall be exempt from the 
requirements of the act unless the acquisition will confer control of 
the issuer and the issuer (including all entities controlled by the 
issuer) either: holds assets located in the United States (other than 
investment assets, voting or nonvoting securities of another person, 
and assets included pursuant to Sec.  801.40(d)(2) of this chapter) 
having an aggregate total value of over $50 million (as adjusted); or 
made aggregate sales in or into the United States of over $50 million 
(as adjusted) in its most recent fiscal year.
    (2) If controlling interests in multiple foreign issuers are being 
acquired from the same acquired person, the assets located in the 
United States and sales in or into the United States of all the issuers 
must be aggregated to determine whether either $50 million (as 
adjusted) limitation is exceeded.
    (c) * * *
    (2) The aggregate sales of the acquiring and acquired persons in or 
into the United States are less than $110 million (as adjusted) in 
their respective most recent fiscal years;
    (3) The aggregate total assets of the acquiring and acquired 
persons located in the United States (other than investment assets, 
voting or nonvoting securities of another person, and assets included 
pursuant to Sec.  801.40(d)(2) of this chapter) are less than $110 
million (as adjusted); and
* * * * *

    Examples:
    1. ``A,'' a U.S. person, is to acquire the voting securities of 
C, a foreign issuer. C has no assets in the United States, but made 
aggregate sales into the United States of in excess of 50 million 
(as adjusted) in the most recent fiscal year. The transaction is not 
exempt under this section.
    2. Assume that ``A'' and ``B'' are foreign persons with 
aggregate sales in or into the United States in excess of $110 
million (as adjusted), and that ``A'' is acquiring 100% of the 
voting securities of ``B.'' Included within ``B'' is U.S. issuer C, 
whose total U.S. assets are valued in excess of $50 million (as 
adjusted). Since ``A'' will be acquiring control of an issuer, C, 
with total U.S. assets of more than $50 million (as adjusted), and 
the parties' aggregate sales in or into the U.S. in the relevant 
time period exceed $110 million (as adjusted), the acquisition is 
not exempt under this section.
    3. ``A,'' a foreign person, intends to acquire 100 percent of 
the voting securities of two wholly owned subsidiaries of ``B'' for 
a total of in excess of $50 million (as adjusted). BSUB1 is a 
foreign issuer with less than $50 million (as adjusted) in sales 
into the U.S. in its most recent fiscal year and with assets of less 
than $50 million (as adjusted) located in the U.S. Less than $50 
million (as adjusted) of the acquisition price has been allocated to 
BSUB1. BSUB2 is a U.S. issuer with more than $50 million (as 
adjusted) in U.S. sales and more than $50 million (as adjusted) in 
assets located in the U.S. Less than $50 million (as adjusted) of 
the acquisition price is allocated to BSUB2. Since BSUB1 does not 
exceed the $50 million (as adjusted) limitation for U.S. sales or 
assets in Sec.  802.51(b), its voting securities are not held as a 
result of the acquisition (see Sec.  801.15(b) of this chapter). 
Since the acquisition price for BSUB2 alone would not result in 
``A'' holding in excess of $50 million (as adjusted) of voting 
securities of the acquired person, the transaction is non-reportable 
in its entirety. Note that the U.S. sales and assets of BSUB1 are 
not aggregated with those of BSUB2 for purposes of determining 
whether the limitations in paragraph (b) of this section are 
exceeded. If BSUB2 were also a foreign issuer, such aggregation 
would be required under paragraph (b)(2) of this section, and the 
transaction in its entirety would be reportable.


0
27. Amend Sec.  802.52 by revising its Example to read as follows:


Sec.  802.52  Acquisitions by or from foreign governmental 
corporations.

* * * * *
    Example: The government of foreign country X has decided to sell 
assets of its wholly owned corporation, B, all of which are located 
in foreign country X. The buyer is ``A,'' a U.S. person. Regardless 
of the aggregate sales in or into the United States attributable to 
the assets of B, the transaction is exempt under this section. (If 
such aggregate sales were $50 million (as adjusted) or less, the 
transaction would also be exempt under Sec.  802.50).


0
28. Amend Sec.  802.64 by revising Example 1 to read as follows:


Sec.  802.64  Acquisitions of voting securities by certain 
institutional investors.

* * * * *
    (c) * * *

    Examples:
    1. Assume that A and its subsidiary, B, are both institutional 
investors as defined in paragraph (a) of this section, that X is 
not, and that the conditions set forth in paragraphs (b)(2), (3) and 
(4) of this section are satisfied. Either A or B may acquire voting 
securities of X worth in excess of $50 million (as adjusted) as long 
as the aggregate amount held by person ``A'' as a result of the 
acquisition does not exceed 15 percent of X's outstanding voting 
securities. If the aggregate holdings would exceed 15 percent, ``A'' 
may acquire no more than $50 million (as adjusted) worth of voting 
securities without being subject to the requirements of the act.
* * * * *

PART 803--TRANSMITTAL RULES

0
29. The authority citation for part 803 continues to read as follows:

    Authority: 15 U.S.C. 18a(d).


0
30. Amend Sec.  803.5(a)(2) by revising Examples 2 and 3 to read as 
follows:


Sec.  803.5  Affidavits required.

    (a) * * *
    (2) * * *

    Examples:
* * * * *
    2. ``A'' holds 100,000 shares of the voting securities of 
Company B. ``A'' has a good faith intention to acquire an additional 
900,000 shares of Company B's voting securities. ``A'' states in its 
notice to B, inter alia, that as a result of the acquisition it will 
hold 1,000,000 shares. If 1,000,000 shares of Company B represent 20 
percent of Company B's outstanding voting securities, the statement 
will be deemed by the enforcement agencies a notification for the 
$100 million threshold (as adjusted).
    3. Company A intends to acquire voting securities of Company B. 
``A'' does not know exactly how many shares it will acquire, but it 
knows it will definitely acquire in excess of $50 million (as 
adjusted) worth and may

[[Page 4997]]

acquire 50 percent of Company B's shares. ``A'''s notice to the 
acquired person would meet the requirements of Sec. 803.5(a)(1)(iii) 
if it states, inter alia, either: ``Company A has a present good 
faith intention to acquire in excess of $50 million (as adjusted) of 
the outstanding voting securities of Company B, and depending on 
market conditions, may acquire more of the voting securities of 
Company B and thus designates the 50 percent threshold,'' or 
``Company A has a present good faith intention to acquire in excess 
of $50 million (as adjusted) of the outstanding voting securities of 
Company B, and depending on market conditions may acquire 50 percent 
or more of the voting securities of Company B.'' The Commission 
would deem either of these statements as intending to give notice 
for the 50 percent threshold.
* * * * *

0
31. Amend Sec.  803.7 by revising its example to read as follows:


Sec.  803.7  Expiration of notification.

* * * * *
    Example: ``A'' files notification that in excess of $100 million 
(as adjusted) of the voting securities of corporation B are to be 
acquired. One year after the expiration of the waiting period, ``A'' 
has acquired less than $100 million (as adjusted) of B's voting 
securities. Although Sec.  802.21 will permit ``A'' to purchase any 
amount of B's voting securities short of $100 million (as adjusted) 
within 5 years from the expiration of the waiting period, A's 
holdings may not meet or exceed the $100 million (as adjusted) 
notification threshold without ``A'' and ``B'' again filing 
notification and observing a waiting period.


0
32. Amend Sec.  803.9(a) by revising Examples 1 through 6 to read as 
follows:


Sec.  803.9  Filing fee.

    (a) * * *
    Examples:

    1. ``A'' wishes to acquire voting securities issued by B, where 
the greater of the acquisition price and the market price is in 
excess of $50 million (as adjusted) but less than $100 million (as 
adjusted) pursuant to Sec.  801.10. When ``A'' files notification 
for the transaction, it must indicate the $50 million (as adjusted) 
threshold and pay a filing fee of $45,000 because the aggregate 
total amount of the acquisition is less than $100 million (as 
adjusted), but greater than $50 million (as adjusted).
    2. ``A'' acquires less than $50 million (as adjusted) of assets 
from ``B.'' The parties meet the size of person criteria of Section 
7A(a)(2)(B), but the transaction is not reportable because it does 
not exceed the $50 million (as adjusted) size of transaction 
threshold of that provision. Two months later ``A'' acquires 
additional assets from ``B'' valued at between $50 million (as 
adjusted) and $100 million (as adjusted). Pursuant to the 
aggregation requirements of Sec.  801.13(b)(2)(ii), the aggregate 
total amount of ``B's'' assets that ``A'' will hold as a result of 
the second acquisition is in excess of $100 million (as adjusted). 
Accordingly, when ``A'' files notification for the second 
transaction, ``A'' must indicate the $100 million (as adjusted) 
threshold and pay a filing fee of $125,000 because the aggregate 
total amount of the acquisition is less than $500 million (as 
adjusted), but not less than $100 million (as adjusted).
    3. ``A'' acquires in excess of $50 million (as adjusted) of 
voting securities issued by B after submitting its notification and 
$45,000 filing fee and indicates the $50 million (as adjusted) 
threshold. Two years later, ``A'' files to acquire additional voting 
securities issued by B valued at $50 million (as adjusted) because 
it will exceed the next higher reporting threshold (see Sec. Sec.  
801.1(h)). Assuming the second transaction is reportable and the 
value of its initial holdings is unchanged (see Sec. Sec.  
801.13(a)(2) and 801.10(c)), the provisions of Sec.  801.13(a)(1) 
require that ``A'' report that the value of the second transaction 
is in excess of $100 million (as adjusted) because ``A'' must 
aggregate previously acquired securities in calculating the value of 
B's voting securities that it will hold as a result of the second 
acquisition. ``A'' should pay a filing fee of $125,000.
    4. ``A'' signs a contract with a stated purchase price in excess 
of $100 million (as adjusted), subject to adjustments, to acquire 
all of the assets of ``B.'' If the amount of adjustments can be 
reasonably estimated, the acquisition price--as adjusted to reflect 
that estimate--is determined. If the amount of adjustments cannot be 
reasonably estimated, the acquisition price is undetermined. In 
either case the board or its delegee must also determine in good 
faith the fair market value. (Sec.  801.10(b) states that the value 
of an asset acquisition is to be the fair market value or the 
acquisition price, if determined and greater than fair market 
value.) ``A'' files notification and submits a $45,000 filing fee. 
``A'''s decision to pay that fee may be justified on either of two 
bases, and ``A'' should submit an attachment to the Notification and 
Report Form explaining the valuation. First, ``A'' may have 
concluded that the acquisition price can be reasonably estimated to 
be less than $100 million (as adjusted), because of anticipated 
adjustments--e.g., based on due diligence by ``A's'' accounting firm 
indicating that one third of the inventory is not saleable. If fair 
market value is also determined in good faith to be less than $100 
million (as adjusted), the $45,000 fee is appropriate. 
Alternatively, ``A'' may conclude that because the adjustments 
cannot reasonably be estimated, acquisition price is undetermined. 
If so, ``A'' would base the valuation on the good faith 
determination of fair market value. The acquiring party's execution 
of the Certification also attests to the good faith valuation of the 
value of the transaction.
    5. ``A'' contracts to acquire all of the assets of ``B'' for in 
excess of $500 million (as adjusted). The assets include hotels, 
office buildings, and rental retail property, all of which are 
exempted by Sec.  802.2. Section 802.2 directs that these assets are 
exempt from the requirements of the act and that reporting 
requirements for the transaction should be determined by analyzing 
the remainder of the acquisition as if it were a separate 
transaction. Furthermore, Sec.  801.15(a)(2) states that those 
exempt assets are never held as a result of the acquisition. 
Accordingly, the aggregate amount of the transaction is in excess of 
$100 million (as adjusted), but less than $500 million (as 
adjusted). ``A'' will be liable for a filing fee of $125,000, rather 
than $280,000, because the value of the transaction is not less than 
$100 million (as adjusted) but less than $500 million (as adjusted). 
Note, however, that ``A'' must include an attachment in its 
Notification and Report Form setting out both the in excess of $500 
million (as adjusted) total purchase price and the basis for its 
determination that the aggregate total amount of the acquisition 
under the rules is between $100 million (as adjusted) and $500 
million (as adjusted) rather than in excess of $500 million (as 
adjusted), in accordance with the Instructions to the Form.
    6. ``A'' acquires coal reserves from ``B'' valued at $150 
million. No notification or filing fee is required because the 
acquisition is exempted by Sec.  802.3(b). Three months later, A 
proposes to acquire additional coal reserves from ``B'' valued at 
$500 million (as adjusted). This transaction is subject to the 
notification requirements of the act because the value of the 
acquisition exceeds the $200 million limitation on the exemption in 
Sec.  802.3(b). As a result of Sec.  801.13(b)(2)(ii), the prior 
$150 million acquisition must be added because the additional $500 
million (as adjusted) of coal reserves were acquired from the same 
person within 180 days of the initial acquisition. Because 
aggregating the two acquisitions exceeds the $200 million exemption 
limitation, Sec.  801.15(b) directs that ``A'' will also hold the 
previously exempt $150 million acquisition; thus, the aggregate 
amount held as a result of the $500 million (as adjusted) 
acquisition exceeds $500 million (as adjusted). Accordingly, ``A'' 
must file notification to acquire the coal reserves valued in excess 
of $500 million (as adjusted) and pay a filing fee of $280,000.
* * * * *

0
33. Revise the Appendix to part 803 to read as follows:
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    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 05-1679 Filed 1-28-05; 8:45 am]
BILLING CODE 6750-01-C