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Date
Rule
801.12
Staff
Michael Verne
Response/Comments
If the shares to be acquired as a result of the exercise of warrants represent common stock, you must do a calculation of percentage held under Section 801.12. If the amount held crosses a new threshold, an additional filing would be required.

Question

From:(redacted)

Sent: Monday, February 27, 2006 2:56 PM

To:Verne, B. Michael

Cc:(redacted)

Subject: question

Hi, Mike

You and I had spoken sometime ago about an entity which held non-voting notes of an issuer which weregoing to be turned into voting securities by virtue of a charter amendmentgiving the holders of such notes the right to vote with shares of the issuer'scommon stock. Since the issuer's charter subjected the holder to a 5% votinglimitation, you had advised us that we could file for the threshold whichconstituted 5% of the value of the notes. The question arises as to whether anexercise of warrants, which would result in an acquisition of common stock,would give rise to a new filing obligation assuming a new threshold is crossed.Despite acquiring additional voting securities, the 5% limitation remains ineffect, such that the voting interest is no greater than it was previously. Areyou of the opinion that a new filing is not necessary?

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