[Code of Federal Regulations]
[Title 17, Volume 2]
[Revised as of April 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 17CFR228.404]

[Page 333-334]
 
              TITLE 17--COMMODITY AND SECURITIES EXCHANGES
 
             CHAPTER II--SECURITIES AND EXCHANGE COMMISSION
 
PART 228--INTEGRATED DISCLOSURE SYSTEM FOR SMALL BUSINESS ISSUERS--Table of Contents
 
                        Subpart A--Regulation S-B
 
Sec. 228.404  (Item 404) Certain Relationships and Related Transactions.

    (a) Describe any transaction during the last two years, or proposed 
transactions, to which the small business issuer was or is to be a 
party, in which any of the following persons had or is to have a direct 
or indirect material interest. Give the name of the person, the 
relationship to the issuer, nature of the person's interest in the 
transaction and, the amount of such interest:
    (1) Any director or executive officer of the small business issuer;
    (2) Any nominee for election as a director;
    (3) Any security holder named in response to Item 403 
(Sec. 228.403); and
    (4) Any member of the immediate family (including spouse, parents, 
children, siblings, and in-laws) of any of the persons in paragraphs (a) 
(1), (2) or (3) of this Item.
    (b) No information need be included for any transaction where:
    (1) Competitive bids determine the rates or charges involved in the 
transaction;
    (2) The transaction involves services at rates or charges fixed by 
law or governmental authority;
    (3) The transaction involves services as a bank depositary of funds, 
transfer

[[Page 334]]

agent, registrar, trustee under a trust indenture, or similar services;
    (4) The amount involved in the transaction or a series of similar 
transactions does not exceed $60,000; or
    (5) The interest of the person arises solely from the ownership of 
securities of the small business issuer and the person receives no extra 
or special benefit that was not shared equally (pro rata) by all holders 
of securities of the class.
    (c) List all parents of the small business issuer showing the basis 
of control and as to each parent, the percentage of voting securities 
owned or other basis of control by its immediate parent if any.
    (d) Transactions with promoters. Issuers organized within the past 
five years shall:
    (1) State the names of the promoters, the nature and amount of 
anything of value (including money, property, contracts, options or 
rights of any kind) received or to be received by each promoter, 
directly or indirectly, from the issuer and the nature and amount of any 
assets, services or other consideration therefore received or to be 
received by the registrant; and
    (2) As to any assets acquired or to be acquired from a promoter, 
state the amount at which the assets were acquired or are to be acquired 
and the principle followed or to be followed in determining such amount 
and identify the persons making the determination and their 
relationship, if any, with the registrant or any promoter. If the assets 
were acquired by the promoter within two years prior to their transfer 
to the issuer, also state the cost thereof to the promoter.

Instructions to Item 404: 1. A person does not have a material indirect 
interest in a transaction within the meaning of this Item where:
    (a) The interest arises only:
    (1) from such person's position as a director of another corporation 
or organization (other than a partnership) which is a party to the 
transaction and/or
    (2) from the total ownership (direct or indirect) by all specified 
persons of less than a 10% equity interest in another person (other than 
a partnership) which is a party to the transaction;
    (b) The interest arises only from such person's position as a 
limited partner in a partnership in which he and all other specified 
persons had an interest of less than 10 percent; or
    (c) The interest of such person arises solely from holding an equity 
interest (but not a general partnership interest) or a creditor interest 
in another person that is a party to the transaction and the transaction 
is not material to such other person.
    2. Include information for any material underwriting discounts and 
commissions upon the sale of securities by the small business issuer 
where any of the specified persons was or is to be a principal 
underwriter or is a controlling person or member of a firm that was or 
is to be a principle underwriter.
    3. As to any transaction involving the purchase or sale of assets by 
or to the small business issuer otherwise than in the ordinary course of 
business, state the cost of the assets to the purchase and if acquired 
by the seller within two years before the transaction, the cost thereof 
to the seller.