M E M O R A N D U M


        Securities Act Release No. 33-7646, dated February 26, 1999
              Regarding Registration of Securities on Form S-8


     Purpose
     -------
     To clarify that S-8 is not available to consultants who directly or
indirectly promote or maintain a market for the issuer's securities,
declaring that these persons take from an issuer with a view to
distribution and are therefore "statutory underwriters" (who presumably
would not have an exemption for the resale of securities issued in these
types of transactions [Section 4(1) of the Securities Act of 1933, as
amended (the "Act"), the exemption relied upon for secondary sales of
securities, is not available to "issuers, underwriters or dealers" in
securities]).

     Background
     ----------
     As of April 7, 1999, the availability of S-8's streamlined
registration process was restricted to deter the abuse of the Form to make
sales to the general public through so-called "consultants" and "advisors,"
and to eliminate registration on the Form to "stock promoters."

     S-8 eliminated a need to file a prospectus that duplicated information
usually available to plan participants who were being compensated by the
issuance of securities rather than cash, and it reflected the Commission's
distinction between offerings made to employees for compensatory reasons
and offerings made for capital raising.  The Commission reasoned that the
relationship of the employee to the issuer provided the employee with a
familiarity of the issuer's business sufficient to justify the abbreviated
disclosure, which would not be adequate in a capital raising transaction.

     The 1990 amendment included "consultants" whom the Commission found no
reason to distinguish from regular employees, for bona fide non-capital
raising services rendered.

     Abuses
     ------
     Since 1990, the Form has been used to distribute securities to the
public without the protections to investors of registration under Section 5
of the Act.  Securities are often issued to so-called "consultants" for
nominal services, with pre-arrangements for exercise and distribution to
the public in the underlying markets.  Often the options granted are
exercised to provide funds to the issuer or the proceeds of the sales are
for the payment of debts of the issuer that are not related to any services
provided by the consultants.

     The initial registration of the shares underlying these options did
not register the public "capital raising" transaction which actually takes
place via the secondary sales.  In these instances, the employee or
consultant acts as a conduit to the public, and the shares are not actually
issued as compensation for services, for which the Form is solely intended.


     Securities have also been issued to consultants whose services are to
promote the issuer's securities.  This practice invites fraud by providing
inexpensive compensation to person who hype the securities of the issuer
and expand the issuer's market through resales by theses and other persons.

     Through its recent amendments to Form S-8, the Commission has sought
to curb these practices, while maintaining, to the extent possible, the
initial intent of the Form, i.e., the registration of compensatory
transactions between the issuer and consultants and advisors who render
bona fide services outside of "capital raising" circumstances, as well as
to traditional employees.

     Amendments
     ----------
     The Form's availability is for employees or employees or subsidiaries,
pursuant to any employee benefit plan.  An "employee" is defined to include
a consultant or advisor who provides bona fide services to the issuer other
than in capital raising transactions.  Like the traditional employee, the
consultant or advisor must be a natural person, and there must be a
contract between the issuer and the consultant or advisor.  The Commission
has determined that "capital raising" includes (i) compensation for any
service that directly or indirectly promotes or maintains a market for the
issuer's securities, or (ii) where the securities are issued to persons who
act as conduits for a distribution to the general public.

     Securities issued to persons who promote the issuer's securities are
outside the intent of the Form.  Securities cannot be issued to anyone who
directly or indirectly promotes or maintains a market in the issuer's
securities.

     Issuers cannot use the Form for the issuance of securities to
consultants and advisors whose services related to potential capital
restructuring because this service is a predicate to "capital raising" and
market maintenance; however, services rendered in structuring the
compensation scheme would be included under the Form.

     Public relations services are also prohibited as the Commission
believes these services enhance and expand the market of the issuer and its
securities.

     Rule 701 Amendments
     -------------------
     As of April 7, 1999, the Commission amended Rule 701 to harmonize the
definition of "consultants and advisors" permitted to use the Rule to the
narrower definition of Form S-8.  As revised, securities promoters will
clearly be excluded from the scope of persons eligible to use Rule 701.