EX-11.2 4 himx-20241231xex11d2.htm EX-11.2

Exhibit 11.2

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HIMAX TECHNOLOGIES, INC.

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STATEMENT OF POLICY CONCERNING

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TRADING POLICIES

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Amended and Adopted on M arch 1 2, 202 5

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TABLE OF CONTENTS

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​ |  | ​ | Page No.
I. | ​ | SUMMARY OF THE COMPANY POLICY CONCERNING TRADING POLICIES | 1
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II. | ​ | THE USE OF INSIDE INFORMATION IN CONNECTION WITH TRADING IN SECURITIES | 2
​ | ​ | A. | General Rule | 2
​ | ​ | B. | To Whom Does the Policy Apply? | 4
​ | ​ | C. | Other Companies’ Stock | 4
​ | ​ | D. | Hedging and Derivatives | 5
​ | ​ | E. | Pledging of Securities, Margin Accounts | 5
​ | ​ | F. | General Guidelines | 5
​ | ​ | ​ | 1. | Nondisclosure | 5
​ | ​ | ​ | 2. | Trading in the Company Securities | 6
​ | ​ | ​ | 3. | Avoid Speculation | 6
​ | ​ | ​ | 4. | Trading in Other Securities | 6
​ | ​ | ​ | 5. | Restrictions on the Window Group | 6
​ | ​ | G. | Guidelines for 10b5-1 Plans | 8
​ | ​ | H. | Applicability of U.S. Securities Laws to International Transactions | 11
III. | ​ | Other Limitations on Securities Transactions | 12
​ | ​ | A. | Public Resales – Rule 144 | 12
​ | ​ | B. | Private Resales | 13
​ | ​ | C. | Restrictions on Purchases of Company Securities | 14
​ | ​ | D. | Filing Requirements | 14
​ | ​ | ​ | 1. | Schedule 13D and 13G | 14
​ | ​ | ​ | 2. | Form 144 | 14

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I.

SUMMARY OF THE COMPANY POLICY CONCERNING

TRADING POLICIES

It is the policy of Himax Technologies, Inc. and its subsidiaries (the “Company”) that it will without exception comply with all applicable laws and regulations in conducting its business. Each employee, each executive officer, each director and each of their respective family members is expected to abide by this policy. When carrying out Company business, employees, executive officers and directors must avoid any activity that violates applicable laws or regulations. In order to avoid an appearance of impropriety, the Company’s directors, executive officers and certain other employees are subject to trading window restrictions, pre-approval requirements and other limitations on their ability to enter into transactions involving the Company’s securities. Although these limitations do not apply to transactions pursuant to written plans for trading securities that comply with Rule 10b5-1 under the Securities Exchange Act of 1934 (the “Exchange Act”), the entry into, amendment or termination of any such written trading plan is subject to pre-approval requirements and other limitations.

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II.

THE USE OF INSIDE INFORMATION IN CONNECTION WITH

TRADING IN SECURITIES

| A. | General Rule.

The U.S. securities laws regulate the sale and purchase of securities in the interest of protecting the investing public. U.S. securities laws give the Company, its executive officers and directors, and other employees the responsibility to ensure that information about the Company is not used unlawfully in the purchase and sale of securities.

All employees, executive officers and directors should pay particularly close attention to the laws against trading on “inside” information. These laws are based upon the belief that all persons trading in a company’s securities should have equal access to all “material” information about that company. For example, if an employee, an executive officer or a director of a company knows material n onpublic information, that employee, executive officer or director is prohibited from buying or selling shares (including American Depositary Shares, or ADSs) in the company until the information has been adequately disclosed to the public. This is because the employee, executive officer or director knows information that will probably cause the share price to change, and it would be unfair for the employee, executive officer or director to have an advantage (knowledge that the share price will change) that the rest of the investing public does not have. In fact, it is more than unfair, it is considered to be fraudulent and illegal. Civil and criminal penalties for this kind of activity are severe.

The general rule can be stated as follows: It is a violation of the federal securities laws for any person to buy, sell, or otherwise trade or deal in securities if he or she is in possession of material n onpublic information. Information is material if there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision. Material information can be favorable or unfavorable. If it is not clear whether inside information is material, it should be treated as if it was material. Some examples of information that could be considered material include:

| · | Significant changes in key performance indicators of the Company,

| · | Actual, anticipated or targeted earnings and dividends and other financial information,

| · | Financial, sales and other significant internal business forecasts, or a change in previously released estimates,

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| · | Mergers, business acquisitions or dispositions, or the expansion or curtailment of operations

| · | Significant events affecting the Company’s operations, including any breach of information systems that compromises the functioning of the Company’s information or other systems or results in the exposure or loss of customer information, in particular personal information,

| · | New equity or debt offerings or significant borrowing,

| · | Changes in debt ratings, or analyst upgrades or downgrades of the issuer or one of its securities,

| · | Significant changes in accounting treatment, write-offs or effective tax rate,

| · | Significant litigation or governmental investigation,

| · | Changes in senior management, and

| · | Stock splits or other corporate actions.

It is inside information if it has not been publicly disclosed. Furthermore, it is illegal for any person in possession of material nonpublic information to provide other people (including family members such as parents, spouses and children) with such information or to recommend that they buy or sell the securities. This is called “tipping.” In that case, they may both be held liable.

The Securities and Exchange Commission (the “SEC”), NASDAQ, and plaintiffs’ lawyers focus on uncovering insider trading. A breach of the insider trading laws could expose the insider or anyone who trades on information provided by an insider to criminal fines up to three times the profits earned and imprisonment up to ten years, in addition to civil penalties (up to three times of the profits earned), and injunctive actions. Securities laws also subject controlling persons to civil penalties for illegal insider trading by employees, including employees located outside the United States. Controlling persons include directors, executive officers, and supervisors. These persons may be subject to fines up to the greater of US$1,000,000 or three times profit (or loss avoided) by the insider trader.

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Material nonpublic information does not belong to the individual executive directors, officers, or other employees who may handle it or otherwise become knowledgeable about it. It is an asset of the Company. For any person to use such information for personal benefit or to disclose it to others outside the Company violates the Company’s interests. More particularly, in connection with trading in the Company’s securities, it is a fraud against members of the investing public and against the Company. The mere perception that an employee, executive officer, or director traded with the knowledge of material inside information could harm the reputation of both the Company and that employee, executive officer or director.

| B. | To Whom Does the Policy Apply?

The prohibition against trading on material nonpublic information applies to executive directors, officers, and all other employees of the Company, and to other people who gain access to that information. The prohibition applies to both domestic and international employees of the Company and its subsidiaries. The guidelines are discussed in section F below.

Directors, executive officers and certain designated employees (the “Window Group”) of the Company are subject to additional restrictions on trading in the Company’s securities because of their access to confidential information on a regular basis.

The restrictions for the Window Group are discussed in Section F(5) below. Please note that household members of those designated in the Window Group are deemed members of the Window Group and must also abide by the guidelines of the Company policy. Therefore, those in the Window Group should notify their household members of the policy and its guidelines, including additional trading restrictions applicable to the Window Group, outlined herein and ensure their compliance with the policy.

Finally, directors and certain employees with inside knowledge of material nonpublic information may be subject to ad hoc restrictions on trading from time to time.

The Chief Financial Officer or Legal Department of the Company will notify those affected by ad hoc restrictions if and when necessary.

| C. | Other Companies’ Stocks.

The same rules apply to other companies’ stocks. Employees, executive officers and directors who learn material nonpublic information about suppliers, customers, or competitors through their work at the Company should keep such information confidential and not buy or sell stock in such companies until the information becomes public. Employees, executive officers and directors should not give tips about such stocks.

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| D. | Hedging and Derivatives.

Employees, executive officers and directors are prohibited from engaging in any derivative transactions (including transactions involving options, puts, calls, prepaid variable forward contracts, equity swaps, collars and exchange funds or other derivatives) that are designed to hedge or speculate on any change in the market value of the Company’s equity securities. Employees, executive officers and directors are also prohibited from shorting the Company’s shares.

The insider trading prohibition also applies to trading in options or other derivatives in general, such as put and call options. Options trading is highly speculative and very risky. People who buy options are betting that the share price will move rapidly. For that reason, when a person trades in options in his or her employer’s shares, it will arouse suspicion in the eyes of the SEC that the person was trading on the basis of inside information, particularly where the trading occurs before a Company announcement or major event. It is difficult for an employee, executive officer or director to prove that he or she did not know about the announcement or event.

If the SEC or NASDAQ were to notice active options trading by one or more employees, executive officers or directors of the Company prior to an announcement, they would investigate. Such an investigation could be embarrassing to the Company (as well as expensive) and could result in severe penalties and expense for the persons involved. For all of these reasons, the Company prohibits its employees, executive officers and directors from trading in options or other securities involving the Company shares. This policy does not pertain to employee stock options granted by the Company. Employee stock options cannot be traded.

| E. | Pledging of Securities, Margin Accounts.

Pledged securities may be sold by the pledgee without the pledgor’s consent under certain conditions. For example, securities held in a margin account may be sold by the broker without the customer’s consent if the customer fails to meet a margin call. Because such a sale may occur at a time when an employee, executive officer or a director has material nonpublic information or is otherwise not permitted to trade in Company securities, the Company prohibits employees, executive officers and directors from pledging Company securities in any circumstance, including by purchasing Company securities on margin or holding Company securities in a margin account.

| F. | General Guidelines.

The following guidelines should be followed in order to ensure compliance with applicable antifraud laws and with the Company’s policies:

| 1. | Nondisclosure. Material nonpublic information must not be

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disclosed to anyone, except to persons within the Company whose positions require them to know it. No employee, executive officer, or director should discuss material inside information in public places.

2. Trading in the Company Securities. No employee, executive officer or director should place a purchase or sale order or recommend that another person place a purchase or sale order in the Company’s securities when he or she has knowledge of material information concerning the Company that has not been disclosed to the public. This includes orders for purchases and sales of shares and convertible securities, and other securities (such as bonds). The exercise of employee stock options is not subject to this policy. However, shares that were acquired upon exercise of a stock option or upon vesting of a restricted share unit will be treated like any other shares and may not be sold by an employee who is in possession of material nonpublic information. Any employee or director who possesses material nonpublic information should wait until the start of the second business day after the information has been publicly released before trading.

3. Avoid Speculation. Investing in the Company’s securities provides an opportunity to share in the future growth of the Company. But investment in the Company and sharing in the growth of the Company does not mean short range speculation based on fluctuations in the market. Such activities put the personal gain of the employee, executive officer or director in conflict with the best interests of the Company and its shareholders. Although this policy does not mean that employees, executive officers or directors may never sell shares, the Company encourages employees, executive officers and directors to avoid frequent trading in Company shares. Speculating in Company shares is not part of the Company culture.

4. Trading in Other Securities. No employee, executive officer or director should place a purchase or sale order or recommend that another person place a purchase or sale order in the securities of another corporation, if the employee, executive officer or director learns in the course of his or her employment confidential information about the other corporation that is likely to affect the value of those securities. For example, it would be a violation of the securities laws if an employee, executive officer or director learned through Company sources that the Company intended to purchase assets from a company and then bought or sold shares in that other company because of the likely increase or decrease in the value of its securities.

5. Restrictions on the Window Group. The Window Group is subject to the following restrictions on trading in Company securities:

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| · | trading is permitted from the start of the second business day following an earnings release with respect to the preceding fiscal period and end thirty (30) days thereafter (the “Window”), subject to the restrictions below;

(For example: if the Company were to announce its quarterly earnings on February 1, May 1, August 1, and November 1 of each year, the Window would be as follows (assuming that each of these dates is a business day; if each of these days falls on a holiday in either the U.S. or Taiwan, then the next business day applies):

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First Quarter Window | February 3 – March 4
Second Quarter Window | May 3 – June 1
Third Quarter Window | August 3 – September 1
Fourth Quarter Window | November 3 – December 2

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The above dates are for illustrative purposes only. Each Window period will be communicated to the Window Group once the quarterly earnings announcement date has been determined.)

| · | all trades subject to prior review;

| · | clearance for all trades should be obtained from the Company’s Chief Financial Officer or Legal Department;

| · | no trading is permitted outside the Window periods except for reasons of exceptional personal hardship and subject to prior review; and

| · | individuals in the Window Group are also subject to the general rules and restrictions applicable to all employees.

Note that at times the Company’s Chief Financial Officer or Legal Department may determine that no trades may occur even during the Window when clearance is requested. This may occur as a result of a pending business transaction, a cyber-breach, or any material development that has not yet been publicly disclosed. No reasons may be provided and the closing of the Window itself may constitute material inside information that should not be communicated.

The foregoing Window Group restrictions do not apply to transactions pursuant to written plans for trading securities that comply with Rule 10b5-1 under the Exchange Act (“10b5-1 Plans”) described in below Section G hereto. However, Window Group members may not enter into, amend or terminate a 10b5-1 Plan relating to Company securities without

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the prior approval of the Chief Financial Officer or the Legal Department of the Company, which will only be given during a Window period and only if the Window Group member does not have knowledge of material nonpublic information.

The Company from time to time may also impose an ad hoc trading freeze on all executive officers, directors, and other members of the Window Group due to significant unannounced corporate developments. These trading freezes may vary in length.

Executive officers, directors or any other member of the Window Group must promptly report to the Chief Financial Officer or the Legal Department of the Company any transaction in any of the Company’s securities by his or her or any of their respective assistants or family members other than transactions made pursuant to an approved 10b5-1 Plan.

IN SUMMARY, EVERY EMPLOYEE OF THE COMPANY IS SUBJECT TO TRADING RESTRICTIONS WHEN IN POSSESSION OF INSIDE INFORMATION REGARDING THE COMPANY. IN ADDITION, EXECUTIVE OFFICERS, DIRECTORS, AND OTHER MEMBERS OF THE WINDOW GROUP ARE SUBJECT TO PARAGRAPH 5 ABOVE RESTRICTING THEIR TRADING TO WINDOW PERIODS AND REQUIRING PRE-CLEARANCE.

YOU MUST PROMPTLY REPORT TO THE CHIEF FINANCIAL OFFICER OR THE LEGAL DEPARTMENT OF THE COMPANY ANY TRADING IN THE COMPANY’S SECURITIES BY ANYONE OR DISCLOSURE OF INSIDE INFORMATION BY COMPANY PERSONNEL THAT YOU HAVE REASON TO BELIEVE MAY VIOLATE THIS POLICY OR THE SECURITIES LAWS OF THE UNITED STATES.

| G. | Guidelines for 10b5-1 Plans

The following guidelines apply for any Rule 10b5-1 trading plan (a “10b5-1 Plan”) relating to the stock of Himax Technologies, Inc. (the “Company”). All 10b5-1 Plans entered into and any amendment, suspension or termination must comply with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company’s Statement of Policy Concerning Trading in Company Securities (the “Trading Policy”) and other Company policies and must meet the following conditions:

1. Participants. Company directors, executive officers and employees (each, an “Insider,” and collectively, “Insiders”) are eligible to adopt a 10b5-1 Plan.

2. Plan and Approval. The 10b5-1 Plan must be in writing and signed by the Insider, and the Insider must provide a copy to the Company. The form of each 10b5-1 Plan and any subsequent amendment, suspension or termination must be consistent with these guidelines. Each 10b5-1 Plan must be approved in writing by the Company’s Chief Financial Officer or the Legal Department of the Company prior to the adoption, amendment, suspension or termination of such plan. A 10b5-1 Plan must not permit an Insider to exercise any subsequent influence over how, when or whether to effect purchases or sales. Sales under a 10b5-1 Plan must be via an approved broker. The Insider must act

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in good faith with respect to a 10b5-1 Plan when the Plan is adopted and for the duration of the Plan and must not enter into a 10b5-1 Plan as part of a plan or scheme to evade the prohibitions of Rule 10b-5. In addition, each 10b5-1 Plan must include a representation by the Insider certifying that (a) such person is not in possession of material nonpublic information about the Company or its securities, and (b) the 10b5-1 Plan is being adopted in good faith and not as part of a plan to evade the prohibitions of Rule 10b-5.

3.Timing and Term of Plan. Each 10b5-1 Plan must be adopted (a) during an open trading window under the Company’s Trading Policy, and (b) when the Insider does not otherwise possess material nonpublic information about the Company. Each 10b5-1 Plan must be structured to remain in place for at least six months but no longer than 12 months after the effective date of such plan. Each 10b5-1 Plan must provide for delayed effectiveness after adoption or amendment (a “Cooling-Off Period”). For Insiders who are directors or executive officers (“D&O Insiders”), each 10b5-1 Plan must specify that trades may not execute under the 10b5-1 Plan until the later of (a) 90 days after the date of adoption or amendment of the 10b5-1 Plan and (b) 2 business days following the Company’s filing of a quarterly or annual report covering the financial reporting period in which the 10b5-1 Plan was adopted or amended, but in no event later than 120 days after the date of adoption or amendment of the 10b5-1 Plan. For all other Insiders (the “Other Insiders”), each 10b5-1 Plan must specify that trades may not execute under the 10b5-1 Plan for a period of at least 30 days after the date of adoption or amendment of the 10b5-1 Plan.

4.Plan Specifications. Discretion Regarding Trades. The 10b5-1 Plan must either (a) specify the amount of securities to be purchased or sold and the price at which and the date on which the securities are to be purchased or sold, or (b) specify or set an objective formula or algorithm for determining the amount of stock to be purchased or sold and the price at which and the date on which the securities are to be purchased or sold.

5.Amendment, Suspension and Termination. Amendments, suspensions, and terminations of 10b5-1 Plans must be approved in advance by the Chief Financial Officer or the Legal Department of the Company. In addition, an Insider may voluntarily amend a 10b5-1 Plan only (a) during an open trading window under the Company’s Trading Policy and (b) when the Insider does not otherwise possess material nonpublic information about the Company. Insiders may make amendments to 10b5-1 Plans without triggering a Cooling-Off Period so long as the amendment does not change the pricing provisions of the 10b5-1 Plan, the amount of securities covered under the 10b5-1 Plan or the timing of trades under the 10b5-1 Plan, or where a broker executing trades on behalf of the Insider is substituted by a different broker (so long as the purchase or sales instructions remain the same).

6.Mandatory Suspension. Each 10b5-1 Plan must provide for suspension of trades under such plan if legal, regulatory or contractual restrictions are imposed on the Insider, or if these guidelines are amended, or other events occur, that would prohibit sales under such 10b5-1 Plan.

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7.Results of Termination of a Plan. If an Insider terminates a 10b5-1 Plan prior to its stated duration, such Insider may not trade in Company securities (other than pursuant to another 10b5-1 Plan already in place) for a period of at least 30 days following such termination; provided, however, that any trades following such termination shall comply with the Company’s Trading Policy. If an existing 10b5-1 Plan is terminated early and another 10b5-1 Plan is already in place, the first trade under the later-commencing plan must not be scheduled to occur until after the end of the effective Cooling-Off Period following the termination of the earlier 10b5-1 Plan.

8.Only One Plan in Effect at Any Time. An Insider may have only one 10b5-1 Plan in effect at any time, except that a written, irrevocable election (an “Election”) by an Insider to sell a portion of shares as necessary to satisfy statutory tax withholding obligations arising solely from the vesting of compensatory awards (not including options) (“Sales to Cover”) is permitted, provided that (a) the Election is made during an open trading window under the Trading Policy, (b) at the time of the Election, the Insider is not aware of any material, nonpublic information with respect to the Company or any securities of the Company, (c) the Sales to Cover are made in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5, (d) the Insider does not have, and will not attempt to exercise, authority, influence or control over any such Sales to Cover, and (e) the Election contains appropriate representations as to clauses (b)-(d).

An Insider may adopt a new 10b5-1 Plan to replace an existing 10b5-1 Plan before the scheduled termination date of such existing 10b5-1 Plan, so long as the first scheduled trade under the new 10b5-1 Plan does not occur until after all trades under the existing 10b5-1 Plan are completed or expire without execution (subject to any Cooling-Off Periods), and otherwise complies with the guidelines regarding the first trade described above. A series of separate contracts with different brokers to execute trades under a 10b5-1 Plan may be treated as a single plan, provided the contracts as a whole meet the conditions under Rule 10b5-1, and provided further that any amendment of one contract is treated as an amendment of all of the contracts under the plan.

9.Limitation on Single-Trade Arrangements. In any 12-month period, an Insider is limited to one “single-trade plan” — one designed to effect the open market purchase or sale of the total amount of the securities subject to the plan as a single transaction. The following do not constitute single-trade plans: (a) a 10b5-1 Plan that gives discretion to an agent over whether to execute the 10b5-1 Plan as a single transaction or that provides the agent’s future acts depend on facts not known at the time the 10b5-1 Plan’s adoption and might reasonably result in multiple transactions, and (b) Sales to Cover.

10.No Hedging. As described in the Trading Policy, individuals subject to the policy are prohibited from engaging in any hedging or similar transactions designed to decrease the risks associated with holding Company securities. Further to this end, an Insider adopting a 10b5-1 Plan may not have entered into or altered a corresponding or hedging transaction or position with

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respect to the securities subject to the 10b5-1 Plan and must agree not to enter into any such transaction while the 10b5-1 Plan is in effect.

11.Compliance with Rule 144. All sales made under a 10b5-1 Plan must be made in reliance on an exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”) and may not be made pursuant to a registration statement. To the extent that sales made under a 10b5-1 Plan are made pursuant to Rule 144 under the Securities Act, such 10b5-1 Plan must provide for specific procedures to comply with Rule 144, including the filing of Forms 144.

12.Broker Obligation to Provide Notice of Trades. Each 10b5-1 Plan entered into by an Insider must provide that the broker will provide notice of any trades under the 10b5-1 Plan to the Insider and the Company in sufficient time to allow for the Insider to make timely filings under the Exchange Act.

13.Insider Obligation to Make Exchange Act Filings and Company Disclosures. Each 10b5-1 Plan must contain an explicit acknowledgement by such Insider that all filings required by the Exchange Act, as a result of or in connection with trades under such 10b5-1 Plan, are the sole obligation of such Insider and not the Company. The Company will also disclose in its quarterly and annual reports the material terms of the 10b5-1 Plans adopted or terminated (which includes modifications) by D&O Insiders, as required by the Securities and Exchange Commission’s rules, including the identity of the person, the date of adoption or termination, the duration of the trading arrangement and the aggregate number of securities under the 10b5-1 Plan.

14.Required Footnote Disclosure. Insiders must footnote trades disclosed on Forms 144 to indicate that the trades were made pursuant to a 10b5-1 Plan.

| H. | Applicability of U.S. Securities Laws to International Transactions.

All employees of the Company’s and its subsidiaries are subject to the restrictions on trading in the Company securities and the securities of other companies. The U.S. securities laws may be applicable to trades in the Company’s securities executed outside the U.S. as well as to the securities of the Company’s subsidiaries or affiliates, even if they are located outside the United States. Transactions involving securities of subsidiaries or affiliates should be carefully reviewed by counsel for compliance not only with local law but also for possible application of U.S. securities laws.

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III.

OTHER LIMITATIONS ON SECURITIES TRANSACTIONS

| A. | Public Resales – Rule 144.

The U.S. Securities Act (the “Securities Act”) requires every person who offers or sells a security to register such transaction with the SEC unless an exemption from registration is available. Rule 144 under the Securities Act is the exemption typically relied upon for (i) for public resales by any person of “restricted securities” (i.e., unregistered securities acquired in a private offering or sale) and (ii) public resales by directors, executive officers and other control persons of a company (known as “affiliates”) of any of the Company’s securities, whether restricted or unrestricted.

The exemption in Rule 144 may only be relied upon if certain conditions are met. These conditions vary based upon whether the Company has been subject to the SEC’s reporting requirements for 90 days (and is therefore a “reporting company” for purposes of the rule) and whether the person seeking to sell the securities is an affiliate or not. Application of the rule is complex and Company employees, executive officers and directors should not make a sale of Company securities in reliance on Rule 144 without obtaining the approval of the Chief Financial Officer or the Legal Department of the Company, who may require the employee, executive officer or director to obtain an outside legal opinion satisfactory to the Chief Financial Officer or the Legal Department of the Company concluding that the proposed sale qualifies for the Rule 144 exemption.

1.Holding Period. Restricted securities issued by a reporting company (i.e., a company that has been subject to the SEC’s reporting requirements for at least 90 days) must be held and fully paid for a period of six months prior to their sale. Restricted securities issued by a non-reporting company are subject to a one-year holding period. The holding period requirement does not apply to securities held by affiliates that were acquired either in the open market or in a public offering of securities registered under the Securities Act. Generally, if the seller acquired the securities from someone other than the Company or an affiliate of the Company, the holding period of the person from whom the seller acquired such securities can be “tacked” to the seller’s holding period in determining if the holding period has been satisfied.

2.Current Public Information. Current information about the Company must be publicly available before the sale can be made. The Company’s periodic reports filed with the SEC ordinarily satisfy this requirement. If the seller is not an affiliate of the Company issuing the securities (and has not been an affiliate for at least three months) and one year has passed since the securities were acquired from the issuer or an affiliate of the issuer

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(whichever is later), the seller can sell the securities without regard to the current public information requirement.

Rule 144 also imposes the following additional conditions on sales by persons who are “affiliates.” A person or entity is considered an “affiliate,” and therefore subject to these additional conditions, if it is currently an affiliate or has been an affiliate within the previous three months.

3.Volume Limitations. The amount of debt securities that can be sold by an affiliate and by certain persons associated with the affiliate during any three-month period cannot exceed 10% of a tranche (or class when the securities are non-participatory preferred stock), together with all sales of securities of the same tranche sold for the account of the affiliate. The amount of equity securities that can be sold by an affiliate during any three-month period cannot exceed the greater of (i) one percent of the outstanding shares of the class or (ii) the average weekly reported trading volume for shares of the class during the four calendar weeks preceding the time the order to sell is received by the broker or executed directly with a market maker.

4.Manner of Sale. Equity securities held by affiliates must be sold in unsolicited brokers’ transactions, directly to a market-maker or in riskless principal transactions.

5.Notice of Sale. An affiliate seller must file a notice of the proposed sale with the SEC at the time the order to sell is placed with the broker, unless the amount to be sold neither exceeds 5,000 shares nor involves sale proceeds greater than $50,000. See “Filing Requirements”.

Bona fide gifts are not deemed to involve sales of shares for purposes of Rule 144, so they can be made at any time without limitation on the amount of the gift. Donees who receive restricted securities from an affiliate generally will be subject to the same restrictions under Rule 144 that would have applied to the donor, depending on the circumstances.

| B. | Private Resales.

Directors and executive officers also may sell securities in a private transaction without registration pursuant to Section 4(a)(7) of the Securities Act, which allows resales of shares of reporting companies to accredited investors, provided that the sale is not solicited by any form of general solicitation or advertising. There are a number of additional requirements, including that the seller and persons participating in the sale on a remunerated basis are not “bad actors” under Rule 506(d)(1) of Regulation D or otherwise subject to certain statutory disqualifications; the Company is engaged in a business and not in bankruptcy; and the securities offered have been outstanding for at least 90 days and are not part of an unsold underwriter’s allotment. Private resales raise certain documentation and other issues and must be reviewed in advance by the Company’s Chief Financial Officer or Legal Department.

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| C. | Restrictions on Purchases of Company Securities.

In order to prevent market manipulation, the SEC adopted Regulation M under the U.S. Exchange Act. Regulation M generally restricts the Company or any of its affiliates from buying Company stock, including as part of a share buyback program, in the open market during certain periods while a distribution, such as a public offering, is taking place. You should consult with the Company’s Chief Financial Officer or Legal Department if you desire to make purchases of Company shares during any period that the Company is conducting an offering or buying shares from the public.

| D. | Filing Requirements.

1.Schedule 13D and 13G. Section 13(d) of the Exchange Act requires the filing of a statement on Schedule 13D (or on Schedule 13G, in certain limited circumstances) by any person or group which acquires beneficial ownership of more than five percent of a class of equity securities registered under the Exchange Act. The threshold for reporting is met if the shares owned, when coupled with the amount of shares subject to options exercisable within 60 days, exceeds the five percent limit.

A report on Schedule 13D is required to be filed with the SEC and submitted to the Company within five business days after the reporting threshold is reached. If a material change occurs in the facts set forth in the Schedule 13D, such as an increase or decrease of one percent or more in the percentage of shares beneficially owned, an amendment disclosing the change must be filed within two business days after the triggering event. A decrease in beneficial ownership to less than five percent is per se material and must be reported. Schedule 13G reporting, which is more limited and subject to fewer updating requirements that 13D, is generally available for equity securities acquired before the Company’s IPO. A report on Schedule 13G is required to be filed with the SEC and submitted to the Company within 45 days after the end of the calendar q uarter in which the reporting threshold is reached.

A person is deemed the beneficial owner of securities for purposes of Section 13(d) if such person has or shares voting power (i.e., the power to vote or direct the voting of the securities) or dispositive power (i.e., the power to sell or direct the sale of the securities). A person filing a Schedule 13D or 13G may disclaim beneficial ownership of any securities attributed to him or her if he or she believes there is a reasonable basis for doing so.

2.Form 144. As described above under the discussion of Rule 144, a seller relying on Rule 144 must file a notice of proposed sale with the SEC at the time the order to sell is placed with the broker unless (x) the amount to be sold neither exceeds 5,000 shares nor involves sale proceeds greater than $50,000 or (y) the seller is not at the time of the sale, and has not been for the three months preceding such date, an affiliate of the Company.

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