number of shares of stock which directors may

acquire or which may be subject to qualified, restricted or employee stock purchase plan stock options granted to directors and the terms upon which, and the times at which or the periods within which, such stock may be acquired or such options may be acquired and exercised; or (ii) sets forth, by formula or otherwise, effective and determinable limitations with respect to the foregoing based upon earnings of the issuer, dividends paid, compensation received by participants, option prices, market value of shares, outstanding shares or percentages thereof outstanding from time to time, or similar factors.

(2) With respect to the participation of officers who are not directors

(A) By the board of directors of the issuer or a committee of three or more directors; or

(B) By, or only in accordance with the recommendations of, a committee of three or more persons having full authority to act in the matter, all of the members of which committee are disinterested persons.

For the purpose of this paragraph, a director or committee member shall be deemed to be a disinterested person only if such person is not at the time such discretion is exercised eligible and has not at any time within 1 year prior thereto been eligible for selection as a person to whom stock may be allocated or to whom qualified, restricted or employee stock purchase plan stock options may be granted pursuant to the plan or any other plan of the issuer or any of its affiliates entitling the participants therein to acquire stock or qualified, restricted or employee stock purchase plan stock options of the issuer or any of its affiliates.

(3) The provisions of this paragraph shall not apply with respect to any option granted, or other equity security acquired, prior to the date of the first registration of an equity security under section 12 of the Act.

(c) As to each participant or as to all participants the plan effectively limits the aggregate dollar amount or the aggregate number of shares of stock which may be allocated, or which may be subject to qualified, restricted, or employee stock purchase plan stock options granted, pursuant to the plan. The limitation may be established on an annual basis, or for the duration of the plan, whether or not the plan has a fixed termination date; and may be determined either by fixed or

maximum dollar amounts or fixed or maximum numbers of shares or by formulas based upon earnings of the issuer, dividends paid, compensation received by participants, option prices, market value of shares, outstanding shares or percentages thereof outstanding from time to time, or similar factors which will result in an effective and determinable limitation. Such limitations may be subject to any provisions for adjustment of the plan or of stock allocable or options outstanding thereunder to prevent dilution or enlargement of rights.

(d) Unless the context otherwise requires, all terms used in this rule shall have the same meaning as in the Act or elsewhere in the General Rules and Regulations thereunder. In addition, the following definitions apply:

(1) The term "plan" includes any plan, whether or not set forth in any formal written document or documents and whether or not approved in its entirety at one time.

(2) The definition of the terms "qualified stock option" and "employee stock purchase plan” that are set forth in sections 422 and 423 of the Internal Revenue Code of 1954, as amended, are to be applied to those terms where used in the rule. The term "restricted stock option" as defined in section 424 (b) of the Internal Revenue Code of 1954, as amended, shall be applied to that term as used in this rule: Provided however, That for the purposes of this rule an option which meets all of the conditions of that section other than the date of issuance shall be deemed to be a "restricted stock option."

(3) The term "exercise of an option, warrant or right" contained in the parenthetical clause of the first paragraph of this rule shall not include (i) the making of any election to receive under any plan compensation in the form of stock or credits therefore: Provided, That such election is made. either prior to the making of the award or prior to the fulfillment of all conditions to the receipt of the compensation and: Provided further, That

such election is irrevocable until at least 6 months after termination of employment; (ii) the subsequent crediting of such stock; (iii) the making of any election as to the time for delivery of such stock after termination of employment: Provided, That such election is made at least 6 months prior to any such delivery; (iv) the fulfillment of any condition to the absolute right to receive such stock; or (v)

the acceptance of certificates for shares of such stock.

(Amended Aug. 27, 1964, Release 34-7403; Nov. 20, 1964, Release 34-7467; Mar. 22, 1965, Release 34-7559. Adopted subsection (3) to para. (d), eff. Dec. 20, 1965, Releases 34-7776 and 7788; amended para. (d) (3) May 1, eff. May 1, 1969, Release 34–8592.)

Rule 16b-4. Exemption From Section 16(b) of Certain Transactions by Public Utility Holding Companies and Subsidiaries Thereof

Any transaction of purchase and sale, or sale and purchase, of a security shall be exempt from the provisions of section 16(b), to the extent prescribed in this rule, as not comprehended within the purpose of said subsection, if (a) the person effecting such transaction is either a holding company registered under the Public Utility Holding Company Act of 1935 or a subsidiary company thereof and (b) both the purchase and the sale of such security have been approved or permitted by the Commission pursuant to the applicable provisions of that Act and the rules and regulations thereunder.

Rule 16b-5. Exemption From Section 16(b) of Certain Transactions in Which Securities Are Received by Redeeming Other Securities

Any acquisition of an equity security (other than a convertible security or right to purchase a security) by a director or officer of the issuer of such security shall be exempt from the operation of section 16 (b) upon condition that

(a) the equity security is acquired by way of redemption of another security of an issuer substantially all of whose assets other than cash (or Government bonds) consist of securities of the issuer of the equity security so acquired, and which

(1) represented substantially and in practical effect a stated or readily ascertainable amount of such equity security,

(2) had a value which was substantially determined by the value of such equity security, and

(3) conferred upon the holder the right to receive such equity security without the payment of any consideration other than the security redeemed;

(6) No security of the same class as the security redeemed was acquired by the director or officer within 6 months prior to such redemption or is

acquired within 6 months after such redemption;

(c) The issuer of the equity security acquired has recognized the applicability of paragraph (a) of this rule by appropriate corporate action.

Rule 16b-6. Exemption of Long-Term Profits Incident to Sales Within Six Months of the Exercise of an Option

(a) To the extent specified in paragraph (b) of this rule the Commission hereby exempts as not comprehended within the purposes of section 16 (b) of the Act any transaction or transactions involving the purchase and sale or sale and purchase of any equity security where such purchase is pursuant to the exercise of an option or similar right either (1) acquired more than 6 months before its exercise, or (2) acquired pursuant to the terms of an employment contract entered into more than 6 months before its exercise.

(b) In respect of transactions specified in paragraph (a) the profits inuring to the issuer shall not exceed the difference between the proceeds of sale and the lowest market price of any security of the same class within 6 months before or after the date of sale. Nothing in this rule shall be deemed to enlarge the amount of profit which would inure to the issuer in the absence of this rule.

(c) The Commission also hereby exempts, as not comprehended within the purposes of section 16 (b) of the Act, the disposition of a security, purchased in a transaction specified in paragraph (a), pursuant to a plan or agreement for merger or consolidation, or reclassification of the issuers' securities, or for the exchange of its securities for the securities of another person which has acquired its assets or which is in control, as defined in section 368 (c) of the Internal Revenue Code of 1954, of a person which has acquired its assets, where the terms of such plan or agreement are binding upon all stockholders of the issuer except to the extent that dissenting stockholders may be entitled, under statuatory provisions or provisions contained in the certificate of incorporation, to receive the appraised or fair value of their holdings.

(d) The exemptions provided by this rule shall not apply to any transaction made unlawful by section 16(c) of the Act or by any rules and regulations thereunder.

(e) The burden of establishing market price of a security for the purpose of this rule shall rest upon the person claiming the exemption.

(f) The exemption granted pursuant to this rule shall apply to any liability under section 16 (b) existing at or after the effective date of this rule, but shall not be deemed to affect judgments rendered prior to that date.

(Amended para. (c) eff. Oct. 1, 1965, Release 34–7717.) Rule 16b-7. Exemption From Section 16(b) of Certain Acquisitions and Dispositions of Securities Pursuant to Mergers or Consolidations

(a) The following transactions shall be exempt from the provisions of section 16 (b) as not comprehended within the purpose of said subsection:

(1) The acquisition of a security of a company, pursuant to a merger or consolidation, in exchange for a security of a company which, prior to said merger or consolidation, owned 85 percent or more of the equity securities of all other companies involved in the merger or consolidation except, in the case of consolidation, the resulting company;

(2) The disposition of a security, pursuant to a merger or consolidation of a company which, prior to said merger or consolidation, owned 85 percent or more of the equity securities of all other companies involved in the merger or consolidation except, in the case of consolidations, the resulting company;

(3) The acquisition of a security of a company, pursuant to a merger or consolidation, in exchange for a security of a company which, prior to said merger or consolidation, held over 85 percent of the combined assets of all the companies undergoing merger or consolidation, computed according to their book values prior to the merger or consolidation as determined by reference to their most recent available financial statements for a

12-month period prior to the merger or

all the assets of one company by another in exchange for stock which is then distributed to the security holders of the company which sold its assets.

(c) Notwithstanding the foregoing, if an officer, director or stockholder shall make any purchase (other than a purchase exempted by this rule or any other rule under section 16(b) of the Act) of a security in any company involved in the merger or consolidation and any sale (other than a sale exempted by this rule or any other rule under section 16(b) of the Act) of a security in any other company involved in the merger or consolidation within any period of less than 6 months during which the merger or consolidation took place the exemption provided by this rule shall be unavailable to such officer, director, or stockholder to the extent of such purchase and sale.

(Amended para. (c) Oct. 10, Release 34-8177, eff. Oct. 10, 1967.)

Rule 16b-8. Exemption From Section 16(b) of Transactions Involving the Deposit or Withdrawal of Equity Securities Under a Voting Trust or Deposit Agreement

Any acquisition or disposition of an equity security involved in the deposit of such security under, or the withdrawal of such security from, a voting trust or deposit agreement, and the acquisition or disposition in connection therewith of the certificate representing such security, shall be exempt from the operation of section 16(b) of the Act if substantially all of the assets held under the voting trust or deposit agreement immediately after the deposit or immediately prior to the withdrawal, as the case may be, consisted of equity securities of the same class as the security deposited or withdrawn: Provided, however, That this rule shall not apply to the extent that there shall have been either (i) a purchase of an equity security of the class deposited and a sale of any certificate representing an equity security of such class, or (ii) a sale of an equity security of the class deposited and a purchase of any certificate representing an equity security of such class (otherwise than in a transaction involved in such deposit or withdrawal or in a transaction exempted by any other rule under section 16 (b) within a period of less than 6 months which includes the date of the deposit or withdrawal.

(Amended title and para. Feb. 17, 1966, Release 347826.)

Rule 16b-9. Exemption From Section 16(b) of Transactions Involving the Conversion of Equity Securities

(a) Any acquisition or disposition of an equity security involved in the conversion of an equity security which, by its terms or pursuant to the terms of the corporate charter or other governing instruments, is convertible immediately or after a stated period of time into another equity security of the same issuer, shall be exempt from the operation of section 16 (b) of the Act: Provided, however, That this rule shall not apply to the extent that there shall have been either (i) a purchase of any equity security of the class convertible (including any acquisition of or change in a conversion privilege) and a sale of any equity security of the class issuable upon conversion, or (ii) a sale of any equity security of the class convertible and any purchase of any equity security issuable upon conversion (otherwise than in a transaction involved in such conversion or in a transaction exempted by any other rule under section 16(b)) within a period of less than 6 months which includes the date of conversion.

(b) For the purpose of this rule, an equity security shall not be deemed to be acquired or disposed of upon conversion of an equity security if the terms of the equity security converted require the payment or entail the receipt, in connection with such conversion, of cash or other property (other than equity securities involved in the conversion) equal in value at the time of conversion to more than 15 percent of the value of the equity security issued upon conversion.

(c) For the purpose of this rule, an equity security shall be deemed convertible if it is convertible at the option of the holder or of some other person or by operation of the terms of the security or the governing instruments.

(Adopted eff. Aug. 19, 1963, Release 34-7118; amended title and paras. (a), (b) and added para. (c) Feb. 17, 1966, Release 34-7826.)

Rule 16b-10. Exemption From Section 16(b) of Certain Transactions of Exchange by Railroads Incident to Unifications, Mergers and Acquisitions of Control Approved by the Interstate Commerce Commission

Any acquisition of securities made in exchange for other securities shall be exempt from the provisions of section 16(b) of the Act, as not compre

hended within the purpose of said section, if

(a) The securities are acquired from the issuer. (b) The person acquiring the securities is subject to one or more of the provisions of Part I of the Interstate Commerce Act.

(c) The person acquiring the securities is subject to an order of, or has accepted a condition imposed by, the Interstate Commerce Commission in connection with approval by the Interstate Commerce Commission of a unification, merger or acquisition of control pursuant to section 5(2) of the Interstate Commerce Act, requiring such person to dispose of all securities of the same class as those exchanged for the securities acquired; and the issuance of the securities acquired by such person has been approved by the Interstate Commerce Commission pursuant to section 20a of the Interstate Commerce Act.

(d) The person acquiring the securities has transferred all voting rights in equity securities (other than debt securities which accord no right to vote for election of directors) of the issuer of the securities acquired to one or more banks or trust companies under agreements giving such banks or trust companies the unrestricted right to vote such securities until disposed of by such person.

(Adopted eff. Mar. 10, 1965, Release 34–7551.)

Rule 16b-11. Exemption From Section 16(b) of Certain Transactions Involving the Sale of Subscription Rights

(a) Any sale of a subscription right to acquire any subject security of the same issuer shall be exempt from the provision of section 16(b), to the extent prescribed in this rule, as not comprehended within the purpose of said section, if:

(1) Such subscription right is acquired, directly or indirectly, from the issuer without the payment of consideration;

(2) Such subscription right by its terms expires within 45 days after the issuance thereof;

(3) Such subscription right by its terms is issued on a pro rata basis to all holders of the beneficiary security of the issuer; and

(4) A registration statement under the Securities Act of 1933 is in effect as to each subject security, or the applicable terms of any exemption from such registration have been met in respect to each subject security.

(b) When used within this rule the following terms shall have the meaning indicated:

(1) The term "subscription right" means any warrant or certificate evidencing a right to subscribe to or otherwise acquire an equity security.

(2) The term "beneficiary security" means a security registered pursuant to section 12 to the holders of which a subscription right is granted. (3) The term "subject security" means a security which is the subject of a subscription right.

(c) Notwithstanding anything contained herein to the contrary, if a person purchases subscription rights for cash or other consideration, then a sale by such person of subscription rights otherwise exempted by this rule will not be so exempted to the extent of such purchases within the 6-month period preceding or following such sale. (Adopted, Jan. 17, Release 34-8229, eff. Jan. 17, 1968.)