Transfer and Sales of Restricted Rule 144 Stock

Transfer and Sales of Restricted Rule 144 Stock

Rule 144 allows holders of restricted or control securities to sell those securities in the open market without filing a registration statement under the Securities Act of 1933, provided certain conditions are met by the seller, the broker and the company. Rule 144 has a basic 6-month holding period for a reporting company; Rule 144(d) has a basic one-year holding period for non-reporting companies. In both instances, other conditions must also be met. At no time may shares be resold under Rule 144 if the issuing company is now or ever has been a shell or blank check company as defined by Rule 405 (see below).

Applicable Definitions:

Restricted/Control Securities

In general, restricted securities are acquired from a company or a control person (also referred to as an affiliate) of the company in a non-public transaction (private placement.) Such securities are unregistered, can only be resold under certain conditions and usually bear a legend to that effect. Securities acquired by a control person in any manner, including an open market purchase, are control securities. Control securities can also be restricted securities depending on how they were acquired. Restricted securities can also be control securities if the person or entity is using the Issuing Corporations’ address for mailing. Restricted and control securities obtained by third parties as gifts or donations, or pledged for a loan, may be sold under appropriate circumstances through Rule 144.

Control Person

A control person is anyone who directly or indirectly controls the management and affairs of a company. Senior officers, directors and certain large shareholders are usually considered control person. Whether a control relationship exists is a factual determination usually made by the company or its legal counsel.

As a seller under Rule 144, a control person is also defined to include the following: relatives living in the same household as the control person; trusts, estates, corporation or other entities in which the control person has a 10% ownership interest; and trusts and estates in which the control person serves as a trustee, executor or a similar capacity.

Volume Limitations and Manner of Sale

The amount of securities that may be sold by affiliates under Rule 144 during any three-month period is the greater of: 1) 1% of the class of securities outstanding, or 2) the average weekly reported volume of trading in the securities during the four calendar weeks prior to the filing with the SEC of Form 144, Notice of Proposed Sale. “ Manner of sale” denotes that the sale is to be made through a brokerage transaction.

Intent to Sell

For the removal of restrictions under Rule 144, the seller of restricted or control securities must have a “bona fide intent to sell” the securities within a reasonable time after the filing of the notice with the SEC. The SEC rules require the shares be sold within 90 days of filing Form 144.

Blank Check or Shell Companies

Under the new Rules, effective as of February 15, 2008, Rule 144 will not be available for the resale of securities initially issued by either a reporting or a non-reporting shell company or an issuer that has been at any time or previously a reporting or non-reporting shell company unless it meets all of the following conditions: 1) it has ceased being a shell company, 2) it is now subject to all Exchange Act reporting obligations, 3) it has filed ALL Exchange Act reports during the preceding 12 months, and 4) at least 90 days have elapsed from the time the issuer files “Form 10 Information” reflecting that the company has ceased to be a shell company, before any securities can be sold (restrictions removed) under Rule 144.

Conditions of Rule 144 for the sale of restricted or control stock of Reporting Companies

***During the initial six month holding period there are no re-sales permitted under Rule 144****

Holding Period

Non-Affiliates:

Restricted securities must be fully paid for and beneficially owned for a period of at least six months prior to sale. During the period between six months and one year, legend may be removed for unlimited public resales of stock held by non-affiliates as long as there is sufficient current public information available. After one year, non-affiliates need not comply with any other Rule 144 requirement and may complete and submit the appropriate Rule 144(d) Letter on our website under Online Forms along with their certificate and medallion-guaranteed stock powers.

Affiliates:

Restricted securities may be resold after six months in accordance with the following Rule 144 requirements: 1) Current public information is available, 2) Volume limitations are adhered to, 3) the Manner of Sale requirements for equity securities are followed, and 4) a Form 144 is filed with the SEC. These conditions must continue to be followed by affiliates despite the age of the shares.

Conditions of Rule 144 for the sale of restricted or control stock of Non-Reporting Companies:

***During the initial first year holding period there are no re-sales permitted under Rule 144***

Holding Period

Non-Affiliates:

Restricted securities must be fully paid for and beneficially owned for a period of at least one year prior to sale. After one year, non-affiliates need not comply with any other Rule 144 requirement and may complete and submit the appropriate Rule 144(d) Letter on our website under Online Forms along with their certificate and medallion-guaranteed stock powers.

Affiliates:

Restricted securities may be resold after one year in accordance with the following Rule 144 requirements: 1) Current public information is available, 2) Volume limitations are adhered to, 3) the Manner of Sale requirements for equity securities are followed, and 4) a Form 144 is filed with the SEC. These conditions must continue to be followed by affiliates despite the age of the shares.

****Important note concerning the policies and procedures of First American Stock Transfer, Inc: In order to determine whether or not a company is now or ever has been a shell or blank check company, a broker’s representation letter (in the case of affiliates) or seller’s representation letter must be submitted addressing this situation for all Reporting and Non-Reporting Company shares submitted. The seller’s representation letter [Rule 144(d)] for Reporting Company shares older that six months and for Non-Reporting Company shares older than one year is on our website under Online Forms.****