10b5-1 Plans: Frequently Asked Questions

 
Once I establish the plan, can it be modified?

A plan can be modified if the plan participant is not aware of material nonpublic information at the time such modification is made. Frequent modifications of the plan may create the impression that the seller is not acting in good faith, however, which is a requirement in adopting a plan.

Can I engage in transactions outside the plan at the same time as transactions are taking place in the plan?

Yes. But the transactions that take place outside the plan will not be eligible for protection under Rule 10b5-1.

Can I adopt a 10b5-1 plan to exercise my options?

Yes. Plans can be used in connection with "cashless" exercises or immediate sale upon exercises and can be put in place before vesting of the options.

Would hedging transactions affect my 10b5-1 plan?

The affirmative defense is not available if the insider has entered into a hedging or corresponding transaction or position, for instance buying 10,000 shares on the same day the plan calls for selling 10,000 shares.

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