Plan Examples

Rule 10b5-1 trading plans can range from the very simple to the very complex. The following examples illustrate a few uses of 10b5-1 programs Please keep in mind that trading plans can be customized to suit your unique needs. Please contact us to see how a trading plan can be constructed to meet your goals.

• An executive owns 700,000 shares of stock valued at $20 million and wishes to diversify. The executive would like to spread out the sales over a 3-year time frame, covering 180,000 shares. The executive enters into a 3-year contract calling for monthly sales of 5,000 shares of stock. The executive, if he or she so desires, can place a minimum selling price on the shares. He/she can state a particular date for the transaction, or a range of dates.

 
• An executive has annual liquidity needs due to college expenses for several children. The executive establishes a plan calling for the cashless exercise of stock options and subsequent sale of stock to accomplish this goal. The plan calls for the cashless exercise and sale of stock occurring 3 weeks prior to the due date for the college payments throughout all 4 years of college.

 
• A corporation has implemented a stock buyback and is interested in purchasing stock at lower prices. The company enters into a 10b5-1 plan to repurchase shares should the stock drop to the stipulated levels.

 
• A Private Equity fund holds a sizeable position in public stock in a company. The Fund holds a board seat, and is therefore considered an affiliate. The Fund wants to sell a portion of this stake, but does not want to enter into a secondary offering. A 10b5-1 plan can be created to sell stock on behalf of the Fund.

 
• A business owner sells his privately held company to a public company for $25million in stock. He takes a seat on the new company board. He wants to diversify by selling his holdings over a three-year period. A 10b5-1 plan is crafted to provide for timely sales over a 3-year period.

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