Firemans Contractors, Inc. (FRCN)

[Pucha]

Overview of 10b5-1 Plans

Under Rule 10b5-1, large stockholders, directors, officers and other insiders who regularly possess
material nonpublic information (MNPI) but who nonetheless wish to buy or sell stock may establish an
affirmative defense to an illegal insider trading charge by adopting a written plan to buy or sell at a time
when they are not in possession of MNPI. (Companies themselves may also employ 10b5-1 plans for
stock repurchases.) A 10b5-1 plan typically takes the form of a contract between the insider and his or
her broker.
The plan must be entered into at a time when the insider has no MNPI about the company or its securities
(even if no trades will occur until after the release of the MNPI). The plan must:
1. specify the amount, price (which may include a limit price) and specific dates of purchases or
sales; or
2. include a formula or similar method for determining amount, price and date; or
3. give the broker the exclusive right to determine whether, how and when to make purchases and
sales, as long as the broker does so without being aware of MNPI at the time the trades are
made.