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decedent’s Reliance shares (the shares attributed to her as
trustee and beneficiary of the Trusts and the shares she owned
through her ESOP and IRA and individually), decedent was
considered an “affiliate” (or an affiliated person) of Reliance.
Under applicable Federal security laws, because of decedent’s
status as an affiliate, as of the valuation date, the public
resale of the estate’s 3,601,267 Reliance shares generally would
be restricted.3
Under Securities and Exchange Commission Rule 144, 17 C.F.R.
section 230.144 (1999) (SEC Rule 144), the estate would not be
allowed to sell to the public more than 277,860 of its 3,601,267
restricted Reliance shares in any 3-month period.4 Thus, selling
the estate’s 3,601,267 Reliance shares in the public market under
the SEC Rule 144 sales restriction would take a minimum of
approximately 3 years and 3 months (i.e., 39 months).
3 Both the parties and the experts treat under applicable
Securities and Exchange Commission regulations decedent as an
affiliate and the estate’s 3,601,267 Reliance shares as
restricted. Further, because 3,548,450 of the estate’s 3,601,267
Reliance shares (approximately 99 percent) were unregistered (the
shares held by the Trusts), the parties and the experts treat the
3,548,450 shares as restricted regardless of decedent’s affiliate
status. We accept this treatment of the estate’s Reliance
shares.
4 SEC Rule 144 limits the amount of a corporation’s
restricted stock that can be sold to the public by a holder of
the restricted stock in any 3-month period to the greater of 1
percent of the outstanding class of stock to be sold or the
average weekly trading volume for the previous 4 weeks. In the
case of Reliance stock, the greater number would be 1 percent of
the outstanding stock, or 277,860 shares.
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Last modified: May 25, 2011