Albert J. Henry - Page 7

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          This particular program was managed by Cramer, Monaghan, and                
          Hendrickson.                                                                
               In the process of granting stock options to its employees,             
          IMED required the participants to file elections pursuant to                
          section 83(b) (section 83(b) elections).3  Generally, IMED did              
          not issue Forms W-2 or 1099 to any option grantee for the year in           
          which the option was issued.  Subsequent to the section 83(b)               
          election, IMED did not deduct the costs of the stock options it             
          granted to its employees because that might result in the                   
          realization of ordinary income by the recipients.                           
               On August 17, 1979, Henry received his first stock options             
          (1979 options).  The 1979 options granted Henry the right to                
          purchase 29,250 shares of IMED's common stock.  The par value of            
          the common stock was 15 cents per share.  Henry could exercise              
          his options to purchase stock at $13 per share.                             
               On September 14, 1979, Hendrickson presented Henry with a              
          section 83(b) form to sign.  Hendrickson further informed him               
          that this document was required to be signed in order to obtain             
          long-term capital gains on the 1979 stock options.  The document            
          contains the note that, as a condition of exercising these                  

               3 Sec. 83(a) provides generally that if property is                    
          transferred to an individual as compensation for services,                  
          recognition of income will be deferred if the property is not               
          transferable or is subject to a substantial risk of forfeiture.             
               Sec. 83(b) provides, in relevant part, that the employee may           
          elect within 30 days of receipt to include the value of the                 
          property for the year he receives it, despite the fact that such            
          property is nontransferable and forfeitable.                                



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