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Inc. (Exodus) he acquired during 2000 as a result of exercising
an incentive stock option (ISO) were subject to a substantial
risk of forfeiture; and (2) whether petitioner is entitled to an
alternative tax net operating loss (ATNOL) deduction under
section 56(d).
Background
At the time he filed his petition, petitioner resided in
Dallas, Texas.
On July 2, 1999, petitioner commenced work for Service
Metrics, Inc. (SMI), as Vice President of Marketing. On July 14,
1999, SMI granted petitioner a stock option to purchase 275,000
shares of SMI common stock.
On November 19, 1999, petitioner entered into an employment
agreement with Exodus. On November 23, 1999, Exodus acquired
SMI. Pursuant to the reorganization agreement, petitioner’s SMI
stock option was assumed by Exodus and was converted into an
option to purchase shares of Exodus common stock.
According to the Exodus prospectus entitled “Stock Options
Granted Under the Service Metrics, Inc. 1998 Stock Option Plan
Assumed by Exodus Communications, Inc.”:
The Service Metrics Plan generally does not impose
any restrictions on the resale of shares of Common
Stock purchased under the Service Metrics Plan. * * *
In accordance with federal law and Exodus’ policy
prohibiting insider trading, you [petitioner] are
always prohibited from trading in Exodus securities
when you [petitioner] have inside information.
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Last modified: May 25, 2011