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Company the aggregate amount of sale or loan proceeds
to pay the Option exercise price and any withholding
tax obligations that may arise in connection with the
exercise and (b) the Company to deliver the
certificates for such purchased shares directly to such
brokerage firm, all in accordance with the regulations
of the Federal Reserve Board; or (iv) such other
consideration as the Plan Administrator may permit.
Section 14 of the 1995 Plan states that Primus may require an
optionee to pay Primus the amount of any withholding tax that
Primus is required to withhold with respect to the grant,
exercise, payment, or settlement of the option. The 1995 Plan
does not provide for postponing the delivery of shares of stock
to an optionee who exercises a stock option.
Petitioner’s Piper Jaffray Account
During all periods relevant to this case, U.S. Bancorp Piper
Jaffray (Piper Jaffray) was a brokerage firm designated by Primus
as one authorized to pay the optionee’s exercise price and
receive the optionee’s certificates for purchased shares. On
July 13, 2000, petitioner opened an asset management account at
Piper Jaffray. Petitioner stated on the application that his
annual income was $150,000, that his net worth, excluding his
home, was more than $999,000, and that his liquid net worth
(e.g., his cash and securities holdings) totaled $500,000. The
account gave petitioner “automatic access to credit extension
(pre-approved loans at competitive rates).” Petitioner’s account
at Piper Jaffray was subject to an Asset Management Account
Agreement, Disclosure Statement, and Application (PJ account
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