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Stock Option Notice of Exercise and Exercise
In order for petitioner to exercise his stock options from
Primus, Piper Jaffray used a 1-page form (notice). The notice
was drafted on Piper Jaffray letterhead and was entitled “Stock
Option Notice of Exercise”. The top half of the notice allowed
petitioner to advise Primus that he was exercising his stock
options and to instruct Piper Jaffray on the manner in which he
would pay for the exercise by checking one of three boxes with
corresponding instructions.3 The top half of the notice also
advised Primus that Piper Jaffray was enclosing its check (or
checks) payable to Primus as “the TOTAL PAYMENT amount
representing the exercise price due as a result of the stock
option exercise”, instructed Primus to deposit into petitioner’s
Piper Jaffray account the shares he purchased by exercising his
stock options, and contained lines on which petitioner should
enter certain specified personal information and sign his name
with a date of signature. The bottom half of the notice
contained a statement that Primus verified the information set
forth on the top half of the notice and that it would deliver the
requested shares to Piper Jaffray within 3 business days or a
reasonable time thereafter. The bottom half of the notice also
3 The respective instructions to the three boxes were:
“SAME DAY SALE: Exercise your stock options by selling all
shares immediately”; “CASHLESS EXERCISE: Exercise your stock
options by selling enough shares to cover exercise cost”; and
“EXERCISE AND HOLD: Margin stock to exercise options and hold at
US Bancorp Piper Jaffray. Interest rates will be charged
according to current margin rates”.
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Last modified: May 25, 2011