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Technology Stocks : VALENCE TECHNOLOGY (VLNC) -- Ignore unavailable to you. Want to Upgrade?

To: Larry Brubaker who wrote (2089)	2/10/1998 11:52:00 AM
From: FMK	Respond to of 27311

Larry, I just spoke with a broker who believes the exercise price will be in the $1.50 to $2.00 range. I know it was based on some kind of average, and he has 90 days from his departure date in December to exercise them. The cash will go to the company and according to the new SEC rules, the earnings per share will remain unchanged since his available unexercised options would be included as outstanding shares in the earnings calculations regardless. Regards, FMK

To: Larry Brubaker who wrote (2089)	2/10/1998 4:48:00 PM
From: I. N. Vester	Read Replies (1) \| Respond to of 27311

CR calculations: AMT may make it optimal for him to raise cash and exercise ASAP, rather than wait! Incentive stock options are subject to AMT due the year of exercise on the 'bonus value', i.e current market - exercise price. This is true even if you hold the stock and don't sell it. (unless you had the opportunity to file a section 83b exclusion when granted, which very few people are even aware of). AMT concerns could actually be a BIG motivation for him to exercise now ASAP, at the lowest possible price. If he holds the shares, he can turn cap gains from now forward into long term gains. But he'll get hit for AMT this year on the bonus value at time of exercise. If he exercises at 4.50 that liability is far less than if the price gets to $8-10 before he exercises the options (even if he KNOWS it will get close to that very shortly). That's a real big hit - 40% due this year, verses far less defered until he sells. So i think he's had a balancing act between waiting to sell his shares as long as possible to get a higher price, and selling asap to exercise the remaining options asap and have the lowest possible 1998 AMT liability. I think we know which way his accountant told him to go....At least this is a large consideration unique to his situation!