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To: drakes353 who wrote (28212)	2/28/1998 1:06:00 AM
From: Marshall	Read Replies (2) \| Respond to of 33268

I wish I could "show" you but from what I understand it isn't supposed to be visible. The way it's been explained to me several times in the past, with this last time from someone I believe should know, is along these lines. I'm going to try to wing it with a few points I remember, I'll try to get a more accurate description next week. It's possible to sell shares in markets out of the U.S. without actual posession or borrowing of said shares just as it's possible for any market maker to be "light" shares so long as they aren't involved in any customer accounts. Accounting and reporting requirements differ in countries outside of U.S. Jurisdiction. Once the terms are set in a private offering there is little chance they will be altered. Those who loaned the money probably had a pretty good idea of the immediate future all along, at least enough of it to be able to be pretty sure they wouldn't lose completely out and probably have plenty of research into the progress curve. If conditions seem to warrant it, a hedge could begin accumulating at some point before the actual shares were to become convertible. While it should be obvious that any hedging activities would probably have a downward effect on the share price thus causing the delivery of more shares per $ at conversion, if some of the shares obtained at conversion were used to close out accounts in which shares were previously sold at higher prices a profit is realized. Mathematical formulas are used for guidance. Like I said, I'll try to get a more definitive explanation of this in real terminology as opposed to my lame attempts. To me it looks like: OK, we've got 1M shares coming for our $5M if it stays at $5 If we sell 500K over time between $5 and $3 we get $2M cash now. We convert 500K at (now) $2.50 and use them to close out the hedge position. The $2M we got out of the hedge was just covered for $1.25M of the total owed us. Looks too easy, doesn't it? Please add your comments, I'll ask so I can produce a better explanation later on.