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Gold/Mining/Energy : American International Petroleum Corp -- Ignore unavailable to you. Want to Upgrade?

To: sand wedge who wrote (8627)	5/18/1998 4:16:00 PM
From: Sycamore	Read Replies (1) \| Respond to of 11888

Sandwedge, The loss is clearly diminishing and AIPC appears to be getting closer to making money after all. Anyway, I look forward to see significant positive results on Q2 and Q3. Fundamentals is solidifying w/o a doubt. Guess it will be a lot easier for the company now to secure conventional financing than before. regards, sycamore

To: sand wedge who wrote (8627)	5/21/1998 10:44:00 AM
From: taxikid	Respond to of 11888

yes there is more.. it only took two hours to copy, scan convert to word then condense, thenof course chop it down to fit here. Generally, under present law, when an Option qualifies as an ISO under Section 422 of the Code, (1) an employee will not realize taxable income either upon the grant or the exercise of the Option, (ii) the 15 amount by which the fair market value of the shares acquired by the exercise of the Option at the time of exercise exceeds the option price is included in alternative minimum taxable income for purposes of determining the employee's alternative minimum tax, (Ili) any gain or loss (the difference between the net proceeds received upon the disposition of the shares and the option price paid therefor), upon a qualifying disposition of the shares acquired by the exercise of the Option will be treated as capital gain or loss if the stock qualifies as a capital asset in the hands of the employee, and (iv) no deduction will be allowed to the Company for Federal income tax purposes in connection with the grant or exercise of an ISO or a qualifying disposition of the shares. A disposition by an employee of shares acquired upon exercise of an ISO will constitute a qualifying disposition if it occurs more than 2 years after the grant of the Option and one year after the issuance of the shares to the employee. If such shares are disposed of by the employee before the expiration of those time limits, the transfer would be a "disqualifying disposition" and the employee, in general, will recognize ordinary income (and the Company will receive an equivalent deduction) equal to the lesser of (i) the aggregate fair market value of the shares as of the date of exercise less the option price, or (11) the amount realized on the disqualifying disposition less the option price. Ordinary income from a disqualifying disposition will constitute compensation for which withholding may be required under Federal and state law. The maximum rate of tax on ordinary income is greater than the rate of tax on long-ten-n capital gains. In the case of an NQSO granted under the 1998 Plan, no income generally is recognized by the Participant at the time of the grant of the Option assuming such NQSO does not have a readily ascertainable fair market value. The Participant generally will recognize ordinary income when the NQSO is exercised equal to the aggregate fair market value of the shares acquired less the option price. Withholding may be required, and the Company will receive an equivalent deduction, subject to excessive employee remuneration provisions of Section 162 (in) of the Code. Section 162 (in) generally disallows a deduction for employee remuneration paid by a company in any taxable year to an executive officer in excess of $1,000,000 (unless such compensation is considered performance based compensation). For purposes of determining remuneration paid, the excess of the fair market value of the Common Stock upon exercise of an NQSO over the exercise price is considered remuneration paid in the year of exercise unless the income is considered performance-based compensation. One of the requirements to qualify as perfon-nance-based compensation is that the 1998 Plan set forth the maximum number of Options to which a Participant may be entitled. The 1998 Plan does not contain such a provision. Therefore, the NQSOs granted under the 1998 Plan will not be considered performance-based compensation for purposes of Section 162(m). Shares acquired upon exercise of an NQSO will have a tax basis equal to their fair market value on the exercise date or other relevant date on which ordinary income is recognized and the holding period for the shares generally will begin on the date of the exercise or such other relevant date. Upon subsequent disposition of the shares, the participant will recognize capital gain or loss if the stock is a capital asset in his hands. Provided the shares are held by the Participant for more than one year prior to disposition, such gain or loss will be long-term capital gain or loss. As set forth above, the maximum rate of tax on ordinary income is currently greater than the maximum rate of tax on long-term capital gains. To the extent a Participant recognizes a capital loss, such loss generally may offset capital gains and $3,000 of ordinary income. Any excess capital loss is carried forward indefinitely. The grant of an SAR is generally not a taxable event for the optionee. Upon the exercise of an SAR the optionee will recognize ordinary income in an amount equal to the amount of cash and the fair market value of any Common Stock received upon such exercise, and the Company will be entitled to a deduction equal to the same amount. Notwithstanding the above, if the sale of any shares received upon the exercise of an NQSO or a SAR in tandem with an NQSO would be subject to Section 16(b) of the Securities Exchange Act of 1934, recognition of ordinary income attributable to such shares received will be deferred until the date such 16 sale would not give rise to a Section 16(b) action. However, such shares will be valued at the fair market value at such later time, unless the opt'onee has made an election under Section 83(b) of the Code w' in I ith 30 days after the date of exercise to recognize ordinary income as of the date of exercise based on the fair market value at the date of exercise. The foregoing discussion is only a brief summary of the applicable Federal income tax laws as in effect on this date and should not be relied upon as being a complete statement. The Federal tax laws are complex, and they are subject to legislative changes and new or revised judicial or administrative interpretations at any time. In addition to the Federal income tax consequences described herein, a Participant may also be subject to state and/or local income tax consequences in the jurisdiction in which the grantee works and/or resides. The affirmative vote of the holders of a majority of the shares of Common Stock represented at the Meeting is required to ratify the adoption of the 1998 Plan. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 3. Proposal 4. Ratification of 1998 Stock Award Plan On April 2, 1998, the Board of Directors adopted, subject to the approval of the stockholders of the Company, the American International Petroleum Corporation 1998 Stock Award Plan (the "Plan"). The Plan provides for the granting of stock awards not to exceed an aggregate of 500,000 shares of Common Stock of the Company. The purpose of the Plan is to attract, retain, motivate and reward, and to provide competitive incentive compensation for employees, officers, and consultants of the Company, and to encourage stock ownership and a proprietary interest in the Company by such employees, officers, and consultants. The Board of Directors believes that the Plan will encourage this sense of proprietorship on the part of key employees and consultants