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Non-Tech : Bill Wexler's Dog Pound -- Ignore unavailable to you. Want to Upgrade?

To: chester lee who wrote (925)	5/1/1999 11:35:00 AM
From: Larry Brubaker	Respond to of 10293

Chester, your explanation of the VLNC financing is basically correct. One additional point. VLNC shareholders did approve additional dilution beyond the 4.9%. In fact, they approved unlimited dilution. My opinion is the 4.9% restriction language is in there so that Castle Creek does not have to report to the SEC any transactions in VLNC stock to the SEC. Owners of 5% of outstanding stock must report their purchases and sales. With the 4.9% limitation, Castle Creek is free to short against their preferred shares without having to report.

To: chester lee who wrote (925)	5/1/1999 8:41:00 PM
From: incomep	Read Replies (1) \| Respond to of 10293

Dear CL: thanks for the explanation. It is pretty hard to understand the mathematical model on Black Scholes. For the 2nd question, I think the key word is "or". You do not necessarily exercise option and warrant at same time. [Under the terms of the certificate of designations of the preferred stock and the warrants, the preferred stock investor may not convert the preferred stock "OR" exercise the warrants if after doing so the investor will own more than 4.9% of the Company's common stock ]