Albert J. Henry - Page 26

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          that the stock option proceeds should be long-term capital gain.            
          At the very least, Henry was aware that Warner-Lambert chose to             
          coordinate with IMED on the issue of the proper taxation of the             
          outstanding stock options.                                                  
               Hendrickson introduced Douglas to Henry and gave Douglas an            
          excellent recommendation.  Douglas had been in contact with                 
          Hendrickson regarding the IMED stock option plan when it was set            
          up, and he gave Douglas the impression that Arthur Young had                
          approved of the tax treatment of IMED's stock option plan.                  
          Hendrickson addressed important tax matters with Henry and also             
          likely apprised him of the issue of the proper characterization             
          of the stock option proceeds.                                               
               It should also be noted that in 1981 Hendrickson was placed            
          on notice by the Stine letter that because "the definition of               
          'readily ascertainable fair market value' is virtually impossible           
          to meet, IMED's present position [that section 83 governed IMED's           
          stock options] is subject to challenge."  The top executives and            
          officers of IMED believed that the proper treatment of the stock            
          option proceeds was as long-term capital gain.  Yet the record              
          does not reflect that their belief was based on thorough research           
          or analysis.  Nor did they consult their tax professionals                  
          concerning the section 83 option issue.  In this setting, the               
          Stine letter is the only in-depth inquiry concerning the proper             
          taxation of the income from the option proceeds.  It appears                
          improbable that the significance of the Stine letter would escape           



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