There are some tax traps around exercising options and then having the value of the stock plummet, but if this is 'real' equity then I'm pretty sure it doesn't

There are some tax traps around exercising options and then having the value of the stock plummet, but if this is 'real' equity then I'm pretty sure it doesn't apply. Talk to them about the tax treatment (because they know it better than you) and counter offer with $5k because that way you earn $500 in ten seconds.