holder of the Debentures has agreed contractually not to convert the
Debentures or exercise the Investor Warrants to the extent that such
conversion or exercise would result in such holder and its affiliates
beneficially owning more than 9.99% of the then outstanding Common
-26-
(2) Beneficial ownership is based upon the conversion of all of the
Debentures and exercise of all of the Warrants and based on the lower
of the average of the closing bid prices of Common Stock for each of
the 30 trading days immediately preceding October 28, 1998 or $16.00.
If all Debentures held by such Selling Shareholders had been issued and
converted on October 31, 1998 (assuming a price of $1.00 per share of
Common Stock) and all Investor Warrants had been exercised and,
assuming two years interest at 8% being paid in Common Stock, the
Company would have been obligated to issue 8,300,000 shares of Common
stock in respect thereto. The actual number of shares of Common Stock
issued or issuable upon the conversion of the Debentures and exercise
of the Investor Warrants is subject to adjustment and could be
materially less or more than such estimated amount depending on factors
that cannot be predicted by the Company at this time, including, among
others, the future market price of the Common Stock. However, each
holder of the Debentures has agreed contractually not to convert the
Debentures or exercise the Investor Warrants to the extent that such
conversion or exercise would result in such holder and its affiliates
beneficially owning more than 9.99% of the then outstanding Common
Stock unless at such time the Company is in default under any provision
of the Debentures or under the relevant Securities Purchase Agreement
between the Company and such holder, or any of the agreements
contemplated therein. The Company may be required to issue shares in
excess of 8,300,000 in certain circumstances. For a further description
of the Debentures, see "Risk Factors--Debentures, Warrants and Options;
Potential Dilution and Adverse Impact on Additional Financing."
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