To: MGV who wrote (21047 ) 8/14/2000 9:41:43 PM From: MGV Respond to FUTURE SALES OF CURRENTLY OUTSTANDING SHARES COULD ADVERSELY AFFECT OUR STOCK PRICE. The market price of our common stock could drop as a result of sales of a large number of shares in the market or in response to the perception that these sales could occur. In addition these sales might make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate. We had outstanding 38,468,681 shares of common stock, based upon shares outstanding as of August 8, 2000 and the conversion of all of our Series B Preferred Stock. Of these shares, most will be registered and freely tradable. Included in these shares are 950,000 shares issued to a wholly owned subsidiary, which pledged these shares to secure our obligations in accordance with the settlement of a class action lawsuit. On May 8, 2000, the court approved the parties' settlement agreement for this class action lawsuit and issued an order formally dismissing the case. Under the terms of the settlement, the plaintiffs' settlement counsel, or their authorized agents, acting on behalf of the settlement class and subject to the supervision and direction of the court, will administer and calculate the claims submitted by the settlement class members and will oversee distribution of the balance of the settlement fund to the authorized claimants as of the effective date of the settlement. The settlement fund will be applied in the following order: (a) to pay counsel to the representative plaintiffs attorneys' fees the fee and expense award (as defined in the settlement and if and to the extent allowed by the court); (b) to pay all costs and expenses reasonably and actually incurred in connection with providing notice i.e. locating class members; (c) to pay the taxes and tax expenses as described in the settlement agreement; and (d) to distribute the balance of the settlement fund to authorized claimants as allowed by the terms of the settlement, the Court or the Plan of Allocation (as defined in the settlement). In addition, we have filed registration statements on Form S-8 under the Securities Act of 1933 that cover 2,125,107 shares of common stock pursuant to outstanding but unexercised vested options to acquire our common stock.
