Cappello Capital Corp. Closes $500 Million in Future Priced Securities.

SANTA MONICA, Calif.--(BUSINESS WIRE)--June 4, 1998--

41 Successful Equity Placements Establishes Cappello Capital as Leader

With 41 successful equity placements totaling $500 million, Cappello Capital Corp. becomes the number one investment banking firm in crafting future priced securities. The firm asserted today that proper use of future priced securities provides a viable option for fast-expanding businesses to finance continued growth.

Cappello Capital Corp. was responding to recent instances where certain companies, most with no affiliation to Cappello Capital Corp., encountered severe dilution in outstanding shares of common stock after raising capital through issuance of convertible preferred stock. In most of these instances, the trouble occurred in companies whose convertible preferred structures allowed short selling by their preferred shareholders. Problems also have occurred with companies that issued convertible securities in a quantity that was excessive relativeto their trading volume or market capitalization, or whose operational performance fell significantly short of analysts' expectations.

"We've built our reputation customizing future priced securities that provide the greatest stability in the market, aligning the interests of our investors with those of the common shareholders," says Alexander L. Cappello, chairman and CEO of Cappello Group Inc., citing his firm's 20-year track record of satisfied clients. "These securities are in greater demand today for high-growth companies. As a result, many new players have entered the field that may not provide the same sound structure and market stability we've developed," said Gerard K. Cappello, president and CEO of Cappello Capital Corp., "so it's more important than ever for investors and companies seeking equity to be certain they are dealing with respected professionals."

To avoid the pitfalls experienced by some issuers, Cappello Capital Corp. has designed several future pricing mechanisms that allow the issuer to receive needed growth capital as soon as the placement closes but delay pricing of the corresponding common stock for six to 24-months. If the issuing company's management takes effective actions that lead to increased market price of its stock, the mechanism will reduce dilution to the common shareholders.

The firm's use of unique issuer protections further ensures a more stable common share price, Gerard Cappello points out. These features include:

--Outright bans on short sales of common stock and other hedging activities;

--Restrictions on monthly conversions of preferred shares; --Restrictions on daily sales of underlying common shares; --A minimum lock-up period of 90 to 180 days; --Conversion price discounts that increase throughout the holding period and offer an incentive to delay conversion;

--Dividends to give investors an incentive to hold preferred stock longer by providing a fixed return;

--Conversion price caps that create an incentive for investors to hold up to 48 months after the private placement closes;

--"Look-back pricing" which calculates from the low trade price during a past period to give investors the incentive to convert to common shares when the issuer's stock price is rising; and

--Most importantly, "green floors" which allow the issuer to honor conversions via cash payment rather than issuance of common shares.

"We're in this business for the long haul," notes Alex Cappello. "We're extremely careful to work with companies that expect to enhance shareholder value thorough either a new product release, improved customer service, completion of an acquisition or development of superior technology."

Cappello Capital Corp. is a leading investment banking firm specializing in private placement of securities for publicly traded companies. Cappello Group Inc., is a merchant banking firm which provides corporate finance services. Cappello Capital Corp.'s investors include some of the world's largest commercial and merchant banks, investment banks, hedge funds, mutual funds and small-cap, high-growth funds and index funds.

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