<PAGE>
 
Split, the result would be that each stockholder who owns five or more shares of
Common Stock will receive one share of new Common Stock for each five shares of
Common Stock held at the time of the Reverse Stock Split, with fractional share
interests, if any, receiving the treatment as described above. Each Company
stockholder who owns fewer than five shares of Common Stock prior to the Reverse
Stock Split will have such shares converted into the right to receive cash for
the fractional share resulting from the Reverse Stock Split. The interest of
each such stockholder in the Company will thereby be terminated.

     After the Reverse Stock Split the Company will still have authorized Common
Stock of 165,000,000 shares.  As of March 23, 1994, the number of issued shares
of Common Stock was 158,302,958.  Based upon the Company's best estimates, the
aggregate number of shares of new Common Stock that will be issued and
outstanding as a result of the Reverse Stock Split will be 31,660,592.  Because
the number of authorized shares of Common Stock is remaining at 165,000,000
there will remain an estimated 130,400,000 authorized but unissued shares of
Common Stock as a result of the Reverse Stock Split (after the reservation of an
additional 2,940,000 shares of Common Stock for conversion of the $100
Preference Stock as described above).

FEDERAL INCOME TAX CONSEQUENCES

     The following is a summary of the material anticipated Federal income tax
consequences of the Reverse Stock Split to stockholders of the Company.  This
summary is based on the Federal income tax laws now in effect and as currently
interpreted; it does not take into account possible changes in such laws or
interpretations, including amendments to applicable statutes, regulations and
proposed regulations or changes in judicial or administrative rulings, some of
which may have retroactive effect.  This summary is provided for general
information only and does not purport to address all aspects of the possible
Federal income tax consequences  of the Reverse Stock Split and IS NOT INTENDED
AS TAX ADVICE TO ANY PERSON.  In particular, and without limiting the foregoing,
this summary does not consider the Federal income tax consequences to
stockholders of the Company in light of their individual investment
circumstances or to holders subject to special treatment under the Federal
income tax laws (for example, life insurance companies, regulated investment
companies and foreign taxpayers).  The summary does not address any consequence
of the Reverse Stock Split under any state, local or foreign tax laws.

     No ruling from the Internal Revenue Service ("Service") or opinion of
counsel will be obtained regarding the Federal income tax consequences to the
stockholders of the Company as a result of the Reverse Stock Split.
ACCORDINGLY, EACH STOCKHOLDER IS ENCOURAGED TO CONSULT HIS OR HER TAX ADVISOR
REGARDING THE SPECIFIC TAX CONSEQUENCES OF THE PROPOSED TRANSACTION TO SUCH
STOCKHOLDER, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN
INCOME AND OTHER TAX LAWS.

     The Company believes that the Reverse Stock Split would be a tax-free
recapitalization to the Company and its stockholders. If the Reverse Stock Split
qualifies as a recapitalization under Section 368(a)(1)(E) of the Internal
Revenue Code of 1986, as amended, a stockholder of the Company who exchanges his
or her Common Stock solely for new Common Stock should recognize no gain or loss
for Federal income tax purposes. A stockholder's aggregate tax basis in his or
her shares of new Common Stock received from the Company should be the same as
his or her aggregate tax basis in the Common Stock exchanged therefor. The
holding period of the new Common Stock received by such stockholder should
include the period during which the Common Stock surrendered in exchange
therefore was held, provided all such Common Stock was held as a capital asset
on the date of the exchange.

                                       20