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                                                                    EXHIBIT 99.1

                                  RISK FACTORS

    Investors should carefully consider the risks described. Our business,
financial condition or results of operations could be harmed by any of these
risks. The trading price of our common stock could decline due to any of these
risks, and you may lose all or part of your investment.

THE MARKETS FOR OUR PRODUCTS AND SERVICES ARE HIGHLY COMPETITIVE AND WE COMPETE
AGAINST SUBSTANTIALLY LARGER COMPANIES.

    Competition among medical device companies is intense. Our inability to
compete effectively with existing or future competitors may prevent us from
retaining our existing customers or from attracting new customers, which could
materially impair our business. There are a number of companies that currently
offer, or are in the process of developing, products that compete with products
offered by us. We cannot assure you that some of these competitors will not
succeed in developing products that are more effective and/or less expensive
than those currently used or produced by us or that would render some products
offered by us obsolete or non-competitive. Many of our competitors have greater
financial, research and development, manufacturing and marketing resources and
may be in a better position to withstand the adverse effects on gross margins
and profitability caused by price decreases.

WE COULD LOSE CUSTOMERS AND OUR BUSINESS COULD BE ADVERSELY AFFECTED IF OUR
COMPETITORS IMPLEMENT NEW TECHNOLOGIES BEFORE WE DO.

    The market for our products is characterized by frequent product
improvements and evolving technology. Our revenue and profitability could be
adversely affected by technological change. To compete effectively, we must
anticipate and adapt to technological changes and offer, on a timely basis,
competitively priced products with new and improved features that meet evolving
industry standards and customer preferences. We may choose new technologies that
prove to be ineffective, do not gain market acceptance or are incompatible with
technologies of our customers. As new technologies develop, we may be forced to
implement these new technologies at a substantial cost to us to remain
competitive. In addition, competitors may implement new technologies which allow
them to offer lower-priced or superior quality products which render our
products obsolete or uncompetitive.

WE ARE SUBJECT TO SUBSTANTIAL COST CONTAINMENT PRESSURES THAT COULD ADVERSELY
IMPACT OUR PRICES AND OUR PROFITABILITY.

    In recent years, widespread efforts have been made in both the public and
private sectors to control health care costs, including the prices of products
such as those sold by us. Such efforts may have a material adverse effect on the
pricing of, and demand for, our products. Health care organizations are
evaluating approaches to reduce costs by decreasing the frequency with which a
treatment, device or product is used. Cost containment has also caused the
decision-making function with respect to purchasing to shift in many cases from
the physician to the administrator at the health care institution, resulting in
an increased emphasis on reduced price, as opposed to features and clinical
benefits. Efforts by governmental and private payors to contain costs will
likely continue, and we expect that international health care markets will be
subject to a similar trend toward cost containment that has impacted the U.S.
market.

WE ARE SUBJECT TO SUBSTANTIAL GOVERNMENTAL REGULATION WHICH DIRECTLY IMPACTS
MOST ASPECTS OF OUR BUSINESS.

    We are subject to stringent worldwide regulation. The stringent regulatory
oversight in product clearance and enforcement activities causes us to
experience longer approval cycles, more uncertainty with respect to timing the
introduction of new or modified products, greater risk with respect to approvals
and higher expenses. Our products are subject to extensive regulation by the
U.S. Food and Drug Administration, commonly known as the FDA, and certain
similar foreign regulatory agencies.

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The FDA regulates the preclinical and clinical testing, manufacture, labeling,
distribution and promotion of medical devices. It can take several years to
receive the appropriate approvals from the FDA and we cannot assure you that we
can always obtain such approvals. In addition, the products that we manufacture
or distribute pursuant to FDA clearances or approvals are subject to pervasive
and continuing regulations by the FDA. Noncompliance with applicable
requirements can result in, among other things, warning letters, fines,
injunctions, civil penalties, recalls or seizures of products, total or partial
suspension of production, failure of the government to grant premarket clearance
or premarket approval for devices, withdrawal of marketing clearances or
approvals and criminal prosecution. The FDA also has the authority to require us
to repair, replace or refund the cost of any device that we manufacture or
distribute.

    International sales of medical devices are subject to foreign government
regulations, which vary substantially from country to country. The time required
to obtain approval by a foreign country may be longer or shorter than that
required for FDA approval, and the requirements may differ significantly.
Non-compliance with foreign regulations may carry the same or increased risks,
liabilities and exposures as non-compliance with FDA requirements.

    Certain of our business activities require that we collect and/or use
information about individuals and their medical conditions. As a result, we are
subject to regulations by both U.S. and foreign authorities intended to protect
the privacy of those individuals by requiring that we maintain the
confidentiality of their information. These regulations are highly complex and
it may be costly for us to implement and comply with all the requirements of the
regulations.

    We are also subject to numerous environmental and safety laws and
regulations, including those governing use of hazardous materials. Any violation
of, and the cost of compliance with, these regulations could have a material
adverse affect on our business, financial condition and results of operations.

EVEN AFTER RECEIVING FDA CLEARANCE OR APPROVAL, OUR PRODUCTS MAY BE SUBJECT TO
PRODUCT RECALLS, WHICH MAY HARM OUR REPUTATION.

    The FDA and similar governmental authorities in other countries have the
authority to make a mandatory recall or order the removal from the market of our
products in the event of material deficiencies or defects in design,
manufacture, or labeling of the device. A government mandated or voluntary
recall by us could occur as a result of component failures, manufacturing errors
or design defects, including labeling defects. Any recall of our products may
materially adversely effect our profitability, divert managerial resources and
harm our reputation.

THE PRESENCE OF GROUP PURCHASING ORGANIZATIONS MAY IMPACT OUR COMPETITIVE
POSITION, OUR PRICING AND ULTIMATELY OUR PROFITS.

    Our business depends in part upon our relationships with group purchasing
organizations. Our ability to sell our products to hospitals depends on our
relationships with group purchasing organizations. If we are unable to keep our
relationships and develop new relationships with group purchasing organizations,
our competitive position would likely suffer. In addition, some group purchasing
organizations have tested the use of new internet bidding procedures in order to
maximize their abilities to negotiate lower prices with suppliers. We cannot
assure you that movement to these bidding modalities will not increase and may
result in lower pricing or failure to secure contracts with these organizations.

WE MAY LOSE SIGNIFICANT CUSTOMERS AS A RESULT OF SUBSTANTIAL CONSOLIDATION
WITHIN THE HEALTH CARE INDUSTRY.

    Over the past several years, the health care industry, which includes our
customers, has undergone significant consolidation, and we expect this trend to
continue. We are subject to risks and uncertainties that result from these
transactions. If, as a result of such mergers or combinations, our customers
decide to use one of our competitors or reduce the orders for our products, our
revenue may be significantly impacted.

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WE ARE DEPENDENT ON A SINGLE SUPPLIER FOR OUR MOST WIDELY SOLD PRODUCT.

    Since 1980, we have purchased our anesthesia face masks from a single
source, Respironics, Inc., which maintains a site in the People's Republic of
China at which it manufactures face masks for our anesthesia products. If we are
unable to obtain our anesthesia face masks from Respironics, our business and
revenue can be significantly affected. Our current supply agreement with
Respironics calls for the continued supply of anesthesia face masks to us
through 2006, with an option for us to extend the term of the agreement through
2011. If the supply of our anesthesia face masks from Respironics is interrupted
or ceases for any reason, we would experience significant disruption in our
business. We are not aware of any alternate manufacturer or supplier with the
present capacity to manufacture anesthesia face masks in the quantities required
by us. In the event of such an interruption or termination of our supply
agreement, we may not be able to obtain anesthesia face masks in a sufficient
quantity or at a cost effective price, which may have a material adverse effect
on our business, financial condition and results of operations.

HEALTH CARE REFORM PROPOSALS ARE GAINING SUBSTANTIAL SUPPORT IN THE U.S.
CONGRESS AND STATE LEGISLATURES AND COULD IMPACT THE PROFITABILITY OF OUR
BUSINESS.

    The health care industry in the U.S. is subject to several reform proposals,
including more stringent regulations. It is uncertain whether and when such
proposals would become legal requirements affecting our business, but we cannot
assure you that any such changes will not have a material adverse effect on our
business. Changes in the law or new interpretations of existing laws may have a
dramatic effect on the costs associated with doing business and the amount of
reimbursement our customers receive from both government and third-party payors.
Federal, state and local government representatives will, in all likelihood,
continue to review and assess alternative regulations and payment methodologies.

OUR SUCCESS DEPENDS UPON THE DEVELOPMENT OF NEW PRODUCTS AND PRODUCT
ENHANCEMENTS, WHICH ENTAILS CONSIDERABLE TIME AND EXPENSE.

    We place a high priority on the development of new products to add to our
product portfolio and on the development of enhancements to our existing
products. Product development involves substantial expense and it is uncertain
that a completed product can in fact generate sufficient revenue for our
business to justify the resources that we devote to research and development
related to such product. The time and expense required to develop new products
and product enhancements is difficult to predict and we cannot assure you that
we will succeed in developing, introducing and marketing new products and
product enhancements. Our inability to successfully develop and introduce new or
enhanced products on a timely basis or at all, or achieve market acceptance of
such products, could materially impair our business.

IF WE ARE UNABLE TO IDENTIFY, COMPLETE AND INTEGRATE FUTURE ACQUISITIONS, OUR
BUSINESS MAY SUFFER.

    We have supplemented internal growth with product and business acquisitions
in the past, and intend to do so in the future. Any acquisition strategy is
subject to inherent risks, including the following:

     viable acquisition candidates may not be available to us on price and other
     terms that are satisfactory to us;

     we may be unable to effectively integrate acquired companies into our
     business;

     we may be unsuccessful in commercializing products that we manufacture
     pursuant to licensed patents;

     acquired companies may require more capital resources and/or management
     attention than we anticipate at the time of acquisition;

     our due diligence may fail to identify liabilities and exposures which,
     once discovered, materially adversely affect our ability to operate the
     newly acquired business profitably; and

     management focus on our existing businesses may be diverted.

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In the event that the success of an acquired business or technology or an
alliance does not meet expectations, we may be required to restructure.

GOVERNMENT AND PRIVATE INSURANCE PLANS MAY NOT REIMBURSE OUR CUSTOMERS FOR OUR
PRODUCTS, WHICH COULD RESULT IN REDUCTIONS IN SALES OR SELLING PRICES FOR OUR
PRODUCTS.

    The cost of medical care in the U.S. and many other countries is funded
substantially by government and private insurance programs. If such funding
becomes limited or unavailable to our customers, our business may be adversely
impacted. Although we do not generally receive payment for our products or
services directly from these payors other than for our sleep diagnostic
services, our continued success is dependent upon the ability of patients or our
customers to obtain adequate reimbursement for our products and services. In
most major markets, our products are purchased primarily by hospitals which in
turn bill third-party payors, or otherwise bill patients directly who then seek
reimbursement from third-party payors.

    In the U.S., third-party payors include Medicare, Medicaid and private
health insurance providers. These payors may deny reimbursement if they
determine that a device has not received appropriate FDA clearance, is not used
in accordance with approved indications, or is experimental, unnecessary or
deemed to be inappropriate treatment for the patient. Third-party payors are
also increasingly challenging prices charged for medical products and services.
We cannot assure you that our products will be considered cost-effective by
third-party payors, that reimbursement will be available, or that payors'
reimbursement policies will not adversely affect our ability to sell our
products on a profitable basis, if at all.

    Health care reimbursement systems vary from country to country and,
accordingly, we cannot assure you that third-party reimbursement available under
one system will be available for procedures utilizing our products under any
other reimbursement system. Lack of, or inadequate reimbursement by, government
and other third-party payors for our products would have a material adverse
effect on our business, financial condition and results of operations.

WE CANNOT BE CERTAIN THAT OUR PRODUCT LIABILITY INSURANCE WILL BE SATISFACTORY
TO PROTECT US AGAINST SIGNIFICANT EXPOSURE TO PRODUCT LIABILITY RISKS.

    We are exposed to potential product liability resulting from the use of our
products. We presently maintain product liability insurance coverage of
$20,000,000 in the aggregate. Our product liability policy generally protects us
against claims of bodily injury or property damage arising out of any products
manufactured, sold or distributed by us. If a judgment in a product liability
suit were entered against us or we entered into a settlement agreement in excess
of a policy limit or outside the scope of coverage, including for example,
punitive damages, our profitability and financial condition may be impacted
significantly. We cannot assure you that our current level of insurance will be
sufficient to cover product liability claims or that such coverage will remain
available to us on satisfactory terms, if at all.

WE MANUFACTURE AND SELL A SIGNIFICANT PORTION OF OUR PRODUCTS IN MARKETS OUTSIDE
THE U.S., SUBJECTING US TO VARIOUS RISKS RELATING TO INTERNATIONAL ACTIVITIES.

    International sales accounted for approximately 22% of our net revenue
during the fiscal year ended September 30, 2002 and approximately 25% of our net
revenue during the fiscal year ended September 30, 2003. Such sales are subject
to several risks that are separate and distinct from those we face in our U.S.
operations, including:

     currency losses that may arise as a result of the fact that not all of our
     sales are denominated in U.S. dollars;

     compliance with foreign medical device manufacturing and sales regulations
     in the countries in which we sell and/or manufacture our products;

     reduction in third-party payor reimbursement applicable to our customers;

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     changes in trade policies and in domestic and foreign tax policies in the
     countries in which we sell and/or manufacture our products;

     possible changes in export or import restrictions in the countries in which
     we sell and/or manufacture our products;

     the modification or introduction of other governmental policies in the
     countries in which we sell and/or manufacture our products; and

     political uncertainties in countries in which we sell and/or manufacture
     our products, in particular in the People's Republic of China where our
     main supplier of anesthesia face masks is located.

Any such factor may affect our international operations and our potential for
growth in markets outside of the U.S. and can have a significant negative impact
on the sales of our products and our profitability.

WE ARE DEPENDENT IN PART UPON OUR RELATIONSHIPS WITH DISTRIBUTORS. IF WE ARE
UNABLE TO MAINTAIN THESE RELATIONSHIPS, OUR BUSINESS MAY BE HARMED.

    Our business depends in part upon our relationships with distributors. The
loss of or damage to existing relationships, or our failure to continue to
develop relationships, could have a material adverse effect on our business. We
do not have agreements in writing with any of our distributors. The loss of a
business relationship with any of these distributors could have an adverse
effect on our business.

WE MAY NOT BE ABLE TO OBTAIN NEW PATENTS OR PROTECT OUR EXISTING PATENTS WHICH
COULD ENABLE THIRD-PARTIES TO USE OUR TECHNOLOGY.

    Our ability to compete effectively will depend on our ability to maintain
the proprietary nature of our technologies and manufacturing processes, which
includes the ability to obtain, protect and enforce patents on our technology
and products. If we are unable to obtain new patents and protect our existing
patents, our competitive position may suffer. We own or have licensed patents
that cover several aspects of our anesthesia, respiratory/critical care and
sleep/personal ventilation product lines. Others may challenge our patents and,
as a result, our patents could be narrowed, invalidated or rendered
unenforceable. Competitors may develop products similar to ours which our
patents do not cover. In addition, our current and future patent applications
may not result in the issuance of patents in the U.S. or foreign countries.
Further, there is a substantial backlog of patent applications at the U.S.
Patent and Trademark Office, and the approval or rejection of patent
applications may take several years. Additionally, many of our products are not
protected by patents, but rather are distinguished by product features that
others may seek to copy.

OUR COMPETITIVE POSITION IS DEPENDENT IN PART UPON UNPATENTED TRADE SECRETS
WHICH WE MAY NOT BE ABLE TO PROTECT.

    Our competitive position is also dependent upon unpatented trade secrets.
Trade secrets are difficult to protect and we cannot assure you that others will
not independently develop substantially equivalent proprietary information and
techniques or otherwise gain access to our trade secrets. If other companies are
successful in copying our trade secrets and developing products similar to ours,
we may lose our competitive position and our revenue may be significantly
impacted.

OUR SUCCESS IS DEPENDENT IN PART ON OUR ABILITY TO OPERATE WITHOUT INFRINGING OR
MISAPPROPRIATING THE PROPRIETARY RIGHTS OF OTHERS.

    We have been sued in the past, and may in the future be sued again, for
infringing the intellectual property rights of others. In addition, we may find
it necessary, if threatened, to initiate a lawsuit seeking a declaration from a
court that we do not infringe the proprietary rights of others or that these
rights are invalid or unenforceable. Even if we prevail in such litigation,
infringement proceedings can be very expensive and time-consuming. For example,
we took a $7.8 million charge in fiscal 2000 in connection with two infringement
proceedings, a portion of which expense was reversed in fiscal 2002. If we do
not prevail in an infringement litigation, we may be required to pay damages and
expenses, and we would be required to stop the infringing activity or obtain a
license. Any required license may not be

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available to us on acceptable terms, or at all. In addition, some licenses may
be nonexclusive, and, therefore, our competitors may have access to the same
technology licensed to us. If we fail to obtain a required license or are unable
to design around a patent, we may be unable to sell some of our products, which
could have a material adverse effect on our business. We may decide not to
introduce a product in the United States or a foreign country based on potential
risk of patent infringement litigation.

GOVERNMENT REGULATION RESTRICTS THE MANNER IN WHICH WE MAY SELL OUR OBSTRUCTIVE
SLEEP APNEA PRODUCTS TO CUSTOMERS OF OUR SLEEP CENTERS AND THE MANNER IN WHICH
WE RELATE TO REFERRING PHYSICIANS.

    Since 2000, we have operated sleep centers in the U.S. that diagnose
obstructive sleep apnea and other sleep disorders. Our ability to sell our Breas
products in our sleep centers is restricted by regulations which prohibit us
from diverging from a physician's prescription. If a physician prescribes a
continuous positive airway pressure product other than a Breas product for a
patient at one of our sleep centers, we are prohibited by federal regulations
from substituting a Breas product. Federal anti-kickback and and-referral
regulations strictly limit the extent to which we may provide anything of value
to physicians who refer Medicare or Medicaid patients to our sleep centers. Any
failure by us to comply with these regulations may result in significant
regulatory actions, including criminal prosecution and large fines, that could
have a material adverse effect upon our business, financial condition and
results of operations.

IF WE ARE UNABLE TO SUPPORT OUR CONTINUOUS GROWTH, OUR BUSINESS MAY SUFFER.

    As we grow, the complexity of our operations increases, placing greater
demands on our management. Our ability to manage our growth effectively depends
in part upon our ability to implement and improve our financial and management
information systems on a timely basis and to effect other changes in our
business. If we fail to manage our growth effectively, our business could
suffer. Unexpected difficulties during expansion, the failure to attract and
retain qualified employees, the failure to successfully replace or upgrade our
management information systems, the failure to manage costs or our inability to
respond effectively to growth or plan for future expansion could cause our
growth to slowdown, stop or decrease.

OUR QUARTERLY OPERATING RESULTS ARE SUBJECT TO FLUCTUATION WHICH MAY IMPACT THE
PRICE OF OUR STOCK.

    Our operating results have, from time to time, fluctuated on a quarterly
basis and may be subject to similar fluctuations in the future. These
fluctuations may result from a number of factors, including:

     the introduction of new products by us or our competitors;

     actions taken by group purchasing organizations;

     timing of orders by our customers;

     the mix of our product sales;

     competitive pricing in different regions in which we sell our products;

     timing and cost of regulatory clearances and approvals of our products;

     the cost, effect and success of our promotional and marketing programs;

     seasonality, reflecting the impact of the flu season on our respiratory
     business; and

     expenditures incurred by us for research and development.

     expenditures incurred by us to comply with enhanced regulatory obligations
     and internal controls.

Any of these factors may cause the price for our common stock to fluctuate and
therefore change the value of your investment in our company.

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A SUBSTANTIAL PORTION OF OUR ASSETS CONSISTS OF GOODWILL AND AN IMPAIRMENT IN
THE VALUE OF OUR GOODWILL WOULD HAVE THE EFFECT OF DECREASING OUR EARNINGS OR
INCREASING OUR LOSSES.

    As of September 30, 2003, goodwill represented 31% of our total assets. If
we are required to record an impairment charge to earnings relating to goodwill,
it would have the effect of decreasing our earnings or increasing our losses.
Goodwill represents the excess of the total purchase price of our acquisitions
over the fair value of the net assets acquired. Through September 30, 2001, we
amortized goodwill on a straight-line basis over periods of up to 40 years. In
July 2001, the Financial Accounting Standards Board issued new standards
relating to business combinations and goodwill and other intangible assets. The
accounting standards on goodwill and other intangible assets, which we have
adopted as of October 1, 2001, require goodwill to be reviewed at least annually
for impairment, and does not permit amortization. In the event that impairment
is identified, a charge to earnings will be recorded and our stock price may
decline as a result.

WE HAVE A SMALL NUMBER OF SHARES OF COMMON STOCK OUTSTANDING, MUCH OF WHICH IS
HELD BY, AND SUBJECT TO PLEDGES BY, INSIDERS, AND AS A RESULT THE TRADING MARKET
FOR OUR COMMON STOCK IS NOT VERY LIQUID AND OUR STOCK PRICE CAN BE VERY
VOLATILE.

    Approximately 52% of our common stock is beneficially owned by Terry D.
Wall, our chief executive officer, his wife and trusts established for the
benefit of his children. Companies with a small number of shares held by the
public can be subject to a more volatile stock price. Our stock price, and
therefore your investment in our company, may be volatile.

    A substantial portion of the shares owned by Terry D. Wall, his wife and
such trusts have been pledged to secure loans made by third-parties. Such loans
may be called in the future. Sales of a substantial number of such shares may
result in a change in control of Vital Signs and/or have a disruptive effect on
the market price of our common stock.

OUR MAJOR SHAREHOLDERS ARE ABLE TO EXERCISE SIGNIFICANT INFLUENCE ON US AND THEY
MAY PURSUE POLICIES WITH WHICH YOU DISAGREE.

    As of September 30, 2003, Terry D. Wall, our chief executive officer, his
wife and trusts maintained for the benefit of his children beneficially own
approximately 52% of our common stock. As a result, Mr. Wall, his wife and
trusts for the benefit of his children have a significant influence in electing
our directors, appointing new management and approving any action requiring the
approval of our stockholders, including any amendment to our certificate of
incorporation, mergers or sales of substantially all of our assets.

IF WE LOSE KEY PERSONNEL, OR ARE UNABLE TO ATTRACT AND RETAIN ADDITIONAL HIGHLY
SKILLED PERSONNEL REQUIRED FOR THE EXPANSION OF OUR ACTIVITIES, OUR BUSINESS
WILL SUFFER.

    Our success is dependent on key personnel, including Terry D. Wall, our
president and chief executive officer, and members of our senior management. Mr.
Wall has been with us since we were first incorporated 30 years ago. We have no
employment agreement with Mr. Wall nor with any other executive officer other
than Joseph J. Thomas, the president of our Thomas Medical Products, Inc.
subsidiary. If Mr. Wall or other members of management do not continue in their
present positions, our business may suffer.

    To successfully expand our operations, we will need to attract and retain
additional, highly skilled individuals, particularly in the areas of sales,
marketing, manufacturing and finance. If we cannot attract sufficient skilled
individuals, we may not be able to successfully grow our business.

ANTI-TAKEOVER PROVISIONS MAY PREVENT YOU FROM REALIZING A PREMIUM RETURN.

    Anti-takeover provisions in our certificate of incorporation, make it more
difficult for a third-party to acquire us. These provisions include:

     the authorization of the issuance of up to 4,000,000 shares of our
     preferred stock without further approval of our shareholders;

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     the election of directors on a staggered term basis; and

     the elimination of shareholder action by written consent.

    Similarly, our bylaws establish procedures, including notification
procedures, with regard to the nomination, other than by or at the direction of
our Board of Directors, of candidates for election as directors or for
shareholder proposals to be submitted at shareholder meetings.

    We are also subject to the New Jersey Shareholders Protection Act, an
anti-takeover provision. In general, that Act prevents a shareholder owning 10%
or more of a New Jersey public corporation's outstanding voting stock from
engaging in business combinations with that corporation for five years following
the date the shareholder acquired 10% or more of the corporation's outstanding
voting stock, unless board approval is obtained prior to the time that the
shareholder reaches the 10% threshold.

    These provisions are expected to discourage different types of coercive
takeover practices and inadequate takeover bids and to encourage persons seeking
to acquire control of our company to first negotiate with our Board of
Directors. At the same time, however, these provisions make it more difficult
for a third-party to successfully acquire us.




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