REPORT ON FORM 8-K
DESCRIBING THE TERMS OF THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION
DOCUMENTS IN THE FORM REQUIRED BY THE EXCHANGE ACT AND ATTACHING THE MATERIAL
TRANSACTION DOCUMENTS (INCLUDING, WITHOUT LIMITATION, THIS AGREEMENT, THE FORM
OF THE NOTES, THE FORM OF WARRANT AND THE FORM OF THE REGISTRATION RIGHTS
AGREEMENT) AS EXHIBITS TO SUCH FILING.
(R)
REVENUE.
THE COMPANY WILL NOT PERMIT ITS ACTUAL MONTHLY REVENUE
TO FALL MORE THAN 10% BELOW THE ACTUAL REVENUE REFLECTED ON THE ANNUAL OPERATING
PLAN FOR THE QUARTER ENDING JULY 31, 2008 OR FOR ANY MONTHLY PERIOD THEREAFTER.
(S)
EBITDA.
THE COMPANY WILL NOT PERMIT ITS MONTHLY EBITDA TO FALL
MORE THAN 10% BELOW THE EBITDA REFLECTED ON THE ANNUAL OPERATING PLAN FOR THE
QUARTER ENDING JULY 31, 2008 OR FOR EACH QUARTER THEREAFTER.
(T)
CASH FLOW.
THE COMPANY WILL NOT PERMIT ITS MONTHLY FREE CASH
FLOW TO FALL MORE THAN 10% BELOW THE FREE CASH FLOW REFLECTED ON THE ANNUAL
OPERATING PLAN FOR THE QUARTER ENDING JULY 31, 2008 OR FOR EACH QUARTER
THEREAFTER.
(U)
OFFICER BONUSES.
THE COMPANY WILL NOT DISTRIBUTE OFFICER BONUSES,
ALLOCATED PRO RATA TO A GIVEN QUARTER, UNLESS (I) IN SUCH QUARTER THE COMPANY
ACHIEVES A MINIMUM OF 110% OF THE TARGETED EBITDA REFLECTED ON THE ANNUAL
OPERATING PLAN OR (II) THE BUYER(S) CONSENT.
(V)
FUTURE DEBT FINANCING.
IF THE COMPANY AND/OR ANY OF ITS WHOLLY
OWNED SUBSIDIARIES (EACH A "GRANTOR") OBTAINS A COMMITMENT FOR DEBT FINANCING,
THE BUYER WILL UPON WRITTEN REQUEST BY ANY OF THE GRANTORS EVALUATE SUCH
FINANCING OFFER IN GOOD FAITH.
IF SUCH
FINANCING IS ACCEPTABLE TO THE BUYER IN THE BUYERS' SOLE REASONABLE DISCRETION,
BUYER WILL RELEASE ITS SECURITY INTEREST IN A PORTION OF THE INVENTORY AND
RECEIVABLES OF THE GRANTOR GRANTED TO THE BUYER PURSUANT TO THE SECURITY
DOCUMENTS.
6.
TRANSFER AGENT INSTRUCTIONS.
(A)
THE COMPANY SHALL ISSUE THE IRREVOCABLE TRANSFER AGENT
INSTRUCTIONS TO ITS TRANSFER AGENT, AND ANY SUBSEQUENT TRANSFER AGENT,
IRREVOCABLY APPOINTING DAVID GONZALEZ, ESQ. AS THE COMPANY'S AGENT FOR PURPOSE
INSTRUCTING ITS TRANSFER AGENT TO ISSUE CERTIFICATES OR CREDIT SHARES TO THE
APPLICABLE BALANCE ACCOUNTS AT THE DEPOSITORY TRUST COMPANY ("DTC"), REGISTERED
IN THE NAME OF EACH BUYER OR ITS RESPECTIVE NOMINEE(S), FOR THE WARRANT SHARES
ISSUED UPON EXERCISE OF THE WARRANTS AS SPECIFIED FROM TIME TO TIME BY EACH
BUYER TO THE COMPANY UPON EXERCISE OF THE WARRANTS.
THE COMPANY SHALL NOT
CHANGE ITS TRANSFER AGENT WITHOUT THE EXPRESS WRITTEN CONSENT OF THE BUYERS,
WHICH MAY BE WITHHELD BY THE BUYERS IN THEIR SOLE DISCRETION.
THE COMPANY
WARRANTS THAT NO INSTRUCTION OTHER THAN THE IRREVOCABLE TRANSFER AGENT
INSTRUCTIONS REFERRED TO IN THIS SECTION 5, AND STOP TRANSFER INSTRUCTIONS TO
GIVE EFFECT TO SECTION 2(G) HEREOF (IN THE CASE OF THE WARRANT SHARES PRIOR TO
REGISTRATION OF SUCH SHARES UNDER THE SECURITIES ACT) WILL BE GIVEN BY THE
COMPANY TO ITS TRANSFER AGENT, AND THAT THE SECURITIES SHALL OTHERWISE BE FREELY
TRANSFERABLE ON THE BOOKS AND RECORDS OF THE COMPANY AS AND TO THE EXTENT
PROVIDED IN THIS