| On April 18, 2002, the Company sold 1 million restricted common shares and
warrants (valued according to the Black Scholes
valuation method) to acquire 100,000 common shares to Calm Waters
Partnership and two other investors (the "Investors") for $6,000. The warrants
have an exercise price of $9.35 per share, subject to adjustment. In addition,
the agreement calls for the Investors to purchase an additional 2,640,000 common
shares for $16,500 and to receive a warrant to purchase 250,000 shares of common
stock at an exercise price equal to the greater of 105% of the last reported
sale price of common stock on the day preceding the second closing date or
$1.50. The Investors' obligation to purchase the additional shares is subject to
certain conditions including that a replacement of the Company's existing credit
facility occur on or prior to December 31, 2002, conditions related to the
Company's existing class action litigation and ongoing investigations, quarterly
aggregate EBITDA, among others. The Company has also agreed to issue a warrant
to purchase 333,000 shares of common stock to the Investors if the Company fails
to achieve aggregate EBITDA of $80 million or more for the 12-month period
commencing on April 1, 2002. The warrant exercise price per share is based upon
the Company's EBITDA for such period. |