EXHIBIT A
Due to the financial condition of the Company, it is acknowledged that the
Company may not be in a position to fully pay the management fee set forth in
Section 5.1 of the Agreement when due (the "Management Fee"), and therefore it
is agreed as follows:
1. At the end of each calendar quarter during the Term (including for this
purpose the quarter ending March 31, 1996), the Company's "current assets", as
hereinafter defined, shall be determined. "Current assets" shall mean the total,
on the last day of the quarter in question, of: (i) cash or cash equivalents on
hand; plus (ii) contract and/or accounts receivable due the Company which are
due and collectible within the following twelve months. The Company's Chief
Executive Officer or Chief Financial Officer shall certify to the Board the
amount of the Company's current assets within 10 days after the end of each
quarter.
2. With respect to each calendar quarter during the Term, the following
percentage of the Management Fee shall be paid:
(a) 0% if the current assets as of the end of the previous calendar quarter
are less than $500,000; or
(b) 33 1/3% if the current assets as of the end of the previous calendar
quarter are more than $500,000 but less than $1,000,000; or
(c) 66 2/3% if the current assets as of the end of the previous calendar
quarter are more than $1,000,000 but less than $1,500,000; or
(d) 100% if the current assets as of the end of the previous calendar
quarter are more than $1,500,000.
3. Any portion of the Management Fee otherwise due which is not paid as a
result of the conditions imposed under Paragraph 2 of this Exhibit A shall
accrue (the "Shortfall"). At the end of each calendar quarter the Company shall
issue a promissory note for the Shortfall (the "Note"), which Note shall be due
and payable within twelve months of the date of issue, and which shall bear
interest at two percentage points per annum over the prime rate of interest in
New York on the date of issue.
4. Each Note issued hereunder shall provide that the holder shall have the
option, at any time prior to payment in full of the Note, to exchange any
portion or all of the then remaining balance of such Note for newly issued
common stock of the Company. Such exchange shall be based on the outstanding
principal and interest on the Note on the date of the exchange and the average
closing bid price of the Company's common stock for the most recent ten days in
which stock traded. Any such stock, when issued, shall carry the most favorable
anti-dilution, "piggyback" registration and such other rights as may then, or
thereafter, apply to any other issued common stock of the Company and/or to any
options or warrants to purchase stock of the Company.
