XML 54 R16.htm IDEA: XBRL DOCUMENT v2.4.0.6
Subsequent Events
6 Months Ended
Jan. 31, 2013
Subsequent Events [Abstract]  
Subsequent Events

11. Subsequent Events

 

We evaluated whether any events or transactions occurred after the balance sheet date that would require recognition or disclosure in our financial statements in accordance with GAAP, and determined that there was an event that occurred after January 31, 2013, but prior to March 11, 2012, that will have an effect on the financial statements. 

 

On March 8, 2013, the Company entered into the Third Amendment to the Loan and Security Agreement (as amended, the “Loan and Security Agreement”).

 

Under the Loan Agreement Amendment, the Loan and Security Agreement was amended primarily for the following purposes:  (i) to permit an additional add-back to EBITDA (“Adjusted EBITDA”) for non-cash expenses limited to bonuses and board director fees paid in shares of the Company’s common stock, provided that any conversion of non-cash expenses into cash payments will be permitted only with the prior written of Fifth Third; (ii) to amend the definition of EBITDA to permit additional add-backs for certain transaction expenses; (iii) to amend the fixed charge coverage ratio to be calculated based on Adjusted EBITDA, rather than EBITDA and to exclude certain extraordinary gains; (iv) to amend the required fixed charge coverage ratio for the four fiscal quarter periods ending January 31, 2013 and April 30, 2013 to 0.90x and 1.00x, respectively; (v) to require delivery of the personal financial statement of Roy W. Olivier within 120 days after the end of each calendar year; (vi) to restrict the Company’s ability to enter into certain transactions without the prior written consent of Fifth Third, including, without limitation, certain change in control transactions, reclassifications, reorganizations and recapitalizations of the Company’s Common Stock or any compulsory share exchange pursuant to which any of the Company’s common stock is effectively converted into and exchanged for other securities, cash or property; and (vii) to permit the Company to use the net cash proceeds from an equity raise transaction (as described below) in excess of $1,500,000 for working capital or to prepay the outstanding principal balance under the Sifen Note.

 

The Loan Agreement Amendment also contains Fifth Third Bank’s consent to the Company raising additional capital by selling and issuing additional equity securities, and waivers by Fifth Third of the provisions of the Loan and Security Agreement that would otherwise have prohibited such a transaction, subject to certain terms and conditions.  Such terms and conditions include, among others, a deemed event of default under the Loan and Security Agreement in the event the Company does not raise at least $250,000 in net cash proceeds on or before May 15, 2013 or any portion of the first $1,500,000 of such net cash proceeds is not used to prepay the outstanding principal balance of the Term Loan (the “Mandatory Prepayment”); and payment of a nonrefundable fee of $100,000 in the event the Company does not raise at least $1,500,000 on or before May 15, 2013 or any portion of the such amount is not used to make the Mandatory Prepayment.  The Loan Agreement Amendment also contains other terms and conditions customary for an agreement of this nature.  The Company was required to pay a $30,000 amendment fee to Fifth Third Bank in connection with the Loan Agreement Amendment.