2. Covenants of the Company
2.1 Financial Information. The Company will deliver the financial information
identified in Section 2.1(a) to each Investor, and for so long as an Investor holds at least Five
Hundred Thousand (500,000) shares (as adjusted for stock splits, stock dividends, reverse stock
splits or the like) of Registrable Securities (a Major Holder) the Company shall also deliver to
such Investor all of the reports and financial information identified in Sections 2.1(b), (c) and
(a) As soon as practicable after the end of each fiscal year, and in any event within 120 days
thereafter, audited consolidated balance sheets of the Company and its subsidiaries, if any, as of
the end of such fiscal year, and consolidated statements of income and consolidated statements of
cash flow of the Company and its subsidiaries, if any, for such year, prepared in accordance with
generally accepted accounting principles, consistently applied, and setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable detail. Such
financial statements shall be accompanied by a report and opinion thereon by independent public
accountants of national standing selected by the Board of Directors.
(b) Contemporaneously with delivery to holders of Common Stock, a copy of each report of the
Company delivered to holders of the Companys Common Stock.
(c) As soon as practicable after the end of each month, and in any event within thirty (30)
days after the end of each month, an unaudited consolidated balance sheet of the Company as at the
end of such month, and unaudited consolidated statements of income and unaudited consolidated
statements of cash flow for such month and for the current fiscal year to date. Such financial
statements shall be prepared in accordance with generally accepted accounting principles
consistently applied (other than accompanying notes and subject to year-end adjustments), all in
reasonable detail, including detailed quarterly comparison to budget and such financial statements
shall be accompanied by an instrument executed by the Chief Financial Officer or President of the
Company and certifying that such financials fairly present the financial condition of the Company
and its results of operation for the period specified, subject to any year-end audit adjustment.
(d) As soon as practicable, and in any event within sixty (60) days prior to the beginning of
the fiscal year, a copy of the Companys annual operating plan and budget for the upcoming fiscal
year, which shall include without limitation forecasts of the Companys revenues, expenses and cash
position on a month-to-month basis for such upcoming fiscal year together with any other budgets or
revised budgets as they become available throughout the fiscal year.
For so long as a Major Holder is eligible to receive reports under this Section 2.1, it shall
also have the right to discuss the affairs, finances and accounts of the Company with the Companys
officers, all at such reasonable times and as often as may be reasonably requested; provided,
however, that the Company shall not be obligated to provide any information unless the Major Holder
agrees to sign a non-disclosure agreement in customary form.
- 13 -