AGAINST SUCH LOSSES AND RISKS
AND IN SUCH AMOUNTS AS ARE PRUDENT AND CUSTOMARY IN THE BUSINESSES IN WHICH THE
COMPANY AND THE SUBSIDIARIES ARE ENGAGED, INCLUDING, BUT NOT LIMITED TO,
DIRECTORS AND OFFICERS INSURANCE COVERAGE AT LEAST EQUAL TO THE AGGREGATE
SUBSCRIPTION AMOUNT.
NEITHER THE COMPANY NOR ANY SUBSIDIARY HAS ANY REASON TO
BELIEVE THAT IT WILL NOT BE ABLE TO RENEW ITS EXISTING INSURANCE COVERAGE AS AND
WHEN SUCH COVERAGE EXPIRES OR TO OBTAIN SIMILAR COVERAGE FROM SIMILAR INSURERS
AS MAY BE NECESSARY TO CONTINUE ITS BUSINESS WITHOUT A SIGNIFICANT INCREASE IN
COST.
(R)
TRANSACTIONS WITH AFFILIATES AND EMPLOYEES.
EXCEPT AS SET
FORTH ON SCHEDULE 3.1(R), NONE OF THE OFFICERS OR DIRECTORS OF THE COMPANY OR
ANY SUBSIDIARY AND, TO THE KNOWLEDGE OF THE COMPANY, NONE OF THE EMPLOYEES OF
THE COMPANY OR ANY SUBSIDIARY IS PRESENTLY A PARTY TO ANY TRANSACTION WITH THE
COMPANY OR ANY SUBSIDIARY (OTHER THAN FOR SERVICES AS EMPLOYEES, OFFICERS AND
DIRECTORS), INCLUDING ANY CONTRACT, AGREEMENT OR OTHER ARRANGEMENT PROVIDING FOR
THE FURNISHING OF SERVICES TO OR BY, PROVIDING FOR RENTAL OF REAL OR PERSONAL
PROPERTY TO OR FROM, PROVIDING FOR THE BORROWING OF MONEY FROM OR LENDING OF
MONEY TO OR OTHERWISE REQUIRING PAYMENTS TO OR FROM ANY OFFICER, DIRECTOR OR
SUCH EMPLOYEE OR, TO THE KNOWLEDGE OF THE COMPANY, ANY ENTITY IN WHICH ANY
OFFICER, DIRECTOR, OR ANY SUCH EMPLOYEE HAS A SUBSTANTIAL INTEREST OR IS AN
OFFICER, DIRECTOR, TRUSTEE, STOCKHOLDER, MEMBER OR PARTNER, IN EACH CASE IN
EXCESS OF $120,000 OTHER THAN FOR (I) PAYMENT OF SALARY OR CONSULTING FEES FOR
SERVICES RENDERED, (II) REIMBURSEMENT FOR EXPENSES INCURRED ON BEHALF OF THE
COMPANY AND (III) OTHER EMPLOYEE BENEFITS, INCLUDING STOCK OPTION AGREEMENTS
UNDER ANY STOCK OPTION PLAN OF THE COMPANY.
(S)
SARBANES-OXLEY; INTERNAL ACCOUNTING CONTROLS.
THE
COMPANY AND THE SUBSIDIARIES ARE IN COMPLIANCE WITH ANY AND ALL APPLICABLE
REQUIREMENTS OF THE SARBANES-OXLEY ACT OF 2002 THAT ARE EFFECTIVE AS OF THE DATE
HEREOF, AND ANY AND ALL APPLICABLE RULES AND REGULATIONS PROMULGATED BY THE
COMMISSION THEREUNDER THAT ARE EFFECTIVE AS OF THE DATE HEREOF AND AS OF THE
CLOSING DATE.
THE COMPANY AND THE SUBSIDIARIES MAINTAIN A SYSTEM OF INTERNAL
ACCOUNTING CONTROLS SUFFICIENT TO PROVIDE REASONABLE ASSURANCE THAT: (I)
TRANSACTIONS ARE EXECUTED IN ACCORDANCE WITH MANAGEMENT'S GENERAL OR SPECIFIC
AUTHORIZATIONS, (II) TRANSACTIONS ARE RECORDED AS NECESSARY TO PERMIT
PREPARATION OF FINANCIAL STATEMENTS IN CONFORMITY WITH GAAP AND TO MAINTAIN
ASSET ACCOUNTABILITY, (III) ACCESS TO ASSETS IS PERMITTED ONLY IN ACCORDANCE
WITH MANAGEMENT'S GENERAL OR SPECIFIC AUTHORIZATION, AND (IV) THE RECORDED
ACCOUNTABILITY FOR ASSETS IS COMPARED WITH THE EXISTING ASSETS AT REASONABLE
INTERVALS AND APPROPRIATE ACTION IS TAKEN WITH RESPECT TO ANY DIFFERENCES. THE
COMPANY AND THE SUBSIDIARIES HAVE ESTABLISHED DISCLOSURE CONTROLS AND PROCEDURES
(AS DEFINED IN EXCHANGE ACT RULES 13A-15(E) AND 15D-15(E)) FOR THE COMPANY AND
THE SUBSIDIARIES AND DESIGNED SUCH DISCLOSURE CONTROLS AND PROCEDURES TO ENSURE
THAT INFORMATION REQUIRED TO BE DISCLOSED BY THE COMPANY IN THE REPORTS IT FILES
OR SUBMITS UNDER THE EXCHANGE ACT IS RECORDED, PROCESSED,