THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED, AND THE RULES AND REGULATIONS OF THE SEC
THEREUNDER.
8
(13)
SUBSIDIARIES.
TO THE EXTENT REQUIRED UNDER
APPLICABLE SEC RULES, EXHIBIT 21 TO THE 2004 FORM 10-KSB SETS FORTH EACH
SUBSIDIARY OF THE COMPANY, SHOWING THE JURISDICTION OF ITS INCORPORATION OR
ORGANIZATION.
FOR THE PURPOSES OF THIS AGREEMENT, "SUBSIDIARY" SHALL MEAN ANY
COMPANY OR OTHER ENTITY OF WHICH AT LEAST 50% OF THE SECURITIES OR OTHER
OWNERSHIP INTEREST HAVING ORDINARY VOTING POWER FOR THE ELECTION OF DIRECTORS OR
OTHER PERSONS PERFORMING SIMILAR FUNCTIONS ARE AT THE TIME OWNED DIRECTLY OR
INDIRECTLY BY THE COMPANY OR ANY OF ITS OTHER SUBSIDIARIES.
(14)
INDEBTEDNESS.
THE FINANCIAL STATEMENTS IN THE
SEC REPORTS REFLECT, TO THE EXTENT REQUIRED, AS OF THE DATE THEREOF, ALL
OUTSTANDING SECURED AND UNSECURED INDEBTEDNESS (AS DEFINED BELOW) OF THE COMPANY
OR ANY SUBSIDIARY, OR FOR WHICH THE COMPANY OR ANY SUBSIDIARY HAS COMMITMENTS.
FOR PURPOSES OF THIS AGREEMENT, "INDEBTEDNESS" SHALL MEAN (A) ANY LIABILITIES
FOR BORROWED MONEY OR AMOUNTS OWED IN EXCESS OF $50,000 (OTHER THAN TRADE
ACCOUNTS PAYABLE INCURRED IN THE ORDINARY COURSE OF BUSINESS), (B) ALL
GUARANTIES, ENDORSEMENTS AND OTHER CONTINGENT OBLIGATIONS IN RESPECT OF
INDEBTEDNESS OF OTHERS, WHETHER OR NOT THE SAME ARE OR SHOULD BE REFLECTED IN
THE COMPANY'S BALANCE SHEET (OR THE NOTES THERETO), EXCEPT GUARANTIES BY
ENDORSEMENT OF NEGOTIABLE INSTRUMENTS FOR DEPOSIT OR COLLECTION OR SIMILAR
TRANSACTIONS IN THE ORDINARY COURSE OF BUSINESS; AND (C) THE PRESENT VALUE OF
ANY LEASE PAYMENTS IN EXCESS OF $50,000 DUE UNDER LEASES REQUIRED TO BE
CAPITALIZED IN ACCORDANCE WITH GAAP.
NEITHER THE COMPANY NOR ANY SUBSIDIARY IS
IN DEFAULT WITH RESPECT TO ANY INDEBTEDNESS.
(15)
CERTAIN FEES.
OTHER THAN FEES PAYABLE TO THE
PLACEMENT AGENT PURSUANT TO THE PLACEMENT AGENT AGREEMENT, NO BROKERS', FINDERS'
OR FINANCIAL ADVISORY FEES OR COMMISSIONS WILL BE PAYABLE BY THE COMPANY OR ANY
SUBSIDIARY WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
(16)
MATERIAL AGREEMENTS.
EXCEPT AS SET FORTH IN THE
SEC REPORTS, NEITHER THE COMPANY NOR ANY SUBSIDIARY IS A PARTY TO ANY WRITTEN OR
ORAL CONTRACT, INSTRUMENT, AGREEMENT, COMMITMENT, OBLIGATION, PLAN OR
ARRANGEMENT, A COPY OF WHICH WOULD BE REQUIRED TO BE FILED WITH THE SEC AS AN
EXHIBIT TO FORM 10-KSB (EACH, A "MATERIAL AGREEMENT").
THE COMPANY AND EACH OF
ITS SUBSIDIARIES HAS IN ALL MATERIAL RESPECTS PERFORMED ALL THE OBLIGATIONS
REQUIRED TO BE PERFORMED BY THEM TO DATE UNDER THE FOREGOING AGREEMENTS, HAVE
RECEIVED NO NOTICE OF DEFAULT BY THE COMPANY OR THE SUBSIDIARY THAT IS A PARTY
THERETO, AS THE CASE MAY BE, AND, TO THE COMPANY'S KNOWLEDGE, ARE NOT IN DEFAULT
UNDER ANY MATERIAL AGREEMENT NOW IN EFFECT.
(17)
TRANSACTIONS WITH AFFILIATES.
EXCEPT AS SET
FORTH IN THE SEC REPORTS, THERE ARE NO LOANS, LEASES, AGREEMENTS, CONTRACTS,
ROYALTY AGREEMENTS, MANAGEMENT CONTRACTS OR ARRANGEMENTS OR OTHER CONTINUING
TRANSACTIONS WITH AGGREGATE OBLIGATIONS OF ANY PARTY EXCEEDING $60,000 BETWEEN
(A) THE COMPANY, ANY SUBSIDIARY OR ANY OF THEIR RESPECTIVE CUSTOMERS OR
SUPPLIERS ON THE ONE HAND, AND (B)