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SECURITIES PURCHASE AGREEMENT

Purchase and Sale Agreement

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Zone4Play, Inc

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Title: SECURITIES PURCHASE AGREEMENT
Governing Law: New York     Date: 1/27/2005
Law Firm: Thelen Reid    

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SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this "Agreement") is dated as of

January 27, 2005, among Zone4Play, Inc., a Nevada corporation (the "Company"),

and each purchaser identified on the signature pages hereto (each, including its

successors and assigns, a "Purchaser" and collectively the "Purchasers").

WHEREAS, subject to the terms and conditions set forth in this Agreement

and pursuant to Section 4(2) of the Securities Act (as defined below), and Rule

506 promulgated thereunder, the Company desires to issue and sell to the

Purchasers, and the Purchasers, severally and not jointly, desire to purchase

from the Company, in the aggregate, up to 4 million shares of Common Stock (as

defined below) on the Closing Date (as defined below).

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this

Agreement, and for other good and valuable consideration the receipt and

adequacy of which are hereby acknowledged, the Company and each Purchaser agrees

as follows:

ARTICLE I.

DEFINITIONS

1.1 Definitions. In addition to the terms defined elsewhere in this

Agreement, for all purposes of this Agreement, the following terms have the

meanings indicated in this Section 1.1:

"Action" shall have the meaning ascribed to such term in Section 3.1(j).

"Affiliate" means any Person that, directly or indirectly through one or

more intermediaries, controls or is controlled by or is under common control

with a Person as such terms are used in and construed under Rule 144. With

respect to a Purchaser, any investment fund or managed account that is managed

on a discretionary basis by the same investment manager as such Purchaser will

be deemed to be an Affiliate of such Purchaser.

"Closing" means the closing of the purchase and sale of the Common Stock

pursuant to Section 2.1.

"Closing Date" means the Trading Day when all of the Transaction Documents

have been executed and delivered by the applicable parties thereto, and all

conditions precedent to (a) the Purchasers' obligations to pay the Subscription

Amount and (b) the Company's obligations to deliver the Shares have been

satisfied or waived.

"Closing Price" means on any particular date (a) the last reported closing

price per share of Common Stock on such date on the Trading Market (as reported

by Bloomberg L.P. ), or (b) if there is no such price on such date, then the

closing price on the Trading Market on the date nearest preceding such date (as

reported by Bloomberg L.P., (c) if the Common Stock is not then listed or quoted

on the Trading Market and if prices for the Common Stock are then reported in

the "pink sheets" published by the Pink Sheets LLC (formerly the National

Quotation Bureau Incorporated (or a similar organization or agency succeeding to

its functions of reporting prices)), the most recent bid price per share of the

Common Stock so reported, or (d) if the shares of Common Stock are not then

publicly traded, the fair market value of a share of Common Stock as determined

by a qualified independent appraiser selected in good faith by the Purchasers of

a majority in interest of the Shares then outstanding.

<PAGE>

"Commission" means the United States Securities and Exchange Commission.

"Common Stock" means the common stock of the Company, $0.001 par value per

share, and any securities into which such common stock may hereafter be

reclassified.

"Common Stock Equivalents" means any securities of the Company or the

Subsidiaries which would entitle the holder thereof to acquire at any time

shares of Common Stock, including without limitation, any debt, preferred stock,

rights, options, warrants or other instrument that is at any time convertible

into or exchangeable for, or otherwise entitles the holder thereof to receive,

shares of Common Stock.

"Company Counsel" means Sichenzia Ross Friedman Ference LLP, with offices

at 1065 Avenue of the Americas, New York, New York 10018, Tel: (212) 930-9700,

Fax: (212) 930-9725.

"Disclosure Schedules" means the Disclosure Schedules of the Company

attached hereto and incorporated herein.

"Effective Date" means the date that a Registration Statement is first

declared effective by the Commission.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Intellectual Property Rights" shall have the meaning ascribed to such

term in Section 3.1(o).

"Liens" means a lien, charge, security interest, encumbrance, right of

first refusal, preemptive right or other similar restriction.

"Material Adverse Effect" shall have the meaning ascribed to such term in

Section 3.1(b).

"Material Permits" shall have the meaning ascribed to such term in Section

3.1(m).

"OTCBB" means the Over-The-Counter Bulletin Board.

"Per Share Purchase Price" equals $1.50, subject to adjustment for reverse

and forward stock splits, stock dividends, stock combinations and other similar

transactions of the Common Stock that occur after the date of this Agreement.

"Person" means an individual or corporation, partnership, trust,

incorporated or unincorporated association, joint venture, limited liability

company, joint stock company, government (or an agency or subdivision thereof)

or other legal entity of any kind.

"Proceeding" means an action, claim, suit, investigation or proceeding

(including, without limitation, an investigation or partial proceeding, such as

a deposition).

 

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<PAGE>

"Registration Statement" means a registration statement meeting the

requirements set forth in the Registration Rights Agreement and covering the

resale by the Purchasers of the Shares or a portion thereof (as provided for in

the Registration Rights Agreement).

"Registration Rights Agreement" means the Registration Rights Agreement,

dated as of the date of this Agreement, by and among the Company and each

Purchaser, in the form of Exhibit A hereto.

"Required Approvals" shall have the meaning ascribed to such term in

Section 3.1(e).

"Rule 144" means Rule 144 promulgated by the Commission pursuant to the

Securities Act, as such Rule may be amended from time to time, or any similar

rule or regulation hereafter adopted by the Commission having substantially the

same effect as such Rule.

"SEC Reports" shall have the meaning ascribed to such term in Section

3.1(h).

"Securities Act" means the Securities Act of 1933, as amended.

"Shares" means the shares of Common Stock issued or issuable to each

Purchaser pursuant to this Agreement.

"Subscription Amount" means, as to each Purchaser, the amounts set forth

below such Purchaser's signature block on the signature page hereto, in United

States dollars and in immediately available funds.

"Subsidiary" shall mean the subsidiaries of the Company, if any, set forth

on Schedule 3.1(a).

"TRP" shall mean Thelen Reid & Priest LLP with offices located at 875

Third Avenue, New York, New York 10022.

"Trading Day" means a day on which the Common Stock is traded on a Trading

Market.

"Trading Market" means each of the following markets or exchanges on which

the Common Stock is listed or quoted for trading on the date in question: OTCBB,

the American Stock Exchange, the New York Stock Exchange, the Nasdaq National

Market or the Nasdaq SmallCap Market.

"Transaction Documents" means this Agreement and the Registration Rights

Agreement and any other documents or agreements executed in connection with the

transactions contemplated hereunder.

ARTICLE II.

PURCHASE AND SALE

2.1 Closing. On the Closing Date, each and every Purchaser shall purchase

from the Company, severally and not jointly with the other Purchasers, and the

Company shall issue and sell to each Purchaser, (a) a number of Shares equal to

such Purchaser's Subscription Amount divided by the Per Share Purchase Price.

The aggregate Subscription Amounts for Shares sold hereunder shall be up to

$6,000,000. Upon satisfaction or waiver of the conditions set forth in Sections

2.2(a), (b), (c) and (d), the Closing shall occur at the offices of TRP or such

other location as the parties shall mutually agree.

 

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<PAGE>

2.2 Deliveries; Closing Conditions.

(a) On the Closing Date, the Company shall deliver or cause to be

delivered to each Purchaser the following:

(i) this Agreement duly executed by the Company;

(ii) a copy of duly executed irrevocable instructions, which

shall be satisfactory in form and substance to each of the

Purchasers, to the Company's transfer agent instructing the transfer

agent to deliver, on an expedited basis, a certificate evidencing a

number of Shares equal to such Purchaser's Subscription Amount

divided by the Per Share Purchase Price, registered in the name of

such Purchaser;

(iii) the Registration Rights Agreement duly executed by the

Company; and

(iv) a legal opinion of Company Counsel, in the form of

Exhibit B attached hereto.

(b) On the Closing Date, each Purchaser shall deliver or cause to be

delivered to the Company the following:

(i) this Agreement duly executed by such Purchaser;

(ii) such Purchaser's Subscription Amount by wire transfer to

the account as specified in writing by the Company; and

(iii) the Registration Rights Agreement duly executed by such

Purchaser.

(c) All representations and warranties of the other party contained

herein shall remain true and correct in all material respects as of the Closing

Date and all covenants of the other party shall have been performed if due prior

to such date.

(d) From the date hereof to the Closing Date, trading in the Common

Stock shall not have been suspended by the Commission (except for any suspension

of trading of limited duration agreed to by the Company, which suspension shall

be terminated prior to the Closing), and, at any time prior to the Closing Date,

trading in securities generally shall not have been suspended or limited on any

Trading Market, nor shall a general commercial banking moratorium have been

declared either by the United States or New York State authorities, nor shall

there have occurred any material outbreak or escalation of hostilities or other

national or international calamity of such magnitude in its effect on, or any

material adverse change in, any financial market which, in each case, in the

reasonable judgment of Purchasers representing a majority of the Subscription

Amounts made by all Purchasers, makes it impracticable or inadvisable to

purchase the Shares at the Closing.

 

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<PAGE>

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company. Except as otherwise set

forth under the corresponding section of the Disclosure Schedules attached

hereto, which Disclosure Schedules shall be deemed a part hereof, the Company

hereby represents and warrants as of the date hereof and as of the Closing Date

to each Purchaser as follows:

(a) Subsidiaries. All of the direct and indirect Subsidiaries of the

Company are set forth on Schedule 3.1(a). Except for Mix TV, in which the

Company owns a 50.1% interest, the Company owns, directly or indirectly, all of

the capital stock or other equity interests of each Subsidiary free and clear of

any Liens, and all the issued and outstanding shares of capital stock of each

Subsidiary are validly issued and are fully paid, non-assessable and free of

preemptive and similar rights to subscribe for or purchase such securities. If

the Company has no subsidiaries, then references in the Transaction Documents to

the Subsidiaries will be disregarded.

(b) Organization and Qualification. Each of the Company and the

Subsidiaries is an entity duly incorporated or otherwise organized, validly

existing and in good standing under the laws of the jurisdiction of its

incorporation or organization (as applicable), with the requisite power and

authority to own and use its properties and assets and to carry on its business

as currently conducted except where failure to be so qualified, organized or

have such power and authority would not reasonably be expected to have a

Material Adverse Effect (as defined below). Neither the Company nor any

Subsidiary is in violation or default of any of the provisions of its respective

certificate or articles of incorporation, bylaws or other organizational or

charter documents. Each of the Company and the Subsidiaries is duly qualified to

conduct business and is in good standing as a foreign corporation or other

entity in each jurisdiction in which the nature of the business conducted or

property owned by it makes such qualification necessary, except where the

failure to be so qualified or in good standing, as the case may be, would not

have or reasonably be expected to result in (i) a material adverse effect on the

legality, validity or enforceability of any Transaction Document, (ii) a

material adverse effect on the results of operations, assets, business or

financial condition of the Company and the Subsidiaries, taken as a whole, or

(iii) a material adverse effect on the Company's ability to perform in any

material respect on a timely basis its obligations under any Transaction

Document (any of (i), (ii) or (iii), a "Material Adverse Effect"), and to the

knowledge of the Company, no Proceeding has been instituted in any such

jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or

curtail such power and authority or qualification.

(c) Authorization; Enforcement. The Company has the requisite

corporate power and authority to execute and deliver this Agreement and to

consummate the transactions contemplated by each of the Transaction Documents to

which it is a party and otherwise to carry out its obligations thereunder. The

execution, delivery and performance by the Company of each of the Transaction

Documents to which it is a party and the consummation by it of the transactions

contemplated thereby have been duly authorized by all necessary action on the

part of the Company and no further action is required by the Company in

connection therewith other than in connection with the Required Approvals. Each

Transaction Document to which it is a party has been (or upon delivery will have

been) duly executed by the Company and, when delivered in accordance with the

terms hereof, will constitute the valid and legally binding obligation of the

Company enforceable against the Company in accordance with its terms except (i)

as limited by applicable bankruptcy, insolvency, reorganization, moratorium and

other laws of general application affecting enforcement of creditors' rights

generally, (ii) as limited by laws relating to the availability of specific

performance, injunctive relief or other equitable remedies and (iii) as the

rights to indemnification or contribution hereunder and thereunder may be

limited by applicable law.

 

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<PAGE>

(d) No Conflicts. The execution, delivery and performance by the

Company of the Transaction Documents to which it is a party, the issuance and

sale of the Shares and the consummation by the Company of the other transactions

contemplated thereby do not and will not (i) conflict with or violate any

provision of the Company's or any Subsidiary's certificate or articles of

incorporation, bylaws or other organizational or charter documents, or (ii)

conflict with, or constitute a default (or an event that with notice or lapse of

time or both would become a default) under, result in the creation of any Lien

upon any of the properties or assets of the Company or any Subsidiary, or give

to others any rights of termination, amendment, acceleration or cancellation

(with or without notice, lapse of time or both) of, any agreement, credit

facility, debt or other instrument evidencing a Company or Subsidiary debt or

otherwise or other understanding to which the Company or any Subsidiary is a

party or by which any property or material asset of the Company or any

Subsidiary is bound, or (iii) subject to the Required Approvals, conflict with

or result in a violation of any law, rule, regulation, order, judgment,

injunction, decree or other restriction of any court or governmental authority

to which the Company or a Subsidiary is subject (including federal and state

securities laws and regulations), or by which any property or asset of the

Company or a Subsidiary is bound, or (iv) violate the terms of any agreement by

which the Company or any Subsidiary is bound or to which any property or asset

of the Company or any Subsidiary is bound; except in the case of each of clauses

(ii), (iii) and (iv), such as would not have or reasonably be expected to result

in a Material Adverse Effect.

(e) Filings, Consents and Approvals. The Company is not required to

obtain any consent, waiver, authorization or order of, give any notice to, or

make any filing or registration with, any court or other federal, state, local

or other governmental authority or other Person in connection with the

execution, delivery and performance by the Company of the Transaction Documents,

other than (i) filings required pursuant to Section 4.4 of this Agreement, (ii)

the filing with the Commission of the Registration Statement, (iii)

application(s) to each applicable Trading Market for the listing of the Shares

for trading thereon in the time and manner required thereby, (iv) the filing of

Form D with the Commission and such filings as are required to be made under

applicable state securities laws, (v) any other filings required to be made

pursuant to the terms of the Registration Rights Agreement, and (vi) the notices

set forth on Schedule 3.1(e) (collectively, the "Required Approvals").

 

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<PAGE>

(f) Issuance of the Shares. The Shares have been duly authorized

and, when issued and paid for in accordance with the terms of the Transaction

Documents, will be duly and validly issued, fully paid and nonassessable, free

and clear of all Liens imposed by the Company other than restrictions on

transfer provided for in the Transaction Documents and under applicable federal

and state securities laws. The Company has reserved from its duly authorized

capital stock the maximum number of shares of Common Stock issuable pursuant to

this Agreement.

(g) Capitalization. Since September 30, 2004, the Company has not

issued any capital stock other than pursuant to the exercise of employee stock

options under the Company's stock option plans, the issuance of shares of Common

Stock to employees pursuant to the Company's employee stock purchase plan and

pursuant to the conversion or exercise of outstanding Common Stock Equivalents

outstanding. No Person has any right of first refusal, preemptive right, right

of participation, or any similar right to participate in the transactions

contemplated by the Transaction Documents. Except as a result of the purchase

and sale of the Shares, and except for warrants and shares issuable to certain

advisors listed on Schedule 3.1(g), there are no outstanding options, warrants,

script rights to subscribe to, calls or commitments of any character whatsoever

relating to, or securities, rights or obligations convertible into or

exchangeable for, or giving any Person any right to subscribe for or acquire,

any shares of Common Stock, or contracts, commitments, understandings or

arrangements by which the Company or any Subsidiary is or may become bound to

issue additional shares of Common Stock, or securities or rights convertible or

exchangeable into shares of Common Stock. The issue and sale of the Shares will

not obligate the Company to issue shares of Common Stock or other securities to

any Person (other than the Purchasers) and will not result in a right of any

holder of Company securities to adjust the exercise, conversion, exchange or

reset price under such securities. All of the outstanding shares of capital

stock of the Company are validly issued, fully paid and nonassessable, have been

issued in compliance with all federal and state securities laws, and none of

such outstanding shares were issued in violation of any preemptive rights or

similar rights to subscribe for or purchase securities. No further approval or

authorization of any shareholder, the Board of Directors of the Company or

others is required for the issuance and sale of the Shares. Except as disclosed

in the SEC Reports, there are no shareholders agreements, voting agreements or

other similar agreements with respect to the Company's capital stock to which

the Company is a party or, to the knowledge of the Company, between or among any

of the Company's shareholders.

(h) SEC Reports; Financial Statements. Except as set forth in

Schedule 3.1(h), the Company has filed all reports required to be filed by it

under the Exchange Act, including without limitation, those filed pursuant to

Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (the

foregoing materials, including the exhibits thereto, being collectively referred

to herein as the "SEC Reports") on a timely basis or has received a valid

extension of such time of filing and has filed any such SEC Reports prior to the

expiration of any such extension. As of their respective dates, the SEC Reports

complied in all material respects with the requirements of the Exchange Act and

the rules and regulations of the Commission promulgated thereunder, and none of

the SEC Reports, when filed, contained any untrue statement of a material fact

or omitted to state a material fact required to be stated therein or necessary

in order to make the statements therein, in light of the circumstances under

which they were made, not misleading. The financial statements of the Company

included in the SEC Reports comply as to form in all material respects with

applicable accounting requirements and the rules and regulations of the

Commission with respect thereto as in effect at the time of filing. Such

financial statements have been prepared in accordance with United States

generally accepted accounting principles applied on a consistent basis during

the periods involved ("GAAP"), except as may be otherwise specified in such

financial statements or the notes thereto and except that unaudited financial

statements may not contain all footnotes required by GAAP, and fairly present in

all material respects the financial position of the Company and its consolidated

subsidiaries as of and for the dates thereof and the results of operations and

cash flows for the periods then ended, subject, in the case of unaudited

statements, to normal, immaterial, year-end audit adjustments.

 

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<PAGE>

(i) Material Changes. Since December 31, 2003, except as

specifically disclosed in the SEC Reports, (i) there has been no event,

occurrence or development that has had or that would reasonably be expected to

result in a Material Adverse Effect, (ii) the Company has not incurred any

liabilities (contingent or otherwise) other than (A) liabilities incurred in the

ordinary course of business consistent with past practice and (B) liabilities

not required to be reflected in the Company's financial statements pursuant to

GAAP or required to be disclosed in filings made with the Commission, (iii) the

Company has not altered its method of accounting, (iv) the Company has not

declared or made any dividend or distribution of cash or other property to its

shareholders or purchased, redeemed or made any agreements to purchase or redeem

any shares of its capital stock and (v) the Company has not issued any equity

securities to any officer, director or Affiliate, except pursuant to existing

Company stock option plans. The Company does not have pending before the

Commission any request for confidential treatment of information.

(j) Litigation. There is no action, suit, inquiry, notice of

violation or proceeding pending or, to the knowledge of the Company, threatened,

nor, to the knowledge of the Company, is any investigation pending or

threatened, against the Company, any Subsidiary or any of their respective

properties before or by any court, arbitrator, governmental or administrative

agency or regulatory authority (federal, state, county, local or foreign)

(collectively, an "Action") which (i) challenges the legality, validity or

enforceability of any of the Transaction Documents or the Shares or (ii) would,

if there were an unfavorable decision, have or reasonably be expected to result

in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor to the

knowledge of the Company, any director or officer thereof, is or has been the

subject of any Action involving a claim of violation of or liability under

federal or state securities laws or a claim of breach of fiduciary duty. There

has not been, and to the knowledge of the Company, there is not pending, any

investigation by the Commission involving the Company or any current or former

director or officer of the Company. The Commission has not issued any stop order

or other order suspending the effectiveness of any registration statement filed

by the Company or any Subsidiary under the Exchange Act or the Securities Act.

(k) Labor Relations. No material labor dispute exists or, to the

knowledge of the Company, is imminent with respect to any of the employees of

the Company or any Subsidiary which would reasonably be expected to result in a

Material Adverse Effect.

 

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<PAGE>

(l) Compliance. Neither the Company nor any Subsidiary (i) is in

default under or in violation of (and no event has occurred that has not been

waived that, with notice or lapse of time or both, would result in a default by

the Company or any Subsidiary under), nor has the Company or any Subsidiary

received written notice of a claim that it is in default under, any indenture,

loan or credit agreement or any other agreement or instrument to which it is a

party or by which it or any of its properties is bound (whether or not such

default or violation has been waived), (ii) is in violation of any order of any

court, arbitrator or governmental body, or (iii) is in violation of any statute,

rule or regulation of any governmental authority, including without limitation

all foreign, federal, state and local laws applicable to its business, except in

each case as would not have a Material Adverse Effect.

(m) Regulatory Permits. The Company and the Subsidiaries possess all

certificates, authorizations and permits issued by the appropriate federal,

state, local or foreign regulatory authorities necessary to conduct their

respective businesses as described in the SEC Reports, except where the failure

to possess such permits would not have or reasonably be expected to result in a

Material Adverse Effect ("Material Permits"), and neither the Company nor any

Subsidiary has received any written notice of proceedings relating to the

revocation or modification of any Material Permit.

(n) Title to Assets. The Company and the Subsidiaries have good,

marketable and fee simple title to all real property owned by them that is

material to the business of the Company and the Subsidiaries and valid title in

all personal property owned by them that is material to the business of the

Company and the Subsidiaries, in each case free and clear of all Liens, except

for Liens as do not materially affect the value of such property and do not

materially interfere with the use made and proposed to be made of such property

by the Company and the Subsidiaries and Liens for the payment of federal, state

or other taxes, the payment of which is neither delinquent nor subject to

penalties. Any real property and facilities held under lease by the Company and

the Subsidiaries are held by them under valid, subsisting and enforceable leases

and no landlord for any such real property or facility has notified the Company

or any such Subsidiary that any of them are in default under any such lease.

(o) Patents and Trademarks. The Company and the Subsidiaries have,

or have rights to use, all patents, patent applications, trademarks, trademark

applications, service marks, trade names, copyrights, licenses and other similar

rights necessary or material for use in connection with their respective

businesses as described in the SEC Reports and which the failure to so have

would have a Material Adverse Effect (collectively, the "Intellectual Property

Rights"). Neither the Company nor any Subsidiary has received a written notice

that the Intellectual Property Rights used by the Company or any Subsidiary

violates or infringes upon the rights of any Person. To the knowledge of the

Company, all such Intellectual Property Rights are enforceable and there is no

known existing infringement by another Person of any of the Intellectual

Property Rights of others which would have a Material Adverse Effect.

(p) Insurance. The Company and the Subsidiaries are insured by

insurers of recognized financial responsibility against such losses and risks

and in such amounts as the Company believes are prudent and customary in the

businesses in which the Company and the Subsidiaries are engaged. 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.

 

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<PAGE>

(q) Transactions With Affiliates and Employees. Except as set forth

in the SEC Reports and in Schedule 3.1(q), none of the officers or directors of

the Company and, to the knowledge of the Company, none of the employees of the

Company 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, 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 or partner, in each case in excess of $60,000

other than (i) for payment of salary or consulting fees for services rendered,

(ii) reimbursement for expenses incurred on behalf of the Company and (iii) for

other benefits under benefit or pension plans sponsored by the Company,

including without limitation stock option agreements under any stock option plan

of the Company.

(r) Sarbanes-Oxley; Internal Accounting Controls. The Company is in

material compliance with all provisions of the Sarbanes-Oxley Act of 2002 which

are applicable to it as of the Closing Date. To the extent required by

applicable law, 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. To

the extent required by applicable law, the Company has established disclosure

controls and procedures (as defined in Exchange Act Rules 13a-15(e) and

15d-15(e)) for the Company and designed such disclosure controls and procedures

to ensure that material information relating to the Company, including its

Subsidiaries, is made known to the certifying officers by others within those

entities. To the extent required by applicable law, the Company's certifying

officers have evaluated the effectiveness of the Company's controls and

procedures as of the end of the period covered by its most recently filed

periodic report under the Exchange Act (the date of such evaluation, the

"Evaluation Date"). To the extent required by applicable law, the Company

presented in its most recently filed periodic report under the Exchange Act the

conclusions of the certifying officers about the effectiveness of the disclosure

controls and procedures based on their evaluations as of the Evaluation Date and

since the Evaluation Date, there have been no significant changes in the

Company's internal control over financial reporting (as defined in Exchange Act

Rules 13a-15(f) and 15d-15(f)) or, to the best of the Company's knowledge, in

other factors that could significantly affect the Company's internal controls.

(s) Certain Fees. Other than as set forth in footnote 1 in Schedule

3.1(g), no brokerage or finder's fees or commissions are or will be payable by

the Company or any Subsidiary to any broker, financial advisor or consultant,

finder, placement agent, investment banker, bank or other Person with respect to

the transactions contemplated by this Agreement. To the knowledge of the

Company, the Purchasers shall have no obligation with respect to any fees or

with respect to any claims made against the Company by or on behalf of other

Persons for


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