EXHIBIT 10.1
SECURITIES PURCHASE
AGREEMENT
This Securities Purchase Agreement
(this "Agreement" ) is dated as of September 23, 2009, among
DOR BioPharma, Inc., a Delaware corporation (the "Company"
), and the investors identified on the signature pages hereto
(each, an "Investor" and collectively, the
"Investors" ).
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 Investors,
and each Investor, severally and not jointly, desires to purchase
from the Company certain securities of the Company, as more fully
described in this Agreement.
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 the Investors agree 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 shall have the meanings indicated in this
Section 1.1:
"Action" means any action, suit, inquiry, notice of
violation, proceeding (including any partial proceeding such as a
deposition) or investigation pending or threatened in writing
against or affecting the Company, any Subsidiary or any of their
respective properties before or by any court, arbitrator,
governmental or administrative agency, regulatory authority
(federal, state, county, local or foreign), stock market, stock
exchange or trading facility.
"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.
"Business Day"
means any day except Saturday,
Sunday and any day that is a federal legal holiday or a day on
which banking institutions in the State of New York are authorized
or required by law or other governmental action to
close.
"Closing" means the closing of the purchase and sale of
the Securities pursuant to Article II.
"Closing Date"
means the Business Day immediately
following the date on which all the conditions set forth in
Sections 5.1 and 5.2 hereof are satisfied, or such other date as
the parties may agree.
"Commission"
means the Securities and Exchange
Commission.
"Common Stock"
means the common stock of the
Company, par value $.001 per share, and any securities into which
such common stock may hereafter be reclassified.
“Common Stock
Equivalents” means
any securities of the Company or any Subsidiary which would entitle
the holder thereof to acquire at any time Common Stock, including
without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into
or exercisable or exchangeable for, or otherwise entitles the
holder thereof to receive, Common Stock.
"Company Counsel"
means Edwards Angell Palmer &
Dodge LLP.
"Delaware Court"
has the meaning set forth in Section
6.8 hereof.
"Disclosure Materials"
has the meaning set forth in Section
3.1(h) hereof.
"Discussion Time"
has the meaning set forth in Section
3.2(g) hereof.
"Effective Date"
means the date that the Registration
Statement required by Section 2(a) of the Registration Rights
Agreement is first declared effective by the Commission.
"Exchange Act"
means the Securities Exchange Act of
1934, as amended.
"Exempt Issuance"
means the issuance of (a) shares of
Common Stock or options to employees, officers, directors, or
consultants of or to the Company pursuant to any stock or option
plan duly adopted for such purpose, by a majority of the
non-employee members of the Company’s Board of Directors or a
majority of the members of a committee of non-employee directors
established for such purpose, (b) securities upon the exercise or
exchange of or conversion of any Securities issued hereunder and/or
other securities exercisable or exchangeable for or convertible
into shares of Common Stock issued and outstanding on the date of
this Agreement, provided that such securities have not been amended
since the date of this Agreement to increase the number of such
securities or to decrease the exercise price, exchange price or
conversion price of such securities, and (c) securities issued
pursuant to acquisitions or strategic transactions approved by a
majority of the disinterested directors of the Company, provided
that any such issuance shall only be to a Person (or to the
equityholders of a Person) which is, itself or through its
subsidiaries, an operating company or an asset in a business
synergistic with the business of the Company and shall provide to
the Company additional benefits in addition to the investment of
funds, but shall not include a transaction in which the Company is
issuing securities primarily for the purpose of raising capital or
to an entity whose primary business is investing in
securities.
"GAAP" has the meaning set forth in Section 3.1(h)
hereof.
"Intellectual Property
Rights" has the meaning
set forth in Section 3.1(o) hereof.
"Investment Amount"
means, with respect to each
Investor, the investment amount indicated below the Investor's name
on the signature page of this Agreement.
"Investor Party"
has the meaning set forth in Section
4.5 hereof.
"Investors"
shall mean the parties listed on the
signature pages attached hereto.
"Lien" means any lien, charge, encumbrance, security
interest, right of first refusal or other restrictions of any
kind.
"Losses" shall have the meaning set forth in Section 4.5
hereof.
"Material Adverse
Effect" has the meaning
set forth in Section 3.1(b) hereof.
"Material Permits"
has the meaning set forth in Section
3.1(m) hereof.
"Per Unit Purchase
Price" $0.253.
"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 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), whether
commenced or threatened.
"Registration
Statement" means a
registration statement meeting the requirements set forth in the
Registration Rights Agreement and covering the resale by the
Investors of the Shares.
"Registration Rights
Agreement" means the
Registration Rights Agreement, dated as of the date of this
Agreement, among the Company and the Investors, in the form of
Exhibit A hereto.
"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.
“Securities” means the Shares, the Warrants and the Warrant
Shares.
"Securities Act"
means the Securities Act of 1933, as
amended.
"SEC Reports"
has the meaning set forth in Section
3.1(h) hereof.
"Shares" means the shares of Common Stock issued or
issuable to the Investors pursuant to this Agreement.
"Short Sales"
means, without limitation, all
"short sales" as defined in Rule 3b-3 of the Exchange
Act.
"Subsidiary"
means any "significant subsidiary"
as defined in Rule 1-02(w) of the Regulation S-X promulgated by the
Commission under the Exchange Act.
"Trading Day"
means (i) a day on which the Common
Stock is traded in the over-the-counter market, as reported by the
OTC Bulletin Board, or (ii) if the Common Stock is not quoted on
the OTC Bulletin Board, a day on which the Common Stock is quoted
in the over-the-counter market as reported by the National
Quotation Bureau Incorporated (or any similar organization or
agency succeeding to its functions of reporting prices); provided,
that in the event that the Common Stock is not listed or quoted as
set forth in (i) and (ii) hereof, then Trading Day shall mean a
Business Day.
"Trading Market"
means the OTC Bulletin Board on
which the Common Stock is listed or quoted for trading on the date
in question.
"Transaction
Documents" means this
Agreement, the Registration Rights Agreement, and any other
documents or agreements executed in connection with the
transactions contemplated hereunder.
“Warrants”
means, collectively, the warrants to
purchase Common Stock delivered to the Investor at the Closing in
accordance with Section 2.2(a) hereof, in the form of Exhibit
B attached hereto.
“Warrant
Shares” means the
shares of Common Stock issuable upon exercise of the
Warrants.
ARTICLE II.
PURCHASE AND SALE
2.1 Closing
. Subject to the terms and conditions set forth in this
Agreement, at the Closing the Company shall issue and sell to the
Investors, and each Investor shall, severally and not jointly,
purchase from the Company, the Shares representing each
Investor’s Investment Amount. The Closing shall
take place at the offices of Edwards Angell Palmer & Dodge LLP,
750 Lexington Avenue, New York, New York 10022 on the Closing Date
or at such other location or time as the parties may
agree.
(a) At the Closing, the Company shall
deliver or cause to be delivered to the Investors the following
(the “Company Deliverables” ):
(i) a copy of an
irrevocable instruction to the Company’s transfer agent,
dated as of the Closing, requesting the transfer agent to deliver
to each Investor a stock certificate evidencing a number of Shares
equal to each Investor’s Investment Amount divided by the Per
Unit Purchase Price, registered in the name of the
Investor;
(ii) a Warrant
registered in the name of each Investor to purchase a number of
shares of Common Stock equal to 50% of the number of common shares
purchased herein. The strike price of the Warrant will
be equal to a 10% premium to the Per Unit Purchase Price, subject
to adjustment therein;
(iii) this Agreement and
the Registration Rights Agreement, duly executed by the Company;
and
(iv) The legal opinion
of Company Counsel, in agreed form, addressed to the
Investors.
(b) At the Closing,
the Investors shall deliver or cause to be delivered to the Company
the following:
(i) its Investment
Amount, in United States dollars and in immediately available
funds, by wire transfer to an account designated in writing by the
Company for such purpose; and
(ii) this Agreement and
the Registration Rights Agreement, duly executed by the
Investors.
2.3
Termination . This Agreement may be terminated by
any Investor, as to such Investor’s obligations hereunder
only and without any effect whatsoever on the obligations between
the Company and the other Investors, by written notice to the other
parties, if the Closing has not been consummated on or before
September 28, 2009; provided, however, that no such termination
will affect the right of any party to sue for any breach by the
other party (or parties).
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations
and Warranties of the Company . The Company hereby
makes the following representations and warranties to the
Investors:
(a)
Subsidiaries . The Company has no direct or
indirect Subsidiaries other than as specified in the SEC
Reports. The Company owns, directly or indirectly, all
of the capital stock of each Subsidiary free and clear of any and
all Liens, other than restrictions on transfer under applicable
securities laws, 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.
(b) Organization
and Qualification . The Company and its
"Subsidiaries" (which for purposes of this Agreement means any
entity in which the Company, directly or indirectly, owns 50% or
more of the voting stock or capital stock or other similar equity
interests) are corporations duly organized and validly existing in
good standing under the laws of the jurisdiction in which they are
incorporated, and have the requisite corporate power and authority
to own their properties and to carry on their business as now being
conducted. Each of the Company and its Subsidiaries is
duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which its ownership of
property or the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to
be so qualified or be in good standing could not reasonably be
expected to have a Material Adverse Effect. As used in
this Agreement, "Material Adverse Effect" means any material
adverse effect on any of: (i) the business, properties, assets,
operations, results of operations or financial condition of the
Company and its Subsidiaries, if any, taken as a whole, or (ii) the
authority or ability of the Company to perform its obligations
under the Transaction Documents (as defined in Section 3.1 (b)
hereof). The Company has no Subsidiaries except as set
forth on Schedule 3.1 (b).
(c) Authorization;
Enforcement . The Company has the requisite
corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents and
otherwise to carry out its obligations thereunder. The
execution and delivery of each of the Transaction Documents by the
Company 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 the filings referred to
in Section 3.1(e) hereof and required pursuant to Section 4.5
hereof. Each Transaction Document 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 binding obligation of the Company enforceable against the
Company in accordance with its terms, except (i) as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles 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) insofar as indemnification and contribution provisions
may be limited by applicable law.
(d) No
Conflicts . The execution, delivery and performance
of the Transaction Documents by the Company and the consummation by
the Company of the 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,
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 asset of the Company or any
Subsidiary is bound or affected, or (iii) 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 affected; except in the
case of each of clauses (ii) and (iii), such as would not,
individually or in the aggregate, 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) the filing with the Commission of one or more Registration
Statements in accordance with the requirements of the Registration
Rights Agreement, (ii) filings required by state securities
laws, and the timely filing of a Notice of Sale of Securities on
Form D with the Commission, (iii) the filings required in
accordance with Section 4.4, and (iv) those that have been made or
obtained prior to the date of this Agreement.
(f) Issuance of
the Securities . The Securities have been duly
authorized and, when issued and paid for in accordance with the
Transaction Documents, will be duly and validly issued, fully paid
and nonassessable, free and clear of all Liens, other than
restrictions on transfer under applicable securities
laws. The Company has reserved from its duly authorized
capital stock the shares of Common Stock issuable pursuant to this
Agreement.
(g)
Capitalization . The authorized capital stock of
the Company consists of: 400,000,000 shares of Common Stock,
of which as of the date hereof, 168,148,591 shares are issued
and outstanding, 19,172,439 shares are reserved for issuance
pursuant to the Company's stock option plans of which only
approximately 825,000 shares remain available for future
grants and 32,830,369 shares are issuable and reserved for
issuance pursuant to securities (other than stock options issued
pursuant to the Company's stock option plans) exercisable or
exchangeable for, or convertible into, shares of Common Stock and
(ii) 4,600,000 shares of Preferred Stock, $0.001 par value, of
which as of the date hereof no shares are issued or
outstanding, 200,000 shares of Series B Convertible Preferred
Stock, $0.05 par value, of which as of the date hereof no
shares are issued or outstanding, and 200,000 of Series C
Convertible Preferred Stock, $0.05 par value, of which as of the
date hereof, no shares are issued or outstanding, and no
other Preferred Stock is outstanding. All of such
outstanding shares have been, or upon issuance will be, validly
issued and are fully paid and nonassessable. Except as
disclosed in Schedule 3.1 (g), (i) no shares of the Company's
capital stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the
Company, (ii) there are no outstanding debt securities, (iii) there
are no outstanding options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to,
or securities or rights convertible into, any shares of capital
stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or
any of its Subsidiaries is or may become bound to issue additional
shares of capital stock of the Company or any of its Subsidiaries
or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities
or rights convertible into, any shares of capital stock of the
Company or any of its Subsidiaries, (iv) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is
obligated to register the sale of any of their securities under the
1933 Act (except the Registration Rights Agreement and except for
agreements disclosed in Schedule 3.1 (g)), (v) there are no
outstanding securities or instruments of the Company or any of its
Subsidiaries which contain any redemption or similar provisions,
and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or
may become bound to redeem a security of the Company or any of its
Subsidiaries, (vi) there are no securities or instruments
containing anti-dilution or similar provisions that will be
triggered by the issuance of the Securities as described in this
Agreement and (vii) the Company does not have any stock
appreciation rights or "phantom stock" plans or agreements or any
similar plan or agreement. The Company has furnished to
each Investor true and correct copies of the Company's Certificate
of Incorporation, as amended and as in effect on the date hereof
(the "Certificate of Incorporation"), and the Company's By-laws, as
amended and as in effect on the date hereof (the "By-laws"), and
summaries of the terms of all securities convertible into or
exercisable for Common Stock, if any, and copies of any documents
containing the material rights of the holders thereof in respect
thereto.
(h) SEC Reports;
Financial Statements . The Company has filed all
reports required to be filed by it under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the 12 months preceding the date hereof (or such shorter period
as the Company was required by law to file such reports) (the
foregoing materials being collectively referred to herein as the
"SEC Reports" and, together with the Schedules to this
Agreement (if any), the "Disclosure Materials" ) on a timely
basis or has timely filed 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 Securities Act and 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 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 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,
year-end audit adjustments disclosed therein.
(i) Absence of
Certain Changes . As disclosed in the SEC Documents,
since June 30, 2009, there has been no material adverse change in
the business, properties, operations, financial condition or
results of operations of the Company or its
Subsidiaries. The Company has not taken any steps, and
does not currently expect to take any steps, to seek protection
pursuant to any Bankruptcy Law nor does the Company or any of its
Subsidiaries have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy
or insolvency proceedings.
(j) Litigation
. Except as disclosed in the SEC Reports, there is no
Action which (i) adversely affects or challenges the legality,
validity or enforceability of any of the Transaction Documents or
the Securities or (ii) except as specifically disclosed in the SEC
Reports, would, if there were an unfavorable decision, individually
or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect. Neither the Company nor any
Subsidiary, nor any director or officer thereof (in his or her
capacity as such), 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,
except as specifically disclosed in the SEC
Reports. 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 (in his or her capacity as such). 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 actual knowledge of the executive officers or directors of the
Company, is imminent with respect to any of the employees of the
Company.
(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 notice of a claim
that it is in default under or that it is in violation of, 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 or has been in
violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state
and local laws relating to taxes, environmental protection,
occupational health and safety, product quality and safety and
employment and labor matters, except in each case as would not,
individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect. The Company is in compliance
with the applicable effective requirements of the Sarbanes-Oxley
Act of 2002, as amended, and the rules and regulations thereunder,
except where such noncompliance would not have or reasonably be
expected to result in 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, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect ( "Material
Permits" ), and neither the Company nor any Subsidiary has
received any notice of proceedings relating to the revocation or
modification of any Material Permit.
(n) Title to
Assets . The Company and the Subsidiaries have good
and marketable title in fee simple to all real property owned by
them that is material to their respective businesses and good and
marketable title in all personal property owned by them that is
material to their respective businesses, 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. Any real property and facilities held under
lease by the Company and the Subsidiaries are held by them under
valid, subsisting and enforceable leases of which the Company and
the Subsidiaries are in compliance, except as would not,
individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect.
(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 that are 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, individually or in the aggregate, have or reasonably be
expected to result in 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 where such
infringement would have or could reasonably be expected to have a
Material Adverse Effect. Except as set forth in the SEC
Reports and file histories of pending patent applications, to the
actual knowledge of the executive officers and directors of the
Company, all such Intellectual Property Rights are enforceable and
there is no existing infringement by another Person of any of the
Intellectual Property Rights.
(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 are prudent and customary in the
businesses in which the Company and the Subsidiaries are
engaged. The Company has no 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 on
terms consistent with market for the Company’s line of
business.
(q) Transactions
With Affiliates and Employees . Except as set forth
in the SEC Reports, 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.
(r) Internal
Accounting Controls . 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
generally accepted accounting principles 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
