EXHIBIT 10.1
ALFACELL CORPORATION
SECURITIES PURCHASE
AGREEMENT
This Securities Purchase Agreement (this
“ Agreement ”) is made and entered into
as of October 19, 2009, by and among
Alfacell Corporation, a Delaware corporation (the “
Company ”), and the investors identified on the
signature pages hereto (each, a “ Purchaser
”, and collectively, the “ Purchasers
”).
RECITALS
WHEREAS, the Company desires to issue up
to 65 units (the “ Units ”), in a private
placement (this “ Offering ”), each Unit
consisting of (i) $50,000 principal amount of 5% Senior Secured
Convertible Promissory Notes (the “ Notes
”) in the form attached as Exhibit A hereto, convertible into
shares of the Company’s common stock, par value $.001 per
share (“ Common Stock ”), (ii) three-year
Series A Common Stock Purchase Warrants (the “ Series A
Warrants ”) in the form attached as Exhibit B hereto,
to purchase in the aggregate that number of shares of Common Stock
initially issuable upon conversion of the aggregate amount of Notes
issued as part of the Unit, at an exercise price of $.15 per share,
and (iii) five-year Series B Common Stock Purchase Warrants (the
“ Series B Warrants ”, and
together with the Series A Warrants, the
“Warrants” ) in the form attached as
Exhibit C hereto, to purchase in the aggregate that number of
shares of Common Stock initially issuable upon conversion of the
aggregate amount of Notes issued as part of the Unit, at an
exercise price of $.25 per share;
WHEREAS, the Notes will initially be
convertible into shares of Common Stock at a conversion price equal
to $.15 per
share;
WHEREAS, the Notes will be secured by the
assets of the Company pursuant to a Security Agreement in the form
attached as Exhibit D hereto (the “ Security
Agreement ”), between the Company and James McCash,
as collateral agent for the Purchasers (the “
Agent ”);
WHEREAS, the Purchasers will appoint the
Agent to act as collateral agent for the subscribers under the
Security Agreement pursuant the terms set forth herein;
and
WHEREAS, contemporaneously with the
execution and delivery of this Agreement, the Company and
Purchasers are executing and delivering an Investor Rights
Agreement, substantially in the form attached hereto as Exhibit E
(the “ Investor Rights Agreement
”), pursuant to which the Company has agreed to provide
certain registration rights with respect to the Registrable
Securities (as defined in the Investor Rights
Agreement);
WHEREAS, contemporaneously with the
execution and delivery of this Agreement, the Company and the
Escrow Parties (as defined herein) are executing and delivering an
Escrow Agreement, substantially in the form attached hereto as
Exhibit F (the “ Escrow Agreement ”)
.
NOW, THEREFORE, in consideration of the
foregoing, the mutual promises hereinafter set forth, and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as
follows:
1.
AGREEMENT TO PURCHASE AND SELL
UNITS.
(a)
Agreement to Purchase and Sell
Securities . Subject to
the terms and conditions of this Agreement, each Purchaser,
severally and not jointly, agrees to purchase, and the Company
agrees to sell and issue to each Purchaser, at the Closing (as
defined below), at a price of $50,000 per Unit the number of Units,
and the corresponding principal amount of Notes and Warrants to
purchase the corresponding number of shares of Common Stock
identified on the signature pages hereto.
(b)
Obligations Several, Not
Joint . The obligations
of each Purchaser under this Agreement are several and not joint
with the obligations of any other Purchaser, and no Purchaser shall
be responsible in any way for the performance of the obligations of
any other Purchaser under this Agreement. The decision of
each of the Purchasers to purchase the Units pursuant to this
Agreement has been made by such Purchaser independently of any
other Purchaser. Nothing contained herein, and no action
taken by any Purchaser pursuant hereto, shall be deemed to
constitute the Purchasers as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that
the Purchasers are in any way acting in concert or as a group with
respect to such obligations or the transactions contemplated by
this Agreement. Each Purchaser shall be entitled to
independently protect and enforce such Purchaser’s rights,
including, without limitation, the rights arising out of this
Agreement, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such
purpose.
2.
CLOSING .
Subject to the satisfaction of the
conditions to Closing set forth in this Agreement, the purchase and
sale of the Units shall take place at the offices of Goodwin
Procter LLP, The New York Times Building, 620 Eighth Avenue, New
York, New York 10018 at 10:00 a.m., New York City time, on October
19, 2009, or at such other time and place as the Company and the
Purchasers purchasing a majority of the principal amount of the
Notes mutually agree (which time and place are referred to in this
Agreement as the “ Closing ”).
The date of the Closing hereunder is referred to herein
as the “ Closing Date ”. On the
Closing Date, the Company shall, against such payment for the
Units, deliver to each Purchaser the Notes and Warrants purchased
hereunder.
3.
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
The Company hereby represents and
warrants to each Purchaser that as of the date hereof (except with
respect to any representations and warranties that speak as of a
specified date, which shall be true and correct as of such
date):
(a)
Organization Good Standing and
Qualification . The
Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all
corporate power and authority required to (i) own, operate and
occupy its properties and to carry on its business as presently
conducted and (ii) enter into this Agreement,
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the Notes, the Warrants, the Security
Agreement, the Investor Rights Agreement, the Escrow Agreement and
all other agreements, instruments and documents contemplated hereby
(collectively, the “ Transaction Documents
”), and to consummate the transactions contemplated hereby
and thereby. The Company is qualified to do business and is
in good standing in each jurisdiction in which the failure to so
qualify would have a Material Adverse Effect. As used in this
Agreement, “ Material Adverse Effect ”
means a material adverse effect on, or a material adverse change
in, the business, operations, financial condition, results of
operations, properties, prospects, assets or liabilities of the
Company, taken as a whole, or on the transactions contemplated
hereby and the other agreements, instruments and documents
contemplated hereby or on the authority or ability of the Company
to perform its obligations under the Transaction Documents.
(b)
Capitalization . The capitalization of the Company, prior to
the issuance of the Units, is as follows:
(i)
The authorized capital stock of the
Company consists of 100 million shares of Common Stock, and one
million shares of Preferred Stock, par value $0.01 per share (the
“ Preferred Stock ”).
(ii)
As of September 30, 2009, the issued and
outstanding capital stock of the Company consisted of (A)
47,313,880 shares of Common Stock and (B) no shares of Preferred
Stock. The issued and outstanding shares of Common Stock have
been duly authorized and validly issued, are fully paid and
nonassessable and have not been issued in violation of or are not
otherwise subject to any preemptive or other similar
rights.
(iii)
As of September 30, 2009, the Company had
three equity incentive plans: the 2004 Stock Incentive Plan,
the 1997 Stock Option Plan and the 1993 Stock Option Plan
(collectively, the "Plans"). As of September 30, 2009, the
Company had (1) 4,161,900 shares of Common Stock reserved for
issuance upon exercise of outstanding options, (2) 8,075,493 shares
of Common Stock reserved for issuance upon exercise of outstanding
warrants, and (3) 5,012,500 shares reserved for issuance under the
Plans. Each stock option granted by the Company (i) was
granted in accordance with the terms of the applicable Plan, and
(ii) was granted with an exercise price at least equal to the fair
market value of the Common Stock on the date such option would be
considered granted under generally accepted accounting principles
in the United States and applicable law (that is, no option has
been backdated). The Company has not knowingly granted, and there
is no and has been no Company policy or practice to knowingly
grant, stock options prior to, or otherwise knowingly coordinate
the grant of stock options with, the release or other public
announcement of material information regarding the Company or its
financial results or prospects. Except as set forth in
this Section 3(b) and Section 3(b) of the disclosure letter dated
October 19, 2009, attached hereto as Exhibit G (the “
Disclosure Letter ”), there are no outstanding
subscriptions, options, warrants, convertible or exchangeable
securities or other rights granted to or by the Company to purchase
shares of Common Stock or other securities of the Company and there
are no commitments, plans or arrangements to issue any shares of
Common Stock or any security convertible into or exchangeable for
Common Stock.
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(iv)
Except as set forth in Section 3(b) of
the Disclosure Letter (i) there are no outstanding securities
or instruments of the Company which contain any redemption or
similar provisions; (ii) there are no securities or instruments
containing anti-dilution or similar provisions that will be
triggered by the issuance of the Units; (iii) none of the
Company’s capital stock is subject to preemptive rights or
any other similar rights or any liens or encumbrances suffered or
permitted by the Company; and (iv) there are no outstanding debt
securities, notes, credit agreements, credit facilities or other
agreements, documents or instruments evidencing indebtedness, other
than trade credit and other indebtedness incurred in the ordinary
course of business, of the Company or by which the Company is or
may become bound. There are no shareholder agreements, voting
agreements, or other similar arrangements, with respect to the
Company’s capital stock to which the Company is a party or,
to the Company’s knowledge, between or among any of the
Company’s stockholders.
(c)
Subsidiary . The Company does not have any Subsidiaries,
and the Company does not own any capital stock of, assets
comprising the business of, obligations of, or any other interest
(including any equity or partnership interest) in, any person or
entity. As used herein " Subsidiaries " means
any entity in which the Company, directly or indirectly, owns any
capital stock or holds an equity or similar interest
(d)
Due Authorization
. All corporate actions on the part
of the Company necessary for (i) the authorization, execution,
delivery of, and the performance of all obligations of the Company
under each of the Transaction Documents, and (ii) the
authorization, issuance, reservation for issuance and delivery of
all of the shares of Common Stock issuable upon conversion of the
Notes and exercise of the Warrants (collectively, the “
Shares ”), have been taken, and each of the
Transaction Documents constitutes (or will constitute upon
execution by the Company) the valid and binding obligation of the
Company, enforceable against the Company in accordance with its
respective terms.
(e)
Valid Issuance of Shares
.
(i)
Shares . The Shares will be, upon conversion of the
Notes and exercise of the Warrants, as applicable, in accordance
with the terms thereof, duly authorized, validly issued, fully paid
and non-assessable free and clear from all taxes, liens, claims and
encumbrances with respect to the issuance of the Shares and will
not be subject to any preemptive rights or similar rights; provided
that prior to the time of conversion of the Notes and exercise of
the Warrants, as applicable, the Company’s certificate of
incorporation shall be amended to increase the authorized shares of
Common Stock to such number that will permit the Company to satisfy
its obligations to issue shares upon such conversion and exercise,
as applicable.
(ii)
Compliance with Securities
Laws . Subject to the
accuracy of the representations made by the Purchasers in Section 4
hereof, the Units will be issued and sold to the Purchasers in
compliance with applicable exemptions from the registration and
prospectus delivery requirements of the Securities Act of 1933, as amended (the “ Securities
Act ”) .
4
(f)
Governmental Consents
. Except as set forth in
Section 3(f) of the Disclosure Letter, no consent, approval,
order or authorization of, or registration, qualification,
designation, declaration or filing with, or notice to, any federal,
state or local governmental authority (each, a “
Governmental Entity ”) on the part of the
Company is required in connection with the issuance and sale of the
Units to the Purchasers, or the consummation of the other
transactions contemplated by this Agreement, except such filings as
have been made prior to the date hereof, and such additional
post-Closing filings as may be required to comply with applicable
state and federal securities laws.
(g)
Non-Contravention
. The execution, delivery and
performance of each of the Transaction Documents by the Company,
and the consummation by the Company of the transactions
contemplated hereby and thereby, do not (i) contravene or conflict
with any certificate of incorporation, certificate of formation,
any certificate of designations or other constituent documents of
the Company, or the bylaws of the Company; (ii) assuming the
accuracy of the representations and warranties made by the
Purchasers in Section 4 hereof, constitute a violation in any
respect of any provision of any federal, state, local or foreign
law, rule, regulation, order, judgment or decree applicable to the
Company; or (iii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a
default) or require any consent under, give rise to any right of
termination, amendment, cancellation or acceleration of, or to a
loss of any material benefit to which the Company is entitled
under, or result in the creation or imposition of any lien, claim
or encumbrance on any assets of the Company under, any contract to
which the Company is a party or any permit, license or similar
right relating to the Company or by which the Company may be bound
or affected.
(h)
Litigation . Except as set forth in Section 3(h) of
the Disclosure Letter, there is no material action, suit,
proceeding, claim, arbitration or investigation pending or, to the
Company’s knowledge, threatened: (i) against the
Company, its activities, properties or assets, or any officer,
director or employee of the Company in connection with such
officer’s, director’s or employee’s relationship
with, or actions taken on behalf of, the Company, or (ii) that
seeks to prevent, enjoin, alter, challenge or delay the
transactions contemplated by this Agreement. The Company is
not a party to or subject to the provisions of, any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. Except as set forth in Section 3(h) of the
Disclosure Letter, the Company has, to the Company’s
knowledge, in all material respects, complied with all laws,
regulations and orders applicable to its business, including
Pharmaceutical Laws (as defined below), and has all material
permits and licenses required thereby. “
Pharmaceutical Laws ” shall mean any federal,
state, local or foreign law, statute, rule or regulation relating
to the development, commercialization and sale of pharmaceutical
and biotechnology products and devices, including all applicable
regulations of the U.S. Food and Drug Administration (the
“ FDA ”).
(i)
Compliance with Law and Charter
Documents; Regulatory Permits . The Company is not in violation or default of
any provisions of its certificate of incorporation, bylaws or
similar organizational document, as applicable. The Company
has, to the Company’s knowledge, materially complied and is
currently in material compliance with all applicable judgments,
decrees, statutes, laws, rules, regulations and orders of the
United States of America and all states thereof, foreign countries
and other governmental bodies and agencies
5
having jurisdiction over the
Company’s business or property, and the Company has not
received notice that it is in violation of any statute, rule or
regulation of any governmental authority applicable to it,
including without limitation, all applicable rules and regulations
of the FDA. Except as set forth in Section 3(i) of the
Disclosure Letter, the Company, to the Company’s knowledge,
is not in default (and there exists no condition which, with or
without the passage of time or giving of notice or both, would
constitute a default) in any material respect in the performance of
any bond, debenture, note or any other evidence of indebtedness in
any indenture, mortgage, deed of trust or any other material
agreement or instrument to which the Company is a party or by which
the Company is bound or by which the properties of the Company are
bound, which default would be reasonably likely to have a Material
Adverse Effect. The Company possesses all certificates,
authorizations and permits issued by the appropriate regulatory
authorities necessary to conduct its business as described in the
SEC Documents (as defined below), except where the failure to
possess such certificates, authorizations or permits would not
have, individually or in the aggregate, a Material Adverse Effect,
and the Company has not received any notice of proceedings relating
to the revocation or modification of any such certificate,
authorization or permit.
(j)
FDA Matters . Except as set forth in Section 3(j) of the
Disclosure Letter, the human clinical trials and other preclinical
tests conducted by the Company or in which the Company has
participated, and such studies and tests conducted on behalf of the
Company and that the Company has relied on or intends to rely on in
support of regulatory clearance or approval by the FDA or foreign
regulatory agencies, to the Company’s knowledge, were and are
being conducted in all material respects in accordance with
accepted industry standards for experimental protocols, procedures
and controls as generally used by qualified experts in the
preclinical or clinical study of pharmaceutical products as applied
to comparable products to those being developed by the
Company.
(k)
SEC Documents .
(i)
Reports . Except as set forth in Section 3(k) of the
Disclosure Letter, the Company has filed in a timely manner all
reports, schedules, forms, statements and other documents required
to be filed by it with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended
(the “ Exchange Act ”) and the rules and
regulations promulgated thereunder. The Company has filed on
the SEC’s EDGAR system, prior to the date hereof, its Annual
Report on Form 10-K for the fiscal year ended July 31, 2008 (the
“ Form 10-K ”), its quarterly reports on
Form 10-Q for the fiscal quarters ended October 31, 2008, January
31, 2009 and April 30, 2009 (the “ Form 10-Qs
”), and any Current Report on Form 8-K (“ Form
8-Ks ”) required to be filed by the Company with the
SEC for events occurring during the two (2) years prior to the date
hereof (the Form 10-K, Form 10-Qs and Form 8-Ks, together with all
exhibits, schedules and other attachments that are filed with such
documents, are collectively referred to herein as the “
SEC Documents ”). Each SEC Document, as
of its date (or, if amended or superseded by a filing prior to the
Closing Date, then on the date of such filing), did not contain any
untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not
misleading. Each SEC Document, as it may have been
subsequently amended by filings made by the Company with the SEC
prior to the date hereof, complied in all material respects with
the requirements of the Exchange Act
6
and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Document. As of
their respective dates, the financial statements of the Company
included in the SEC Documents complied as to form and substance in
all material respects with applicable accounting requirements and
published rules and regulations of the SEC with respect thereto.
Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied in
the United States (“ GAAP ”), during the
periods involved (except in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be
condensed or summary statements), correspond to the books and
records of the Company and fairly present in all material respects
the financial position of the Company as of the dates thereof and
the results of operations and cash flows for the periods then
ended. Except as set forth in Section 3(k) of the Disclosure
Letter, the Company is not required to file and will not be
required to file any agreement, note, lease, mortgage, deed or
other instrument entered into prior to the date of this Agreement
and to which the Company is a party or by which the Company is
bound which has not been previously filed or incorporated by
reference as an exhibit to the SEC Documents.
(ii)
Sarbanes-Oxley . The Chief Executive Officer and the Chief
Financial Officer of the Company have signed, and the Company has
furnished to the SEC, all certifications required by Sections 302
and 906 of the Sarbanes-Oxley Act of 2002 as of the date hereof.
Such certifications contain no exceptions to the matters
certified therein and have not been modified or withdrawn; and
neither the Company nor any of its officers has received notice
from any Governmental Entity questioning or challenging the
accuracy of such certifications. The Company is otherwise in
compliance with all applicable effective provisions of the
Sarbanes-Oxley Act of 2002 and the rules and regulations issued
thereunder by the SEC.
(l)
Absence of Certain Changes
. Except as set forth in Section
3(l) of the Disclosure Letter or in the SEC Documents, since July
31, 2008, the business and operations of the Company have been
conducted in the ordinary course consistent with past practice, and
there has not been:
(i)
Any declaration, setting aside or payment
of any dividend or other distribution of the assets of the Company
with respect to any shares of capital stock of the
Company;
(ii)
any repurchase, redemption or other
acquisition by the Company of any outstanding shares of the
Company’s capital stock;
(iii)
any damage, destruction or loss to the
Company’s properties or assets, whether or not covered by
insurance, except for such occurrences, individually and
collectively, that have not had, and would not reasonably be
expected to have, a Material Adverse Effect;
(iv)
any waiver by the Company of a valuable
right or of a material debt owed to it, except for such waivers,
individually and collectively, that have not had, and would not
reasonably be expected to have, a Material Adverse
Effect;
7
(v)
any material change by the Company in its
accounting principles, methods or practices or in the manner in
which it keeps its accounting books and records, except any such
change required by a change in GAAP or by the SEC;
(vi)
any material change or amendment to, or
any waiver of any material right under a material contract or
arrangement by which the Company or any of its assets or properties
is bound or subject that could be expected to have a Material
Adverse Effect;
(vii)
any other event or condition of any
character, except for such events and conditions that have not
resulted, and are not reasonably expected to result either
individually or collectively, in a Material Adverse
Effect;
(viii)
any sale of any assets, individually or
in the aggregate, in excess of $10,000 outside of the ordinary
course of business; or
(ix)
any capital expenditures, individually or
in the aggregate, in excess of $10,000 outside of the ordinary
course of business.
(m)
Intellectual Property
. To the Company’s knowledge,
the Company owns or possesses sufficient rights to use all patents,
patent rights, inventions, trade secrets, know-how, trademarks, or
other intellectual property (collectively, “
Intellectual Property ”), which are necessary
to conduct its business as currently conducted, except where the
failure to own or possess such rights would not reasonably be
expected to result in a Material Adverse Effect. To the Company’s
knowledge, the Company has not infringed any patents of others with
respect to any Intellectual Property which, either individually or
in the aggregate, if the subject of an unfavorable decision, ruling
or finding, would reasonably be expected to have a Material Adverse
Effect, and, except as set forth in Section 3(m) of the Disclosure
Letter, no patent owned or licensed by the Company is unenforceable
or invalid. To the Company’s knowledge, there is no
claim, action or proceeding against the Company with respect to any
Intellectual Property. The Company has no actual knowledge of
any infringement or improper use by any third party with respect to
any Intellectual Property of the Company which would reasonably be
expected to result in a Material Adverse Effect. The Company
has taken reasonable security measures to protect the secrecy,
confidentiality and value of all of such of its Intellectual
Property as the Company is required to keep secret. Except as
set forth in Section 3(m) of the Disclosure Letter, none of the
Company’s Intellectual Property has expired or terminated.
All of the patent assignments concerning the Intellectual
Property which are of record in the United States Patent and
Trademark Office as to which the Company is the assignee are
believed to be valid and binding obligations of the
assignor(s).
(n)
Registration Rights
. Except as provided in the
Investor Rights Agreement or as set forth on Section 3(n) of the
Disclosure Letter, effective upon the Closing, the Company is not
currently subject to any agreement providing any person or entity
any rights (including piggyback registration rights) to have any
securities of the Company registered with the SEC or registered or
qualified with any other governmental authority.
8
(o)
Title to Property and
Assets . The properties
and assets of the Company are owned by the Company and, to the
Company’s knowledge, are free and clear of all mortgages,
deeds of trust, liens, charges, encumbrances and security interests
except for (i) statutory liens for the payment of current taxes
that are not yet delinquent and (ii) liens, encumbrances and
security interests that are in the ordinary course of business and
do not materially detract from the value of the properties and
assets of the Company, taken as a whole. With respect to the
property and assets it leases, except as set forth on Section 3(o)
of the Disclosure Letter, the Company is in compliance with such
leases in all material respects and such leases are held by it
under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the
Company.
(p)
Taxes . The Company has filed or has obtained
currently effective extensions with respect to all federal, state,
county, local and foreign tax returns which are required to be
filed by it, such returns are complete and accurate in all material
respects and all taxes shown thereon to be due have been timely
paid with exceptions not material to the Company, taken as a whole.
No material controversy with respect to taxes of any type
with respect to the Company is pending or, to the Company’s
knowledge, threatened. The Company has withheld or collected
from each payment made to its employees the amount of all taxes
required to be withheld or collected therefrom and has paid all
such amounts to the appropriate taxing authorities when due
(including, but not limited to, federal income taxes, Federal
Insurance Contribution Act taxes and Federal Unemployment Tax Act
taxes). The Company does not have any material tax liability
relating to income, properties or assets of the Company as of the
Closing that is not adequately provided for.
(q)
Insurance . The Company maintains insurance of the types
and in the amounts that the Company reasonably believes is prudent
and adequate for its business, all of which insurance is in full
force and effect in all material respects. The Company has not been
refused any insurance coverage sought or applied for and the
Company does not have 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 at a cost
that would not have a Material Adverse Effect.
(r)
Labor Relations
.
(i)
No material labor dispute exists or, to
the knowledge of the Company, is imminent with respect to any of
the employees of the Company.
(ii)
The Company is not a party to any
collective bargaining agreement or employs any member of a union.
No executive officer (as defined in Rule 501(f) of the
Securities Act) of the Company has notified the Company that such
officer intends to leave the Company or otherwise terminate such
officer’s employment with the Company. No executive
officer of the Company, to the knowledge of the Company, is, or is
now expected to be, in violation of any material term of any
employment contract, confidentiality, disclosure or proprietary
information agreement, non-competition agreement, or any other
contract or agreement or any restrictive covenant, and the
continued employment of each such executive
9
officer does not subject the Company to
any liability with respect to any of the foregoing
matters.
(iii)
The Company is in compliance with all
federal, state, local and foreign laws and regulations respecting
labor, employment and employment practices and benefits, terms and
conditions of employment and wages and hours, except where failure
to be in compliance would not, either individually or in the
aggregate, reasonably be expected to result in a Material Adverse
Effect.
(s)
Internal Accounting Controls;
Disclosure Controls .
The Company maintains 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 or incurrence of liabilities is permitted only in
accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets and
liabilities is compared with the existing assets and liabilities at
reasonable intervals and appropriate action is taken with respect
to any differences. The Company maintains disclosure controls
and procedures (as such term is defined in Rule 13a-15 under the
Exchange Act) that are effective in ensuring that information
required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the
rules and forms of the SEC, including, without limitation, controls
and procedures designed to ensure that information required to be
disclosed by the Company in the reports that it files or submits
under the Exchange Act is accumulated and communicated to the
Company’s management, including its principal executive
officer or officers and its principal financial officer or
officers, as appropriate, to allow timely decisions regarding
required disclosure. During the twelve months prior to the
date hereof the Company has not received any notice or
correspondence from any accountant relating to any material
weakness in any part of the system of internal accounting controls
of the Company.
(t)
Transactions with
Affiliates . Except as
set forth in Section 3(t) of the Disclosure Letter, none of
the officers, directors or employees of the Company has entered
into any transaction with the Company that would be required to be
disclosed pursuant to Item 404(a) of Regulation S-K of the
SEC.
(u)
General Solicitation
. Neither the Company, nor any of
its affiliates, nor any other person or entity authorized by the
Company to act on its behalf has engaged in a general solicitation
or general advertising (within the meaning of Regulation D of the
Securities Act) of investors with respect to offers or sales of the
Units.
(v)
No Integrated Offering
. Neither the Company, nor any
affiliate of the Company, nor, to the Company’s knowledge any
person acting on its or their behalf has, directly or indirectly,
made any offers or sales of any security or solicited any offers to
buy any security, under c
