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EXHIBIT 1.1
EXECUTION COPY
October 20, 2006
Banc of America Securities LLC
as Placement Agent
9 West 57th Street, 29th Floor
New York, New York 10019
Lazard Capital Markets LLC
as Placement Agent
30 Rockefeller Plaza
New York, NY 10020
Ladies and Gentlemen:
Lexicon Genetics Incorporated, a Delaware corporation (the
"COMPANY"),
proposes to issue and sell to certain investors (collectively, the
"INVESTORS")
up to an aggregate of 10,582,011 shares (the "SHARES") of Common
Stock, par
value $0.001 per share (the "COMMON STOCK"), of the Company. The
Company desires
to engage Banc of America Securities LLC ("BAS" or the "LEAD
PLACEMENT AGENT")
and Lazard Capital Markets LLC ("LCM") as its exclusive lead
placement agent and
co-placement agent, respectively (the "PLACEMENT AGENTS" and each,
a "PLACEMENT
AGENT"), in connection with such issuance and sale. The Shares are
described in
the Prospectus that is referred to below.
The
Company has prepared and filed, in accordance with the provisions
of
the Securities Act of 1933, as amended, and the rules and
regulations thereunder
(collectively, the "ACT"), with the Securities and Exchange
Commission (the
"COMMISSION") a registration statement under the Act on Form S-3
(File No.
333-122214) on January 21, 2005 (the "REGISTRATION STATEMENT"). The
registration
statement has been declared by the Commission to be effective under
the Act. The
Company will next file with the Commission pursuant to Rule 424(b)
under the Act
a final prospectus supplement to the Basic Prospectus (as defined
below),
describing the Shares and the offering thereof, in such form as has
been
provided to or discussed with, and reasonably approved, by the
Placement Agents.
The
term "REGISTRATION STATEMENT" as used in this Agreement means
the
registration statement, at the time it became effective and as
supplemented or
amended prior to the execution of this Agreement (excluding the
prospectus
supplement dated as of September 14, 2006), including (i) all
financial
statements, exhibits and schedules thereto and (ii) all documents
incorporated
by reference or deemed to be incorporated by reference therein. The
term "BASIC
PROSPECTUS" as used in this Agreement means the basic prospectus
dated as of
June 13, 2006 that is part of the registration statement for use in
connection
with the offer and/or sale of the Shares pursuant to this
Agreement. The term
"PROSPECTUS SUPPLEMENT" as used in this Agreement means the final
prospectus
supplement dated as of October 20, 2006 specifically relating to
the
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Shares and which will be filed with the Commission pursuant to Rule
424(b) under
the Act after the date and time that this Agreement is executed and
delivered by
the parties hereto (the "EXECUTION TIME"). The term "PROSPECTUS" as
used in this
Agreement means the Basic Prospectus together with the Prospectus
Supplement
except that if such Basic Prospectus is amended or supplemented on
or prior to
the date of the Prospectus Supplement, the term "PROSPECTUS" shall
refer to the
Basic Prospectus as so amended or supplemented and as supplemented
by the
Prospectus Supplement. Any reference herein to the registration
statement, the
Registration Statement, the Basic Prospectus, any Prospectus
Supplement or the
Prospectus shall be deemed to refer to and include (i) the
documents
incorporated by reference therein as of the date of the Prospectus
pursuant to
Item 12 of Form S-3 under the Securities Act (the "INCORPORATED
DOCUMENTS") and
(ii) the copy of the Registration Statement, the Basic Prospectus,
the
Prospectus Supplement, the Prospectus or the incorporated documents
filed with
the Commission pursuant to its Electronic Data Gathering, Analysis
and Retrieval
system ("EDGAR"). Any reference herein to the terms "AMEND,"
"AMENDMENT" or
"SUPPLEMENT" with respect to the Registration Statement, the
Prospectus
Supplement or the Prospectus shall be deemed to refer to and
include the filing
of any document under the Securities Exchange Act of 1934, as
amended, and the
rules and regulations thereunder (collectively, the "EXCHANGE ACT")
after the
effective date of the Registration Statement, or the date of the
Prospectus, as
the case may be, deemed to be incorporated therein by reference. As
used herein,
"BUSINESS DAY" shall mean a day on which the Nasdaq Global Market
(the "NASDAQ")
is open for trading.
The
term "DISCLOSURE PACKAGE" shall mean (i) the Prospectus as of
the
Execution Time, (ii) the issuer free writing prospectuses as
defined in Rule 433
of the Act (each, an "ISSUER FREE WRITING PROSPECTUS"), if any,
identified in
Exhibit A hereto, (iii) any other free writing prospectus that the
parties
hereto shall hereafter expressly agree in writing to treat as part
of the
Disclosure Package, and (iv) the information identified in Schedule
B hereto.
The
Company hereby confirms its agreement with the Placement Agents
as
follows:
Section 1. Agreement to Act as Placement Agents. Upon the basis of
the
representations and warranties of the Company and subject to the
terms and
conditions set forth in this Agreement and in the letter agreement
dated October
16, 2006 between the Company and the Placement Agents (the
"ENGAGEMENT LETTER"),
the Company engages the Placement Agents to act as the exclusive
placement
agents, on a best efforts basis, in connection with the offer and
sale by the
Company of Shares to the Investors. LCM may utilize the expertise
of Lazard
Freres & Co. LLC in connection with LCM's placement agent
activities. As
compensation for services rendered, at the time of purchase (as
defined below)
the Company shall pay to the Placement Agents, by Federal Funds
wire transfer of
immediately available funds to an account or accounts designated by
the
Placement Agents, an amount equal to 6% of the gross proceeds
received by the
Company in respect of the sale of the Shares, which shall be
allocated between
the Placement Agents as follows: 70% to BAS and 30% to LCM. The
Shares are being
sold at a price of $3.78 per share. The Placement Agents may retain
other
brokers or dealers to act as subagents on its behalf in connection
with the
offering and sale of the Shares; provided that the Company will
only be
obligated to pay the Placement Agents for services rendered
hereunder.
This
Agreement shall not give rise to any commitment by the
Placement
Agents or any of its affiliates to underwrite or purchase any of
the Shares, and
the Placement Agents shall have no
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authority to bind the Company in respect of the sale of any Shares.
The sale of
the Shares shall be made pursuant to a purchase agreement in the
form included
as Exhibit B hereto (the "PURCHASE AGREEMENT"). The Placement
Agents shall
communicate to the Company each reasonable offer or indication of
interest
received by it to purchase Shares. The Company shall have the sole
right to
accept offers to purchase the Shares and may reject any such offer
in whole or
in part.
Section 2. Payment and Delivery. Subject to the terms and
conditions
hereof, payment of the purchase price for, and delivery of
certificates for, the
Shares shall be made at the office of King & Spalding LLP (or
at such other
place as shall be agreed upon by the Placement Agents and the
Company), at 10:00
A.M., New York City time, on October 25, 2006 (unless another time
shall be
agreed to by the Placement Agents and the Company). Subject to the
terms and
conditions hereof, payment of the purchase price for the Shares
shall be made to
the Company by Federal Funds wire transfer of immediately available
funds,
against delivery of the Shares, through the facilities of The
Depository Trust
Company ("DTC"), to such persons, and shall be registered in such
name or names
and shall be in such denominations, as the Placement Agents may
request at least
one business day before the time of purchase. The Shares shall be
delivered by
the Company free from any transfer taxes or other similar fees or
charges under
federal law or the laws of any state, or any political subdivision
thereof,
required to be paid in connection with the execution and delivery
of this
Agreement or the issuance by the Company or sale by the Company of
the Shares.
Payment of the purchase price for the Shares shall be made at the
time of
purchase by the Investors directly to the Company. The time at
which such
payment and delivery are to be made is hereinafter sometimes called
the "TIME OF
PURCHASE." Electronic transfer of the Shares shall be made at the
time of
purchase in such names and in such denominations as the Placement
Agents shall
specify.
Section 3. Representations and Warranties of the Placement Agents.
Each of
the Placement Agents represents and warrants to and agrees with the
Company that
it has not distributed and will not distribute, prior to the time
of purchase,
any Issuer Free Writing Prospectus as defined in Rule 433 of the
Act other than
the Issuer Free Writing Prospectuses listed on Exhibit A.
Section 4. Representations and Warranties of the Company. The
Company
represents and warrants to and agrees with the Placement Agents
that:
(a)
the Registration Statement has been declared effective under the
Act;
the Company has complied to the Commission's satisfaction with all
requests of
the Commission for additional or supplemental information; no stop
order of the
Commission preventing or suspending the use of the Basic
Prospectus, the
Prospectus Supplement or the Prospectus or the effectiveness of the
Registration
Statement has been issued or is in effect, and no proceedings for
such purpose
have been instituted or are pending or, to the Company's knowledge,
are
contemplated or threatened by the Commission; the Company is
eligible to use
Form S-3. The Registration Statement complied when it became
effective, complies
and will comply, at the time of purchase, the Basic Prospectus, the
Prospectus
Supplement and the Prospectus complied as of their respective
dates, comply and
will comply at the time of purchase, and the offering of the Shares
complies and
will comply at the time of purchase in all material respects with
the
requirements of the Act (including Rule 415 under the Act); any
statutes,
regulations, legal or governmental proceedings,
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business relationships or related-party transactions, direct or
contingent
material liabilities or obligations (including any off-balance
sheet
obligations), contracts or other documents that are required to be
described in
the Registration Statement, the Disclosure Package or the
Prospectus or to be
filed as exhibits to the Registration Statement have been and will
be so
described or filed; the conditions to the use of Form S-3 have been
satisfied;
and the Registration Statement did not at the time of
effectiveness, does not
and will not at the time of purchase contain an untrue statement of
a material
fact or omit to state a material fact required to be stated therein
or necessary
to make the statements therein not misleading, and the Basic
Prospectus, the
Prospectus Supplement and the Prospectus did not as of their
respective dates,
do not and will not at the time of purchase contain an untrue
statement of a
material fact or omit to state a material fact required to be
stated therein or
necessary to make the statements therein, in the light of the
circumstances
under which they were made, not misleading; and the documents
incorporated by
reference in the Basic Prospectus, the Prospectus Supplement, the
Registration
Statement and the Prospectus, at the time they became effective or
were filed
with the Commission, complied in all material respects with the
requirements of
the Exchange Act and did not contain an untrue statement of a
material fact or
omit to state a material fact required to be stated therein or
necessary to make
the statements therein, in the light of the circumstances under
which they were
made, not misleading, provided that the representations and
warranties set forth
in this paragraph do not apply to statements or omissions in the
Registration
Statement, the Basic Prospectus, the Prospectus Supplement or the
Prospectus
based upon information relating to the Placement Agents furnished
to the Company
in writing by the Placement Agents expressly for use therein;
(b)
the Disclosure Package does not and at the time of purchase, as
defined
herein, will not contain any untrue statement of a material fact or
omit to
state any material fact necessary in order to make the statements
therein, in
the light of the circumstances under which they were made, not
misleading,
provided that the representations and warranties set forth in this
paragraph do
not apply to statements or omissions in the Disclosure Package
based upon
information relating to the Placement Agents furnished to the
Company in writing
by the Placement Agents expressly for use therein;
(c)
each Issuer Free Writing Prospectus, as of its issue date and at
all
subsequent times through the time of purchase, as defined herein,
did not, does
not and will not contain any information that conflicted, conflicts
or will
conflict with the information contained in the Registration
Statement. If at any
time following issuance of an Issuer Free Writing Prospectus there
occurred or
occurs an event or development as a result of which such Issuer
Free Writing
Prospectus conflicted or would conflict with the information
contained in the
Registration Statement, the Company has promptly notified or will
promptly
notify the Placement Agents and has promptly amended or will
promptly amend or
supplement, at its own expense, such Issuer Free Writing Prospectus
to eliminate
or correct such conflict;
(d)
as of the Execution Time (with such date being used as the
determination date for purposes of this clause), the Company is not
an
Ineligible Issuer (as defined in Rule 405 of the Act);
(e)
the Company has not distributed and will not distribute, prior to
the
time of purchase, any offering material in connection with the
offering and sale
of the Shares other than
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the Prospectus, any Issuer Free Writing Prospectus reviewed and
consented to by
the Placement Agents (which consent shall not be unreasonably
withheld) or
listed in Exhibit A hereto or the Registration Statement;
(f)
the statements included or incorporated by reference into the
Disclosure Package and the Prospectus under the headings
"ALLIANCES,
COLLABORATIONS AND LICENSES", "PATENTS AND PROPRIETARY RIGHTS",
"GOVERNMENTAL
REGULATION" and "RISK FACTORS--RISKS RELATED TO OUR INDUSTRY"
(other than the
statements under the headings "--THE UNCERTAINTY OF PHARMACEUTICAL
PRICING AND
REIMBURSEMENT MAY DECREASE THE COMMERCIAL POTENTIAL OF ANY PRODUCTS
THAT WE OR
OUR COLLABORATORS MAY DEVELOP AND AFFECT OUR ABILITY TO RAISE
CAPITAL", "--WE
MAY BE SUED FOR PRODUCT LIABILITY" and "--PUBLIC PERCEPTION OF
ETHICAL AND
SOCIAL ISSUES MAY LIMIT OR DISCOURAGE THE USE OF OUR TECHNOLOGIES,
WHICH COULD
REDUCE OUR REVENUES"), insofar as such statements summarize legal
matters,
agreements, documents or proceedings discussed therein, are
accurate and fair
summaries of such legal matters, agreements, documents or
proceedings;
(g)
as of the date of this Agreement, the Company has an authorized
and
outstanding capitalization as set forth or incorporated by
reference in each of
the Disclosure Package and the Prospectus and, as of the time of
purchase, the
Company shall have an authorized and outstanding capitalization as
set forth in
each of the Disclosure Package and the Prospectus (subject, in each
case, to the
issuance of shares of Common Stock on September 15, 2006 pursuant
to the Common
Stock Purchase Agreement between the Company and Azimuth
Opportunity Ltd.
("AZIMUTH") dated June 12, 2006 (the "AZIMUTH EQUITY AGREEMENT"),
the issuance
of shares of Common Stock upon conversion of existing convertible
securities,
the exercise of existing stock options and warrants disclosed as
outstanding in
each of the Disclosure Package and the Prospectus and the grant of
options under
existing stock option plans described in each of the Disclosure
Package and the
Prospectus); all of the issued and outstanding shares of capital
stock,
including the Common Stock, of the Company have been duly
authorized and validly
issued and are fully paid and non-assessable, have been issued in
compliance
with all federal and state securities laws and were not issued in
violation of
any preemptive right, resale right, right of first refusal or
similar right;
(h)
the Company has been duly incorporated and is validly existing as
a
corporation in good standing under the laws of the jurisdiction of
its
incorporation, with the requisite corporate power and authority to
own, lease
and operate its properties and conduct its business as described or
incorporated
by reference in each of the Disclosure Package and the Prospectus,
and to
execute, deliver and perform its obligations under this Agreement
and under the
Purchase Agreement;
(i)
the Company is duly qualified to do business as a foreign
corporation
and is in good standing in each jurisdiction where the ownership or
leasing of
its properties or the conduct of its business requires such
qualification,
except where the failure to be so qualified and in good standing
would not,
individually or in the aggregate, have or reasonably be expected to
have a
material adverse effect on the condition, financial or otherwise,
or in the
earnings, business, properties, prospects or operations of the
Company and the
Subsidiaries (as hereinafter defined) taken as a whole (a "MATERIAL
ADVERSE
EFFECT");
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(j)
the Company has no subsidiaries (as defined in the Act) other than
as
listed in Schedule A annexed hereto (collectively, the
"SUBSIDIARIES"); the
Company has no Significant Subsidiaries (as such term is defined in
Rule 1-02 of
Regulation S-X promulgated under the Act) other than the
Significant
Subsidiaries indicated on Schedule A (each, a "SIGNIFICANT
SUBSIDIARY"); the
Company owns all of the issued and outstanding capital stock or
other equity
interests of each of the Subsidiaries other than as listed in
Schedule A annexed
hereto; complete and correct copies of the certificate of
incorporation and the
bylaws, of the Company and all amendments thereto have been made
available to
the Placement Agents, and no changes therein will be made
subsequent to the date
hereof and prior to the time of purchase; each Subsidiary has been
duly
incorporated or formed and is validly existing as a corporation,
limited
liability company or limited partnership, as the case may be, in
good standing,
if applicable, under the laws of the jurisdiction of its
incorporation or
formation, with the requisite power and authority to own, lease and
operate its
properties and to conduct its business as described in each of the
Disclosure
Package and the Prospectus; each Significant Subsidiary is duly
qualified to do
business as a foreign corporation, limited liability company or
limited
partnership, as the case may be, and is in good standing, if
applicable, in each
jurisdiction where the ownership or leasing of its properties or
the conduct of
its business requires such qualification, except where the failure
to be so
qualified and in good standing would not, individually or in the
aggregate, have
a Material Adverse Effect; all of the outstanding shares of capital
stock or
ownership interests of each of the Significant Subsidiaries owned
by the Company
or any Subsidiary have been duly authorized and validly issued, are
fully paid
and non-assessable and are owned by the Company or such Subsidiary
subject to no
security interest, other encumbrance or adverse claims other than
as listed in
Schedule A annexed hereto or disclosed in each of the Disclosure
Package and the
Prospectus; and no options, warrants or other rights to purchase,
agreements or
other obligations to issue or other rights to convert any
obligation into shares
of capital stock or ownership interests in the Significant
Subsidiaries are
outstanding other than as listed in Schedule A annexed hereto;
(k)
the Shares have been duly authorized and, when issued, delivered
and
paid for in accordance with the terms of this Agreement, will be
validly issued,
fully paid and non-assessable and will not be sold to the Investors
in violation
of statutory or contractual preemptive rights, resale rights,
rights of first
refusal or similar rights;
(l)
the capital stock of the Company, including the Shares, conforms in
all
material respects to the description thereof contained in each of
the Disclosure
Package and the Prospectus;
(m)
this Agreement has been duly authorized, executed and delivered by
the
Company;
(n)
neither the Company nor any of its subsidiaries is (i) in violation
or
in default (or, with the giving of notice or lapse of time, would
be in default)
("DEFAULT") under its charter or by-laws, (ii) in Default under any
indenture,
mortgage, loan or credit agreement, deed of trust, note, contract,
franchise,
lease or other agreement, obligation, condition, covenant or
instrument to which
the Company or such subsidiary is a party or by which it may be
bound
(including, without limitation, the Azimuth Equity Agreement, the
Loan and
Security Agreement, dated April 21, 2004, between Lex-Gen
Woodlands, L.P. and
iStar Financial Inc. and the Note Agreement, dated December 17,
2002 and amended
November 30, 2005, between the Company
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and Genentech, Inc.), or to which any of the property or assets of
the Company
or any of its subsidiaries is subject, in each case only to the
extent material
to the Company and its subsidiaries, taken as a whole (each, an
"EXISTING
INSTRUMENT") or (iii) in violation of any statute, law, rule,
regulation,
judgment, order or decree of any court, regulatory body,
administrative agency,
governmental body, arbitrator or other authority having
jurisdiction over the
Company or such subsidiary or any of its properties, as applicable,
except with
respect to clauses (ii) and (iii) only, for such Defaults and
violations as
would not, individually or in the aggregate, have a Material
Adverse Effect. The
Company's execution, delivery and performance of this Agreement and
consummation
of the transactions contemplated hereby, by the Disclosure Package
and by the
Prospectus (i) have been duly authorized by all necessary corporate
action and
will not result in any Default under the charter or by-laws of the
Company or
any subsidiary, (ii) will not conflict with or constitute a breach
of, or
Default under, or result in the creation or imposition of any lien,
charge or
encumbrance upon any property or assets of the Company or any of
its
subsidiaries pursuant to, or require the consent of any other party
to, any
Existing Instrument, and (iii) will not result in any violation of
any statute,
law, rule, regulation, judgment, order or decree applicable to the
Company or
any of its subsidiaries of any court, regulatory body,
administrative agency,
governmental body, arbitrator or other authority having
jurisdiction over the
Company or any of its subsidiaries or any of its or their
properties, except
with respect to clauses (ii) and (iii) only, for such conflicts,
breaches,
Defaults or violations as would not, individually or in the
aggregate, have a
Material Adverse Effect;
(o)
no approval, authorization, consent or order of or filing with
any
federal, state, local or foreign governmental or regulatory
commission, board,
body, authority or agency or of or with the Nasdaq, or approval of
the
stockholders of the Company, is required in connection with the
sale by the
Company of the Shares or the consummation by the Company of the
transactions
contemplated hereby other than registration under the Act of the
offer and sale
of the Shares, which has been effected, and any necessary
qualification under
the securities or blue sky laws of the various jurisdictions in
which the Shares
are being offered under the terms of this Agreement or under the
rules and
regulations of the National Association of Securities Dealers, Inc.
(the
"NASD");
(p)
except as set forth in the Disclosure Package and the Prospectus,
(i)
no person has the right, contractual or otherwise, to cause the
Company to issue
or sell to it any shares of Common Stock or shares of any other
capital stock or
other equity interests of the Company, (ii) no person has any
warrants, options,
preemptive rights, resale rights, rights of first refusal or other
rights to
purchase any shares of Common Stock or shares of any other capital
stock or
other securities of the Company, and (iii) except as provided
herein, no person
has the right to act as an underwriter, placement agent or
financial advisor to
the Company or is entitled to receive from the Company any
brokerage or finder's
fee or other fee or commission in connection with the offer and
sale of the
Shares, in the case of each of the foregoing clauses, whether as a
result of the
filing or effectiveness of the Registration Statement or the sale
of the Shares
as contemplated thereby or otherwise and except, in each case, for
such rights
as have been duly and validly satisfied or waived; except as
disclosed in each
of the Disclosure Package and the Prospectus, no person has the
right,
contractual or otherwise, to cause the Company to register under
the Act any
shares of Common Stock or shares of any other capital stock or
other securities
of the Company, or to include any such shares or interests in the
Registration
Statement or the offering contemplated by this Agreement, whether
as a result of
the filing or
7
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effectiveness of the Registration Statement or the sale of the
Shares as
contemplated thereby or otherwise other than such rights as have
been duly and
validly satisfied or waived;
(q)
each of the Company and the Significant Subsidiaries has all
material
licenses, authorizations, consents and approvals and has made all
material
filings required under any federal, state, local or foreign law,
regulation or
rule, and has obtained all material authorizations, consents and
approvals from
other persons, necessary in order to conduct its respective
business as
described in each of the Disclosure Package and the Prospectus,
except for such
licenses, authorizations, consents, approvals and filings, the
failure of which
to have, maintain or make would not, individually or in the
aggregate, have a
Material Adverse Effect; neither the Company nor any of the
Significant
Subsidiaries is in violation of, or in default under, or has
received notice of
any proceedings relating to revocation or modification of, any such
license,
authorization, consent or approval or any federal, state, local or
foreign law,
regulation or rule or any decree, order or judgment applicable to
the Company or
any of the Significant Subsidiaries, except where such violation,
default,
revocation or modification would not, individually or in the
aggregate, have a
Material Adverse Effect;
(r)
except as disclosed in each of the Disclosure Package and the
Prospectus, there are no legal or governmental actions, suits,
claims,
investigations or proceedings pending or, to the Company's
knowledge, threatened
to which the Company or any of the Significant Subsidiaries or any
of their
respective directors or officers is or would be a party or of which
any of their
respective properties is or would be subject at law or in equity,
before or by
any federal, state, local or foreign governmental or regulatory
commission,
board, body, authority or agency, except any such action, suit,
claim,
investigation or proceeding which would not result in a judgment,
decree or
order having, individually or in the aggregate, a Material Adverse
Effect or
adversely affect the consummation of the transactions contemplated
hereby;
(s)
no labor problem or dispute with the employees of the Company or
any of
its subsidiaries exists or is threatened or imminent, and the
Company is not
aware of any existing or imminent labor disturbance by the
employees of any of
its or its subsidiaries' principal suppliers, contractors or
customers, that
could have a Material Adverse Effect;
(t)
Ernst & Young LLP, whose reports on the consolidated
financial
statements of the Company and the Subsidiaries are filed with the
Commission as
part of the Registration Statement and the Prospectus, are
independent public
accountants as required by the Act and the Exchange Act and the
applicable
published rules and regulations thereunder;
(u)
the financial statements included or incorporated by reference in
the
Registration Statement and included or incorporated by reference in
the
Disclosure Package and the Prospectus, together with the related
notes and
schedules, present fairly in all material respects the consolidated
financial
position of the Company and the Subsidiaries as of the dates
indicated and the
consolidated results of operations and cash flows of the Company
and the
Subsidiaries for the periods specified, comply as to form in all
material
respects with the applicable accounting requirements of the Act and
have been
prepared in conformity with generally accepted accounting
principles in the
United States applied on a consistent basis throughout the periods
involved,
except (i) as may be otherwise specified in such financial
statements or the
notes thereto, or (ii) in the case of unaudited interim statements,
to the
extent they may exclude
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footnotes or may be condensed or summary statements; the other
financial data of
the Company set forth in the Registration Statement, the Disclosure
Package and
the Prospectus are accurately presented and prepared on a basis
consistent with
the financial statements and books and records of the Company; the
financial
data set forth in the Prospectus under the captions "SELECTED
FINANCIAL DATA"
fairly present the information set forth therein on a basis
consistent with that
of the audited financial statements contained in the Registration
Statement. The
Company's ratio of earnings to fixed charges set forth in the
Prospectus under
the caption "RATIO OF EARNINGS TO FIXED CHARGES" and in Exhibit
12.1 to the
Registration Statement has been calculated in compliance with Item
503(d) of
Regulation S-K under the Act;
(v)
subsequent to the respective dates as of which information is given
or
incorporated by reference in the Disclosure Package, there has not
been (i) any
material adverse change, or any development that could reasonably
be expected to
result in a prospective material adverse change, in the condition,
financial or
otherwise, or in the earnings, business, operations, properties or
prospects,
whether or not arising from transactions in the ordinary course of
business, of
the Company and its Significant Subsidiaries, considered as one
entity (a
"MATERIAL ADVERSE CHANGE", (ii) any transaction which is material
to the Company
and the Significant Subsidiaries taken as a whole, (iii) any
obligation, direct
or contingent (including any off-balance sheet obligations),
incurred by the
Company or the Significant Subsidiaries, which is material to the
Company and
the Significant Subsidiaries taken as a whole, (iv) any change in
the capital
stock of the Subsidiaries or (v) any dividend or distribution of
any kind
declared, paid or made on the capital stock of the Company;
(w)
the Company has been advised of the rules and requirements under
the
Investment Company Act of 1940, as amended (the "INVESTMENT COMPANY
ACT"). The
Company is not, and after receipt of payment for the Shares and the
application
of the proceeds thereof as contemplated under the caption "USE OF
PROCEEDS" in
the Prospectus will not be, an "INVESTMENT COMPANY" within the
meaning of the
Investment Company Act and will conduct its business in a manner so
that it will
not become subject to the Investment Company Act;
(x)
except as described in each of the Disclosure Package and the
Prospectus, the Company and each of the Significant Subsidiaries
has good and
marketable title to all property (real and personal) described in
the Disclosure
Package and the Prospectus as being owned by each of them, free and
clear of all
liens, claims, security interests or other encumbrances, or subject
only to
liens, claims, security interests or other encumbrances that do not
individually
or in the aggregate materially affect the value of such property or
materially
interfere with the use made of such property by the Company and the
Significant
Subsidiaries; all the property described in the Disclosure Package
and the
Prospectus as being held under lease by the Company or a
Significant Subsidiary
is held thereby under valid, subsisting and enforceable leases
except as would
not reasonably be expected to result in a Material Adverse
Effect;
(y)
the Company and its subsidiaries own, possess, license or have
other
rights to use, on reasonable terms, all patents, patent
applications, trade and
service marks, trade and service mark registrations, trade names,
copyrights,
licenses, inventions, trade secrets, technology, know-how and other
intellectual
property (collectively, the "INTELLECTUAL PROPERTY") necessary for
the conduct
of the Company's business as now conducted or as proposed in the
Disclosure
Package and the Prospectus to be conducted, except as would not be
reasonably
expected to
9
<PAGE>
result in a Material Adverse Effect. Except as set forth in the
Disclosure
Package and the Prospectus, (a) to the Company's best knowledge,
there is no
material infringement by third parties of any such Intellectual
Property owned
by or exclusively licensed to the Company; (b) there is no pending
or, to the
Company's best knowledge, threatened action, suit, proceeding or
claim by others
challenging the Company's rights in or to any material Intellectual
Property,
and the Company is unaware of any facts which would form a
reasonable basis for
any such claim; (c) there is no pending or, to the Company's best
knowledge,
threatened action, suit, proceeding or claim by others challenging
the validity
or scope of any such Intellectual Property, and the Company is
unaware of any
facts which would form a reasonable basis for any such claim; and
(d) there is
no pending or, to the Company's best knowledge, threatened action,
suit,
proceeding or claim by others that the Company's business as now
conducted
infringes or otherwise violates any patent, trademark, copyright,
trade secret
or other proprietary rights of others, except for such threatened
actions,
suits, proceedings or claims which, if determined adversely to the
Company,
would not have a Material Adverse Effect, and the Company is
unaware of any
other fact which would form a reasonable basis for any such
claim;
(z)
none of the following events has occurred or exists: (i) a failure
to
fulfill the obligations, if any, under the minimum funding
standards of Section
302 of the United States Employee Retirement Income Security Act of
1974, as
amended ("ERISA"), and the regulations and published
interpretations thereunder
with respect to a Plan, determined without regard to any waiver of
such
obligations or extension of any amortization period; (ii) an audit
or
investigation by the Internal Revenue Service, the U.S. Department
of Labor, the
Pension Benefit Guaranty Corporation or any other federal or state
governmental
agency or any foreign regulatory agency with respect to the
employment or
compensation of employees by any member of the Company that could
have a
Material Adverse Effect on the Company; or (iii) any breach of any
contractual
obligation, or any violation of law or applicable qualification
standards, with
respect to the employment or compensation of employees by any
member of the
Company that could have a Material Adverse Effect. None of the
following events
has occurred or is reasonably likely to occur: (i) a material
increase in the
Company's "accumulated post retirement benefit obligations" (within
the meaning
of Statement of Financial Accounting Standards 106) compared to the
amount of
such obligations in the Company's most recently completed fiscal
year; or (ii)
any event or condition giving rise to a liability under Title IV of
ERISA that
could have a Material Adverse Effect. For purposes of this
paragraph, the term
"PLAN" means a plan (within the meaning of Section 3(3) of ERISA)
subject to
Title IV of ERISA with respect to which any member of the Company
may have any
liability;
(aa)
except as otherwise disclosed in the Disclosure Package and the
Prospectus, (i) neither the Company nor any of its subsidiaries is
in violation
of any federal, state, local or foreign law, regulation, order,
permit or other
requirement relating to pollution or protection of human health or
the
environment (including, without limitation, ambient air, surface
water,
groundwater, land surface or subsurface strata) or wildlife,
including without
limitation, laws and regulations relating to emissions, discharges,
releases or
threatened releases of chemicals, pollutants, contaminants, wastes,
toxic
substances, hazardous substances, petroleum and petroleum
products
(collectively, "MATERIALS OF ENVIRONMENTAL CONCERN"), or otherwise
relating to
the manufacture, processing, distribution, use, treatment, storage,
disposal,
transport or handling of Materials of Environment Concern
(collectively,
"ENVIRONMENTAL LAWS"), which violation includes, but is not limited
to,
noncompliance with any permits or other governmental
10
<PAGE>
authorizations required for the operation of the business of the
Company or its
subsidiaries under applicable Environmental Laws, or noncompliance
with the
terms and conditions thereof, nor has the Company or any of its
subsidiaries
received any written communication, whether from a governmental
authority,
citizens group, employee or otherwise, that alleges that the
Company or any of
its subsidiaries is in violation of any Environmental Law, except,
in each of
the foregoing instances listed in this subsection (i), as would
not,
individually or in the aggregate, have a Material Adverse Effect;
(ii) there is
no claim, action or cause of action filed with a court or
governmental
authority, no investigation with respect to which the Company has
received
written notice, and no written notice by any person or entity
alleging potential
liability for investigatory costs, cleanup costs, governmental
responses costs,
natural resources damages, property damages, personal injuries,
attorneys' fees
or penalties arising out of, based on or resulting from the
presence, or release
into the environment, of any Material of Environmental Concern at
any location
owned, leased or operated by the Company or any of its
subsidiaries, now or in
the past (collectively, "ENVIRONMENTAL CLAIMS"), pending or, to the
best of the
Company's knowledge, threatened against the Company or any of its
subsidiaries
or any person or entity whose liability for any Environmental Claim
the Company
or any of its subsidiaries has retained or assumed either
contractually or by
operation of law, except as would not, individually or in the
aggregate, have a
Material Adverse Effect; (iii) to the best of the Company's
knowledge, there are
no past, present or anticipated future actions, activities,
circumstances,
conditions, events or incidents, including, without limitation, the
release,
emission, discharge, presence or disposal of any Material of
Environmental
Concern, that reasonably could result in a violation of any
Environmental Law,
require expenditures to be incurred pursuant to Environmental Law,
or form the
basis of a potential Environmental Claim against the Company or any
of its
subsidiaries or against any person or entity whose liability for
any
Environmental Claim the Company or any of its subsidiaries has
retained or
assumed either contractually or by operation of law, except as
would not,
individually or in the aggregate, have a Material Adverse Effect;
and (iv)
neither the Company nor any of its subsidiaries is subject to any
pending or
threatened proceeding under Environmental Law to which a
governmental authority
is a party and which is reasonably likely to result in monetary
sanctions of
$100,000 or more;
(bb)
all tax returns required to be filed by the Company and each of
the
Significant Subsidiaries have been filed, and all material taxes
and other
assessments of a similar nature (whether imposed directly or
through
withholding) including any interest, additions to tax or penalties
applicable
thereto due or claimed to be due from such entities have been paid,
other than
those being contested in good faith; the Company has made
appropriate provisions
in the applicable financial statements referred to in Section 4(u)
above in
respect of all federal, state, local and foreign income and
franchise taxes for
all current or prior periods as to which the tax liability of the
Company or any
of its consolidated subsidiaries has not been finally
determined;
(cc)
the Company and its subsidiaries are insured by what the
Company
reasonably considers to be recognized, financially sound and
reputable
institutions with policies in such amounts and with such
deductibles and
covering such risks as are generally deemed adequate and customary
for their
businesses including, but not limited to, policies covering real
and personal
property owned or leased by the Company and its subsidiaries
against theft,
damage, destruction and acts of vandalism. All policies of
insurance and
fidelity or surety bonds insuring the Company or any of its
subsidiaries or
their respective businesses, assets, employees, officers and
directors are in
full force and effect; the Company and its subsidiaries are in
compliance with
11
<PAGE>
the terms of such policies and instruments in all material
respects; and there
are no claims by the Company or any of its subsidiaries under any
such policy or
instrument as to which any insurance company is denying liability
or defending
under a reservation of rights clause; and neither the Company nor
any such
subsidiary has been refused any insurance coverage sought or
applied for without
subsequently obtaining substantially similar insurance coverage
from an
alternative provider. The Company has no reason to believe that it
or any
subsidiary will not be able (i) to renew its existing insurance
coverage as and
when such policies expire or (ii) to obtain comparable coverage
from similar
institutions as may be necessary or appropriate to conduct its
business as now
conducted and at a cost that would not have a Material Adverse
Effect;
(dd)
neither the Company nor any of the Significant Subsidiaries has
sustained since the date of the last quarterly financial statements
included in
the Disclosure Package any loss or interference with its respective
business
from fire, explosion, flood or other calamity, whether or not
covered by
insurance, or from any labor dispute or court or governmental
action, order or
decree, except as would not, individually or in the aggregate, have
a Material
Adverse Effect;
(ee)
except as otherwise disclosed in each of the Disclosure Package
and
the Prospectus, the Company has not sent or received any written
communication
regarding termination of any of the material contracts or
agreements referred to
or described in, or filed as an exhibit to, the Registration
Statement, and no
such termination has been threatened by the Company or, to the
Company's
knowledge, any other party to any such contract or agreement;
(ff)
no subsidiary of the Company is currently prohibited, directly
or
indirectly, from paying any dividends to the Company, from making
any other
distribution on such subsidiary's capital stock, from repaying to
the Company
any loans or advances to such subsidiary from the Company or from
transferring
any of such subsidiary's property or assets to the Company or any
other
subsidiary of the Company, except as described in or contemplated
by the
Disclosure Package and the Prospectus;
(gg)
the Company has not taken and will not take, directly or
indirectly,
any action designed to or that might be reasonably expected to
cause or result
in stabilization or manipulation of the price of the Common Stock
to facilitate
the sale or resale of the Shares; the Company acknowledges that the
Placement
Agents may engage in passive market making transactions in the
Shares on the
Nasdaq in accordance with Regulation M under the Exchange Act;
(hh)
