<PAGE>
EXHIBIT 1.1
_____________ Shares
SGX Pharmaceuticals, Inc.
Common Stock
UNDERWRITING AGREEMENT
___________, 2006
CIBC World Markets Corp.
Piper Jaffray & Co.
JMP Securities LLC
c/o CIBC World Markets Corp.
300 Madison Avenue
New York, New York 10017
Ladies and Gentlemen:
SGX Pharmaceuticals, Inc., a Delaware corporation (the
"Company")
proposes, subject to the terms and conditions contained herein, to
sell to you
and the other underwriters named on Schedule I to this Agreement
(the
"Underwriters"), for whom you are acting as Representatives
(the
"Representatives"), an aggregate of shares (the "Firm Shares") of
the Company's
common stock, $0.001 par value per share (the "Common Stock"). All
of the Firm
Shares are to be issued and sold by the Company. The respective
amounts of the
Firm Shares to be purchased by each of the several Underwriters are
set forth
opposite their names on Schedule I hereto. In addition, the Company
proposes to
grant to the Underwriters an option to purchase up to an additional
shares (the
"Option Shares") of Common Stock from the Company for the purpose
of covering
over-allotments in connection with the sale of the Firm Shares. The
Firm Shares
and the Option Shares are collectively called the "Shares."
The Company has prepared and filed in conformity with the
requirements
of the Securities Act of 1933, as amended (the "Securities Act"),
and the
published rules and regulations thereunder (the "Rules") adopted by
the
Securities and Exchange Commission (the "Commission") a
Registration Statement
(as hereinafter defined) on Form S-1 (No. 333-128059), including a
preliminary
prospectus relating to the Shares, and such amendments thereof as
may have been
required to the date of this Agreement. Copies of such Registration
Statement
(including all amendments thereof) and of the related Preliminary
Prospectus (as
hereinafter defined) have heretofore been delivered by the Company
to you. The
term "Preliminary Prospectus" means the preliminary prospectus
included as a
part of the Registration Statement or filed with the Commission by
the Company
pursuant to Rule 424(a) of the Rules in the form first used to make
offers and
described on Schedule IV hereto. The term "Registration Statement"
as used in
this Agreement means the initial registration statement (including
all exhibits
and financial schedules thereto), as amended at the time and on the
date it
becomes effective (the "Effective Date"), including the information
(if any)
contained in the form of final prospectus filed with the Commission
pursuant to
Rule 424(b) of the Rules and deemed to be part thereof at the time
of
effectiveness pursuant to Rule 430A of the Rules. If the Company
has filed an
abbreviated registration statement to register additional Shares
pursuant to
Rule 462(b) under the Rules (the "462(b) Registration Statement"),
then any
reference herein to the Registration Statement shall also be deemed
to include
such 462(b) Registration Statement. The term "Prospectus" as used
in this
Agreement means the prospectus in the form included in the
Registration
Statement at the time of effectiveness or, if Rule 430A of the
Rules is relied
on, the term Prospectus shall also include the final prospectus
filed with the
Commission pursuant to and within the time limits described in Rule
424(b) of
the Rules.
1
<PAGE>
The Company understands that the Underwriters propose to make a
public
offering of the Shares, as set forth in and pursuant to the
Statutory Prospectus
(as hereinafter defined) and the Prospectus, as soon after the
Effective Date
and the date of this Agreement as the Representatives deem
advisable. The
Company hereby confirms that the Underwriters and dealers have been
authorized
to distribute or cause to be distributed each Preliminary
Prospectus and each
Issuer Free Writing Prospectus (as hereinafter defined) in
connection with the
offering of the Shares and are authorized to distribute the
Prospectus (as from
time to time amended or supplemented if the Company furnishes
amendments or
supplements thereto to the Underwriters) in connection with the
sale of the
Shares.
1. Sale, Purchase, Delivery and Payment for the Shares. On the
basis of
the representations, warranties and agreements contained in, and
subject to the
terms and conditions of, this Agreement:
(a) The Company agrees to issue and sell to each of the
Underwriters, and each of the Underwriters agrees, severally and
not
jointly, to purchase from the Company, at a purchase price of $
per
share (the "Initial Price"), the number of Firm Shares set
forth
opposite the name of such Underwriter under the column "Number of
Firm
Shares to be Purchased" on Schedule I to this Agreement, subject
to
adjustment
in accordance with Section 8 hereof.
(b) The Company hereby grants to the several Underwriters an
option to purchase, severally and not jointly, all or any part of
the
Option Shares at the Initial Price. The number of Option Shares to
be
purchased by each Underwriter shall be the same percentage
(adjusted by
the Representatives to eliminate fractions) of the total number
of
Option Shares to be purchased by the Underwriters as such
Underwriter is
purchasing of the Firm Shares. Such option may be exercised only
to
cover over-allotments in the sales of the Firm Shares by the
Underwriters and may be exercised in whole or in part at any time
on or
before 12:00 noon, New York City time, on the business day before
the
Firm Shares Closing Date (as defined below), and from time to
time
thereafter within 30 days after the date of this Agreement, in each
case
upon written, facsimile or telegraphic notice, or verbal or
telephonic
notice confirmed by written, facsimile or telegraphic notice, by
the
Representatives to the Company no later than 12:00 noon, New York
City
time, on the business day before the Firm Shares Closing Date or
at
least two business days before the Option Shares Closing Date
(as
defined below), as the case may be, setting forth the number of
Option
Shares to be purchased and the time and date (if other than the
Firm
Shares Closing Date) of such purchase.
(c) Payment of the purchase price for, and delivery of
certificates for, the Firm Shares shall be made at the offices of
CIBC
World Markets Corp., 300 Madison Avenue, New York, New York 10017,
at
10:00 a.m., New York City time, on the third business day following
the
date of this Agreement or at such time on such other date, not
later
than ten (10) business days after the date of this Agreement, as
shall
be agreed upon by the Company and the Representatives (such time
and
date of delivery and payment are called the "Firm Shares Closing
Date").
In addition, in the event that any or all of the Option Shares
are
purchased by the Underwriters, payment of the purchase price,
and
delivery of the certificates, for such Option Shares shall be made
at
the above-mentioned offices, or at such other place as shall be
agreed
upon by the Representatives and the Company, on each date of
delivery as
specified in the notice from the Representatives to the Company
(such
time and date of delivery and payment are called the "Option
Shares
Closing Date"). The Firm Shares Closing Date and any Option
Shares
Closing Date are
called, individually, a "Closing Date" and, together,
the "Closing Dates."
(d) Payment shall be made to the Company by wire transfer of
immediately available funds or by certified or official bank check
or
checks payable in New York Clearing House (same day) funds drawn to
the
order of the Company against delivery of the respective
certificates to
the
2
<PAGE>
Representatives for the respective accounts of the Underwriters
of
certificates for the Shares to be purchased by them.
(e) Certificates evidencing the Shares shall be registered in
such names and shall be in such denominations as the
Representatives
shall request at least two full business days before the Firm
Shares
Closing Date or, in the case of Option Shares, on the day of notice
of
exercise of the option as described in Section 1(b) and shall
be
delivered by or on behalf of the Company to the Representatives
through
the facilities of the Depository Trust Company ("DTC") for the
account
of such Underwriter. The Company will cause the certificates
representing the Shares to be made available for checking and
packaging,
at such place as is designated by the Representatives, on the
full
business day before the Firm Shares Closing Date (or the Option
Shares
Closing Date in the case of the Option Shares).
2. Representations and Warranties of the Company. The Company
represents
and warrants to each Underwriter as of the date hereof, as of the
Firm Shares
Closing Date and as of each Option Shares Closing Date (if any), as
follows:
(a) On the Effective Date, the Registration Statement complied,
and on the date of the Prospectus, the date any post-effective
amendment
to the Registration Statement becomes effective, the date any
supplement
or amendment to the Prospectus is filed with the Commission and
each
Closing Date, the Registration Statement and the Prospectus (and
any
amendment thereof or supplement thereto) will comply, in all
material
respects, with the requirements of the Securities Act and the Rules
and
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"),
and the rules and regulations of the Commission thereunder. The
Registration Statement did not, as of the Effective Date, contain
any
untrue statement of a material fact or omit to state any material
fact
required to be stated therein or necessary in order to make the
statements therein not misleading; and on the Effective Date and
the
other dates referred to above neither the Registration Statement
nor the
Prospectus, nor any amendment thereof or supplement thereto,
will
contain any untrue statement of a material fact or will omit to
state
any material fact required to be stated therein or necessary in
order to
make the statements therein not misleading. When the
Preliminary
Prospectus was first filed with the Commission (whether filed as
part of
the Registration Statement or any amendment thereto or pursuant to
Rule
424(a) of the Rules) and when any amendment thereof or
supplement
thereto was first filed with the Commission, such Preliminary
Prospectus
as amended or supplemented complied in all material respects with
the
applicable provisions of the Securities Act and the Rules and did
not
contain any untrue statement of a material fact or omit to state
any
material fact required to be stated therein or necessary in order
to
make the statements therein not misleading. If applicable, each
Preliminary Prospectus and the Prospectus delivered to the
Underwriters
for use in connection with this offering was identical to the
electronically transmitted copies thereof filed with the
Commission
pursuant to EDGAR, except to the extent permitted by Regulation
S-T.
Notwithstanding the foregoing, none of the representations and
warranties in this paragraph 2(a) shall apply to statements in,
or
omissions from, the Registration Statement or the Prospectus or
any
amendments thereof or supplements thereto made in reliance upon,
and in
conformity with, information herein or otherwise furnished in
writing by
the Representatives on behalf of the several Underwriters for use
in the
Registration Statement or the Prospectus. With respect to the
preceding
sentence, the Company acknowledges that the only information
furnished
in writing by the Representatives on behalf of the several
Underwriters
for use in the
Registration Statement or the Prospectus or any
amendments thereof or supplements thereto is the statements
contained in
the tenth, thirteenth and fourteenth paragraphs under the
caption
"Underwriting" in the Preliminary Prospectus (the "Underwriter
Information").
3
<PAGE>
(b) As of the Applicable Time (as hereinafter defined), the
Statutory Prospectus (as hereinafter defined), as then amended
or
supplemented by the Company, if applicable, did not contain any
untrue
statement of a material fact or omit to state any material fact
required
to be stated therein or necessary in order to make the
statements
therein not misleading. Each Issuer Free Writing Prospectus (i)
is
identified in Schedule III hereto, (ii) when considered as part of
the
Statutory Prospectus, did not contain any untrue statement of a
material
fact or omit to state any material fact required to be stated
therein or
necessary in order to make the statements therein not misleading,
and
(iii) that the Company is required to file pursuant to Rule 433(d)
of
the Rules has been, or will be, filed with the Commission in
accordance
with the requirements of the Securities Act and the applicable
Rules.
The Company has made at least one version of the Road Show
available
without restriction by means of graphic communication to any
person,
including any potential investor in the Shares (and if there is
more
than one version of a "bona fide electronic road show" as defined
in
Rule 433(h)(5) under the Securities Act that is a written
communication,
the Road Show was made available no later than the other
versions).
Notwithstanding the foregoing, none of the representations and
warranties in this paragraph 2(b) shall apply to statements in,
or
omissions from, the Statutory Prospectus or any amendments thereof
or
supplements thereto made in reliance upon, and in conformity with,
the
Underwriter Information.
As used in the foregoing paragraph and elsewhere in this
Agreement:
"Applicable Time" means ___:00 [a/p]m (Eastern time) on
the date of this Underwriting Agreement.
"Issuer Free Writing Prospectus" means each "issuer free
writing prospectus" (as defined in Rule 405 of the
Rules) prepared by or on behalf of the Company or used
or referred to by the Company in connection with the
offering of the Shares. Each Issuer Free Writing
Prospectus is identified in Schedule III hereto.
"Statutory Prospectus" as of any time means the
Preliminary Prospectus relating to the Shares that is
included in the Registration Statement immediately prior
to the Applicable Time together with each Issuer Free
Writing Prospectus used, issued or filed on or after the
date of such Preliminary Prospectus and at or prior to
the Applicable Time. For purposes of this definition,
information contained in a form of prospectus that is
deemed retroactively to be a part of the Registration
Statement pursuant to Rule 430A of the Rules shall be
considered to be included in the Statutory Prospectus as
of the actual time that form of prospectus is filed with
the
Commission pursuant to Rule 424(b) of the Rules.
"Road Show" means the "bona fide electronic road show"
as defined in Rule 433(h)(5) under the Securities Act
that has been made available by the Company without
restriction to any person.
(c) The Registration Statement is effective under the
Securities
Act and no stop order preventing or suspending the effectiveness of
the
Registration Statement
or suspending or preventing the use of any
Preliminary Prospectus, any "free writing prospectus," as defined
in
Rule 405 of the Rules, pertaining to the Company, the Shares or
the
Public Offering, or the Prospectus has been issued by the
Commission
and, to the Company's knowledge, no proceedings for that purpose
have
been instituted or are threatened under the Securities Act. Any
required
filing of the Prospectus and any supplement thereto pursuant to
Rule
424(b) of the Rules has been or will be made in the manner and
within
the time period required by such Rule 424(b). Any material
required
4
<PAGE>
to be filed by the Company pursuant to Rule 433(d) of the Rules has
been
or will be made in the manner and within the time period required
by
such Rules.
(d) The financial statements of the Company (including all
notes
and schedules thereto) included in the Registration Statement,
the
Statutory Prospectus and the Prospectus present fairly, in all
material
respects, the financial position of the Company and its
consolidated
subsidiaries at the dates indicated and the statement of
operations,
stockholders' equity and cash flows of the Company and its
consolidated
subsidiaries for the periods specified; and such financial
statements
and related schedules and notes thereto, and the unaudited
financial
information filed with the Commission as part of the
Registration
Statement, have been prepared in conformity with generally
accepted
accounting principles, consistently applied throughout the
periods
involved (provided that non-year-end financial statements are
subject to
normal recurring year-end audit adjustments that are not expected
to be
material in the aggregate and do not contain all footnotes required
by
generally accepted accounting principles). The summary and
selected
consolidated financial data included in the Statutory Prospectus
and the
Prospectus present fairly, in all material respects, the
information
shown therein as at the respective dates and for the respective
periods
specified and have been presented on a basis consistent with
the
consolidated financial statements set forth in the Statutory
Prospectus
and the Prospectus and other financial information.
(e) Ernst & Young LLP (the "Auditor"), whose reports are
filed
with the Commission as a part of the Registration Statement, are
and,
during the periods covered by their reports, were independent
public
accountants as required by the Securities Act and the Rules.
(f) The Company and each of its subsidiaries is duly organized,
validly existing and in good standing under the laws of their
respective
jurisdictions of incorporation or organization and is duly
qualified to
do business and is in good standing as a foreign corporation in
each
jurisdiction in which the nature of the business conducted by it
or
location of the assets or properties owned, leased or licensed by
it
requires such qualification, except for such jurisdictions where
the
failure to so qualify or be in good standing, individually or in
the
aggregate, would not have a material adverse effect on the
assets,
properties, condition, financial or otherwise, or in the results
of
operations, business affairs or business prospects of the Company
and
its subsidiaries considered as a whole (a "Material Adverse
Effect");
and to the Company's knowledge, no proceeding has been instituted
in any
such jurisdiction revoking, limiting or curtailing, or seeking
to
revoke, limit or curtail, such power and authority or
qualification.
(g) The Company and each of its subsidiaries has all requisite
corporate power and authority, and all necessary
authorizations,
approvals, consents, orders, licenses, certificates and permits of
and
from all governmental or regulatory bodies or any other person or
entity
(collectively, the "Permits"), to own, lease and license its assets
and
properties and conduct its business, all of which are valid and in
full
force and effect, except where the lack of such Permits,
individually or
in the aggregate, would not have a Material Adverse Effect. The
Company
and each of its subsidiaries has fulfilled and performed in all
material
respects all of its material obligations with respect to such
Permits
and, to the Company's knowledge, no event has occurred that allows,
or
after notice or lapse of time would allow, revocation or
termination
thereof or results in any other material impairment of the rights
of the
Company thereunder. Except as may be required under the Securities
Act,
the rules of the National Association of Securities Dealers, Inc.
(the
"NASD") and state and foreign Blue Sky laws, no other Permits
are
required to enter into, deliver and perform this Agreement and to
issue
and sell the Shares.
(h) At the time of the filing of the Registration Statement and
at the date hereof, the Company was not and is not an
"ineligible
issuer," as defined in Rule 405 of the Rules, including without
5
<PAGE>
limitation the Company or any subsidiary thereof in the preceding
three
years not having been convicted of a felony or misdemeanor or
having
been made the subject of a judicial or administrative decree or
order as
described in Rule 405 of the Rules.
(i) The Company and each of its subsidiaries owns or possesses
legally enforceable rights to use all patents, patent rights,
inventions, trademarks, trademark applications, trade names,
service
marks, copyrights, copyright applications, licenses, know-how and
other
similar rights and proprietary knowledge necessary for the conduct
of
its business (collectively, "Intangibles") as conducted on the
date
hereof and
described in the Registration Statement and Prospectus.
Neither the Company nor any of its subsidiaries has received any
written
notice of and neither the Company nor any of its subsidiaries has
any
knowledge of any infringement of or conflict with asserted rights
of
others with respect to any Intangibles.
(j) The Company and each of its subsidiaries has good and
marketable title in fee simple to all real property, and good
and
marketable title to all tangible personal property owned by it, in
each
case free and clear of all liens, encumbrances, claims,
security
interests and defects, except as are disclosed in the Prospectus or
such
as are not material to the Company and its subsidiaries, taken as
a
whole, and do not materially interfere with the use made or
proposed to
be made of such property, as of the date hereof, by the Company and
its
subsidiaries. All property held under lease by the Company and
its
subsidiaries is held by them under valid, existing and
enforceable
leases, with only such exceptions as are not material and do
not
materially interfere with the use made or proposed to be made of
such
property by the
Company and its subsidiaries. Subsequent to the
respective dates as of which information is given in the
Registration
Statement, the Statutory Prospectus and the Prospectus, (i) there
has
not been any Material Adverse Effect; (ii) neither the Company nor
any
of its subsidiaries has sustained any loss or interference with
its
assets, businesses or properties (whether owned or leased) from
fire,
explosion, earthquake, flood or other calamity, whether or not
covered
by insurance, or from any labor dispute or any court or legislative
or
other governmental action, order or decree which would have a
Material
Adverse Effect; and (iii) since the date of the latest balance
sheet
included in the Registration Statement, the Statutory Prospectus
and the
Prospectus, except as otherwise disclosed in the Prospectus,
neither the
Company nor its subsidiaries has (A) incurred any liability or
obligation, direct or contingent, for borrowed money, except
such
liabilities or obligations incurred in the ordinary course of
business,
(B) entered into any transaction not in the ordinary course of
business
or (C) declared or paid any dividend or made any distribution on
any
shares of its stock or redeemed, purchased or otherwise acquired
or
agreed to redeem, purchase or otherwise acquire any shares of
its
capital stock.
(k) There is no document, contract or other agreement required
to be described in the Registration Statement, the Statutory
Prospectus
and the Prospectus or to be filed as an exhibit to the
Registration
Statement which is not described or filed as required by the
Securities
Act or Rules. Each description of a contract, document or other
agreement in the Registration Statement, the Statutory Prospectus
and
the Prospectus accurately reflects in all material respects the
terms of
the underlying contract, document or other agreement. Each
contract,
document or other agreement described in the Registration
Statement, the
Statutory Prospectus and the Prospectus or listed in the Exhibits
to the
Registration Statement is in full force and effect and is valid
and
enforceable by and against the Company or its subsidiaries, as the
case
may be, in accordance with its terms. Neither the Company nor any
of its
subsidiaries, if a subsidiary is a party, nor to the Company's
knowledge, any other party is in default in the observance or
performance of any term or obligation to be performed by it under
any
such contract, document or other agreement and no event has
occurred
which with notice or lapse of time or both would constitute such
a
default, in any such case which default or event, individually or
in the
aggregate, would have a Material Adverse Effect. No default exists,
and
no event has occurred which with notice or lapse of time or both
would
constitute a default, in the
6
<PAGE>
due performance and observance of any term, covenant or condition,
by
the Company or its subsidiary, if a subsidiary is a party thereto,
of
any other agreement or instrument to which the Company or any of
its
subsidiaries is a party or by which Company or its properties
or
business of a subsidiary or its properties or business may be bound
or
affected which default or event, individually or in the aggregate,
would
have a Material Adverse Effect.
(l) The statistical and market related data included in the
Registration Statement, the Statutory Prospectus and the Prospectus
are
based on or derived from sources that the Company believes to
be
reliable and accurate.
(m) Neither the Company nor any of its subsidiaries is in
violation of any term or provision of its charter or bylaws or of
any
franchise, license, permit, judgment, decree, order, statute, rule
or
regulation, where the consequences of such violation, individually
or in
the aggregate, would have a Material Adverse Effect.
(n) This Agreement has been duly authorized, executed and
delivered by the Company.
(o) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the
transactions
contemplated hereby (including, without limitation, the issuance
and
sale by the Company of the Shares) will give rise to a right to
terminate or accelerate the due date of any payment due under,
or
conflict with or result in the breach of any term or provision of,
or
constitute a default (or an event which with notice or lapse of
time or
both would constitute a default) under, or require any consent or
waiver
under, or result in the execution or imposition of any lien, charge
or
encumbrance upon any properties or assets of the Company or its
subsidiaries pursuant to the terms of, any indenture, mortgage,
deed of
trust or other agreement or instrument to which the Company or any
of
its subsidiaries is a party or by which either the Company or
its
subsidiaries or any of their properties or businesses is bound, or
any
franchise, license, permit, judgment, decree, order, statute, rule
or
regulation applicable to the Company or any of its subsidiaries,
expect
where it would not have a Material Adverse Effect, or violate
any
provision of the charter or by-laws of the Company or any of
its
subsidiaries, except for such consents or waivers which have
already
been obtained and are in full force and effect.
(p) On the date set forth therein, the Company had the
authorized and outstanding capital stock as set forth under the
caption
"Capitalization" in the Statutory Prospectus and the Prospectus.
The
certificates evidencing the Shares are in due and proper legal form
and
have been duly authorized for issuance by the Company. All of the
issued
and outstanding shares of Common Stock have been duly and validly
issued
and are fully paid and nonassessable. Except as disclosed in
the
Registration Statement, the Statutory Prospectus and the Prospectus
or
as set forth in the Amended and Restated Investor Rights Agreement
dated
April 21, 2005 by and among the Company and the parties named
therein,
there are no statutory preemptive or other similar rights granted
by the
Company to subscribe for or to purchase or acquire any shares of
Common
Stock of the Company or any of its subsidiaries or any such
rights
pursuant to its Certificate of Incorporation or bylaws or any
agreement
or instrument to or by which the Company or any of its subsidiaries
is a
party or bound, other than such rights that have been properly
waived.
The Shares, when issued and sold pursuant to this Agreement, will
be
duly and validly issued, fully paid and nonassessable and none of
them
will be issued in violation of any preemptive or other similar
right
granted by the Company. Except as disclosed in the Registration
Statement, the Statutory Prospectus and the Prospectus, there is
no
outstanding option, warrant or other right calling for the issuance
of,
and there is no commitment, plan or arrangement to issue, any share
of
stock of the Company or any of its subsidiaries or any security
convertible into, or exercisable or exchangeable for, such stock.
The
Common Stock and the Shares conform in all material respects to
all
statements in relation thereto
7
<PAGE>
contained in the Registration Statement, the Statutory Prospectus
and
the Prospectus. All outstanding shares of capital stock of each of
the
Company's subsidiaries have been duly authorized and validly
issued, and
are fully paid and nonassessable and are owned directly by the
Company
or by another wholly-owned subsidiary of the Company free and clear
of
any security interests, liens, encumbrances, equities or claims,
other
than those described in the Statutory Prospectus and the
Prospectus.
(q) There are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or of which
any
property of the Company or any of its subsidiaries is the subject
which
would individually or in the aggregate have a Material Adverse
Effect;
and,
to the knowledge of the Company, no such proceedings are
threatened
or contemplated by governmental authorities or threatened by
others.
(r) No holder of any security of the Company has any right,
which has not been waived, to have any security owned by such
holder
included in the Registration Statement or to demand registration of
any
security owned by such holder for a period of 180 days after the
date of
this Agreement. Each director and executive officer of the Company
and
each stockholder of the Company listed on Schedule II has delivered
to
the Representatives his enforceable written lock-up agreement in
the
form attached to this Agreement as Exhibit A hereto ("Lock-Up
Agreement").
(s) All necessary corporate action has been duly and validly
taken by the Company and to authorize the execution, delivery
and
performance of this Agreement and the issuance and sale of the
Shares by
the Company. This Agreement has been duly and validly
authorized,
executed and delivered by the Company and constitute and will
constitute
legal, valid and binding obligations of the Company enforceable
against
the Company in accordance with their respective terms, except as
the
enforceability thereof may be limited by bankruptcy,
insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general
equitable
principles.
(t) Neither the Company nor any of its subsidiaries is involved
in any labor dispute nor, to the knowledge of the Company, is any
such
dispute threatened, which dispute would have a Material Adverse
Effect.
The Company is not aware of any existing or imminent labor
disturbance
by the employees of any of its principal suppliers or contractors
which
would have a Material Adverse Effect. The Company is not aware of
any
threatened or pending litigation between the Company or its
subsidiaries
and any of its executive officers which, if adversely determined,
could
have a Material Adverse Effect.
(u) No transaction has occurred between or among the Company
and
any of its officers or directors, stockholders or any affiliate
or
affiliates of any such officer or director or stockholder that
is
required to be described in and is not described in the
Registration
Statement, the Statutory Prospectus and the Prospectus.
(v) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be
expected
to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or
manipulation
of the price of the Common Stock or any security of the Company
to
facilitate the sale or resale of any of the Shares.
(w) The Company and each of its subsidiaries has filed all
Federal, state, local and foreign tax returns which are required to
be
filed through the date hereof, which returns are true and correct
in all
material respects or has received valid extensions thereof, and has
paid
all taxes shown on such returns and all assessments received by it
to
the extent that the same are material and have become
8
<PAGE>
due. To the Company's knowledge, there are no tax audits or
investigations pending, which if adversely determined would have
a
Material Adverse Effect; nor to the Company's knowledge are there
any
material proposed additional tax assessments against the Company or
any
of its subsidiaries.
(x) The Shares have been duly authorized for quotation on the
National Association of Securities Dealers Automated Quotation
("Nasdaq") National Market System, subject to official Notice
of
Issuance. A registration statement has been filed on Form 8-A
pursuant
to Section 12 of the Exchange Act, which registration statement
complies
in all material respects with the Exchange Act.
(y) The Company has taken no action designed to, or likely to
have the effect of, terminating the registration of the Common
Stock
under the Exchange Act or the quotation of the Common Stock on
the
Nasdaq National Market, nor has the Company received any
notification
that the Commission or the Nasdaq National Market is
contemplating
terminating such registration or quotation.
(z) The books, records and accounts of the Company and its
subsidiaries accurately and fairly reflect, in reasonable detail,
the
transactions in, and dispositions of, the assets of, and the
results of
operations of, the Company and its subsidiaries. The Company and
each of
its subsidiaries maintains a system of internal accounting
controls
sufficient to provide reasonable assurances 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 accordance 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 action is taken with respect to any
differences.
(aa) The Company is actively taking steps to establish
disclosure controls and procedures (as such term is defined in
Rule
13a-15 under the Exchange Act), which: (i) are designed to ensure
that
material information relating to the Company is made known to
the
Company's principal executive officer and its principal
financial
officer by others within the Company, particularly during the
periods in
which the periodic reports required under the Exchange Act are
required
to be prepared; (ii) provide for the periodic evaluation of the
effectiveness of such disclosure controls and procedures at the end
of
the periods in which the periodic reports are required to be
prepared;
and (iii) are effective in all material respects to perform the
functions for which they were established.
(bb) Based on the evaluation of its disclosure controls and
procedures as established to date, the Company is not aware of (i)
any
significant deficiency in the design or operation of internal
controls
which could adversely affect the Company's ability to record,
process,
summarize and report financial data or any material weaknesses
in
internal controls; or (ii) any fraud, whether or not material,
that
involves management or other employees who have a role in the
Company's
internal controls.
(cc) Except as described in the Statutory Prospectus and the
Prospectus, there are no material off-balance sheet arrangements
(as
defined in Item 303 of Regulation S-K) that have or are
reasonably
likely to have a material current or future effect on the
Company's
financial condition, revenues or expenses, changes in financial
condition, results of operations, liquidity, capital expenditures
or
capital resources.
9
<PAGE>
(dd) Except as described in the Statutory Prospectus and the
Prospectus and as preapproved in accordance with the requirements
set
forth in Section 10A of the Exchange Act, the Auditor has not
been
engaged by the Company to perform any "prohibited activities"
(as
defined in Section 10A of the Exchange Act).
(ee) The Company's Board of Directors has validly appointed an
audit committee whose composition satisfies the requirements of
Rule
4350(d)(2) of the Rules of the National Association of
Securities
Dealers, Inc. (the "NASD Rules") and the Board of Directors and/or
the
audit committee has adopted a charter that satisfies the
requirements of
Rule 4350(d)(1) of the NASD Rules.
(ff) The Company is actively taking steps to ensure that it
will
be in compliance with all other applicable provisions of the
Sarbanes-Oxley Act of 2002, any related rules and regulations
promulgated by the Commission and corporate governance
requirements
under the NASD Rules upon the effectiveness of such provisions as
may be
applicable.
(gg) The Company and its subsidiaries are insured by insurers
of
recognized financial responsibility against such losses and risks
and in
such
amounts as are customary in the businesses in which they are
engaged or propose to engage after giving effect to the
transactions as
described in the Statutory Prospectus and the Prospectus; all
policies
of insurance insuring the Company or any of its subsidiaries or
the
Company's or its subsidiaries' respective businesses, assets,
employees,
officers and directors are in full force and effect; the Company
and
each of its subsidiaries are in compliance with the terms of
such
policies and instruments in all material respects; and neither
the
Company nor any subsidiary of the Company has any reason to believe
that
it will not be able to renew its existing insurance coverage as and
when
such coverage expires or to obtain similar coverage from
similar
insurers as may be necessary to continue its business. Neither
the
Company nor any of its subsidiaries has been denied any
insurance
coverage which it has sought or for which it has applied.
(hh) Each approval, consent, order, authorization, designation,
declaration or filing of, by or with any regulatory, administrative
or
other governmental body necessary in connection with the execution
and
delivery by the Company of this Agreement and the consummation of
the
transactions herein contemplated required to be obtained or
performed by
the Company (except such additional steps as may be required by the
NASD
or may be necessary to qualify the Shares for public offering by
the
Underwriters under the state securities or Blue Sky laws) has
been
obtained or made and is in full force and effect.
(ii) There are no affiliations with the NASD among the
Company's
officers, directors or, to the best of the knowledge of the
Company, any
five percent or greater stockholder of the Company, except as set
forth
in the Registration Statement or otherwise disclosed in writing to
the
Representatives.
(jj) (i) Neither the Company nor any of its subsidiaries are in
violation of any applicable rules, laws and regulation relating to
the
use, treatment, storage and disposal of toxic substances and
protection
of health or the environment ("Environmental Law") which are
applicable
to its business except for any violation which would not have a
Material
Adverse Effect; (ii) neither the Company nor its subsidiaries
has
received any notice from any governmental authority or third party
of an
asserted claim under Environmental Laws; (iii) each of the Company
and
each of its subsidiaries has received all permits, licenses or
other
approvals
required of it under applicable Environmental Laws to the
conduct its business and is in compliance with all terms and
conditions
of any such permit, license or approval, except for where
non-compliance
would not have a Material Adverse Effect;
10
<PAGE>
(iv) to the Company's knowledge, no facts currently exist that
will
require the Company or any of its subsidiaries to make future
material
capital expenditures to comply with Environmental Laws; and (v)
no
property which is or has been owned, or to the Company's
knowledge,
leased or occupied by the Company or its subsidiaries
