UNDERWRITING AGREEMENT

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EXHIBIT 1.1

____ Shares

SGX Pharmaceuticals, Inc.

Common Stock

UNDERWRITING AGREEMENT

________, 2005

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-_________), 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 any preliminary prospectus included at any time

as a part of the Registration Statement or filed with the Commission by the

Company pursuant to Rule 424(a) of the Rules. 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 Rule 424(b) of the Rules.

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The Company understands that the Underwriters propose to make a public

offering of the Shares, as set forth in and pursuant to 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 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 Representatives for the respective accounts of the Underwriters of

certificates for the Shares to be purchased by them.

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(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. If Rule 434 is used, the

Company will comply with the requirements of Rule 434 and the Prospectus

shall not be "materially different," as such term is used in Rule 434,

from the Prospectus included in the Registration Statement at the time it

became effective. 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 and Section 5(b), 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

Prospectus.

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(b) 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 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).

(c) The financial statements of the Company (including all notes and

schedules thereto) included in the Registration Statement and 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 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 Prospectus and other financial information.

(d) 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.

(e) 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.

(f) 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

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foreign Blue Sky laws, no other Permits are required to enter into,

deliver and perform this Agreement and to issue and sell the Shares.

(g) 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.

(h) 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 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 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.

(i) There is no document, contract or other agreement required to be

described in the Registration Statement or 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 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 and 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 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

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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.

(j) The statistical and market related data included in the

Registration Statement are based on or derived from sources that the

Company believes to be reliable and accurate.

(k) 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.

(l) This Agreement has been duly authorized, executed and delivered

by the Company.

(m) 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.

(n) On the date set forth therein, the Company had the authorized

and outstanding capital stock as set forth under the caption

"Capitalization" in 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 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 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 contained in the Registration Statement 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

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wholly-owned subsidiary of the Company free and clear of any security

interests, liens, encumbrances, equities or claims, other than those

described in the Prospectus.

(o) 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").

(p) 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.

(q) 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.

(r) 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 and the

Prospectus.

(s) 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.

(t) 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 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.

(u) 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.

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(v) 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.

(w) 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.

(x) 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.

(y) 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.

(z) Except as described in 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.

(aa) Except as described in 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).

(bb) 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.

(cc) 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

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promulgated by the Commission and corporate governance requirements under

the NASD Rules upon the effectiveness of such provisions as may be

applicable.

(dd) 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 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.

(ee) 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.

(ff) 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.

(gg) (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; (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 has been

designated as a Superfund site pursuant to the Comprehensive Environmental

Response, Compensation of Liability Act of 1980, as amended (42 U.S.C.

Section 9601, et. seq.) ("CERCLA") or otherwise designated as a

contaminated site under applicable state or local law. Neither the Company

nor any of its subsidiaries has been named as a "potentially responsible

party" under CERCLA.

(hh) The Company is not and, after giving effect to the offering and

sale of the Shares and the application of the net proceeds therefrom as

described in the Prospectus, will not be subject to registration as an

"investment company" within the meaning of the Investment Company Act of

1940, as amended (the "Investment Company Act").

9

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(ii) Neither the Company nor any other person associated with or

acting on behalf of the Company including, without limitation, any

director or officer or, to the Company's knowledge, any agent or employee

of the Company or its sub