Attached files
Exhibit 1.1
___________
Shares
(Plus up
to ______ Option Shares to cover over-allotments, if any.)
MIDAS
MEDICI GROUP HOLDINGS, INC.
COMMON
STOCK, PAR VALUE $.001 PER SHARE
UNDERWRITING
AGREEMENT
_________,
2010
NATIONAL
SECURITIES CORPORATION
[As
Representative of the Several
Underwriters
Named in Schedule I Hereto]
330
Madison Ave.
New York,
NY 10017
Ladies
and Gentlemen:
Midas
Medici Group Holdings, Inc., a Delaware corporation (the "COMPANY"), proposes,
subject to the terms and conditions stated herein, to sell to the several
Underwriters named in SCHEDULE I hereto (the "UNDERWRITERS"), for whom National
Securities Corporation is serving as representative (the "REPRESENTATIVE"), an
aggregate of up to [___________] shares (the "FIRM SHARES") of the Company's
common stock, par value $.001 per share (the "COMMON STOCK"). If the
Representative is the only firm named in SCHEDULE I hereto, then the terms
"UNDERWRITERS" and “REPRESENTATIVE," as used herein, shall each be deemed to
refer to such firm. The term "UNDERWRITER" as used in this Agreement
shall include any person substituted under this Section with like effect as if
such person had originally been a party to this Agreement with respect to such
Shares. Notwithstanding the foregoing, in the event that any
Underwriter does not purchase the Shares contemplated hereby, the Representative
shall be ultimately responsible therefore.
In
addition, in order to cover over-allotments in the sale of the Firm Shares, the
Underwriters may, at the Underwriters' election and subject to the terms and
conditions stated herein, purchase ratably in proportion to the amounts set
forth opposite their respective names in SCHEDULE I hereto, unless agreed to
otherwise by the Underwriters, up to [____________] additional shares of Common
Stock from the Company (such additional shares of Common Stock, the “OPTION
SHARES"). The Firm Shares and the Option Shares are referred to
collectively as the "SHARES." The Company and the Underwriters, intending to be
legally bound, hereby confirm their agreement as follows:
1. Representations and
Warranties of the Company. The Company represents and warrants
to, and agrees with, each of the Underwriters that:
(a) A
registration statement on Form S-1 (File No. 333-161522) (the “INITIAL
REGISTRATION STATEMENT") in respect of the Shares has been filed with the
Securities and Exchange Commission (the "COMMISSION"); the Initial Registration
Statement and any post-effective amendment thereto, each in the form heretofore
delivered to the Representative and, excluding exhibits thereto, to each of the
other Underwriters, have been declared effective by the Commission in such form;
other than a registration statement, if any, increasing the size of the offering
(a "RULE 462(B) REGISTRATION STATEMENT"), filed pursuant to Rule 462(b) under
the Securities Act of 1933, as amended (the “ACT"), which became effective upon
filing, no other document with respect to the Initial Registration Statement has
heretofore been filed with the Commission; and no stop order suspending the
effectiveness of the Initial Registration Statement, any post-effective
amendment thereto or the Rule 462(b)Registration Statement, if any, has been
issued by the Commission and no proceeding for that purpose has been initiated
or threatened by the Commission (any preliminary prospectus included in the
Initial Registration Statement or filed with the Commission pursuant to Rule
424(a) of the rules and regulations of the Commission under the Act is
hereinafter called a "PRELIMINARY PROSPECTUS"; the various parts of the Initial
Registration Statement and the Rule 462(b) Registration Statement, if any,
including all final exhibits thereto and including the information contained in
the form of final prospectus filed with the Commission pursuant to Rule 424(b)
under the Act and deemed by virtue of Rule 430A under the Act to be part of the
Initial Registration Statement at the time it was declared effective or such
part of the Rule 462(b) Registration Statement, if any, became or hereafter
becomes effective, each as amended at the time such part of the Initial
Registration Statement became effective, are hereinafter collectively called the
"REGISTRATION STATEMENT"; and such final prospectus, in the form filed pursuant
to Rule 424(b) under the Act, is hereinafter called the
"PROSPECTUS");
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(b) No order
preventing or suspending the use of any Preliminary Prospectus has been issued
by the Commission, and each Preliminary Prospectus, at the time of filing
thereof, conformed in all material respects to the requirements of the Act and
the rules and regulations of the Commission thereunder, 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, however, that this
representation and warranty shall not apply to any statements or omissions made
in reliance upon and inconformity with information furnished in writing to the
Company by an Underwriter through the Representative expressly for use
therein.
(c) The
Registration Statement conforms, and the Prospectus and any further amendments
or supplements to the Registration Statement or the Prospectus will conform, in
all material respects to the requirements of the Act and the rules and
regulations of the Commission hereunder and do not and will not, as of the
applicable effective date as to the Registration Statement and any amendment
thereto, and as of the applicable filing date as to the Prospectus and any
amendment or supplement thereto, 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; provided, however, that this
representation and warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information furnished in writing to the
Company by an Underwriter through the Representative or its counsel expressly
for use therein.
(d) There are
no legal or governmental proceedings pending or, to the knowledge of the
Company, threatened to which the Company or any of its subsidiaries (as defined
in Rule 405 of the rules and regulations under the Act) is a party or to which
any of the properties of the Company or any of its subsidiaries are subject,
except any such proceedings which individually or in the aggregate would not
have a material adverse effect on the financial position, results of operations
or business of the Company and its subsidiaries taken as a whole ("MATERIAL
ADVERSE EFFECT").
(e) The
Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of Delaware. Each of the Company’s
subsidiaries has been duly incorporated and is validly existing as a corporation
in good standing under the laws of its state or country of incorporation or
organization. The Company has full power and authority (corporate and
other) to own or lease its properties and conduct its business as described in
the Prospectus. The Company has full power and authority (corporate
and other) to enter into this Agreement and the Underwriter's Warrant (as
defined in Section 6(b) below) and to
perform its obligations hereunder and thereunder. The Company is duly
qualified to transact business as a foreign corporation under the laws of each
other jurisdiction in which it owns or leases properties, or conducts any
business, to the extent required under such laws, except where the failure to so
qualify would not have Material Adverse Effect.
(f) The
Company's authorized, issued and outstanding capital stock is as disclosed in
the Prospectus. All of the issued shares of capital stock of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable and conform to the description thereof contained in the
Prospectus. None of the issued shares of capital stock of the Company
have been issued or are owned or held in violation of any statutory or any other
preemptive rights of shareholders, and no person or entity (including any holder
of outstanding shares of capital stock of the Company) has any statutory or any
other preemptive or other rights to subscribe for any of the
Shares. None of the capital stock of the Company has been issued by
it in violation of applicable federal or state securities laws.
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(g) Other
than the equity securities of its subsidiaries (including, without limitation,
Utilipoint International, Inc.) disclosed in the Prospectus, the Company does
not own, directly or indirectly, any capital stock or other equity securities of
any other corporation or any ownership interest in any partnership, joint
venture or other association.
(h) Except as
disclosed in the Prospectus, there are no outstanding (i) securities or
obligations of the Company convertible into or exchangeable for any capital
stock of the Company, (ii) warrants, rights or options to subscribe for or
purchase from the Company any capital stock of the Company or any such
convertible or exchangeable securities or obligations (other than pursuant to
the Company's stock benefit plans) or (iii) obligations of the Company to issue
any shares of capital stock, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or options.
(i) Since the
respective dates as of which information is given in the Prospectus or otherwise
disclosed therein, and prior to the First Time of Delivery and Second Time of
Delivery (as such terms are hereinafter defined), (i) neither the Company nor
any of its subsidiaries has incurred any liabilities or obligations, direct or
contingent, or entered into any transactions, not in the ordinary course of
business, that are material to the Company, (ii) the Company has not purchased
any of its outstanding capital stock or declared, paid or otherwise made any
dividend or distribution of any kind on its capital stock, (iii) there has not
been any material change in the capital stock, long-term debt or short-term debt
of the Company, and (iv) there has not been any change, or any development
involving a prospective change, which would have a Material Adverse Effect, in
each case other than as disclosed in or contemplated by the
Prospectus.
(j) Neither
the Company nor any of its subsidiaries is, or with notice or the passage of
time or both would be, in violation of its Articles of Incorporation or Bylaws
(or comparable charter documents) or in default under any indenture, mortgage,
deed of trust, loan agreement, lease or other agreement or instrument to which
the Company or any of its subsidiaries is a party or to which any of their
properties or assets are subject other then as would not have a Material Adverse
Effect.
(k) The
Company and its subsidiaries have good and marketable title in fee simple to all
real property, if any, and good title to all personal property owned by them, in
each case, free and clear of all liens, security interests, pledges, charges,
encumbrances, mortgages and defects, except such as are disclosed in the
Prospectus or do not materially interfere with the use made or proposed to be
made of such property by the Company and its subsidiaries; and any real property
and buildings held under lease by the Company or any of its subsidiaries are
held under valid, subsisting and enforceable leases, with such exceptions as are
disclosed in the Prospectus or are not material and, in any case, do not
materially interfere with the use made or proposed to be made of such property
and buildings by the Company and its subsidiaries.
(l) The issue
and sale of the Shares by the Company and the issue and sale of the
Underwriter’s Warrant, the Warrant Shares by the Company when issued and
delivered upon due exercise of the Underwriter’s Warrant and the compliance by
the Company with all of the provisions of this Agreement and the Underwriter's
Warrant and the consummation of the transactions herein and therein contemplated
will not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the Company
or any of its subsidiaries is subject, nor will such action result in any
violation of the provisions of the Articles of Incorporation or By-laws of the
Company or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties; and no filing, consent, approval,
authorization, order, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the Shares or
the Warrant Shares or the consummation by the Company of the transactions
contemplated by this Agreement and the Underwriter's Warrant, except the
registration under the Act of sale of the Shares, the approval by FINRA of the
terms of the sale of the Shares and of the Underwriter’s Warrant and such
consents, approvals, authorizations, registrations or qualifications as may be
required under state securities or blue sky laws in connection with the purchase
and distribution of the Shares by the Underwriters.
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(m) Other
than as disclosed in the Prospectus, there is no litigation, arbitration, claim,
proceeding (formal or informal) or investigation (including without limitation,
any Company regulatory proceeding) pending or, to the Company’s knowledge,
threatened in which the Company or any of its subsidiaries is a party or of
which any of their properties or assets are the subject which, if determined
adversely to the Company or any of its subsidiaries, would individually or in
the aggregate have a Material Adverse Effect. Neither the Company nor
any of its subsidiaries is in violation of, or in default with respect to, any
law, statute, rule, regulation, order, judgment or decree, except as described
in the Prospectus or such as do not and will not individually or in the
aggregate have a Material Adverse Effect, and neither the Company nor any of its
subsidiaries is required to take any action in order to avoid any such violation
or default.
(n) JH Cohn
LLP, Certified Public Accountants, which have certified certain financial
statements of the Company included in the Prospectus, are independent public
accountants as required by federal law and the rules and regulations of the
Commission and are registered with the Public Company Accounting Oversight
Board.
(o) The
financial statements and schedules (including the related notes) of the Company
and its subsidiaries included in the Prospectus and/or any Preliminary
Prospectus were prepared in accordance with generally accepted accounting
principles for financial reporting in the United States ("GAAP"), applied on a
consistent basis throughout the periods involved and fairly present the
consolidated financial position and results of operations of the Company and its
subsidiaries at the dates and for the periods presented. The selected
consolidated financial data and other operating and statistical information set
forth in the Prospectus fairly present, on the basis stated in the Prospectus,
the information included therein, and have been compiled on a basis consistent
with that of the audited financial statements included in the
Prospectus. The unaudited interim consolidated financial statements
included in the Prospectus comply as to form in all material respects with the
applicable accounting requirements of Rule 10-01 of Regulation S-X under the
Act.
(p) The
execution, delivery and performance of each of this Agreement and the
Underwriter’s Warrant have been duly authorized, executed and delivered by the
Company and, assuming due execution, delivery and performance of this Agreement
by the Representative, each constitutes the valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, subject,
as to enforcement, to applicable bankruptcy, insolvency, reorganization and
moratorium laws and other laws relating to or affecting the enforcement of
creditors' rights generally and to general equitable principles and except as
the enforceability of rights to indemnity and contribution under this Agreement
may be limited under applicable securities laws or the public policy underlying
such laws.
(q) When the
Shares to be sold by the Company hereunder have been duly delivered against
payment therefor as contemplated by this Agreement, the Shares will be validly
issued, fully paid and nonassessable, and the holders thereof will not be
subject to personal liability solely by reason of being such
holders. When the Warrant Shares to be sold by the Company upon
exercise of the Underwriter's Warrant have been duly delivered against payment
therefor as contemplated by the Underwriter's Warrant, the Warrant Shares will
be validly issued, fully paid and nonassessable, and the holders thereof will
not be subject to personal liability solely by reason of being such
holders. The stock certificate representing the Shares is in proper
legal form under, and conforms in all respects to the requirements of, the
General Corporation Law of the State of Delaware.
(r) The
Company has not distributed and will not distribute any offering material in
connection with the offering and sale of the Shares other than a Preliminary
Prospectus, the Prospectus and such other material, including but not limited to
advertisements or press releases, if any, as has been or will be provided to the
Underwriters prior to distribution for their review and consent, said consent
not to be unreasonably withheld.
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(s) The
operations of the Company and its subsidiaries with respect to any real property
currently leased or owned by them are in compliance in all material respects
with all applicable federal, state, and local laws, ordinances, rules, and
regulations relating to occupational health and safety and the environment
(collectively, "LAWS"), and neither the Company nor any of its subsidiaries has
violated any Laws in a way which, individually or in the aggregate, would have a
Material Adverse Effect. Except as disclosed in the Prospectus, there
is no pending or, to the Company's knowledge, threatened claim, litigation or
administrative agency proceeding, nor has the Company or any of its subsidiaries
received any written or oral notice from any governmental entity or third party,
that: (i)alleges a violation of any Laws by the Company or any of its
subsidiaries or (ii) alleges that the Company or any of its subsidiaries is a
liable party under the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. Section 9601 et seq. or any state
superfund law.
(t) The
Company and its subsidiaries have sufficient interests in, all patents, patent
rights, licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "INTELLECTUAL PROPERTY") necessary for
their business as described in the Prospectus, and neither the Company nor any
of its subsidiaries has received any notice or is otherwise aware of any
infringement of, or conflict with, any asserted rights of others with respect to
any Intellectual Property which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(u) The
Company and its subsidiaries make and keep accurate books and records reflecting
their assets and maintain internal accounting controls which provide reasonable
assurance that (i) transactions are executed in accordance with management's
authorization, (ii) transactions are recorded as necessary to permit preparation
of the Company's consolidated financial statements in accordance with GAAP and
to maintain accountability for the assets of the Company and its subsidiaries,
(iii) access to the assets of the Company and its subsidiaries is permitted only
in accordance with management's authorization, and (iv) the recorded assets of
the Company and its subsidiaries are compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
(v) The
Company and its subsidiaries have filed all foreign, federal, state and local
tax returns that are required to be filed by them and have paid all taxes shown
as due on such returns, as well as all other taxes, assessments and governmental
charges that are due and payable; and no material deficiency with respect to any
such return has been assessed or, to the knowledge of the Company,
proposed.
(w) Except
for such plans as are expressly disclosed in the Prospectus ("PLANS"), the
Company and its subsidiaries do not maintain, contribute to or have any material
liability with respect to any employee benefit plan, profit sharing plan,
employee pension benefit plan, employee welfare benefit plan, equity-based plan
or deferred compensation plan or arrangement that is subject to the provisions
of the Employee Retirement Income Security Act of 1974, as amended, or the rules
and regulations thereunder ("ERISA"). All Plans are in compliance
with all applicable laws, including but not limited to ERISA and the Internal
Revenue Code of 1986, as amended (the "CODE") and have been operated and
administered in accordance with their terms. No Plan is a
multi-employer plan. The Company and its subsidiaries do not provide
retiree life and/or retiree health benefits or coverage for any employee or any
beneficiary of any employee after such employee’s termination of employment,
except as required by Section 4980B of the Code or under a Plan which is
intended to be "qualified" under Section 401(a) of the Code. No
liability has been, or could be expected to be, incurred under Title IV of ERISA
or Section 412 of the Code by any entity required to be aggregated with the
Company pursuant to Section 4001(b) of ERISA and/or Section 414(b) or (c) of the
Code (and the regulations promulgated thereunder) with respect to any "employee
pension benefit plan" which is not a Plan. As used in this
subsection, the terms "defined benefit plan," "employee benefit plan," "employee
pension benefit plan," "employee welfare benefit plan" and "multi-employer plan"
shall have the respective meanings assigned to such terms in Section 3 of
ERISA.
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(x) No
material labor dispute exists with the Company's or any of its subsidiaries
employees, and no such labor dispute is threatened. The Company has
no knowledge of any existing or threatened labor disturbance by the employees of
any of its principal agents, suppliers, contractors or customers that would be
likely to have a Material Adverse Effect.
(y) The
Company and its subsidiaries have received all permits, licenses, franchises,
authorizations, registrations, qualifications and approvals (collectively,
"PERMITS") of governmental or regulatory authorities (including, without
limitation, state or federal regulatory authorities) as may be required of them
to own their properties and conduct their business in the manner described in
the Prospectus, subject to such qualifications as may be set forth in the
Prospectus and except for such deficiencies with respect to the foregoing which
would not have a Material Adverse Effect; and the Company and its subsidiaries
each have fulfilled and performed all of its material obligations with respect
to such Permits, and no event has occurred which allows or, after notice or
lapse of time or both, would allow revocation or termination thereof or result
in any other material impairment of the rights of the holder of any such Permit,
subject in each case to such qualifications as may be set forth in the
Prospectus; and, except as described in the Prospectus, such Permits contain no
restrictions that materially affect the ability of the Company or its
subsidiaries to conduct their business.
(z) The
Common Stock has been registered pursuant to Section 12 of the Securities and
Exchange Act of 1934, as amended (the “EXCHANGE ACT”). The Company
has filed, or has had filed on its behalf, on a timely basis, all materials,
reports, documents and information, including but not limited to annual reports,
with the Commission which are required to be filed by it.
(aa) The
Company is not an "investment company" or a company "controlled" by an
investment company as such terms are defined in Sections 3(a) and 2(a)(9),
respectively, of the Investment Company Act of 1940, as amended (the "INVESTMENT
COMPANY ACT"), and if the Company conducts its business as set forth in the
Prospectus, it will not become an "investment company" and will not be required
to register under the Investment Company Act.
(bb) The
Company has in place and effective such policies of insurance, with limits of
liability in such amounts, as are normal and prudent in the ordinary scope of
business similar to that of the Company in the jurisdictions in which it
conducts business.
2. Purchase and Sale of
Shares.
(a) Subject
to the terms and conditions herein set forth, the Company agrees to 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 [______] Dollars
and [______] Cents ($[____]) per share (the "PER SHARE PRICE") the number of
Firm Shares to be purchased by such Underwriter as set forth opposite the name
of such Underwriter in SCHEDULE I hereto.
(b) The
Company hereby grants to the Underwriters the right to purchase at their
election, in whole or in part, from time to time, the Option Shares, at the Per
Share Price, for the sole purpose of covering over-allotments in the sale of the
Firm Shares. Any such election to purchase Option Shares may be
exercised by written notice from the Representative to the Company, given at
anytime (but not more than once) within a period of 45 calendar days after the
date of this Agreement and setting forth the aggregate number of Option Shares
to be purchased and the date on which such Option Shares are to be delivered, as
determined by the Representative, but in no event earlier than the First Time of
Delivery (as hereinafter defined) or, unless the Representative otherwise agrees
in writing, earlier than two or later than ten business days after the date of
such notice. In the event the Underwriters elect to purchase all or a
portion of the Option Shares, the Company agrees to furnish or cause to be
furnished to the Representative the certificates, letters and opinions, and to
satisfy all conditions set forth in Section 7 hereof at the Subsequent Time of Delivery
(as hereinafter defined).
(c) In making
this Agreement, each Underwriter is contracting severally, and not jointly, and
except as provided in Sections 2(b) and
9 hereof, the agreement of each
Underwriter is to purchase only that number of shares specified with respect to
that Underwriter in SCHEDULE I hereto. No Underwriter shall be under
any obligation to purchase any Option Shares prior to an exercise of the option
with respect to such Option Shares granted pursuant to Section 2(b) hereof.
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3. Offering by the
Underwriters. Upon the authorization by the Representative of
the release of the Shares, the several Underwriters propose to offer the Shares
for sale upon the terms and conditions disclosed in the Prospectus.
4. Delivery of Shares;
Closing. The Firm Shares shall be issued in the form of one or
more fully registered stock certificates in book-entry form in such denomination
and registered in the name of the nominee of The Depositary Trust Company
("DTC") or in such names as the Representative may request upon at least two
business days' prior notice to the Company, and shall be delivered by or on
behalf of the Company to the Representative for the account of such Underwriter,
against payment by such Underwriter on its behalf of the purchase price
therefore by wire transfer of immediately available funds to such accounts as
the Company shall designate in writing. The closing of the sale and
purchase of the Firm Shares shall be held at the offices of Hodgson Russ LLP,
1540 Broadway, 24th
Floor, New York, New York 10036. The time and date of such delivery
and payment shall be, with respect to the Firm Shares, at 9:00 a.m., New York
City time, on the fourth (4th) full business day after this Agreement is
executed or at such other time and date as the Representative and the Company
may agree upon in writing, and, with respect to the Option Shares, at 9:00 a.m.,
Eastern time, on the date reasonably specified by the Representative in the
written notice given by the Representative of the Underwriters' election to
purchase all or part of such Option Shares, or at such other time and date as
the Representative and the Company may agree upon in writing. Such
time and date for delivery of the Firm Shares is herein called the "FIRST TIME
OF DELIVERY," such time and date for delivery of any Option Shares, if not the
First Time of Delivery, is herein called a "SUBSEQUENT TIME OF DELIVERY," and
each such time and date for delivery is herein called a "TIME OF
DELIVERY".
5. Covenants of the
Company. The Company covenants and agrees with each of the
Underwriters that:
(a) The
Company will prepare the Prospectus in a form approved in all material respects
by its counsel and the Representative and file such Prospectus pursuant to Rule
424(b) under the Act not later than the Commission's close of business on the
second business day following the execution and delivery of this Agreement, or,
if applicable, such earlier time as may be required by Rule 430A(a)(3) under the
Act. Any further amendment or any supplement to the Registration
Statement or Prospectus shall be presented to the Representative in advance of
filing and shall be filed unless disapproved by the Representative for good
reason within 3 business days thereof.
(b) The
Company will advise the Representative promptly after receiving notice of (i)
any request by the Commission for the amending or supplementing of the
Registration Statement or Prospectus or for additional information; (ii) the
time when any amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended Prospectus has been
filed and to furnish the Representative with copies thereof; and (iii) the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or prospectus, of the
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose. In the event of the issuance of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
prospectus or suspending any such qualification, promptly to use its best
efforts to obtain the withdrawal of such order.
(c) The
Company promptly from time to time will take such action as the Representative
may reasonably request to qualify the Shares for offering and sale under the
securities or blue sky laws of such jurisdictions within the United States as
the Representative may request and will continue such qualifications in effect
for as long as may be necessary to complete the distribution of the Shares,
provided that in connection therewith the Company shall not be required to
qualify as a foreign corporation or as a dealer in securities or to file a
general consent to service of process in any jurisdiction. The
Company will file such statements and reports as may be required by the laws of
each jurisdiction in which the Shares have been qualified as above
provided.
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(d) The
Company will promptly provide the Representative, without charge, at each Time
of Delivery, as many copies of the Prospectus and any amendment or supplement
thereto as the Representative may reasonably request.
(e) To
furnish to its stockholders as soon as practicable after the end of each fiscal
year an annual report (including a balance sheet and statements of income,
stockholders' equity and cash flows of the Company and its consolidated
subsidiaries certified by independent public accountants) and, as soon as
practicable after the end of each of the first here quarters of each fiscal year
(beginning with the fiscal quarter ending after the effective date of the
Registration Statement), to make available to its stockholders consolidated
summary financial information of the company and its subsidiaries for such
quarter in reasonable detail.
(f) During
the period beginning from the date hereof and continuing to and including the
date 365 days after the date of the Prospectus, the Company will not, and will
cause each executive officer and director of the Company and each stockholder of
the Company owning 2% or more of the outstanding Common Stock to deliver to the
Representative an agreement in the form attached hereto as Exhibit A (each, a
"LOCK-UP AGREEMENT"), agreeing not, without the prior written consent of the
Representative, directly or indirectly to (i) offer, sell, contract to sell or
otherwise dispose of, any shares of Common Stock or securities convertible into
or exercisable or exchangeable for shares of Common Stock or (ii) enter into any
swap or other agreement or any transaction that transfers, in whole or in part,
the economic consequences of ownership of shares of Common Stock whether any
such swap or other agreement is to be settled by delivery of shares of Common
Stock, other securities, cash or otherwise; except for the sale of the Shares
hereunder, except for the issuance of Common Stock upon the exercise of stock
options or warrants or the conversion of convertible securities outstanding on
the date of this Agreement to the extent that such stock options, warrants and
convertible securities are disclosed in the Prospectus and except for the grant
to employees of stock options to purchase Common Stock which are not exercisable
within such 365 days. Notwithstanding the foregoing, Knox Lawrence
International, LLC (“KLI”), shall be permitted to transfer up to 10% of its
shares of the Company’s Common Stock to up to five individuals or entities,
provided that each such transferee, simultaneously with becoming a transferee
executes and delivers and is bound by a Lock-Up Agreement.
(g) Upon
request of the Representative and during the period of three years commencing on
the date of this Agreement, the Company will furnish to the Representative and,
upon request, to each of the other Underwriters, without charge, (i) copies of
all reports and (ii) as soon as they are available, copies of any reports and
financial statements furnished to or filed under the Securities Exchange Act of
1934 (the "Exchange Act").
(h) Prior to
the termination of the underwriting syndicate contemplated by this Agreement,
the Company and its affiliates will not, and the Company shall cause its
officers and directors not to, (i) take, directly or indirectly, any action
designed to cause or to result in, or that might be expected to cause or result
in, the stabilization or manipulation of the price of any security of the
Company or (ii) sell, bid for, purchase or pay anyone any compensation for
soliciting purchases of, the Shares. Notwithstanding anything herein
to the contrary, no market stabilization activities lawfully and reasonably
implemented by the Underwriters with respect to the Shares or Option Shares,
during the period immediately after the closing of First Time of Delivery shall
be deemed a violation of this Agreement.
(i) In case
of any event, at any time within the period between the date hereof and the
First Time of Delivery or final Subsequent Time of Delivery, as a result of
which any Preliminary Prospectus or the Prospectus, as then amended or
supplemented, would contain an untrue statement of a material fact, or omit to
state any material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, the
Company promptly will prepare an amendment or supplement that will correct such
statement or omission and will furnish to the several Underwriters such number
of copies of such amendment(s) or supplement(s) as the Representative may
reasonably request. For purposes of this subsection, the Company will
provide such information to the Representative's counsel and counsel to the
Company as shall be necessary to enable such persons to consult with the Company
with respect to the need to amend or supplement any Preliminary Prospectus or
the Prospectus, and shall furnish to the Representative and the Underwriters'
counsel such further information as each may from time to time reasonably
request.
8
(j) The
Company shall use its best efforts to have the Shares quoted on the FINRA OTC
Bulletin Board.
(k) The
Company shall continue to retain as its accountants JH Cohn LLP or another firm
of independent public accountants reasonably acceptable to the Representative
for one year from the First Time of Delivery.
(l) The
Company shall retain as outside legal counsel a firm acceptable to the
Representative, which shall be experienced in securities law matters, for one
year from the First Time of Delivery. The Representative acknowledges
that Sichenzia Ross Friedman Ference LLP, the Company's current counsel, is so
qualified.
(m) The
Company shall establish, maintain and execute an active and vigorous investor
relations program for a period of 2 years from the First Time of
Delivery. The Company shall retain continuously an
investor/public relations firm reasonably acceptable to the Representative for a
period of 2 years from the First Time of Delivery. If no investor
relations firm has been hired for any 2 month period, the Representative may
hire, at the Company’s reasonable expense, a firm on behalf of the Company the
fees of which shall be paid by the Company by the date due.
(n) By the
First Delivery Date, if not previously registered, the Company shall have
registered the Common Stock pursuant to the Exchange Act, and the Company shall
use its best efforts to maintain such registration in effect for a period of at
least 5 years from the first Delivery Date.
(o) By the
First Delivery Date, the Company shall register with, and for a period of five
years from such date shall remain covered by, the corporate Record Savings and
Annual Report Information Service published by Standard & Poor’s Corporation
or a similar manual filing service.
(p) By the
First Delivery Date and for a period of one year from such date, the Company
shall continue to retain Continental Stock Transfer & Trust Company or
retain another transfer agent reasonably acceptable to the
Representative. The Company shall cause such transfer agent to
provide the Representative with copies of the Company’s stock transfer sheet on
a quarterly basis.
(q) For a
period of not less than one year from the First Delivery Date, promptly
following the close of each fiscal quarter, the Company will upon request
provide the Representative with copies of quarterly statements setting forth
such information regarding the Company’s operations and financial position
(including balance sheet, profit and loss statements and data regarding
outstanding purchase orders) as may be regularly prepared by management of the
Company and its subsidiaries.
(r) For a
period of one year following the First Delivery Date, the Company shall not,
without the prior written consent of the Representative file a registration
statement with the Commission, other than a registration statement on Form S-8,
or any similar successor form for the registration of securities issuable under
the Company’s stock option plan; or sell any securities pursuant to
Regulation S, promulgated under the Securities Act.
6. Expenses and
Fees.
(a) The
Company will pay all costs and expenses, up to a maximum of $50,000, incident to
the performance of the obligations of the Company under this Agreement, whether
or not the transactions contemplated hereby are consummated or this Agreement is
terminated pursuant to Section 10
hereof, including, without limitation, all costs and expenses incident to (i)
the preparation, printing of and mailing expenses associated with any
Preliminary Prospectus and the Prospectus and any amendments or supplements
thereto, this Agreement, the Agreement among the Underwriters, the Underwriters'
Questionnaire submitted to each of the Underwriters by the Representative in
connection herewith, the power of attorney executed by each of the Underwriters
in favor of the Representative in connection herewith, the Selected Dealer
Agreement and related documents (collectively, the "UNDERWRITING DOCUMENTS");
(ii) the fees, disbursements and expenses of the Company's counsel and
accountants in connection with the registration of the Company's Common Stock
under the Exchange Act and all other expenses in connection with the preparation
and, if applicable, filing of, any Preliminary Prospectus, the Prospectus and
any amendments and supplements thereto and the Underwriting Documents; (iii) the
delivery of copies of the foregoing documents to the Underwriters; (iv) the
filing fees of the Financial Industry Regulatory Authority Inc. (“FINRA”)
relating to its approval of the fairness and reasonableness of the underwriting
terms and arrangements; (v) the preparation, issuance and delivery to the
Underwriters of any certificates evidencing the Shares, including transfer
agent's and registrar's fees; (vi) any fees relating to causing the shares to be
quoted on the FINRA OTC Bulletin Board; (vii) any expenses for travel, lodging
and meals incurred by the Company and any of its officers, directors and
employees in connection with any meetings with prospective investors in the
Shares; (viii) any reasonable cost of holding due diligence meetings and
drafting sessions; (ix) any cost for placing a "tombstone” advertisement in the
Wall Street Journal;
(x) all “Blue Sky” filing fees as requested by the Representative and all costs
and expenses of “Blue Sky” registration or qualification, including the fees and
disbursements of the Representatives legal counsel in connection therewith, the
costs of preparing, printing and delivering “Blue Sky” memoranda, and all state
registration, qualification and filing fees, and (xi) all other costs and
expenses reasonably incident to the performance of the Company's obligations
hereunder that are not otherwise specifically provided for in this Section 6. In addition, at the closing
of each sale of securities pursuant to this Agreement, we will withhold and
retain an amount equal to one percent (1%) of the aggregate offering price to
the public of the Common Stock so sold.
9
(b) On the
Closing Date, the Company will further issue and sell to the Representative or,
at the direction of the Representative, to designees of the Representative, at a
purchase price of $100.00 and for other good and valuable consideration,
warrants to purchase Common Stock (the "UNDERWRITER’S WARRANT") entitling the
holders thereof to purchase an aggregate of up to [______] shares of Common
Stock, plus a number of shares of Common Stock equal to 5% of any Option Shares
purchased by the Underwriters (the "WARRANT SHARES"), and,
exercisable for a period of four years, such period to commence on the first
anniversary of the effective date of the Registration Statement. The
Underwriter's Warrant shall be exercisable at a price equal to 120% of the
public offering price of the Firm Shares, and shall contain terms and provisions
more fully set forth more particularly in the warrant agreement relating to the
Underwriter’s Warrant to be executed by the Company at each Time of Delivery
(the "UNDERWRITER'S WARRANT AGREEMENT"). No sale, transfer,
assignment, pledge or hypothecation of the Underwriter's Warrant shall be made
for a period of one year from the effective date of the Registration Statement,
except (i) by operation of law or reorganization of the Company, or (ii) to the
Representative and bona fide partners, officers (not directors) of the
Representative and selling group members. A copy of the form of the
Underwriter’s Warrant is set forth in EXHIBIT UW appended hereto.
7. Conditions of the
Underwriters' Obligations. The obligations of the Underwriters
hereunder to purchase and pay for the Shares to be delivered at each Time of
Delivery shall be subject, in their discretion, to the accuracy of the
representations and warranties of the Company contained herein as of the date
hereof and as of such Time of Delivery, to the accuracy of the statements of the
Company's officers made pursuant to the provisions hereof, to the performance by
the Company of its covenants and agreements hereunder, and to the following
additional conditions precedent:
(a) The
Prospectus shall have been filed with the Commission pursuant to Rule 424(b)
within the applicable time period prescribed for such filing by the rules and
regulations under the Act and in accordance with Section 5(a) hereof; if the Company has elected to
rely upon Rule 462(b), the Rule 462(b) Registration Statement shall have been
filed by 10:00 P.M., Washington, D.C. time, on the date of this
Agreement; no stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the Commission; and all
requests for additional information on the part of the Commission shall have
been complied with to the Representative's reasonable satisfaction.
(b) The
Representative shall have received a copy of an executed Lock-Up Agreement from
the Company and each of the Company's executive officers and
directors.
(c) The
Representative shall have received an opinion, dated as of each Time of
Delivery, of Sichenzia Ross Friedman Ference LLP, securities counsel for the
Company in connection with this Agreement, in form and substance satisfactory to
the Representative and its counsel, to the effect that:
(i) Based
solely upon certificates of public officials, the Company is validly existing as
a corporation, and is in good standing, under the General Corporation Law of the
State of Delaware. The Company has the corporate power under the
General Corporation Law of the State of Delaware and the Articles of
Incorporation and the By-Laws of the Company to execute, deliver and perform
(including, but not limited to, issuing the Firm Shares and the Option Shares in
accordance with this Agreement) this Agreement, the Underwriter's
Warrant. The Company has the corporate power under the General
Corporation Law of the State of Delaware and the Articles of Incorporation and
the By-laws of the Company to own its properties and conduct its business as
described in the Prospectus. Based solely upon the certificate of an
officer, of the Company as to factual matters, there is no state in which, by
virtue of the ownership of property, or the conduct of business, by the Company
in such state, the Company would be required to qualify to do business under the
statute of such state providing for the qualification of a business corporation
incorporated in another state to do business to such state.
10
(ii) Based
solely upon certificates of public officials, Utilipoint (the "WHOLLY-OWNED
SUBSIDIARY") is validly existing as a corporation, and is in good standing under
the Business Corporation Act of the State of New Mexico. All of the
issued shares of capital stock of the U.S. Subsidiary (the “WHOLLY-OWNED
SUBSIDIARY SHARES”) have been duly and validly authorized and issued and,
assuming they are fully paid, are non-assessable, under the New Mexico Business
Corporation Act and the Articles of Incorporation and the By-Laws of the US
Subsidiary. All of the Wholly-Owned Subsidiary Shares are owned of
record directly by the Company, and to such counsel's knowledge, are free and
clear of all liens, encumbrances, equities and claims. Based solely
as to factual matters upon representations and warranties made by an officer of
the Company the Wholly-Owned Subsidiary Shares are fully paid.
(iii) Based
solely upon certificates of public officials, The Intelligent Project LLC (the
"MAJORITY-OWNED SUBSIDIARY", and collectively with the Wholly-Owned Subsidiary,
the “U.S. SUBSIDIARIES) is validly existing as a limited liability company, and
is in good standing under the [LLC law] of _______________. All of
the membership interests of the Majority-Owned Subsidiary have been duly and
validly authorized and issued and, based solely upon a certificate of an officer
of the Company, are fully paid, under the [LLC law] of ________ and the
[Articles of Organization] and the [operating agreement] of the Majority-Owned
Subsidiary. Based solely upon a certificate of an officer of
the Company, the Company owns a [60]% membership interest in the Majority-Owned
Subsidiary, and to such counsel’s knowledge, such ownership interest is free and
clear of all liens, encumbrances, equities and claims.
(iv) All of
the issued shares of capital stock of the Company, including, but not limited
to, all of the Shares and all other outstanding shares of the Common Stock, have
been duly authorized and validly issued, and assuming they are fully paid are
non-assessable, under the General Corporation Law of the State of Delaware and
the Articles of Incorporation and the By-laws of the Company and conform in all
material respects to the description thereof contained in the Prospectus.
Assuming compliance with the terms of this Agreement and based solely as to
factual matters upon representations and warranties made by an officer of the
Company, the Shares and all other outstanding shares of Common Stock are fully
paid. The Warrant Shares have been duly authorized, and, when delivered against
payment therefor as contemplated by the Underwriter's Warrant, will be validly
issued, fully paid and nonassessable, under the General Corporation Law of the
State of Delaware and the Articles of Incorporation and the By-laws of the
Company and will conform to the description thereof contained in the
Prospectus. Based solely as to factual matters on representations and
warranties made by an officer of the Company, none of the issued shares of the
Common Stock has been issued in violation of the General Corporation Law of the
State of Delaware or any preemptive right of any shareholder under the Articles
of Incorporation or the By-laws of the Company, and no party (including, but not
limited to, any holder of outstanding shares of the Common Stock) has any
preemptive right under the General Corporation Law of the State of Delaware, or
to the knowledge of such counsel, under any agreement, contract or arrangement,
to subscribe for any of the Shares or any of the Warrant Shares.
(v) To such
counsel's knowledge, except as disclosed in the Prospectus, there is no
outstanding (A) security or obligation of the Company convertible into or
exchangeable for any capital stock of the Company, (B) warrant, right or option
to subscribe for or purchase from the Company any such capital stock or any such
security or obligation of the Company convertible into or exchangeable for any
such capital stock other than pursuant to the Company's stock benefit plans or
(C) obligation of the Company to issue any shares of such capital stock, any
such security or obligation of the Company convertible into or exchangeable for
any such capital stock or any such warrant, right or option.
(vi) The sale
of those of the Shares being sold at such Time of Delivery, the sale of the
Warrant Shares upon exercise of the Underwriter's Warrant and the performance of
this Agreement, the Underwriter's Warrant and the consummation of the
transactions contemplated by this Agreement and the Underwriter's Warrant will
not, assuming the application of proceeds from the sale of the Shares as set
forth in the Prospectus, violate (A) the General Corporation Law of the State of
Delaware, any statute, rule or regulation of the State of New York or any United
States federal statute rule or regulation, (B) to counsel's knowledge, any order
of any governmental agency or body or any court having jurisdiction over the
Company, the U.S. Subsidiary or any of the properties of the Company or the U.S.
Subsidiary, (C) to such counsel’s knowledge, any agreement or instrument
(including, but not limited to, any indenture but excluding any loan or credit
agreement, mortgage or lease) to which the Company or the U.S. Subsidiary is a
party, by which the Company or the U.S. Subsidiary is bound or to which any of
the properties of the Company or the U.S. Subsidiary is subject and that is
identified to such counsel by the Company or (D) the Articles of Incorporation
or the By-laws of the Company.
(vii) No
consent, approval, authorization or order of, or filing with, any governmental
agency or body of the State of Delaware or the State of New York, any court of
the State of Delaware or the State of New York or any United States federal
governmental agency or body or United States federal court is required to be
obtained or made by the Company under the General Corporation Law of the State
of Delaware, any statute, rule or regulation of the State of New York or any
United States federal statute, rule or regulation for the consummation of the
transactions contemplated by this Agreement in connection with the sale of the
Shares and the Warrant Shares by the Company, except for those that have been
obtained and made under the Act and those required under the Exchange Act or any
state securities statute, rule or regulation.
11
(viii) To such
counsel's knowledge, other than as disclosed in the Prospectus, there is no
pending or threatened litigation, arbitration or investigation to which the
Company or the U.S. Subsidiary is a party or to which any of the properties of
the Company or the U.S. Subsidiary is subject that, if determined adversely to
the Company or the U.S. Subsidiary, would individually or in the aggregate have
a Material Adverse Effect.
(ix) The
execution, delivery and performance (including, but not limited to, the issuance
of the Firm Shares and the Option Shares in accordance with this Agreement) of
this Agreement and the Underwriter's Warrant by the Company have been duly
authorized by all corporate (including, but not limited to, shareholder) action
of the Company necessary under the General Corporation Law of the State of
Delaware and the Articles of Incorporation and the By-Laws of the
Company.
(x) Each of
this Agreement and the Underwriter's Warrant is enforceable against the Company
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization and moratorium statutes, rules and regulations and other
statutes, rules and regulations relating to or affecting the enforcement of
creditors' rights generally and to general equitable principles and except that
the enforceability of rights to indemnity and contribution under this Agreement
may be limited under any applicable securities statute, rule or regulation or
any public policy underlying any such statute, rule or regulation.
(xi) The
Company is not and, after giving effect to the offering and sale of the Shares
and the application of the proceeds thereof as described in the Prospectus and
taking account of the operation of the Company's business as described in the
Prospectus, will not be an "investment company" as defined in the Investment
Company Act.
(xii) The
Registration Statement and the Prospectus, and each amendment or supplement to
either, each as of its effective or issue date (other then the financial
statements and the notes and schedules thereto, as to which such counsel need
express no opinion), complied as to form in all material respects with the
requirements of the Act and the rules and regulations thereunder.
Such counsel shall also confirm
that, although such counsel has not passed upon, has not undertaken to verify
independently, and does not assume any responsibility for, the accuracy,
completeness or fairness of any statement contained in the Preliminary
Prospectus or the Prospectus, subject to the qualifications set forth in such
opinion, that, based upon participation in conferences with officers, directors
and other representatives of the Company, representatives of the independent
public accountants for the Company and representatives of the Representative at
which the contents of the Prospectus or any amendment thereof or supplement
thereto were discussed, such counsel has no reason to believe that the
Prospectus or any amendment thereof or supplement thereto, as of its issue date
or as of the date of such opinion, contains or contained any untrue statement of
a material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading (provided that such
counsel need not express any belief regarding the financial statements, the
notes and schedules thereto and other financial, statistical or operating
information or data contained in the Prospectus or any amendment or supplement
thereto).
In rendering any such opinion,
such counsel may rely, to the extent such counsel deems proper, on certificates
of officers of the Company or the U.S. Subsidiary as to matters of fact, on
certificates of public officials and on opinions of local
counsel. Copies of such certificates and opinions shall be furnished
to the Underwriters and counsel for the Underwriters.
12
(d) Hodgson
Russ LLP, counsel for the Underwriters, shall have furnished to the
Representative such opinion or opinions, dated such Time of Delivery, with
respect to such matters as the Representative may reasonably request, and the
Company shall have furnished to such counsel such documents as they request for
the purpose of enabling them to pass upon such matters.
(e) The
Representative shall have received from JH Cohn LLP and REDW LLC, in
form and substance satisfactory to the Representative, letters dated as of the
date hereof, the date of delivery of the Firm Shares and the date(s) of delivery
of any Option Shares, containing statements and information of the type
ordinarily included in accountants’ “comfort letters" to Underwriters with
respect to the financial statements and certain financial information contained
in the Prospectus; provided that the letter dated as of the date of delivery of
the Firm Shares shall use a "cut-off date" not earlier than the date
hereof.
(f) Since the
date of the latest audited financial statements included in the Prospectus,
neither the Company nor any of its subsidiaries shall have sustained any
material change or any development reasonably likely to involve a material
prospective change (including, without limitation, a change in management or
control of the Company), other than as disclosed in or contemplated by the
Prospectus, the effect of which, in either such case, in the Representative's
reasonable judgment makes it impracticable or inadvisable to proceed with the
purchase, sale and delivery of the Shares.
(g) Subsequent
to the date hereof and prior to Closing, there shall not have occurred any of
the following: (i) any suspension or limitation in trading in securities
generally on any national securities exchange or any setting of minimum prices
for trading on any national securities exchange, or in the Common Stock of the
Company by the Commission or any national securities exchange; (ii) a moratorium
on commercial banking activities declared by either federal or state
authorities; (iii) any outbreak or escalation of hostilities
involving the United States, declaration by the United States of a national
emergency or war or any other national or international calamity or emergency if
the effect of any such event specified in this clause; or (iv) in the
Representative's reasonable judgment makes it impracticable or inadvisable to
proceed with the purchase, sale and delivery of the Shares.
(h) The
Company shall have furnished to the Representative at such Time of Delivery
certificates of the chief executive officer or an executive vice president and
the chief financial officer of the Company satisfactory to the Representative,
as to the accuracy of the representations and warranties of the Company herein
at and as of such Time of Delivery with the same effect as if made at such Time
of Delivery, as to the performance by the Company of all of its obligations
hereunder to be performed at or prior to such Time of Delivery, and as to such
other matters as the Representative may reasonably request, and the Company
shall have furnished or caused to be furnished certificates of such officers as
to such matters as the Representative may reasonably request.
(i) The
representations and warranties of the Company in this Agreement and in the
certificates delivered by the Company pursuant to this Agreement shall be true
and correct in all material respects when made and on and as of each Time of
Delivery as if made at such time, and the Company shall have performed in all
material respects all covenants and agreements and satisfied all conditions
contained in this Agreement required to be performed or satisfied by the Company
at or before such Time of Delivery.
8. Indemnification and
Contribution.
(a) The
Company agrees to indemnify and hold harmless each Underwriter against any
losses, claims, damages or liabilities, joint or several, to which such
Underwriter may become subject, including reasonable attorneys’
fees, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement made by the Company in Section 1 of this Agreement; (ii) any untrue
statement of any material fact contained in (A) any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto, or (B) any application or
other document, or amendment or supplement thereto, executed by the Company or
based upon written information furnished by or on behalf of the Company filed in
any jurisdiction in order to qualify the Shares under the securities or blue sky
laws thereof or filed with any securities association or securities exchange
(each an "APPLICATION"); or (iii) the omission to state in Section 1, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto, or any Application of a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating, defending against or appearing as a third-party witness in
connection with any such loss, claim, damage, liability or action; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, liability or action arises out of or is based upon an untrue
statement or omission made in any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto or any Application in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through the Representative expressly for use therein. The Company
will not, without the prior written consent of the Representative, which shall
not be unreasonably withheld, settle or compromise or consent to the entry of
any judgment in any pending or threatened claim, action, suit or proceeding (or
related cause of action or portion thereof) in respect of which indemnification
may be sought hereunder (whether or not any Underwriter is a party to such
claim, action, suit or proceeding), unless such settlement, compromise or
consent includes an unconditional release of each Underwriter from all liability
arising out of such claim, action, suit or proceeding (or related cause of
action or portion thereof).
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(b) Each
Underwriter, severally but not jointly, agrees to indemnify and hold harmless
the Company against any actual losses, claims, damages or liabilities to which
the Company may become subject under the Act or otherwise including reasonable
attorneys’ fees, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, or any
Application or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by such Underwriter through the
Representative expressly for use therein; and will reimburse the Company for any
legal or other expenses reasonably incurred by the Company in connection with
investigating or defending any such loss, claim, damage, liability or
action.
(c) Promptly
after receipt by an indemnified party under subsection 8(a) or 8(b) above of notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the omission so
to notify the indemnifying party shall not relieve the indemnifying party from
any liability which it may have to any indemnified party otherwise than under
such subsection 8(a) or 8(b). In case any such action
shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party); provided,
however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party shall not have
the right to assume the defense of such action on behalf of such indemnified
party and such indemnified party shall have the right to select separate counsel
to defend such action on behalf of such indemnified party. After such
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof and approval by such indemnified party of counsel
appointed to defend such action, the indemnifying party will not be liable to
such indemnified party under this Section 8 for any legal or other expenses,
other than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof. Nothing in
this Section 8(c) shall preclude an
indemnified party from participating at its own expense in the defense of any
such action so assumed by the indemnifying party.
(d) If the
indemnification provided for in this Section 8 is unavailable to or insufficient
to hold harmless an indemnified party under subsection 8(a) or 8(b) above in respect of any losses,
claims, damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other hand from the offering of the Shares. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required under Section 8(c)
above, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company on the one hand and the Underwriters on the other hand in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other hand shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or the Underwriters on the other hand and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the Underwriters agree
that it would not be just and equitable if contributions pursuant to this
Section 8(d) were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 8(d). The amount paid or payable
by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this Section 8(d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 8(d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this Section 8(d) to contribute are several in
proportion to their respective underwriting obligations and not
joint.
14
(e) The
obligations of the Company under this Section 8 shall be in addition to any liability
which the Company may otherwise have and shall extend, upon the same terms and
conditions, to each officer, director and employee of the Underwriters and to
each person, if any, who controls any Underwriter within the meaning of the Act
or the Exchange Act; and the obligations of the Underwriters under this Section
8 shall be in addition to any liability
which the respective Underwriters may otherwise have and shall extend, upon the
same terms and conditions, to each officer and director of the Company and to
each person, if any, who controls the Company within the meaning of the Act or
the Exchange Act.
9. Default of
Underwriters.
(a) If any
Underwriter defaults in its obligation to purchase Shares at a Time of Delivery,
the Representative may in its discretion arrange for one or more other
Underwriters and/or one or more other parties to purchase such Shares on the
terms contained herein within thirty-six (36) hours after such default by any
Underwriter. In the event that, within the respective prescribed
period, the Representative notifies the Company that they have so arranged for
the purchase of such Shares, the Representative shall have the right to postpone
a Time of Delivery for period of not more than seven (7) days in order to effect
whatever changes may thereby be made necessary in the Prospectus or Registration
Statement or with the FINRA OTC Bulletin Board application, or in any other
documents or arrangements, and the Company agrees to file promptly any
amendments to the Prospectus that in the Representative's opinion may thereby be
made necessary.
(b) If, after
giving effect to any arrangements for the purchase of the Shares of a defaulting
Underwriter or Underwriters by the Representative as provided in Section 9(a) above, if any, the aggregate number of
such Shares which remain does not exceed one-eleventh (1/11) of the aggregate
number of Shares to be purchased at such Time of Delivery, then the Company
shall have the right to require each non-defaulting Underwriter to purchase the
number of Shares which such Underwriter agreed to purchase hereunder at such
Time of Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been
made.
10. Termination.
(a) This
Agreement may be terminated in the sole discretion of the Representative by
notice to the Company given prior to the First Time of Delivery or any
Subsequent Time of Delivery, respectively, in the event that (i) any condition
to the obligations of the Underwriters set forth in Section 7 hereof has not been satisfied, or (ii)
the Company shall have failed, refused or been unable to deliver the Firm Shares
or the Company shall have failed, refused or been unable to perform all
obligations and satisfy all conditions on its part to be performed or satisfied
hereunder at or prior to such Time of Delivery, in either case other than by
reason of a default by any of the Underwriters. If this Agreement is
terminated pursuant to this Section 10(a), the Company will reimburse the
Underwriters severally upon demand for all reasonable out-of-pocket expenses
(including counsel fees and disbursements) that shall have been incurred by them
in connection with the proposed purchase and sale of the Shares. Any
termination pursuant to this Section 10(a) shall be without liability on the
part of any Underwriter to the Company or on the part of the Company to any
Underwriter, except for expenses to be paid by the Company pursuant to Section 6
hereof or reimbursed by the Company pursuant to this Section 10(a) and except as to indemnification and
contribution to the extent provided in Section 8 hereof.
(b) If, after
giving effect to any arrangements for the purchase of the Shares of a defaulting
Underwriter or Underwriters as provided in Section 9(a), the aggregate number of such Shares
which remain unpurchased exceed one-eleventh (1/11) of the aggregate number of
Shares to be purchased at such Time of Delivery, then this Agreement (or, with
respect to a Subsequent Time of Delivery, the obligations of the Underwriters to
purchase and of the Company to sell the Option Shares) shall thereupon
terminate, without liability on the part of any non-defaulting Underwriter or
the Company, except for the expenses to be borne by the Company and the
Underwriters as provided in Section 6
hereof and the indemnity and contribution agreements in Section 8 hereof; but nothing herein shall relieve
a defaulting Underwriter from liability for its default.
11. Survival. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, its officers and the several Underwriters, as set
forth in this Agreement or made by or on behalf of them, respectively, pursuant
to this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person referred to in Section 8(f) or the
Company, or any officer or director or controlling person of the Company
referred to in Section 8(f), and shall survive delivery of and payment for the
Shares. The respective agreements, covenants, indemnities and other
statements set forth in Sections 6 and
8 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this
Agreement.
12. Notices. All
communications hereunder shall be in writing and, if sent to any of the
Underwriters, shall be sufficient in all respects if mailed, delivered or
telecopied and confirmed in writing to National Securities Corporation
Corporation, 330 Madison Avenue, New York, NY 10017, Attention Sagiv
Shiv (with a copy to Hodgson Russ LLP, 1540 Broadway, 24th
Floor, New York, New York, 10036 (Fax No.(212) 751-0928), Attention: Stephen A.
Weiss, Esq.); if to the Company, shall be sufficient in all respects if mailed,
delivered or telecopied and confirmed in writing to Midas Medici Group Holdings,
Inc., 445 Park Avenue, New York, NY 10022 (Fax No. (212)792-0920),
Attention: Nana Baffour, Chief Executive Officer (with a copy to Sichenzia Ross
Friedman Ference LLP, 61 Broadway, New York, NY 10006 (Fax No. (212)
930-9725, Attention: Thomas A. Rose, Esq.).
13. Binding
Effect. This Agreement shall be binding upon, and inure solely
to the benefit of, the Underwriters, the Company and, to the extent provided in
Sections 8 and 11 hereof, the officers, directors and
employees and controlling persons referred to therein and their respective
heirs, executors, administrators, successors and assigns, and no other person
shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Shares from any Underwriter
shall be deemed a successor or assign by reason merely of such
purchase.
14. Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to any
provisions regarding conflicts of laws.
15. Counterparts. This
Agreement may be executed by any one or more of the parties hereto in any number
of counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
[SIGNATURES
APPEAR ON THE FOLLOWING PAGE]
15
If the foregoing is in accordance with
your understanding of our agreement, please sign and return to us one of the
counterparts hereof, and upon the acceptance hereof by the Representative, on
behalf of each of the Underwriters, this letter will constitute a binding
agreement among the Underwriters and the Company. It is understood
that your acceptance of this letter on behalf of each of the Underwriters is
pursuant to the authority set forth in the Agreement among Underwriters, a copy
of which shall be submitted to the Company for examination, upon request, but
without warranty on your part as to the authority of the signers
thereof.
Very
truly yours,
MIDAS
MEDICI GROUP HOLDINGS, INC.
By:
_______________________________
Name:
Title:
The
foregoing Agreement is hereby confirmed and accepted as of the date first
written above.
NATIONAL
SECURITIES CORPORATION
By:
_______________________________
Name:
Title:
On behalf
of each of the Underwriters
16
SCHEDULE
I
|
Underwriter
|
Firm
Shares to Be Purchased
|
Option
Shares to be Purchase if Maximum Option Shares Sold
|
|
National
Securities Corporation
|
||
|
Ardour
Captial Investments, LLC
|
||
|
Total:
|
17
EXHIBIT
A
FORM OF
LOCK-UP AGREEMENT
MIDAS
MEDICI GROUP HOLDINGS, INC.
LOCK-UP
AGREEMENT
___________,
2010
NATIONAL
SECURITIES CORPORATION
[As
Representative (the "REPRESENTATIVE") of the Several
Underwriters
Named in Schedule I Hereto]
330
Madison Ave.
New York,
NY 10017
Ladies
and Gentlemen:
The undersigned understands that
you, as Representative of the several underwriters (the "UNDERWRITERS"), propose
to enter into an underwriting agreement (the "UNDERWRITING AGREEMENT") with
Midas Medici Group Holdings, Inc. (the “COMPANY") providing for the
public offering (the "PUBLIC OFFERING") by the Underwriters, including yourself,
of common stock of the Company (the "COMMON STOCK"). In consideration
of the Underwriters' agreement to purchase and make the Public Offering of the
Common Stock, and for other good and valuable consideration, receipt of which is
hereby acknowledged, the undersigned hereby agrees, for a period of 365 days
after the First Time of Delivery, as such term is defined in the Underwriting
Agreement (the "LOCK-UP PERIOD"), not to, and will cause any spouse or immediate
family member living in the undersigned’s household not to, sell, offer to sell,
solicit an offer to buy, contract to sell, encumber, distribute, pledge, grant
any option for the sale of, or otherwise transfer or dispose of, directly or
indirectly, in one or a series of transactions (collectively, a “DISPOSITION"),
any shares of Common Stock or any securities convertible or exercisable into or
exchangeable for shares of Common Stock (collectively, “SECURITIES"), now owned
(either of record or beneficially as defined in Rule 13d-3 promulgated under the
Exchange Act of 1934, as amended) or hereafter acquired by the undersigned or
with respect to which the undersigned has acquired or hereafter acquires the
power of disposition, without the prior written consent of the
Representative.
Prior to the expiration of the Lock-Up
Period, the undersigned agrees that it will not publicly announce or disclose
any intention to take any action after the expiration of such period which the
undersigned is prohibited, as provided in the preceding sentence, from taking
during the Lock-Up Period. The undersigned acknowledges and agrees
that the restrictions above are expressly agreed to preclude the holder of the
Securities from engaging in any hedging or other transaction which is designed
to, or reasonably expected to, lead to or result in a Disposition of Securities
(or the economic equivalent thereof) during the Lock-Up Period even if such
Securities would be disposed of by someone other than the
undersigned. Such prohibited hedging or other transactions would
include, without limitation, any short sale (whether or not against the box) or
any purchase, sale or grant of any right (including, without limitation, any put
or call option) with respect to any Securities or with respect to any security
(other than a broad-based market basket or index) that includes, relates to or
derives any significant part of its value from the Securities. The
undersigned hereby also agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent against the transfer of the
Securities held by the undersigned except in compliance with the Lock-Up
Agreement. It is understood that, if the Underwriting Agreement is
not executed, or if the Underwriting Agreement shall terminate or be terminated
prior to payment for and delivery of the Common Stock the subject thereof, this
Lock-Up Agreement shall automatically terminate and be of no further force or
effect. This Lock-Up Agreement shall be governed by and construed in
accordance with the laws of the State of New York (without giving effect to its
conflict of laws provisions).
Very
truly yours,
___________________________________
Name:
18
EXHIBIT
UW
FORM OF
UNDERWRITER’S WARRANT
19