EXHIBIT 10.13
FORM OF EMPLOYEE WARRANT AGREEMENT
U.S. LABORATORIES INC.
STOCK WARRANT AGREEMENT
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THIS AGREEMENT made and entered into as of ______ (the "Grant Date"), by
and between U.S. Laboratories Inc., a Delaware corporation (the "Company"), and
____________ (the "Holder").
RECITALS
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WHEREAS, the Board of Directors of the Company (the "Board") approved the
grant of a warrant to purchase shares of the Company's common stock, par value
$.01 per share ("Stock"), to the Holder; and
WHEREAS, this Agreement is intended to memorialize the terms and conditions
of such grant.
AGREEMENT
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NOW, THEREFORE, in consideration of the covenants and agreements herein set
forth, the parties hereby mutually covenant and agree as follows:
1. Grant. The Company hereby grants to Holder a warrant to purchase from
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the Company all or any part of an aggregate number of _____ shares of Stock
(hereinafter such shares of Stock are referred to as the "Warrant Shares" and
the warrant to purchase the Warrant Shares is referred to as the "Warrant").
2. Price. The price to be paid for the Warrant Shares shall be ___
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dollars ($____) per share.
3. Term; Exercise.
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(a) This Warrant may be exercised by the Holder hereof in whole or in
part, from time to time, beginning on the earlier to occur of:
(i) the date on which the closing price of a share of Stock as
reported on the Nasdaq Small-Cap Market is greater than $12.00, or
(ii) the date on which the audited financial statements of the
Company for its fiscal year ending December 31, 1998 (including on a
consolidated basis the earnings on Xxxxx Testing Laboratories, Inc.
("Xxxxx")), or any fiscal year thereafter during the term of the
Warrant, reflect that the Company's earnings per share of Stock for
the fiscal year are at least twice the award of the "base period
earnings." The "base period earnings"
shall mean $841,041, which represents the combined earnings of the
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Company and Xxxxx as reported in the audited financial statements of
the Company for the fiscal year ending December 31, 1997.
(b) This Warrant will expire and will not be exercisable after the
earlier to occur of:
(i) thirty (30) days after the Holder's termination of
employment for any reason other than death, disability or cause (as
defined below);
(ii) ninety (90) days after the Holder's termination of
employment as a result of death or disability (as defined in Section
22(e)(3) of the Code);
(iii) the Holder's termination of employment for cause (as
defined below); or
(iv) November 1, 2001;
provided, however, that if the Warrant is not exercisable pursuant to paragraph
3(a) hereof as of the date of the Participant's termination of employment with
the Company or its subsidiaries for any reason, the Warrant shall be immediately
terminated and automatically cancelled as of such date of termination.
As used herein, "cause" shall mean (i) conviction of a felony, (ii) commission
by the Participant of an act of fraud, misappropriation or embezzlement or (iii)
any other act or omission to act by the Participant if, in the judgment of the
Committee (A) the Participant knew or should have known that such an act or
omission would cause material injury to the financial condition or reputation of
the Company or its subsidiaries, and (B) such material injury has occurred or is
likely to occur, all as determined by the Committee.
4. Method of Exercise. The Warrant may be exercised only by written
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notice, delivered or mailed by postpaid registered or certified mail, addressed
to the treasurer of the Company at the Company's principal executive offices
specifying the number of Warranted Shares being purchased. Such notice shall be
accompanied by payment of the entire price of the Warrant Shares being purchased
(i) in cash or its equivalent, (ii) with the consent of the Board, by tendering
previously acquired shares of Stock having a fair market value (as determined by
the Board) equal to the price of the Warrant Shares being purchased, or (iii)
with the consent of the Board, by a combination of (i) and (ii). On and after
the effective date of an IPO (as defined below) of the Stock, the Warrant may be
exercised in the manner previously described or by delivery to the Company or
its designated agent of an executed irrevocable exercise form together with
instructions to a broker-dealer to sell or margin a sufficient portion of the
shares being exercised and deliver the sale or margin proceeds directly to the
Company to pay for price for the Warrant Shares. As used herein, "IPO" means the
event that occurs when shares of Stock are sold to the public pursuant to an
effective registration statement, other than a registration statement on
Form S-4 or Form S-8 or any other forms primarily used to register securities to
be issued pursuant to Company benefit
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plans, filed by the Company under the Securities Act of 1933 (the "Securities
Act"). Upon receipt of the payment of the entire price of the Warrant Shares so
purchased, certificates for such Warrant Shares shall be issued to the Holder.
The Warrant Shares so purchased shall be fully paid and nonassessable.
5. No Rights as a Shareholder. The Holder shall not be deemed for any
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purposes to be a shareholder of the Company with respect to any shares which may
be acquired hereunder except to the extent that the Warrant shall have been
exercised with respect thereto and a stock certificate issued therefor.
6. Nontransferabilitv; Collateral. Unless permitted by the Board, the
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Warrant shall not be transferable by the Holder otherwise than by will or the
laws of descent and distribution, and may be exercised during the life of the
Holder only by the Holder. The Warrant may not be assigned, mortgaged or pledged
as any type of security or collateral.
7. Restrictions on Transfers of Stock. The shares to be acquired upon
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exercise of the Warrant may not be sold or offered for sale except (i) pursuant
to an effective registration statement under the Securities Act of 1933 (the
"Act") or any applicable state securities laws, (ii) in a transaction satisfying
the requirements of Rule 144 promulgated under the Act, or (iii) in a
transaction which, in the opinion of counsel for the Company, is exempt from the
registration provisions of the Act or applicable state securities laws. The
Holder agrees that any certificate representing shares acquired upon exercise of
the Warrant may bear the following legend:
The shares of Common Stock represented by this certificate are
restricted securities as that term is defined under Rule 144
promulgated under the Securities Act of 1933, as amended (the "Act").
These shares may not be sold, transferred or disposed of unless they
are registered under the Act, sold in a transaction satisfying the
requirements of Rule 144 or unless the request to transfer is
accompanied by an opinion of counsel acceptable to the issuer, that
the transfer will not result in a violation of the Act or any
applicable state securities laws.
8. Specific Restrictions Upon Warrant Shares. The Holder hereby agrees
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with the Company that the Holder shall acquire the Warrant Shares for investment
purposes only and not with a view to resale or other distribution thereof to the
public in violation of the Act, and shall not dispose of the Warrant Shares in
any transaction which, in the opinion of counsel to the Company, would violate
the Act, or the rules and regulations thereunder, or any applicable state
securities or blue sky laws.
9. Adjustments. If the Company shall at any time change the number of
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shares of its Stock without new consideration to the Company (such as by stock
dividend, stock split or similar transaction), the total number of shares then
remaining subject to purchase hereunder shall be changed in proportion to the
change in issued shares, and the Warrant price per share shall be adjusted so
that the total consideration payable to the Company upon the purchase of all
shares not theretofore purchased shall not be changed. In the event there shall
be any
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change, other than as specified above, in the number or kind of outstanding
shares of Stock or of any stock or other securities into which such Stock shall
have been changed or for which it shall have been exchanged, then if the Board
shall in its sole discretion determine that such change equitably requires an
adjustment in the number or kind of shares subject to the Warrant, such
adjustment shall be made by the Board. The Warrant price for each share of Stock
or other securities substituted or adjusted as provided in this paragraph shall
be determined by dividing the Warrant price for each share prior to such
substitution or adjustment by the number of shares or the fraction of a share
substituted for such share or to which such share shall have been adjusted. No
adjustment or substitution provided for in this paragraph shall require the
Company to sell a fractional share.
10. Tax Withholding. It shall be a condition of the obligation of the
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Company to issue or transfer shares of Stock upon exercise of the Warrant, that
the Holder shall pay to the Company upon its demand, or agree that the Company
may withhold from compensation due the Holder, such amount as may be requested
by the Company for the purpose of satisfying its liability to withhold federal,
state or local income or other taxes incurred by reason of the exercise of the
Warrant. If the Holder fails to comply with this Paragraph 10, the Company may
refuse to issue or transfer shares of Stock upon exercise of the Warrant.
11. Powers of Company Not Affected. The existence of the Warrant herein
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granted shall not affect in any way the right or power of the Company or its
shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issuance of
bonds, debentures, preferred, or prior preference stock ahead of or affecting
the Stock or the rights thereof, or dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.
12. Interpretation. As a condition of the granting of the Warrant, the
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Holder agrees for himself and his legal representatives, that any dispute or
disagreement which may arise under or as a result of or pursuant to this
Agreement shall be determined by the Board in its sole discretion, and any
interpretation by the Board of the terms of this Agreement shall be final,
binding and conclusive.
13. Amendment or Modification. No term or provision of this Agreement may
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be amended, modified or supplemented orally, but only by an instrument in
writing signed by the party against whom or which the enforcement of the
amendment, modification or supplement is sought.
14. Governing Law. This Agreement shall be governed by the internal laws
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of the State of Delaware as to all matters, including, but not limited to,
matters of validity, construction, effect, performance and remedies.
15. Entire Agreement. This Agreement entered into between the Holder and
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the Company sets forth the entire agreement of the parties hereto in respect of
the subject matter contained herein and supersedes all prior agreements,
promises, covenants, arrangements,
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communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein is
hereby terminated and canceled.
16. Delegation by Board. Except to the extent prohibited by applicable
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law or the applicable rules of a stock exchange or market, the Board may
delegate all or any portion of its responsibilities and powers to any one or
more of its members. Any such delegation may be revoked by the Board at any
time.
17. Heirs and Successors. This Agreement shall be binding upon, and inure
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to the benefit of, the Company and its successors and assigns, and upon person
acquiring all or substantially all of the Company's assets and business. In the
event of the Holder's death prior to exercise of the warrant, the Warrant may be
exercised by the estate of the Holder to the extent such exercise is otherwise
permitted by this Agreement.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
by its duly authorized officer and the Holder has executed this Agreement as of
the day and year first above written.
U.S. LABORATORIES INC.
(the "Company")
By:______________________________________
Secretary / Treasurer
HOLDER:
_________________________________________
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