Exhibit 1.1
Form of Underwriting Agreement
U. S. LABORATORIES INC.
(A DELAWARE CORPORATION)
1,100,000 UNITS
1,100,000 SHARES OF COMMON STOCK AND
REDEEMABLE WARRANTS TO PURCHASE 1,100,000 SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
DATED: JANUARY , 1999
TABLE OF CONTENTS
PAGE
SECTION 1. Representations and Warranties . . . . . . . . . . . . . . . . . 2
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY . . . . 2
(i) Compliance with Registration Requirements. . . 3
(ii) Independent Accountants. . . . . . . . . . . 3
(iii) Financial Statements . . . . . . . . . . . . 3
(iv) No Material Adverse Change In Business . . . . 4
(v) Good Standing of the Company . . . . . . . . . 4
(vi) Good Standing of Subsidiaries. . . . . . . . . 4
(vii) Capitalization . . . . . . . . . . . . . . . . 4
(viii) Authorization and Description of Securities. 5
(ix) Absence of Defaults and Conflicts. . . . . . . 5
(x) Absence of Labor Dispute . . . . . . . . . . . 6
(xi) Absence of Proceedings . . . . . . . . . . . . 6
(xii) Absence of Contingent Liabilities. . . . . . . 6
(xiii) Absence of Transactions. . . . . . . . . . . . 6
(xiv) Accuracy of Exhibits . . . . . . . . . . . . . 6
(xv) Possession of Intellectual Property. . . . . . 7
(xvi) Absence of Further Requirements. . . . . . . . 7
(xvii) Possession of Licenses and Permits . . . . . . 7
(xviii) Authorization of Agreement . . . . . . . . . . 8
(xix) Compliance With Applicable Laws. . . . . . . . 8
(xx) Title to Property. . . . . . . . . . . . . . 8
(xxi) Registration Rights. . . . . . . . . . . . . . 9
(xxii) Warrants, Options and Other Rights . . . . . . 9
(xxiii) Investment Company Act . . . . . . . . . . . . 9
(xxiv) Environmental Laws . . . . . . . . . . . . . . 9
(xxv) Tax Matters. . . . . . . . . . . . . . . . . . 9
(xxvi) Insurance. . . . . . . . . . . . . . . . . . . 10
(xxvii) Accounting Controls. . . . . . . . . . . . . . 10
(xxviii) Fees . . . . . . . . . . . . . . . . . . . . . 10
(xxix) Lock-Up Agreements . . . . . . . . . . . . . . 10
(xxx) Use of Prospectus. . . . . . . . . . . . . . . 10
(xxxi) Compliance With Cuba Act . . . . . . . . . . . 11
(xxxii) Stock Split. . . . . . . . . . . . . . . . . . 11
(xxxiii) Affiliate Relationships. . . . . . . . . . . . 11
(xxxiv) Prior Securities Offerings . . . . . . . . . . 11
(xxxv) Corporate Records. . . . . . . . . . . . . . . 11
(xxxvi) NASD Affiliations. . . . . . . . . . . . . . . 11
(xxxvii) ERISA. . . . . . . . . . . . . . . . . . . . . 11
(b) OFFICER'S CERTIFICATES . . . . . . . . . . . . . . . . . 12
SECTION 2. Sale and Delivery to Underwriters; Closing . . . . . . . . . . . 12
(a) INITIAL SECURITIES . . . . . . . . . . . . . . . . . . . 12
(b) OPTION SECURITIES. . . . . . . . . . . . . . . . . . . . 12
(c) PAYMENT. . . . . . . . . . . . . . . . . . . . . . . . . 12
(d) DENOMINATIONS; REGISTRATION. . . . . . . . . . . . . . . 13
(5) Underwriters Warrant . . . . . . . . . . . . . . . . . . 13
SECTION 3. Covenants of the Company . . . . . . . . . . . . . . . . . . . . 13
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND
COMMISSION REQUESTS. . . . . . . . . . . . . . . . . . . 13
(2) FILING OF AMENDMENTS . . . . . . . . . . . . . . . . . . 14
(c) DELIVERY OF REGISTRATION STATEMENTS. . . . . . . . . . . 14
(d) DELIVERY of PROSPECTUSES . . . . . . . . . . . . . . . . 14
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. . . . . . . . 14
(6) Blue Sky Qualifications. . . . . . . . . . . . . . . . . 15
(g) RULE 158 . . . . . . . . . . . . . . . . . . . . . . . . 15
(h) USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . 15
(i) LISTING. . . . . . . . . . . . . . . . . . . . . . . . . 15
(j) RESTRICTION ON SALE OF SECURITIES. . . . . . . . . . . . 15
(k) REPORTING REQUIREMENTS . . . . . . . . . . . . . . . . . 16
(1) COMPLIANCE WITH RULE 463 . . . . . . . . . . . . . . . . 16
(m) REGISTRATION RIGHTS. . . . . . . . . . . . . . . . . . . 16
(n) REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . 16
(o) KEY MAN INSURANCE. . . . . . . . . . . . . . . . . . . . 16
(p) BOARD MEETINGS . . . . . . . . . . . . . . . . . . . . . 16
(q) MERGER & ACQUISITION ADVISORS. . . . . . . . . . . . . . 17
(18) Stabilization. . . . . . . . . . . . . . . . . . . . . . 17
(19) Securities Positions . . . . . . . . . . . . . . . . . . 17
(20) Form 8-A . . . . . . . . . . . . . . . . . . . . . . . . 17
(21) Employment Agreements. . . . . . . . . . . . . . . . . . 17
(22) Press Releases . . . . . . . . . . . . . . . . . . . . . 17
(w) ACCOUNTANTS. . . . . . . . . . . . . . . . . . . . . . . 17
(x) PUBLIC RELATIONS . . . . . . . . . . . . . . . . . . . . 17
SECTION 4. Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . 18
(1) Expenses . . . . . . . . . . . . . . . . . . . . . . . . 18
(2) Termination of Agreement . . . . . . . . . . . . . . . . 18
SECTION 5. Conditions of Underwriters' Obligations. . . . . . . . . . . . . 18
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. . . . . . . . . 18
(b) OPINION OF COUNSEL FOR COMPANY . . . . . . . . . . . . . 19
(c) OFFICER'S CERTIFICATE. . . . . . . . . . . . . . . . . . 19
(d) ACCOUNTANT'S COMFORT LETTER. . . . . . . . . . . . . . . 19
(e) BRING-DOWN COMFORT LETTER. . . . . . . . . . . . . . . . 19
(f) APPROVAL OF LISTING. . . . . . . . . . . . . . . . . . . 20
(g) NO OBJECTION . . . . . . . . . . . . . . . . . . . . . . 20
(h) LOCK-UP AGREEMENTS . . . . . . . . . . . . . . . . . . . 20
(i) ADDITIONAL DOCUMENTS . . . . . . . . . . . . . . . . . . 20
(j) CONDITIONS TO PURCHASE OF OPTION SECURITIES. . . . . . . 20
(i) Officer's Certificate. . . . . . . . . . . . . 20
(ii) Opinion of Counsel for Company . . . . . . . . 20
(iii) Bring-Down Comfort Letter. . . . . . . . . . . 20
(k) TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . 20
SECTION 6. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 21
(a) INDEMNIFICATION OF UNDERWRITERS. . . . . . . . . . . . . 21
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS . . . 21
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. . . . . . . . . . 22
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE . . . 22
SECTION 7. Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 8. Representations, Warranties and Agreements to Survive Delivery . 24
SECTION 9. Termination of Agreement . . . . . . . . . . . . . . . . . . . . 24
(a) TERMINATION; GENERAL . . . . . . . . . . . . . . . . . . 24
(b) LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 10. Default by One or More of the Underwriters. . . . . . . . . . . 24
SECTION 11. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 12. Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 13. Governing Law and Time. . . . . . . . . . . . . . . . . . . . . 25
SECTION 14. Effect of Headings. . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 15. Waiver and Amendment. . . . . . . . . . . . . . . . . . . . . . 26
SECTION 16. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 17. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . 26
1,100,000 Units
U. S. LABORATORIES INC.
(a Delaware corporation)
1,100,000 Shares of Common Stock and
Redeemable Warrants to Purchase 1,100,000 Shares of Common Stock
UNDERWRITING AGREEMENT
January , 1999
CARDINAL CAPITAL MANAGEMENT, INC.
XXXXX & XXXXXXXXXX LLC
FAS WEALTH MANAGEMENT SERVICES, INC.
as Representatives of the several Underwriters
c/o Cardinal Capital Management, Inc.
000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxx 00000
Dear Sirs:
U. S. Laboratories Inc., a Delaware corporation (the "Company"), confirms
its agreement with Cardinal Capital Management, Inc. ("Cardinal"), Xxxxx &
Xxxxxxxxxx LLC ("Xxxxx"), FAS Wealth Management Services, Inc. ("FAS") and each
of the other Underwriters named in Schedule A hereto (collectively, the
"Underwriters," which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), for whom Cardinal, Xxxxx and FAS are
acting as representatives (in such capacity, Cardinal, FAS and Xxxxx shall
hereinafter be referred to as the "Representatives"), with respect to the sale
by the Company and the purchase by the Underwriters, acting severally and not
jointly, of the respective numbers of Units ("Units") consisting of one share of
Common Stock, par value $.01 per share, of the Company ("Common Stock") and one
redeemable warrant to purchase one share of Common Stock ("Warrants") set
forth in said Schedule A, and with respect to the grant by the Company to the
Underwriters, acting severally and not jointly, of the option described in
Section 2(b) hereof to purchase all or any part of 165,000 additional Units
to cover over-allotments, if any. The aforesaid 1,100,000 Units (the
"Initial Securities") to be purchased by the Underwriters and all or any part
of the 165,000 Units subject to the option described in Section 2(b) hereof
(the "Option Securities") are hereinafter called, collectively, the
"Securities."
The Company also proposes to issue and sell to the Underwriters a warrant
(the "Underwriters Warrant") pursuant to the Underwriters Warrant Agreement
between the Company and Cardinal (the "Underwriters Warrant Agreement") for the
purchase of 110,000 additional Units (the "Underwriters Units").
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form SB-2 (No. 333-66173) covering
the registration of the Securities under the Securities Act of 1933, as
amended (the "1933 Act"), including the related preliminary prospectus or
prospectuses. Promptly after execution and delivery of this Agreement, the
Company will either (i) prepare and file a prospectus in accordance with the
provisions of Rule 430A ("Rule 430A") of the rules and regulations of the
Commission under the 1933 Act (the "1933 Act Regulations") and paragraph (b)
of Rule 424 ("Rule 424(b)") of the 1933 Act Regulations or (ii) if the
Company has elected to rely upon Rule 434 ("Rule 434") of the 1933 Act
Regulations, prepare and file a term sheet (a "Term Sheet") in accordance
with the provisions of Rule 434 and Rule 424(b). The information included in
such prospectus or in such Term Sheet, as the case may be, that was omitted
from such registration statement at the time it became effective but that is
deemed to be part of such registration statement at the time it became
effective (a) pursuant to paragraph (b) of Rule 430A is referred to as "Rule
430A Information" or (b) pursuant to paragraph (d) of Rule 434 is referred to
as "Rule 434 Information." Each prospectus used before such registration
statement became effective, and any prospectus that omitted, as applicable,
the Rule 430A Information or the Rule 434 Information, that was used after
such effectiveness and prior to the execution and delivery of this Agreement,
is herein called a "preliminary prospectus." Such registration statement,
including the exhibits thereto and schedules thereto at the time it became
effective and including the Rule 430A Inforination and the Rule 434
Information, as applicable, is herein called the "Registration Statement."
Any registration statement filed pursuant to Rule 462(b) of the 1933 Act
Regulations is herein referred to as the "Rule 462(b) Registration
Statement," and after such filing the term "Registration Statement" shall
include the Rule 462(b) Registration Statement. The final prospectus in the
form first furnished to the Underwriters for use in connection with the
offering of the Securities is herein called the "Prospectus." If Rule 434 is
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relied on, the term "Prospectus" shall refer to the preliminary prospectus
dated ______________________, 1999 together with the Term Sheet and all
references in this Agreement to the date of the Prospectus shall mean the
date of the Term Sheet. For purposes of this Agreement, all references to
the Registration Statement, any preliminary prospectus, the Prospectus or any
Term Sheet or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval system ("XXXXX").
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
this Agreement has been executed and delivered.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company represents
and warrants to each Underwriter as of the date hereof, and as of the Closing
Time referred to in Section 2(c) hereof, and as of each Date of Delivery (if
any) referred to in Section 2(b) hereof, and agrees with each Underwriter, as
follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. Each of the
Registration Statement and any Rule 462(b) Registration Statement has become
effective under the 1933 Act and no stop order suspending the effectiveness of
the Registration Statement or any Rule 462(b) Registration Statement has been
issued under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are contemplated
by the Commission, and any request on the part of the Commission for additional
information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (as hereinafter defined) (and, if any Option
Securities are purchased, at the Date of Delivery (as hereinafter defined)), the
Registration Statement, the Rule 462(b) Realstration Statement and any
amendments and supplements thereto complied and will comply in all material
respects with the requirements of the 1933 Act and the 1933 Act Regulations and
did not and will 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 not misleading. Neither the Prospectus nor any amendments or
supplements thereto, at the time the Prospectus or any such amendment or
supplement was issued and at the Closing Time (and, if any Option Securities are
purchased, at the Date of Delivery), included or will include an untrue
statement
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of a material fact or omitted or will omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading._ If Rule 434 is used, the Company
will comply with the requirements of Rule 434 and the Prospectus shall not be
"materially different," as such term is used in Rule 434, from the prospectus
included in the Registration Statement at the time it became effective. The
representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or Prospectus made
in reliance upon and in conformity with information furnished to the Company
in writing by any Underwriter through Cardinal expressly for use in the
Registration Statement or Prospectus.
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment thereto,
or filed pursuant to Rule 424 under the 1933 Act, complied when so filed in all
material respects with the 1933 Act Regulations and each preliminary prospectus
and the Prospectus delivered to the Underwriters for use in connection with this
offering was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T.
(ii) INDEPENDENT ACCOUNTANTS. The accountants who certified the
financial statements and supporting schedules included in the Registration
Statement are independent public accountants as required by the 1933 Act and the
1933 Act Regulations.
(iii) FINANCIAL STATEMENTS. The financial statements included in
the Registration Statement and the Prospectus, together with the related
schedule and notes, present fairly the financial position of the Company and its
consolidated subsidiaries at the dates indicated and the statement of income,
stockholders' equity and cash flows of the Company and its consolidated
subsidiaries for the periods specified; except as otherwise stated in the
Registration Statement, said financial statements have been prepared in
conformity with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved. No other financial statements
or notes thereto are required to be included in the Registration Statement. The
supporting schedules, if any, included in the Registration Statement present
fairly in accordance with GAAP the information required to be stated therein.
The selected financial data and the summary financial information included in
the Prospectus have been compiled on a basis consistent with that of the audited
financial statements included in the Registration Statement.
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(iv) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
eamings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, (B) there have been no transactions entered into by
the Company or any of its subsidiaries, other than those in the ordinary course
of business, which are material with respect to the Company and its subsidiaries
considered as one enterprise, and (C) there has been no dividend or distribution
of any kind declared, paid or made by the Company on any class of its capital
stock.
(v) GOOD STANDING OF THE COMPANY. The Company has been duly
incorporated and is validly existing, as a corporation in good standing under
the laws of the State of Delaware and has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its oblications under this Agreement
and the Underwriters Warrant Agreement.
(vi) GOOD STANDING OF SUBSIDIARIES. Each subsidiary of the
Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and is in good standing in
each jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except where
the failure so to qualify or to be in good standing would not, individually or
in the aggregate, have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise; all of the issued and
outstanding capital stock of each such subsidiary has been duly authorized and
validly issued, is fully paid and non-assessable and is directly owned by the
Company, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity; none of the outstanding shares of capital stock of
any subsidiary was issued in violation of the preemptive or similar rights of
any stockholder of such corporation arising by operation of law, under the
charter or by-laws of any subsidiaries or under any agreement to which the
Company or any subsidiary is a party. The only active subsidiaries of the
Company are Professional Engineering & Inspection Company, Inc., a Florida
corporation ("PEICO"), U. S. Engineering Laboratories, Inc., a Delaware
corporation ("USEL") San Diego Testing Engineers, Inc., a Delaware corporation
("TESD") and Los Angeles Testing Engineers, Inc., a
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Delaware corporation ("LATE"). Except for the shares of capital stock of
PEICO, USEL, TESD and LATE owned by the Company, neither the Company, PEICO,
USEL, TESD, nor LATE owns any shares of stock or any other equity securities
of any corporation or has any equity interest in any firm, partnership,
association or other entity, except as described in by the Prospectus.
(vii) CAPITALIZATION. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectus in the column
entitled "Actual" under the caption "Capitalization" (except for subsequent
issuances, if any, pursuant to this Agreement, pursuant to reservations,
agreements or employee benefit plans referred to in the Prospectus or
pursuant to the exercise of convertible securities or options referred to in
the Prospectus). The shares of issued and outstanding capital stock of the
Company have been duly authorized and validly issued and are fully paid and
non-assessable; none of the outstanding shares of capital stock of the
Company was issued in violation of the preemptive or other similar rights of
any securityholder of the Company.
(viii) AUTHORIZATION AND DESCRIPTION OF SECURITIES. The
Securities, the Underwriters Warrants and the Underwriters Units to be
purchased by the Underwriters from the Company have been duly authorized for
issuance and sale to the Underwriters pursuant to this Agreement and, when
issued and delivered by the Company pursuant to this Agreement against payment
of the consideration set forth herein, will be validly issued and fully paid and
non-assessable; the Securities, the Underwriters Warrant and the Underwriters
Units conform to all statements relating thereto contained in the Prospectus and
such descriptions conform to the rights set forth in the instruments defining
the same; no holder of the Securities, the Underwriters Warrant and the
Underwriters Units will be subject to personal liability reason of being such a
holder; and the issuance and sale of the Securities, the Underwriters Warrants
and the Underwriters Units by the Company is not subject to the preemptive or
other similar rights of any securityholder of the Company.
(ix) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company nor
any of its subsidiaries is in violation of its charter or in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which or any of them may be bound, or
to which any of the property or assets of the Company or any of its subsidiaries
is subject, and which violation or default, singly or in the aggregate, would
materially and adversely affect the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as
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one enterprise; and the execution, delivery and performance of this
Agreement, the consummation of the transactions contemplated herein and
compliance by the Company with its obligations hereunder (including the use
of the proceeds from the sale of the Securities as described in the
Prospectus under the caption "Use of Proceeds"), as are applicable to the
Company have been duly authorized by all necessary corporate action and do
not and will not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or default or
Repayment Event (as def-ined below) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any subsidiaries of the Company pursuant to, any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease or
other agreement or instrument to which the Company or any of its subsidiaries
is a party or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any of its subsidiaries is subject and
which breach or default singly or in the aggregate, would materially and
adversely affect the condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise nor will such action result in any violation of
the provisions of the charter or by-laws of the Company or any subsidiaries
of the Company or any applicable law, statute, rule, regulation, judgment,
order, writ or decree of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any of its
subsidiaries or any of their assets or properties and which violation, singly
or in the aggregate, would materially and adversely affect the condition,
financial or otherwise, or the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise.
As used herein, a "Repayment Event" means any event or condition which gives
the holder of any note, debenture or other evidence of indebtedness (or any
person acting on such holder's behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by the
Company or any subsidiaries of the Company.
(x) ABSENCE OF LABOR DISPUTE. No labor dispute with the
employees of the Company or any of its subsidiaries exists or, to the knowledge
of the Company, is imminent.
(xi) ABSENCE OF PROCEEDINGS. There is no action, suit,
proceeding, inquiry or investigation before or by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of the
Company, threatened, against or affecting the Company or any of its subsidiaries
which is required to be disclosed in the Registration Statement, or which might
reasonably be expected to result in any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the
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Company and its subsidiaries considered as one enterprise, or which might
reasonably be expected to materially and adversely affect the properties or
assets thereof or the consummation of this Agreement or the performance by
the Company of its obligations hereunder; the aggregate of all pending legal
or governmental proceedings to which the Company or any of its subsidiaries
is party or of which any of their respective property or assets is the
subject which are not described in the Registration Statement, including
ordinary routine litigation incidental to the business, could not reasonably
be expected to result in a material adverse change in the condition,
financial or otherwise, or the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise.
(xii) ABSENCE OF CONTINGENT LIABILITIES. Except as set forth in
the Registration Statement, the Company does not have any material contingent
liabilities.
(xiii) ABSENCE OF TRANSACTIONS. Subsequent to the respective dates
as of which information is set forth in the Registration Statement and
Prospectus, and except as may otherwise be indicated or contemplated herein or
therein, the Company has not: (i) issued any securities or incurred any
liability or obligation, direct or contingent, for borrowed money, in any
material amount; (ii) entered into any transaction other than in the ordinary
course of business; (iii) declared or paid any dividend or made any other
distribution on or in respect of its capital stock; (iv) made any changes in
capital stock, material changes in debt (long or short term) or liabilities
other than in the ordinary course of business; (v) made any material changes in
or affecting the general affairs, management, financial operations,
stockholders' equity or results of operations of the Company; or (vi) entered
into any agreement, or commenced any negotiations or discussions, relating to
any business acquisition or combination.
(xiv) ACCURACY OF EXHIBITS. There are no contracts or documents
which are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits thereto by the 1933 Act or by the 1933 Act
Regulations which have not been so described and filed as required. All
executed agreements or copies of executed agreements (whether electronically
scanned or otherwise) filed as exhibits to the Registration Statement to which
the Company is a party or by which the Company may be bound or to which any of
its assets, properties or businesses may be subject have been duly and validly
authorized, executed and delivered by the Company, and constitute legally valid
and binding agreements of the Company, enforceable against it in accordance with
their respective terms, except to the extent that there is no material adverse
effect upon the Company.
8
(xv) POSSESSION OF INTELLECTUAL PROPERTY. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms, the 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 and trade names
(collectively, "patent and proprietary rights") presently employed by them in
connection with the business now operated by them as described in the
Prospectus, except where lack thereof would not result in a material adverse
change in the condition, financial or otherwise, or the earnings, business
affairs or business prospects of the Company and its subsidiaries considered as
one enterprise, and neither the Company nor any of its subsidiaries has received
any notice or is otherwise aware of any infringement of or conflict with
asserted rights of others with respect to any patent or proprietary rights or of
any facts or circumstances which would render any patent and proprietary rights
invalid or inadequate to protect the interest of the Company therein, and which
infringement or conflict (if the subject of any unfavorable decision, ruling or
finding) or invalidity or inadequacy, singly or in the aggregate, would result
in any material adverse change in the condition, financial or otherwise, or in
the eamings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise. The Company has taken reasonable
security measures to protect the secrecy, confidentiality and value of all the
patent and proprietary rights material to its operations.
(xvi) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency is necessary or
required for the performance by the Company of its obligations hereunder, in
connection with the offering, issuance or sale of the Securities hereunder or
the consummation by it of the transactions contemplated by this Agreement,
except such as have been already obtained or as may be required under the 1933
Act or the 1933 Act Regulations or state securities laws.
(xvii) POSSESSION OF LICENSES AND PERMITS. The Company and its
subsidiaries possess such certificates, authorities, permits, licenses,
approvals, consents and other authorizations (collectively, "Governmental
Licenses") issued by the appropriate federal, state, local or foreign regulatory
agencies or bodies necessary to conduct the business now operated by them; the
Company and its subsidiaries are in compliance with the terms and conditions of
all such Govemmental Licenses, except where the failure so to comply would not,
singly or in the aggregate, have a material adverse effect on the condition,
financial or otherwise, or the earnings, business affairs or business prospects
of the Company
9
and its subsidiaries considered as one enterprise; all of the Governmental
Licenses are valid and in full force and effect, except when the invalidity
of such Governmental Licenses or the failure of such Governmental Licenses to
be in full force and effect would not have a material adverse effect on the
condition, financial or otherwise, earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise;
and neither the Company nor any of its subsidiaries has received any notice
of proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and adversely
affect the condition, financial or otherwise, or the earnings, business
affairs or business prospects of the Company and its subsidiaries considered
as one enterprise.
(xviii) AUTHORIZATION OF AGREEMENTS. The Company has full legal
right, power and authority to enter into this Agreement and the Underwriters
Warrant Agreement and to consummate the transactions provided for in such
agreements; and this Agreement and the Underwriters Warrant Agreement have each
been duly authorized, executed and delivered by the Company. Each of this
Agreement and the Underwriters Warrant Agreement constitutes a legally valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms (except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application relating to or affecting enforcement of creditors' rights and the
application of equitable principles in any action, legal or equitable, and
except as rights to indemnity or contribution may be limited by applicable law).
Neither the Company's execution nor delivery of this Agreement or the
Underwriters Warrant Agreement, its performance hereunder and thereunder, its
consummation of the transactions contemplated herein and therein, nor the
conduct of its business as described in the Registration Statement, the
Prospectus, and any amendments or supplements thereto, conflicts with or will
conflict with or supplements thereto, conflicts with or will conflict with or
results or will result in any breach or violation of any of the terms or
provisions of, or constitutes or will constitute a default under, or result in
the creation or imposition of any material lien, charge, claim, encumbrance,
pledge, security interest defect or other restriction or equity of any kind
whatsoever upon, any property or assets (tangible or intangible) of the Company
pursuant to the terms of: (i) the Certificate of Incorporation or Bylaws of the
Company; (ii) any license, contract, indenture, mortgage, deed of trust, voting
trust agreement, stockholders agreement, note, loan or credit agreement or any
other agreement or instrument to which the Company is a party or by which the
Company is bound or to which any of its properties or assets (tangible or
intangible) is or may be subject; or (iii) any statute, judgment, decree, order,
rule or regulation applicable to the Company of any arbitrator, court,
regulatory body or administrative agency or other governmental agency or body
(including,
10
without limitation, those having jurisdiction over environmental or similar
matters), domestic or foreign, having jurisdiction over the Company or any of
its activities or properties.
(xix) COMPLIANCE WITH APPLICABLE LAWS. Except as set forth in the
Prospectus, the Company and its subsidiaries are in compliance in all material
respects with all applicable laws, statutes, ordinances, rules or regulations,
the violation of which, individually or in the aggregate, would be reasonably
expected to have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise.
(xx) TITLE TO PROPERTY. The Company and its subsidiaries have
good and marketable title to all properties (real and personal) owned by the
Company and its subsidiaries, free and clear of all mortgages, pledges, liens,
security interests, claims, restrictions or encumbrances of any kind except such
as (a) are described in the Prospectus or (b) do not, singly or in the
aggregate, materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the Company or its
subsidiaries; and all properties held under lease by the Company or its
subsidiaries are held under valid, subsisting and enforceable leases.
(xxi) REGISTRATION RIGHTS. Except as set forth in the Prospectus,
there are no persons with registration or other similar rights to have any
securities registered pursuant to the Registration Statement or otherwise
registered by the Company under the 1933 Act.
(xxii) WARRANTS, OPTIONS AND OTHER RIGHTS. Except as disclosed in
the Prospectus, there are no outstanding options, warrants, or other rights
calling for the issuance of, and no commitments, plans or arrangements to issue,
any shares of capital stock of the Company or any of its subsidiaries or any
security convertible into or exchangeable for capital stock of the Company or
any of its subsidiaries.
(xxiii) INVESTMENT COMPANY ACT. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the application
of the net proceeds therefrom as described in the Prospectus under the caption
"Use of Proceeds" will not be, an "investment company" or an entity "controlled"
by an "investment company," as such terms are defined in the Investment Company
Act of 1940, as amended (the "1940 Act").
(xxiv) ENVIRONMENTAL LAWS. Except as described in the Registration
Statement and except as would not, individually or in the aggregate, result in a
11
material adverse effect, (A) neither the Company nor any of its subsidiaries is
in violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent, decree or judgment, relating to pollution or protection of human
health, the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or threatened
release of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution. use, treatment,
storage, disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (B) the Company and its subsidiaries have all permits,
authorizations and approvals required under any applicable Environmental Laws
and are each in compliance with their requirements, (C) there are no pending or
threatened, administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigations or proceedings relating to any Environmental Law against the
Company or any of its subsidiaries and (D) there are no events or circumstances
that might reasonably be expected to form the basis of an order for cleanup or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any of its
subsidiaries relating to Hazardous Materials or any Environmental Laws.
(xxv) TAX MATTERS. The Company and its subsidiaries have filed
all federal, state, local and foreign tax returns that are required to be filed
or have duly requested extensions thereof and have paid all taxes required to be
paid by any of them and any related assessments, fines or penalties, except for
any such tax, assessment, fine or penalty that is being contested in good faith
and by appropriate proceedings; and adequate charges, accruals and reserves have
been provided for in the financial statements referred to in Section 1 (a)(iii)
above in respect of all federal, state, local and foreign taxes for all periods
as to which the tax liability of the Company or any of its subsidiaries has not
been finally determined or remains open to examination by applicable taxing
authorities.
(xxvi) INSURANCE. The Company and its subsidiaries carry or are
entitled to the benefits of insurance in such amounts and covering such risks as
is generally maintained by companies of established repute engaged in the same
or similar business, and all such insurance is in full force and effect.
(xxvii) ACCOUNTING CONTROLS. The Company and its subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's
12
general and specific authorizations; (ii) transactions are recorded as
necessary to permit preparations of financial statements in conformity with
GAAP and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorizations; and (iv) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences. Neither the Company nor any of its
officers, employees, agents or any other person acting on behalf of the
Company has, directly or indirectly, given or agreed to give any money, gift
or similar benefit (other than legal price concessions to customers in the
ordinary course of business) to any customer, supplier, employee or agent of
a customer or supplier, or official or employee of any governmental agency
(domestic or foreign) or instrumentality of any government (domestic or
foreign) or any political party or candidate for office (domestic or foreign)
or other person who was, is, or may be in a position to help or hinder the
business of the Company (or assist the Company in connection with any actual
or proposed transaction) which: (a) might subject the Company, or any other
such person to any damage or penalty in any civil, criminal or governmental
litigation or proceeding (domestic or foreign); (b) if not given in he past,
might have had a materially adverse effect on the assets, business or
operations or prospects of the Company, and (c) if not continued in the
future, might adversely affect the assets, business, operations or prospects
of the Company. The Company's internal accounting controls are sufficient to
ensure the Company's compliance with the Foreign Corrupt Practices Act of
1978, as amended.
(xxviii) FEES. Other than as contemplated by this Agreement, there
is no broker, finder or other party that is entitled to receive from the
Company any brokerage or finder's fee or any other fee, commission or payment as
a result of the transactions contemplated by this Agreement.
(xxix) LOCK-UP AGREEMENTS. The Company has obtained and delivered
to the Representatives the duly executed, legally binding and enforceable
agreements of the persons and entities named in Schedule B annexed hereto to the
effect that each such person will not, for a period of eighteen months from the
date hereof and except as otherwise provided therein, without the prior written
consent of the Representatives, directly or indirectly, offer to sell, grant any
option for the sale of, or otherwise dispose of, any shares of Common Stock or
any securities convertible into or exercisable for Common Stock owned by such
person or entity or with respect to which such person has the power of
disposition.
(xxx) USE OF PROSPECTUS. The Company has not distributed and,
prior to the later to occur of (i) the Closing Time and (ii) completion of the
distribution of the Securities, will not distribute any prospectus (as such term
is
13
defined in the 1933 Act and the 1933 Act Regulations) in connection with the
offering and sale of the Securities other than the Registration Statement,
any preliminary prospectus, the Prospectus or other materials, if any,
permitted by the 1933 Act or by the 1933 Act Regulations and approved by the
Representatives. The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Units.
(xxxi) COMPLIANCE WITH CUBA ACT. The Company has complied with,
and is and will be in compliance with, the provisions of that certain Florida
act relating to disclosure of doing business with Cuba, codified as Section
517.075 of the Florida Statutes, and the rules and regulations thereunder
(collectively, the "Cuba Act") or is exempt therefrom.
(xxxii) STOCK SPLIT. Each of the Company's 20,324 -for-one Common
Stock stock split and one-for-0.8413 Common Stock reverse stock split has been
duly and validly authorized by all necessary corporate and shareholder action.
(xxxiii) AFFILIATE RELATIONSHIPS. Except as set forth in the
Prospectus, no officer, director or stockholder of the Company, or any
"affiliate" or "associate" (as these terms are defined in Rule 405 promulgated
under the 1933 Act Regulations) of any such person or entity or the Company, has
or has had, either directly or indirectly, (i) an interest in any person or
entity which (A) furnishes or sells services or products which are furnished or
sold or are proposed to be furnished or sold by the Company, or (B) purchases
from or sells or furnishes to the Company any goods or services, except with
respect to the beneficial ownership of not more than 1% of the outstanding
shares of capital stock of any publicly-held entity; or (ii) a beneficial
interest in any contract or agreement to which the Company is a party or by
which it may be bound or affected. Except as set forth in the Prospectus under
"Certain Transactions, "there are no existing agreements, arrangements,
understandings or transactions, or proposed agreements, arrangements,
understandings or transactions, between or among the Company, and any officer,
director, or principal stockholder of the Company, or any affiliate or associate
of any such person or entity.
(xxxiv) PRIOR SECURITIES OFFERINGS. No securities of the Company
have been sold by the Company since its inception, except as disclosed in Part
II of the Registration Statement.
(xxxv) CORPORATE RECORDS. The minute books of the Company have
been made available to the Underwriters' counsel and contain a complete
14
summary of all meetings and actions of the Board of Directors and
stockholders of the Company and its subsidiaries since inception.
(xxxvi) NASD AFFILIATIONS. Except as disclosed in writing to the
Underwriters, no officer, or director or, to the Company's knowledge,
stockholder of the Company has any affiliation or association with any members
of the NASD.
(xxxvii) ERISA. Except as disclosed in the Prospectus, the Company
does not presently maintain, sponsor or contribute to, and never has maintained,
sponsored or contributed to, any program or arrangement that is an "employee
pension benefit plan," an "employee welfare benefit plan" or a "multiemployer
plan," as such terms are defined in Sections 3(2), 3(1) and 3(37), respectively,
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
Except as disclosed in the Prospectus, the Company does not maintain or
contribute, now or at any time previously, to a defined benefit plan, as defined
in Section 3(35) of ERISA.
(b) OFFICER'S CERTIFICATES. Any certificate signed by any officer of the
Company and delivered to the Representatives or to counsel for the Underwriters
shall be deemed a representation and warranty by the Company to each Underwriter
as to the matters covered thereby.
15
SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING.
(a) INITIAL SECURITIES. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter, severally and not
jointly, and each Underwriter, severally and not jointly, agrees to purchase
from the Company, at a purchase price of $5.40 per Unit, the number of Initial
Securities set forth in Schedule A opposite the name of such Underwriter, plus
any additional number of Initial Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof.
(b) OPTION SECURITIES. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the Underwriters, severally
and not jointly, to purchase up to an additional 165,000 Units at a purchase
price of $5.40 per Unit, less an amount per share equal to any dividends or
distributions declared by the Company and payable on the Initial Securities but
not payable on the Option Securities. The option hereby granted will expire 45
days after the date hereof and may be exercised in whole or in part from time to
time only for the purpose of covering over-allotments which may be made in
connection with the offering and distribution of the Initial Securities upon
notice by the Representatives to the Company setting forth the number of Option
Securities as to which the several Underwriters are then exercising the option
and the time and date of payment and delivery for such Option Securities. Any
such time and date of delivery (a "Date of Delivery") shall be determined by the
Representatives, but shall not be later than seven full business days after the
exercise of said option, nor in any event prior to the Closing Time (as
hereinafter defined). If the option is exercised as to all or any portion of
the Option Securities, each of the Underwriters, acting severally and not
jointly, will purchase that proportion of the total number of Option Securities
then being purchased which the number of Initial Securities set forth in
Schedule A opposite the name of such Underwriter bears to the total number of
Initial Securities, subject in each case to such adjustments as the
Representatives in their discretion shall make to eliminate any sales or
purchases of fractional shares.
(c) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Cardinal, 000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxx Xxxxxx, Xxxxxxx 00000, or at such
other place as shall be agreed upon by the Representatives and the Company, at
9:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs after 4:30
P.M. (Eastern time) on any given day) business day after the date hereof (unless
postponed in accordance with the provisions of Section 10), or such other time
not later than
16
ten business days after such date as shall be agreed upon by the
Representatives and the Company (such time and date of payment and delivery
being herein called the "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices of Cardinal, or at such other place as shall be agreed upon by the
Representatives and the Company, on each Date of Delivery as specified in the
notice from the Representatives to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Representatives for the respective accounts of the Underwriters of
certificates for the Securities to be purchased by them. It is understood that
each Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Initial Securities and the Option Securities, if any, which it has agreed to
purchase. Cardinal, individually and not as representative of the Underwriters,
may (but shall not be obligated to) make payment of the purchase price for the
Initial Securities or the Option Securities, if any, to be purchased by any
Underwriter whose funds have not been received by the Closing Time or the
relevant Date of Delivery, as the case may be, but such payment shall not
relieve such Underwriter from its obligations hereunder.
(d) DENOMINATIONS; REGISTRATION. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such denominations and registered
in such names as the Representatives may request in writing at least one full
business day before the Closing Time or the relevant Date of Delivery, as the
case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representatives in Coral Gables, Florida not later than 10:00 A.M. (Eastern
time) on the business day prior to the Closing Time or the relevant Date of
Delivery, as the case may be.
(e) UNDERWRITERS WARRANTS. At the Closing Time, the Company shall issue
and sell to the Underwriters the Underwriters Warrants at a purchase price of
$1,100, which Underwriters Warrants shall entitle the holders thereof to
purchase 110,000 Underwriters Units. The Underwriters Warrants shall be
exercisable for a period of four (4) years commencing one (1) year from the
effective date of the Registration Statement at an initial exercise price equal
to one hundred twenty percent (120%) of the initial public offering price of the
Units. Underwriters Units underlying the Underwriters Warrants shall be
identical to the Securities, except
17
that the warrants comprising a portion of such Underwriters Units shall not
be subject to redemption. The Underwriters Warrant Agreement and form of
Warrant Certificate shall be substantially in the form filed as an Exhibit to
the Registration Statement. Payment for the Underwriters Warrants shall be
made at the Closing Time. The Company has reserved and shall continue to
reserve a sufficient number of shares of Common Stock and Warrants for
issuance upon exercise of the Underwriters Warrants.
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with each
Underwriter as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS. The
Company, subject to Section 3(b), will comply with the requirements of Rule 430A
or Rule 434, as applicable, and will notify the Representatives immediately, and
confirm the notice in writing, (i) when any post-effective amendment to the
Registration Statement shall become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (ii) of the receipt
of any comments from the Commission, (iii) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus or for additional information, and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus, or of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes. The Company will promptly effect the
filings necessary pursuant to Rule 424(b) and will take such steps as it deems
necessary to ascertain promptly whether the form of prospectus transmitted for
filing under Rule 424(b) was received for filing by the Commission and, in the
event that it was not, it will promptly file such prospectus. The Company will
make every reasonable effort to prevent the issuance of any stop order and, if
any stop order is issued, to obtain the lifting thereof at the earliest possible
moment.
(b) FILING OF AMENDMENTS. The Company will give the Representatives
notice of its intention to file or prepare any amendment to the Registration
Statement (including any filing under Rule 462(b)), any Term Sheet or any
amendment, supplement or revision to either the prospectus included in the
Registration Statement at the time it became effective or to the Prospectus,
will furnish the Representatives with copies of any such documents a reasonable
amount of time prior to such proposed filing or use, as the case may be, and
will not file or use any such document to which the Representatives or counsel
for the Underwriters shall object.
18
(c) DELIVERY OF REGISTRATION STATEMENTS. The Company has furnished or
will deliver to the Representatives and counsel for the Underwriters, without
charge, signed copies of the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will also deliver to the Representatives, without charge, a
conformed copy of the Registration Statement as originally filed and of each
amendment thereto (without exhibits) for each of the Underwriters. The copies
of the Registration Statement and each amendment thereto furnished to the
Underwriters will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T.
(d) DELIVERY OF PROSPECTUSES. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably requested, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act or the Securities
Exchange Act of 1934, as amended (the "1934 Act"), such number of copies of the
Prospectus (as amended or supplemented) as such Underwriter may reasonably
request. The Prospectus and any amendments or supplements thereto furnished to
the Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to XXXXX, except to the extent
permitted by Regulation S-T.
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company will comply
with the 1933 Act and the 1933 Act Regulations so as to permit the completion of
the distribution of the Securities as contemplated in this Agreement and in the
Prospectus. If at any time when a prospectus is required by the 1933 Act to be
delivered in connection with sales of the Securities, any event shall occur or
condition shall exist as a result of which it is necessary, in the opinion of
counsel for the Underwriters or for the Company, to amend the Registration
Statement or amend or supplement the Prospectus in order that the Prospectus
will not include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein not misleading
in the light of the circumstances existing at the time it is delivered to a
purchaser, or if it shall be necessary, in the opinion of such counsel, at any
such time to amend the Registration Statement or amend or supplement the
Prospectus in order to comply with the requirements of the 1933 Act or the 1933
Act Regulations, the Company will promptly prepare and file with the Commission,
subject to Section 3(b), such amendments or supplements as may be necessary to
correct such statement or
19
omission or to make the Registration Statement or the Prospectus comply with
such requirements, and the Company will furnish to the Underwriters such
number of copies of such amendments or supplements as the Underwriters may
reasonably request.
(f) BLUE SKY QUALIFICATIONS. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Securities for offering and
sale under the applicable securities laws of such states and other jurisdictions
(domestic or foreign) as the Representatives may designate and to maintain such
qualifications in effect for a period of not less than one year from the later
of the effective date of the Registration Statement and any Rule 462(b)
Registration Statement; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified, the Company will
file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of not less
than one year from the effective date of the Registration Statement and any Rule
462(b) Registration Statement.
(g) RULE 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its security
holders as soon as practicable an earnings statement for the purposes of, and to
provide the benefits contemplated by, the last paragraph of Section 11(a) of the
1933 Act.
(h) USE OF PROCEEDS. The Company will use the net proceeds received by
it from the sale of the Securities in the manner specified in the Prospectus
under "Use of Proceeds." No portion of the net proceeds will be used
directly or indirectly to acquire any securities issued by the Company.
(i) LISTING. For a period of five (5) years from the effective date of
the Registration Statement, the Company will use its best efforts at its cost
and expense to effect and maintain the quotation of the Securities and the
Underwriters Units on the Nasdaq SmallCap Market and will file with the Nasdaq
SmallCap Market all documents and notices required by the Nasdaq SmallCap Market
of companies that have securities that are traded in the over-the-counter market
and quotations for which are reported by the Nasdaq SmallCap Market.
20
(j) RESTRICTION ON SALE OF SECURITIES. During a period of eighteen months
from the date of the Prospectus, the Company will not, without the prior written
consent of Cardinal, (i) directly or indirectly, offer, pledge, sell, contract
to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock or file any registration
statement under the 1933 Act with respect to any of the foregoing or (ii) enter
into any swap or any other agreement or any transaction that transfers, in whole
or in part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to (A)
the Securities, the Underwriters Warrants and Underwriters Units to be sold
hereunder and (B) any shares of Common Stock issued by the Company upon the
exercise of an option or warrant or the conversion of a security outstanding on
the date hereof and referred to in the Prospectus.
(k) REPORTING REQUIREMENTS. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the rules and
regulations of the Commission thereunder.
(1) COMPLIANCE WITH RULE 463. The Company will report the use of proceeds
from the sale of the Securities as required pursuant to Rule 463 of the 1933 Act
Regulations.
(m) REGISTRATION RIGHTS. The Company shall provide the Underwriters with
the registration rights with respect to the Underwriters Units set forth in the
Underwriters Warrant Agreement, including, without limitation, at the Company's
sole cost and expense, accomplishing on demand one registration of the
securities underlying the Underwriters Warrant for resale, at such time during
the period between the first and fifth anniversaries of the effective date of
the Registration Statement as the Underwriters shall so request in writing. The
Company shall not enter into any agreement or take any steps which would
substantially impair the registration rights of holders of the Underwriters
Warrant or the underlying securities.
(n) REPORTS. For a period of five (5) years from the effective date of
the Registration Statement, the Company shall furnish the Underwriters the
following:
21
(i) as soon as practicable after they have been sent to
stockholders of the Company or filed with the Commission, two copies of each
annual and interim financial and other report or communication sent by the
Company to its stockholders or filed with the Commission; the NASD or any
securities exchange;
(ii) as soon as practicable, two copies of every press release
which is released by the Company;
(iii) such additional publicly available documents and information
with respect to the Company and its affairs and the affairs of any of its
subsidiaries as the Underwriters may from time to time reasonably request; and
(iv) a copy of any Schedule 13D, 13G, 14D-1, 13E-3 or 13E-4
received or filed by the Company from time to time.
(o) KEY MAN INSURANCE. For a period of five (5) years from the effective
date of the Registration Statement, the Company shall purchase and maintain in
effect key man life insurance on Xxxxxxxxx Xxxxxx in an amount of at least
$3,650,000.
(p) BOARD MEETINGS. For a period of five years from the effective date of
the Registration Statement, the Company shall promptly notify Cardinal of all
meetings of the Board of Directors or shareholders of the Company and Cardinal
shall have the right to have an observer at any such meetings.
(q) MERGER AND ACQUISITION ADVISORS. For a period of two years from the
effective date of the Registration Statement, the Company has appointed Cardinal
and Xxxxx as non-exclusive advisors to the Company for the purpose of
identifying and developing future merger and acquisition agreements on behalf of
the Company (compensation for such services to be based on the "Xxxxxx Formula"
for the indicated value of the transaction) and has entered into a financial
consulting agreement to that effect (the "Financial Consulting Agreement").
(r) STABILIZATION. Neither the Company, nor its officers or directors,
nor affiliates of any of them (within the meaning of the 1933 Act Regulations)
will take, directly or indirectly, any action designed to, or which might in the
future reasonably be expected to cause or result in, stabilization or
manipulation of the price of any securities of the Company.
(s) SECURITIES POSITIONS. For a period of five (5) years from the
effective date of the Registration Statement upon the Underwriters request, the
Company
22
shall furnish to the Underwriters at the Company's sole expense, (i) daily
consolidated transfer sheets relating to the Securities; (ii) a list of
holders of Securities; (iii) a list of, if any, the securities positions of
participants in the Depository Trust Company.
(t) FORM 8-A. As soon as practicable, but in no event later than five (5)
business days after the effective date of the Registration Statement, the
Company shall file a Form 8-A with the Commission providing for the registration
under the 1934 Act of the Securities and the Underwriters Units.
(u) EMPLOYMENT AGREEMENTS. For a period of five (5) years from the
effective date of the Registration Statement the Company shall not amend or
alter any term of any written employment agreement between the Company and any
executive officer, during the term of such written employment agreement, in a
manner more favorable to such employee, without the express written consent of
the Underwriters.
(v) PRESS RELEASES. Until the completion of the distribution of the
Securities, the Company shall not without the prior written consent of the
Underwriters, which consent shall not be unreasonably withheld, issue, directly
or indirectly, any press release or other communication or hold any press
conference with respect to the company or its activities or the offering
contemplated hereby, other than trade releases issued in the ordinary course of
the Company's business consistent with past practices with respect to the
Company's operations.
(w) ACCOUNTANTS. For a period of five (5) years from the effective date
of the Registration Statement, the Company shall retain an independent public
accounting firm acceptable to Cardinal.
(x) PUBLIC RELATIONS. As soon as practicable, but in no event later than
60 business days after the date hereof, and for a period of five (5) years from
the effective date of the Registration Statement, the Company shall retain a
financial public relations firm acceptable to Cardinal.
23
SECTION 4. PAYMENT OF EXPENSES.
(a) EXPENSES. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the printing,
and filing of the Registration Statement as originally filed and of each
amendment thereto, (ii) the preparation, printing and delivery to the
Underwriters of this Agreement, the Selected Dealer Agreements, Agreement among
Underwriters and such other documents as may be required in connection with the
offering, purchase, sale and delivery of the Securities, (iii) the preparation,
issuance and delivery of the certificates for the Securities to the
Underwriters, including any capital duties, stamp duties and stock or other
transfer taxes payable upon the sale of the Securities to the Underwriters, (iv)
the fees and disbursements of the Company's counsel, accountants and other
advisors, (v) the qualification of the Securities under securities laws in
accordance with the provisions of Section 3(f) hereof, including filing fees and
the fees and disbursements of counsel for the Underwriters in connection
therewith and in connection with the preparation of the Blue Sky Survey and any
supplement thereto, (vi) the printing and delivery to the Underwriters of copies
of each preliminary prospectus and of the Prospectus and any amendments or
supplements thereto, (vii) the preparation, printing and delivery to the
Underwriters of copies of the Blue Sky Survey and any supplement thereto, (viii)
advertising costs and expenses, including but not limited to costs and expenses
in connection with one information meeting held in New York, New York, and such
bound volumes and prospectus memorabilia as the Representatives may request;
(ix) the fees and expenses of any transfer agent or registrar for the Securities
and (x) the filing fees incident to, and the fees and disbursements of counsel
to the Underwriters in connection with, the review by the National Association
of Securities Dealers, Inc. (the "NASD") of the terms of the sale of the
Securities and (xi) the fees and expenses incurred in connection with the
inclusion of the Securities in the Nasdaq SmallCap Market.
(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
(c) The Company further agrees that, in addition to the expenses payable
pursuant to subsection (a) of this Section 4, it will pay to the Underwriters a
non-accountable expense allowance equal to three percent (3%) of the gross
proceeds received by the Company from the sale of the Securities, $50,000 of
which has been paid to date to the Underwriters. The Company will pay the
remaining portion of the non-accountable expense allowance at the Closing Time
by certified
24
or bank cashier's check or, at the election of the Underwriters, by deduction
from the proceeds of the offering contemplated herein.
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company herein contained, to the
performance by the Company of its obligations hereunder, and to the following
further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration Statement
shall have become effective not later than 5:30 P.M. on the date hereof, or with
the consent of the Representatives, at a later time and date, not later,
however, than 5:30 P.M. on the first business day following the date hereof, or
at such later time and date as may be approved by a majority in interest of the
several Underwriters; and at the Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act or proceedings therefor initiated, threatened or, to the knowledge of
the Company, contemplated by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the Underwriters. If the Company has
elected to rely upon Rule 430A of the 1933 Act Regulations, the price of the
Securities and any price-related information previously omitted from the
effective Registration Statement pursuant to such Rule 430A shall have been
transmitted to the Commission for filing, in accordance with Rule 424(b) of the
1933 Act Regulations within the prescribed time period and prior to Closing Time
the Company shall have provided evidence satisfactory to the Representatives of
such timely filing, or a post-effective amendment providing such information
shall have been promptly filed and declared effective in accordance with the
requirements of Rule 430A of the 1933 Act Regulations.
(b) OPINION OF COUNSEL FOR COMPANY. At the Closing Time the
Representatives shall have received the opinion, dated as of the Closing Time,
of Xxxxx & Xxxxxxx, counsel for the Company, in form and substance satisfactory
to counsel for the Underwriters, together with signed or reproduced copies of
such letter for each of the other Underwriters to the effect set forth in
Exhibit A hereto and to such further effect as counsel to the Underwriters may
reasonably request.
(c) OFFICER'S CERTIFICATE. At the Closing Time there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs in the ordinary course of
business, and the Representatives shall have received a certificate of the
President or a Vice
25
President of the Company and of the chief financial or chief accounting
officer of the Company, dated as of Closing Time, to the effect that (i)
there has been no such material adverse change, (ii) the representations and
warranties in Section 1 hereof are true and correct with the same force and
effect as though expressly made at and as of Closing Time, (iii) the Company
has complied with all agreements and satisfied all conditions on its part to
be performed or satisfied at or prior to Closing Time, and (iv) no stop
order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been initiated or threatened
by the Commission. As used in this Section 5(c) the term "Prospectus" means
the Prospectus in the form first used by the Underwriters to confirm sales of
the Securities.
(d) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of this
Agreement, the Representatives shall have received from Singer Lewak Xxxxxxxxx &
Xxxxxxxxx LLP a letter dated such date, in form and substance satisfactory to
the Representatives containing statements and information of the type ordinarily
included in accountants' "comfort letter" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the prospectus.
(e) BRING-DOWN COMFORT LETTER. At the Closing Time the Representatives
shall have received from Singer Lewak Xxxxxxxxx & Xxxxxxxxx LLP a letter, dated
as of Closing Time, to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (d) of this Section, except that the
specified date referred to shall be a date not more than three days prior to
Closing Time.
(f) APPROVAL OF LISTING. At the Closing Time the Securities shall have
been approved for inclusion in the Nasdaq SmallCap Market, subject only to
official notice of issuance.
(g) NO OBJECTION. The NASD shall have confirmed that it has not raised
any objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
(h) LOCK-UP AGREEMENTS. At the time of the execution of this Agreement,
the Representatives shall have received an agreement substantially in the form
of Exhibit B hereto signed by each of the persons named in Schedule B hereto.
(i) ADDITIONAL DOCUMENTS. At the Closing Time and at each Date of
Delivery counsel for the Underwriters shall have been furnished with such
documents and opinions as they may require for the purpose of enabling them to
26
pass upon the issuance and sale of the Securities as herein contemplated and
related proceedings, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfilledment of any of the conditions,
herein contained; and all proceedings taken by the Company in connection with
the issuance and sale of the Securities as herein contemplated shall be
satisfactory in form and substance to the Representatives and counsel for the
Underwriters.
(j) CONDITIONS TO PURCHASE OF OPTION SECURITIES. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Securities, the representations and warranties
of the Company contained herein and the statements in any certificates furnished
by the Company hereunder shall be true and correct as of each Date of Delivery
and, at the relevant Date of Delivery, the Representatives shall have received:
(i) OFFICER'S CERTIFICATE. A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company and of the chief
financial or chief accounting officer of the Company confirming that the
certificate delivered at the Closing Time pursuant to Section 5(d) hereof
remains true and correct as of such Date of Delivery.
(ii) OPINION OF COUNSEL FOR COMPANY. The opinion of Xxxxx &
Lardner, counsel for the Company, in form and substance satisfactory to counsel
for the Underwriters, dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery and otherwise to the same
effect as the opinion required by Section 5(b) hereof.
(iii) BRING-DOWN COMFORT LETTER. A letter from Singer Lewak
Xxxxxxxxx & Xxxxxxxxx LLP, in form and substance satisfactory to the
Representatives and dated such Date of Delivery, substantially the same in form
and substance as the letter furnished to the Representatives pursuant to Section
5(e) hereof, except that the "specified date" in the letter furnished pursuant
to this paragraph shall be a date not more than four days prior to such Date of
Delivery.
(k) TERMINATION OF AGREEMENT. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Representatives by notice to the Company at
any time at or prior to Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 6, 7 and 8 shall survive any such termination and remain
in full force and effect.
SECTION 6. INDEMNIFICATION.
27
(a) INDEMNIFICATION OF UNDERWRITERS. The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement (or
any amendment thereto), including the information deemed to be part of the
Registration Statement pursuant to Rule 430A(b) of the 1933 Act Regulations, if
applicable, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue statement of
a material fact contained in any preliminary prospectus or prospectus, including
the Prospectus (or any amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission; provided that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including, subject to the third sentence of Section 6(c) hereof, the fees and
disbursements of counsel chosen by Cardinal), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under (i) or (ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through the Representatives expressly for use in the Registration
28
Statement (or any amendment thereto) or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS. Each Underwriter
severally agrees to indemnify and hold harmless the Company, its directors, each
of its officers who signed the Registration Statement, and each person, if any,
who controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto) or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such Underwriter through the
Representatives expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability which it may have otherwise than on
account of this Agreement. An indemnifying party may participate at its own
expense in the defense of any such action; provided, however, that counsel to
the indemnifying party shall not (except with the consent of the indemnified
party) be counsel to the indemnified party. In no event shall the indemnifying
parties be liable for fees and expenses of more than one counsel (in addition to
any local counsel) separate from their own counsel for all indemnified parties
in connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances. No indemnifying party shall, without the prior written consent
of the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 or Section 7 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
29
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into
more than 45 days after receipt by such indemnifying party of the aforesaid
request, (ii) such indemnifying party shall have received notice of the terms of
such settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such settlement.
SECTION 7. CONTRIBUTION. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) 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 Securities pursuant to this Agreement or (ii) if the allocation provided
by clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
Underwriters on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, 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 in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company
and the total underwriting discount received by the Underwriters, in each case
as set forth on the cover of the Prospectus, bear to the aggregate initial
public offering price of the Securities as set forth on such cover.
The relative fault of the Company on the one hand and the Underwriters on
the other hand 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 or by the Underwriters and the parties' relative intent, knowledge,
30
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 contribution pursuant to this Section 7 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 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities 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 of
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning, of
Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number of Initial Securities set forth opposite their
respective names in Schedule A hereto and not joint.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Company submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of
31
any investigation made by or on behalf of any Underwriter or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Securities to the Underwriters.
SECTION 9. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or elsewhere, any outbreak
of hostilities or escalation thereof or other calamity or crisis or any change
or development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Representatives, impracticable to
market the Securities or to enforce contracts for the sale of the Securities, or
(iii) if trading in the Common Stock has been suspended or limited by the
Commission or Nasdaq, or if trading generally on the American Stock Exchange or
the New York Stock Exchange or in Nasdaq has been suspended or limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the NASD or any other governmental authority, or (iv)
if a banking moratorium has been declared by either Federal or Florida
authorities. As used in this Section 9(a), the term "Prospectus" means the
Prospectus in the form first used by the Underwriters to confirm sales of the
Securities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If one or more
of the Underwriters shall fail at Closing Time or a Date of Delivery to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representatives shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and
32
upon the terms herein set forth; if, however, the Representatives shall not
have completed such arrangements within such 24-hour period, then:
(1) if the number of Defaulted Securities does not exceed 10% of the
number of Securities to be purchased on such date, each of the non-defaulting
Underwriters shall be obligated, severally and not jointly, to purchase the
full amount thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
Securities to be purchased on such date, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, either the Representatives or the Company shall have the right
to postpone Closing Time or a Date of Delivery for a period not exceeding seven
days in order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements. As used herein, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 10.
SECTION 11. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at c/o Cardinal Capital
Management, Inc. 000 Xxxxxxx Xxxx, Xxxxx 000 Xxxxx Xxxxxx, Xxxxxxx 00000,
attention of Xxxxxxx X. Xxxxx, Xx., President and Chief Executive Officer;
notices to the Company shall be directed to it at 0000 Xxxxxx Xxxxx, Xxxxx 00,
Xxx Xxxxx, Xxxxxxxxxx, 00000, attention of Xxxxxxxxx Xxxxxx, President and Chief
Executive Officer.
SECTION 12. PARTIES. This Agreement shall each inure to the benefit of
and be binding upon the Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
33
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Underwriters and the Company and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE, WITHOUT GIVING EFFECT TO
CHOICE OF LAW OR CONFLICTS OF LAWS PRINCIPLES. SPECIFIED TIMES OF DAY REFER TO
CORAL GABLES, FLORIDA TIME.
34
SECTION 14. EFFECT OF HEADINGS. The Article and Section headings herein
and the Table of
Contents are for convenience only and shall not affect the construction thereof.
SECTION 15. WAIVER AND AMENDMENT. No change, amendment or supplement
to, or waiver of, this Agreement or any term, provision or condition herein,
shall be valid or of any effect unless in writing and signed by the party
against whom such is asserted. The waiver by any party hereto of the breach of
any provision of this Agreement by another party hereto shall not operate or be
construed as a waiver of any subsequent breach.
SECTION 16. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, and all of
which taken together shall be deemed to be one and the same instrument.
SECTION 17. ENTIRE AGREEMENT. This Agreement contains the entire
understanding by and among the parties hereto and supersedes any prior
understandings and agreements among them respecting the subject matter of this
Agreement.
35
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Underwriters and the Company in accordance with its terms.
Very truly yours,
U. S. LABORATORIES INC.
--------------------------------------------
By: Xxxxxxxxx Xxxxxx
Title: President and Chief Executive Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
CARDINAL CAPITAL MANAGEMENT, INC.
XXXXX & XXXXXXXXXX LLC
FAS WEALTH MANAGEMENT SERVICES, INC.
By: CARDINAL CAPITAL MANAGEMENT, INC.
--------------------------------------------
By: Xxxxxxx F, Xxxxx, Xx.
Title: President and Chief Executive Officer
For themselves and as representatives of
the several Underwriters named in
Schedule A hereto.
36
SCHEDULE A
Number of
Initial
Name of Underwriter Securities
------------------- -------------
Cardinal Capital Management, Inc.. . . . . . . . . . . . . . _____________
FAS Wealth Management Services, Inc. . . . . . . . . . . . . _____________
Xxxxx & Xxxxxxxxxx LLC . . . . . . . . . . . . . . . . . . . _____________
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . _____________
SCHEDULE B
LIST OF PERSONS SUBJECT TO SECTION l(a)(xxvii) OF THE UNDERWRITING
AGREEMENT WHO ARE REQUIRED TO DELIVER A LETTER SUBSTANTIALLY IN
THE FORM OF EXHIBIT B TO THE UNDERWRITING AGREEMENT
Exhibit A
FORM OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
2. The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and to enter into and perform its obligations under the
Underwriting Agreement, the Underwriters Warrant Agreement and the Financial
Consulting Agreement.
3. The Company is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify
or to be in good standing would not have a material adverse effect on the
condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise.
4. The authorized, issued and outstanding capital stock of the Company
is as set forth in the Prospectus in the column entitled "As Adjusted" under
the caption "Capitalization"; the shares of issued and outstanding Common
Stock have been duly authorized and validly issued and fully paid and
non-assessable; and none of the outstanding shares of Common Stock was issued
in violation of the preemptive or other similar rights of any security holder
of the Company arising by operation of law, under the charter or by-laws of
the Company or under any agreement to which the Company is a party.
5. The Securities, the Underwriters Warrants and the Underwriters
Units have been duly authorized for issuance and sale to the Underwriters
pursuant to the Underwriting Agreement and, when issued and delivered by the
Company pursuant to the Underwriting Agreement against payment of the
consideration set forth in the Underwriting Agreement, will be validly
issued, fully paid and non-assessable, with no personal liability attaching
to the ownership thereof. The Common Stock and the Warrants conform to all
statements relating thereto contained in the Prospectus and such descriptions
conform to the rights set forth in the instruments defining the same.
A-1
6. The Underwriters Units and underlying securities to be issued upon
the exercise of the Underwriters Warrants have been duly reserved and, when
issued and paid for, will be validly issued, fully paid and non-assessable,
with no personal liability attaching to the ownership thereof. The
Underwriters Warrants have been duly authorized and constitute valid and
binding obligations of the Company to issue and sell, upon exercise thereof
and payment therefor, the number of shares of Common Stock and warrants to
purchase Common Stock called for thereby. The Underwriters Warrants and the
Underwriters Units conform to all statements relating thereto contained in
the Prospectus and such descriptions conform to the rights set forth in the
instruments defining the same.
7. The issuance of the Securities, the Underwriters Warrants and the
Underwriters Units is not subject to preemptive or other similar rights
arising by operation of law, under the charter or by-laws of the Company or,
to the best of their knowledge and information, otherwise.
8. Each of the Company's 20,324-for-one Common Stock stock split and
one-for 0.8413 Common Stock reverse stock split has been duly and validly
authorized by all necessary corporate and shareholder action.
9. Each of the Company's subsidiaries has been duly incorporated and
is validly existing in good standing under the jurisdiction of its
organization, has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and each of the Company's subsidiaries is in good standing in each
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except where
the failure so to qualify or to be in good standing would not have a material
adverse effect on the condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise; all of the respective issued and outstanding
capital stock of each of the Company's subsidiaries has been duly authorized
and validly issued, is fully paid and non-assessable and, to the best of
their knowledge, is owned by the Company, directly or through a subsidiary,
free and clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity; and none of such shares was issued in violation of the
preemptive rights of any shareholder. To the best of their knowledge, the
Company does not have any subsidiaries other than PEICO, USEL, TESD and LATE.
To the best of their knowledge, except for the shares of capital stock of
PEICO, USEL, TESD and LATE owned by the Company, neither the Company, PEICO,
USEL, TESD nor LATE owns any shares of stock or any other equity securities
of any corporation or has any equity interest in any firm, partnership,
association or other entity except as described in the Prospectus.
A-2
10. Except as disclosed in or specifically contemplated by the
Prospectus, to the best of such counsel's knowledge, there are no outstanding
options, warrants or other rights calling for the issuance of, and no
commitments, obligations, plans or arrangements to issue, any shares of
capital stock of the Company or any security convertible into or exchangeable
for capital stock of the Company. The outstanding stock options and warrants
relating to the Company's Common Stock have been duly authorized and validly
issued and the descriptions thereof contained in the Prospectus is accurate
in all material respects.
11. The execution, delivery and performance of each of the Underwriting
Agreement, the Underwriters Warrant Agreement and the Financial Consulting
Agreement by the Company and the consummation by the Company of the
transactions contemplated thereby have been duly authorized by all necessary
corporate action on the part of the Company, and will not result in any
violation by any of the terms or provisions of the Company's certificate of
incorporation or bylaws. Each of the Underwriting Agreement, the Underwriters
Warrant Agreement and the Financial Consulting Agreement has been duly
authorized, executed and delivered by the Company, and constitutes the legal,
valid and binding obligation of the Company, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles
of equity (regardless of whether enforcement is sought in a proceeding at law
or in equity).
12. The Registration Statement, including any Rule 462(b) Registration
Statement, has been declared effective under the 1933 Act; any required
filing of the Prospectus pursuant to Rule 424(b) has been made in the manner
and within the time period required by Rule 424(b); and, to the best of their
knowledge, no Rule 462(b) Registration Statement has been issued under the
1933 Act and no proceedings for that purpose have been instituted or are
pending or threatened by the Commission.
13. The Registration Statement, including any Rule 462(b) Registration
Statement, the Rule 430A Information and the Rule 434 Information, as
applicable, the Prospectus, and each amendment or supplement to the
Registration Statement and Prospectus, as of their respective effective or
issued dates (other than the financial statements and supporting schedules
included therein or omitted therefrom, as to which such counsel need express
no opinion) complied as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations.
A-3
14. If Rule 434 has been relied upon, the Prospectus was not
"materially different," as such term is used in Rule 434, from the Prospectus
included in the Registration Statement at the time it became effective.
15. The form of certificate used to evidence the Common Stock and
Warrants comply in all material respects with all applicable statutory
requirements, with any applicable requirements of the charter and by-laws of
the Company and the requirements of the Nasdaq SmallCap Market.
16. There is not pending or, to the best of such counsel's knowledge,
threatened any action, suit, proceeding, inquiry or investigation, to which
the Company or any of its subsidiaries is a party, or to which the property
of the Company or any of its subsidiaries is subject, before or brought by
any court or governmental agency or body, which might reasonably be expected
to result in any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, or which might
reasonably be expected to materially and adversely affect the properties or
assets thereof or the consummation of the Underwriting Agreement or the
performance by the Company of its obligations hereunder or any of the other
transactions contemplated by the Registration Statement; and all pending,
legal or governmental proceedings to which the Company or any of its
subsidiaries is a party or that affect any of their respective properties
that are not described in the Prospectus, including ordinary routine
litigation incidental to the business, could not reasonably be expected to
result in a material adverse change in the condition, financial or otherwise,
or in the earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise.
17. The information in the Prospectus under the captions "Prospectus
Summary," "Risk Factors," "Business," "Description of Securities," and
"Shares Eligible for Future Sale," and in the Registration Statement under
items 14 and 15, to the extent that it constitutes matters of law, summaries
of legal matters, documents or proceedings, or legal conclusions, has been
reviewed by such counsel and complies in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations; to the best of
such counsel's knowledge, there are no statutes or regulations, and no legal
or governmental actions, suits or proceedings pending or threatened against
the Company or any of its subsidiaries that are required to be described in
the Prospectus that are not described as required.
A-4
18. To be best of such counsel's knowledge, there is no matter which
would render any of the representations in Section 1 of the Underwriting
Agreement incorrect.
19. Such counsel is familiar with all contracts or other documents
referred to in the Registration Statement and the Prospectus. All
descriptions in the Registration Statement and the Prospectus of such
contracts and other documents to which the Company or any of its subsidiaries
is a party are accurate in all material respects; to the best of such
counsel's knowledge, there are no franchises, contracts, indentures,
mortgages, loan agreements, notes, leases or other instruments required to be
described or referred to in the Registration Statement or to be filed as
exhibits thereto other than those described or referred to therein or filed
as exhibits thereto and the descriptions thereof or references thereto comply
in all material respects with the requirements of the 1933 Act and the 1933
Act Regulations.
20. To the best of such counsel's knowledge, neither the Company nor
any subsidiary is in violation of its charter or by-laws and no default by
the Company or any subsidiary exists in the due performance or observance of
any material obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other agreement
or instrument that is described or referred to in the Registration Statement
or the Prospectus or filed or incorporated by reference as an exhibit to the
Registration Statement.
21. No filing with, or authorization, approval, consent or order of any
court or governmental authority or agency (other than under the 1933 Act and
the 1933 Act Regulations or as may be required under the securities or blue
sky laws of the various states, as to which such counsel need express no
opinion) is required in connection with the due authorization, execution and
delivery by the Company of the Underwriting Agreement or for the offering,
issuance, sale or delivery of the Securities; and the execution, delivery and
performance of the Underwriting Agreement and the consummation of the
transactions contemplated herein and compliance by the Company with its
obligations hereunder (including the use of the proceeds from the sale of the
Securities as described in the Prospectus under the caption "Use of
Proceeds") will not, whether with or without the giving of notice or lapse of
time or both, conflict with or constitute a breach of, or default or
Repayment Event under or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of
its subsidiaries pursuant to any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or any other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which any of them
A-5
may be bound, or to which any of the property or assets of the Company or any
of its subsidiaries is subject, which would, in any such case or in the
aggregate, be material to the Company and its subsidiaries considered as one
enterprise, nor will such action result in any violation of the provisions of
the charter or by-laws of the Company or any of its subsidiaries, or any
applicable law, statute, rule, regulation, judgment, order, writ or decree of
any government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries or any of
their respective properties, assets or operations.
22. To the best of such counsel's knowledge, except as disclosed in the
Registration Statement there are no persons with registration or other
similar rights to have any securities registered pursuant to the Registration
Statement or otherwise registered by the Company under the 1933 Act.
23. The Company is not, and (assuming application by the Company of the
net proceeds of the sale of the Units in the manner described in the
Prospectus) will not become, as a result of the consummation of the
transactions contemplated by the Registration Statement, required to register
as an investment company under the Investment Company Act of 1940, as amended.
24. Nothing has come to such counsel's attention that would lead them
to believe that the Registration Statement or any amendment thereto,
including the Rule 430A Information and Rule 434 Information (if applicable)
(except for financial statements and schedules and other financial data
included therein or omitted therefrom, as to which such counsel need make no
statement), at the time such Registration Statement or any such amendment
became effective, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Prospectus or any amendment
or supplement thereto (except for financial statements and schedules and
other financial data included therein or omitted therefrom, as to which such
counsel need make no statement), at the time the Prospectus was issued, at
the time any such amended or supplemented prospectus was issued or at the
Closing Time, included or includes an untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
In rendering such opinion, such counsel may rely as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials,
which certificates shall be attached to such opinion. Such opinion shall not
state that it is to be governed
A-6
or qualified by, or that it is otherwise subject to, any treatise, written
policy or other document relating to legal opinions, including, without
limitation, the Legal Opinion Accord of the ABA Section of Business Law
(1991).
A-7
Exhibit B
January __, 1999
CARDINAL CAPITAL MANAGEMENT, INC.
FAS WEALTH MANAGEMENT SERVICES, INC.
XXXXX & XXXXXXXXXX LLC
as Representatives of the several Underwriters
c/o Cardinal Capital Management, Inc.
000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxx 00000
Re: PROPOSED PUBLIC OFFERING BY U.S. LABORATORIES INC.
Dear Sirs:
The undersigned, an officer and/or director of U.S. Laboratories Inc., a
Delaware corporation (the "Company"), understands that Cardinal Capital
Management, Inc., Xxxxx & Xxxxxxxxxx LLC, and FAS Wealth Management Services,
Inc., acting as representatives (the "Representatives") of the Underwriters,
propose to enter into a Underwriting Agreement (the "Underwriting Agreement")
with the Company providing for the public offering of Units consisting of one
share of the Company's common stock, par value $.01 per share (the "Common
Stock") and one warrant to purchase one share of Common Stock. In recognition
of the benefit that such an offering will confer upon the undersigned as an
officer and/or director of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
undersigned agrees with each underwriter to be named in the Underwriting
Agreement that, during a period of eighteen months from the date of the
Underwriting Agreement, the undersigned will not, without the prior written
consent of the Representatives, directly or indirectly, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant for the sale of, or
otherwise dispose of or transfer any shares of Common Stock or any securities
convertible into or exchangeable or exercisable for Common Stock, whether now
owned or hereafter acquired by the undersigned or with respect to which the
undersigned has or hereafter acquires the power of disposition, or file or cause
to be filed any registration statement under the Securities Act of 1933, as
amended, with respect to any of the foregoing or (ii) enter into any swap or any
other agreement or any transaction that transfers, in whole or in part, directly
or indirectly, the economic consequence of ownership of the Common Stock,
whether any such swap or transaction is to be settled by delivery of Common
Stock or other securities, in cash or otherwise.
Very truly yours,
Signature:
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Print Name:
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