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EXHIBIT 10.1
UNIVERSAL STANDARD HEALTHCARE, INC.
STOCK PURCHASE AGREEMENT
June 8, 1998
The ▇▇▇▇▇▇▇▇ Fund, Inc.
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▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Gentlemen:
The undersigned, Universal Standard Healthcare, Inc., a Michigan
corporation (the "Company"), agrees with you (the "Purchaser") as follows:
1. Sale and Purchase of Purchased Shares; Closing.
1.1 Agreement to Sell and Purchase Purchased Shares; Option to
Sell and Purchase Debentures.
(a) The Company agrees to sell to the Purchaser and the
Purchaser agrees to purchase from the Company, subject to the terms and
conditions hereof and in reliance upon the representations and warranties
contained herein, on the Closing Date hereinafter referred to, the number of
shares of the Company's common stock, no par value, (the "Common Stock") set
forth opposite the Purchaser's name in Exhibit 1.1 hereto. The purchase price
of such shares shall be $2.50 per share or, if greater, the average of the
closing bid prices for the Common Stock as reported in the principal
consolidated transaction reporting system with respect to securities listed on
The Nasdaq Stock Market National Market for the three trading days (being days
on which The Nasdaq Stock Market reports transactions in securities listed
therewith) ending immediately prior to the Closing Date (the "Purchase
Price"). The Purchase Price for the Common Stock purchased pursuant to this
Section 1.1(a) shall be payable in immediately available funds on the Closing
Date.
(b) The Company shall have the option to purchase from
the Purchaser, and the Purchaser agrees to sell to the Company, subject to the
terms and conditions hereof, on the Debenture Closing Dates hereinafter
referred to, up to $2,500,000 in principal amount of 8.25% Convertible
Subordinated Debentures issued by the Company Due February 1, 2006 (the
"Debentures"), less the principal amount of Debentures purchased prior thereto
pursuant to Section 1.1(c). The purchase price for the Debentures shall be
paid with shares of Common Stock with a value equal to the principal amount of
Debentures to be purchased, with each share of Common Stock being deemed for
purposes of this Agreement to have a value equal to the Purchase Price (the
"Option Exercise Price"). The Company may exercise the foregoing option (the
"Company's Call Option"), from time to time, by written notice delivered to the
Purchaser prior to December 31, 1998,
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stating the principal amount of Debentures to be purchased by the Company,
provided that, if, immediately prior to such exercise, the Purchaser
beneficially owns (as defined in Rule 13d-3 of the General Rules and
Regulations Under the Securities Exchange Act of 1934, as amended) less than
twenty-five (25%) percent of the outstanding shares of Common Stock, the
Company's Call Option shall not be exercisable to the extent it would cause the
Purchaser, immediately following such exercise, to beneficially own more than
twenty-five (25%) percent of the outstanding shares of Common Stock. Each
Closing of the purchase of Debentures from the Purchaser shall occur on the
fifth day following the day the Company's exercise notice is delivered to the
Purchaser, in the case of Section 1.1(b), and the fifth day following the day
the Purchaser's exercise notice is delivered to the Company, in the case of
Section 1.1(c) or, if such day is not a business day, the first business day
thereafter (the "Debenture Closing Date"). On the Debenture Closing Date, the
Company shall automatically, without further action, become the owner of the
Debentures to be exchanged on such date, and the Purchaser shall become owner
of the Common Stock to be issued in exchange therefor. In the event the
Company exercises the Company's Call Option pursuant to this Section 1.1(b),
then the Purchaser will accrue interest on the Debentures, at a rate of 8.25%,
from the last Interest Payment Date up to and including the Debenture Closing
Date, to be paid by the Company to the Purchaser on the Debenture Closing Date,
but in the event the Purchaser exercises the Purchaser's Put Option pursuant to
Section 1.1(c), then no interest shall be deemed to have accrued from the most
recent Interest Payment Date to the Debenture Closing Date, and no interest
shall be payable by the Company to the Purchaser on the Debenture Closing Date.
(c) The Purchaser shall have the option to sell to the
Company, and the Company shall purchase from the Purchaser, subject to the
terms and conditions hereof, on the Debenture Closing Dates hereinafter
referred to, up to $2,500,000 in principal amount of Debentures, less the
principal amount of Debentures purchased prior thereto pursuant to Section
1.1(b). The purchase price for the Debentures shall be paid with shares of
Common Stock with a value equal to the principal amount of Debentures to be
purchased, with each share of Common Stock being deemed for purposes of this
Agreement to have a value equal to the Purchase Price (the "Option Exercise
Price"). The Purchaser may exercise the foregoing option (the "Purchaser's Put
Option"), from time to time, by written notice delivered to the Company prior
to December 31, 1998, stating the principal amount of Debentures to be
purchased by the Company, provided that, unless shareholder approval is
obtained, the Company shall not be required to issue any shares of Common Stock
to the Purchaser pursuant to this Section 1.1(c) to the extent provided in
Section 1.4, including to the extent that such issuance would result in the
total number of shares of Stock or Common Stock issued pursuant to this Section
1 equaling or exceeding 20% of the Common Stock outstanding as of the date of
this Agreement or exceeding 1,313,901 shares of Common Stock. If shareholder
approval of the issuance of Common Stock upon exercise of the Purchaser's Put
Option is required under Section 1.4, the Company agrees to seek such approval
at the next meeting of the shareholders of the Company, provided that if the
Purchaser exercises the Purchaser's Put Option prior to December 31, 1998, and
the next meeting of the shareholders of the Company is after December 31, 1998,
then the Debenture Closing Date shall be deferred until after such meeting of
the shareholders. If the shareholders do not approve of any such issuance,
then the Purchaser's exercise of the Purchaser's Put Option shall be null and
void. Each closing of the purchase of Debentures shall occur on the Debenture
Closing Date. In the event that the Company is seeking shareholder approval of
a
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transaction described in Section 1.1(d), it will use its best efforts to obtain
shareholder approval of the issuance of Common Stock upon exercise of the
Purchaser's Put Option, even if such Put Option has not yet been exercised.
(d) Unless the Purchaser shall exercise the Purchaser's
Put Option prior thereto, which exercise may be conditioned upon the closing of
a transaction described in this Section 11(d), the options set forth in
Sections 1.1(b) and (c) shall terminate effective upon (i) the merger of the
Company with any other company, if the Company is not the survivor of such
merger, (ii) a merger or statutory share exchange in which the holders of the
Common Stock of the Company immediately prior to such transaction do not own
more than fifty (50%) percent of the Common Stock of the Company immediately
following the transaction or (iii) upon the dissolution or liquidation of the
Company.
(e) Upon the occurrence of an Extraordinary Common Stock
Event, the Option Exercise Price shall, simultaneously with the occurrence of
such Extraordinary Common Stock Event, be adjusted by dividing the Option
Exercise Price in effect immediately before such Extraordinary Common Stock
Event by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately before such Extraordinary Common Stock
Event and the denominator of which shall be the number of shares of Common
Stock outstanding immediately after such Extraordinary Common Stock Event and
the product so obtained shall thereafter be the Option Exercise Price. The
Option Exercise Price, as so adjusted, shall be readjusted in the same manner
upon the occurrence of any subsequent successive Extraordinary Common Stock
Event or Events. "Extraordinary Common Stock Event" shall mean (i) the issue
of additional shares of Common Stock as a dividend or other distribution on
outstanding Common Stock, (ii) the subdivision of outstanding shares of Common
Stock into a greater number of shares of Common Stock, (iii) the combination of
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, or (iv) a change in the Common Stock's par value, or from par value to a
no par value, or from no par value to par value.
(f) The shares of Common Stock issued pursuant to Section
1.1 and Section 1.3 shall be referred to in this Agreement as the Purchased
Shares.
1.2 CLOSING.
(a) The closing of the delivery of and payment for the
Purchased Shares purchased pursuant to Section 1.1 shall be held simultaneously
with the execution and delivery of this Agreement made on June 8, 1998, or
such other date and at such place as is mutually agreed upon by the Company and
the Purchaser (the "Closing Date"). On the Closing Date, the Company will
deliver to the Purchaser, against payment of the Purchase Price therefor, a
certificate dated such Closing Date and registered in the Purchaser's name for
the number of shares of Common Stock set forth opposite the Purchaser's name in
Exhibit 1.1 hereto.
(b) On each Debenture Closing Date, (i) the Purchaser
will deliver to the Company Debentures in the principal amount to be sold, free
and clear of all liens, pledges or
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encumbrances of any kind, nature or description, duly endorsed in blank, in
proper form for transfer, with all signatures properly guaranteed by a member
firm of the New York Stock Exchange or a commercial bank or trust company bank
or trust company that is a member of a signature guarantee medallion program,
(ii) the Company will deliver to the Purchaser a certificate dated such
Debenture Closing Date and registered in the Purchaser's name for the number of
shares of Common Stock to be issued to the Purchaser pursuant to Section 1.1,
(iii), in the case of a purchase under Section 1.1(c), a written certificate
from the Purchaser, dated the Debenture Closing Date, representing and
warranting that the Purchaser's representations and warranties to the Company
set forth in Section 4 are true and correct in all material respects as though
made on the Debenture Closing Date, and (iv), in the case of a purchase under
Section 1.1(b), a written certificate from the Company, dated the Debenture
Closing Date, representing and warranting that the Company's representations
and warranties to the Purchaser set forth in Section 3 (other than those set
forth in the first sentence of Section 3(iv)) are true and correct in all
material respects as though made on the Debenture Closing Date. The Company
may waive the delivery of the certificate set forth in (iii) above and the
Purchaser may waive the delivery of the certificate set forth in (iv) above at
their sole discretion and the Purchaser shall not be liable to the Company, and
the Company shall not be liable to the Purchaser, if they are unable to deliver
the foregoing certificates solely because of changes in facts which have made
the parties prior representations and warranties no longer accurate. The
obligation of each party to go forward on a Debenture Closing Date with the
transactions contemplated herein is subject to the delivery by the other party
of all documents and payments required hereunder to be delivered by such party,
and, in the case of Section 1.1(c), the receipt of any Required Shareholder
Approvals.
1.3 SUBSEQUENT STOCK ISSUANCES.
(a) Except for shares of the Company's voting capital
stock (the "Stock") issued in a public offering of shares registered under the
Securities Act, shares of Stock issued as compensation or in conjunction with
any employee benefit plan or program, shares of Stock issued in connection with
the conversion of the Debentures or exercise of options or warrants, or shares
of Stock issued for consideration other than money, in the event that the
Company after the date of this Agreement, but prior to December 31, 1998,
issues any shares of Stock as a new issue or from treasury (the "New Issue"),
the Purchaser shall have the pre-emptive right to purchase a percentage of such
New Issue equal to the Purchaser's percentage holding of the issued and
outstanding Stock of the Company at the date of such issuance. The Purchaser
may exercise this pre-emptive right at any time within ten days after it
receives written notice from the Company of the contemplated offer, sale or
issuance of the New Issue, by delivery of a written notice stating the number
of shares of the New Issue it elects to so purchase and representing and
warranting that the Purchaser's representations and warranties to the Company
set forth in Section 4 are true and correct in all material respects as though
made on the date of such notice.
(b) Except for shares of the Company's Common Stock
issued as compensation or in conjunction with any employee benefit plan or
program, including any employee or director stock option plan, shares of the
Company's Common Stock issued in connection with the exercise of presently
outstanding options or shares of the Company's Common Stock issued for
consideration
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other than money or Debentures, in the event that the Company, after the date
of this Agreement, but prior to December 31, 1998, issues any shares of Common
Stock, or rights to acquire shares of Common Stock, as a new issue or from
treasury, at a price per share less than the Purchase Price (the "Below
Purchase Price"), then (i) the Company shall issue to the Purchaser an
additional number of shares of Common Stock calculated as follows: (the sum of
the total Purchase Price paid for the Common Stock purchased pursuant to
Section 1.1(a) and the total principal amount of Debentures exchanged for
Common Stock pursuant to Section 1.1(b) and (c) prior to such issuance, divided
by the Below Purchase Price) less the number of shares of Common Stock
purchased under Section 1.1 or 1.3(b) of this Agreement prior to such issuance
and (ii) the Option Exercise Price set forth in Section 1.1(b) and 1.1(c) shall
thereafter be the Below Purchase Price.
1.4 NASDAQ LIMITATION. Notwithstanding the foregoing provisions
of this Section 1, the Company shall not be required to issue any shares of
Stock or Common Stock to the Purchaser pursuant to this Section 1 to the extent
that (i) such issuance would result in the total number of shares of Stock or
Common Stock issued pursuant to this Section 1 equaling or exceeding 20% of the
Common Stock outstanding as of the date of this Agreement or exceeding
1,313,901 shares of Common Stock or (ii) such issuance requires approval of the
shareholders of the Company under applicable law or the rules of The Nasdaq
Stock Market, until shareholder approval of such issuance is received and, in
that case, the Debenture Closing Date shall be the fifth day after such
shareholder approval is received or, if such day is not a business day, the
first business day thereafter. If such approval is required, the Company
agrees to use its best efforts to obtain approval of the shareholders of the
Company (i), in the case of issuances under Section 1.3, at the meeting of the
shareholders of the Company held to approve the event triggering the
Purchaser's rights under Section 1.3, or, if no such meeting is held, at the
next meeting of the shareholders of the Company following the event triggering
the Purchaser's rights under Section 1.3 and (ii), in all other cases, at the
next meeting of the shareholders of the Company following the event triggering
the Purchaser's rights under Section 1. The Company shall not be required to
call a special meeting of the shareholders of the Company to vote on any such
issuance and shall only be required to present each such proposed issuance to
shareholders for approval one time.
2. Registration Rights.
2.1 Filing and Effectiveness. The Company hereby agrees to file
with the Securities and Exchange Commission (the "SEC"), as soon as
practicable, but in no event later than thirty (30) days following the Closing
Date, a registration statement on Form S-3 and, no later than January 31, 1999,
a second registration statement on Form S-3 (the "Registration Statements"), in
each case, registering the Purchased Shares purchased prior to each such filing
date not previously so registered for resale by the Purchaser. The Company
will furnish the Purchaser with copies of the Registration Statements prior to
the filing of the same. The Company will use its best efforts to have such
Registration Statements declared effective by the SEC as soon as is
practicable. The Company shall keep such Registration Statements effective for
the period necessary for the Purchaser, in its sole discretion, to complete the
public resale or other disposition of the Purchased Shares or, if earlier, the
date when the Purchased Shares are eligible for sale pursuant to Rule 144(k)
(or any similar provision in force) under the Securities Act of 1933, as
amended (the "Securities Act"). If in the
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good faith judgment of the Board of Directors of the Company, the filing,
effectiveness or continued use of the Registration Statements would be
materially detrimental to the Company, then the Company shall have the right to
defer such filing or effectiveness, and may suspend the Purchaser's right to
sell Common Stock under the Registration Statements, for the period during
which such filing, effectiveness or use would be materially detrimental to the
Company, provided that such deferral or suspension shall not be for a period of
more than thirty (30) days and the Company shall not make such a deferral or
suspension more than once in any twelve month period.
2.2 Blue Sky. The Company shall use its best efforts to register
or qualify the Purchased Shares under such securities acts or laws of such
states of the United States as the Purchaser shall reasonably request;
provided, however, that in no event shall the Company be obligated, in
connection therewith, to qualify to do business in any jurisdiction where it
shall not then be qualified or grant a general consent to service of process in
any jurisdiction in which such consent to service has not been previously
given.
2.3 Additional Obligations. The Company hereby agrees to:
(a) Supply to the Purchaser one true copy of each
Registration Statement (and any supplement or amendment thereto) and such
number of the preliminary, final and any other prospectus and amendments
thereto, prepared in conformity with the requirements of the Securities Act and
the rules and regulations thereunder, as each such Purchaser may reasonably
request in order to facilitate the public sale of shares owned by the
Purchaser.
(b) Remove all "stop transfer orders" relating to the
Purchased Shares once registered with the SEC under Section 5 of the Securities
Act and, thereafter, remove all legends from stock certificates representing
such Purchased Shares restricting the transferability of such stock under
applicable securities laws;
(c) Notify the Purchaser immediately, and confirm the
notice in writing, (i) of the effectiveness of the Registration Statements and
any amendment thereto (including any post-effective amendment), (ii) of the
receipt of any comments from the SEC, (iii) of any request by the SEC for any
amendment to the Registration Statements or any amendment or supplement to any
prospectus relating thereto or for additional information, (iv) of the issuance
by the SEC of any stop order suspending the effectiveness of the Registration
Statements or the initiation of any proceedings for that purpose and (v)
immediately notify the Purchaser at any time when a prospectus relating thereto
is required to be delivered under the Securities Act of the happening of any
event as a result of which the prospectus included in such Registration
Statements, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or incomplete in the light of the
circumstances then existing. The Company will use its best efforts 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.
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(d) Give the Purchaser notice of its intention to file or
prepare any amendment to the Registration Statements (including any
post-effective amendment) or any amendment or supplement to the final
prospectus (including any revised prospectus which the Company proposes for use
by the Purchaser in connection with the offering of the Purchased Shares which
differs from the prospectus on file at the SEC at the time the Registration
Statements become effective, whether or not such revised prospectus is required
to be filed pursuant to Rule 424(b) of the Securities Act Regulations), and
furnish the Purchaser with copies of any such amendment or supplement a
reasonable amount of time prior to such proposed filing or use, as the case may
be. The term "Prospectus" shall refer to the final prospectus and any revised
prospectus provided to the Purchaser from time to time thereafter and all
material incorporated by reference therein.
(e) If any event shall occur as a result of which it is
necessary to amend or supplement the Prospectus in order to make the Prospectus
not misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, forthwith amend or supplement the Prospectus so that,
as so amended or supplemented, the Prospectus will not include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
existing at the time it is delivered to a purchaser, not misleading, and
furnish to the Purchaser such copies of such amendment or supplement as
Purchaser shall request.
(f) In the event that the Company files a Registration
Statement on a form, other than Form S-3, or any substitute therefor, furnish
to Purchaser at the effective date of such Registration Statement upon request
a signed counterpart, addressed to Purchaser, of
(i) an opinion of counsel for the Company,
covering such matters as are typically addressed in opinions rendered by
Company counsel to underwriters of public securities of the Company, dated the
effective date of the Registration Statement and in form reasonably acceptable
to the Company and Purchaser, and
(ii) "comfort" letters signed by the Company's
independent public accountants who have examined and reported on the Company's
financial statements included in the registration statement, to the extent
permitted by the standards of the American Institute of Certified Public
Accountants,
in the case of (i) and (ii) covering substantially the same matters with
respect to such Registration Statement (and the prospectus included therein)
and (in the case of the accountants' "comfort" letter) with respect to events
subsequent to the date of the financial statements, as are customarily covered
in opinions of issuer's counsel and in accountants' "comfort" letters delivered
to the underwriters in underwritten public offerings of securities;
(g) Make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of at least
twelve months, but not more than eighteen months, beginning with the first
month after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act;
and
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(h) In connection with the preparation and filing of each
Registration Statement give the underwriters, if any, and their respective
counsel and accountants, the opportunity to participate in the preparation of
such Registration Statement, each prospectus included therein or filed with the
SEC, and each amendment thereof or supplement thereto, and will give such
persons such access to the Company's books and records and such opportunities
to discuss the business of the Company with its officers, its counsel and the
independent public accountants who have certified the Company financial
statements, as shall be necessary, in the opinion of Purchaser or such
underwriters or their respective counsel, in order to conduct a reasonable and
diligent investigation within the meaning of the Securities Act. Without
limiting the foregoing, each Registration Statement, prospectus, amendment,
supplement or any other document filed with respect to a registration shall be
subject to review and reasonable approval by the Purchaser and its counsel;
provided that if there is any disagreement between the Purchaser and the
Company with respect to the content of any such document, then the Company may
delay the filing of the same and may suspend the Purchaser's right to sell
Common Stock under the Registration Statement until such disagreement is
resolved.
2.4 Expenses of Registration. All expenses, other than
underwriting discounts and selling commissions, incurred in effecting any
registration pursuant to this Section 2, including, without limitation, all
costs of preparation and registration, filing fees, printing expenses, expenses
of compliance with Blue Sky laws, fees and disbursements of counsel for the
Company and fees and disbursements of counsel for the Purchaser, up to a
maximum of $5,000.00 for such Purchaser's counsel, shall be borne by the
Company.
2.5 Conditions to Company's Obligations. The Company's
obligations under this Section 2 shall be conditioned upon a timely receipt by
the Company in writing of:
(i) Information as to the terms of such public offering
furnished by or on behalf of the Purchaser; and
(ii) Such other information as the Company may reasonably
require from the Purchaser, or any underwriter for it, for inclusion in such
Registration Statement.
2.6 Indemnification.
(a) The Company agrees to indemnify and hold harmless the
Purchaser and each person, if any, who controls the Purchaser within the
meaning of Section 15 of the Securities Act, against any and all loss,
liability, claim, damage and expense whatsoever arising out of any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statements (or any amendment thereto), including the information
deemed to be part of the Registration Statements pursuant to Rule 430A(b) of
the rules and regulations of the SEC under the Securities Act (the "Securities
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 Prospectus (or any
amendment or supplement thereto) or the omission or alleged omission therefrom
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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;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent (i) 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 the
Purchaser expressly for use in the Registration Statements (or any amendment or
Supplement thereto) or any Prospectus (or any amendment or supplement thereto)
or (ii) arising from the fact that a copy of the Prospectus was not timely
delivered by the Purchaser to a purchaser who became a plaintiff in a lawsuit.
(b) The Purchaser agrees to indemnify and hold harmless the
Company, its directors, each of its officers who signed the Registration
Statements, and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities 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 Statements (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with
written information to the Company by the Purchaser for use in the Registration
Statements (or any amendment thereto) or such final Prospectus (or any
amendment or supplement thereto).
(c) 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
indemnity agreement. In case such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party and, after notice from the indemnifying party to such
indemnified party of its election to assume the defense thereof and so long as
the indemnifying party continues to defend the matter, the indemnifying party
shall not be liable under this indemnity for any legal expenses subsequently
incurred by such indemnified party in connection with the defense thereof,
provided however, that the indemnified party shall have the right to employ
separate counsel at its expense in any such action and participate in the
defense thereof. No indemnifying party shall be liable for any settlement
entered into without its consent. An indemnifying party who elects not to
assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by the
indemnifying party with respect to the claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between the
indemnified party and any other indemnified party with respect to the claim, in
which event the indemnifying party shall be obligated to pay the fees and
expenses of no more than one additional counsel for the indemnified parties per
venue.
2.7 Contribution. If the indemnification provided for in Section
2.6 is unavailable to an indemnified party in respect of any losses,
liabilities, claims, damages, or expenses referred to therein, then each
indemnifying party thereunder shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, liabilities, claims, damages
or expenses in such
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proportion as is appropriate to reflect the relative fault of the Company and
the Purchaser in connection with the statements or omissions that resulted in
such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations. The relative fault of the Company and the
Purchaser shall be determined by reference to, among other things, whether the
untrue or alleged 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 Purchaser and the parties' relative intent and knowledge.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 2.7 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section, each director of the
Purchaser, each officer of the Purchaser and each person, if any, who controls
the Purchaser within the meaning of Section 15 of the Securities Act shall have
the same rights to contributions as such Purchaser, and each director of the
Company, each officer of the Company who signed the Registration Statements,
and each person, if any, who controls the Company within the meaning of Section
15 of the Securities Act shall have the same rights to contribution as the
Company.
3. Representations and Warranties. The Company represents and
warrants to the Purchaser as of the date hereof, and after giving effect to the
transactions contemplated by this Agreement, as follows:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Michigan with 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 obligations under this Agreement; and 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 to so qualify 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.
(ii) 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 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 to so qualify
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 issued
and outstanding capital stock of each such subsidiary has been duly authorized
and validly issued, is fully paid and non-assessable and, is owned by the
Company,
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directly or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity, except for pledges to NBD
Bank.
(iii) Since March 31, 1998, except as otherwise stated to
the Purchaser in writing, (A) there has been no material adverse change in the
condition, financial or otherwise, or in the earnings or business affairs 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. This Agreement and any other agreement,
document, certificate or written statement furnished to the Purchaser by or on
behalf of the Company in connection with the transactions contemplated hereby,
when read together, do not contain any untrue statement of a material fact and
do not omit to state a material fact necessary in order to make the statements
contained herein or therein not misleading.
(iv) As of June 8, 1998, the authorized capital of the
Company consisted of 20,000,000 shares of Common Stock of which 6,569,513
shares were authorized and outstanding prior to the issuance of Common Stock
pursuant to the terms of this Agreement and 4,370,054 shares of Common Stock
are reserved for issuance upon the conversion or exchange of outstanding
securities or rights to acquire capital stock of the Company, other than rights
created by this Agreement, and not including not more than 10,000 shares of
Common Stock reserved for issuance upon exercise of outstanding elections to
purchase Common Stock under the Company's Employee Stock Purchase Plan;
provided that the Company plans to seek shareholder approval to increase the
authorized capital of the Company to 40,000,000 shares of Common Stock and
10,000,000 shares of Preferred Stock. The Purchased Shares have been duly
authorized for issuance and sale to the Purchaser pursuant to this Agreement
and, when issued and delivered by the Company pursuant to this Agreement
against payment therefor in the manner herein described, will be validly issued
and fully paid and non-assessable; and the issuance of the Purchased Shares is
not subject to preemptive or other similar rights. No further approval or
authority of any shareholder or the Board of Directors of the Company is
required for the issuance and sale of the Purchased Shares, except as may be
required under Sections 1.1(c) and 1.3 of this Agreement.
(v) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated herein and
compliance by the Company with its obligations hereunder have been duly
authorized by all necessary corporate action and will not conflict with or
constitute a breach of, or default 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, loan agreement, note, lease or other 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, nor will such action result in any violation of the
provisions of the articles of incorporation or by-laws of the Company or any
applicable law, administrative regulation or administrative or court decree,
except as may be required under Sections 1.1(c) and 1.3 of this Agreement.
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(vi) No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the offering,
issuance or sale of the Purchased Shares hereunder.
(vii) The financial statements of the Company, together
with related notes and schedules, included in the SEC Filings (as defined
below) present fairly the financial position of the Company and its
consolidated subsidiaries as at the dates indicated and the results of their
operations for the periods specified and such financial statements have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis, except as stated therein and all adjustments necessary for
a fair presentation of results for such periods have been made. Each of the
SEC Filings, as of its date, did not contain any untrue statement of material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances in which made, not misleading. All filings required to be filed
by the Company with the SEC during the last twelve months have been filed in a
timely manner.
(viii) This 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
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting enforcement,
creditors' rights generally and by general principles of equity whether
considered in a proceeding at law or in equity.
(ix) Neither the Company nor any of its officers,
directors or affiliates (as defined in the Securities Act and the Securities
Act Regulations thereunder) has taken or will take, directly or indirectly, any
action designed to or which has constituted or which might reasonably be
expected to cause or result, under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or otherwise in stabilization or manipulation of
the price of any security of the Company, to facilitate the sale or resale of
the Purchased Shares.
(x) The Company is not, and does not intend to conduct
its business in a manner in which it would become, an "investment company" as
defined in Section 3(a) of the Investment Company Act of 1940, as amended.
(xi) The Company satisfies the registrant and transaction
requirements contained in the instructions for use of the Form S- 3 in effect
as of the date hereof in order to use the Form S-3 to register the Purchased
Shares.
(xii) The net proceeds to the Company of the transactions
contemplated hereby will be used for general corporate purposes, including
additional working capital.
4. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Company as follows:
4.1 Investment Representations. The Purchaser is purchasing the
Purchased Shares for its own account for investment and not with a view to or
for sale in connection with any unregistered
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distribution (as that term is defined under the Securities Act, or the
Securities Act Regulations) thereof.
4.2 Status of Investor.
(a) The Purchaser is an Accredited Investor as that term
is defined in Regulation D (17 C.F.R. 230.501 - 230.506).
(b) The Purchaser was not organized for the specific
purpose of acquiring the Purchased Shares.
(c) The address set forth on the first page of this
letter is the Purchaser's principal place of business, unless otherwise
disclosed to the Company in writing.
4.3 Restrictions. The Purchaser is aware that the Purchased
Shares delivered hereunder have not been registered under the Securities Act,
or under applicable state securities laws, and that the Company in issuing the
Purchased Shares will be relying upon, among other things, the Purchaser's
representations and warranties contained in Section 4 of this Agreement, in
concluding that such issuance is a "private offering" and does not require
compliance with the registration provisions of the Securities Act and
applicable state securities laws. The Purchaser will not sell, transfer or
otherwise dispose of the Purchased Shares except in compliance with Section 4.7
of this Agreement. In addition, the Purchaser is aware that the Purchased
Shares shall contain the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER ANY OTHER
SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THESE SECURITIES
UNDER SAID ACT AND ANY OTHER APPLICABLE SECURITIES LAW, AN OPINION OF
COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED OR A WRITTEN ADVICE FROM THE SECURITIES AND EXCHANGE
COMMISSION AND APPLICABLE STATE SECURITIES AGENCIES, OR A MEMBER OF
THE STAFF THEREOF, THAT "NO-ACTION" WOULD BE RECOMMENDED IF THE
PROPOSED TRANSFER WERE TO BE MADE WITHOUT THE FILING OF A REGISTRATION
STATEMENT (OR ANY COMBINATION OF THE FOREGOING).
The Purchaser agrees that the Company may issue instructions to its transfer
agent to place, or may itself place, a "stop transfer order" with respect to
the Purchased Shares, provided, however, that such "stop transfer orders" shall
not be enforced if the Purchased Shares are sold or transferred in a
transaction which complies with Section 4.7 hereof.
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4.4 Access. The Purchaser has received and reviewed a
copy of the following documents: (a) the Company's Annual Report on Form 10-K,
and the amendment thereto on Form 10-K-A, for the fiscal year ended
December 31, 1997, (b) the Company's Quarterly Report on Form 10-Q for the
period ended March 31, 1998, and (c) all filings by the Company with the SEC
under Section 13(a), 14(a), 14(c) and 15(d) of the Securities Exchange Act of
1934, as amended, filed by the Company after the date of this Agreement, but
prior to each Closing Date or Debenture Closing Date (the "SEC Filings"). The
Purchaser has been given access to the Company's facilities, records and books;
the Purchaser has had an opportunity to ask questions of and receive answers
from the Company and its officers and directors concerning the Company, its
subsidiaries and the terms and conditions of the sale of the Purchased Shares
and to obtain any additional information which the Company possesses or can
acquire without unreasonable effort or expense that is necessary to verify the
accuracy of the information furnished to the Purchaser; and the Purchaser has
made such investigation and examination of the affairs of the Company and its
subsidiaries and has obtained such information relating thereto as the
Purchaser deems necessary. The Purchaser understands that the Purchased Shares
issuable pursuant to this Agreement are "restricted securities" within the
meaning of Rule 144 (17 C.F.R. 230.144) promulgated under the Securities Act,
and that they must be held indefinitely, unless they are subsequently
registered under the Securities Act, and under applicable securities laws, or
exemptions from such registrations are available.
By virtue of the Purchaser's investment acumen, knowledge and business
experience and independent advice, the Purchaser is capable of understanding
and evaluating the risks, hazards and merits of participating in the purchase
of Purchased Shares to be made by the Purchaser. The Purchaser has substantial
financial means and is able to bear the economic risk of participating in the
purchase of the Purchased Shares.
4.5 Due Execution of Agreement. This Agreement constitutes the
Purchaser's valid and legally binding obligation enforceable in accordance
with its terms, except insofar as enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting the rights of creditors
generally, and the remedy of specific performance may not be available with
respect to any particular provisions of this Agreement.
4.6 Transferability. The Purchaser hereby agrees that it will not
transfer any of its Purchased Shares without an effective registration
statement relating thereto, an opinion of counsel satisfactory to the Company
that such registration is not required under the Securities Act and applicable
state law, or a written advice from the SEC and applicable state securities
agencies, or a member of the staff thereof, that "no-action" would be
recommended if the proposed transfer were to be made without the filing of a
registration statement (or any combination of the foregoing).
4.7 Incorporation. The Purchaser has been duly incorporated and
is validly existing as a corporation in good standing under the laws of the
State of Maryland with corporate power and authority to own, lease and operate
its properties and to conduct its business as now conducted and to enter into
and perform its obligations under this Agreement.
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4.8 Due Authorization. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein and
compliance by the Purchaser with its obligations hereunder have been duly
authorized by all necessary corporate action and will not conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
the Purchaser or any of its subsidiaries pursuant to, any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which the
Purchaser 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 Purchaser or any
of its subsidiaries is subject, nor will such action result in any violation of
the provisions of the charter or by-laws of the Purchaser or any applicable
law, administrative regulation or administrative or court decree.
4.9 Consents. No authorization, approval or consent of any court
or governmental authority or agency is necessary in connection with the
execution, delivery and performance of this Agreement by the Purchaser and the
consummation of the transactions contemplated herein and compliance by the
Purchaser with its obligations hereunder.
4.10 Ownership of Debentures. The Purchaser owns of record and
beneficially all of the Debentures and has good and valid title to all of the
Debentures, free and clear of all liens (including tax liens), forfeitures,
covenants, conditions, pledges, penalties, charges, encumbrances, buy-sell
agreements, rights of first refusal, equities or claims or rights of others
whatsoever. The delivery to the Company of the Debentures pursuant to this
Agreement will transfer to the Company valid title thereto, free and clear of
all liens, encumbrances, restrictions and claims of any kind. With respect to
the Debentures, the Purchaser hereby confirms to the Company the warranties set
forth in Mich Comp ▇▇▇▇ ▇▇▇. Section 440.8306(2)(a).
5. 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 or the
Purchaser submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any
Purchaser or controlling person, or by or on behalf of the Company or any
controlling person, and shall survive delivery of the Purchased Shares to the
Purchaser and the Debentures to the Company.
6. 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
Purchaser shall be directed to The ▇▇▇▇▇▇▇▇ Fund, Inc. at ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Inc. attention of ▇▇▇▇▇ ▇▇▇▇▇▇▇; and
notices to the Company shall be directed to it at Universal Standard
Healthcare, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
attention: President and Chief Executive Officer.
7. Parties. This Agreement shall inure to the benefit of and be
binding upon the Purchaser 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 Purchaser and
the Company and their respective successors and the controlling persons and
officers and directors and their heirs and legal representatives, any legal or
equitable right, remedy or claim
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under or in respect of this Agreement or any provision herein or therein
contained. This Agreement and all conditions and provisions hereof and thereof
are intended to be for the sole and exclusive benefit of the Purchaser 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 the Purchased
Shares from the Purchaser shall be deemed to be a successor by reason merely of
such purchase.
8. Governing Law and Time; Amendments. This Agreement shall be
governed by and construed in accordance with the laws of the State of Michigan
applicable to agreements made and to be performed in said State. No amendment
to this Agreement shall be enforceable unless in writing and signed by the
Company and the Purchaser.
9. Severability. The provisions of this Agreement are severable
and if any provision hereof shall be held null, void, invalid, unenforceable or
contrary to law, no other provisions of this Agreement shall be thereby
affected but on the contrary shall remain in full force and effect, and all
parties hereto shall remain bound under all such other provisions hereof.
10. Headings. The section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
11. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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 Purchaser and the Company in accordance with its terms.
Very truly yours,
UNIVERSAL STANDARD HEALTHCARE, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇
------------------------------
▇▇▇▇ ▇. ▇▇▇
Vice President
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written:
THE ▇▇▇▇▇▇▇▇ FUND, INC.
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By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
Title: Chairman and Portfolio Company Manager
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Exhibit 1.1
to Universal Standard Healthcare, Inc.
Stock Purchase Agreement
Number of
Name Purchased Shares
---- ----------------
The ▇▇▇▇▇▇▇▇ Fund, Inc. 500,000
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