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EXHIBIT 99.3
UNIVERSAL STANDARD HEALTHCARE, INC.
STOCK PURCHASE AGREEMENT
July 16, 1998
Laboratory Corporation of America Holdings
000 Xxxxx Xxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
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.
(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 common stock of the Company (the "Common Stock") set forth opposite
the Purchaser's name in Exhibit 1.1 hereto (the "Purchased Shares"). The
purchase price of such shares shall be $3.00 per share (the "Purchase Price").
The Purchase Price for the Common Stock purchased pursuant to this Section
1.1(a) shall be payable in cash on the Closing Date.
(b) The shares of Common Stock issued pursuant to Section
1.1(a) shall be referred to in this Agreement as the Purchased Shares.
1.2 Closing. Delivery of and payment for the Purchased Shares
shall be made on August 3, 1998, at the offices of Xxxxxx Xxxxxxx, PLLC, 000
Xxxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 or such other date and at such
place as is mutually agreed upon by the Company and the Purchaser (the "Closing
Date"), subject to Section 5(a) below. On the Closing Date, (i) the Company
will deliver to the Purchaser, against payment of the Purchase Price therefor
in immediately available funds delivered by wire transfer to Company, a
certificate dated such Closing Date and registered in the Purchaser's name for
the number of Purchased Shares set forth opposite the Purchaser's name in
Exhibit 1.2A hereto, (ii) the Purchaser and the Company shall have entered into
a Shareholders' Agreement, in the form attached hereto as Exhibit 1.2B (the
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"Shareholders' Agreement"); (iii) there shall be delivered an opinion of counsel
for the Purchaser in a form acceptable to the Company relating to this Agreement
and the other agreements to be delivered at the closing (the "Other Agreements")
and the transactions contemplated by this Agreement and such Other Agreements
and there shall be delivered an opinion of counsel for the Company in a form
acceptable to the Purchaser relating to this Agreement and the Other Agreements
to be delivered at the closing (the "Other Agreements") and the transactions
contemplated by this Agreement and such Other Agreements; (iv) there shall be
delivered the certificates referred to in Section 5(a)(i) and 5(b)(i); (v) there
shall be delivered a certificate of the secretary of the Purchaser certifying
the resolutions of the Board of Directors of the Purchaser approving this
Agreement and the performance by the Purchaser of its obligations hereunder;
(vi) there shall be delivered a certificate of the secretary of the Company
certifying the resolutions of the Board of Directors of the Company approving
this Agreement and the performance by the Company of its obligations hereunder;
(vii) the Company, the Purchaser and NBD Bank shall have entered into and
delivered the NBD Subordination Agreement (as defined below), in a form mutually
acceptable to the parties thereto; (viii) the parties to the Voting Agreement,
the Co- Marketing Agreement and the Security Agreement shall enter into and
deliver such agreements in the form attached hereto as Exhibits 1.2C, 1.2D and
1.2E, respectively; (ix) there shall be delivered the consent of NBD Bank to
this Agreement and the performance by the Company of its obligations hereunder,
which consent shall include a waiver of the provisions of the Loan Agreement (as
defined below) in a form reasonably acceptable to the Purchaser; and (x) there
shall be delivered the waiver by The Xxxxxxxx Fund, Inc. of the Xxxxxxxx
Preemptive Rights (as defined below) in a form acceptable to the Purchaser.
2. Representations and Warranties. (a) The Company represents and
warrants to the Purchaser as of the date hereof 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 currently conducted and to enter into
and perform its obligations under this Agreement. Exhibit 2(i)(A) is a true copy
of the Articles of Incorporation (with all amendments) of the Company (the
"Articles of Incorporation"). Exhibit 2(i)(B) is a certificate of good standing
of the Company certified by the Michigan Department of Consumer and Industry
Services, dated July 14, 1998. Exhibit 2(i)(C) is a true copy of the By-laws of
the Company (with all amendments) (the "By-Laws"). The Company is duly qualified
as a foreign corporation to do business in all jurisdictions in which the nature
of its properties and business require such qualification, except to the extent
that the failure to so qualify would not have a material adverse effect on the
condition, financial or otherwise, or the assets, liabilities, business
prospects, earnings or business affairs of the Company and its subsidiaries,
considered as one enterprise ("Material Adverse Effect").
(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
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business as currently conducted; 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, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity, except for pledges to NBD Bank. Each subsidiary of
the Company is duly qualified as a foreign corporation to do business in all
jurisdictions in which the nature of its properties and business require such
qualification, except to the extent that the failure to so qualify would not
have a Material Adverse Effect.
(iii) The Company has delivered the SEC Filings (as defined
below), including audited financial statements of the Company and its
subsidiaries as of and at December 31, 1997 and unaudited financial statements
of the Company and its subsidiaries as of and at March 31, 1998, and unaudited
monthly financial statements of the Company and its subsidiaries as of and at
April 30, 1998 and May 31, 1998 (the "Monthly Financials"), shown on Exhibit
2(iii)(A) attached hereto. (The audited and unaudited financial statements of
the Company are hereinafter referred to as the "Financials.) The unaudited
Financials, including the Monthly Financials, have been prepared in accordance
with GAAP (as defined below) consistently applied (subject to the lack of
footnote disclosure and charges resulting from normal year-end adjustments). The
Financials fairly present the financial condition of the Company as of the dates
thereof. Since May 31, 1998, except as set forth on Exhibit 2(iii)(B), (A) there
has been no material adverse change in the condition, financial or otherwise, or
in the assets, liabilities, business prospects, earnings or business affairs of
the Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, from that disclosed in the SEC
Filings and Monthly Financials, (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, the Exhibits hereto, the SEC Filings and the
Monthly Financials 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) The authorized capital of the Company consists of
20,000,000 shares of Common Stock; provided that the Company has obtained
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 "Amendment"). All the outstanding Common Stock is validly issued, fully
paid and non-assessable and has been issued in full compliance with applicable
law. 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, except for preemptive rights held by The Xxxxxxxx Fund, Inc. under a
certain Stock Purchase Agreement (the "Xxxxxxxx Agreement") dated June 8, 1998
(the "Xxxxxxxx Preemptive Rights"). No further approval or authority of any
shareholder (except as may be required to list the Purchased Shares with The
Nasdaq Stock Market, Inc. (" Nasdaq")) or the Board of Directors
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of the Company is required for the issuance and sale of the Purchased Shares as
contemplated herein. None of the outstanding shares of the Common Stock are
entitled to cumulative voting rights, preemptive rights, anti-dilution rights or
registration rights under the Securities Act of 1933, as amended (the
"Securities Act"), (except as set forth in the Xxxxxxxx Agreement, a
Stockholders Agreement dated June 28, 1991 (the "Original Stockholders
Agreement"), the Westsphere Warrant (as defined below), the Debentures (as
defined below) and a Warrant dated July 8, 1998 issued to NBD Bank (the "NBD
Warrant") copies of which are attached as Exhibits 2(iv)A, 2(iv)B, 2(iv)C,
2(iv)D and 2(iv)E respectively). The Company has outstanding no option, warrant
or other commitment to issue or to acquire any shares of its capital stock, or
any security or obligations convertible into or exchangeable for its capital
stock nor has it given any person or entity any right to acquire from the
Company or sell to the Company any shares of its capital stock, except as
provided in the Xxxxxxxx Agreement, a certain Warrant dated June 18, 1992,
issued to WestSphere Funding, Ltd. (the "WestSphere Warrant"), the 1992 Stock
Option Plan, the Directors Stock Option Plan, the Employee Stock Purchase Plan,
Non-Qualified Stock Option Agreements with Xxxxxx XxXxxxxx, Xxxxxx Xxxxxxxx,
Xxxx Xxx, Xxxxxxx Xxxxxxx, Xxxxxx Xxxxxx and Xxxxxx Xxxxxx, dated February 13,
1992, May 31, 1992, May 31, 1992, June 24, 1992, June 20, 1992 and June 28,
1992, respectively, the 8.25% Convertible Subordinated Debentures Due February
1, 2006 (the "Debentures"), and the NBD Warrant. Certain information with
respect to the foregoing documents are set forth on Exhibit 2(iv)F. There is,
and immediately upon the Closing hereunder there will be, no agreement,
restriction or encumbrance with respect to the sale or voting of any shares of
capital stock of the Company to which the Company is a party, except the Voting
Agreement, the LCA Voting Agreement, the Shareholders' Agreement and the
Original Stockholders Agreement. Assuming the accuracy of the Purchaser's
representations set forth in Section 3 hereof, the issuance of the Purchased
Shares in accordance with the terms of this Agreement is exempt from
registration under the Securities Act and the Company has complied with all
federal and state securities laws in connection with such issuance which are
required to be complied with prior to the date hereof and will comply with all
such requirements in connection with such issuance which are required to be
complied with prior to the Closing Date.
(v) The execution, delivery and performance of this Agreement,
the Voting Agreement, the Shareholders' Agreement, the Co-Marketing Agreement,
the NBD Subordination Agreement and the Security Agreement and the consummation
of the transactions contemplated herein and therein, and compliance by the
Company with its obligations hereunder and thereunder (A) have been duly
authorized by all necessary corporate action, (B) 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, (C) will not violate the provisions of the Articles of
Incorporation or By-laws of the Company or the articles of incorporation or
certificate of incorporation or by-laws of any of its subsidiaries and will not
violate any law, administrative regulation or administrative or court decree
applicable to the Company or any of its subsidiaries, (D) do not give any person
or entity rights to terminate any
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agreements with the Company or any of its subsidiaries or otherwise exercise any
rights against the Company of any of its subsidiaries, and (E) will not cause
any payment or performance obligation of the Company or any of its subsidiaries
to be accelerated, including, but not limited to any acceleration of any payment
due under any note, debenture or bond, and (f) will not cause the acceleration
of any outstanding rights to purchase or convert any instrument into capital
stock of the Company, except (i) as set forth in the Security Agreement, (ii)
that the consent of NBD Bank is required prior to the consummation of the
transactions contemplated herein, and the compliance by the Company with its
obligations hereunder, pursuant to a certain Revolving Credit and Loan Agreement
dated September 27, 1997 (the "Loan Agreement"), (iii) to the extent any
approval of the shareholders of the Company is required by the rules of Nasdaq,
and (iv) that the waiver by The Xxxxxxxx Fund Inc. of the Xxxxxxxx Preemptive
Rights is required prior to the issuance of the Purchased Shares.
(vi) No authorization, approval or consent of any court,
governmental authority or agency or any securities exchange including Nasdaq, is
necessary in connection with the execution, delivery and performance by the
Company of this Agreement, the Voting Agreement, the Shareholders' Agreement,
the Co-Marketing Agreement, the NBD Subordination Agreement and the Security
Agreement, the consummation of the transactions contemplated herein or therein,
the compliance by the Company with its obligations hereunder or thereunder,
including the offering, issuance or sale of the Purchased Shares hereunder,
except to the extent any approval of the shareholders of the Company is required
by the rules of Nasdaq.
(vii) The Company has the unconditional corporate power and
authority, and has taken all required corporate action necessary to execute and
deliver this Agreement, the Voting Agreement, the Shareholders' Agreement, the
Co-Marketing Agreement, the NBD Subordination Agreement and the Security
Agreement, and to sell the Purchased Shares and otherwise to perform its
obligations hereunder and thereunder, except to the extent the approval of the
shareholders of the Company is required by the rules of Nasdaq. This Agreement,
the Voting Agreement, the Shareholders' Agreement, the Co-Marketing Agreement,
the NBD Subordination Agreement and the Security Agreement have been duly
authorized, executed and delivered by the Company, and constitute the legal,
valid and binding obligations of the Company, enforceable against it in
accordance with their respective terms.
(viii) Neither the Company nor any of its officers, directors or
affiliates (as defined in the Securities Act) and the rules and regulations of
the Securities and Exchange Commission (the "SEC") thereunder (the "Securities
Act Regulations") 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.
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(ix) 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.
(x) The Company is eligible to use Form S-3 as promulgated
by the SEC.
(xi) The net proceeds to the Company of the transactions
contemplated hereby will be used in strict accordance with Exhibit 2(xi)
attached hereto.
(xii) Assuming the accuracy of the Purchaser's representations
set forth in Section 3 hereof and The Xxxxxxxx Fund, Inc.'s representations set
forth in the Xxxxxxxx Agreement, all securities issued by the Company which are
issued and outstanding immediately after the Closing Date will have been offered
and sold in full compliance with all applicable federal and other securities
laws in effect at the time of any such issuance and sale.
(xiii) Attached hereto as Exhibit 2(xiii) is a true, correct
and complete list of all of the Company's Debt (as defined below) which is
secured by a security interest in the assets of the Company or its subsidiaries,
setting forth the name of such creditor, the amount due to such creditor as of a
specified date within 45 days of the date of this Agreement, and the assets of
the Company or its subsidiaries subject to each such security interest.
(xiv) Except as set forth in the SEC Filings and on Exhibit
2(xiv), the Company and its subsidiaries have no outstanding unpaid tax
liabilities (except for taxes which are currently accruing from its current
operations and ownership of property, and which are not delinquent), no tax
deficiencies have been proposed or assessed against the Company or any of its
subsidiaries and there are no pending audits of the Company or any of its
subsidiaries' federal or state income tax returns, which have resulted in or are
likely to result in the assessment of any material tax liability against the
Company or any of its subsidiaries. Except as set forth on Exhibit 2(xiv), to
the best of the knowledge of the Company, the Company has accurately completed
and filed, or will file within the time prescribed by law (including extensions
of time to be filed, approved by the appropriate taxing authorities) all tax
returns and reports required to be filed and has paid or made adequate provision
in the Financials for the payment of all taxes, interest and penalties due or to
be due for periods covered by the Financials.
(xv) Except as set forth on Exhibit 2(xv), neither the Company
nor any of its subsidiaries is a party to any litigation or administrative
proceeding, nor to the knowledge of the Company, is any such litigation or
administrative proceeding threatened against the Company or its subsidiaries,
which in either case would have a Material Adverse Effect, or which concerns the
transactions contemplated by this Agreement, the Voting Agreement, the
Shareholders' Agreement, the NBD Subordination Agreement, the Co-Marketing
Agreement or the Security Agreement..
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(xvi) Except as set forth on Exhibit 2(xvi), to the Company's
knowledge, the Company and its subsidiaries are not in violation of any
Environmental Law or regulations involving the Company or any of its
subsidiaries' operations, facilities and property. Neither the Company nor any
of its subsidiaries has received notice that it is currently in violation of
any Environmental Law or regulation. To the Company's knowledge, the Company
and its subsidiaries have all necessary permits, licenses and approvals
required by any Environmental Law to operate their businesses, and is in
compliance with such permits, licenses and approvals. "Environmental Law" means
any federal, state or local law, whether common law, court or administrative
decision, ordinance, regulation, rule, court order or decree or administrative
order relating to the environment, public health, any hazardous material or
environmental activity or condition in effect from time to time, including, but
not limited to, the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. Section 9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. Section 9601 et seq.), the Federal Water Pollution
Control Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (42 U.S.C.
Section 2601 et seq.), and the Occupational Safety and Health Act (29 U.S.C.
Section 6451 et seq.), as such laws have been amended or supplemented from time
to time, and any similar present or future Federal, state or local statute,
ordinance, rule or regulation.
(xvii) Except as set forth on Exhibit 2(xvii), each Plan of the
Company which is not a Multiemployer Plan is Fully-Funded and no Reportable
Event has occurred with respect to any such Plan. Further, except as set forth
on Exhibit 2(xvii), the Company has no Withdrawal Liability to any Multiemployer
Plan. "Plan" means any pension plan as defined in Section 3(2) of ERISA which is
subject to Title IV of ERISA. "Fully-Funded" means that a plan has sufficient
assets to satisfy the Plan's accrued liabilities to participants as determined
by the Plan's enrolled actuary. "Reportable Event" means an event described in
ERISA Section 4043(c) and the regulations thereunder. "Withdrawal Liability"
means the amount determined under ERISA Section 4211 and the regulations
thereunder, computed as if the Company is currently withdrawing. "Multiemployer
Plan" means a multiemployer plan described in ERISA Section 3(37). "ERISA" means
the Employee Retirement Income Security Act of 1974.
(xviii) Except as set forth in Exhibit 2(xviii) the Company has
not made a commitment, and has taken no action that could result in a claim, for
any brokers', finders', or similar fees or commitments in respect to the
transactions described in this Agreement.
(xix) To the best of the Company's knowledge, neither the
Company, its subsidiaries nor any employee, agent or representative thereof has
directly or indirectly used funds or other assets of the Company or its
subsidiaries for illegal contributions, gifts, or payments to or for the benefit
of any governmental official or employee, has received or made bribes or
kickbacks or have paid amounts with an understanding that rebates or refunds
will be made in contravention of any laws.
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(xx) Attached as Exhibit 2(xx) are financial projections for
the Company's managed care operations for the three years ended December
31, 2001 (the "Projections"). To the best of the Company's knowledge,
as of the date of this Agreement, the Company has a reasonable basis for making
the Projections.
(xxi) Except as set forth in Exhibit 2(xxi), the Company and
its subsidiaries have all necessary permits, licenses and approvals required by
any applicable law or regulation (outside of Environmental Laws) to operate
their businesses and are in compliance with such permits, licenses and
approvals.
3. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Company as follows:
3.1 Investment Representations. The Purchaser is purchasing the
Purchased Shares for its own account for investment and not with a view to or
for sale or transfer, except for sales or transfers permitted hereunder.
3.2 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.
3.3 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 3 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 3.7 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
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SECURITIES LAW, OR AN OPINION OF COUNSEL REASONABLY
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.
3.4 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,
and (b) the Company's Quarterly Report on Form 10-Q for the period ended March
31, 1998 (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 have 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.
3.5 Due Execution of Agreement. This Agreement, the Voting
Agreement, the Shareholders' Agreement, the Co-Marketing Agreement, the NBD
Subordination Agreement and the Security Agreement have been duly authorized,
executed and delivered by the Purchaser and constitute the legal, valid and
binding obligations of the Purchaser enforceable in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization,
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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.
3.6 Inducement. The Purchaser agrees with the Company that each
warranty, representation and covenant contained in Section 3 of this Agreement
is a material inducement to the Company to enter into and to perform each of the
obligations undertaken by it in this Agreement and to sell the Purchased Shares.
3.7 Transferability. The Purchaser hereby agrees that it will not
transfer any of its Purchased Shares without an effective registration statement
relating thereto, or an opinion of counsel reasonably 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). In addition, the
Purchaser hereby agrees that it will not transfer any of its Purchased Shares
except in compliance with the Shareholders Agreement.
3.8 Incorporation. The Purchaser has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Delaware 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.
3.9 Due Authorization. The execution, delivery and performance of
this Agreement, the Voting Agreement, the Shareholders' Agreement, the
Co-Marketing Agreement, the NBD Subordination Agreement and the Security
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.
3.10 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, the Voting Agreement, the
Shareholders' Agreement, the Co-Marketing Agreement, the NBD Subordination
Agreement and the Security Agreement by the Purchaser and the consummation of
the transactions contemplated therein and compliance by the Purchaser with its
obligations thereunder.
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4. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties, indemnifications, covenants and agreements
contained in this Agreement or the Exhibits hereto, or contained in certificates
of officers of the Company or the Purchaser delivered at the Closing Date
pursuant hereto, shall remain operative and in full force and effect, regardless
of any investigation made or not made by or on behalf of any Purchaser or
controlling person, or by or on behalf of the Company or any controlling person,
and further regardless of whether the Company or the Purchaser could have known
of a misrepresentation or breach of representation, warranty or agreement, and
shall survive the execution and delivery of the Agreement, the closing hereunder
and the delivery of the Purchased Shares to the Purchaser.
5. Conditions to Closing.
(a) The obligations of the Purchaser to go forward on the
Closing Date with the consummation of the transactions contemplated herein is
subject to the satisfaction, or waiver, of each of the following conditions
precedent:
(i) On and as of the Closing Date, all of the
representations and warranties of the Company set forth herein shall be true
and correct in all material respects (without any exception for approval of
shareholders of the Company with respect to any representations or warranties
contained herein). At the Closing, the Company shall deliver to the Purchaser
a written certificate, dated the Closing Date, reaffirming such representations
and warranties as of the Closing Date, including that any representations and
warranties are no longer qualified by an exception concerning the approval of
the shareholders of the Company.
(ii) To the extent it is determined that any approval of
shareholders of the Company required by the rules of Nasdaq for the issuance by
the Company of the Purchased Shares is required, such approval shall have been
obtained; provided, however, that in the event there is a closing hereunder
without shareholder approval being obtained, the Company shall be deemed to have
made a representation and warranty to the Purchaser that such approval was not
required.
(iii) All of the transactions contemplated by the Purchase
Agreement, dated July 15, 1998, between the Company and the Purchaser (the
"Purchase Agreement") shall simultaneously be consummated.
(iv) On and as of the Closing Date, there shall not be
pending any litigation or governmental proceeding to restrict or prohibit any
of the transactions contemplated by this Agreement, the Voting Agreement, the
Shareholders' Agreement, the Co-Marketing Agreement, the NBD Subordination
Agreement or the Security Agreement, including the issuance of the Purchased
Shares, nor shall there be outstanding any order, injunction or decree of any
court or governmental body restricting or prohibiting any of the transactions
contemplated by this Agreement, the Voting Agreement, the Shareholders'
Agreement, the Co-Marketing Agreement,
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the NBD Subordination Agreement or the Security Agreement, including the
issuance of the Purchased Shares.
(v) The consent of NBD Bank of the issuance by the
Company of the purchased Shares as described in Section 1.2 above shall have
been obtained.
(vi) The waiver by The Xxxxxxxx Fund, Inc. of its
preemptive rights as described in Section 1.2 above shall have been obtained.
(vii) Each of the documents, agreements and stock
certificate described in Section 1.2 above required to be delivered at
Closing by persons other than the Purchaser shall have been delivered.
(viii) The Company shall have performed and complied with
all agreements and conditions contained herein required to be performed
or complied with by it prior to or at the Closing Date.
(ix) A person designated by the Purchaser shall have
been validly elected to the Company's Board of Directors for a term expiring at
the Company's Annual Meeting of Shareholders to be in 2001.
(b) The obligation of the Company to go forward on the Closing
Date with the consummation of the transactions contemplated herein is subject to
the satisfaction, or waiver, of each of the following conditions precedent:
(i) On and as of the Closing Date, all of the
representations and warranties of the Purchaser set forth herein shall be true
and correct in material respects. At the Closing the Purchaser shall deliver
to the Company a written certificate, dated the Closing Date, reaffirming such
representations and warranties as of the Closing Date.
(ii) To the extent it is determined that any approval of
shareholders of the Company required by the rules of Nasdaq for the issuance by
the Company of the Purchased Shares is required, such approval shall have been
obtained.
(iii) All of the transactions contemplated by the Purchase
Purchase Agreement shall simultaneously be consummated.
(iv) On and as of the Closing Date, there shall not be
pending any litigation or governmental proceeding to restrict or prohibit any of
the transactions contemplated by this Agreement, the Voting Agreement, the
Shareholders' Agreement, the Co-Marketing Agreement, the NBD Subordination
Agreement or the Security Agreement, including the issuance of the Purchased
Shares, nor shall there be outstanding any order, injunction or decree of any
court or governmental body restricting or prohibiting any of the transactions
contemplated by this
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Agreement, the Voting Agreement, the Shareholders' Agreement, the Co-Marketing
Agreement, the NBD Subordination Agreement or the Security Agreement, including
the issuance of the Purchased Shares.
(v) The consent of NBD Bank of the issuance by the Company
of the Purchased Shares as described in Section 1.2 above shall have been
obtained.
(vi) The waiver by The Xxxxxxxx Fund, Inc. of its preemptive
rights as described in Section 1.2 above shall have been obtained.
(vii) Each of the documents, agreements and stock certificate
described in Section 1.2 above required to be delivered at Closing by persons
other than the Company shall have been delivered.
(viii) The Purchaser shall have performed and complied with
all agreements and conditions contained herein required to be performed
or complied with by it prior to or at the Closing Date.
(ix) The Purchaser shall have entered into an agreement, in
a form mutually acceptable to the Company and the Purchaser, pursuant to which
the Purchaser's security interest under the Security Agreement and rights to
receive the Co-Marketing Termination Fee (the "Obligation") are subordinated to
the liens in the Company's assets held by holders of Senior Debt and the
obligations of the Company to the holders of the Senior Debt, on substantially
the same terms as contained in the NBD Subordination Agreement. For purposes of
this Agreement, the term "Senior Debt" shall mean the principal of (and
premium, if any) and interest on, and all obligations of the Company to the
holders of the Senior Debt, including all attorneys fees and other costs of
enforcement incurred by the holders of the Senior Debt, relating to (i) all
Debt, whether outstanding on the date hereof or hereafter created, to banks,
financial institutions, insurance companies, business and industrial
development corporations, registered investment companies, entities regularly
engaged in the business of lending or investing money, and entities
constituting Accredited Investors as defined in Rule 501(a)(1), (2) or (3) of
the General Rules and Regulations under the Securities Act, and (ii) any and
all extensions and renewals of any of the foregoing; provided, however, that
Senior Debt shall not include the Debentures and indebtedness as to which the
instrument creating or evidencing the same states that such indebtedness is not
superior in right of payment (or is subordinate or junior) to the Obligation.
6. Reasonable Efforts. Upon the terms and subject to the conditions
set forth in this Agreement, each of the parties agrees to use reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
reasonably necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the transactions contemplated by this
Agreement; provided that the foregoing shall not prohibit the Board of
Directors of the Company from taking any action permitted by Section XIIA.7. of
the Purchase Agreement and shall not require the Purchaser or
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the Company to enter into any of the Other Agreements which are not exhibits
hereto, except in the sole discretion of each of the Purchaser and the Company.
7. Termination. This Agreement may be terminated as follows:
(a) At any time by mutual written agreement of the
Purchaser and the Company
(b) By either the Purchaser or the Company, if the
Purchase Agreement terminates for any reason prior to the consummation of the
transactions contemplated therein.
(c) By Purchaser if any of the conditions set forth in
Section 5(a) shall not be fulfilled for reasons beyond the reasonable control of
Purchaser and are not waived by Purchaser.
(d) By the Company if any of the conditions set forth in
Section 5(b) shall not be fulfilled for reasons beyond the reasonable control of
the Company and are not waived by the Company.
If this Agreement is terminated pursuant to this Section 7, this
Agreement shall become void and of no effect with no liability on the part of
any party hereto; provided, however, that, if the election to terminate is due
to the default of a party hereunder, then the non-defaulting party shall be
entitled to any and all remedies available at law or in equity.
8. Covenants.
(a) Company Covenants. Until the payment of the
Co-Marketing Termination Fee provided for under the Co-Marketing Agreement (the
"Co-Marketing Termination Fee"), and exercise of the Co-Marketing Agreement
Call Right (as defined below) and payment of the Co-Marketing Call Price (as
defined below), or the expiration of the Co-Marketing Termination Fee, without
being exercised, the Company shall comply with the following covenants:
(i) Information and Financial Reports. The
Company shall:
(A) deliver to Purchaser as soon as
possible, and in any event within 90 days after the close of each
fiscal year of the Company, an audited consolidated balance sheet of
the Company and its consolidated subsidiaries as of the close of each
such fiscal year and audited consolidated statements of income, cash
flows and stockholders' equity of the Company and its consolidated
subsidiaries for the fiscal year then ended, accompanied by an audit
report thereon containing an opinion of an independent certified
public accountant firm of national recognition.
(B) deliver to Purchaser as soon as
available, and in any event within 45 days after the close of each
fiscal quarter of the Company, an unaudited consolidated balance sheet
of the Company and its subsidiaries as of the close of each such
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fiscal quarter and unaudited consolidated statements of income, cash
flows and stockholders' equity of the Company and its subsidiaries for
the fiscal quarter and from the beginning of the fiscal year to the
end of that quarter.
(C) deliver to Purchaser within 45 days
after the end of each calendar month of each fiscal year of the
Company, unaudited financial statements of the Company, including an
unaudited consolidated balance sheet of the Company and its
Subsidiaries as of the end of such month and unaudited consolidated
statements of income and cash flows of the Company and its
subsidiaries for such month and for the period from the beginning of
the fiscal year to the end of that month.
(ii) Directors and Officers' Insurance. Subject
to the approval of the Board of Directors as to the reasonableness of applicable
premiums, the Company shall use reasonable efforts to maintain directors and
officers' insurance ("D&O Insurance") with an aggregate loss limit of at least
$7,000,000, the amount in effect as of the date of this Agreement. The Company's
current D&O Insurance policy is attached as Exhibit 8(a)(ii).
(iii) Restrictions on Dividends, Redemptions and
Repurchases. The Company will give the Purchaser written notice (a "Distribution
Notice") at least thirty (30) days prior to the approval by the Board of
Directors of any of the following actions (or if Board approval is not required
or will not be obtained, at least thirty (30) days prior to the occurrence of
any of the following actions):
(A) payment or declaration of any
dividend on any shares of capital stock of the Company, common or
preferred, (except dividends with respect to shares of common stock
payable solely in shares of common stock), or
(B) making of any other distribution on
account of any shares of capital stock of the Company, common or
preferred, or
(C) redemption, purchase or other
acquisition, directly or indirectly, any shares of capital stock of
the Company, common or preferred.
(collectively, "Distributions"). For the thirty (30) days following such notice
(the "Distribution Notice Period"), the Purchaser may elect (the "Purchaser's
Election") to terminate the Co- Marketing Agreement pursuant to Section 9(b)
thereof as though the Co-Marketing Agreement was being terminated by Purchaser
without cause, in which case, the Co-Marketing Termination Fee shall become due
and payable in full by the Company on the effective date of the termination of
the Co-Marketing Agreement. Following the Company's receipt of the Purchaser's
Election, no Distribution may be approved or made (unless being made pursuant to
a prior Distribution Notice, the Distribution Notice Period for which terminated
without the Purchaser making a Purchaser's Election) before the payment by the
Company of the Co-Marketing Termination Fee
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in full, other than as required by the terms of NBD Warrant. In addition to the
prohibition set forth above, the Company will not make any Distribution unless,
after giving effect thereto, the aggregate amount of all such Distributions
(including Distributions under the NBD Warrant) made after December 31, 1998
would not exceed the sum of (1) 50% of Consolidated Net Income for the period
commencing on January 1, 1998 to and including the date of the making of the
proposed Distribution, computed on a cumulative basis for such entire period,
(2) plus the net cash proceeds received by the Company from the sale, subsequent
to the Closing Date, of shares of its capital stock, plus (3) the aggregate
principal amount of Debentures converted, after the Closing Date, into shares of
Common Stock of the Company or (ii) except as required by the NBD Warrant.
"Consolidated Net Income" shall mean for any period the Net Income of the
Company and its subsidiaries for such period determined on a consolidated basis
in accordance with GAAP consistently applied and after eliminating earnings or
losses attributable to outstanding minority interests in the capital stock of
any subsidiary.
"GAAP" shall mean generally accepted accounting principles in effect from time
to time.
"Net Income" of any person means, for any period, the net income (or the net
deficit) of such person for such period, determined in the following manner:
(A) The gross revenues and other proper income
credits of such person shall be computed for such period in accordance
with GAAP; provided, however, that in any event there shall not be
included in such gross revenues and income credits any of the following
items: (i) any proceeds of any life insurance policy; (ii) any
restoration to income of any contingency or other reserve resulting
from unusual or non-recurring transactions, (iii) any net gain arising
from any sale or other disposition of any capital assets, and (iv) any
gain arising from or represented by items which would, in accordance
with GAAP, require separate treatment or classification in the
preparation of financial statements.
(B) From the amount of such gross revenues and other
proper income credits for such period, determined as provided in the
preceding clause (a), there shall be deducted an amount equal to the
aggregate of all expenses and other proper income charges, exclusive of
(i) any losses arising from any write-down or abandonment of any
capital assets and of any losses arising from the sale or other
disposition of any capital assets, and (ii) any charge or expense which
would, in accordance with GAAP, require separate treatment or
classification in the preparation of financial statements for such
period, determined in accordance with GAAP.
(iv) Amendments. The Company shall not amend,
modify or repeal any provision of the Articles of Incorporation (except for the
Amendment, solely in terms of the number of shares of capital stock of the
Company authorized) or the By-laws of the Company which changes the rights of
the holders of Common Stock as set forth in the Articles of Incorporation and
the By-laws of the Company as of the date of the Agreement or which would
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prohibit the Company from paying the Co-Marketing Termination Fee or adversely
affects the rights of the Purchaser under the Agreement, the Voting Agreement,
the Co-Marketing Agreement or the Security Agreement.
(v) Limitation on Debt. Prior to August 31, 2000,
the Company will not, and will not permit its subsidiaries to, become liable for
any Debt, except as follows:
(A) Up to $4,000,000 in Senior Debt (as
defined in the Security Agreement) at the Closing Date, $5,000,000 in
Senior Debt at June 30, 1999 and $6,000,000 in Senior Debt at June 30,
2000.
(B) Capital Leases in effect at the
Closing Date and up to $1,000,000 in Capital Leases and Purchase Money
Debt in each calendar year thereafter.
(C) Up to $1,500,000 in Letters of
Credit (as defined below).
(D) Debt due to the Purchaser.
"Debt" means all liabilities of the Company and its subsidiaries for or in
respect of (i) borrowed money or which has been incurred in connection with the
acquisition of property, (ii) obligations for or in respect of borrowed money or
incurred in connection with the acquisition of property secured by a lien on the
property of the Company or its subsidiaries, (iii) Capital Leases, in each case
to the extent required to be recorded as a liability on the consolidated balance
sheet of the Company in accordance with generally accepted accounting principles
("GAAP"), whether outstanding on the date hereof or hereafter created, (iv)
obligations evidenced by bonds, debentures, notes or other similar instruments,
(v) all obligations to pay the deferred purchase price of property or services
(other than customary trade payables), (vi) all debt of any other person or
entity guaranteed by the Company or any of its subsidiaries and (vii) all
obligations, contingent or otherwise, with respect to letters of credit and
banker's acceptances ("Letters of Credit"), other than letters of credit issued
to customers of the Company to secure the performance by the Company of its
obligations to such customers under managed care agreements between the customer
and the Company. "Capital Leases" are leases of property, the obligations for
rental of which are required to be capitalized on the consolidated balance sheet
of the Company in accordance with GAAP. "Purchase Money Debt" is Debt incurred
by the Company or its subsidiaries to acquire property which is secured solely
by such property or other property securing Purchase Money Debt.
(vi) Restrictions on Piggyback Registration
Rights. The Company will not grant to any other person rights to have their
shares of Common Stock participate in a Piggyback Registration (as defined
below) in a manner superior to the Purchased Shares held by the Purchaser
(except for an Initiating Shareholder (as defined below)), but rather shall
cause the Purchased Shares and such shares of Common Stock to be included in any
such Piggyback Registration in proportion to the number of shares the Purchaser
and each such person request be
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included in such Piggyback Registration. The Company shall deliver notice to the
Purchaser of grants by the Company to any person of rights to have their shares
of Common Stock participate in a Piggyback Registration.
(vii) Preemptive Rights. 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 (which, for purposes hereof, includes notes, bonds, debentures
or other similar debt instruments), in the event that the Company after the date
of this Agreement, but prior to August 31, 2000, 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 fifteen (15) 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 3
are true and correct in all material respects as though made on the date of such
notice.
(viii) Subsidiary Stock. The Company shall cause
its subsidiaries to not, and to require their subsidiaries to not, issue any
additional shares of capital stock of such subsidiaries, other than to (i) the
Company or (ii) a wholly owned subsidiary of either the Company or a wholly
owned subsidiary of the Company.
(b) Company Board Covenant. So long as the Purchased
Shares owned by the Purchaser represent beneficial ownership of at least five
percent (5%) of the Common Stock of the Company, calculated in accordance with
the requirements of Section 13(d) of the Exchange Act, the Company agrees that,
as an inducement to the Purchaser to enter into this Agreement, a person
designated by the Purchaser shall be a member of the Company's Board of
Directors. The Company agrees that if such person is not a member of the
Company's Board of Directors as required by the foregoing sentence, except for
causes in the absolute control of Purchaser or the Purchaser's designee, such
circumstance shall be deemed to be a breach and violation of this Agreement by
the Company and the Purchaser shall have all remedies provided herein and at law
or in equity. A person designated by LCA or the LCA Group (as such terms are
defined in the Voting Agreement) pursuant to the Voting Agreement as their
designee for election to the Board of Directors of the Company shall be a person
designated by the Purchaser for purposes of this Section 8(b).
(c) Purchaser Covenants.
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(i) NBD Subordination Agreement. The Purchaser
agrees to negotiate with NBD Bank on the terms and conditions to be contained in
an agreement to be entered into at Closing between the Company, the Purchaser
and NBD Bank subordinating (A) the Purchaser's right to payment of a
Co-Marketing Termination Fee (as defined in the Security Agreement) to the
indebtedness and obligations due to NBD Bank from the Company and its
subsidiaries and (B) the Purchaser's security interest in certain assets of the
Company and its subsidiaries granted in the Security Agreement to the security
interest of NBD Bank in the same assets of the Company and its subsidiaries (the
"NBD Subordination Agreement"). The Purchaser agrees to enter into the NBD
Subordination Agreement at Closing, on terms mutually acceptable to the Company,
the Purchaser and NBD Bank, in their sole respective discretions.
9. Call of Common Stock.
(a) At any time from October 1, 2000 to November 30, 2000
(the "Call Period"), the Company shall have the right, by written notice to the
Purchaser (the "Call Notice"), to purchase, all and not less than all, the
Purchased Shares then held by the Purchaser at a purchase price of $5.00 per
share (the "Call Price"). The "Call Effective Date" shall be the first business
day occurring more than thirty (30) days after the date the Purchaser receives
the Company's Call Notice. At the Call Effective Date, the Purchaser shall
deliver to the Company the certificates for the Purchased Shares, 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 that is a member of a signature guarantee medallion program, and the
Company shall deliver to the Purchaser the Call Price payable therefor in
immediately available funds.
(b) At any time after termination of the Co-Marketing
Agreement in a manner which requires the Company to pay the Co-Marketing
Termination Fee, and upon the full payment of such fee to the Purchaser, the
Company shall have the right (the "Co-Marketing Agreement Call Right"), by
written notice to the Purchaser (the "Co-Marketing Call Notice"), to purchase,
all and not less than all, the Purchased Shares then held by the Purchaser at a
purchase price of $0.50 per share; provided that if the Co-Marketing Termination
Fee is not paid within 90 days after its due date the purchase price shall
increase to $0.75 per share and if the Co-Marketing Termination Fee is not paid
within 150 days after its due date the purchase price shall increase to $1.00
per share (the "Co-Marketing Call Price"). The "Co-Marketing Call Effective
Date" shall be the first business day occurring more than thirty (30) days after
the date the Purchaser receives the Company's Co-Marketing Call Notice. At the
Co-Marketing Call Effective Date, the Purchaser shall deliver to the Company the
certificates for the Purchased Shares, 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 that is a member
of a signature guarantee medallion program, and the Company shall deliver to the
Purchaser the Co-Marketing Call Price payable therefor in immediately available
funds. During any period in which Universal is required to pay the Co-Marketing
Termination Fee, but in no event more than six (6) months after the due date of
the Co-Marketing Termination Fee (the "Restricted Period"), the Purchaser agrees
not to sell or transfer the Purchased Shares held by it. If the Co-Marketing Fee
is due and
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payable by the Company, but is not paid prior to the end of the Restricted
Period, then, after the end of the Restricted Period and until the Co-Marketing
Termination Fee is paid in full, the Purchaser may sell the Purchased Shares and
promptly following such sale the Company will pay the Purchaser an amount equal
to $4.00 per share times the number of shares of Purchased Shares actually so
sold, less the proceeds (net of selling commissions and discounts and expenses
incurred in connection with the sale) received by the Purchaser from the sale of
such shares of Purchased Shares.
(c) Upon the occurrence of an Extraordinary Common Stock
Event, the Call Price and the Co-Marketing Call Price, respectively, shall,
simultaneously with the occurrence of such Extraordinary Common Stock Event, be
adjusted by multiplying the Call Price and the Co- Marketing Call Price,
respectively, 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 Adjusted Call Price and the Adjusted
Co-Marketing Call Price, respectively. The Adjusted Call Price and the Adjusted
Co-Marketing Call Price, respectively, 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 issuance 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, or (iii)
the combination of outstanding shares of Common Stock into a smaller number of
shares of Common Stock.
10. Registration Rights.
(a) Demand Registration. At any time after July 1, 1999,
upon written request (a "Registration Request") of holders of a majority of the
Purchased Shares then subject to the registration rights provided for in this
Section 10(a) (who for purposes of this Section 10 shall be referred to
collectively as the "Purchaser"), the Company hereby agrees to file with the
Securities and Exchange Commission (the "SEC"), as soon as practicable
thereafter but not later than 30 days after receipt of such request, a
registration statement on Form S-3 or its successor form (the "Form S-3
Registration Statement"), registering the Purchased Shares then outstanding for
resale by the Purchaser. Upon receipt of the Registration Request, the Company
will give notice to all other holders of Purchased Shares then subject to the
registration rights provided for in this Section 10(a) of the Registration
Request (other than those making such request) (the "Other Purchasers"), and
offer to include in the Form S-3 Registration Statement Purchased Shares
(subject to the registration rights provided for in this Section 10) then held
by the Other Purchasers, and will include all such shares held by the Other
Purchasers in the Form S-3 Registration Statement which such Other Purchasers
elect, by a written notice to the Company within 15 days of their receipt of the
Company's notice. The Company will furnish the Purchaser with copies of the Form
S-3 Registration Statement prior to the filing of the same. The Company will use
its reasonable efforts
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to have such Form S-3 Registration Statement declared effective promptly by the
SEC. The Company shall keep such Form S-3 Registration Statement effective for
the period necessary for the Purchaser to complete the public resale or other
disposition or distribution of the Purchased Shares or, if earlier, the date
when all of the Purchased Shares are eligible for sale in one 3-month period
under Rule 144 under the Securities Act. If in the good faith judgment of the
Board of Directors of the Company (as evidenced by an appropriately adopted
resolution), the filing, effectiveness or continued use of the Form S-3
Registration Statement would be materially detrimental to the Company and its
shareholders, 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 Form S-3 Registration Statement, for the period during which such filing,
effectiveness or use would be materially detrimental to the Company, provided
that such deferral or suspension shall be for a period of not more than sixty
(60) days and the Company shall not make such a deferral or suspension more than
once in any twelve month period, and, further provided, that during such
deferral or suspension the Company shall not file a registration statement for
securities to be issued and sold for its own account or for the account of any
other security holder of the Company, or both. The Company shall have the right
to defer the filing of the Form S-3 Registration Statement for a period of 180
days after the effective date of a registration statement, the preparation of
which the Company initiated at the time of the Purchaser's request for
registration. The Company shall not be required to file the Form S-3
Registration Statement on a date when the inclusion in such Form S-3
Registration Statement of financial statements of the Company, other than the
historical financial statements of the Company required to be contained in the
most recently required reports of the Company on SEC Forms 10-K and 10-Q and the
required reports on SEC Form 8-K since the end of the fiscal year covered by the
most recently required report on Form 10-K, would be required under the General
Rules and Regulations of the SEC.
(b) Piggyback Registration. Whenever the Company proposes to
register any of its securities under the Securities Act for sale by the Company
solely for cash (other than securities to be issued in connection with any
compensation plan, program or agreement), or, upon the request of any of its
shareholders who have contractual registration rights, for sale for the account
of any of its shareholders, other than Signal Capital Corporation ("Signal")
pursuant to the Original Stockholders Agreement, (an "Initiating Shareholder"),
(a "Piggyback Registration"), the Company will give written notice to the
Purchaser of its intentions to effect such a registration not later than the 20
days prior to the anticipated filing date. Before and after the Closing Date,
the Company will use its reasonable efforts to cause Signal to amend the
Original Stockholders Agreement to allow the Purchaser to piggyback on a
registration statement initiated by Signal in accordance with the provisions of
this Section 10(b) provided that the Company in doing so shall not be required
to provide Signal with any greater registration rights then those currently
provided under the original Stockholders Agreement. The Company will include in
such Piggyback Registration all of the Purchased Shares then subject to this
Agreement with respect to which the Company has received written request for
inclusion therein with 15 days after the receipt by the Purchaser of the
Company's notice. The Purchaser shall be permitted to withdraw all or any part
of the Purchased Shares from a Piggyback Registration at any time prior to the
effective date of such Piggyback Registration. If a Piggyback Registration is an
underwritten offering, the
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Purchaser shall be obligated to sell its Purchased Shares on the same terms and
conditions as apply to the securities being issued and sold by the Company;
provided, however, that if an underwritten offering is being conducted in which
the Purchaser seeks to exercise its piggyback rights and the managing
underwriter advises the Company in writing that in its opinion the total number
or dollar amount of securities requested to be included in such registration
exceeds the number or dollar amount of securities which can be offered and sold
on reasonable terms and price under prevailing market conditions, the Company
will include in such registration first the securities which the Company
proposes to sell, if the registration was initiated by the Company, or the
securities which the Initiating Shareholders propose to sell, if the
registration was initiated by or for shareholders of the Company, and then the
remaining number and dollar amount of securities of the Company which, in the
opinion of the underwriter, can be sold shall be allocated among the Purchaser
and persons or entities, other than the Company and the Purchaser, with
contractual registration rights seeking to include their securities of the
Company in the registration statement (the "Other Holders") (collectively, the
Purchaser and the Other Holders shall be referred to as the "Selling Holders")
and, in the case where the registration was initiated by or for Initiating
Shareholders, the Company, in proportion to the number of shares of Common Stock
or other securities each such person has elected to include in the registration
statement.
Notwithstanding the foregoing, if the Company proposes to sell any of
its securities under the Securities Act pursuant to the terms of warrants,
rights or convertible securities which are being registered in connection with
the registration of such warrants, rights or convertible securities or in
connection with dividend reinvestment plans, the Company shall have no
obligation to register Purchased Shares for sale as part of the offering of such
warrants, rights or convertible securities unless the Purchased Shares can be
registered and sold in an offering conducted subsequent to such offering, and
provided that if the managing underwriter or their representatives, or the
selling dealers or their representatives, if any, determine, reasonably and in
good faith that the number of securities in any such registration exceeds the
number of shares which can be offered and sold on reasonable terms and price
under prevailing market conditions, the Company will include in such
registration first the warrants, rights or convertible securities which the
Company proposes to sell and then, in a subsequent offering, the number and
dollar amount of Common Stock or other securities of the Company which can be
sold under prevailing market conditions, reduced, if necessary, on a
proportionate basis among such Selling Holders as described above.
Nothing in this Section 10(b) shall be deemed to require the Company to
proceed with any registration of its securities after giving the notice herein
provided.
(c) Blue Sky. The Company shall use its reasonable 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, grant a general consent to service of process in
any jurisdiction in which such
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consent to service has not been previously given or subject itself to taxation
in any jurisdiction where it is not then subject to taxation.
(d) Additional Obligations. The Company hereby agrees to:
(i) Supply to the Purchaser one true copy of each
Form S-3 Registration Statement and each registration statement filed in
connection with a Piggyback Registration (collectively, the "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.
(ii) 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;
(iii) Notify the Purchaser immediately, and
confirm the notice in writing, (A) of the effectiveness of the Registration
Statement and any amendment thereto (including any post-effective amendment),
(B) of the receipt of any comments from the SEC, (C) of any request by the SEC
for any amendment to the Registration Statement or any amendment or supplement
to any prospectus relating thereto or for additional information, (D) of the
issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose and
(E) 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
Statement, 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.
(iv) Give the Purchaser notice of its intention
to file or prepare any amendment to the Registration Statement (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 Statement
becomes 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
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therein. The Company shall prepare and file with the SEC all amendments and
supplements to the Registration Statement and Prospectuses necessary to comply
with the Securities Act and to keep the Registration Statement effective as
required by Section 10(a) in the case of a Form S-3 Registration Statement and
Section 10(b) in the case of a Piggyback Registration.
(v) Amend or supplement the Prospectus forthwith
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,
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.
(vi) 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
(vii) Take such other actions as are reasonably
requested by the Purchaser in connection with the registration of the Purchased
Shares pursuant to this Section 10.
(viii) Use its reasonable efforts to cause all
Purchased Shares covered by such Registration Statements described in this
Section 10 to be listed on Nasdaq, if the Common Stock of the Company is then
listed on Nasdaq, or any securities exchange on which the Common Stock of the
Company is then listed.
(e) Expenses of Registration. All expenses, other than
underwriting discounts and selling commissions, incurred in effecting any
registration pursuant to this Section 10, 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 $20,000.00 for Purchaser's counsel, shall be borne by the Company; provided
that, in connection with any Piggyback Registration, the Purchaser shall bear
the cost of additional filing fees, printing costs and Blue Sky fees and
expenses resulting from the inclusion of the Purchased Shares in such
registration in proportion to the relative amounts of Purchased Shares included
by the Purchaser in such Piggyback Registration in relation to all shares of
Common Stock included in such Piggyback Registration by shareholders of the
Company.
(f) Conditions to Company's Obligations. The Company's
obligations under this Section 10 shall be conditioned upon a timely receipt by
the Company (after the Company's
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delivery of notice requesting the same and providing for a reasonable response
period) 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 for inclusion in such Registration
Statement.
(g) Indemnification.
(i) The Company agrees to indemnify and hold
harmless the Purchaser, its directors, officers and employees 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 (including court costs and attorneys' fees) arising out of any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment or supplement thereto), including the
information deemed to be part of the Registration Statement pursuant to Rule
430A 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 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 or any violation by the Company of any applicable securities law or
regulation or any action brought by the Purchaser to enforce this
indemnification; 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 Statement (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.
(ii) The Purchaser agrees to indemnify and hold
harmless the Company, its directors, each of its officers who signed the
Registration Statement, officers and employees 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 made in the Registration
Statement (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 Statement (or any
amendment thereto) or such final Prospectus (or any amendment or supplement
thereto) or any
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violation by the Purchaser of any applicable securities law or regulation or any
action brought by the Company to enforce this indemnification.
(iii) 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 vigorously and in good faith 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. No indemnifying party shall,
except with the written consent of the indemnified party, consent to the entry
of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant to the indemnified party
of a release from all liability concerning the claim. 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 such additional counsel to defend such indemnified party having a
conflict of interest with another indemnified party, provided that the Company
shall not be required to pay for more than one additional counsel per venue for
all such indemnified parties having a similar conflict of interest with such
other indemnified party, unless they have conflicts of interest among themselves
with respect to the claim, in which case, the indemnifying party shall be
required to pay for one additional counsel per venue for each such indemnified
party which has a conflict of interest.
(h) Contribution. If the indemnification provided for in
Section 10(g) 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 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
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27
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 10(h) 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 Statement, 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.
(i) Survival. The indemnification provided in this
Section 10 shall survive the registration and sale of the Purchased Shares by
the Purchaser and the expiration or termination of this Agreement.
(j) Transfers. The rights granted to the Purchaser by the
Company under this Section 10 may be transferred or assigned by the Purchaser
only to a transferee or assignee of 285,000 or more of the Purchased Shares (as
presently constituted and subject to subsequent adjustments for stock splits,
stock dividends, reverse stock splits, and the like), provided that the Company
is given written notice at the time of or within a reasonable time after said
transfer or assignment, stating the name and address of the transferee or
assignee and, provided further, that the transferee or assignee of such rights
assumes the obligations of Purchaser under this Section 10. The Purchased Shares
are no longer covered by the provisions of this Section 10 once sold in a
registered public offering or in accordance with the requirements of Rule 144
under the Securities Act or other similar provision.
(k) Rule 144 Reporting. The Company agrees to make and
keep public information available, as those terms are understood and defined in
Rule 144 of the Securities Act, at all times after the date of this Agreement.
The Company further agrees to use its best efforts to file with the SEC in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act. So long as the Purchaser owns Purchased
Shares, the Company agrees to furnish promptly to the Purchaser, upon its
reasonable request, a written statement by the Company as to its compliance
with reporting requirements of said Rule 144 and of the Securities Act and the
Exchange Act, a copy of the most recent annual or quarterly financial
statements of the Company and such other reports and documents so filed with
the SEC by the Company which will allow the sale of any such Purchased Shares
under Rule 144 without registration.
11. Indemnification.
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(a) Indemnification by Purchaser. The Purchaser hereby
agrees to indemnify, defend and hold harmless the Company, its officers,
directors, employees, shareholders, agents and its successors and assigns,
against any and all liabilities, obligations, losses, damages, demands, claims,
assessments, actions, tax deficiencies, penalties and interest, reasonable
accounting and attorneys' fees, costs and expenses (individually a "Loss" and
collectively "Losses"), arising out of, or incident to, any of the following:
1. Any misrepresentation, or breach of any
warranty of Purchaser contained in this
Agreement.
2. Any breach of any covenant, agreement or
other term or provision hereof to be
performed by Purchaser.
(b) Indemnification by the Company. The Company hereby
agrees to indemnify, defend and hold harmless the Purchaser, its officers,
directors, employees, shareholders, agents and its successors and assigns,
against any and all liabilities, obligations, losses, damages, demands, claims,
assessments, actions, tax deficiencies, penalties and interest, reasonable
accounting and attorneys' fees, costs and expenses (individually a "Loss" and
collectively "Losses"), arising out of, or incident to, any of the following:
1. Any misrepresentation, or breach of any
warranty of the Company contained in this
Agreement.
2. Any breach of any covenant, agreement or
other term or provision hereof to be
performed by the Company.
(c) Claims. If either party desires to make a claim
against the other under Section 11(a) or (b) hereof which does not involve a
claim by any person other than the parties, then such party shall make such
claim by promptly delivering notice to the other in the form set forth in (1)
below. If either party (the "Claimant") desires to make a claim for indemnity
against the other (the "Indemnitor") under this Agreement which involves a
demand, claim or threat of litigation or the actual institution of any action,
suit or proceeding (collectively, a "Claim") by a person other than the
parties, then such Claim will be made in the following manner and be subject to
the following terms and conditions unless otherwise provided for in this
Agreement:
Each Claimant shall give notice as promptly as
reasonably practicable to each Indemnitor of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
Indemnitor shall not relieve such Indemnitor from any liability which it may
have otherwise then on account of this Section 11. In case such action is
brought against any Claimant, and it notifies the Indemnitor of the
commencement thereof, the Indemnitor will be entitled to participate in,
and, to the extent that it may wish, jointly with any Indemnitor similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory
to such Claimant and after notice from the Indemnitor to such Claimant of its
election to assume
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the defense thereof and so long as the Indemnitor continues to defend vigorously
and in good faith the matter, the Indemnitor shall not be liable under this
indemnity for any legal expenses subsequently incurred by such Claimant in
connection with the defense thereof, provided however, that the Claimant shall
have the right to employ separate counsel at its expense in any such action and
participate in the defense thereof. No Indemnitor shall be liable for any
settlement entered into without its consent. No Indemnitor shall, except with
the written consent of the Claimant, consent to the entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant to the Claimant of a release from all
liability concerning the claim. Any Indemnitor 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 Indemnitor with respect to
the claim, unless in the reasonable judgment of any Claimant a conflict of
interest may exist between the Claimant and any other indemnified party with
respect to the Claim, in which event the Indemnitor shall be obligated to pay
the fees and expenses of such additional counsel to defend such Claimant having
a conflict of interest with another indemnified party, provided that the
Indemnitor shall not be required to pay for more than one additional counsel per
venue for all such indemnified parties having a similar conflict of interest
with such other indemnified party, unless they have a conflict of interest among
themselves with respect to the Claim, in which case, the Indemnitor shall be
required to pay for one additional counsel per venue for each such Claimant
which has a conflict of interest.
(d) Mitigation of Losses. A Claimant shall be entitled to
recover the full amount of any Losses incurred due to the matter for which
indemnification is sought, including reasonable attorney's fees incurred in
connection therewith, but any recovery shall be net of (a) any insurance
proceeds, or (b) any payments received from third parties relating to the
matter.
12. Governing Law and Time. 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 (without regard to its choice
of law or conflict of law rules). The Company hereby consents to the personal
jurisdiction of the federal courts (or, if any such federal court is without
jurisdiction, a state court) located in or including Burlington, North Carolina
in connection with any controversy related to this Agreement and waives any
argument that venue in any such forum is not convenient.
13. 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.
14. 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.
15. Assignment. This Agreement may not be assigned by either party
hereto without the prior written consent of the other party hereto.
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16. Attorneys' Fees and Costs. In connection with any litigation
brought to enforce any provision of this Agreement, the prevailing party shall
be entitled to recover its reasonable attorneys' fees and costs incurred at the
trial and appellate levels.
17. Amendment and Certain Waivers. This Agreement may be amended or
modified only by a written agreement executed by the Company and the Purchaser.
The Company may take any action prohibited by this Agreement or omit to perform
any act required to be performed by it under this Agreement, if the Company
obtains the written consent of the Purchaser. No failure to exercise and no
delay in exercising any right under this Agreement shall operate as a waiver on
such right. No exercise or partial exercise of any right granted under this
Agreement shall preclude any other or further exercise thereof or the exercise
of any other right. The rights and remedies provided in this Agreement are
cumulative and are not exclusive of any other rights or remedies provided by
law.
18. Entire Agreement. This Agreement contains the entire
understanding of the parties with respect to the subject matter of this
Agreement. There are no representations, promises, warranties, covenants or
undertakings other than those expressly set forth or provided for in this
Agreement. This Agreement supersedes all prior agreements and understandings
among the parties with respect to the transactions contemplated by this
Agreement.
19. Notices. All notices, requests, demands or other communications
that are required or may be given pursuant to the terms of this Agreement shall
be in writing and delivery shall be deemed sufficient in all respects and to
have been duly given on the date of service if delivered personally or by
facsimile transmission if receipt is confirmed to the party to whom notice is to
be given, or on the date of mailing if mailed by first class - return receipt
requested, postage prepaid and properly addressed as follows:
If to the Company, to:
Universal Standard Healthcare, Inc.
00000 Xxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Attention: President
Copies to:
Xxxxxx Xxxxxxx PLLC
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
If to Purchaser, to:
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Laboratory Corporation of America Holdings
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attention:
Copies to:
Mezzullo & XxXxxxxxxx
Suite 825
0000 Xxx Xxxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxx, Esq.
or to such other address as may be specified in writing by any of the above.
20. Table of Contents and Captions. The captions of the Sections of
this Agreement are solely for convenient reference and shall not be deemed to
affect the meaning or interpretation of any provision of this Agreement.
21. Validity of Provisions. Should any part of this Agreement for
any reason be declared by any court of competent jurisdiction to be invalid,
that decision shall not affect the validity of the remaining portion, which
shall continue in full force and effect as if this Agreement had been executed
with the invalid portion eliminated, it being the intent of the parties that
they would have executed the remaining portion of the Agreement without
including any part or portion that may for any reason be declared invalid.
22. Knowledge. For purposes of this Agreement, "to the best of
Company's knowledge" or "to the knowledge of the Company" means if any of the
Company's executive officers ("Officers"), as designated in the Company's Proxy
Statement dated June 3, 1998, being:
Xxxxxx X. Xxxxxxxx Chairman of the Board, President, Chief Executive Officer
Xxxxxx X. Xxxxxxxx Vice President and Chief Operating Officer of Universal
Diagnostics
Xxxx X. Xxx Vice President, Finance, Chief Financial Officer,
Treasurer and Assistant Secretary
Xxxxx X. XxXxxxx Executive Vice President and President of Universal
Standard Healthcare of Delaware, Inc.
Xxxxxx X. Xxxxxxx Vice President -- Chief Information Officer
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32
have conscious awareness that the statement as given is not true and correct.
Notwithstanding the foregoing, the Company shall be deemed to have knowledge if
its Officers engaged in conscious or reckless disregard of facts.
23. Brokers. Except as set forth in Schedule 2(xviii), each party
hereto hereby represents to the other that no broker or finder has acted for or
on its behalf in connection with this Agreement or the transactions contemplated
hereby, and each party hereby indemnifies the other against all claims for
broker's and finder's fees allegedly due under any agreement or understanding
between such party and any third party.
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/ Xxxxxx Xxxxxxxx
---------------------------------
Xxxxxx Xxxxxxxx, President
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The foregoing Agreement is hereby confirmed
and accepted as of the date first above written:
LABORATORY CORPORATION OF
AMERICA HOLDINGS
By: /s/ Xxxxxxxx X. Xxxxx
-------------------------------------
Title: Executive Vice President
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EXHIBIT 1.1
to Universal Standard Healthcare, Inc.
Stock Purchase Agreement
Number of
Name Purchased Shares
------------------------------------------ ----------------
Laboratory Corporation of America Holdings 1,416,667
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STOCK PURCHASE AGREEMENT BETWEEN
UNIVERSAL STANDARD HEALTHCARE, INC. AND
LABORATORY CORPORATION OF AMERICA HOLDINGS
July 16, 1998
EXHIBIT LIST
Exhibit 1.1 Number of Purchased Shares
Exhibit 1.2A Stock Certificate dated the Closing Date and
registered in the Purchaser's name for the number
of Purchased Shares
Exhibit 1.2B Shareholders' Agreement
Exhibit 1.2C Voting Agreement
Exhibit 1.2D Co-Marketing Agreement
Exhibit 1.2E Security Agreement
Exhibit 2(i)(A) Articles of Incorporation
Exhibit 2(i)(B) Certificate of Good Standing of the Company
Exhibit 2(i)(C) By-laws of the Company
Exhibit 2(iii)(A) SEC Filings and the Monthly Financials
Exhibit 2(iii)(B) Material Adverse Changes
Exhibit 2(iv)(A) The Xxxxxxx Agreement
Exhibit 2(iv)(B) Original Stockholders Agreement
Exhibit 2(iv)(C) Westphere Warrant
Exhibit 2(iv)(D) Debentures
Exhibit 2(iv)(E) NBD Warrant
Exhibit 2(iv)(F) Information Regarding Stock Options, Warrants and
Debentures
Exhibit 2(xi) Net Proceeds to the Company
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Exhibit 2(xiii) The Company's Debt
Exhibit 2(xiv) Tax Matters
Exhibit 2(xv) Litigation
Exhibit 2(xvi) Environmental
Exhibit 2(xvii) Plans
Exhibit 2(xviii) Brokers or Finders
Exhibit 2(xx) Projections
Exhibit 2(xxi) Permits, Licenses, Approvals
Exhibit 8(a)(ii) D & O Insurance
36
