Exhibit 10.1
VOTING AND STANDSTILL AGREEMENT
     This Voting and Standstill Agreement (the “Agreement”) is made and entered
into as of March 19, 2010 (“Effective Date”), between United American Healthcare
Corporation, a Michigan corporation (“Company”) and St. George Investments, LLC,
an Illinois limited liability company (“St. George”).
W I T N E S S E T H
     WHEREAS, St. George Beneficially Owns Common Shares and may acquire
additional Shares following the Effective Date;
     WHEREAS, the Company believes it is in the best interests of its
shareholders for St. George to withdraw its nominations for Directors so as to
provide stability and to permit management and the Board to create shareholder
value;
     WHEREAS, the Company believes it is in the best interests of its
shareholders for St. George to stand still with respect to any insurgent
activities;
     WHEREAS, the Company believes it is in the best interests of its
shareholders to have a call option to purchase all of the shares owned now or in
the future by St. George, according to the terms described herein;
     WHEREAS, the Company believes it is in the best interests of its
shareholders to have the ability, upon its request, to receive a cash investment
from St. George to enable the Company to create shareholder value;
     WHEREAS, St. George is willing to use its expertise and connections to
assist the Company in identifying merger or acquisition opportunities; and
     WHEREAS, the parties desire to make the covenants and agreements described
herein.
     NOW, THEREFORE, for and in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
ARTICLE I.
DEFINITIONS
          SECTION 1.1 Certain Defined Terms. As used in this Agreement:
     “Action” has the meaning set forth in SECTION 13.1(e).
     “Affiliate” means, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, Controls, is
Controlled By or is Under Common Control With, such specified Person.

 

--------------------------------------------------------------------------------

 

     “Agreement” has the meaning set forth in the introductory paragraph hereof.
     “Beneficially Owns” means, with respect to any Person, that such Person or
any of such Person’s Affiliates is deemed to beneficially own shares of capital
stock of the Company, within the meaning of Rule 13d-3 of the General Rules and
Regulations under the Exchange Act as in effect on the date of this Agreement;
or shares of capital stock that such Person or any of such Person’s Affiliates
has any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any securities of the Company; provided,
however, that an agreement, arrangement or understanding shall not be deemed to
include actions, including any agreement, arrangement or understanding, or
statements by (i) any member of the Board of Directors, as comprised on the date
of this Agreement (the “Existing Directors”), (ii) any subsequent directors of
the Company who have been nominated by a majority of the Existing Directors (the
“Successor Directors”), or (iii) any subsequent member of the Board of Directors
who is elected by a majority of the Existing Directors and/or Successor
Directors, nominating as a group.
     “Board” means the Board of Directors of the Company.
     “Business Combination” means any acquisition by the Company of
substantially all of the outstanding shares or assets of a Person (including an
unincorporated division or business) or the acquisition of substantially all of
the outstanding shares or assets of the Company, in each case, whether by stock
or asset purchase, merger, consolidation, share exchange or other business
combination.
     “Business Day” means a day on which federally-chartered banks are open for
business in Illinois and Michigan.
     “By-laws” means the by-laws of the Company, as amended or restated from
time to time.
     “Call Closing Date” has the meaning set forth in SECTION 6.5.
     “Call Exercise Period” has the meaning set forth in SECTION 6.1.
     “Call Notice” has the meaning set forth in SECTION 6.1.
     “Call Option” has the meaning set forth in SECTION 6.1.
     “Call Price” has the meaning set forth in SECTION 6.3.
     “Call Price Per Share” has the meaning set forth in SECTION 6.4.
     “Call Shares” has the meaning set forth in SECTION 6.1.
     “Certificate of Designation” has the meaning set forth in SECTION 6.1.
     “Charter” means the Articles of Incorporation of the Company, as amended or
restated from time to time.
     “Company” has the meaning set forth in the introductory paragraph hereof.

2

--------------------------------------------------------------------------------

 

     “Common Shares” means the shares of common stock of the Company.
     “Control” (including the terms “Controlled By” and “Under Common Control
With”) means the possession, directly or indirectly, of the power to direct or
cause the direction of management, policies or activities of a Person, whether
through the ownership of voting securities or other interests, by contract or
otherwise.
     “Conversion Shares” means, collectively, the Common Shares issuable upon
conversion of the Preferred Shares in accordance with the terms of Exhibit A.
     “Director” means any member of the Board.
     “Effective Date” has the meaning set forth in the introductory paragraph
hereof.
     “Encumbrance” means any encumbrance, lien, mortgage, charge, claim, option,
pledge, license, sublicense, security interest, assignment by way of security,
call, proxy or similar restriction.
     “Event of Default” has the meaning set forth in SECTION 11.1.
     “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder, or any similar successor statute.
     “Expenses” has the meaning set forth in SECTION 12.1.
     “Fiscal Year 2010” means the fiscal year of the Company ending on June 30,
2010.
     “Group” has the meaning assigned to such term in Section 13(d)(3) of the
Exchange Act.
     “Losses” has the meaning set forth in SECTION 12.1.
     “Make-Whole Shares” has the meaning set forth in SECTION 11.3.
     “Market Price” shall mean the volume weighted average of the closing prices
during a 30 calendar day period immediately preceding March 16, 2010 of a share
of the Company’s capital stock on the principal United States securities
exchange registered under the Exchange Act on which such stock is listed.
     “Person” means any individual, corporation, partnership, association,
limited liability company, trust, estate, or other entity.
     “Preferred Call” means the Company’s right to require St. George to make an
investment in the Company as set forth in SECTION 8.1.
     “Preferred Call Option” means the call option for the Preferred Shares set
forth in Exhibit A.
     “Preferred Call Notice” has the meaning set forth in SECTION 8.1.
     “Preferred Issuance” has the meaning set forth in SECTION 8.1.

3

--------------------------------------------------------------------------------

 

     “Preferred Put Option” means the put option for the Preferred Shares set
forth in Exhibit A.
     “Preferred Shares” has the meaning set forth in SECTION 8.1.
     “Put Closing Date” has the meaning set forth in SECTION 5.6.
     “Put Commencement Date” means October 1, 2011 (subject to acceleration
pursuant to SECTION 5.3).
     “Put Exercise Period” has the meaning set forth in SECTION 5.1.
     “Put Expiration Date” means the last day of the Put Exercise Period.
     “Put Notice” has the meaning set forth in SECTION 5.1.
     “Put Obligations” means the amounts that Company is required to pay to St.
George if and when St. George exercises the Put Option and the Preferred Put
Option.
     “Put Option” has the meaning set forth in SECTION 5.1.
     “Put Price” has the meaning set forth in SECTION 5.4.
     “Put Price Per Share” has the meaning set forth in SECTION 5.5.
     “Put Shares” has the meaning set forth in SECTION 5.1.
     “Register”, “Registered” and “Registration” means a registration effected
by preparing and filing a Registration Statement or Statements in compliance
with the Securities Act providing for offering securities, and the declaration
or ordering of effectiveness of such Registration Statement by the SEC.
     “Registrable Securities” means the Shares, provided that for any particular
securities, such securities shall cease to be Registrable Securities when they
have been sold pursuant to an effective registration statement or in compliance
with Rule 144 or are eligible to be sold pursuant to Rule 144 without volume
limitations under Rule 144(e).
     “Registration Period” means the period from the Effective Date to the
earliest of (i) the date which is two (2) years after the SEC Effective Date,
(ii) the date on which St. George may sell all of its Registrable Securities
without registration under the Securities Act pursuant to Rule 144, without
(A) restriction on the manner of sale or the volume of securities which may be
sold in any period, and (B) the requirement for the giving of any notice to, or
the making of any filing with, the SEC, and (iii) the date on which St. George
no longer beneficially owns any Registrable Securities.
     “Registration Statement” means a registration statement of the Company
under the Securities Act, including any amendment thereto, required to be filed
by the Company pursuant to this Agreement.
     “Reporting Service” means Bloomberg LP or if that service is not then
reporting the relevant information regarding the common stock, a comparable
reporting service of national reputation selected by St. George and Company.

4

--------------------------------------------------------------------------------

 

     “Rule 144” means Rule 144 promulgated under the Securities Act or any other
similar rule or regulation of the SEC that may at any time permit a holder of
any securities to sell securities of the Company to the public without
registration under the Securities Act.
     “SEC” means the United States Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act or the
Exchange Act.
     “SEC Effective Date” means the date the Registration Statement is declared
effective by the SEC.
     “Securities Act” means the Securities Act of 1933, as amended, and the
rules and regulations thereunder, or any similar successor statute.
     “Shareholders’ Equity” means shareholders’ equity as defined by Generally
Accepted Accounting Principles and as reported on the Company’s audited
financial statements prepared in accordance with past practices.
     “Shares” means (a) the Common Shares held by St. George or its Affiliates
as of the Effective Date, or the Common Shares or Preferred Shares acquired by
St. George or its Affiliates thereafter, including upon any stock split, stock
dividend, payment-in-kind dividend, recapitalization or similar event with
respect to such Common Shares or Preferred Shares; (b) any Conversion Shares
issued or issuable to St. George or its Affiliates upon the conversion of any
Preferred Shares and (c) any other security of the Company issued to St. George
or its Affiliates, including those issued as a dividend or other distribution
with respect to, in exchange for, or in replacement of, Shares.
     “St. George” has the meaning set forth in the introductory paragraph
hereof.
     “St. George Party” has the meaning set forth in SECTION 12.1.
     “Triggering Event’ means the earliest of (x) the Company’s execution of a
letter of intent for a Business Combination, (y) the Company’s execution of
definitive agreements for a Business Combination and (z) the Company’s public
announcement (by press release, filing of a Current Report on Form 8-K or
similar means) that it intends to consummate a Business Combination.
     “Volume Weighted Average Price” or “VWAP” means, for any security as of any
date, the dollar volume-weighted average price for such security on the
principal trading market during the period beginning at 9:30:01 am., New York
City time (or such other time as the principal trading market publicly announces
is the official open of trading), and ending at 4:00:00 p.m., New York City time
(or such other time as the principal trading market publicly announces is the
official close of trading) as reported by the Reporting Service (as defined
below) through its ‘Volume at Price’ functions, or, if the foregoing does not
apply, the dollar volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such security
during the period beginning at 9:30:01 a.m., New York City time (or such other
time as the principal trading market publicly announces is the official open of
trading), and ending at 4:00:00 p.m., New York City time (or such other time as
the principal trading market publicly announces is the official close of
trading), as reported by the Reporting Service, or, if no dollar volume-weighted
average price is reported for such security by the Reporting

5

--------------------------------------------------------------------------------

 

Service for such hours, the average of the highest closing bid price and the
lowest closing ask price of any of the market makers for such security as
reported in the “pink sheets” by Pink Sheets LLC (formerly the National
Quotation Bureau, Inc.). If the Volume Weighted Average Price cannot be
calculated for a security on a particular date on any of the foregoing bases,
the Volume Weighted Average Price of such security on such date shall be the
fair market value as determined by St. George and Company.
ARTICLE II.
RECITALS
          SECTION 2.1 Recitals. The above recitals are made a part hereof and
incorporated herein.
ARTICLE III.
VOTING AGREEMENT
          SECTION 3.1 Voting Agreement. During the period commencing on the
Effective Date and terminating as provided in SECTION 3.3, at any meeting of the
shareholders of the Company, however called, or in connection with any written
consent of the shareholders of the Company, St. George shall vote or consent to
vote the Shares with respect to any matter coming before the shareholders for a
vote as recommended by a majority of the Board. This voting agreement will be
effectuated by the grant of irrevocable proxies pursuant to SECTION 3.2.
Currently, Common Shares are held by two St. George Affiliates, John M. Fife and
Iliad Research and Trading, L.P. St. George hereby covenants and represents that
St. George will cause its Affiliates to issue the proxies consistent with
SECTION 3.2 for Common Shares and Conversion Shares described herein and deliver
the same to Company concurrently with the issuance of the Preferred Stock
together with evidence of assignment of Beneficial Ownership from such
Affiliates to St. George.
          SECTION 3.2 Irrevocable Proxy. St. George hereby irrevocably
constitutes and appoints the Secretary of the Company as its attorney-in-fact
and proxy, with full power of substitution, to vote and otherwise act (by
written consent or otherwise) with respect to the Shares which St. George is
entitled to vote at any meeting of shareholders of the Company (whether annual
or special and whether or not at an adjourned or postponed meeting) or consent
to vote in lieu of any such meeting or otherwise, on any matter coming before
the shareholders for a vote, and to duly execute and deliver any and all
consents, instruments or other agreements or documents in order to take any and
all such actions in connection with or in furtherance of the obligations of St.
George set forth in SECTION 3.1. St. George intends that the proxy granted
hereby shall be coupled with an interest pursuant to this Agreement and that
such proxy, therefore, shall be irrevocable until the date specified in SECTION
3.3.

6

--------------------------------------------------------------------------------

 

          SECTION 3.3 Termination of Voting Agreement and Proxy. The voting
agreement set forth in SECTION 3.1 and the proxy set forth in SECTION 3.2 shall
expire on the Put Expiration Date (other than as a result of the elimination of
the Put Option pursuant to SECTION 5.2), unless terminated sooner pursuant to
Article XI.
          SECTION 3.4 Other Proxies. St. George hereby revokes all other proxies
and powers of attorney with respect to the Shares that it heretofore may have
appointed or granted, and no subsequent proxy or power of attorney shall be
given or written consent executed (and if given or executed, shall not be
effective) by St. George with respect thereto. All authority herein conferred or
agreed to be conferred shall survive the dissolution of St. George and any
obligation of St. George under this Agreement shall be binding upon the
successors and assigns of St. George, except as otherwise provided herein.
          SECTION 3.5 Restrictions on Transfer.
          (a) Prior to or following the SEC Effective Date, but subject to
SECTION 5.2, St. George may sell any of the Common Shares or Conversion Shares
held by St. George in the open market pursuant to a Registration or an exemption
from registration under the Exchange Act free and clear of the terms and
conditions of this Agreement, and the obligations of St. George under this
Agreement shall not be binding upon any purchaser of shares in the open market.
          (b) St. George may sell, exchange, pledge, encumber or otherwise
transfer or dispose of in one or more privately placed transactions, or agree to
sell, exchange, pledge, encumber or otherwise transfer or dispose of, any of the
Shares in one or more privately placed transactions, or any interest therein, or
enter into any agreement, arrangement, commitment, understanding or undertaking
to do any of the foregoing in a private transaction, provided that the
obligations of St. George under this Agreement shall be binding upon any
transferee or assignee of the Shares.
          SECTION 3.6 Exceptions to Restrictions on Transfer. If the Company
shall have entered into a definitive agreement providing for, or, in the case of
clause (ii) below, the Board shall have recommended in favor of, (i) any direct
or indirect acquisition or purchase by any Person or Group of a majority of the
issued and outstanding Common Shares, (ii) any tender offer or exchange offer
that if consummated would result in any Person or Group acquiring a majority of
the issued and outstanding Common Shares or (iii) any merger, consolidation,
share exchange or other business combination involving the Company which, if
consummated, would result in the shareholders of the Company immediately prior
to the consummation of such transaction ceasing to own at least a majority of
the equity interests in the surviving entity (or any direct or indirect parent
of such surviving entity), then notwithstanding anything contained herein to the
contrary, any Shares transferred or assigned by St. George pursuant to such
definitive agreement or tender offer or exchange offer shall not be subject to
the obligations of St. George under this Agreement (including the Put Option,
the Call Option and the restrictions in Article III and Article IV).

7

--------------------------------------------------------------------------------

 

          SECTION 3.7 Transfers to Affiliates. Notwithstanding anything
contained in this Agreement to the contrary, St. George may transfer Shares to
one or more Affiliates of St. George, provided that any such transferee agrees
in writing to be bound by the terms of this Agreement, and St. George and such
Affiliates shall not be deemed to be a Group for purposes of this Agreement.
ARTICLE IV.
STANDSTILL
          SECTION 4.1 Standstill Agreement. St. George covenants and agrees with
the Company that it shall not, during the period commencing on the Effective
Date and terminating as provided in SECTION 4.2 directly or indirectly, alone or
in concert with others, unless specifically requested in writing by the Company
or by a resolution of a majority of the Directors (or take any action that would
require the Company to make an announcement regarding any of the following):
          (a) effect, seek, offer, engage in, propose (whether publicly or
otherwise) or cause or participate in, or assist any other Person to effect,
seek, engage in, offer or propose (whether publicly or otherwise) or participate
in:
     (i) any exchange offer, merger, consolidation, share exchange, business
combination, recapitalization, restructuring, liquidation, dissolution or other
extraordinary transaction involving the Company or any of its subsidiaries or
any material portion of its or their business or any purchase of all or any
substantial part of the assets of the Company or any of its subsidiaries or any
material portion of its or their business; or
     (ii) any “solicitation” of “proxies” (as such terms are used the proxy
rules of the SEC but without regard to the exclusion set forth in
Section 14a-1(1)(2)(iv) from the definition of “solicitation”) with respect to
the Company or any of its Affiliates or becoming a “participant” in any
“election contest” (as such terms are used in the proxy rules of the SEC) with
respect to the Company or any of its Affiliates;
          (b) propose any matter for submission to a vote of shareholders of the
Company or call or seek to call a meeting of the shareholders of the Company;
          (c) seek election to the Board, seek to place a representative or
other nominee on the Board or seek the removal of any Director;
          (d) grant any proxy with respect to any Shares (other than to the
Secretary of the Company);

8

--------------------------------------------------------------------------------

 

          (e) execute any written consent with respect to any Shares, other than
at the request of the Company or a majority of the Directors;
          (f) form, join or participate in a Group with respect to any Shares or
deposit any Shares in a voting trust or subject any Shares to any arrangement or
agreement with respect to the voting of such Shares or other agreement having
similar effect;
          (g) take any other action to seek to affect the control of the
management or Board of the Company or any of its Affiliates, including publicly
suggesting or announcing its willingness to engage in or have another Person
engage in a transaction that could reasonably be expected to result in a
transaction of the type described in SECTION 4.1(a)(i);
          (h) enter into any discussions, negotiations, arrangements or
understandings with any Person with respect to any of the foregoing, or advise,
assist, encourage or seek to persuade others to take any action with respect to
any of the foregoing; with respect to the Company or the Common Shares,
(i) otherwise communicate with the Company’s shareholders or others pursuant to
Rule 14a-1(1)(2)(iv) under the Exchange Act, (ii) participate in, or take any
action pursuant to any “shareholder access” proposal that may be adopted by the
SEC, whether in accordance with proposed Rule 14a-11 or otherwise, or
(iii) conduct any nonbinding referendum;
          (i) make any statement or disclose to any Person, or otherwise induce,
encourage, discuss or facilitate, any intention, plan or arrangement
inconsistent with the foregoing or which would result in the Company or any of
its Affiliates to be required to make any such disclosure in any filing with a
governmental entity or being required to make a public announcement with respect
thereto;
          (j) bring any action or otherwise act to contest the validity of this
Article IV (including this SECTION 4.1) or seek a release from the restrictions
contained in this Article IV; or
          (k) request the Company or any of its Affiliates, Directors, officers,
employees, representatives, advisors or agents, or any party hereto, directly or
indirectly, to amend or waive this Article IV, the Charter or the By-laws (or
similar constituent documents) of the Company or any of its Affiliates.
          SECTION 4.2 Termination of Standstill Agreement. The standstill
agreement set forth in SECTION 4.1 shall expire on the Put Expiration Date
(other than as a result of the elimination of the Put Option pursuant to SECTION
5.2), unless terminated sooner pursuant to Article XI.
          SECTION 4.3 Exceptions to Standstill Agreement. If the Company shall
have entered into a definitive agreement providing for, or, in the case of
clause (ii)

9

--------------------------------------------------------------------------------

 

below, the Board shall have recommended in favor of, (i) any direct or indirect
acquisition or purchase by any Person or Group of a majority of the issued and
outstanding Common Shares, (ii) any tender offer or exchange offer that if
consummated would result in any Person or Group acquiring a majority of the
issued and outstanding Common Shares or (iii) any merger, consolidation, share
exchange or other business combination involving the Company which, if
consummated, would result in the shareholders of the Company immediately prior
to the consummation of such transaction ceasing to own at least a majority of
the equity interests in the surviving entity (or any direct or indirect parent
of such surviving entity), then notwithstanding anything contained herein to the
contrary, St. George may take actions otherwise prohibited by SECTION 4.1 if
such actions are consistent with such definitive agreement or tender offer or
exchange offer.
ARTICLE V.
PUT OPTION
          SECTION 5.1 Put Option. During the period beginning on the Put
Commencement Date and terminating one hundred and eighty (180) days thereafter
(the “Put Exercise Period”) St. George shall have the right and option on up to
three (3) occasions (the “Put Option”), exercisable from time to time by written
notice (the “Put Notice”) delivered to Company by registered mail, overnight
courier or facsimile stating that St. George intends to exercise its rights
pursuant to this SECTION 5.1, to sell to Company and to cause Company to
purchase from St. George any or all of the Common Shares and Conversion Shares
then held by St. George (such number of Shares specified in such Put Notice, the
“Put Shares”), for an aggregate purchase price equal to the Put Price. Each time
that St. George exercises the Put Option, the number of Put Shares shall be at
least ten percent (10%) of the Common Shares and Conversion Shares then held by
St. George. The Put Notice shall also specify the Put Closing Date. The Put
Notice shall be deemed to have been delivered (i) five (5) Business Days after
being mailed by registered mail (return receipt requested and postage prepaid)
to the recipient, (ii) one (1) Business Day after being sent by overnight
courier (receipt confirmation requested) or (iii) if sent by facsimile
transmission, on the date of such transmission, with a confirming copy deposited
in the United States mail, postage prepaid. If St. George fails to deliver a Put
Notice during the Put Exercise Period, St. George shall have forfeited the Put
Option.
          SECTION 5.2 Elimination of the Put Option. After the SEC Effective
Date, the Put Option shall be eliminated if the Company creates Shareholder
Value. “Shareholder Value” is defined as the occurrence of one of the following:
(i) if following the SEC Effective Date, within any rolling 90 trading day
period (in which the Registration Statement is continuously effective) the
average of the 30 highest Volume Weighted Average Prices (not required to be
consecutive) of the Common Shares is greater than $2.21 or (ii) if following the
SEC Effective Date, within any rolling 90 trading day period (in which the
Registration Statement is continuously effective) the average Volume Weighted
Average Price of the Common Shares for 20 consecutive trading days is greater
than $2.21. For the avoidance of doubt, all of the days in the computation of
(i) and (ii) above shall fall within a period when the Registration

10

--------------------------------------------------------------------------------

 

Statement is continuously effective. If the Put Option is eliminated, then St.
George may sell or otherwise transfer the Shares pursuant to SECTION 3.5 or may
continue to hold the Shares subject to the terms and conditions of this
Agreement, including the voting agreement set forth in Article III and the
standstill agreement set forth in Article IV. If the Put Option is eliminated
pursuant to this SECTION 5.2, in connection with any sale, transfer or other
disposition permitted by SECTION 3.5, St. George shall in no event sell Common
Shares or Conversion Shares as a result of which its Beneficial Ownership of
Common Shares would be less than 1,882,583 Shares until March 31, 2012, at which
time the restrictions contained in this sentence shall be eliminated.
          SECTION 5.3 Acceleration of the Put Option. The Put Commencement Date
shall accelerate and the Put Option shall become immediately exercisable by St.
George, in accordance with the procedures and terms set forth in this Article V,
upon the occurrence of an Event of Default which is not cured as provided in
SECTION 11.2.
          SECTION 5.4 Put Price. For purposes hereof, with respect to each
exercise of the Put Option, the term “Put Price” shall mean the Put Price Per
Share multiplied by the number of Put Shares.
          SECTION 5.5 Put Price Per Share. The “Put Price Per Share” shall be
equal to the Market Price.
          SECTION 5.6 Put Closing Date. St. George shall fix the date (a “Put
Closing Date”) for the exercise of a Put Option no earlier than ten (10) but not
more than thirty (30) Business Days after the Put Notice is deemed to be
delivered as set forth in SECTION 5.1 hereof.
          SECTION 5.7 Closing Deliveries. On the Put Closing Date, St. George
will physically or electronically deliver certificates representing the Put
Shares (if physical certificate delivery, duly endorsed for transfer by St.
George or accompanied by duly executed stock powers in blank) to Company, and
Company shall deliver payment of the Put Price in cash by wire transfer of
immediately available funds to an account at a bank designated by St. George.
          SECTION 5.8 Non-compliance. If the Company does not honor the Put
Option and comply with the terms of this Article V, interest shall be due and
payable on the portion of the Put Price not paid at an annual rate of eighteen
percent (18%) payable monthly in cash.
ARTICLE VI.
CALL OPTION
          SECTION 6.1 Call Option. During the period beginning on the Effective
Date and terminating on September 30, 2011 (the “Call Exercise Period”) Company

11

--------------------------------------------------------------------------------

 

shall have the right and option (the “Call Option”), exercisable by written
notice (the “Call Notice”) delivered to St. George by registered mail, overnight
courier or facsimile stating that Company intends to exercise its rights
pursuant to this SECTION 6.1, to purchase from St. George and to cause St.
George to sell to Company all, but not less than all, of the Common Shares and
Conversion Shares then held by St. George (the “Call Shares”) for an aggregate
purchase price equal to the Call Price. The Call Notice shall also specify the
Call Closing Date. Additionally, the Call Option may only be exercised in
conjunction with and at the same time as the Preferred Call Option, the Call
Option must be exercised if Company exercises the Preferred Call Option, and the
Preferred Call Option must be exercised if the Company exercises the Call
Option. The Call Notice shall be deemed to have been delivered (i) five
(5) Business Days after being mailed by registered mail (return receipt
requested and postage prepaid) to the recipient, (ii) one (1) Business Day after
being sent by overnight courier (receipt confirmation requested) or (iii) if
sent by facsimile transmission, on the date of such transmission, with a
confirming copy deposited in the United States mail, postage prepaid. If Company
fails to deliver a Call Notice during the Call Exercise Period, Company shall
have forfeited the Call Option.
          SECTION 6.2 Elimination of the Call Option. The Call Option shall be
eliminated upon the occurrence of one of the following: (i) the Put Option is
eliminated pursuant to SECTION 5.2, (ii) the Put Commencement Date is
accelerated pursuant to SECTION 5.3, or (iii) a Triggering Event.
          SECTION 6.3 Call Price. For purposes hereof, the term “Call Price”
shall mean the Call Price Per Share multiplied by the number of Call Shares.
          SECTION 6.4 Call Price Per Share. If the Call Closing Date occurs
during the period beginning on the Effective Date and ending on June 30, 2011,
the “Call Price Per Share” shall be equal to the Market Price less ten percent
(10%). If the Call Closing Date occurs during the period beginning on July 1,
2011 and ending on September 30, 2011, the Call Price Per Share shall be equal
to the Market Price.
          SECTION 6.5 Call Closing Date. Company shall fix the date (the “Call
Closing Date”) for the exercise of the Call Option no earlier than ten (10) but
not more than thirty (30) Business Days after the Call Notice is deemed to be
delivered as set forth in SECTION 6.1 hereof.
          SECTION 6.6 Closing Deliveries. On the Call Closing Date, St. George
will physically or electronically deliver certificates representing the Call
Shares (if physical certificate delivery, duly endorsed for transfer by St.
George or accompanied by duly executed stock powers in blank) to Company, and
Company shall deliver payment of the Call Price in cash by wire transfer of
immediately available funds to an account at a bank designated by Company. The
Call Option and the Preferred Call Option may only be paid in cash.
          SECTION 6.7 Section 16 Compliance. Company shall not exercise the Call
Option at any time that would result in St. George incurring short swing profit

12

--------------------------------------------------------------------------------

 

liability to permit the recapture of profits by the Company pursuant to
Section 16 of the Exchange Act involving an equity security in a transaction
within a period of 6 months.
ARTICLE VII.
CONDITIONS PRECEDENT
          SECTION 7.1 Conditions to Obligations of Company and St. George. The
obligations of Company and St. George to consummate the transactions
contemplated by this Agreement to occur on each Put Closing Date or Call Closing
Date shall be subject to the satisfaction or waiver of the following conditions
on or prior to the applicable Put Closing Date or Call Closing Date:
          (a) No Injunction. No preliminary or permanent injunction or other
order shall have been issued by any court of competent jurisdiction, or by a
governmental or regulatory body, which remains in effect and invalidates any or
all of the provisions of this Agreement or prohibits or enjoins the consummation
of any of the transactions contemplated by this Agreement.
          (b) No Prohibitions. A prohibition shall not exist on the repurchase
under, and the repurchase shall not otherwise violate, Section 345 of the
Michigan Business Corporation Act of 1972, as amended, or any other applicable
successor statute, or the applicable statutes of any state in which Company
reincorporates.
ARTICLE VIII.
PREFERRED CALL
          SECTION 8.1 Preferred Call. At any time after May 1, 2010 and prior to
the earlier of (x) July 1, 2011 and (y) the Company’s filing of a Registration
Statement for the Shares, the Company may give written notice to St. George (the
“Preferred Call Notice”) that it has elected to require that St. George make an
investment of up to $600,000 in the Company by purchasing newly-issued shares of
Series A Convertible Preferred Stock (the “Preferred Stock”) which have the
rights, preferences, privileges and restrictions set forth on the Certificate of
Designation attached hereto as Exhibit A (the “Certificate of Designation”). The
number of shares of Preferred Stock to be issued to St. George (the “Preferred
Issuance”) shall be equal to 600,000 divided by the VWAP for the common stock
for the thirty calendar days immediately prior to the date of issuance of the
shares; provided that if there has occurred a Triggering Event, the VWAP shall
be based on the thirty calendar days prior to the earliest of the Triggering
Events. The Company shall concurrently with the giving of notice of the exercise
of the Preferred Call take such actions as are necessary to adopt and file the
Certificate of Designation which shall authorize a sufficient number of shares
of Preferred Stock for both the Preferred Issuance and additional shares for the
payment

13

--------------------------------------------------------------------------------

 

of dividends in kind and shall reserve a sufficient number of Common Shares for
issuance upon the conversion of the Preferred Shares. The Preferred Shares shall
(i) be convertible into Common Shares at any time; (ii) receive a quarterly
dividend at a rate of three percent (3%) annually to be paid in cash or in
additional Preferred Shares at the Company’s election; and (iii) be non-voting
except for matters that affect the class of Preferred Shares. Any Conversion
Shares shall be subject to all of the terms and conditions of this Agreement,
including the Put Option and Call Option.
          SECTION 8.2 Purchase of Preferred Shares. Within five Business Days
following receipt of the Preferred Call Notice together with evidence of the
filing of the Certificate of Designation, St. George shall purchase from the
Company for $600,000 cash by wire transfer the Preferred Issuance and the
Company shall either issue certificates evidencing the Preferred Issuance or
book-entry transfers reflecting the Preferred Issuance.
ARTICLE IX.
REGISTRATION RIGHTS
          SECTION 9.1 Registration. The Company shall prepare and, on or prior
to June 30, 2011, file with the SEC a Registration Statement on Form S-3 (or, if
the Company is not eligible to use such form at the time of filing with the SEC,
Form S-1) which, on the date of filing with the SEC, covers the resale of Common
Shares equal to the number of Common Shares, Conversion Shares and Make-Whole
Shares held by St. George or which may be issued to St. George pursuant to this
Agreement. Without the written consent of St. George, the Registration Statement
shall not include securities to be sold for the account of any Person that holds
Common Shares (or any other security holder of Company), other than St. George
and other than Common Shares issued in connection with an acquisition or
strategic transaction approved by a majority of the Board provided that if
Company and St. George determine in good faith that due to market conditions,
not all such Common Shares can be registered, all Shares of St. George shall be
registered before any Common Shares of any other Person shall be registered. The
Company shall request the Registration Statement to remain effective during the
Registration Period.
          SECTION 9.2 Other Registrations. Prior to the SEC Effective Date, the
Company shall not file any other registration statement or any amendment thereto
with the SEC under the Securities Act, or request the acceleration of the
effectiveness of any other registration statement previously filed with the SEC,
for any Person that holds Common Shares (or any other security holder of
Company), other than St. George (or subject to the provisions of SECTION 9.1,
for a Person in connection with an acquisition or strategic transaction).
          SECTION 9.3 Reports. The Company shall file all reports required to be
filed by the Company with the SEC in a timely manner so as to obtain and/or
maintain eligibility for the use of Form S-3.

14

--------------------------------------------------------------------------------

 

          SECTION 9.4 Expenses. All reasonable expenses (other than underwriting
discounts and commissions and other fees and expenses of investment bankers
engaged by St. George and other than brokerage commissions), incurred in
connection with registrations, filings or qualifications pursuant to this
Article IX, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees and the fees and disbursements
of counsel for the Company, shall be borne by the Company.
ARTICLE X.
COVENANTS
          SECTION 10.1 Covenants of Company. Company agrees that, during the
period beginning on the Effective Date and ending on the earlier of (i) the
expiration of the Put Exercise Period or (ii) the Company’s payment in full of
the Put Obligations:
          (a) Company shall not enter into any agreement that would interfere
with this Agreement (e.g. a loan agreement that restricts equity redemptions or
dividends);
          (b) Company shall not permit its unrestricted cash to fall below
twenty percent (20%) of Shareholders Equity (as measured in the Company’s
audited financial statements for Fiscal Year 2010). Company shall provide St.
George with a pro forma estimate of Shareholders Equity as of June 30, 2010. For
purposes of this paragraph, the proceeds of St. George’s purchase of Preferred
Shares pursuant to ARTICLE VIII shall not be included within Shareholders’
Equity. Company shall provide a certificate to St. George within ten (10) days
after the end of each calendar month certifying that Company is in compliance
with the covenant contained in this paragraph; provided that the certificate
shall be based on the Company’s pro forma estimate of Shareholders Equity as of
June 30, 2010 (which shall be updated each month), until the audited financial
statements for Fiscal Year 2010 have been prepared.
          (c) In addition to SECTION 10.1(b) above, as restrictions are lifted
from any restricted cash on the Company’s balance sheet as reported in its
quarterly report for the quarter ending December 31, 2009, an additional amount
of cash shall be reserved for the purpose of honoring the Put Option and the
Preferred Put Option, if and when the options are exercised by St. George;
provided that the cash reserved pursuant to SECTION 10.1(b) together with the
cash reserved pursuant to this SECTION 10.1(c) shall not exceed the Put
Obligations; and provided that the cash reserved pursuant to SECTION 10.1(b)
together with the cash reserved pursuant to this SECTION 10.1(c) shall be equal
to, but shall not be required to exceed, 65% of the Put Obligations as of
May 31, 2010, 85% of the Put Obligations as of June 30, 2010 and 100% of the Put
Obligations as of July 31, 2010. The certificate provided in SECTION 10.1(b)
shall also certify that these percentages have been met. If Shares are acquired
after the Effective Date that are subject to either the Put Option or Preferred
Put

15

--------------------------------------------------------------------------------

 

Option, then St. George shall notify the Company in writing (with the filing of
Form 4’s with the SEC constituting sufficient notice), and the Company shall
have two months to set aside sufficient cash to satisfy the Put Obligations with
respect to these Shares, and the Company shall certify as to compliance with the
forgoing in its monthly compliance certificates referred to in SECTION 10.1(b).
After achieving compliance with the cash set aside requirements in each
instance, the Company shall thereafter maintain sufficient cash to satisfy 100%
of the Put Obligations until the earlier of the expiration of the Put Exercise
Period or the Company’s payment in full of the Put Obligations. If St. George
elects in writing not to exercise the Put Option and the Preferred Put Option,
or if the Put Option and the Preferred Put Option expire in accordance with
their terms, the Company shall be permitted to use this cash for any other
operating purpose.
          (d) After any Put Commencement Date, the Company shall maintain
sufficient liquidity and cash resources to be able to honor the Put Option and
the Preferred Put Option in compliance with Section 345 of the Michigan Business
Corporation Act of 1972, as amended, or any other applicable successor statute,
or the applicable statutes of any state in which Company reincorporates; and
          (e) In lieu of maintaining the covenant contained in SECTION 10.1(b),
the Company may provide a letter of credit in the amount of the Put Price that
names St. George as the account beneficiary, and in a form acceptable to St.
George exercising reasonable judgment, or otherwise establish a segregated and
dedicated account containing an amount equal to the Put Price that is specially
and exclusively reserved for the benefit of St. George if and when it elects to
exercise the Put Option and the Preferred Put Option.
          SECTION 10.2 Cooperation; Further Assurances.
          (a) Subject to the terms and conditions of this Agreement, each of the
Parties shall use all reasonable efforts to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including providing information and
using reasonable efforts to obtain all necessary or appropriate waivers,
consents and approvals, and effecting all necessary registrations and filings.
          (b) In case at any time before or after any Put Closing Date or Call
Closing Date any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of the Parties
shall execute such further documents (including assignments, acknowledgments and
consents and other instruments of transfer) and shall take such further action
as shall be necessary or desirable to carry out the purposes of this Agreement,
in each case to the extent not inconsistent with applicable law.
          (c) Subject to the terms and conditions hereof, each of the Parties
shall use its reasonable efforts to cause the fulfillment at the earliest
practicable

16

--------------------------------------------------------------------------------

 

date of all of the conditions to the obligations of the Parties to consummate
the transactions contemplated by this Agreement.
          (d) Insofar as any applicable law or regulation changes after the
Effective Date in a manner that prevents St. George from realizing the benefit
of its bargain hereunder (e.g., change in securities laws affecting registration
statement or sales), the Company shall cooperate with St. George to deliver to
St. George the benefit of its bargain as closely as possible to the original
terms contained herein.
          SECTION 10.3 Public Disclosure. With respect to any public disclosure
required to be made by any Party of the existence of this Agreement, the
contents hereof or the transactions contemplated hereby, such Party shall give
the other Party at least one (1) Business Day to review its proposed form of
public disclosure.
          SECTION 10.4 Observation Rights. From the Effective Date until the
earlier of (i) the expiration of the Put Exercise Period or (ii) the Company’s
payment in full of the Put Obligations, the Company shall give a designee of St.
George copies of all notices, minutes, consents, and other material that it
provides to its Directors at or about the same time as delivered to the
Directors. A designee of St. George shall have the right to attend, in a
non-voting observer status, all meetings of the Board and all meetings of any
committees of the Board. Notwithstanding anything to the contrary in this
Section, the Company reserves the right to withhold any information and to
exclude a St. George observer from any meeting or portion thereof (so long as
the Company notifies such observer of such withholding or exclusion) if access
to such information or attendance at such meeting would (i) in the reasonable
judgment of the Company’s outside counsel, prevent the members of the Board from
engaging in attorney-client privileged communication with counsel to the
material detriment of the Company or (ii) in the good faith determination of a
majority of the members of such Board, result in a conflict of interest with St.
George. The Company will withhold information and restrict attendance at
meetings only under the circumstances set forth in the preceding sentence and
will notify St. George in advance at least one (1) Business Day of any action
taken by its Board at any meeting at which attendance by such observer is so
restricted (except to the extent that such notification would jeopardize the
privilege that the Company was seeking to preserve or would result in the
conflict that the Company was seeking to avoid). St. George and its designee
shall be subject to all of the Company’s inside trading policies.
          SECTION 10.5 Covenants of St. George. St. George covenants and agrees
with the Company that during the period beginning on the Effective Date and
terminating on the Put Commencement Date:
          (a) It shall use commercially reasonable efforts to assist the
Company, upon Company’s request, in identifying possible merger or acquisition
opportunities for the Company without charging any fees in connection with these
services; provided, however, that St. George makes no assurances that any
possible merger or acquisition candidate will be acceptable to the Company’s
Board of Directors or its shareholders (and the Company shall not use this
SECTION 10.5(a) as a defense to excuse any performance on the Company’s part of
its obligations under this Agreement).

17

--------------------------------------------------------------------------------

 

          (b) It shall withdraw, as of the Effective Date, the nominations it
made for the Company’s Board as indicated in the preliminary proxy on Schedule
14(a) and 13D-A filed on or around January 22, 2010; and
          (c) It shall not, directly or indirectly, alone or with its
Affiliates, acquire more than thirty five percent (35%) of the issued and
outstanding Common Shares, provided that the foregoing limitation shall not
include the Conversion Shares.
ARTICLE XI.
DEFAULT
          SECTION 11.1 Default. Company will be deemed in default under this
Agreement upon the occurrence of any of the following (each an “Event of
Default”):
          (a) Company breaches this Agreement, and such breach is not cured by
Company within ten (10) days of receipt of notice of breach;
          (b) Company becomes insolvent, or admits in writing its inability to
pay debts as they become due, a petition under any section or chapter of the
Bankruptcy Reform Act of 1978 or any similar law or regulation is filed by or
against Company (provided, however, that if the filing of a Bankruptcy petition
is involuntary, Company shall have 30 days from the date of filing to have said
petition dismissed), or Company shall make an assignment for the benefit of
creditors;
          (c) A judgment is entered by a court of competent jurisdiction against
Company in excess of two million dollars ($2,000,000) which is not stayed or
discharged within sixty (60) days, and the Company does not have sufficient cash
on hand to honor the Put Option and Preferred Put Option;
          (d) The Company becomes delinquent in its periodic reporting
requirements under Section 13 of the Exchange Act that has the effect to bar St.
George from reliance on Rule 144 of the Securities Act or to preclude the use of
an effective Registration Statement;
          (e) The Common Shares are delisted from a national securities
exchange, NASDAQ, or fail to be quoted on the OTC Bulletin Board; or
          (f) Following the exercise of the Preferred Call, there is an Event of
Default under the Certificate of Designations.
          SECTION 11.2 Notice of Default. Upon the occurrence of an Event of
Default, St. George shall send a notice of default to Company. The notice of
default shall include the default date. If the default is not cured within any
applicable cure

18

--------------------------------------------------------------------------------

 

period, in addition to all other rights and remedies provided at law or in
equity or elsewhere in this Agreement, the Put Commencement Date shall
accelerate to the later of (x) the default date specified in the notice pursuant
to SECTION 5.3 if there is no cure period or (y) the last date of any applicable
cure period. Additionally, as of the date of an Event of Default which is not
cured within any applicable cure period, the voting agreement and proxy set
forth in SECTION 3.1 and SECTION 3.2, and the standstill agreement set forth in
SECTION 4.1, shall terminate.
          SECTION 11.3 Make-Whole Shares. If the Company does not honor the Put
Option or the Preferred Put Option in full because the Company has insufficient
cash or is otherwise under a restraint that prevents the Company’s compliance,
then, St. George shall be deemed to be a creditor of Company in the amount of
the outstanding balance of the Put Obligations, together with interest on the
Put Obligations at the rate of eighteen percent (18%) per annum. With respect to
the Put Shares that have not been honored for payment, those Shares shall be
deemed redeemed by the Company as of the Put Closing Date and St. George shall
have no power or authority to control the disposition or voting of those Shares.
At St. George’s option, St. George may elect to draw down tranches of Common
Shares, subject to the limitation below, for sale in the market and will apply
the net proceeds (after commissions) to the outstanding balance of the Put
Obligations, plus interest. Insofar as the net proceeds of any tranche of Common
Shares is insufficient to extinguish the Put Obligations, St. George may request
from time to time further tranches of Common Shares until Company either pays
the Put Obligations in cash or the net proceeds from the sale of Common Shares
are sufficient to extinguish the Put Obligations. Each tranche of Common Shares
requested by St. George shall not exceed 9.9% of the issued and outstanding
Common Shares of Company. The Company shall electronically deliver the tranche
shares to an account designated by St. George within 3 Business Days of the
Company’s receipt of the request. All Common Shares issued to St. George
following Company’s failure to honor the Put Option or the Preferred Put Option
pursuant to this SECTION 11.3 shall be referred to as “Make-Whole Shares”. On
the Put Closing Date, the Put Shares shall be deemed to be redeemed
ARTICLE XII.
INDEMNIFICATION
          SECTION 12.1 Indemnification. Company hereby unconditionally agrees to
indemnify and hold harmless St. George and each of its Affiliates, members,
managers, directors, officers, agents, successors and assigns (each a “St.
George Party”; collectively, “St. George Parties”) to the fullest extent
permitted by law, from and against any and all losses, claims, damages,
obligations, penalties, judgments, awards, costs, disbursements and liabilities
(including amounts paid in settlement) (collectively, “Losses”) and expenses,
including, without limitation, all fees and expenses of each of the St. George
Parties’ counsel and each of the St. George Parties’ reasonable out-of-pocket
expenses actually and reasonably incurred by each of the St. George Parties or
on their behalf in connection with the investigation of any pending or
threatened claims or the preparation for, the defense of, or the furnishing of
evidence in, any pending or threatened litigation, claim, investigation or
proceedings,

19

--------------------------------------------------------------------------------

 

in which any of the St. George Parties is an actual or threatened party or
participant thereto (collectively, “Expenses”) based upon or arising out of any
issue or controversy that is in any way related to any claim, cause of action,
allegation, action, suit, proceeding, litigation, arbitration or investigation
brought by or against any St. George Party at law or in equity, or before or by
any federal, state, municipal, foreign or other governmental department,
commission, board, agency, instrumentality or authority by any third party
(other than Company) relating to Board action or inaction while St. George or
its designee has observer status to the Board as provided in SECTION 10.4.
Expenses will be reimbursed or advanced when and as incurred or within thirty
(30) days upon submission by any of the St. George Parties of statements to
Company. Company shall not be required to indemnify a St. George Party to the
extent that a court or tribunal finds that it is unlawful or against public
policy to do so.
          SECTION 12.2 Indemnification Procedure. If any litigation,
investigation or proceeding is commenced as to which a St. George Party proposes
to demand indemnification pursuant to SECTION 12.1, the St. George Party will
notify Company with reasonable promptness; provided, however, that any failure
by the St. George Party to notify the Company will relieve the Company from its
obligations only to the extent the Company has been prejudiced by such failure
or delay. The St. George Party will have the right to retain counsel (and local
counsel, if appropriate) of its own choice to represent it (but subject to the
Company’s prior approval, which approval shall not be unreasonably withheld).
The Company will pay the reasonable fees, expenses and disbursements of such
counsel within thirty (30) days upon submission by the St. George Party of
detailed statements describing the services performed, applicable hourly rates
and amounts charged. The Company retains the right to participate in the defense
of such litigation, investigation or proceeding as to which the St. George Party
seeks indemnification through counsel of the Company’s choice (the cost of which
will be paid by the Company) and the St. George Party will reasonably cooperate
with such counsel and the Company (including, keeping the Company reasonably
informed of the defense, unless cooperation conflicts with the St. George
Party’s own interests). Company will be liable for any settlement of any claim
made against a St. George Party; provided that St. George Party shall not settle
a claim without the written consent of Company, which consent will not be
unreasonably withheld. Company shall not settle a claim brought against a St.
George Party without the written consent of the St. George Party, which consent
will not be unreasonably withheld unless the settlement solely involves the
payment of monetary damages by Company.
ARTICLE XIII.
REPRESENTATIONS AND WARRANTIES
          SECTION 13.1 Representations and Warranties of Company. Company
represents and warrants to St. George as of the date hereof that:
          (a) Due Incorporation. Company is a corporation duly organized,
validly existing and in good standing under the laws of Michigan.

20

--------------------------------------------------------------------------------

 

          (b) Authority, Execution and Binding Effect. The execution, delivery
and performance by Company of this Agreement and the transactions contemplated
hereby are within its corporate powers, and have been duly authorized by all
necessary action on the part of Company, and no other corporate act or
proceeding on the part of Company is necessary to approve the execution and
delivery of this Agreement or the consummation by Company of the transactions
contemplated hereby. This Agreement has been validly executed and delivered by
Company. Assuming due authorization, execution and delivery by St. George, this
Agreement constitutes a valid and binding agreement of Company, enforceable
against Company in accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement or creditors’ rights generally or by equitable
principles.
          (c) No Governmental Consent Required. The execution, delivery and
performance by Company of this Agreement require no order, license, consent,
authorization or approval of, or exemption by, or action by or in respect of, or
notice to, or filing or registration with, any governmental body, agency or
official except such as have been obtained or except where the failure to obtain
any such order, license, consent, authorization, approval or exemption or give
any such notice or make any filing or registration would not, in the aggregate,
reasonably be expected to adversely affect the ability of Company to perform its
obligations hereunder.
          (d) No Conflicts. The execution, delivery and performance of this
Agreement by Company will not, with or without the giving of notice or lapse of
time, or both, (i) conflict with the Charter or By-laws or similar constitutive
documents of Company or (ii) result in any breach of any terms or provisions of,
or constitute a default under, or conflict with any material contract, agreement
or instrument to which Company is a party or by which Company is bound, except
for such breaches, defaults or conflicts which, individually or in the
aggregate, would not be likely to have a material adverse effect on the
financial position, results of operations or business of Company, or
(iii) violate any material provision of law, statute, rule or regulation to
which it is subject or any material order, judgment or decree applicable to
Company.
          (e) Litigation. There is no claim, cause of action, allegation,
action, suit, proceeding, litigation, arbitration or investigation (“Action”)
pending or, to Company’s knowledge, threatened (i) by or against Company or any
of its Affiliates which would be likely to prevent, materially interfere with or
materially delay the consummation of the transactions contemplated hereby or
(ii) with respect to the transactions contemplated hereby, at law or in equity,
or before or by any federal, state, municipal, foreign or other governmental
department, commission, board, agency, instrumentality or authority which, if
adversely determined, would be likely to prevent, materially interfere with or
materially delay the consummation of the transactions contemplated hereby. There
is no order, decree, injunction or judgment pending or in effect against Company
or any of its Affiliates which would be likely to prevent, materially interfere
with or materially delay the consummation of the transactions contemplated
hereby.

21

--------------------------------------------------------------------------------

 

          (f) Preferred Shares. The Preferred Shares if sold to St. George upon
exercise of the Preferred Call, when issued, sold and delivered in accordance
with the terms of this Agreement for the consideration expressed herein, will be
duly and validly issued, fully paid and non-assessable. The Common Shares
issuable upon conversion of the Preferred Shares will have been duly and validly
reserved for issuance and, upon issuance, will be duly and validly issued, fully
paid and non-assessable.
          (g) Authorized Capital. The authorized capital of the Company
consists, or will consist as of the Effective Date, of 15,000,000 shares of
Common Shares and 5,000,000 preferred shares.
          (h) No Other Securities. Except for issued and outstanding Common
Shares and the rights of the holders thereof, and the rights and obligations
created by this Agreement, including the issuance of the Preferred Shares if the
Preferred Call is exercised, (A) there are no subscriptions, preemptive rights,
options, convertible securities, warrants, conversion privileges or other rights
(or agreements for any such rights, contingent or otherwise) outstanding to
purchase or otherwise obtain any of the Company’s capital stock, (B) the Company
has no obligation (contingent or otherwise) to issue subscriptions, preemptive
rights, options, convertible securities, warrants, conversion privileges or
other rights or to issue or distribute to holders of any shares of its capital
stock any evidences of indebtedness or assets of the Company, and (C) the
Company has no obligation (contingent or otherwise) to purchase, redeem, or
otherwise acquire any shares of its capital stock or any interest therein or to
pay any dividend or make any distribution in respect thereof.
          SECTION 13.2 Representations and Warranties of St. George. St. George
represents and warrants to Company as of the date hereof that:
          (a) Due Organization. St. George is a limited liability company, duly
organized, validly existing and in good standing, under the laws of Illinois.
          (b) Authority, Execution and Binding Effect. The execution, delivery
and performance by St. George of this Agreement and the transactions
contemplated hereby are within its corporate powers, and have been duly
authorized by all necessary action on the part of St. George, and no other
corporate act or proceeding on the part of St. George is necessary to approve
the execution and delivery of this Agreement or the consummation by St. George
of the transactions contemplated hereby. This Agreement has been validly
executed and delivered by St. George. Assuming due authorization, execution and
delivery by Company, this Agreement constitutes a valid and binding agreement of
St. George, enforceable against St. George in accordance with its terms, except
as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement or creditors’ rights
generally or by equitable principles.

22

--------------------------------------------------------------------------------

 

          (c) No Governmental Consent Required. The execution, delivery and
performance by St. George of this Agreement require no order, license, consent,
authorization or approval of, or exemption by, or action by or in respect of, or
notice to, or filing or registration with, any governmental body, agency or
official except such as have been obtained or except where the failure to obtain
any such order, license, consent, authorization, approval or exemption or give
any such notice or make any filing or registration would not, in the aggregate,
reasonably be expected to adversely affect the ability of St. George to perform
its obligations hereunder.
          (d) No Conflicts. The execution, delivery and performance of this
Agreement by St. George will not, with or without the giving of notice or lapse
of time, or both, (i) conflict with the operating agreement or similar
constitutive documents of St. George or (ii) result in any breach of any terms
or provisions of, or constitute a default under, or conflict with any material
contract, agreement or instrument to which St. George is a party or by which St.
George is bound, except for such breaches, defaults or conflicts which,
individually or in the aggregate, would not be likely to have a material adverse
effect on the financial position, results of operations or business of St.
George or (iii) violate any material provision of law, statute, rule or
regulation to which it is subject or any material order, judgment or decree
applicable to St. George.
          (e) Stock Ownership; Title to Shares. John M. Fife and Iliad Research
and Trading, L.P. have assigned all of their Beneficial Ownership rights in and
to the Shares to St. George. St. George Beneficially Owns 1,882,583 Common
Shares as of the date hereof. All of the Shares are as of the date hereof and
will be on each Put Closing Date or Call Closing Date owned beneficially and of
record by St. George, free and clear of all Encumbrances. When Company acquires
the Shares pursuant to the provisions of this Agreement, upon payment of the Put
Price or the Call Price, as applicable, it will receive the Shares free and
clear of any Encumbrances other than Encumbrances resulting from acts or
omissions of or created by Company.
          (f) Litigation. There is no Action pending or, to St. George’s
knowledge, threatened (i) by or against St. George or any of its Affiliates
which would be likely to prevent, materially interfere with or materially delay
the consummation of the transactions contemplated hereby or (ii) with respect to
the transactions contemplated hereby, at law or in equity, or before or by any
federal, state, municipal, foreign or other governmental department, commission,
board, agency, instrumentality or authority which, if adversely determined,
would be likely to prevent, materially interfere with or materially delay the
consummation of the transactions contemplated hereby. There is no order, decree,
injunction or judgment pending or in effect against St. George which would be
likely to prevent, materially interfere with or materially delay the
consummation of the transactions contemplated hereby.
          (g) Information. St. George has received all the information it
considers necessary or appropriate for deciding whether to purchase the
Preferred Shares. St. George further represents that it has had an opportunity
to

23

--------------------------------------------------------------------------------

 

ask questions and receive answers from the Company regarding the Preferred
Shares and the business, properties, prospects and financial condition of the
Company and to obtain additional information (to the extent the Company
possessed such information or could acquire it without unreasonable effort or
expense) necessary to verify the accuracy of any information furnished to it or
to which it had access.
          (h) Financial Experience. St. George is an “accredited investor” as
that term is defined in Rule 501 of Regulation D promulgated under the
Securities Act, and experienced in evaluating and investing in private placement
transactions of securities of companies in a similar stage of development and
acknowledges that it is able to fend for itself, can bear the economic risk of
its investment, and has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the investment
in the Preferred Shares. St. George also represents that it has not been
organized for the purpose of acquiring the Preferred Shares.
ARTICLE XIV.
NOTICE
          SECTION 14.1 Notice. All notices, consents, requests, instructions,
approvals and other communications provided for herein and all legal process in
regard hereto shall be in writing and shall be deemed to have been delivered
(i) five (5) Business Days after being mailed by registered mail (return receipt
requested and postage prepaid) to the recipient, (ii) one (1) Business Day after
being sent by overnight courier (receipt confirmation requested) or (iii) if
sent by facsimile transmission, on the date of such transmission, with a
confirming copy deposited in the United States mail, postage prepaid. All
notices shall be addressed as follows, or to such other address as any party
hereto may from time to time designate in writing delivered in a like manner.
If to Company:
United American Healthcare Corporation
300 River Place, Suite 4950
Detroit, Michigan 48207-4291
Attention: William Brooks, President
Facsimile: 313-393-3394
with a required copy to:
Honigman Miller Schwartz and Cohn LLP
2290 First National Building
660 Woodward Avenue
Detroit, Michigan 48226
Attention: Alex L. Parrish, Esq.
Facsimile: (313) 465-7513

24

--------------------------------------------------------------------------------

 

If to St. George:
St. George Investments, LLC
c/o Fife Trading, Inc.
303 E. Wacker Drive, Suite 311
Chicago, IL 60601
Attention: John M. Fife, President
Facsimile: 312-819-9701
with a required copy to:
Lathrop & Gage LLC
100 North Riverside Plaza
Suite 2100
Chicago, IL 60606
Attention: Eric M. Fogel, Esq.
Facsimile: 312-920-3305
ARTICLE XV.
GENERAL PROVISIONS
          SECTION 15.1 Captions. The paragraph titles or captions contained in
this Agreement are for convenience only and shall not be deemed a part of this
Agreement.
          SECTION 15.2 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be unenforceable or
invalid under applicable law, such provision shall be ineffective only to the
extent of such unenforceability or invalidity and the remaining provisions of
this Agreement shall continue to be binding and in full force and effect.
          SECTION 15.3 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto relating to the subject matter hereof. No
change, amendment or modification of this Agreement shall be valid unless the
same shall be in writing and signed by the parties hereto.
          SECTION 15.4 Specific Performance. Each of the parties hereto
acknowledges that a breach by it of any provision contained in this Agreement
will cause the other party to sustain damage for which it would not have an
adequate remedy at law for money damages, and therefore each of the parties
hereto agrees that in the event of any such breach, the aggrieved party shall be
entitled to the remedy of specific performance of such agreement and injunctive
and other equitable relief in addition to any other remedy to which it may be
entitled, at law or in equity. Each of Company and St. George irrevocably submit
to the jurisdiction of the courts of

25

--------------------------------------------------------------------------------

 

the State of Michigan and the federal courts located in the State of Michigan in
respect of the interpretation and enforcement of the provisions of this
Agreement.
          SECTION 15.5 No Waiver. The failure of any party to insist, in one or
more instances, on performance by any other in strict accordance with the terms
and conditions of this Agreement shall not be deemed a waiver or relinquishment
of any right granted hereunder or of the future performance of any term or
condition of this Agreement unless such waiver or relinquishment is contained in
writing signed by or on behalf of any such party. The remedies in this Agreement
are cumulative and are not exclusive of any other remedies provided by law or in
equity.
          SECTION 15.6 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Michigan.
          SECTION 15.7 Assignment. Except as otherwise provided herein, no party
hereto may assign its or his rights or delegate its or his duties hereunder
without the prior written consent of the other parties.
          SECTION 15.8 Binding Effect. Except as otherwise provided herein, this
Agreement shall inure to the benefit of, and be binding upon, the parties hereto
and their respective heirs, personal representatives, successors and, to the
extent permitted hereby, assigns.
          SECTION 15.9 Attorneys Fees. In the event any action is instituted by
a party hereto regarding the construction of any term herein or to recover
damage because of the breach of any term of this Agreement, the prevailing party
in such action shall be entitled to reasonable reimbursement from the
non-prevailing party, including, but not limited to attorneys’ fees, costs and
expenses incurred as a result thereof.
          SECTION 15.10 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of which
taken together shall constitute a single instrument.
          SECTION 15.11 Survival. The representations, warranties and
indemnification agreements made in this Agreement, and any liability for breach
of any agreement or any inaccuracy of or omission from any representation or
warranty under this Agreement shall survive the termination of this Agreement.
[signature page follows]

26

--------------------------------------------------------------------------------

 

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

                  COMPANY:    
 
                United American Healthcare Corporation,         a Michigan
corporation    
 
           
 
  By:   /s/ William C. Brooks
 
William C. Brooks, President and Chief Executive Officer    
 
                ST. GEORGE:    
 
                St. George Investments, LLC,         an Illinois limited
liability company    
 
                By: Fife Trading, Inc.,         an Illinois corporation, its
Manager    
 
           
 
  By:   /s/ John M. Fife
 
John M. Fife, President    

27

--------------------------------------------------------------------------------

 

EXHIBIT A
CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RIGHTS
of
SERIES A CONVERTIBLE PREFERRED STOCK
of
UNITED AMERICAN HEALTHCARE CORPORATION
(Pursuant to Section 450.1302 of the Michigan Business Corporation Act)
     United American Healthcare Corporation (the “Company”), a corporation
organized and existing under the Michigan Business Corporation Act, as amended
(the “Michigan Act”), hereby certifies that, pursuant to authority granted by
Article III of the Restated Articles of Incorporation of the Corporation, as
amended, and in accordance with the provisions of Section 450.1302 of the
Michigan Act, the Board of Directors of the Company (the “Board of Directors” or
the “Board”) has adopted the following resolutions, at a meeting duly called and
held on                      ___,                     :
     RESOLVED, that there is hereby established a series of Preferred Stock (the
“Preferred Stock”), no par value per share, and the designation and certain
terms, powers, preferences and relative, participating and other rights and
certain qualifications, limitations and restrictions thereon, are hereby fixed
as follows:
Capitalized terms used and not otherwise immediately defined are defined in
Section 10.
     1. Designation and Amount. The series of Preferred Stock shall be
designated as Series A Convertible Preferred Stock (the “Series A Convertible
Preferred Stock”) and the number of shares so designated shall be
                     plus                     shares to enable the Company to
satisfy all dividends that may accrue hereunder.
     2. Stated Value. The stated value of each issued share of Series A
Convertible Preferred Stock shall be deemed to be $1.00 (the “Stated Value”).
     3. Dividends. When, as and if declared by the Board of Directors and to the
extent permitted by the Michigan Business Corporation Act, the Company shall pay
preferential dividends to the holders of shares of Series A Convertible
Preferred Stock in the form of cash or additional shares of Series A Convertible
Preferred Stock, at the Company’s election. Regardless of whether dividends are
paid, dividends on each share of Series A Convertible Preferred Stock
outstanding from time to time shall accrue on a quarterly basis at the rate of
3% per annum on the Stated Value of the shares of Series A Convertible Preferred
Stock plus the amount of any accrued and unpaid dividends calculated from the
Original Issue Date of such share through the most recently preceding Quarterly
Dividend Reference Date. The “Quarterly Dividend Reference Dates” are each
March 1, June 1, September 1 and December 1 occurring after the Original Issue
Date and on or prior to the Conversion Date (as defined below). Dividends shall
be paid only as and when declared by the Board of Directors to holders of record
at the close of the

A-1

--------------------------------------------------------------------------------

 

Quarterly Dividend Reference Dates with respect to which the dividend has been
declared and cash or certificates for such dividend shall be distributed to such
holders within ten (10) calendar days after such record date as the Board of
Directors may establish. Dividends shall begin to accrue on shares of Series A
Convertible Preferred Stock issued as dividends as of the day following the
record date for their issuance regardless of the actual distribution of a
certificate. All dividends that have been accrued but not declared shall
continue to accrue and accumulate as provided herein. All dividends that have
been accrued and declared shall be paid as provided herein and dividends on such
shares shall begin to accrue as provided herein. Dividends under this Section 3
shall cease to accrue on the Conversion Date. The number of shares to be paid as
a dividend pursuant to this Section 3 shall be rounded to the nearest whole
share. All shares of Series A Convertible Preferred Stock issued in payment of
dividends hereunder shall be deemed issued and outstanding on the applicable
record date, and will thereupon be duly authorized, validly issued, fully paid
and nonassessable and free and clear of all liens and charges. The Company shall
at all times reserve for issuance 100,000 shares of Series A Convertible
Preferred Stock to enable it to satisfy all dividends that may accrue hereunder.
Dividends paid in shares of Series A Convertible Stock shall be delivered to the
Holder within 30 days of each Quarterly Dividend Reference Date in either
physical certificate form or via electronic delivery.
     4. Voting.
     a) Voting Rights. Except as otherwise expressly provided herein or as
required by law, the holders of shares of Series A Convertible Preferred Stock
shall not be entitled to voting rights. Upon conversion of the shares of
Series A Convertible Preferred Stock by holders thereof into Common Stock,
holders (to the extent of their Common Stock) shall be entitled to voting rights
pertaining to the Common Stock received upon such conversion.
     b) Limitations on Corporate Actions. Notwithstanding anything to the
contrary in Section 4.a) above, as long as any shares of Series A Convertible
Preferred Stock are outstanding, the Company shall not, without the written
consent or affirmative vote of the holders of no-less than sixty-six and
two-thirds percent (66 2/3%) of the then-outstanding Stated Value of the
Series A Convertible Preferred Stock consenting or voting (as the case may be)
as a separate class from the Common Stock, either directly or by amendment,
merger, consolidation or otherwise:
     i) amend its articles of incorporation in any manner that adversely affects
the rights of the Holders;
     ii) alter or change adversely the voting or other powers, preferences,
rights, privileges, or restrictions of the Series A Convertible Preferred Stock
contained herein or alter or amend this Certificate of Designation;
     iii) increase the authorized number of shares of Preferred Stock or
Series A Convertible Preferred Stock or reinstate or issue any other

A-2

--------------------------------------------------------------------------------

 

series of preferred stock; provided that the Company may increase the authorized
number of shares of Preferred Stock in connection with, and may reinstate or
issue, Junior Stock;
     iv) redeem, purchase or otherwise acquire directly or indirectly any Junior
Stock or any shares pari passu with the Series A Convertible Preferred Stock;
     v) directly or indirectly pay or declare any dividend or make any
distribution in respect of, any Junior Stock, or set aside any monies for the
purchase or redemption (through a sinking fund or otherwise) of any Junior Stock
or any shares pari passu with the Series A Convertible Preferred Stock;
     vi) authorize or create any class of stock ranking as to dividends,
redemption or distribution of assets upon a Liquidation (as defined in
Section 5) senior to or otherwise pari passu with the Series A Convertible
Preferred Stock; or
     vii) enter into any agreement with respect to any of the foregoing.
     5. Liquidation, Dissolution, or Winding-Down. In the event of a
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary (a “Liquidation”), the holders of shares of Series A Convertible
Preferred Stock then outstanding shall be entitled to receive out of the
available assets of the Company an amount on such date equal to the Stated Value
of the shares of Series A Convertible Preferred Stock, plus the amount of any
accrued and unpaid dividends as of such date, and any declared but unpaid
dividends as of such date (collectively, the “Liquidation Preference”). Such
payment shall be made before any payment shall be made or any assets distributed
to the holders of any class or series of the Common Stock or any other class or
series of the Company’s capital stock ranking junior as to liquidation rights to
the Series A Convertible Preferred Stock. If upon any Liquidation the assets
available for payment of the Liquidation Preference are insufficient to permit
the payment to the holders of the shares of Series A Convertible Preferred Stock
of the full preferential amounts described in this paragraph, then all the
remaining available assets shall be distributed pro rata among the holders of
the then outstanding shares of Series A Convertible Preferred Stock.
     6. Conversion. The holders of Series A Convertible Preferred Stock shall
have the conversion rights as follows.
     a) Right to Convert. Each share of Series A Convertible Preferred Stock
shall be convertible, at the option of the holder thereof, at any time after the
Original Issue Date, and without the payment of additional consideration by the
holder thereof, into such number of fully-paid and nonassessable shares of
Common Stock as is determined by dividing the Stated Value per share by the

A-3

--------------------------------------------------------------------------------

 

Conversion Price in effect at the time of conversion. The “Conversion Price” per
share shall be equal to the Stated Value per share, subject to adjustment as
provided in Section 7. Shares of Series A Convertible Preferred Stock converted
into Common Stock or redeemed in accordance with the terms hereof shall be
canceled and shall not be reissued.
     b) Holders shall effect conversions by providing the Company with the form
of conversion notice attached hereto as Annex A (a “Notice of Conversion”). Each
Notice of Conversion shall specify the number of shares of Series A Convertible
Preferred Stock to be converted, the number of shares of Series A Convertible
Preferred Stock owned prior to the conversion at issue, the number of shares of
Series A Convertible Preferred Stock owned subsequent to the conversion at issue
and the date on which such conversion is to be effected, which date may not be
prior to the date the applicable Holder delivers such Notice of Conversion to
the Company (such date, the “Conversion Date”). The Notice of Conversion shall
be deemed to have been delivered (i) five (5) Business Days after being mailed
by registered mail (return receipt requested and postage prepaid) to the
recipient, (ii) one (1) Business Day after being sent by overnight courier
(receipt confirmation requested) or (iii) if sent by facsimile transmission, on
the date of such transmission, with a confirming copy deposited in the United
States mail, postage prepaid. If no Conversion Date is specified in a Notice of
Conversion, the Conversion Date shall be the date that such Notice of Conversion
to the Company is deemed delivered hereunder. To effect conversions of shares of
Series A Convertible Preferred Stock, a Holder shall not be required to
surrender the certificate(s) representing such shares of Series A Convertible
Preferred Stock to the Company unless all of the shares of Series A Convertible
Preferred Stock represented thereby are so converted, in which case such Holder
shall deliver the certificate representing such shares of Series A Convertible
Preferred Stock promptly following the Conversion Date at issue.
Notwithstanding anything to the contrary contained herein, (i) if any conversion
would result in the issuance by the Company of more the 20% of the issued and
outstanding shares of Common Stock (prior to taking into account the
conversion), and, (ii) if at the time of conversion, any exchange where the
Common Stock is listed or quoted requires shareholder approval prior to the
issuance of more than 20% of the issued and outstanding shares, then, prior to
the issuance of any Common Stock that would exceed the 20% threshold, a
shareholders meeting shall be convened to vote upon whether the Company may
issue the shares above the 20% threshold.
     c) Fractional Shares. No fractional shares of Common Stock shall be issued
upon conversion of the Series A Convertible Preferred Stock. Any fractional
shares to which the holder would otherwise be entitled shall be rounded to the
nearest whole share. Whether or not fractional shares would be issuable upon
such conversion shall be determined on the basis of the total number of shares
of Series A Convertible Preferred Stock the holder is at the time converting
into Common Stock and the aggregate number of shares of Common Stock issuable
upon such conversion.

A-4

--------------------------------------------------------------------------------

 

     d) Mechanics of Conversion.
     i) Delivery of Certificate Upon Conversion. Not later than five (5) Trading
Days after each Conversion Date (the “Share Delivery Date”), the Company shall
deliver, or cause to be delivered, to the converting Holder a certificate or
certificates representing the number of shares of Common Stock being acquired
upon the conversion of shares of Series A Convertible Preferred Stock. If in the
case of any Notice of Conversion such certificate or certificates are not
delivered to or as directed by the applicable Holder by the fifth (5th) Trading
Day after the Conversion Date, the applicable Holder shall be entitled to elect
by written notice to the Company at any time on or before its receipt of such
certificate or certificates, to rescind such Conversion Notice by written notice
to the Company, in which event the Company shall promptly return to such Holder
any original Series A Convertible Preferred Stock certificate delivered to the
Company and such Holder shall promptly return any Common Stock certificates
representing the shares of Series A Convertible Preferred Stock tendered for
conversion to the Company.
     ii) Obligation Absolute; Damages. The Company’s obligation to issue and
deliver the Conversion Shares upon conversion of Series A Convertible Preferred
Stock in accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by a Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by such Holder or any other Person of any obligation to the Company;
provided, however, that such delivery shall not operate as a waiver by the
Company of any such action that the Company may have against such Holder. If the
Company fails to deliver to a Holder such certificate or certificates pursuant
to this Section on the fifth (5th) Trading Day after the Share Delivery Date
applicable to such conversion, it shall be deemed to be an Event of Default, as
defined below.
     e) Reservation of Shares Issuable Upon Conversion. The Company covenants
that it will at all times reserve and keep available out of its authorized and
unissued shares of Common Stock for the sole purpose of issuance upon conversion
of the Series A Convertible Preferred Stock, free from preemptive rights or any
other actual contingent purchase rights of Persons other than the Holders of the
Series A Convertible Preferred Stock, not less than such aggregate number of
shares of the Common Stock as shall (subject to the terms and conditions in the
Securities Purchase Agreement) be issuable upon the conversion of all
outstanding shares of Series A Convertible Preferred Stock. The Company
covenants that all shares of Common Stock that shall be so issuable shall, upon
issue, be duly authorized, validly issued, fully paid and nonassessable.
     7. Certain Adjustments.

A-5

--------------------------------------------------------------------------------

 

     a) Stock Dividends and Stock Splits. If the Company, at any time while this
Series A Convertible Preferred Stock is outstanding: (A) pays a stock dividend
or otherwise makes a distribution or distributions payable in shares of Common
Stock on shares of Common Stock or any other Common Stock Equivalents (which,
for avoidance of doubt, shall not include any shares of Common Stock issued by
the Company upon conversion of, or payment of a dividend on, this Series A
Convertible Preferred Stock); (B) subdivides outstanding shares of Common Stock
into a larger number of shares; (C) combines (including by way of a reverse
stock split) outstanding shares of Common Stock into a smaller number of shares;
or (D) issues, in the event of a reclassification of shares of the Common Stock,
any shares of capital stock of the Company, then the Conversion Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to this Section 7.a)
shall become effective immediately after the record date for the determination
of shareholders entitled to receive such dividend or distribution and shall
become effective immediately after the effective date in the case of a
subdivision, combination or re-classification.
     b) Fundamental Transaction. If, at any time while the Series A Convertible
Preferred Stock is outstanding, (i) the Company effects any merger or
consolidation of the Company with or into another Person, (ii) the Company
effects any sale of all or substantially all of its assets in one transaction or
a series of related transactions, (iii) any tender offer or exchange offer
(whether by the Company or another Person) is completed pursuant to which
holders of Common Stock are permitted to tender or exchange their shares for
other securities, cash or property, or (iv) the Company effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property (in any such case, a “Fundamental Transaction”),
then, upon any subsequent conversion of this Series A Convertible Preferred
Stock, the Holders shall have the right to receive, for each Conversion Share
that would have been issuable upon such conversion immediately prior to the
occurrence of such Fundamental Transaction, the same kind and amount of
securities, cash or property as it would have been entitled to receive upon the
occurrence of such Fundamental Transaction if it had been, immediately prior to
such Fundamental Transaction, the holder of one share of Common Stock (the
“Alternate Consideration”). For purposes of any such conversion, the
determination of the Conversion Price shall be appropriately adjusted to apply
to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Conversion Price among the
Alternate Consideration in a reasonable manner reflecting the relative value of
any different components of the Alternate Consideration. If holders of Common
Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holders shall be given the same choice as
to the Alternate Consideration the Holders receive upon any conversion of this
Series A Convertible Preferred Stock following such Fundamental Transaction.

A-6

--------------------------------------------------------------------------------

 

     c) Calculations. All calculations under this Section 7 shall be made to the
nearest cent or the nearest whole share, as the case may be. For purposes of
this Section 7, the number of shares of Common Stock deemed to be issued and
outstanding as of a given date shall be the sum of the number of shares of
Common Stock issued and outstanding.
     d) Notice to the Holders.
     i) Adjustment to Conversion Price. Whenever the Conversion Price is
adjusted pursuant to any provision of this Section 7, the Company shall promptly
mail to each Holder a notice setting forth the Conversion Price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment.
     ii) Notice to Allow Conversion by Holder. If (A) the Company shall declare
a dividend (or any other distribution in whatever form) on the Common Stock,
(B) the Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (C) the Company shall authorize the granting to
all holders of the Common Stock of rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights, (D) the
approval of any shareholders of the Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which
the Company is a party, any sale or transfer of all or substantially all of the
assets of the Company, or any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property or (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Company, then, in each case, the Company shall cause to be
filed at each office or agency maintained for the purpose of conversion of this
Series A Convertible Preferred Stock, and shall cause to be delivered to each
Holder at its last address as it shall appear upon the stock books of the
Company, at least ten (10) calendar days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as
of which the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be determined or
(y) the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and the
date as of which it is expected that holders of the Common Stock of record shall
be entitled to exchange their shares of the Common Stock for securities, cash or
other property deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange, provided that the failure to deliver such
notice or any defect therein or in the delivery thereof shall not affect the
validity of the corporate action required to be specified in such notice. The
Holder is entitled to convert the Series A Convertible Preferred Stock (or any
part hereof) during the ten (10) day period commencing on the date of such
notice through the effective date of the event triggering such notice.

A-7

--------------------------------------------------------------------------------

 

     8. Preferred Put Option.
     a) Option. During the period beginning on the Put Commencement Date and
terminating one hundred and eighty (180) days thereafter (the “Put Exercise
Period”) a holder shall have the right and option on up to three (3) occasions
(the “Preferred Put Option”), exercisable from time to time by written notice
(the “Put Notice”) delivered to Company by registered mail, overnight courier or
facsimile stating that the Holder intends to exercise its rights, to sell to
Company and to cause Company to purchase from the Holder any or all shares of
Series A Convertible Preferred Stock then held by the Holder, on an as-converted
basis, for an aggregate purchase price equal to the Put Price. The number of
as-converted shares (the “Put Shares”) shall be equal to the Stated Value per
share divided by Conversion Price per share, multiplied by the number of shares
of Series A Convertible Preferred Stock being put to the Company. The Put Notice
shall also specify the Put Closing Date. The Put Notice shall be deemed to have
been delivered (i) five (5) Business Days after being mailed by registered mail
(return receipt requested and postage prepaid) to the recipient, (ii) one
(1) Business Day after being sent by overnight courier (receipt confirmation
requested) or (iii) if sent by facsimile transmission, on the date of such
transmission, with a confirming copy deposited in the United States mail,
postage prepaid. If a Holder fails to deliver a Put Notice during the Put
Exercise Period, the Holder shall have forfeited the Preferred Put Option. Each
time that a Holder exercises the Preferred Put Option, the number of Put Shares
shall be at least ten percent (10%) of the shares of Series A Convertible
Preferred Stock then held by the Holder.
     b) Elimination of the Preferred Put Option. After the SEC Effective Date,
the Preferred Put Option shall be eliminated if the Company creates Shareholder
Value. “Shareholder Value” is defined as the occurrence of one or both of the
following: (i) if following the SEC Effective Date, within any rolling 90
trading day period (in which the Registration Statement is continuously
effective) the average of the 30 highest Volume Weighted Average Prices (not
required to be consecutive) of the Common Stock is greater than $2.21, or
(ii) if following the SEC Effective Date, within any rolling 90 trading day
period (in which the Registration Statement is continuously effective) the
average Volume Weighted Average Price of the Common Stock for 20 consecutive
trading days is greater than $2.21. For the avoidance of doubt, all of the days
in the computation of (i) and (ii) above shall fall within a period when the
Registration Statement is continuously effective.
     c) Acceleration of the Preferred Put Option. Upon the occurrence of an
Event of Default, the Holder shall send a notice of default to Company. The
notice of default shall include the default date. If the default is not cured
within any applicable cure period, the Put Commencement Date shall accelerate to
the later of (x) the default date specified in the notice if there is no cure
period or (y) the last date of any applicable cure period.

A-8

--------------------------------------------------------------------------------

 

     d) Put Price. For purposes hereof, with respect to each exercise of the
Preferred Put Option, the term “Put Price” shall mean the Put Price Per Share
multiplied by the number of Put Shares.
     e) Put Price Per Share. The “Put Price Per Share” shall be equal to the
Market Price.
     f) Put Closing Date. The Holder shall fix the date (a “Put Closing Date”)
for the exercise of a Preferred Put Option no earlier than ten (10) but not more
than thirty (30) Business Days after the Put Notice is deemed to be delivered.
     g) Closing Deliveries. On the Put Closing Date, the Holder will deliver the
certificates representing the Put Shares or deliver electronically (if physical
delivery, duly endorsed for transfer by the Holder or accompanied by duly
executed stock powers in blank) to Company, and Company shall deliver payment of
the Put Price in cash by wire transfer of immediately available funds to an
account at a bank designated by the Holder.
     h) Non-compliance. If the Company does not honor the Preferred Put Option
and comply with the terms of this Section 8, interest shall be due and payable
on the portion of the Put Price not paid at an annual rate of eighteen percent
(18%) payable monthly in cash.
     9. Preferred Call Option.
     a) Option. During the period beginning on the Effective Date and
terminating on September 30, 2011 (the “Call Exercise Period”) Company shall
have the right and option (the “Preferred Call Option”), exercisable by written
notice (the “Call Notice”) delivered to a Holder by registered mail, overnight
courier or facsimile stating that Company intends to exercise its rights to
purchase from the Holder and to cause the Holder to sell to Company all, but not
less than all, of the shares of Series A Convertible Preferred Stock then held
by the Holder on an as-converted basis, for an aggregate purchase price equal to
the Call Price. The number of as-converted shares (the “Call Shares”) shall be
equal to the Stated Value per share divided by the Conversion Price per share,
multiplied by the number of shares Series A Convertible Preferred Stock being
called by the Company (which shall not be less than all of the Series A
Convertible Preferred Stock). The Call Notice shall also specify the Call
Closing Date. The Call Notice shall be deemed to have been delivered (i) five
(5) Business Days after being mailed by registered mail (return receipt
requested and postage prepaid) to the recipient, (ii) one (1) Business Day after
being sent by overnight courier (receipt confirmation requested) or (iii) if
sent by facsimile transmission, on the date of such transmission, with a
confirming copy deposited in the United States mail, postage prepaid. If Company
fails to deliver a Call Notice during the Call Exercise Period, Company shall
have forfeited the Preferred Call Option.

A-9

--------------------------------------------------------------------------------

 

     b) Elimination of the Preferred Call Option. The Preferred Call Option
shall be eliminated upon the earliest to occur of: (i) the Preferred Put Option
is eliminated pursuant to Section 8.b), (ii) the Put Commencement Date is
accelerated pursuant to Section 8.c), (iii) October 1, 2011, (iv) the Company’s
execution of a letter of intent for a Business Combination, (v) the Company’s
execution of definitive documents for a Business Combination and (vi) the
Company’s public announcement (by press release, filing of a Current Report on
Form 8-K or other similar means) that it intends to consummate a Business
Combination.
     c) Call Price. For purposes hereof, the term “Call Price” shall mean the
Call Price Per Share multiplied by the number of Call Shares.
     d) Call Price Per Share. If the Call Closing Date occurs during the period
beginning on the Effective Date and ending on June 30, 2011, the Call Price Per
Share shall be equal to the Market Price less ten percent (10%). If the Call
Closing Date occurs during the period beginning on July 1, 2011 and ending on
September 30, 2011, the Call Price Per Share shall be equal to the Market Price.
     e) Call Closing Date. Company shall fix the date (the “Call Closing Date”)
for the exercise of the Preferred Call Option no earlier than ten (10) but not
more than thirty (30) Business Days after the Call Notice is deemed to be
delivered.
     f) Closing Deliveries. On the Call Closing Date, the Holder will deliver
the certificates representing the Call Shares or deliver electronically (if
physical delivery, duly endorsed for transfer by the Holder or accompanied by
duly executed stock powers in blank) to Company, and Company shall deliver
payment of the Call Price in cash by wire transfer of immediately available
funds to an account at a bank designated by Company.
     g) Section 16 Compliance. Company shall not exercise the Preferred Call
Option at any time that would result in the Holder incurring short swing profit
liability to permit the recapture of profits by the Company pursuant to
Section 16 of the Exchange Act involving an equity security in a transaction
within a period of 6 months.
     10. Definitions. As used herein, the following terms shall have the
following meanings:
     “Affiliate” means, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, Controls, is
Controlled By or is Under Common Control With, such specified Person.
     “Bankruptcy Event” means any of the following events: (a) the Company or
any Significant Subsidiary (as such term is defined in Rule 1-02(w) of
Regulation S-X) thereof

A-10

--------------------------------------------------------------------------------

 

commences a case or other proceeding under any bankruptcy, reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction relating to the Company or any
Significant Subsidiary thereof; (b) there is commenced against the Company or
any Significant Subsidiary thereof any such case or proceeding that is not
dismissed within sixty (60) days after commencement; (c) the Company or any
Significant Subsidiary thereof is adjudicated.
     “Business Combination” means any acquisition by the Company of
substantially all of the outstanding shares or assets of a Person (including an
unincorporated division or business) or the acquisition of substantially all of
the outstanding shares or assets of the Company, in each case, whether by stock
or asset purchase, merger, consolidation, share exchange or other business
combination.
     “Business Day” means a day on which federally-chartered banks are open for
business in Illinois and Michigan.
     “Common Stock” means the shares of common stock of the Company.
     “Common Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.
     “Control” (including the terms “Controlled By” and “Under Common Control
With”) means the possession, directly or indirectly, of the power to direct or
cause the direction of management, policies or activities of a Person, whether
through the ownership of voting securities or other interests, by contract or
otherwise.
     “Conversion Shares” means, collectively, the shares of Common Stock
issuable upon conversion of the shares of Series A Convertible Preferred Stock
in accordance with the terms hereof.
     “Effective Date” means the date of filing of this Certificate of
Designations.
     “Event of Default” means the occurrence of any of the following (each an
“Event of Default”):
     (a) From the Put Commencement Date until the earlier of (i) the expiration
of the Put Exercise Period or (ii) the Company’s payment in full of the Put
Obligations, if the Company violates one or more of the following covenants, and
such violation is not cured by Company within ten (10) days of receipt of notice
of the violation:
     (i) Company shall not enter into any agreement that would interfere with
this Certificate of Designation (e.g. a loan agreement that restricts equity
redemptions or dividends);
     (ii) Company shall not permit its unrestricted cash to fall below twenty
percent (20%) of Shareholders Equity (as measured in the Company’s audited
financial statements for Fiscal Year 2010). Company

A-11

--------------------------------------------------------------------------------

 

shall provide the Holder with a pro forma estimate of Shareholders Equity as
June 30, 2010. For purposes of this paragraph, the proceeds of a Holder’s
purchase of Series A Convertible Preferred Stock shall not be included within
Shareholders’ Equity. After the Put Commencement Date, Company shall provide a
certificate to the Holder within ten (10) days after the end of each calendar
month certifying that Company is in compliance with the covenant contained in
this paragraph; provided that the certificate shall be based on the Company’s
pro forma estimate of Shareholders Equity as of June 30, 2010 (which shall be
updated each month), until the audited financial statements for Fiscal Year 2010
have been prepared
     (iii) In addition to (a)(ii) above, as restrictions are lifted from any
restricted cash on the Company’s balance sheet as reported in its quarterly
report for the quarter ending December 31, 2009, an additional amount of cash
shall be reserved for the purpose of honoring the Put Obligations, if and when
the option is exercised by the Holder; provided that the cash reserved pursuant
to subsection (a)(ii) together with the cash reserved pursuant to this
subsection (a)(iii) shall not exceed the Put Obligations. If Shares are acquired
after the Effective Date that are subject to either the Put Option or Preferred
Put Option, then Holder shall notify the Company in writing (with the filing of
Form 4’s with the SEC constituting sufficient notice), and the Company shall
have two months to set aside sufficient cash to satisfy the Put Obligations with
respect to these Shares, and the Company shall certify as to compliance with the
foregoing in its monthly compliance certificates referred to in (ii) above.
After achieving compliance with the cash set aside requirements in each
instance, the Company shall thereafter maintain sufficient cash to satisfy 100%
of the Put Obligations until the earlier of the expiration of the Put Exercise
Period or the Company’s payment in full of the Put Obligations. If the Holder
elects in writing not to exercise the Preferred Put Option, or if the Preferred
Put Option expires in accordance with its terms, the Company shall be permitted
to use this cash for any other operating purpose.
     (iv) After any Put Commencement Date, the Company shall maintain sufficient
liquidity and cash resources to be able to honor the Preferred Put Option in
compliance with Section 345 of the Michigan Business Corporation Act of 1972, as
amended, or any other applicable successor statute; and
     (v) In lieu of maintaining the covenant contained in (ii) above, the
Company may provide a letter of credit in the amount of the Put Price, that
names the Holder as the account beneficiary, and in a form acceptable to the
Holder exercising reasonable judgment, or otherwise establish a segregated and
dedicated account containing an amount equal to the Put Price that is specially
and exclusively reserved for the benefit of the Holder if and when it elects to
exercise the Preferred Put Option.
     (b) Company fails to deliver to a Holder a certificate or certificates
pursuant to a conversion request pursuant to Section 6(d)(ii) of this
certificate within five (5) Trading Days after the Share Delivery Date, or the
Company

A-12

--------------------------------------------------------------------------------

 

otherwise breaches this Certificate of Designation which breach is not cured by
Company within ten (10) days of receipt of notice of breach;
     (c) Company becomes insolvent or generally fails to pay, or admits in
writing its inability to pay debts as they become due, a petition under any
section or chapter of the Bankruptcy Reform Act of 1978 or any similar law or
regulation is filed by or against Company (provided, however, that if the filing
of a Bankruptcy petition is involuntary, Company shall have 30 days from the
date of filing to have said petition dismissed), or Company shall make an
assignment for the benefit of creditors;
     (d) A judgment is entered by a court of competent jurisdiction against
Company in excess of two million dollars ($2,000,000) which is not stayed or
discharged within sixty (60) days, and the Company does not have sufficient cash
on hand to honor the Preferred Put Option;
     (e) The Company becomes delinquent in its periodic reporting requirements
under Section 13 of the Exchange Act that has the effect to bar any prospective
selling shareholder from reliance on Rule 144 of the Securities Act or to
preclude the use of an effective Registration Statement; or
     (f) The Common Shares are delisted from a national securities exchange,
NASDAQ, or fail to be quoted on the OTC Bulletin Board.
     “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder, or any similar successor statute.
     “Fiscal Year 2010” means the fiscal year of the Company ending on June 30,
2010.
     “Holder” means a holder of Series A Convertible Preferred Stock.
     “Junior Stock” means the Common Stock and all other securities of the
Company, including Common Stock Equivalents of the Company other than those
securities which are explicitly senior or pari passu to the Series A Convertible
Preferred Stock in dividend rights or liquidation preference.
     “Market Price” means the volume weighted average of the closing prices
during a 30 calendar day period immediately preceding the Effective Date of a
share of the Company’s capital stock on the principal United States securities
exchange registered under the Exchange Act on which such stock is listed.
     “Original Issue Date” means the date the Company initially issues the
shares of Series A Convertible Preferred Stock, regardless of the number of
times transfer of such share is made on the stock records maintained by or for
the Company and regardless of the number of certificates which may be issued to
evidence such shares.
     “Person” means any individual, corporation, partnership, association,
limited liability company, trust, estate, or other entity.

A-13

--------------------------------------------------------------------------------

 

     “Put Commencement Date” means October 1, 2011 (subject to acceleration
pursuant to Section 8.c)).
     “Put Obligations” means Company’s obligations under the Preferred Put
Option plus the put option held by the Holder on Common Stock.
     “Registration Statement” means any registration statement of the Company
under the Securities Act, including any amendment thereto, required to be filed
by the Company with respect to the Conversion Shares.
     “Rule 144” means Rule 144 promulgated under the Securities Act or any other
similar rule or regulation of the SEC that may at any time permit a holder of
any securities to sell securities of the Company to the public without
registration under the Securities Act.
     “SEC” means the United States Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act or the
Exchange Act.
     “SEC Effective Date” means the date a Registration Statement is declared
effective by the SEC.
     “Securities Act” means the Securities Act of 1933, as amended, and the
rules and regulations thereunder, or any similar successor statute.
     “Shareholders’ Equity” means shareholders equity as defined by Generally
Accepted Accounting Principles and as reported on the Company’s audited
financial statements prepared in accordance with past practices.
     “Subsidiary” means any corporation, association, partnership, limited
liability company or other business entity of which more than fifty percent
(50%) of the total voting power is, at the time, owned or controlled, directly
or indirectly, by the Company or one or more of the other Subsidiaries of the
Company or a combination thereof.
     “Trading Day” means a day on which the Common Stock is traded on a Trading
Market.
     “Trading Market” means the following exchanges on which the Common Stock is
listed for trading on the date in question: the New York Stock Exchange, the
Nasdaq Capital Market or the Nasdaq Global Market, the NYSE Amex, the OTCBB, or
Pink Sheets.
     “Volume Weighted Average Price” or “VWAP” means, for any security as of any
date, the dollar volume-weighted average price for such security on the
principal trading market during the period beginning at 9:30:01 am., New York
City time (or such other time as the principal trading market publicly announces
is the official open of trading), and ending at 4:00:00 p.m., New York City time
(or such other time as the principal trading market publicly announces is the
official close of trading) as reported by the Reporting Service (as defined
below) through its ‘Volume at Price’ functions, or, if the foregoing does not
apply, the dollar volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such security
during the period beginning at 9:30:01 a.m., New York City time (or such other
time as the principal trading

A-14

--------------------------------------------------------------------------------

 

market publicly announces is the official open of trading), and ending at
4:00:00 p.m., New York City time (or such other time as the principal trading
market publicly announces is the official close of trading), as reported by the
Reporting Service, or, if no dollar volume-weighted average price is reported
for such security by the Reporting Service for such hours, the average of the
highest closing bid price and the lowest closing ask price of any of the market
makers for such security as reported in the “pink sheets” by Pink Sheets LLC
(formerly the National Quotation Bureau, Inc.). If the Volume Weighted Average
Price cannot be calculated for a security on a particular date on any of the
foregoing bases, the Volume Weighted Average Price of such security on such date
shall be the fair market value as determined by the Company and the Holder. For
purposes of this section, “Reporting Service” means Bloomberg LP or if that
service is not then reporting the relevant information regarding the common
stock, a comparable reporting service of national reputation selected by the
Holder and the Company.
     IN WITNESS WHEREOF, this Certificate of Designations has been executed by a
duly authorized officer of the Company on this ___th day of
                    , ___.

            United American Healthcare Corporation,
a Michigan corporation
      By:           William C. Brooks, President and        Chief Executive
Officer     

A-15

--------------------------------------------------------------------------------

 

ANNEX A
NOTICE OF CONVERSION
(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT
SHARES
OF SERIES A PREFERRED STOCK)
The undersigned hereby elects to convert the number of shares of Series A
Convertible Preferred Stock indicated below into shares of common stock, $.001
par value per share (the “Common Stock”), of United American Healthcare
Corporation, a Michigan corporation (the "Company”), according to the conditions
hereof, as of the date written below. If shares of Common Stock are to be issued
in the name of a Person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto and is delivering herewith such
certificates and opinions as may be required by the Company in accordance with
the Certificate of Designation. No fee will be charged to the Holders for any
conversion, except for any such transfer taxes.
Conversion calculations:
Date to Effect Conversion:
 
Number of shares of Series A Convertible Preferred Stock owned prior to
Conversion:
 
Number of shares of Series A Convertible Preferred Stock to be Converted:
 
Stated Value of shares of Series A Convertible Preferred Stock to be Converted:
 
Applicable Conversion Price:
 
Number of shares of Preferred Stock subsequent to Conversion:
 

            [HOLDER]
            Name:         Title:      

A-16