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Item 1.01 |
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Entry into a Material Definitive Agreement. |
On June 23, 2011, registrant United American Healthcare Corporation (the Company) entered into a
Reimbursement Agreement and Mutual Release (the Reimbursement Agreement) with various parties
(collectively, the Parties), including Strategic Turnaround Equity Partners, L.P. (Cayman), a
Cayman Islands limited partnership (STEP), Bruce R. Galloway (Galloway), St. George
Investments, LLC, an Illinois limited liability company (St. George), John M. Fife (Fife), and
several of their respective affiliates. St. George is controlled by Mr. John M. Fife, who is our
Chairman, CEO and President.
Under the Reimbursement Agreement, the Parties agreed to dismiss the litigation between them in the
U.S. District Court for the Eastern District of Michigan, the Circuit Court for Wayne County,
Michigan, and the Michigan Court of Appeals, as well as to release each other from liability in
connection with any issue related to the litigation, in exchange for payments of $5,000 by each of
the Company and St. George to STEP (for a total of $10,000). The Parties filed a Joint Stipulation
of Dismissal on June 27, 2011.
As part of the Reimbursement Agreement and as further consideration for the releases, STEP, its
principals and affiliates, including Galloway, agreed that for 20 years they would not (i) purchase
any shares of common stock of the Company (Common Stock), (ii) take any insurgent action against
the Company, engage in any type of proxy challenge, tender offer, acquisition or battle for
corporate control with respect to the Company, (iii) initiate any lawsuit or governmental
proceeding against the Company, its affiliates or any or their respective directors, officers,
employees or agents, or (iv) take any action that would encourage any of the foregoing.
In addition, under the Reimbursement Agreement, each of the Company and St. George agreed to
reimburse STEP in the amount of $225,409.64 (for a total of $450,819.27) for expenses incurred by
STEP, Galloway and their affiliates in connection with the proxy contest for the election of
directors to the Companys Board of Directors (the Board) in 2010. St. George paid $225,409.64
in cash on June 27, 2011. The payment of $225,409.64 by the Company is payable from the proceeds
of the sale of artwork owned by the Company. However, the Companys payment obligation will be due
and payable upon the occurrence of the earlier of (i) the Companys receipt of at least $225,409.64
from an escrow held in the State of Tennessee, (ii) a refinancing of the Companys credit facility
with Fifth Third Bank dated March 31, 2009, as amended, or (iii) June 12, 2012.
In connection with the Reimbursement Agreement, Galloway resigned from the Board, on June 23, 2011,
effective immediately.
In addition, in connection with the Reimbursement Agreement, on June 24, 2011, St. George purchased
774,151 shares of the Common Stock owned by STEP, Galloway and their affiliates at a price of
$0.20112 per share for a total purchase price of $155,697.25 (the Stock Purchase).
Finally, pursuant to the Waiver Agreement dated June 23, 2011, between St. George, the Company,
STEP, Galloway and others, STEP, Galloway and their affiliates agreed to sell in the open market
within 30 days all of their shares of the Companys common stock that were not purchased by St.
George. After this 30-day period, STEP, its principals and affiliates, including Galloway, will
own no Common Stock and are prohibited from owning Common Stock for 20 years in the future.
On June 27, 2011, St. George exercised its right to convert, into newly issued Common Stock, the
entire $400,000 principal amount, plus $4,383.56 in accrued interest, of the Convertible Promissory
Note (the Note) issued by the Company to St. George, as disclosed in the Companys Current Report
on Form 8-K filed on May 18, 2011. Based on the conversion price of $0.20112 per share set forth
in the Note, the Company issued 2,010,658 new shares of Common Stock to St. George. This issuance increased the
total number of issued and outstanding shares of Common Stock from 9,807,108 to 11,817,766 shares.