PLEDGE AGREEMENT
BETWEEN
TRANS HEALTHCARE, INC.
AND
MONARCH PROPERTIES, LP
DATED AS OF __________, 1998
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Pledge Agreement") made as of __________, 1998
between TRANS HEALTHCARE, INC. ("Pledgor") for the benefit of MONARCH
PROPERTIES, LP ("Monarch").
The circumstances underlying the execution of this Pledge Agreement are as
follows:
A. Monarch has purchased from Xxxxxx Management Corporation and leased to
[Insert THI Subsidiary Lessee] ("Subsidiary") three (3) health care facilities
("Facilities") pursuant to a Master Lease ("Master Lease"), dated as of the date
hereof.
B. Monarch has required, as a condition to its purchase of the Facilities
and lease thereof to Subsidiary, that Pledgor execute and deliver to Monarch
this Pledge Agreement, pursuant to which Pledgor pledges to Monarch, as security
for the Guaranty, all shares of common stock now or hereafter owned by Pledgor
in the Subsidiary, on the terms and conditions hereinafter set forth.
C. Capitalized words not defined herein shall have the definitions given
them in the Master Lease.
NOW, THEREFORE, in consideration of the foregoing, and other valuable
consideration, the receipt, legal adequacy and sufficiency of which hereby are
acknowledged, Pledgor agrees with Monarch as follows:
1. DEFINITION OF "PLEDGED STOCK". For purposes of this Pledge Agreement,
the term "Pledged Stock" means and includes all of the issued and outstanding
shares of the common stock or other securities of the Subsidiary now or
hereafter owned by Pledgor or voting trust certificates or other documents of
any kind evidencing any and all ownership or other interests of Pledgor in the
Subsidiary, including, without limitation, those listed on Exhibit A hereto and
any supplemental Exhibit A attached hereto or delivered to Monarch from time to
time.
2. PLEDGE; RIGHTS AND REMEDIES. (a) As collateral security for the due
payment and performance of all indebtedness and other liabilities and
obligations payable or due to Monarch from Subsidiary under the Master Lease,
whether now existing or hereafter arising (collectively, the "Obligations"),
Pledgor hereby pledges, assigns, hypothecates, delivers and sets over to Monarch
all of Pledgor's right, title and interest in and to the Pledged Stock, and
hereby grants to Monarch a security interest in all of its right, title and
interest in and to the Pledged Stock and in the proceeds thereof. Concurrently
herewith, Pledgor has delivered to Monarch all certificates representing the
currently existing Pledged Stock, together with a Stock Assignment
Separate from Certificate ("Assignments"), substantially in the form of attached
Exhibit B hereto, for each certificate representing the Pledged Stock, all duly
executed in blank. Monarch shall hold such certificates and Assignments as
security for performance by Pledgor of the obligations secured hereby and shall
at all times have the first priority and only lien therein.
(b) If Pledgor becomes entitled to receive, or if Pledgor receives,
any additional stock or voting trust certificate of the Subsidiary (including,
without limitation, any certificate representing a stock dividend or a
distribution in connection with any reclassification, increase, or reduction of
capital), option or rights, whether as an addition to, in substitution of, or in
exchange for any Pledged Stock, or otherwise, Pledgor shall accept any such
instruments as Monarch's agent, shall hold them in trust for Monarch, and shall
deliver them forthwith to Monarch in the exact form received, with Pledgor's
endorsement when necessary, and/or appropriate stock powers duly executed in
blank, to be held by Monarch, subject to the terms hereof, as further collateral
security for the Obligations.
(c) Upon the occurrence and continuation of an Event of Default, or
the occurrence and continuation beyond any applicable cure or grace period of
any other material breach of or default under the Obligations:
(i) Any or all shares of the Pledged Stock held by Monarch hereunder
may, at the option of Monarch, be registered in the name of Monarch or its
nominee as pledgee, and Monarch or its nominee may thereafter, without
notice, exercise all available voting and corporate rights at any meetings
of the Subsidiary and exercise any and all rights of conversion, exchange,
subscription or any other rights, privileges or options pertaining to any
of the Pledged Stock as if it were the absolute owner thereof, including,
without limitation, the right to receive dividends payable thereon and the
right to exchange, at its discretion, any and all of the Pledged Stock upon
the merger, consolidation, reorganization, recapitalization or other
readjustment of any corporation issuing any of such securities or upon the
exercise by any such issuer of any right, privilege or option pertaining to
any of the Pledged Stock, and in connection therewith, to deposit and
deliver any and all of the Pledged Stock with any committee, depository,
transfer agent, registrar or other designated agency upon such terms and
conditions as it may determine, all without liability except to account for
property actually received by it, but Monarch shall have no duty to
exercise any of the foregoing rights, privileges or options and shall not
be responsible for any failure or omission to do so or delay in so doing.
(ii) Monarch shall have the right to require that all cash dividends
payable with respect to any part of the Pledged Stock be paid to Monarch to
be held by Monarch as additional security hereunder until applied to the
Obligations.
(iii) Monarch, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of
the time and place of public or
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private sale) to or upon Pledgor or any other person or entity, including
without limitation, any trustee (all and each of which demands,
advertisements and/or notices are, to the extent permitted by law, hereby
expressly waived), immediately may collect, receive, appropriate and
realize upon the Pledged Stock, or any part thereof, and/or immediately may
sell, assign, give an option or options to purchase, contract to sell or
otherwise dispose of and deliver the Pledged Stock, or any part thereof, in
one or more parcels at public or private-sale or sales, in whatever order
Monarch may select, at any exchange, broker's board or at any of Monarch's
offices or elsewhere at such prices and on such terms (including, without
limitation, a requirement that any purchaser of all or any part of the
Pledged Stock shall be required to purchase the securities constituting the
Pledged Stock for investment and without any intention to make a
distribution thereof) as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk, with the right of
Monarch or any Monarch subsidiary upon any such sale or sales, whether
public or private, to purchase the whole or any part of the Pledged Stock
so sold, free of any right or equity of redemption in Pledgor, which right
or equity is hereby expressly waived and released.
(d) The proceeds of any collection, recovery, receipt, appropriation,
realization, sale or other disposition shall be applied as follows:
(i) First, to the reasonable costs and expenses of every kind incurred
in connection therewith or incidental to the care, safekeeping, or
otherwise of any and all of the Pledged Stock or in any way relating to the
rights of Monarch hereunder, including reasonable attorneys fees and legal
expenses;
(ii) Second, to the satisfaction of the Obligations in such order as
Monarch may determine in its sole discretion;
(iii) Third, to the payment of any other amounts required by
applicable law; and
(iv) Fourth, to Pledgor, to the extent of the surplus proceeds, if
any.
Monarch shall have no duty to account to Pledgor unless a surplus exists upon
liquidation of the Pledged Stock and any other collateral.
(e) Monarch shall give Pledgor at least ten (10) Business Days'
written notice of the time and place of any public sale or of the time after
which a private sale may take place, and such notice shall be deemed to be
reasonable notification of such matters.
3. RIGHTS OF PLEDGOR UNTIL GUARANTY DEFAULT. Unless and until an Event of
Default shall have occurred and be continuing, Pledgor shall be entitled:
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(a) to vote all or any part of the Pledged Stock at any and all
shareholder meetings of the Subsidiary and to execute consents in respect
thereof, and to consent to, ratify or waive notice of any or all shareholder
meetings of the Subsidiary with the same force and effect as if this Pledge
Agreement had not been made and, if necessary and upon the receipt of the
written request from the Pledgor, Monarch shall from time to time execute and
deliver appropriate proxies for that purpose provided that Pledgor covenants and
agrees not to vote the Pledged Stock in a manner that would create a Guaranty
Default (as defined in the Guaranty) or breach of or default under the
Obligations (as defined in the Guaranty) or create circumstances that, with the
passage of time and/or the giving of notice, would create a Guaranty Default or
breach of or default under the Obligations, and
(b) to receive and collect or to have paid over all dividends declared
or paid on the Pledged Stock, except (i) dividends or distributions constituting
stock dividends, (ii) dividends or distributions in kind, or (iii) liquidating
dividends (either partial or complete), provided that any and all such excepted
dividends and distributions shall constitute additional collateral for the
purposes of this Pledge Agreement and shall be delivered and pledged with
Monarch in accordance with Section 2(b) hereof.
4. REPRESENTATIONS. Pledgor represents and warrants that:
(a) Pledgor is, as of the date hereof, the legal and beneficial owner
of all of the Pledged Stock.
(b) All of the shares of the Pledged Stock have been duly and validly
issued, are fully paid and non-assessable and are owned by Pledgor free and
clear of any pledge, mortgage, hypothecation, lien, charge, encumbrance or
security interest in such shares or the proceeds thereof, except for the
security interest granted to Monarch under this Pledge Agreement.
(c) Upon delivery of the Pledged Stock to Monarch or an agent for
Monarch, this Pledge Agreement creates and grants a valid first lien on and
perfected security interest in the shares of the Pledged Stock and the proceeds
thereof, subject to no prior security interest, lien, charge or encumbrance and
subject to no other security interest, lien, charge or encumbrance or to any
agreement purporting to grant to any third party a security interest in the
property or assets of Pledgor that would include the Pledged Stock.
(d) To the best of Pledgor's knowledge, no authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required to be obtained or made by Pledgor either (i) for the
pledge by Pledgor of the Pledged Stock pursuant to this Pledge Agreement or for
the execution, delivery or performance of this Pledge Agreement by Pledgor, or
(ii) for the exercise by Monarch of the voting or other rights provided for in
this Pledge Agreement or the remedies in respect of the Pledged Stock pursuant
to
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this Pledge Agreement, subject to applicable state and securities laws. Pledgor
has the right and power and is duly authorized to enter into this Pledge
Agreement.
(e) Neither the execution or, delivery of this Pledge Agreement, nor
the consummation of the transactions contemplated hereby, nor the compliance
with or performance of the terms and conditions of this Pledge Agreement by
Pledgor is prevented by, limited by, conflicts with or will result in the breach
or violation of or a default under the terms, conditions or provisions of (i)
any mortgage, security agreement, indenture, evidence of indebtedness, loan or
financing agreement, trust agreement, stockholder agreement, or other agreement
or instrument to which Pledgor is a party or by which he is bound or (ii) any
provision of law, any order of any court or administrative agency or rule or
regulation applicable to Pledgor, subject to applicable state and federal
securities laws.
(f) Any assignee of all or any portion of the Pledged Stock is
entitled to receive payments with respect thereto without any defense,
counterclaim, set-off, abatement, reduction, recoupment or other claims arising
out of the actions of Pledgor.
(g) There are no actions, suits or proceedings (whether or not
purportedly on behalf of Pledgor) pending or, to the best knowledge of Pledgor,
threatened or affecting Pledgor that involve the Pledged Stock.
(h) All consents or approvals, if any, required as a condition
precedent to or in connection with the due and valid execution, delivery and
performance by Pledgor of this Pledge Agreement have been obtained, subject to
applicable state and federal securities laws.
(i) The Subsidiary is duly organized, validly existing and in good
standing under the laws of the State of [Insert State].
5. COVENANTS. (a) Pledgor hereby covenants that, so long as the Obligations
shall be outstanding and unpaid, in whole or in part, Pledgor will not, without
Monarch's prior written consent, sell, convey or otherwise dispose of any shares
of the Pledged Stock or any interest therein, nor will Pledgor create, incur or
permit to exist any pledge, mortgage, lien, charge, encumbrance or any security
interest whatsoever with respect to any of the Pledged Stock or the proceeds
thereof other than that created or permitted hereby, nor shall Pledgor vote the
Pledged Stock to permit or authorize the Subsidiary to issue any new debt or
equity securities.
(b) Pledgor warrants and will defend Monarch's right, title and
security interest in and to the Pledged Stock against the claims of any person,
firm, corporation or other entity.
6. SALE OF PLEDGED STOCK. (a) If Monarch shall determine to exercise its
right to sell any part of the Pledged Stock, and if, in the opinion of counsel
for Monarch, it is necessary to have the Pledged Stock, or that portion thereof
to be sold, registered under the provisions of the
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Securities Act of 1933, as amended (the "Securities Act"), Pledgor will use its
best efforts to cause the Subsidiary to (i) execute and deliver, and cause the
directors and officers of the Subsidiary, to execute and deliver, all at
Pledgor's expense, all such instruments and documents, and to do or cause to be
done all such other acts and things, as may be necessary to register the Pledged
Stock, or that portion thereof to be sold, under the provisions of the
Securities Act and to cause the registration statement relating thereto to
become effective and to remain effective for a period of one (1) year from the
date of the first public offering of the Pledged Stock, or that portion thereof
so to be sold, and to make all amendments thereto and/or to the related
prospectus which, in the opinion of Monarch or its counsel, are necessary or
advisable, all in conformity with the requirements of the Securities Act and the
rules and regulations of the Securities and Exchange Commission thereto; (ii)
comply with the provisions of the securities laws and regulations of any
jurisdiction which Monarch shall designate; and (iii) make available to its
security holders, as soon as practicable, an earnings statement (which need not
be audited) covering a period of twelve (12) months, but not more than eighteen
(18) months, beginning with the first month after the effective date of any such
registration statement, which earnings statement will satisfy the provisions of
Section 11(a) of the Securities Act.
(b) Pledgor acknowledges that a breach of any of the covenants
contained in subparagraph 6(a) above will cause irreparable injury to Monarch,
that Monarch shall have no adequate remedy at law in respect of such breach and,
as a consequence, the covenants of Pledgor contained in said subparagraph 6(a)
shall be specifically enforceable against Pledgor. Pledgor hereby waives, and
shall not assert, any defenses against an action for specific performance of
such covenants, except for a defense that no other breach of or default under
the Obligations has occurred and is continuing.
(c) Notwithstanding the foregoing, Pledgor recognizes that Monarch may
be unable to effect a public sale of all or a part of the Pledged Stock, and may
be compelled to resort to one or more private sales to a restricted group of
purchasers who will be obligated to agree, among other things, to acquire such
securities for their own account, for investment and not with a view to the
distribution or resale thereof. Pledgor acknowledges that any such private sales
may be at places and on terms less favorable to the seller than if sold at
public sales and agrees that such private sales shall be deemed to have been
made in a commercially reasonable manner, and that Monarch has no obligation to
delay sale of any such securities for the period of time necessary to permit the
issuer of such securities to register such securities for public sale under the
Securities Act.
7. COOPERATION. Pledgor shall, at any time and from time to time upon the
request of Monarch, execute and deliver such further documents and do such
further acts and things as Monarch reasonably may request in order to effectuate
the purposes of this Pledge Agreement, including, without limitation, delivering
to Monarch on the date hereof or at any time hereafter irrevocable proxies in
respect of the Pledged Stock in the form of Exhibit C hereto.
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8. GENERAL. (a) Beyond the exercise of reasonable care to assure the safe
custody of the Pledged Stock while held hereunder, Monarch shall have no duty or
liability to preserve rights pertaining thereto and shall be relieved of all
responsibility for the Pledged Stock upon surrendering it to Pledgor.
(b) No course of dealing between Pledgor and Monarch, nor any failure
to exercise, nor any delay in exercising, on the part of Monarch, any right,
power, or privilege, whether now existing or hereafter arising hereunder or
under the obligations, shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, power, or privilege hereunder or thereunder
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege.
(c) The rights and remedies herein provided and provided in all other
agreements, instruments and documents delivered or to be delivered pursuant to
any of the foregoing or the Obligations are cumulative and are in addition to,
and not exclusive of, any rights or remedies provided by law, including, without
limitation, the rights and remedies of a secured party under the Uniform
Commercial Code.
(d) The provisions of this Pledge Agreement are severable, and if any
clause or provision shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction, and shall not
in any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision in this Pledge Agreement in any jurisdiction.
(e) This Pledge Agreement shall inure to the benefit of, and be
binding upon, the successors and assigns of the parties hereto. Notwithstanding
the foregoing, Pledgor shall not have the right to assign or delegate any of its
rights or obligations hereunder without the prior written consent of Monarch,
and any purported assignment or delegation in the absence of such consent shall
be void.
(f) THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS
CONFLICT OF LAW PROVISIONS. PLEDGOR CONSENTS TO IN PERSONAM JURISDICTION BEFORE
THE STATE AND FEDERAL COURTS OF THE STATE OF NEW YORK AND AGREES THAT ALL
DISPUTES CONCERNING THIS AGREEMENT BE HEARD IN THE STATE AND FEDERAL COURTS
LOCATED IN THE STATE OF NEW YORK. PLEDGOR AGREES THAT SERVICE OF PROCESS MAY BE
EFFECTED UPON PLEDGOR UNDER ANY METHOD PERMISSIBLE UNDER THE LAWS OF THE STATE
OF NEW YORK AND IRREVOCABLY WAIVES ANY OBJECTION TO VENUE IN THE STATE AND
FEDERAL COURTS OF THE STATE OF NEW YORK.
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(g) Pledgor recognizes that Monarch has relied on the pledge and
security interest granted herein by Pledgor in extending credit and making the
financial accommodations contemplated by the Master Lease and Pledgor agrees
that such reliance by Monarch shall be sufficient consideration for this pledge.
(h) This Pledge Agreement may be signed in any number of counterparts
with the same effect as if the signatures thereto and hereto were upon the same
instrument.
(i) The section headings used herein are for convenience only and
shall not be read or construed as limiting the substance or generality of this
Pledge Agreement.
(j) Whenever the singular shall be used hereunder, it shall be deemed
to include the plural (and vice-versa) and reference to one gender shall be
construed to include all other genders, including neither, whenever the context
of this Pledge Agreement so requires.
SIGNATURE PAGE FOLLOWS
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IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to be
duly executed and delivered as of the day and first year first written above.
TRANS HEALTHCARE, INC.
By:
-----------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
---------------------------------------
Title: President
--------------------------------------
MONARCH PROPERTIES, LP
By: MP Operating, Inc., as General Partner
By:
-----------------------------------------
Name: Xxxx X. Xxxxx
---------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
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