EXHIBIT 10.2
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (the "AGREEMENT") dated effective as of July 15,
2002, is made by U.S. Medical Development, Inc., a Nevada Corporation
("PLEDGOR"), whose address is 0000 Xxxxx Xxxxx Xxxxxxx 000, Xxxxx 000, Xxxxxx,
XX 00000, for the benefit of Endocare, Inc., a Delaware corporation ("PLEDGEE"),
whose address is 000 Xxxxxxxxxx Xxxxx, Xxxxxx, XX 00000.
R E C I T A L S
A. The Pledgor has delivered to the Pledgee a non-recourse Promissory
Note dated July 15, 2002, payable to the order of the Pledgee in the principal
amount of $6,800,000 (the "NOTE") in connection with the purchase by the Pledgor
and the financing by the Pledgee of the general partnership interests and
limited partnership interests of Litho Management, Inc., a Texas corporation in
U. S. Lithotripsy, L.P., a Texas limited partnership, pursuant to that certain
Partnership Interest Purchase Agreement dated June 28, 2002, by and among the
Pledgor, Healthtronics Surgical Services, Inc., and Litho Management, Inc.
B. Pledgor wishes to provide collateral security for the Secured
Indebtedness (as hereinafter defined) in the form of a pledge of the Collateral
(as hereinafter more specifically defined), which in general consist of all of
Pledgor's right, title and interest in and to its general and limited partner
interests in partnerships and membership interests in limited liability
companies owning medical devices which provide cryosurgical therapy for prostate
cancer and microwave therapy for benign prostate hyperplasia ("BPH").
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, and the direct and indirect material benefit to be
received by Pledgor by reason of the Agreement and the Note, which benefit is
hereby expressly acknowledged by Pledgor, Pledgor agrees as follows:
SECTION 1
DEFINITIONS
(a) Each capitalized term used herein and defined in the Note or the
Agreement shall have the meaning assigned to it in the Note and Agreement,
respectively, unless otherwise defined herein or the context otherwise requires.
In addition, as used herein, the following terms shall, unless otherwise
indicated, have the following meanings:
"ADDITIONAL PLEDGED COLLATERAL" means any and all interests in (a) any
additional equity interest in the Entities hereafter acquired by Pledgor, any
and all of Pledgor's other additional rights and interests in and to the
Entities and any and all of Pledgor's rights to and interests in any proceeds,
income, profits or distributions under or pursuant to the Governing Documents or
otherwise, including (i) all rights of Pledgor to receive moneys in repayment of
loans made to the Entities pursuant to the Governing Documents or otherwise,
(ii) all rights of Pledgor to receive proceeds of any insurance, indemnity,
warranty or guaranty with respect to the Pledged Equity Interests, (iii) all
claims of Pledgor for damages arising out of or for breach of or default or
misrepresentation under the Governing Documents or any documents, instruments or
opinions delivered pursuant thereto, (iv) any right of Pledgor to terminate each
of the Governing Documents, to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder and (v) all rights of Pledgor to vote
and give appraisals, consents, decisions and directions and exercise any other
similar rights with respect to any lawful action of the Entities, and (b) to
the extent not included in the foregoing, all proceeds and supporting
obligations of or with respect to the Pledged Equity Interests and any such
Additional Pledged Collateral.
"CODE" means the Uniform Commercial Code as in effect in the State of
California.
"COLLATERAL" means interests of Pledgor identified in SECTION 2.1
hereof.
"ENTITY(ies)" means (a) each of U.S. Microwave, LLC, a Texas limited
liability company, North Texas PVP, LLP, a Texas limited liability partnership,
Atlantic Cryotherapy, a Texas limited partnership, Central States Cryotherapy, a
Texas limited partnership, East Coast Cryotherapy, a South Carolina limited
partnership, East Michigan Cryotherapy, a Texas limited partnership, Georgia
Cryotherapy, a Texas limited partnership, Kansas City Cryotherapy, a limited
partnership, Mid-America Cryotherapy, a Texas limited partnership, Rocky
Mountain Cryotherapy, a Texas limited partnership, Xxxxx Cryotherapy, a Texas
limited partnership, South Coast Cryotherapy, a Texas limited partnership, and
any other Entity owning medical devices providing cryosurgical therapy for
prostate cancer or microwave therapy for BPH, as such entities exist or may
hereinafter be restated, amended, or restructured, and (b) any partnership,
limited liability company, joint venture, or corporation formed as a result of
the restructure, reorganization, or amendment of any of such Entity.
"EVENT OF DEFAULT" has the meaning assigned to such term in SECTION 4.1.
"GOVERNING DOCUMENTS" with respect to any of the Entities means, if a
general partnership, the partnership agreement and any statement of partnership,
if a limited partnership, the limited partnership agreement and the certificate
of limited partnership, if a limited liability company, the articles of
organization and operating agreement, if another type of entity, any charter or
similar document adopted or filed in connection with the creation, formation or
organization, if a person, all equity holders agreements, voting agreements,
voting trust agreements, joint venture agreements, registration rights
agreements or other agreements or documents related to the organization,
management or operation of any Entity or relating to the rights, duties, or
obligations of the equity holders of any Entity, and any amendment or supplement
to any of the foregoing.
"INTERESTS" shall mean all general partner interests, limited partner
interests, limited liability company membership interests and any other equity
or voting interests owned by Pledgor or any affiliate thereof in the Entities as
more fully set forth on Exhibit A attached hereto and incorporated in full by
this reference.
"PLEDGED EQUITY INTERESTS" means the Interests and all distributions,
proceeds, fees, preferences, payments, or other benefits, which Pledgor now is
or may hereafter become entitled to receive with respect to the Interests and
with respect to the repayment the Note now or hereafter made by Pledgor to the
Pledgee.
"SECURED INDEBTEDNESS" shall have the meaning assigned to such term in
SECTION 2.1(c) hereof.
"SECURITY INTERESTS" means the pledge and security interests securing
the Secured Indebtedness, including (a) the pledge and security interest in the
Pledged Equity Interests granted in this Agreement, and (b) all other security
interests created or assigned as additional security for the Secured
Indebtedness pursuant to the provisions of this Agreement.
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(b) Whenever the context so requires, the neuter gender includes the
masculine and feminine, and the singular number includes the plural, and vice
versa.
SECTION 2
COLLATERAL AND OBLIGATIONS
2.1 GRANT OF SECURITY INTEREST.
(a) As collateral security for the Secured Indebtedness, Pledgor
hereby pledges and grants to Pledgee a first priority lien on and security
interest in and to, and agrees and acknowledges that Pledgee has and shall
continue to have, a security interest in and to, and assigns, transfers,
pledges, and conveys to Pledgee, all of Pledgor's right, title, and interest in
and to (i) the Pledged Equity Interests, and the Additional Pledged Collateral
and any certificates and instruments now or hereafter representing the Pledged
Equity Interests and the Additional Pledged Collateral, (ii) all rights,
interests and claims with respect to the Pledged Equity Interests, and
Additional Pledged Collateral, including under any and all related agreements,
instruments and other documents, and (iii) all books, records and other
documentation of Pledgor related to the Pledged Equity Interests, and Additional
Pledged Collateral, in each case whether presently existing or owned or
hereafter arising or acquired and wherever located (collectively, the "Pledged
Collateral").
(b) The Security Interests are granted as security only and shall
not subject Pledgee or any holder of the Secured Indebtedness to, or transfer or
in any way affect or modify, any obligation or liability of Pledgor with respect
to any of the Pledged Collateral.
(c) The Pledged Collateral shall secure the following obligations,
indebtedness, and liabilities (whether at stated maturity, by acceleration, or
otherwise) (all such obligations, indebtedness, and liabilities being
hereinafter sometimes called the "SECURED INDEBTEDNESS"):
(i) the Note;
(ii) all reasonable costs and expenses, including, without
limitation, all reasonable attorneys' fees and legal expenses, incurred by
Pledgee to preserve and maintain the Pledged Collateral, collect the obligations
herein described, or enforce the Note; and
(iii) all extensions, renewals, amendments, and modifications of
any of the foregoing.
(d) Pledgor shall not have any personal or corporate liability for
the payment of the Secured Indebtedness, it being understood that Pledgee shall
look solely to the Pledged Collateral to enforce payment of the Secured
Indebtedness against Pledgor.
2.2 CONSENT. To the extent the Governing Documents require the consent
or agreement of Pledgor to the transfer, conveyance, or encumbrance of all or
any portion of the Pledged Collateral, Pledgor hereby irrevocably consents to
(a) the grant of the security interest described in SECTION 2.1 of this
Agreement, and (b) the transfer or conveyance of the Pledged Equity Interests
and other Pledged Collateral pursuant to Pledgee's exercise of its rights and
remedies under SECTION 4.4 of this Agreement or the Note.
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SECTION 3
REPRESENTATIONS AND WARRANTIES AND COVENANTS
Pledgor hereby represents and warrants to Pledgee as follows:
(a) This Agreement has been duly executed and delivered by Pledgor and
is the legal and binding obligation of Pledgor enforceable in accordance with
its terms;
(b) Upon execution of this Agreement and an appropriate financing
statement by Pledgor and the recording of the financing statement in the
appropriate office, Pledgee will have a valid, first, and prior perfected
security interest in the Pledged Collateral; and
(c) The chief executive office and principal place of business of
Pledgor is in Irving, Dallas County, Texas and its place of formation is the
State of Nevada.
(d) The Interests will represent all of the general and limited partner
interests, membership interests, and other equity interests owned by Pledgor and
the Affiliates in Entities owning medical devices which provide cryosurgical
therapy for prostate cancer and/or microwave therapy for BPH.
(e) No authorization, consent, approval, license, exemption of, or
filing or registration with, any governmental authority, or approval of consent
of any other person (including any party to any of the Governing Documents), is
required for the due execution, delivery or performance by Pledgor of this
Agreement.
(f) All of the Interests have been, and upon issuance of any additional
Pledged Collateral will be, duly and validly issued, and are and will be fully
paid and non-assessable.
(g) With respect to the Collateral the Pledgor is, and with respect to
any Additional Collateral the Pledgor will be, the legal record and beneficial
owner thereof and has and will have good and marketable title thereto, subject
to no lien except for the pledge and security interest created by this
Agreement.
(h) None of the Interests has been transferred in violation of the
securities registration, securities disclosure or similar laws of any
jurisdiction to which such transfer may be subject.
(i) Other than (i) financing statements disclosed to Pledgee and (ii)
financing statements in favor of the Pledgee, no effective financing statement
naming Pledgor as debtor, assignor, grantor, mortgagor, pledgor or the like and
covering all or any part of the Collateral is on file in any filing or recording
office in any jurisdiction.
(j) Each of the Governing Documents contains the entire agreement
between the parties thereto with respect to the subject matter thereof, has not
been amended or modified, and is in full force and effect in accordance with its
terms. To the best of the knowledge of Pledgor, there exists no material
violation or material default under any of the Governing Documents by Pledgor or
the other parties thereto. Pledgor has not knowingly waived or released any of
its material rights under or otherwise consented to a material departure from
the terms and provisions of any of the Governing Documents.
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Pledgor makes the following covenants:
(a) Pledgor will not cause, permit, or consent to (i) any amendment or
modification to the Governing Documents in effect as of the date hereof (except
an amendment as contemplated herein), or (ii) any transfer or change in the
ownership of the equity interests in the Entities;
(b) Pledgor will not sell, transfer, mortgage, or otherwise encumber any
Pledged Collateral in any manner without first obtaining the written consent of
Pledgee, which consent may be withheld in Pledgee's sole and absolute
discretion. Any written consent to any such sale, mortgage, transfer, or
encumbrance shall not be construed to be a waiver of this provision in respect
of any subsequent proposed sale, mortgage, transfer, or encumbrance;
(c) Pledgor will, at its expense and in such manner and form as Pledgee
may from time-to-time reasonably require, execute, deliver, file, and record any
financing statement, specific assignment, or other instruments, certificates, or
papers, and take any other action that may be necessary or desirable, or that
Lender may from time-to-time reasonably request, in order to create, preserve,
perfect, or validate any Security Interest, or to enable Pledgee to exercise and
enforce its rights hereunder with respect to any of the Pledged Collateral. In
the event, for any reason, that the law of any jurisdiction other than the State
of California becomes or is applicable to the Pledged Collateral, or any part
thereof, Pledgor agrees to execute and deliver all such instruments and to do
all such other things that may be necessary or appropriate to preserve, protect,
and enforce the Security Interests of Lender under the law of such other
jurisdiction, to at least the same extent that the Security Interests would be
protected under the Code. To the extent permitted by applicable law, Pledgor
hereby authorizes Pledgee to execute and file, in the name of Pledgor or
otherwise, Uniform Commercial Code financing statements that Pledgee in its sole
discretion may deem necessary or appropriate to further perfect the Security
Interests;
(d) Pledgor shall perform fully all obligations imposed upon it by any
agreements or instruments concerning all or any part of the Pledged Collateral,
including, without limitation, the Governing Documents, and shall maintain in
full force and effect all such agreements and instruments, and shall not amend
or modify, or consent to the amendment or modification of such agreements or
instruments, without the prior written consent of Pledgee; and
(e) Pledgor will not sell, transfer, mortgage, or otherwise encumber the
assets of the Entities out of the ordinary course of business in any manner
without first obtaining the written consent of Pledgee, which consent may be
withheld in Pledgee's sole and absolute discretion. Any written consent to any
such sale, mortgage, transfer, or encumbrance shall not be construed to be a
waiver of this provision in respect of any subsequent proposed sale, mortgage,
transfer, or encumbrance.
SECTION 4
GENERAL AUTHORITY AND POWERS AND REMEDIES
4.1 EVENTS OF DEFAULT. For purposes hereof, the term "EVENT OF DEFAULT"
shall mean the occurrence of an Event of Default as defined in the Note.
4.2 VOTING RIGHTS; DIVIDENDS, ETC., PRIOR TO DEFAULT.
(a) RIGHTS PRIOR TO DEFAULT. So long as no Event of Default exists and
Pledgee shall not have given written notice of its intention to foreclose upon
or otherwise dispose of all or any part of the
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Pledged Collateral, or to exercise its voting rights pertaining to the Pledged
Equity Interests, Pledgor shall be entitled to exercise any and all voting
and/or consensual rights and powers relating or pertaining to the Pledged Equity
Interests or any part thereof for any purpose not inconsistent with the terms of
this Agreement.
(b) TERMINATION OF RIGHTS. Upon (i) the occurrence of an Event of
Default, and (ii) the giving of written notice by Pledgee to Pledgor of its
intention to (A) foreclose upon or otherwise dispose of all or any part of the
Pledged Collateral or (B) exercise its voting rights pertaining to the Pledged
Equity Interests, all rights of Pledgor to exercise the voting and/or consensual
rights and powers which it is entitled to exercise pursuant to SECTION 4.2(a)
hereof shall cease, at the option of Pledgee, and all such rights shall
thereupon become vested in Pledgee, who shall have the sole and exclusive right
and authority to exercise such voting and/or consensual rights.
(c) NO RIGHT TO RECEIVE DISTRIBUTIONS. If an Event of Default exists,
all payments and distributions to be made to Pledgor upon or with respect to the
Pledged Collateral shall be held in trust for the benefit of Pledgee and shall
be immediately paid or delivered to Pledgee, and Pledgor agrees to take all such
action as Pledgee may reasonably deem necessary or appropriate to cause all such
payments and distributions to be made to Pledgee. Further, Pledgee shall have
the right, at any time after the occurrence of an Event of Default, to notify
and direct the Entities to thereafter make all payments, dividends, and any
other distributions payable in respect thereof directly to Pledgee. The Entities
shall be fully protected in relying on the written statement of Pledgee that it
then holds a security interest which entitles it to receive such payments and
distributions. Any and all money and other property paid over to or received by
Pledgee pursuant to this SECTION 4.2 shall be retained by Pledgee as additional
collateral hereunder and may be applied (and upon Pledgor's written request all
cash shall promptly be applied) in accordance with SECTION 4.6 hereof.
4.3 GENERAL AUTHORITY. Pledgor hereby irrevocably appoints Pledgee, and
its successors and assigns, the true and lawful attorney-in-fact of Pledgor,
with full power of substitution, in the name of Pledgor, for the sole use and
benefit of Pledgee, but at Pledgor's expense, to the extent permitted by law to
exercise, at any time and from time-to-time following the occurrence and during
the continuance of an Event of Default, all or any of the following powers with
respect to the Pledged Collateral:
(a) to ask, demand, xxx for, collect, receive, and give acquittance and
receipts for any and all monies due or to become due upon or by virtue thereof;
(b) to receive, endorse, and collect any drafts or other instruments,
documents, and chattel paper, in connection with CLAUSE (a) preceding;
(c) to settle, compromise, compound, prosecute, or defend any action or
proceeding with respect thereto;
(d) subject to SECTION 4.4 hereof, to sell, transfer, assign, or
otherwise deal in or with the same or the proceeds thereof as fully and
effectually as if Pledgee were the absolute owner thereof; and
(e) to extend the time of payment of any or all thereof and to make any
allowance and other adjustments with reference thereto.
In addition, Pledgee, at any time, either before or after an Event of Default,
shall, upon reasonable advance notice, have the right, together with such
accountants and other agents or representatives as it
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may from time-to-time designate, to visit and inspect the Entities' properties,
assets, books, records, and documents and to discuss the Entities' affairs,
finances, and accounts with Pledgor's and the Entities' representatives,
officers, or directors, during all business hours as Pledgee may designate, and
to make and take away copies of the Entities' records. Pledgor shall furnish to
Pledgee any information reasonably requested by Pledgee in connection with the
Pledged Collateral. Pledgor will maintain complete and accurate books and
records regarding the Pledged Collateral.
4.4 REMEDIES UPON DEFAULT.
(a) If any Event of Default shall have occurred and is continuing,
Pledgee, at its option, without demand, presentment, notice of acceleration,
intention to accelerate, or other notice (which are fully waived) may:
(i) exercise all the rights of a secured party under the Code (whether
or not the Code is in effect in the jurisdiction where such rights are
exercised, unless prohibited by applicable law).
(ii) apply the cash, if any, then held by Pledgee as Pledged Collateral
as specified in SECTION 4.6.
(iii) sell all of the Pledged Collateral or any part thereof at public
or private sale or at any broker's board or on any securities exchange, for
cash, upon credit, or for future delivery, and at such price or prices as
Pledgee may reasonably deem satisfactory. Upon Pledgee's demand, Pledgor will
take all steps necessary to prepare the Pledged Collateral for and otherwise
assist in any proposed disposition of the Pledged Collateral. Any permitted
holder of the Secured Indebtedness may be the purchaser of any or all of the
Pledged Collateral so sold at any public sale (or, if the Pledged Collateral is
of a type customarily sold in a recognized market or is of a type which is the
subject of widely distributed standard price quotations or if the subject
Pledged Collateral is equity interest or other Pledged Collateral that is the
subject of the immediately following paragraph, at any private sale) and
thereafter hold the same absolutely free from any right or claim of whatsoever
kind. Any holder of the Secured Indebtedness shall have the right to offset the
amount of its bid against an equal amount of the Secured Indebtedness held by
such holder.
Pledgor agrees that, because of the Securities Act of 1933, as amended,
or any other laws or regulations, and for other reasons, there may be legal
and/or practical restrictions or limitations affecting Pledgee in any attempts
to dispose of certain portions of the Pledged Collateral and for the enforcement
of their rights. For these reasons, Pledgee is hereby authorized by Pledgor, but
not obligated, upon the occurrence and during the continuation of an Event of
Default, to sell all or any part of the Pledged Collateral at private sale,
subject to investment letter or in any other manner which will not require the
Pledged Collateral, or any part thereof, to be registered in accordance with the
Securities Act of 1933, as amended, or the rules and regulations promulgated
thereunder, or any other laws or regulations, at a reasonable price at such
private sale or other distribution in the manner mentioned above. Pledgor
understands that Pledgee may in its discretion approach a limited number of
potential purchasers and that a sale under such circumstances may yield a lower
price for the Pledged Collateral, or any part thereof, than would otherwise be
obtainable if such Pledged Collateral were either afforded to a larger number of
potential purchasers or registered or sold in the open market. Pledgor agrees
that such private sale shall be deemed to have been made in a commercially
reasonable manner, and that Pledgee has no obligation to delay the sale of any
Pledged Collateral to permit the issuer thereof to register it for public sale
under any applicable federal or state securities laws.
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Pledgee is authorized in connection with any such sale to (i) restrict
the prospective bidders on or purchasers of any of the Pledged Collateral to a
limited number of sophisticated investors who will represent and agree that they
are purchasing for their own account for investment and not with a view to the
distribution or sale of any of such Pledged Collateral, and (ii) impose such
other limitations or conditions in connection with any such sale as Pledgee
reasonably deems necessary in order to comply with applicable law. Pledgor
covenants and agrees that it will execute and deliver such documents and take
such other action as Pledgee reasonably deems necessary in order that any such
sale may be made in compliance with applicable law. Upon any such sale Pledgee
shall have the right to deliver, assign, and transfer to the purchaser thereof
the Pledged Collateral so sold. Each purchaser at any such sale shall hold the
Pledged Collateral so sold absolutely free from any claim or right of Pledgor of
whatsoever kind, including any equity or right of redemption of Pledgor.
Pledgor, to the extent permitted by applicable law, hereby specifically waives
all rights of redemption, stay, or appraisal which it has or may have under any
law now existing or hereafter enacted.
Pledgor agrees that ten (10) days' written notice from Pledgee to
Pledgor of Pledgee's intention to make any such public or private sale or sale
at a broker's board or on a securities exchange shall constitute "reasonable
notification" as required by Section 9611 and 9612 of the Code. Such notice
shall (A) in case of a public sale, state the time and place fixed for such
sale, (B) in case of sale at a broker's board or on a securities exchange, state
the board or exchange at which such a sale is to be made and the day on which
the Pledged Collateral, or the portion thereof so being sold, will first be
offered to sale at such board or exchange, and (C) in the case of a private
sale, state the day after which such sale may be consummated. Any such public
sale shall be held at such time or times within ordinary business hours and at
such place or places as Pledgee may fix in the notice of such sale. At any such
sale, the Pledged Collateral may be sold in one lot as an entirety or in
separate parcels, as Pledgee may reasonably determine. Pledgee shall not be
obligated to make any such sale pursuant to any such notice. Pledgee may,
without notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time-to-time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to which the
same may be so adjourned.
In case of any sale of all or any part of the Pledged Collateral on
credit or for future delivery, the Pledged Collateral so sold may be retained by
Pledgee until the selling price is paid by the purchaser thereof, but Pledgee
shall not incur any liability in case of the failure of such purchaser to take
up and pay for the Pledged Collateral so sold, and in case of any such failure,
such Pledged Collateral may again be sold upon like notice. Pledgee, instead of
exercising the power of sale herein conferred upon it, may proceed by a suit or
suits at law or in equity to foreclose the Security Interests and sell the
Pledged Collateral, or any portion thereof, under a judgment or decree of a
court or courts of competent jurisdiction.
(b) Without limiting the foregoing or imposing upon Pledgee any
obligations or duties not required by applicable law, Pledgor acknowledges and
agrees that, in foreclosing upon any of the Pledged Collateral or exercising any
other rights or remedies provided Pledgee hereunder or under applicable law,
Pledgee may, but shall not be required to: (i) qualify or restrict prospective
purchasers of the Pledged Collateral by requiring evidence of sophistication
and/or creditworthiness, and requiring the execution and delivery of
confidentiality agreements or other documents and agreements as a condition to
such prospective purchasers' receipt of information regarding the Pledged
Collateral or participation in any public or private foreclosure sale process;
(ii) provide to prospective purchasers the Governing Documents and business and
financial information regarding the Entities available in the files of Pledgee
at the time of commencing the foreclosure process, without the requirement that
Pledgee obtain, or seek to obtain, any updated business or financial information
or Governing Documents, or verify or certify to
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prospective purchasers the accuracy of any such business or financial
information or Governing Documents; or (iii) offer for sale, and sell, equity
interests either with, or without, first employing an appraiser, investment
banker, or broker with respect to the evaluation of Pledged Collateral, the
solicitation of purchasers for Pledged Collateral, or the manner of sale of
Pledged Collateral.
(c) Pledgee shall have all rights and remedies granted in the Note or
existing at common law or equity (including specifically those granted by the
Code), and such rights and remedies (i) shall be cumulative and concurrent, (ii)
may be pursued separately, successively, or concurrently against Pledgor and any
party obligated to pay or perform the Secured Indebtedness, any of the Pledged
Collateral, or any other security for any of the Secured Indebtedness, at the
sole discretion of Pledgee, and (iii) may be exercised as often as occasion
therefor shall arise, it being agreed by Pledgor that the exercise or failure to
exercise any such rights or remedies shall in no event be construed as a waiver
or release thereof or of any other right, remedy, or recourse.
(d) Notwithstanding a foreclosure upon any of the Pledged Collateral or
exercise of any other remedy by Pledgee in connection with an Event of Default,
Pledgor shall not be subrogated thereby to any rights of Pledgee against the
Pledged Collateral or any other security for any of the Secured Indebtedness.
Pledgor shall not be deemed based on any subrogation or other rights it may have
to be the owner of any interest in any of the Secured Indebtedness unless and
until all of the Secured Indebtedness has been indefeasibly paid to Pledgee and
fully performed and discharged.
(e) All recitals in any instrument of assignment or any other instrument
executed by Pledgee incident to the sale, transfer, assignment, or other
disposition or utilization of the Pledged Collateral or any part thereof
hereunder shall be presumptive evidence of the matters stated therein and all
prerequisites of such sale or other action contained in such recitals shall be
presumed to have been performed or to have occurred.
4.4 WAIVERS BY PLEDGOR. In case of any Event of Default, neither Pledgor
nor anyone claiming by, through, or under Pledgor, to the extent Pledgor may
lawfully so agree, shall or will set up, claim, or seek to take advantage of any
appraisement, valuation, stay, extension, or redemption law now or hereafter in
force under any applicable law, in order to prevent or hinder the enforcement of
this Agreement, or the absolute sale of the Pledged Collateral, or the final and
absolute putting into possession thereof, immediately after such sale, of the
purchaser thereof; and Pledgor in Pledgor's own right and for all who may claim
under Pledgor, hereby waives, to the fullest extent that Pledgor may lawfully do
so, the benefit of any and all right to have the Pledged Collateral marshaled
upon any enforcement of the Security Interests herein granted, and Pledgor
agrees that Pledgee or any court having jurisdiction to enforce the Security
Interests may sell the Pledged Collateral in parts or as an entirety.
4.6 APPLICATION OF PROCEEDS. Upon the maturity of any instrument
evidencing the Secured Indebtedness or any part thereof, whether such maturity
be by such terms of such instruments or through the exercise of any power of
acceleration, Pledgee is authorized and empowered to apply any and all funds
realized from the sale of all or any part of the Pledged Collateral not
previously credited against the Secured Indebtedness as provided in the Note.
4.7 ENFORCEMENT OF SECURED INDEBTEDNESS. Nothing in this Agreement shall
affect or impair the unconditional and absolute right of Pledgee to enforce the
Secured Indebtedness as and when the same shall become due in accordance with
the terms of the Note whether by acceleration or otherwise.
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SECTION 5
MISCELLANEOUS
5.1 TERMS COMMERCIALLY REASONABLE. The terms of this Agreement shall be
deemed commercially reasonable within the meaning of the Uniform Commercial Code
in effect and applicable hereto.
5.2 HEADINGS. The headings of sections herein are inserted only for
convenience and shall in no way define, describe, or limit the scope or intent
of any provision of this Agreement.
5.3 AMENDMENTS. No change, amendment, modification, cancellation, or
discharge of any provision of this Agreement shall be valid unless consented to
in writing by the party or parties against whom enforcement thereof is sought.
5.4 ASSIGNMENT OF PLEDGEE'S RIGHTS. Pledgee shall have the right to
assign all or any portion of its rights under this Agreement to any permitted
subsequent holder or holders of the Secured Indebtedness.
5.5 PARTIES IN INTEREST. As and when used herein, the term "Pledgor"
shall mean and include Pledgor herein named and its successors and assigns, and
the term "Pledgee" shall mean and include Pledgee herein named and its
successors and permitted assigns, and all covenants and agreements herein shall
be binding upon and inure to the benefit of Pledgor and Pledgee and their
respective assigns.
5.6 APPLICABLE LAWS. THIS AGREEMENT AND ALL ISSUES AND CLAIMS ARISING IN
CONNECTION WITH OR RELATING TO THE SECURED INDEBTEDNESS, INCLUDING BUT WITHOUT
LIMITATION, ALL CONTRACT, TORT, EQUITY, OR OTHER CLAIMS OR COUNTERCLAIMS SHALL
BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA
(WITHOUT CONSIDERATION OF ITS CONFLICTS OF LAWS RULES) AND THE APPLICABLE LAWS
OF THE UNITED STATES OF AMERICA. If any provision of this Agreement is held to
be invalid or unenforceable, the validity and enforceability of the other
provisions of this Agreement shall remain unaffected.
5.7 NOTICES. Any notices or other communications required or permitted
to be given by this Agreement or any other documents and instruments referred to
herein must be given in accordance with SECTION 10.1 of the Agreement, to the
address of such party as follows:
If to Pledgor: U.S. Medical Development, Inc.
0000 Xxxxx Xxxxx Xxxxxxx 000, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Telecopier: (000) 000-0000
If to Pledgee: Endocare, Inc.
000 Xxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxxx
Telecopier: (000) 000-0000
10
5.8 FINANCING STATEMENT. Pledgee shall be entitled at any time to file a
photographic or other reproduction of this Agreement as a financing statement,
but the failure of Pledgee to do so shall not impair the validity or
enforceability of this Agreement.
5.9 OBLIGATIONS ABSOLUTE. All rights and remedies of Pledgee hereunder,
and all obligations of Pledgor hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of the Note or any other
agreement or instrument relating to the Note;
(b) any change in the time, manner, or place of payment of, or in any
other term of, all or any of the Secured Indebtedness, or any other amendment or
waiver of or any consent to any departure from the Note or the Agreement;
(c) any exchange, release, or non-perfection of any Pledged Collateral,
or any release or amendment or waiver of or consent to any departure from any
guarantee, for all or any of the Secured Indebtedness; or
(d) any other circumstance (other than payment in full of the Secured
Indebtedness) that might otherwise constitute a defense available to, or a
discharge of, Pledgor.
5.10 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same instrument, and in making proof of this
Agreement it shall not be necessary to produce or account for more than one such
counterpart.
5.11 DISCLOSURE. Pledgee is granted the right to discuss Pledgor's or
the Entities' affairs, finances, and accounts with all parties to such degree as
Pledgee deems necessary or advisable to protect its security interest and/or the
repayment of the indebtedness secured hereby. Pledgor covenants to do all things
necessary or appropriate to permit Pledgee to fully exercise its rights under
this paragraph.
5.12 ENTIRETY. THIS AGREEMENT, THE NOTE, AND THE AGREEMENT EMBODY THE
FINAL, ENTIRE AGREEMENT AMONG PLEDGOR AND PLEDGEE WITH RESPECT TO THE PLEDGE AND
ASSIGNMENT OF THE PLEDGED COLLATERAL AND THE OTHER MATTERS ADDRESSED HEREIN AND
THEREIN, AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND THEREOF, AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS
OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.
5.13 WAIVER OF NOTICE AND HEARING. PLEDGOR HEREBY WAIVES ANY AND ALL
RIGHTS IT MAY HAVE TO NOTICE OR HEARING PRIOR TO SEIZURE BY PLEDGEE OF THE
PLEDGED COLLATERAL, WHETHER BY WRIT OF POSSESSION OR OTHERWISE.
11
IN WITNESS WHEREOF, Pledgor has executed this Agreement as of the day
and year first above written.
PLEDGOR:
U.S. MEDICAL DEVELOPMENT, INC.
By: /s/ Xxxx X. House
--------------------------------
Name: Xxxx X. House
Title: President
SIGNATURE PAGE TO PLEDGE AGREEMENT
EXHIBIT A
INTERESTS
1. PLEDGED LLC INTERESTS. Interests in each limited liability company as
follows:
ENTITY PERCENTAGE OWNERSHIP DATE OF ISSUANCE OF INTEREST
------ -------------------- ----------------------------
U.S. Microwave, LLC 22.7586% January 12, 2000
2. PLEDGED PARTNERSHIP INTERESTS. Interests in each general partnership,
limited partnership, limited liability partnership or other partnership as
follows:
TYPE OF
PARTNERSHIP INTEREST PERCENTAGE DATE OF ISSUANCE
ENTITY (E.G. GENERAL, LIMITED) OWNERSHIP OR FORMATION
------ ----------------------- ----------- ----------------
North Texas PVP, LLP 1% *
Atlantic Cryotherapy General 20% April 1, 2001
Atlantic Cryotherapy Limited 14.36% April 1, 2001
Central States Cryotherapy General 20% May 24, 2001
Central States Cryotherapy Limited 45% May 24, 2001
East Coast Cryotherapy General 20% September 1, 2001
East Coast Cryotherapy Limited 60% September 1, 0000
Xxxx Xxxxxxxx Cryotherapy General 20% September 1, 0000
Xxxx Xxxxxxxx Cryotherapy Limited 80% September 1, 2001
Georgia Cryotherapy General 20% June 1, 2001
Georgia Cryotherapy Limited 70% June 1, 2001
Kansas City Cryotherapy General * *
Kansas City Cryotherapy Limited * *
Mid-America Cryotherapy General 20% April 4, 2001
Mid-America Cryotherapy Limited - April 4, 2001
Rocky Mountain Cryotherapy General 20% November 1, 2001
Rocky Mountain Cryotherapy Limited 59% November 1, 2001
Xxxxx Cryotherapy General 20% February 27, 2002
Xxxxx Cryotherapy Limited 80% February 27, 2002
South Coast Cryotherapy General 20% April 17, 2002
South Coast Cryotherapy Limited 80% April 17, 2002
*To be provided as soon as possible.
A-1
