EXHIBIT 10.19
(FORM OF MED SUBSIDIARIES PLEDGE AND SECURITY AGREEMENT)
MED SUBSIDIARIES PLEDGE AND SECURITY AGREEMENT
THIS MED SUBSIDIARIES PLEDGE AND SECURITY AGREEMENT (this
"AGREEMENT"), dated as of June 28, 2002, is made and entered into by MED
DIVERSIFIED, INC., a Nevada corporation ("COMPANY"), Chartwell Diversified
Services, Inc., a Delaware corporation, Tender Loving Care Health Care Services,
Inc., a Delaware corporation, Trestle, Inc., a Delaware corporation, Resource
Pharmacy, Inc., a Nevada corporation, and each of the other Med Subsidiaries
that, on or after the Closing Date, becomes a party to this Agreement by
executing a Subsidiary Joinder in substantially the form of the Subsidiary
Joinder attached hereto as EXHIBIT A (collectively, including each party that
joins this Agreement by executing a Subsidiary Joinder, "MED SUBSIDIARIES")
(Company and Med Subsidiaries are hereinafter sometimes referred to collectively
as "PLEDGORS" and individually as "PLEDGOR"), in favor of PRIVATE INVESTMENT
BANK LIMITED, Nassau, Bahamas ("HOLDER"), for the benefit of the Holders of the
Amended Debentures (as defined in the Amendment Agreement, defined below) in
reliance upon the following:
RECITALS
A. Pursuant to that certain Amendment Agreement, of even date
herewith, entered into by and among Company, Med Subsidiaries, ARL, TEGCO, and
Holder (as the same may be modified, restated, supplemented and otherwise in
effect from time to time, the "AMENDMENT AGREEMENT"), Pledgors have agreed to
grant to Holder (i) a first priority security interest in any and all capital
stock or other equity securities of any of the Med Subsidiaries, (ii) a security
interest in any and all rights, title or interest of the Med Subsidiaries in and
to the Med Reserve Account Interests and (iii) a security interest in any and
all rights, title and interest of the Med Subsidiaries in and to the Med
Eligible Accounts Receivable (the items referred to in clauses (i), (ii) and
(iii), collectively, the "MED SUBSIDIARIES DEBENTURE COLLATERAL"). Each
capitalized term used in this Agreement that is not otherwise defined herein
shall have the meaning accorded to such term in the Amendment Agreement.
B. In order to evidence Holder's lien on the Med Debenture
Collateral granted pursuant to the Amendment Agreement, Pledgors hereby execute
and deliver this Agreement.
C. Pledgors understand that Holder is relying upon this Agreement
and the pledge of Med Subsidiaries Debenture Collateral granted hereunder as a
condition to accepting the terms contemplated by the Amendment Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by Pledgors, Pledgors hereby agree as follows:
1. PLEDGE OF INTERESTS. Pledgors hereby pledge, hypothecate, assign and
transfer to Holder, as collateral security, in connection with the terms of the
Amendment Agreement, a first priority security interest in the following:
(a) all of the capital stock or other equity securities of Med
Subsidiaries, whether currently issued and outstanding or to be issued and
outstanding subsequent to the date of this Agreement, as well as all of
Pledgors' rights under any option, warrant or other security instrument or
agreement to acquire shares of the capital stock in any current or future
subsidiary of Company (collectively, the "INTERESTS");
(b) any and all rights of the Med Subsidiaries to receive, upon the
terms and conditions set forth in the relevant Sale and Subservicing
Agreement(s), $20,000,000 of funds that are currently held in reserves, as
identified on an itemized schedule attached as an exhibit to the Amendment
Agreement (the Med Subsidiaries rights in such accounts, collectively, the
"MED RESERVE ACCOUNT INTERESTS"), for the benefit of NCFE and its
affiliates pursuant to the relevant Sale and Subservicing Agreement(s),
with all distributions from the Med Reserve Account Interests on account
of, or in relation to, the Med Reserve Account Interests being directed to
the Med Collection Account to be used exclusively for payments on the
Amended Debentures; and
(c) any and all rights of the Med Subsidiaries in and to the Med
Eligible Accounts Receivable; PROVIDED, HOWEVER, that PIBL's security
interest therein is subject to and (A) equal in right of priority with a
security interest in favor of the financing source(s) for the purchase of
the Transferred Debenture and (B) subordinate to a security interest in
favor of NCFE or its affiliates as the purchaser(s) of accounts receivable
in various financing transactions, which security interest collateralizes,
among other things, a repurchase right for rejected receivables under the
relevant documents for such financing arrangements;
In addition, Pledgors grant to Holder all proceeds to Company, net of the
reasonable and customary costs of the relevant Asset Sale (as defined below),
whether directly or indirectly via a distribution from any Med Subsidiaries
(collectively, "NET ASSET SALE PROCEEDS"), from any sales or other transfers,
during the term of the amended debentures issued pursuant to the Amendment
Agreement (such debentures, the "AMENDED DEBENTURES"), of any assets of Pledgors
or equity securities of Med Subsidiaries, as well as any and all options,
warrants or other security instrument or agreement to acquire shares of the
capital stock or other equity securities of Med Subsidiaries, in any
transaction, including without limitation any securities offering (each, an
"ASSET SALE"); PROVIDED, that an Asset Sale shall NOT include (i) ordinary
course of business sales of goods and provision of services, (ii) the offering
or sale of any debt securities unaccompanied by any equity right (i.e. warrants
or conversion rights) and (iii) any sale of accounts receivable under financing
arrangements with NCFE and its affiliates; and PROVIDED, FURTHER, that Net Asset
Sale Proceeds shall not include any Assets Sale proceeds of any Pledgor unless
and until such proceeds have been, directly or indirectly, distributed or
otherwise paid to, or for the benefit of, Company. Net Asset Sale Proceeds shall
be promptly deposited in collection accounts, established pursuant to that
certain deposit account control agreement, made and entered into as of the date
hereof, between Company and Holder, from which a special mandatory prepayment on
the Amended Debentures shall be made in the full amount of such net proceeds.
SCHEDULE 1 attached hereto completely and accurately sets forth all Interests in
Med Subsidiaries. Company covenants and agrees to give Holder ten (10) business
days advance written notice of the proposed consummation of any Asset Sale,
together with a description of the material terms of such proposed Asset Sale
(including, without limitation copies of draft documents relating thereto), as
they may reasonably request from time to time. Nothing herein or in any
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Modification Documents shall require Pledgors to consummate any Asset Sale, or
to sell any equity securities or other assets for its own account or to cause or
make any distribution to be made in connection with any such Asset Sale.
2. OBLIGATIONS SECURED. The obligations secured by the pledge of the Med
Subsidiaries Debenture Collateral evidenced hereby includes the full and prompt
payment when due, whether by acceleration or otherwise, and at all times
thereafter, and the full and prompt performance when due, of all of the
Liabilities (as hereinafter defined), including interest on any such Liabilities
and further agrees to pay all reasonable expenses (including reasonable
attorneys' fees and legal expenses) paid or incurred by Holder in enforcing this
Agreement. The term "Liabilities", as used herein, shall mean all outstanding
principal under the Amended Debentures, all interest accrued thereon, and all
additional amounts and other sums at any time due and owing, and required to be
paid, to Holder or the Holders of the Amended Debentures under the terms of the
Amendment Agreement and any other Modification Documents, including without
limitation this Pledge, whether the same are matured or unmatured. Holder may,
from time to time at its discretion and without notice to or consent of Pledgors
(which notice and/or consent Pledgors hereby irrevocably waive to the full
extent permitted by law), take any or all of the following actions: (i) retain
or obtain a lien upon or a security interest in property, to secure any of the
Liabilities or any obligation hereunder; (ii) retain or obtain the primary or
secondary obligation of any obligor or obligors, in addition to Pledgors, with
respect to any of the Liabilities; (iii) extend or renew for one or more periods
(regardless of whether longer than the original period), alter or exchange any
of the Liabilities, or release or compromise any obligation of Pledgors
hereunder or any obligation of any nature of any other obligor (including
without limitation the Company) with respect to any of the Liabilities; (iv)
release or fail to perfect its lien upon or security interest in, or impair,
surrender, release or permit any substitution or exchange for, all or any part
of any property securing any of the Liabilities or any obligation hereunder, or
extend or renew for one or more periods (regardless of whether longer than the
original period) or release, compromise, alter or exchange any obligations of
any nature of any obligor with respect to any such property; and (v) upon the
occurrence and during the continuation of an Event of Default, look to and make
demand upon Pledgors for payment of any of the Liabilities (but only to the
extent and in the form of the Med Subsidiaries Debenture Collateral except as
otherwise provided herein), regardless of whether Holder or any other Person
shall have resorted to any property securing any of the Liabilities or any
obligation hereunder or shall have proceeded against any other obligor primarily
or secondarily obligated with respect to any of the Liabilities.
3. HOLDER AS ATTORNEY-IN-FACT.
3.1 APPOINTMENT. Pledgors hereby irrevocably constitute and appoint
Holder and any officer or agent of Holder, with full power of substitution, as
its true and lawful attorney-in-fact with full irrevocable power and authority
in the place and stead of Pledgors and in the name of Pledgors or in its own
name, without notice to or assent by Pledgors, to do the following:
(i) upon the occurrence and during the continuation of an
Event of Default, to ask, demand, collect, receive and give acquittances and
receipts for any and all moneys due and to become due under any Med
Subsidiaries Debenture Collateral and, in the
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name of Pledgors or its own name or otherwise, to take possession of and endorse
and collect any checks, drafts, notes, acceptances or other instruments for the
payment of moneys due under any Med Subsidiaries Debenture Collateral and to
file any claim or to take any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by Pledgors for the purpose of collecting
any and all such moneys due under any Med Subsidiaries Debenture Collateral
whenever payable;
(ii) upon the occurrence and during the continuation of an
Event of Default, to pay or discharge taxes or liens levied or placed on or
threatened against the Med Subsidiaries Debenture Collateral.
(iii) upon the occurrence and during the continuation of an
Event of Default, to (A) direct any party liable for any payment under any of
the Med Subsidiaries Debenture Collateral to make payment of any and all moneys
due, and to become due thereunder, directly to Holder or as Holder shall direct;
(B) receive payment of and receipt for any and all moneys, claims and other
amounts due, and to become due at any time, with respect to or arising out of
any Med Subsidiaries Debenture Collateral; (C) sign and endorse any invoices,
freight or express bills, bills of lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications and notices in connection with or
relating to the Med Subsidiaries Debenture Collateral; (D) settle and adjust any
claims under all policies of insurance covering the Med Subsidiaries Debenture
Collateral; (E) commence and prosecute any suits, actions or proceedings at law
or in equity in any court of competent jurisdiction to collect the Med
Subsidiaries Debenture Collateral or any part thereof and to enforce any other
right in respect of any Med Subsidiaries Debenture Collateral; (F) defend any
suit, action or proceeding brought against Pledgors with respect to any Med
Subsidiaries Debenture Collateral; (G) settle, compromise or adjust any suit,
action or proceeding described above and, in connection therewith, to give such
discharges or releases as Holder may deem appropriate; and (H) generally sell,
transfer, pledge, make any agreement with respect or otherwise deal with any of
the Med Subsidiaries Debenture Collateral as fully and completely as though
Holder were the absolute owner thereof for all purposes, and to do, at Holder's
option, at any time and or from time to time, all acts and things which Holder
reasonably deems necessary to protect, preserve or realize upon the Med
Subsidiaries Debenture Collateral and Holder's lien therein, in order to effect
the intent of this Agreement, all as fully and effectively as Pledgors might do;
and
(iv) at any time and from time to time after the occurrence
of a default or if Pledgors fail to do so after three (3) Business Days' prior
written notice from Holder, to take any and all appropriate action and to
execute and deliver any and all documents and instruments which may be necessary
or desirable to perfect or maintain Holder's liens against any of the Med
Subsidiaries Debenture Collateral.
3.2 RATIFICATION. Pledgors hereby ratify, to the extent permitted by
law, all that said attorneys shall lawfully do or cause to be done by virtue
hereof, except for their respective gross negligence or willful misconduct and
for failure to act in a commercially reasonable manner with respect to any Med
Subsidiaries Debenture Collateral under their respective possession or control.
The power of attorney granted pursuant to SECTION 3.1 is a power coupled with an
interest and shall be irrevocable until the Liabilities are indefeasibly paid in
full. The powers conferred on Holder hereunder are solely to protect Holders'
interests in the
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Med Subsidiaries Debenture Collateral and shall not impose any duty upon Holder
to exercise any such powers. Holder shall be accountable only for amounts that
it actually receives as a result of the exercise of such powers, and neither it
nor any of its officers, directors, or employees shall be responsible to
Pledgors for any act or failure to act, except for its or their respective gross
negligence or willful misconduct and for failure to act in a commercially
reasonable manner with respect to any Med Subsidiaries Debenture Collateral
under its or their respective possession or control. Pledgors also authorize
Holder, at any time and from time to time upon the occurrence and during the
continuation of any Event of Default, to execute, in connection with a
foreclosure sale as contemplated by SECTION 11, any endorsements, assignments or
other instruments of conveyance or transfer with respect to the Med Subsidiaries
Debenture Collateral.
3.3 DELIVERY OF MED SUBSIDIARIES DEBENTURE COLLATERAL.
a. CERTIFICATES. Concurrently with the execution and
delivery of this Pledge, Pledgors shall deliver to Citibank, F.S.B. in its
capacity as collateral agent under that certain Collateral Agency Agreement,
dated as of the date hereof, all of the Interests or other certificates
representing the Interests and any Med Subsidiaries Debenture Collateral arising
out of or relating to the Interests, together with stock powers or other
applicable instruments of transfer duly executed by Pledgors in blank.
b. UCC-1 FINANCING STATEMENTS. Concurrently with the
execution and delivery of this Pledge, Pledgors shall execute and deliver
to Holder UCC-1 Financing Statements covering the Med Subsidiaries Debenture
Collateral, in proper form for filing in all applicable jurisdictions.
3.4 PERFORMANCE OF PLEDGORS' OBLIGATIONS. If Pledgors fail to perform
or comply with any of its agreements contained herein and Holder shall itself
perform or comply, or otherwise cause performance or compliance, with such
agreement, the reasonable expenses of Holder incurred in connection with such
performance or compliance, together with interest thereon at the rate then in
effect with respect to the debentures, shall be payable by Pledgors to Holder on
demand and shall constitute Liabilities secured hereby.
3.5 ADDITIONAL RIGHTS.
a. VOTING RIGHTS. Unless and until an Event of Default
shall have occurred and be continuing and Holder has accelerated the
Liabilities, Pledgors shall have the right to vote the Med Subsidiaries
Debenture Collateral on all matters; PROVIDED, HOWEVER, that no vote shall be
cast, or consent, waiver or ratification given, or any action taken, that would
be inconsistent with or violate any provision of this Agreement or any
Modification Documents. Upon the occurrence and during the continuation of an
Event of Default and after acceleration by Holder, Holder shall thereafter be
entitled to exercise all voting powers pertaining to the Med Subsidiaries
Debenture Collateral.
b. SUBSEQUENT CHANGES AFFECTING COLLATERAL. Pledgors
represent to Holder that Pledgors have made their own arrangements for keeping
itself informed of changes or potential changes affecting the Med Subsidiaries
Debenture Collateral (including without
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limitation rights to convert, rights to subscribe, payment of dividends or other
cash distributions, reorganization or other exchanges, tender offers and voting
rights), and Pledgors agree that Holder shall not have any responsibility or
liability for informing Pledgors of any such changes or potential changes or for
taking any action or omitting to take any action with respect thereto.
c. STOCK DIVIDENDS AND OTHER DISTRIBUTIONS.
(i) If at any time when this Agreement is effective
Pledgors shall become entitled to receive, or shall receive by reason of their
ownership of any Med Subsidiaries Debenture Collateral, any additional Interests
(including without limitation any Interests representing a stock dividend or a
distribution in connection with any reclassification, increase or reduction of
capital, or reorganization) whether as an addition to, in substitution of, or in
exchange for any of the Med Subsidiaries Debenture Collateral, whether by
declared dividend, stock split or other method, Pledgors agree it shall accept
the same as Holder's agent and hold the same in trust for Holder and deliver the
same forthwith to Holder in the exact form received, with the endorsement of
Pledgors when requested by Holder and/or appropriate undated stock powers duly
executed in blank, to be held by Holder as additional collateral security for
the Liabilities. Any sums or property paid upon or in respect of the Med
Subsidiaries Debenture Collateral or any other securities received under this
SECTION 3.5 upon the reorganization, liquidation (whether complete or partial)
or dissolution of the issuer of any of the Med Subsidiaries Debenture Collateral
or any such other securities shall immediately be paid over to Holder to be held
by Holder as additional collateral security for the Liabilities.
(ii) Unless an Event of Default shall have occurred and
be continuing, Pledgors shall be entitled to receive all cash dividends or
distributions declared and paid with respect to any Med Subsidiaries Debenture
Collateral. Upon the occurrence and during the continuation of any Event of
Default, Holder shall be entitled to receive any and all such cash dividends or
distributions, and Pledgors shall promptly deliver to Holder any such cash
dividends or distributions which Pledgors subsequently receive. Holder shall
hold any such cash dividends or distributions as Med Subsidiaries Debenture
Collateral pursuant to this Agreement or, at the election of Holder and the
Pledgors, may apply any such cash dividends to the reduction of any Liabilities
then due and owing.
(iii) Nothing contained in this SECTION 3.5 or elsewhere
in this Agreement shall be deemed to permit any stock dividends, issuance of
additional stock, reclassification, readjustment, change in the capital
structure of any person, or issuance of any warrants, options or other rights by
any person which are otherwise prohibited pursuant to this Agreement.
3.6 FURTHER ASSURANCES. Promptly upon request by Holder, Pledgors
shall: (i) correct any material defect or error that may be discovered in this
Agreement or any instrument or document executed in connection herewith or
pursuant hereto or in the execution, acknowledgment or recordation thereof; and
(ii) do, execute, acknowledge, deliver, record, re-record, file, re-file,
register and re-register any and all such FURTHER acts, deeds, conveyances,
pledge agreements, assignments, estoppel certificates, financing statements and
continuations thereof, termination statements, notices of assignment, transfers,
certificates, assurances, powers, proxies and other instruments as Holder may
reasonably require from time to time in order to
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(A) carry out more effectively the purposes of this Agreement, (B) perfect and
maintain the validity, effectiveness and priority of any of the liens and
security interests intended to be created hereby and (C) assure, convey, grant,
assign, transfer, preserve, protect and confirm to Holder the rights granted or
now or hereafter intended to be granted to it hereunder or under any other
instrument or document executed in connection herewith or pursuant hereto.
4. NATURE OF PLEDGORS' OBLIGATIONS.
4.1 UNCONDITIONAL AND PRIMARY. The covenants and agreements of
Pledgors set forth in this Agreement shall be primary obligations of Pledgors,
and such obligations shall be continuing, absolute and unconditional, shall not
be subject to any counterclaim, setoff, deduction, diminution, abatement,
recoupment, suspension, deferment, reduction or defense (other than full and
strict compliance by Pledgors with its obligations hereunder), whether based
upon any claim that Pledgor or any other person may have against Holder or any
other person, or otherwise, and shall remain in full force and effect without
regard to, and shall not be released, discharged or in any way affected by, any
circumstance or condition whatsoever (whether or not Pledgors shall have any
knowledge or notice thereof), including without limitation:
(i) any amendment, modification, addition, deletion,
supplement or renewal to or of, or other change in, the Liabilities (other than
payment in full thereof) or any Modification Documents, or any other instrument
or agreement applicable thereto or to any of the parties to the Amendment
Agreement, or to any Med Subsidiaries Debenture Collateral, or any furnishing or
acceptance of additional security for, pledge of or right of offset with respect
to, any of the Liabilities, or the failure of any security or the failure of
Holder to perfect or insure any interest in any Med Subsidiaries Debenture
Collateral;
(ii) any failure, omission or delay on the part of Holder to
conform or comply with any term of any instrument or agreement referred to in
clause (i) above;
(iii) any waiver, consent, extension, indulgence, compromise,
release or other action or inaction under or with respect to any instrument,
agreement, pledge, right of offset or security referred to in clause (i) above
or any obligation or liability of Holder, or any exercise or non-exercise by
Holder of any right, remedy, power or privilege under or in respect of any such
instrument, agreement, pledge, right of offset or security or any such
obligation or liability;
(iv) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceeding with respect to any
Holder or any other person, or any of their respective properties or creditors,
or any action taken by any trustee or receiver or by any court in any such
proceeding;
(v) any limitation on the liability or obligations of any
Person under and Modification Documents, the Liabilities, any Med Subsidiaries
Debenture Collateral security for the Liabilities, or any discharge,
termination, cancellation, irregularity, invalidity or unenforceability, in
whole or in part, of any of the foregoing, or any other agreement, instrument,
pledge or security referred to in clause (i) above or any term of any thereof;
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(vi) any merger or consolidation of Holder into or with any
other person or any sale, lease or transfer of any of the assets of Holder to
any other person;
(vii) any change in the ownership of any Med Subsidiaries
Debenture Collateral or of any Holder, or any structural change in Holder; or
(viii) any other occurrence or circumstance whatsoever, whether
similar or dissimilar to the foregoing and any other circumstance that might
otherwise constitute a legal or equitable defense or discharge of the
liabilities of a Pledgor or surety, or that might otherwise limit Holder's
recourse against Pledgors with respect to the Med Subsidiaries Debenture
Collateral.
4.2 WAIVERS. Pledgors waive any and all notice of the creation,
renewal, extension or accrual of any of the Liabilities and notice or proof of
reliance by Holder upon this Agreement or acceptance of this Agreement, and the
Liabilities, and any of them, shall conclusively be deemed to have been created,
contracted or incurred in reliance upon this Agreement. Pledgors unconditionally
waive, to the extent permitted by law: (i) notice of any of the matters referred
to in the foregoing clauses (i) through (viii) of SECTION 4.1, or any right to
consent or assent to any thereof; (ii) all notices that may be required by
statute, rule of law or otherwise, now or hereafter in effect, to preserve
intact any rights against Pledgors, including without limitation any demand,
presentment, protest, proof or notice of nonpayment under any Modification
Documents, and notice of default or any failure on the part of Holder to perform
and comply with any covenant, agreement, term or condition of any Modification
Documents; (iii) any right to the enforcement, assertion or exercise against any
Holder of any right, power, privilege or remedy conferred in any Modification
Documents or otherwise; (iv) any requirement of diligence on the part of any
Person; (v) any requirement of Holder to take any action whatsoever, to exhaust
any remedies or to mitigate the damages resulting from a default under any
Modification Documents; (vi) any notice of any sale, transfer or other
disposition by any person of any right under, title to or interest in any
Modification Documents or any collateral for the Liabilities; and (vii) any
other circumstance whatsoever that might otherwise constitute a legal or
equitable discharge, release or defense of Pledgors or surety, or that might
otherwise limit recourse against Pledgors. Without limiting the foregoing, and
to the full extent permitted by applicable law, Pledgors hereby absolutely,
unconditionally and irrevocably waive and agree not to assert or take advantage
of any defense based upon an election of remedies by Holder, including an
election to proceed by non-judicial rather than judicial foreclosure.
4.3 TERMINATION AND REINSTATEMENT. This Agreement shall terminate
when all of the Liabilities have been paid or otherwise satisfied in full;
provided, however, that this Agreement shall be automatically reinstated if and
to the extent that for any reason any payment by or on behalf of Company is
rescinded or must be otherwise restored by Holder or in any other manner any
Liabilities have revived, whether as a result of any proceedings in bankruptcy
or reorganization or otherwise such that any Liability remains unpaid or
otherwise unperformed.
5. WAIVER OF SUBROGATION. Pledgors hereby irrevocably waive any claim or
other rights which they may now or hereafter acquire against Company that arise
from the existence, payment, performance or enforcement of Pledgors' obligations
under this Agreement, including any right of subrogation, reimbursement,
exoneration or indemnification, any right to participate
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in any claim or remedy of Holder against Company or any of its assets which
Holder now has or hereafter acquires, whether or not such claim, remedy or right
arises in equity, or under contract, statute or common law, including the right
to take or receive from Company, directly or indirectly, in cash or other
property or by set-off or in any manner, payment or security on account of such
claim or other rights. If any amount shall be paid to Pledgors in violation of
the preceding sentence and the Liabilities shall not have been fully paid in
cash, such amount shall be deemed to have been paid to Pledgors for the benefit
of, and held in trust for, Holder and shall forthwith be paid to Holder to be
credited and applied pursuant to the terms of the Amendment Agreement. Pledgors
acknowledge that it will receive substantial direct and indirect benefits from
the financing arrangements contemplated by the Amendment Agreement and that the
waiver set forth in this Section 5 is knowingly made in contemplation of such
benefits.
6. CERTAIN COVENANTS. In addition to any and all other agreements and
undertakings of Pledgors, in this Agreement or otherwise, Pledgors also
covenant and agree as follows:
6.1 FURTHER ASSURANCES. Pledgors will promptly, from time to time and
at its own cost and expense, execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that Holder may reasonably request, in order to perfect, preserve and protect
any security interest granted or purported to be granted hereby or to enable
Holder to exercise and enforce its rights and remedies hereunder with respect to
the Med Subsidiaries Debenture Collateral. With respect to the foregoing and the
grant of security interest hereunder, Pledgors hereby authorize Holder to file
all financing or continuation statements, and amendments thereto, relative to
all or any part of the Med Subsidiaries Debenture Collateral without the
signature of Pledgors where permitted by law in the event that Pledgors fail to
do so within three (3) Business Days of a request from Holder so to do;
PROVIDED, HOWEVER, that such notice and passage of time shall not apply after an
Event of Default has occurred. A carbon, photographic or other reproduction of
this Agreement shall be sufficient as a financing statement where permitted by
law.
6.2 COMPLIANCE WITH LAWS. Pledgors will comply with all laws and
regulations relating to the possession and control of the Med Subsidiaries
Debenture Collateral and, in the event that Holder forecloses on the security
interest granted to Holder under this Agreement, or under the Amendment
Agreement or any other Modification Documents, Pledgors will cooperate with
Holder in any foreclosure or private sale as may be required to sell or transfer
the Med Subsidiaries Debenture Collateral.
6.3 PROHIBITED ACTIONS. Pledgors shall not sell, assign, exchange,
grant a security interest in, transfer, encumber, grant any option of, or
otherwise dispose of, any of the Med Subsidiaries Debenture Collateral, or
attempt or contract to do so. It is understood and agreed that, in order to
secure certain obligations owed by Med and Med Subsidiaries, Pledgors have
previously granted a Security Interest in the Interests in favor of NCFE and its
affiliates, which Security Interest has not been perfected by possession or
otherwise and shall be subordinate in interest and right of payment to the
Security Interest granted to Holder, for the benefit of the Holders of the
Amended Debentures, under this Agreement.
7. ASSIGNMENT BY ANY HOLDER. Holder may, from time to time and without
notice to Pledgors but without cost or expense to Pledgors prior to an Event of
Default, assign or transfer
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any or all of the Liabilities, or any interest therein, in accordance with
the Amendment Agreement and, notwithstanding any such assignment or transfer or
any subsequent assignment or transfer thereof, such Liabilities shall be and
remain Liabilities for the purposes of this Agreement, and each and every
immediate and successive assignee or transferee of any of the Liabilities or of
any interest therein shall, to the extent of such assignee's or transferee's
interest in the Liabilities, be entitled to the benefits of this Agreement to
the same extent as if such assignee or transferee were the Holder.
8. NO WAIVER. No delay in the exercise by Holder of any right or remedy
shall operate as a waiver thereof, and no single or partial exercise by Holder
of any right or remedy shall preclude other or further exercise thereof or the
exercise of any other right or remedy; nor shall any modification or waiver of
any of the provisions of this Agreement be binding upon Holder except as
expressly set forth in a writing duly signed and delivered on its behalf. No
action permitted hereunder shall in any way affect or impair Holder's rights or
Pledgors' obligations under this Agreement. For the purposes of this Agreement,
Liabilities shall include all of the obligations described in the definition
thereof, notwithstanding any right or power of Pledgors or anyone else to assert
any claim or defense as to the invalidity or unenforceability of any such
obligation, and no such claim or defense shall affect or impair the obligations
of Pledgors hereunder. Pledgors' obligations under this Agreement shall be
absolute and unconditional irrespective of any circumstance whatsoever that
might constitute a legal or equitable discharge or defense of the Pledgor so
long as this Agreement is in effect. Pledgors hereby acknowledge that there are
no conditions to the effectiveness of this Agreement.
9. REPRESENTATIONS AND WARRANTIES. Pledgors hereby represent and warrant
to Holder as follows:
9.1 DUE ORGANIZATION; AUTHORITY. Each of Pledgors is duly organized
and validly existing under the laws its formation, as applicable, is qualified
to do business in that state and in every other state in which the scope or
nature of its business requires it to be so qualified, has taken all actions and
has the power and authority to execute and deliver this Agreement and has duly
executed and delivered this Agreement;
9.2 ENFORCEABILITY. This Agreement is the legal, valid and binding
obligation of Pledgors, enforceable in accordance with its terms.
9.3 NO CONFLICT. The execution, delivery and performance of this
Agreement by Pledgors does not conflict with, or constitute a violation under,
any law, regulation order, agreement or instrument to which Pledgors are parties
or by which Pledgor or any of Pledgors' properties is bound.
9.4 COLLATERAL. To the best of Pledgors' knowledge, each item of Med
Subsidiaries Debenture Collateral is genuine, validly issued and outstanding and
is fully paid and nonassessable and was issued in accordance with all applicable
laws and regulations. Each item of Med Subsidiaries Debenture Collateral is free
of any restriction on transfer or assignment created by Pledgors, and Pledgors
have the right to pledge the Med Subsidiaries Debenture Collateral to Holder
without restriction.
10
9.5 OWNERSHIP OF COLLATERAL. Pledgors are, and at all times will be,
the beneficial owners of the Med Subsidiaries Debenture Collateral, and no one
else (other than Holder) has or will have, any pre-emptive right, title, claim,
lien, interest or other right in or against the Med Subsidiaries Debenture
Collateral that is superior in priority of payment to the rights granted to
Holder under this Agreement.
10. EVENTS OF DEFAULT. An "Event of Default" shall exist under this
Agreement if at any time: (i) any representation, warranty or certificate made
by Pledgors under this Agreement or any other Modification Documents is false or
misleading in any material respect when made, or Pledgors omit, or fail to
disclose any information to Holder that is material or could result in a
material adverse effect; (ii) any "Event of Default" under, and as defined in
the Amendment Agreement, shall occur and be continuing, or (iii) Pledgors fail
to perform any of its obligations hereunder.
11. REMEDIES AND APPLICATION OF PROCEEDS.
11.1 REMEDIES. Upon the occurrence and during the continuation of any
Event of Default, Holder has the right to exercise any and all remedies
available to it at law or equity as well as any rights or remedies specified in
this Agreement. Without limiting the generality of the foregoing, Pledgors
expressly agree that in any such event Holder may, without demand of performance
or other demand, advertisement, legal process or notice of any kind (except as
may be required by law or provided herein) to or upon Pledgors or any other
Person (all and each of which demands, advertisements and/or notices are hereby
expressly waived to the maximum extent permitted by the UCC and other applicable
law):
(i) take and remove the Med Subsidiaries Debenture Collateral
or any part thereof, to such other places as Holder may desire;
(ii) forthwith collect, receive, appropriate and realize upon
the Med Subsidiaries Debenture Collateral, or any part thereof,
(iii) forthwith sell, lease, assign, give an option or options
to purchase, or sell or otherwise dispose of and deliver the Med Subsidiaries
Debenture Collateral (or contract to do so), or any part thereof, in one or more
parcels at public or private sale or sales, at any exchange or broker's board or
at any of Holder's offices or elsewhere at such prices and on such terms as are
commercially reasonable (irrespective of the impact of any such sales on the
market price of the Med Subsidiaries Debenture Collateral), for cash or on
credit or for future delivery;
(iv) receive all monies or other property which, but for the
occurrence of the Event of Default, Pledgors would have been entitled to retain;
(v) transfer registration of the Med Subsidiaries Debenture
Collateral into Holder's name;
(vi) exercise all voting rights with respect to the Med
Subsidiaries Debenture Collateral, give all consents, waivers and ratifications
with respect to them and otherwise act as if Holder were the outright owner of
such Med Subsidiaries Debenture
11
Collateral, and Pledgors hereby give Holder an irrevocable power of attorney
and proxy to do same; and
(vii) sell, assign or otherwise dispose of the Med Subsidiaries
Debenture Collateral, in the entirety or in separate lots, and generally in such
manner, at such time or times, at such place or places and on such terms as
Holder, in compliance with any mandatory requirements of applicable law, may
determine to be commercially reasonable, and, to the extent permitted by any
such requirement of law, Holder may bid (which may be a credit bid) for and
become the purchaser of the Med Subsidiaries Debenture Collateral (or any
portion thereof), offered for sale in accordance with this SECTION 11 without
accountability to Pledgors, except pursuant to clause 11.2 below and as
otherwise required by applicable law.
11.2 APPLICATION OF PROCEEDS. The proceeds of any disposition of any
Med Subsidiaries Debenture Collateral obtained pursuant to this SECTION 11 shall
be applied as follows:
(i) first, to the payment of any and all expenses and fees
(including reasonable attorney's fees) incurred by Holder in foreclosing on and
disposing of the Med Subsidiaries Debenture Collateral;
(ii) any surplus then remaining to the payment of the
Liabilities then due and owing in such order as Holder may determine in their
sole discretion; and
(iii) thereafter, if no other Liabilities are outstanding, any
surplus then remaining shall be paid to Pledgors or to such other Person legally
entitled to same.
11.3 WAIVER. To the maximum extent permitted by applicable law but
subject to SECTION 3.2, Pledgors waive all claims, damages and demands against
Holder arising out of the repossession, retention or sale of the Med
Subsidiaries Debenture Collateral. Pledgors agree that, to the extent notice of
sale shall be required by law, neither Holder need give more than ten (10) days'
notice of the time and place of any public sale or of the time after which a
private sale may take place and that such notice shall constitute reasonable
notification within the meaning of Section 9-504(3) of the UCC.
11.4 ADDITIONAL REMEDIES. Without limiting the foregoing, if any Event
of Default shall occur and be continuing, Holder may exercise, in addition to
all other rights and remedies granted to it in this Agreement or by law, all
rights and remedies of a secured party under the UCC.
11.5 COSTS. Pledgors also agree to pay all costs of Holder, including,
without limitation, reasonable attorneys' fees, incurred in connection with the
enforcement of any of Holder's rights and remedies hereunder, including without
limitation reasonable fees for attorneys employed by Holder to collect any
deficiency existing after the application of proceeds from any sale of Med
Subsidiaries Debenture Collateral hereunder in accordance with SECTION 11.2.
11.6 NOTICE OF SALE. Unless any of the Med Subsidiaries Debenture
Collateral threatens to decline speedily in value or is or becomes of a type
customarily sold on a recognized
12
market, Holder will give Pledgors ten (10) days' notice of the time and place of
any public sale thereof, or of the time after which any private sale or other
intended disposition is to be made. Any sale of the Med Subsidiaries Debenture
Collateral conducted in conformity with reasonable commercial practices of
banks, commercial finance companies, insurance companies or other financial
institutions disposing of property similar to the Med Subsidiaries Debenture
Collateral shall be deemed to be commercially reasonable. Any other requirement
of notice, demand or advertisement for sale is, to the extent permitted by law,
waived. In addition, with respect to the Med Subsidiaries Debenture Collateral,
or any part thereof, Holder may in its sole discretion, without notice except as
may be specified herein, sell or cause the same to be sold at any exchange,
broker's board or at public or private sale, in one or more sales or lots, at
such price as Holder may deem best, and for cash or on credit or for future
delivery, without assumption of any credit risk, and the purchaser of any or all
of the Med Subsidiaries Debenture Collateral so sold shall thereafter hold the
same, absolutely free from any claim, encumbrance or right of any kind
whatsoever. Holder may, in its own name or in the name of a designee or nominee,
buy the Med Subsidiaries Debenture Collateral at any public sale and, if
permitted by applicable law, buy the Med Subsidiaries Debenture Collateral at
any private sale.
11.7 COMPLIANCE WITH SECURITIES LAWS. In view of the fact that federal
and state securities laws may impose certain restrictions on the method by which
a sale of the Med Subsidiaries Debenture Collateral may be effected after an
Event of Default, Pledgors agree that, upon the occurrence and during the
continuation of an Event of Default, Holder may from time to time attempt to
sell all or any part of the Med Subsidiaries Debenture Collateral by means of a
private placement restricting the bidder and prospective purchasers to those who
will represent and agree that they are purchasing for investment only and not
for distribution. In so doing, Holder may solicit offers to buy the Med
Subsidiaries Debenture Collateral, or any part of it, for cash, from a limited
number of investors deemed by Holder, in its reasonable judgment, to be
qualified parties who might be interested in purchasing the Med Subsidiaries
Debenture Collateral, and if Holder solicits such offers from not less than five
(5) such investors, then the acceptance by same of the highest offer obtained
therefrom shall be deemed to be a commercially reasonable method of disposition
of such Med Subsidiaries Debenture Collateral.
12. CUMULATIVE RIGHTS. Holder's rights, powers and remedies under this
Agreement shall be in addition to all rights, powers and remedies given to same
under law or under the Amendment Agreement or under any other Modification
Documents between Pledgors (on the one hand) and Holder (on the other hand), all
of which rights, powers and remedies shall be cumulative and may be exercised
successively or concurrently.
13. MISCELLANEOUS.
13.1 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
Pledgors and upon Pledgors' successors; and all references herein to Pledgors
shall be deemed to include any successor or successors, whether immediate or
remote, to such Person. Pledgors shall have no right to assign its obligations
hereunder. This Agreement shall inure to Holder and its permitted successors,
assigns and transferees.
13.2 SEVERABILITY. Wherever possible each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable laws and regulations, but
13
if any provision of this Agreement shall be prohibited by or invalid thereunder,
such provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
13.3 SERVICE OF PROCESS. Pledgors agree that service of process in any
such action or proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form of mail),
postage prepaid, to it at its address set forth below or at such other address
of which Holder shall have been notified in writing, and agrees that nothing
herein shall affect the right to effect service of process in any other manner
permitted by law.
13.4 NOTICES. All notices, demands, declarations, consents,
directions, approvals, instructions, requests and other communications required
or permitted by this Agreement shall be given in the manner provided for by
SECTION 20 of the Amendment Agreement, with all notices to Pledgors also being
addressed to Company.
13.5 CHOICE OF LAW. This Agreement shall be construed in accordance
with and governed by the laws of the State of Nevada, without giving regard to
its conflict of laws principles.
13.6 WAIVER OF JURY TRIAL. EACH PLEDGOR, BY ITS EXECUTION AND DELIVERY
OF THIS AGREEMENT, AND HOLDER, BY ACCEPTING THIS AGREEMENT, EACH EXPRESSLY WAIVE
ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND
ANY RIGHTS UNDER THIS AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS
AGREEMENT, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
13.7 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but which together shall be
deemed to constitute a single document. Copies of this Agreement shall have the
same effect and enforceability as the original.
[Remainder of This Page Intentionally Left Blank; Signature Page Follows]
14
IN WITNESS WHEREOF, Pledgors have caused this Agreement to be executed
and delivered as of the date first above written.
MED DIVERSIFIED, INC.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
AMERICAN REIMBURSEMENT, LLC
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
CHARTWELL DIVERSIFIED SERVICES, INC.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
TRESTLE CORPORATION
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
[SIGNATURE PAGE TO MED SUBSIDIARIES PLEDGE AND SECURITY AGREEMENT]
15
RESOURCE PHARMACY, INC.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
CHARTWELL COMMUNITY SERVICES, INC.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
CHARTWELL CARE GIVERS, INC.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
CHARTWELL MANAGEMENT COMPANY, INC.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
[SIGNATURE PAGE TO MED SUBSIDIARIES PLEDGE AND SECURITY AGREEMENT]
16
CHARTWELL HOME THERAPIES, L.P.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
CHARTWELL PENNSYLVANIA, L.P.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
CHARTWELL MIDWEST INDIANA, LLC
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
CHARTWELL SOUTHERN NEW ENGLAND, LLC
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
CHARTWELL ROCKY MOUNTAIN REGIONAL SERVICES
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
[SIGNATURE PAGE TO MED SUBSIDIARIES PLEDGE AND SECURITY AGREEMENT]
17
CHARTWELL U.C. XXXXX HEALTH SYSTEMS, LLC
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
CHARTWELL MICHIGAN, LLC
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
NORTHWEST HOME CARE, LLC
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
INNOVA HOME THERAPIES, LLC
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
CHARTWELL WISCONSIN ENTERPRISES, LLC
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
[SIGNATURE PAGE TO MED SUBSIDIARIES PLEDGE AND SECURITY AGREEMENT]
18
CHARTWELL-MIDWEST WISCONSIN, LLC
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
CHARTWELL-MIDWEST WISCONSIN HEALTH RESOURCES,
LLC
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
XXXXXX XXXXXXXX HOME CARE, INC.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
CARECO, INC.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
T.L.C. MIDWEST, INC.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
[SIGNATURE PAGE TO MED SUBSIDIARIES PLEDGE AND SECURITY AGREEMENT]
19
T.L.C. MEDICARE SERVICES OF DADE, INC.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
T.L.C. MEDICARE SERVICES OF BROWARD, INC.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
TENDER LOVING CARE HOME CARE SERVICES, INC.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
U.S. ETHICARE CORPORATION
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
U.S. ETHICARE CHAUTAUQUA CORPORATION
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
[SIGNATURE PAGE TO MED SUBSIDIARIES PLEDGE AND SECURITY AGREEMENT]
20
U.S. ETHICARE ERIE CORPORATION
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
U.S. ETHICARE NIAGARA CORPORATION
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
ETHICARE CERTIFIED SERVICES, INC.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
STAFF BUILDERS, INC.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
S.B.H.F., INC.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
[SIGNATURE PAGE TO MED SUBSIDIARIES PLEDGE AND SECURITY AGREEMENT]
21
STAFF BUILDERS SERVICES, INC.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
STAFF BUILDERS HOME HEALTH CARE, INC.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
STAFF BUILDERS INTERNATIONAL, INC.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
A RELIABLE HOMEMAKER OF XXXXXX-ST.
LUCIE COUNTY, INC.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
ST. LUCIE HOME HEALTH AGENY, INC.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
22
T.L.C. HOME HEALTH CARE, INC.
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
PRIVATE INVESTMENT BANK LIMITED
By:
----------------------------------------
Print Name:
--------------------------------
Title:
-------------------------------------
[SIGNATURE PAGE TO MED SUBSIDIARIES PLEDGE AND SECURITY AGREEMENT]
23
SCHEDULE 1
INTERESTS IN MED SUBSIDIARIES
MED SUBSIDIARY PLEDGED INTEREST
-------------------------------------------------- -------------------------------------------
Trestle Corporation 2,800,000 shares of common stock
Resource Pharmacy, Inc. 1,000 shares of common stock
Chartwell Diversified Services, Inc. 1,000 shares of common stock
Chartwell Community Services, Inc. 100 shares of common stock
Chartwell Care Givers, Inc. 100 shares of common stock
Chartwell Management Company, Inc. 100 shares of common stock
Chartwell Home Therapies, L.P. All Partnership Interests (Uncertificated)
Chartwell Pennsylvania, L.P. All Membership Interests (Uncertificated)
Chartwell Midwest Indiana, LLC All Membership Interests (Uncertificated)
Chartwell Southern New England, LLC All Membership Interests (Uncertificated)
Chartwell Rocky Mountain Regional Services All Membership Interests (Uncertificated)
Chartwell U.C. Xxxxx Health Systems, LLC All Membership Interests (Uncertificated)
Chartwell Michigan, LLC All Membership Interests (Uncertificated)
Northwest Home Care, LLC All Membership Interests (Uncertificated)
Innova Home Therapies, LLC All Membership Interests (Uncertificated)
Chartwell Wisconsin Enterprises, LLC All Membership Interests (Uncertificated)
Chartwell-Midwest Wisconsin, LLC All Membership Interests (Uncertificated)
Chartwell-Midwest Wisconsin Health Resources, LLC All Membership Interests (Uncertificated)
Tender Loving Care Health Care Services, Inc. 5,000,000 shares of common stock
Xxxxxx Xxxxxxxx Home Care, Inc. 1,000 shares of common stock
Careco, Inc. 100 shares of common stock
T.L.C. Midwest, Inc. 1,000 shares of common stock
T.L.C. Home Health Care, Inc. 100 shares of common stock
T.L.C. Medicare Services of Dade, Inc. 500 shares of common stock
T.L.C. Medicare Services of Broward, Inc. 500 shares of common stock
Tender Loving Care Home Care Services, Inc. 100 shares of common stock
U.S. Ethicare Corporation 100 shares of common stock
U.S. Ethicare Chautauqua Corporation 500 shares of common stock
U.S. Ethicare Erie Corporation 500 shares of common stock
U.S. Ethicare Niagara Corporation 500 shares of common stock
Ethicare Certified Services, Inc. 100 shares of common stock
Staff Builders, Inc. 100 shares of common stock
S.B.H.F., Inc. 100 shares of common stock
Staff Builders Services, Inc. 100 shares of common stock
Staff Builders Home Health Care, Inc. 100 shares of common stock
Staff Builders International, Inc. 100 shares of common stock
St. Lucie Home Health Agency, Inc. 500 shares of common stock
A Reliable Homemaker of Xxxxxx-St. Lucie County, Inc. 1,000 shares of common stock
24
Exhibit A
FORM OF SUBSIDIARY JOINDER
AGREEMENT TO BE BOUND BY GUARANTY
This Agreement to be Bound by the Med Subsidiaries Pledge and Security
Agreement (this "AGREEMENT") is executed as of the _____ day of _________, ____,
by [NAME OF NEW SUBSIDIARY], a ____________ [corporation] [partnership] [etc.]
(the "NEW SUBSIDIARY"). Capitalized terms used herein by not defined herein
shall be as defined in the Med Subsidiaries Pledge and Security Agreement (THE
"PLEDGE AGREEMENT").
RECITALS
A. Pursuant to that certain Amendment Agreement dated as of June 28,
2002, by and among Med Diversified, Inc., a
Nevada corporation ("MED"), American
Reimbursement, LLC, a Delaware limited liability company, Private Investment
Bank Limited, Nassau, Bahamas ("PIBL"), TEGCO Investments, LLC, a Delaware
limited liability company; Chartwell Diversified Services, Inc., a Delaware
corporation, Tender Loving Care Health Care Services, Inc., a Delaware
corporation, and each of Med Subsidiaries that are a party thereto, (such
agreement, as the same may hereafter be amended, modified, restated,
supplemented and otherwise in effect from time to time, the "AMENDMENT
AGREEMENT"), PIBL accepted and agreed to the Amendment Agreement and extension
of the Original Debentures that was requested by Med. Capitalized terms used
herein without definition herein shall have the meanings assigned to them in the
Amendment Agreement
B. As a condition to the execution of the Amendment Agreement by the
PIBL, certain of the Subsidiaries of Med have executed the Med Subsidiaries
Pledge and Security Agreement, dated as of June 28, 2002 (such agreement, as
amended, the "PLEDGE AGREEMENT"), by and among PIBL and the entities listed in
the signature pages thereof, in favor of PIBL.
C. Section 7(d) of the Amendment Agreement provides that, whenever Med
acquires or forms a new Subsidiary, Med will cause such Subsidiary to deliver an
executed counterpart to the Pledge Agreement and such Subsidiary shall become a
party to the Pledge Agreement.
D. On [INSERT DATE], the New Subsidiary [DESCRIBE ACQUISITION/FORMATION
OF NEW SUBSIDIARY]. The New Subsidiary will benefit from the funds available to
the Med under the Amendment Agreement, and in recognition of this benefit and in
order to comply with the Amendment Agreement, the New Subsidiary is willing to
enter into this Agreement.
AGREEMENT
NOW, THEREFORE, the New Subsidiary agrees as follows:
1. REPRESENTATIONS AND WARRANTIES. On and as of the date of this
Agreement (the "EFFECTIVE DATE") and for the benefit of the PIBL, the New
Subsidiary hereby makes each of the representations and warranties contained in
the Pledge Agreement.
2. AGREEMENT TO BE BOUND. The New Subsidiary agrees that, on and as of
the Effective Date, it shall become a Pledgor under the Pledge Agreement and
shall be bound by all the provisions of the Pledge Agreement the same as if the
New Subsidiary had executed the Pledge Agreement on the Closing Date.
3. WAIVER. Without limiting the generality of the waivers in the Pledge
Agreement, the New Subsidiary specifically agrees to be bound by the Pledge
Agreement and waives any right to notice of acceptance of its execution of this
Agreement and of its agreement to be bound by the Pledge Agreement.
25
4. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
[Remainder of page intentionally left blank, signature page follows.]
26
IN WITNESS WHEREOF, the New Subsidiary has caused this Agreement to be
Bound by the Pledge Agreement to be executed by its duly authorized officer as
of this __ day of _________, ____.
[NAME OF NEW SUBSIDIARY]
By:
-----------------------------
Name:
-----------------------
Title:
-----------------------
[SIGNATURE PAGE TO SUBSIDIARY JOINDER TO PLEDGE AGREEMENT]
27
