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Exhibit 10.27
STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement ("Agreement") is entered into as of the
30th day of May, 1996, by and between RENAL CARE GROUP, INC. ("Borrower"), a
Delaware corporation, and NATIONSBANK OF TENNESSEE, N.A. ("Lender"), a national
banking association.
W I T N E S S E T H
WHEREAS, Lender has agreed to extend credit to Borrower and to
Borrower's subsidiaries, RCG Mississippi, Inc., a Delaware Corporation, Renal
Care Group, Inc., a Tennessee corporation, Kansas Nephrology Association, a
Kansas corporation, Renal Care Group Texas, Inc., a Texas corporation, and
D.M.N. of Indiana Corporation, an Indiana corporation (these subsidiaries of
Borrower are referred to herein as the "Subsidiaries"), on certain terms and
conditions; and
WHEREAS, one condition to Lender's agreement to extend credit to
Borrower and the Subsidiaries is that Lender must be provided a first priority
perfected pledge of certain stock owned by Borrower;
NOW, THEREFORE, as an inducement to cause Lender to extend credit to
Borrower and the Subsidiaries, and for other valuable consideration, the
receipt and sufficiency of which are acknowledged, it is agreed as follows:
1. Definition of Secured Indebtedness. As used herein, "Secured
Indebtedness" shall mean the obligations of Borrower under this Agreement and
the indebtedness and obligations evidenced by that Revolving/Term Note (the
"Note") of even date herewith made by Borrower and the Subsidiaries in the
maximum principal amount of Thirty-five Million and No/100 Dollars
($35,000,000.00) payable to the order of Lender; that Loan Agreement (the "Loan
Agreement") of this date executed by Borrower, the Subsidiaries and Lender in
connection with the indebtedness evidenced by the Note; the other "Loan
Documents," as defined in the Loan Agreement; and all modifications, extensions
and renewals of the foregoing.
2. Pledge of Stock. To secure the payment of the Secured
Indebtedness, Borrower hereby pledges to Lender and grants Lender a security
interest in shares of the common stock of the corporations listed in Exhibit A
hereto (each an "Issuer"), as evidenced by the certificates described in
Exhibit A attached hereto, together with all dividends, distributions and other
rights of payment and property interests arising therefrom or with respect
thereto and proceeds thereof (collectively the "Pledged Stock").
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3. Perfection. Lender's security interest in the Pledged Stock
shall be perfected by Lender's possession of the certificates evidencing the
same. Lender shall also be provided with stock powers covering the Pledged
Stock executed in blank by Borrower.
4. Warranties. Borrower warrants to Lender that the following
warranties are presently true and covenants that they shall remain true at and
"as of" all times hereafter until Lender releases the Pledged Stock:
(a) Title. Borrower is the sole legal and equitable owner
of the Pledged Stock, and Borrower's absolute title thereto is not the subject
of any claim or challenge threatened or asserted by any third party.
(b) Valid Stock. The Pledged Stock has been validly
issued and is fully paid for and non-assessable.
(c) No Liens or Restrictions. The Pledged Stock is not
and will not be subject to any security interest, lien, restriction of
transfer, "buy-sell" agreement, voting agreement, redemption agreement, option
or other agreements, except for any applicable Permitted Encumbrances (as
defined in the Loan Agreement).
(d) Valid Security Interest. This Agreement and the
delivery to Lender of the certificates evidencing the Pledged Stock provide
Lender with a valid pledge of, and a valid first priority perfected security
interest in, the Pledged Stock.
(e) Percentage of Ownership of Issuer. The Pledged Stock
represents the percentage of each Issuer's total outstanding stock set forth in
Exhibit A hereto.
(f) No Other Classes of Stock. Each Issuer has only one
class of stock authorized, except as may be noted in Exhibit A hereto.
(g) No Options. No Issuer has any options, warrants or
convertible debt instruments outstanding that could require the issuance of
additional stock.
(h) All Subsidiaries. The Pledged Stock includes all
stock of all Subsidiaries of Borrower which, under the Loan Agreement, is to be
pledged to Lender.
5. Covenants. Borrower covenants with Lender as follows:
(a) Additional Stock. Borrower shall receive any stock
issued or delivered as a result of ownership of the Pledged Stock as Lender's
agent and shall deliver the same
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immediately to Lender upon receipt. Such additional stock shall become part of
the Pledged Stock hereunder upon issuance.
(b) No Further Encumbrance. Borrower shall not sell or
transfer any or all of the Pledged Stock or grant or suffer the attachment of
any Encumbrance other than Permitted Encumbrances (as defined in the Loan
Agreement) to any or all of the Pledged Stock.
(c) Notices. If Lender so requests, Borrower shall
forward promptly to Lender after issuance, copies of all proxy solicitations,
meeting notices, and other writings pertaining to the Pledged Stock.
6. Voting Rights. As long as no Event of Default has occurred and
is continuing under this Agreement, Borrower shall be entitled to exercise all
voting rights arising from ownership of the Pledged Stock, except that prior
written approval of Lender shall be required for Borrower to vote the Pledged
Stock to authorize any Issuer to liquidate, reorganize, sell substantially all
of its assets, merge or engage in any other business transaction for which
shareholder approval is required by law or by Issuer's Charter or its By-Laws
(except that such approval shall not be required for (x) transactions for which
Lender's approval is not required under the Loan Agreement, and (y) those
transactions for which Lender's approval, if required, has been obtained).
Borrower hereby irrevocably appoints Lender the proxy and attorney-in-fact of
Borrower to cast the votes arising from the Pledged Stock against any
transaction for which Lender's consent is required under this Section 6 and
which Lender has not approved, in its discretion. Lender's rights to so vote
the Pledged Stock are further evidenced by a separate Irrevocable Proxy in
favor of Lender.
7. Right to Distributions. As long as no Event of Default has
occurred and is continuing under this Agreement, Borrower shall have the
exclusive right to receive all distributions of cash made with respect to the
Pledged Stock.
8. Return of Pledged Stock. The Pledged Stock shall be returned
to Borrower when (i) the Secured Indebtedness has been paid in full and (ii)
Lender has no further obligation to extend credit to be included in the Secured
Indebtedness. The return of the Pledged Stock shall be without recourse against
Lender and shall be effected without any representation or warranty on Lender's
part, notwithstanding any provision of the Uniform Commercial Code or other law
that might otherwise imply or require representations or warranties as to title
or other matters.
9. Recitals. Borrower warrants and agrees that the recitals set
forth at the beginning of this Agreement are true.
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10. No Burdensome Agreements. Borrower warrants that Borrower is
not a party to any contract or agreement and is not subject to any contingent
liability that does or may impair Borrower's ability to perform under the terms
of this Agreement. Borrower further warrants that the execution and performance
of this Agreement will not cause a default, acceleration or other event under
any other contract or agreement to which Borrower or any property of Borrower
is subject, and will not result in the imposition of any charge, penalty, lien
or other encumbrance against any of Borrower's property except in favor of
Lender.
11. Legal and Binding Agreement. Borrower warrants that, as of the
date hereof, the execution and performance of this Agreement will not violate
any judicial or administrative order or governmental law or regulation, and
that this Agreement is valid, binding and enforceable in every respect
according to its terms.
12. No Consent Required. Borrower warrants that, as of the date
hereof, Borrower's execution, delivery and performance of this Agreement do not
require the consent of or the giving of notice to any third party including,
but not limited to, any other lender, governmental body or regulatory
authority.
13. No Event of Default. Borrower warrants that, as of the date
hereof, no Event of Default exists hereunder and no condition exists which,
with the giving of notice, the passing of time, or both, would constitute an
Event of Default.
14. Default Defined. The occurrence of an Event of Default under
the Loan Agreement shall constitute an Event of Default under this Agreement.
15. Remedies Upon Default. Upon the occurrence and during the
continuation of an Event of Default hereunder, Lender may exercise any of the
following remedies:
(a) Power to Vote Pledged Stock. If Lender so elects in
writing, Lender shall have the exclusive right to exercise voting powers and
give consents, waivers, ratifications and notices relating to the Pledged
Stock. Borrower hereby irrevocably appoints Lender as Borrower's proxy and
attorney-in-fact to so act with respect to the Pledged Stock. Lender may
exercise its power to vote the Pledged Stock pursuant to the power granted in
this subparagraph or pursuant to the Irrevocable Proxy executed in favor of
Lender in connection with the execution of this Agreement. Each Issuer and the
secretary and transfer agent (if any) of each Issuer are hereby irrevocably
authorized and directed to honor the Irrevocable Proxy in favor of Lender
without any inquiry whatsoever on their part, and Borrower hereby agrees that
each Issuer, the secretary and transfer agent (if any) of each Issuer and all
employees and agents of any of them shall not be liable to Borrower for
honoring the Irrevocable Proxy upon Lender's demand. Lender's exercise of any
rights under the Irrevocable Proxy pending disposition of the Pledged Stock at
a private or public sale shall not be considered a disposition
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of any or all of the Pledged Stock and shall not be considered an acceptance of
the Pledged Stock in satisfaction of any or all of the Secured Indebtedness.
(b) Record Ownership. Lender may cause any or all of the
Pledged Stock to be transferred of record into Lender's name. Borrower hereby
appoints Lender as Borrower's attorney-in-fact for the purpose of so
transferring record ownership of the Pledged Stock. The mere transfer of record
ownership shall be for preservation of Lender's rights only and shall not be
considered a sale or disposition of the Pledged Stock or an acquisition thereof
in full or partial satisfaction of the Secured Indebtedness, unless Lender
specifically so provides in writing and in accordance with applicable law.
(c) Receipt of Distributions. Lender shall have the
exclusive right to receive all distributions made with respect to the Pledged
Stock. Lender shall apply cash distributions to payment of the Secured
Indebtedness and hold all other types of property distributed for sale pursuant
to the Uniform Commercial Code as adopted in Tennessee as proceeds of the
Pledged Stock. Lender's right to receive such distributions shall be further
evidenced by the Irrevocable Proxy executed in connection with this Agreement.
(d) Sale of Pledged Stock. Lender may sell the Pledged
Stock or any part thereof at public or private sale or at any appropriate
broker's board or securities exchange, for cash, on credit, or for future
delivery.
(i) If notice of the disposition is required by law to be
given, such notice shall be sufficient and commercially
reasonable if given at least ten (10) days prior to the
proposed disposition.
(ii) Lender may purchase any or all of the Pledged Stock
sold at any public sale or, to the extent permitted by law, at
any private sale.
(iii) Borrower acknowledges that the Pledged Stock has not
been registered pursuant to applicable securities laws and
that compliance with applicable laws upon any disposition by
Lender may bring a lower price than would otherwise be
obtained for the Pledged Stock. Without limiting the authority
of Lender to take all other measures deemed necessary by
Lender to comply with any applicable securities laws, Borrower
agrees that, or prior to any sale of the Pledged Stock, Lender
may, in its sole discretion, restrict prospective purchasers
to persons who will represent that they will purchase for
their own account for investment and not with view to the
distribution or sale of any of the Pledged Stock and who will
agree that the Pledged Stock so purchased may bear an
appropriate restrictive legend.
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(iv) At or prior to any sale, Lender may, in its sole
discretion, require that prospective purchasers establish, to
Lender's satisfaction, that they are investors of sufficient
financial means and/or business acumen to qualify as
"accredited investors" or that they meet any other appropriate
standard of investor suitability under federal and/or state
securities laws.
(v) At any sale, Lender shall have the right to transfer
to the purchaser thereof the Pledged Stock sold. Lender is
hereby appointed Borrower's attorney-in-fact for the purpose
of supplying any endorsements necessary to effect such
transfer. Each purchaser at any such sale (including, without
limitation, Lender) shall hold the property sold free from any
claim or right of any kind, including any equity or rights of
redemption of Borrower. Borrower hereby specifically waives
all rights of redemption, stay or appraisal which Borrower has
or may have under any rule of law or statute now existing or
hereafter adopted.
(vi) At any sale, the Pledged Stock may be sold in one lot
as an entirety or in separate portions, as Lender may
determine.
(vii) If any of the Issuer's securities are then registered
for public sale, then, prior to any sale hereunder, Lender
may, but shall not be obligated to, seek to have all or part
of the Pledged Stock registered for public distribution
pursuant to any applicable state or federal law or seek
assurances from any state or federal authority that the
intended disposition of Pledged Stock will qualify under an
exception to laws that otherwise require registration for the
sale of stock.
(viii) In addition to other costs of sale, all expenses
incurred by Lender in addressing securities law matters
relating to the sale of the Pledged Stock, including, but not
limited to, reasonable attorney's fees, shall become part of
the Secured Indebtedness.
(ix) Lender shall not be obligated to make any sale
pursuant to any notice given and 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
resumed at any time and place to which the same may be so
adjourned.
(x) In the case of any sale of all or any part of the
Pledged Stock on credit or for future delivery, payments made
by the purchaser shall reduce the outstanding balance of the
Secured Indebtedness as payments are received, and
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the outstanding principal balance of the Secured Indebtedness
shall continue to accrue interest over the time that such
payments are made, until the entire Secured Indebtedness has
been paid in full. Lender shall not incur any liability in
case of the failure of such purchaser to completely pay for
the Pledged Stock so sold and, in the case of any such
failure, the Pledged Stock may again be sold pursuant to the
provisions hereof.
16. Application of Proceeds. All amounts received by Lender by
exercise of its remedies hereunder shall be applied as provided in the Loan
Agreement.
17. Incorporation of Exhibits. All Exhibits referred to in this
Agreement are incorporated herein by this reference.
18. Indulgence Not Waiver. Lender's indulgence in the existence of
an event of Default hereunder or any other departure from the terms of this
Agreement shall not prejudice Lender's rights to declare an Event of Default or
otherwise demand strict compliance with this Agreement.
19. Cumulative Remedies. The remedies provided Lender in this
Agreement are not exclusive of any other remedies that may be available to
Lender under any other document or at law or equity.
20. Amendment and Waiver in Writing. No provision of this
Agreement can be amended or waived, except by a statement in writing signed by
the party against which enforcement of the amendment or waiver is sought.
21. Assignment. This Agreement shall be binding upon and inure to
the benefit of the heirs, successors and assigns of Borrower and the successors
and assigns of Lender, except that Borrower shall not assign any rights or
delegate any obligations arising hereunder without the prior written consent of
Lender. Any attempted assignment or delegation by Borrower without the required
prior consent shall be void.
22. Entire Agreement. This Agreement and the other written
agreements between Borrower and Lender represent the entire agreement between
the parties concerning the subject matter hereof, and all oral discussions and
prior agreements are merged herein.
23. Severability. Should any provision of this Agreement be
invalid or unenforceable for any reason, the remaining provisions hereof shall
remain in full effect.
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24. Time of Essence. Time is of the essence of this Agreement, and
all dates and time periods specified herein shall be strictly observed, except
that Lender may permit specific deviations therefrom by its written consent.
25. Applicable Law. The validity, construction and enforcement of
this Agreement and all other documents executed with respect to the Secured
Indebtedness shall be determined according to the laws of Tennessee applicable
to contracts executed and performed entirely within that state.
26. Jurisdiction, Venue, Arbitration. Disputes arising under this
Agreement shall be governed as to matters of jurisdiction, venue and
arbitration by the provisions of the Loan Agreement.
27. Gender and Number. Words used herein indicating gender or
number shall be read as context may require.
28. Captions Not Controlling. Captions and headings have been
included in this Agreement for the convenience of the parties, and shall not be
construed as affecting the content of the respective paragraphs.
Dated as of the date first written above.
THE UNDERSIGNED ACKNOWLEDGE A THOROUGH
UNDERSTANDING OF THE TERMS OF THIS AGREEMENT
AND AGREE TO BE BOUND THEREBY:
RENAL CARE GROUP, INC.
By: /s/ Xxxxxx Xxxxx
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Title: EVP
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NATIONSBANK OF TENNESSEE, N.A.
By: /s/ Xxx Xxxxxxx
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Title: VP
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EXHIBIT A
DESCRIPTION OF PLEDGED STOCK
Issuer Domicile of Issuer Certificate # # of Shares % of Shares
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D.M.N. of Indiana Indiana 7 430 100%
Corporation
Renal Care Group Texas 9 8,000 100%
Texas, Inc.
RCG Mississippi, Inc. Delaware 2 1,000 100%
Renal Care Group, Inc. Tennessee 7 100 100%
Kansas Nephrology Kansas 6 3,499.98 100%
Association
Additional Note Regarding Issuer
Renal Care Group, Inc., a Tennessee corporation, has authorized (i) 666,667
shares of Series A Preferred Stock, $0.01 par value and (ii) 333,333 shares of
additional undesignated preferred stock. No shares of either additional class
are outstanding.
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