Exhibit 10.2
STOCK PLEDGE AGREEMENT
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(HOLDING)
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This STOCK PLEDGE AGREEMENT (this "Agreement"), dated as of October 7,
2003, is entered into by and between RIVER HOLDING CORP., a California
corporation ("Pledgor"), and ▇▇▇▇▇ FARGO FOOTHILL, INC., a California
corporation, as the arranger and administrative agent for the Lenders (in such
capacity, together with its successors, if any, in such capacity, "Agent"), with
reference to the following:
WHEREAS, ▇▇▇▇▇▇ Respiratory Care Inc., a California corporation (the
"Borrower"), the Lenders (such Lenders, together with Agent, individually and
collectively, the "Lender Group"), and Agent have entered into that certain Loan
and Security Agreement, dated as of even date herewith (as amended, restated,
modified, supplemented, refinanced, renewed, or extended from time to time, the
"Loan Agreement"), pursuant to which the Lender Group has agreed to make certain
financial accommodations to Borrower;
WHEREAS, contemporaneously herewith, Pledgor has executed and
delivered that certain General Continuing Guaranty (the "Guaranty") and that
certain Security Agreement (Guarantors) (the "Security Agreement") in favor of
Agent respecting certain obligations of the Borrower to the Lender Group in
connection with the Loan Agreement;
WHEREAS, Pledgor beneficially owns the specified Equity Interests
identified as Pledged Interests in the Persons identified as Issuers listed
under the name of Pledgor on Schedule A attached hereto (or any addendum
thereto); and
WHEREAS, to induce the Lender Group to make the financial
accommodations provided to the Borrower pursuant to the Loan Agreement, Pledgor
desires to pledge, grant, transfer, and assign to Agent, for the benefit of the
Lender Group, a security interest in the Pledged Collateral (as hereinafter
defined) to secure the Secured Obligations (as hereinafter defined), as provided
herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations, and warranties set forth herein and for other good and valuable
consideration, the parties hereto agree as follows:
1. Definitions And Construction.
(a) Definitions. Capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to them in the Loan Agreement.
The following terms, as used in this Agreement, shall have the following
meanings:
"Agent" shall have the meaning set forth in the preamble to this
Agreement, together with its successors or assigns.
"Agreement" has the meaning set forth in the preamble to this
Agreement.
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"Chief Executive Office" shall mean the Chief Executive Office
listed on Schedule B.
"Equity Interests" shall mean all shares, units, options,
warrants, interests, participations, or other equivalents (regardless of
how designated) of or in a corporation, partnership, limited liability
company, or equivalent entity, whether voting or nonvoting, including
general partner partnership interests, limited partner partnership
interests, common stock, preferred stock, or any other "equity security"
(as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the SEC under the Exchange Act).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor statute.
"Excluded Collateral" shall have the meaning ascribed to such
term in the Loan Agreement.
"Future Rights" shall mean, with respect to each Issuer, (i) all
Equity Interests (other than Pledged Interests) of such Issuer, and all
securities convertible or exchangeable into, and all warrants, options, or
other rights to purchase, Equity Interests of such Issuer; (ii) to the
extent of Pledgor's interest therein, all shares of, all securities
convertible or exchangeable into, and all warrants, options, or other
rights to purchase Equity Interests of any Person in which Pledgor, after
the date of this Agreement, acquires a direct equity interest, irrespective
of whether such Person is or becomes a Subsidiary of Pledgor; and (iii) the
certificates or instruments representing such additional Equity Interests,
convertible or exchangeable securities, warrants, and other rights and all
dividends, cash, options, warrants, rights, instruments, and other property
or proceeds from time to time received, receivable, or otherwise
distributed in respect of or in exchange for any or all of such Equity
Interests.
"Guaranty" shall have the meaning set forth in the recitals to
this Agreement.
"Holder" and "Holders" shall have the meanings set forth in
Section 3 of this Agreement.
"Issuers" shall mean each of the Persons identified as an Issuer
on Schedule A attached hereto (or any addendum thereto), and any successors
thereto, whether by merger or otherwise.
"Lender Group" shall have the meaning set forth in the recitals
to this Agreement.
"Lenders" means, individually and collectively, each of the
financial institutions identified on the signature pages of the Loan
Agreement, and any other person made a party thereto in accordance with the
provisions of Section 14 thereof (together with their respective successors
and assigns).
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"Loan Agreement" shall have the meaning set forth in the recitals
to this Agreement.
"Pledged Collateral" shall mean the Pledged Interests, the Future
Rights, and the Proceeds, collectively but excluding the Excluded
Collateral.
"Pledged Interests" shall mean with respect to each Issuer, all
of the Equity Interests identified as Pledged Interests of such Issuer on
Schedule A attached hereto (or any addendum thereto).
"Pledgor" has the meaning set forth in the preamble to this
Agreement.
"Proceeds" shall mean all proceeds (including proceeds of
proceeds) of the Pledged Interests and Future Rights including all: (a)
rights, benefits, distributions, premiums, profits, dividends, interest,
cash, instruments, documents of title, accounts, contract rights,
inventory, equipment, general intangibles, deposit accounts, chattel paper,
and other property from time to time received, receivable, or otherwise
distributed in respect of or in exchange for, or as a replacement of or a
substitution for, any of the Pledged Interests, Future Rights, or proceeds
thereof (including any cash, Equity Interests, or other securities or
instruments issued after any recapitalization, readjustment,
reclassification, merger or consolidation with respect to any Issuer and
any security entitlements, as defined in the Code, with respect thereto);
(b) "proceeds," as such term is defined in the Code; (c) proceeds of any
insurance, indemnity, warranty, or guaranty (including guaranties of
delivery) payable from time to time with respect to any of the Pledged
Interests, Future Rights, or proceeds thereof; (d) payments (in any form
whatsoever) made or due and payable to Pledgor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Pledged Interests, Future Rights, or
proceeds thereof; and (e) other amounts from time to time paid or payable
under or in connection with any of the Pledged Interests, Future Rights, or
proceeds thereof.
"SEC" shall mean the United States Securities and Exchange
Commission and any successor thereto.
"Security Agreement" shall have the meaning set forth in the
recitals to this Agreement.
"Secured Obligations" shall mean, with respect to Pledgor, all
liabilities, obligations, or undertakings owing by Pledgor to the Lender
Group of any kind or description arising out of or outstanding under,
advanced or issued pursuant to, or evidenced by the Loan Agreement, the
Guaranty, the Security Agreement, this Agreement, or any of the other Loan
Documents, irrespective of whether for the payment of money, whether direct
or indirect, absolute or contingent, due or to become due, voluntary or
involuntary, whether now existing or hereafter arising, and including all
interest (including interest that accrues after the filing of a case under
the Bankruptcy
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Code) and any and all costs, fees (including attorneys fees), and expenses
which Pledgor is required to pay pursuant to any of the foregoing, by law,
or otherwise.
"Securities Act" shall have the meaning set forth in Section 9(c)
of this Agreement.
(b) Construction.
(i) Unless the context of this Agreement clearly requires
otherwise, references to the plural include the singular and to the singular
include the plural, the term "including" is not limiting, and the term "or" has,
except where otherwise indicated, the inclusive meaning represented by the
phrase "and/or." The words "hereof," "herein," "hereby," "hereunder," and other
similar terms in this Agreement refer to this Agreement as a whole and not
exclusively to any particular provision of this Agreement. Article, section,
subsection, exhibit, and schedule references are to this Agreement unless
otherwise specified. All of the exhibits or schedules attached to this Agreement
shall be deemed incorporated herein by reference. Any reference to any of the
following documents includes any and all alterations, amendments, restatements,
extensions, modifications, renewals, or supplements thereto or thereof, as
applicable: this Agreement, the Loan Agreement, the Guaranty, the Security
Agreement, or any of the other Loan Documents.
(ii) Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against Agent or Pledgor,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by each of the parties signatory hereto and their
respective counsel and shall be construed and interpreted according to the
ordinary meaning of the words used so as to fairly accomplish the purposes and
intentions of the parties hereto.
(iii) In the event of any direct conflict between the
express terms and provisions of this Agreement and of the Loan Agreement or the
Security Agreement, the terms and provisions of the Loan Agreement or the
Security Agreement, as applicable, shall control.
2. Pledge. Pledgor hereby pledges, grants, transfers, and assigns to
Agent, for the benefit of the Lender Group, a security interest in all of
Pledgor's right, title, and interest in and to the Pledged Collateral in order
to secure prompt repayment of any and all of the Secured Obligations in
accordance with the terms and conditions of the Loan Documents to which Pledgor
is a party, and in order to secure prompt performance by Pledgor of its
covenants and duties under each Loan Document to which it is a party. Anything
contained in this Agreement or any other Loan Document to the contrary
notwithstanding, Pledgor has no authority, express or implied, to dispose of any
item or portion of the Pledged Collateral.
3. Delivery and Registration of Pledged Collateral.
(a) All certificates or instruments representing or evidencing the
Pledged Collateral shall be promptly delivered by Pledgor to Agent or Agent's
designee pursuant hereto at a location designated by Agent and shall be held by
or on behalf of Agent pursuant hereto, and
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shall be in suitable form for transfer by delivery, or shall be accompanied by
duly executed instruments of transfer or assignment in blank, all in form and
substance reasonably satisfactory to Agent.
(b) Upon the occurrence and during the continuance of an Event of
Default, Agent shall have the right, at any time in its discretion and without
notice to Pledgor, to transfer to or to register on the books of the Issuers (or
of any other Person maintaining records with respect to the Pledged Collateral)
in the name of Agent or any of its nominees any or all of the Pledged
Collateral. In addition, Agent shall have the right at any time to exchange
certificates or instruments representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger denominations.
(c) If, at any time and from time to time, any Pledged Collateral
(including any certificate or instrument representing or evidencing any Pledged
Collateral) is in the possession of a Person other than Agent (or an agent of
Agent) or Pledgor (a "Holder"), then Pledgor shall promptly, at Agent's option,
either cause such Pledged Collateral to be delivered into Agent's possession, or
execute and deliver to such Holder a written notification/instruction, and take
all other steps necessary to perfect the security interest of Agent in such
Pledged Collateral, including obtaining from such Holder a written
acknowledgment that such Holder holds such Pledged Collateral for Agent, all
pursuant to the Code or other applicable law governing the perfection of Agent's
security interest in the Pledged Collateral in the possession of such Holder.
Each such notification/instruction and acknowledgment shall be in form and
substance reasonably satisfactory to Agent.
(d) Any and all Pledged Collateral (including dividends, interest,
and other cash distributions) at any time received or held by Pledgor shall be
so received or held in trust for Agent, shall be segregated from other funds and
property of Pledgor and shall be forthwith delivered to Agent in the same form
as so received or held, with any necessary endorsements; provided that cash
dividends or distributions received by Pledgor, if and to the extent they are
not prohibited by the Loan Agreement, may be retained by Pledgor in accordance
with Section 4 and used in the ordinary course of Pledgor's business, or as
otherwise expressly permitted under the Loan Documents.
(e) If at any time and from time to time any Pledged Collateral
consists of an uncertificated security or a security in book entry form, then
Pledgor shall promptly cause such Pledged Collateral to be registered or
entered, as the case may be, in the name of Agent, for the benefit of the Lender
Group, or otherwise cause the security interest held by Agent, for the benefit
of the Lender Group, to be perfected in accordance with applicable law.
(f) Agent acknowledges that the exercise of the powers or rights
granted in this Section 3 may at some times be subject to the provisions of the
Intercreditor Agreement.
4. Voting Rights and Dividends.
(a) So long as no Event of Default shall have occurred and be
continuing, Pledgor shall be entitled to exercise any and all voting and other
consensual rights pertaining to
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the Pledged Collateral or any part thereof for any purpose not inconsistent with
the terms of the Loan Documents.
(b) Upon the occurrence and during the continuance of an Event of
Default, at the election of Agent in its Permitted Discretion, upon the receipt
by Pledgor of written notice of such election by Agent, all rights of Pledgor to
exercise the voting and other consensual rights or receive and retain cash
dividends or distributions that it would otherwise be entitled to exercise or
receive and retain, as applicable pursuant to Section 4(a), shall cease, and all
such rights shall thereupon become vested in Agent, who shall thereupon have the
sole right to exercise such voting or other consensual rights and to receive and
retain such cash dividends and distributions. Upon the receipt of such written
notice, Pledgor shall execute and deliver (or cause to be executed and
delivered) to Agent all such proxies and other instruments as Agent may
reasonably request for the purpose of enabling Agent to exercise the voting and
other rights which it is entitled to exercise and to receive the dividends and
distributions that it is entitled to receive and retain pursuant to the
preceding sentence.
(c) Agent acknowledges that the exercise of the powers or rights
granted in this Section 4 may at some times be subject to the provisions of the
Intercreditor Agreement.
5. Representations and Warranties. Pledgor represents, warrants, and
covenants as follows:
(a) Pledgor has taken all steps it deems necessary or appropriate to
be informed on a continuing basis of changes or potential changes affecting the
Pledged Collateral (including rights of conversion and exchange, rights to
subscribe, payment of dividends, reorganizations or recapitalization, tender
offers and voting rights), and Pledgor agrees that no member of the Lender Group
shall have any responsibility or liability for informing Pledgor of any such
changes or potential changes or for taking any action or omitting to take any
action with respect thereto;
(b) All information herein or contained in or delivered pursuant to
the Loan Documents supplied to Agent or any other member of the Lender Group by
and prepared by Pledgor or any Subsidiary of Pledgor in writing with respect to
the Pledged Collateral is, or in the case of information hereafter supplied will
be, accurate and complete in all material respects;
(c) Pledgor is and will be the sole legal and beneficial owner of the
Pledged Collateral (including the Pledged Interests and all other Pledged
Collateral acquired by Pledgor after the date hereof) free and clear of any
adverse claim, Lien, or other right, title, or interest of any party, other than
the Liens held by Agent for the benefit of the Lender Group and Permitted Liens;
(d) This Agreement, and the delivery to Agent of certificates, if
any, representing Pledged Collateral (or the delivery to all Holders of such
certificates, if any, representing Pledged Collateral of the
notification/instruction referred to in Section 3 of this Agreement and the
acknowledgement of such Holders referred to in Section 3), creates a valid,
perfected, and first priority security interest in one hundred percent (100%) of
the Pledged
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Interests which are in certificated form in favor of Agent securing payment of
the Secured Obligations, and all actions necessary to achieve such perfection
have been duly taken;
(e) Schedule A to this Agreement is true and correct and complete in
all material respects as of the date hereof; without limiting the generality of
the foregoing, as of the date hereof: (i) except as set forth in Schedule A, all
the Pledged Interests are in certificated form, and, except to the extent
registered in the name of Agent or its nominee pursuant to the provisions of
this Agreement, are registered in the name of Pledgor; and (ii) the Pledged
Interests as to each of the Issuers constitute at least the percentage of all
the fully diluted issued and outstanding Equity Interests of such Issuer as set
forth in Schedule A to this Agreement;
(f) the Pledged Interests that are interests in general partnerships,
limited partnerships or limited liability companies (i) are not dealt in or
traded on securities exchanges or in securities markets, (ii) do not have terms
expressly providing that they are securities governed by Article 8 of the Code,
and (iii) are not investment company securities, and are not, therefore,
"securities" governed by Article 8 of the Code;
(g) There are no presently existing Future Rights owned by Pledgor as
of the date hereof;
(h) The Pledged Interests have been duly authorized and validly
issued and are fully paid and nonassessable; and
(i) Neither the pledge of the Pledged Collateral pursuant to this
Agreement nor the extensions of credit represented by the Secured Obligations
violates Regulation T, U or X of the Board of Governors of the Federal Reserve
System.
6. Further Assurances.
(a) Pledgor agrees that from time to time, at its expense, it will
promptly execute and deliver all further instruments and documents, and take all
further action that may be necessary or reasonably desirable, or that Agent, on
behalf of the Lender Group, may request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable Agent,
on behalf of the Lender Group, to exercise and enforce its rights and remedies
hereunder with respect to any Pledged Collateral. Without limiting the
generality of the foregoing, Pledgor will: (i) at the request of Agent, ▇▇▇▇
conspicuously each of its records pertaining to the Pledged Collateral with a
legend, in form and substance reasonably satisfactory to Agent, indicating that
such Pledged Collateral is subject to the security interest granted hereby; (ii)
execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
reasonably desirable, or as Agent may reasonably request, in order to perfect
and preserve the security interests granted or purported to be granted hereby;
(iii) allow inspection of the Pledged Collateral by Agent or Persons designated
by Agent; and (iv) appear in and defend any action or proceeding that may affect
Pledgor's title to or Agent's security interest in the Pledged Collateral.
(b) Pledgor hereby authorizes Agent, on behalf of the Lender Group,
to file one or more financing or continuation statements, and amendments
thereto, relative to all or any
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part of the Pledged Collateral without Pledgor's signature where permitted by
law. A carbon, photographic, or other reproduction of this Agreement or any
financing statement covering the Pledged Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
(c) Pledgor will furnish to Agent, upon the request of Agent: (i) a
certificate executed by an authorized officer of Pledgor, and dated as of the
date of delivery to Agent, itemizing in such detail as Agent may request, the
Pledged Collateral which, as of the date of such certificate, has been delivered
to Agent by Pledgor pursuant to the provisions of this Agreement; and (ii) such
statements and schedules further identifying and describing the Pledged
Collateral and such other reports in connection with the Pledged Collateral as
Agent may request.
7. Covenants of Pledgor. Pledgor shall:
(a) Perform each and every covenant in the Loan Documents applicable
to Pledgor;
(b) At all times keep at least one complete set of its records
concerning substantially all of the Pledged Collateral at its Chief Executive
Office as set forth in Schedule B hereto, and not change the location of its
Chief Executive Office or such records without giving Agent at least thirty (30)
days prior written notice thereof;
(c) To the extent it may lawfully do so, use its best efforts to
prevent the Issuers from issuing Future Rights or Proceeds, except for cash
dividends and other distributions, if any, that are not prohibited by the terms
of the Loan Agreement to be paid by any Issuer to Pledgor;
(d) Upon receipt by Pledgor of any material notice, report, or other
communication from any of the Issuers or any Holder relating to all or any part
of the Pledged Collateral, deliver such notice, report or other communication to
Agent promptly, but in no event later than five (5) days following the receipt
thereof by Pledgor; and
(e) Not permit any of the Issuers to: (i) authorize the amendment of
or amend the Governing Documents of such Issuer that is a general partnership,
limited partnership or limited liability company to provide that the Equity
Interests of such Issuer is governed by Article 8 of the Code, or (ii) authorize
the issuance of or issue certificates evidencing the Equity Interests of such
Issuer that is a general partnership, limited partnership or limited liability
company.
8. Agent as Pledgor's Attorney-in-Fact.
(a) Pledgor hereby irrevocably appoints Agent, on behalf of the
Lender Group, as Pledgor's attorney-in-fact, with full authority in the place
and stead of Pledgor and in the name of Pledgor, Agent or otherwise, from time
to time at Agent's discretion, to take any action and to execute any instrument
that Agent, on behalf of the Lender Group, may reasonably deem necessary or
advisable to accomplish the purposes of this Agreement, including: (i) upon
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the occurrence and during the continuance of an Event of Default, to receive,
endorse, and collect all instruments made payable to Pledgor representing any
dividend, interest payment or other distribution in respect of the Pledged
Collateral or any part thereof to the extent permitted hereunder and to give
full discharge for the same and to execute and file governmental notifications
and reporting forms; (ii) to issue any notifications/instructions Agent deems
necessary pursuant to Section 3 of this Agreement; or (iii) to arrange for the
transfer of the Pledged Collateral on the books of any of the Issuers or any
other Person to the name of Agent or to the name of Agent's nominee.
(b) In addition to the designation of Agent as Pledgor's
attorney-in-fact in subsection (a), Pledgor hereby irrevocably appoints Agent,
on behalf of the Lender Group, as Pledgor's agent and attorney-in-fact to make,
execute and deliver any and all documents and writings which may be necessary or
appropriate for approval of, or be required by, any regulatory authority located
in any city, county, state or country where Pledgor or any of the Issuers engage
in business, in order to transfer or to more effectively transfer any of the
Pledged Interests or otherwise enforce the rights granted hereunder to the
Lender Group.
9. Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, subject to the terms of the Intercreditor
Agreement:
(a) Agent, on behalf of the Lender Group, may exercise in respect of
the Pledged Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a secured
party on default under the Code (irrespective of whether the Code applies to the
affected items of Pledged Collateral), and Agent, on behalf of the Lender Group,
may also without notice (except as specified below) sell the Pledged Collateral
or any part thereof in one or more parcels at public or private sale, at any
exchange, broker's board or at any of Agent's offices or elsewhere, for cash, on
credit or for future delivery, at such time or times and at such price or prices
and upon such other terms as Agent may deem commercially reasonable,
irrespective of the impact of any such sales on the market price of the Pledged
Collateral. To the maximum extent permitted by applicable law, Agent may be the
purchaser of any or all of the Pledged Collateral at any such sale and shall be
entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Pledged Collateral sold at any such
public sale, to use and apply all or any part of the Secured Obligations as a
credit on account of the purchase price of any Pledged Collateral payable at
such sale. Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of Pledgor, and Pledgor
hereby waives (to the extent permitted by law) all rights of redemption, stay,
or appraisal that it now has or may at any time in the future have under any
rule of law or statute now existing or hereafter enacted. Pledgor agrees that,
to the extent notice of sale shall be required by law, at least ten (10)
calendar days notice to Pledgor of the time and place of any public sale or the
time after which a private sale is to be made shall constitute reasonable
notification. Agent shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. Agent may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned. Subject to subsection (b), to the
maximum extent permitted by law, Pledgor hereby waives any claims against Agent
arising because the price at which any Pledged
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Collateral may have been sold at such a private sale was less than the price
that might have been obtained at a public sale, even if Agent accepts the first
offer received and does not offer such Pledged Collateral to more than one
offeree.
(b) Pledgor hereby agrees that any sale or other disposition of the
Pledged Collateral conducted in conformity with reasonable commercial practices
of banks, insurance companies, or other financial institutions in the City of
Los Angeles, State of California in disposing of property similar to the Pledged
Collateral shall be deemed to be commercially reasonable.
(c) Pledgor hereby acknowledges that the sale by Agent of any Pledged
Collateral pursuant to the terms hereof in compliance with the Securities Act of
1933 as now in effect or as hereafter amended, or any similar statute hereafter
adopted with similar purpose or effect (the "Securities Act"), as well as
applicable "Blue Sky" or other state securities laws may require strict
limitations as to the manner in which Agent or any subsequent transferee of the
Pledged Collateral may dispose thereof. In light of this, Pledgor acknowledges
and agrees that in order to protect Agent's interest it may be necessary to sell
the Pledged Collateral at a price less than the maximum price attainable if a
sale were delayed or were made in another manner, such as a public offering
under the Securities Act. Pledgor has no objection to sale in such a manner and
agrees that Agent shall have no obligation to obtain the maximum possible price
for the Pledged Collateral as long as any sale is made in a commercially
reasonable manner. Without limiting the generality of the foregoing, Pledgor
agrees that, upon the occurrence and during the continuation of an Event of
Default, Agent may, subject to applicable law, from time to time attempt to sell
all or any part of the Pledged Collateral by a private placement, restricting
the bidders and prospective purchasers to those who will represent and agree
that they are purchasing for investment only and not for distribution. In so
doing, Agent may solicit offers to buy the Pledged Collateral or any part
thereof for cash, from a limited number of investors deemed by Agent, in its
reasonable judgment, to be institutional investors or other responsible parties
who might be interested in purchasing the Pledged Collateral. If Agent shall
solicit such offers, then Pledgor acknowledges that the acceptance by Agent of
one of the offers shall not be deemed per se to not be a commercially reasonable
method of disposition of the Pledged Collateral.
(d) If Agent shall determine to exercise its right to sell all or any
portion of the Pledged Collateral pursuant to this Section, Pledgor agrees that,
upon request of Agent, Pledgor will, at no expense to any member of the Lender
Group:
(i) execute and deliver, and, use commercially reasonably
efforts to, cause the Issuers and the directors and officers thereof to execute
and deliver, all such instruments and documents, and to do or use commercially
reasonably efforts to cause to be done all such other acts and things, as may be
necessary or, in the opinion of Agent, advisable to register such Collateral
under the provisions of the Securities Act, and use commercially reasonable
efforts to cause the registration statement relating thereto to become effective
and to remain effective for such period as prospectuses are required by law to
be furnished, and to make all amendments and supplements thereto and to the
related prospectuses which, in the opinion of
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Agent, are necessary or advisable, all in conformity with the requirements of
the Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto;
(ii) use commercially reasonable efforts to qualify the
Collateral under the state securities laws or "Blue Sky" laws and to obtain all
necessary governmental approvals for the sale of the Collateral, as requested by
Agent;
(iii) use commercially reasonably efforts to cause the
Issuers to make available to their respective security holders, as soon as
practicable, an earnings statement which will satisfy the provisions of Section
11(a) of the Securities Act;
(iv) execute and deliver, or use commercially reasonably
efforts to cause the officers and directors of the Issuers to execute and
deliver, to any person, entity or governmental authority as Agent may choose,
any and all documents and writings which, in Agent's reasonable judgment, may be
necessary or appropriate for approval, or be required by, any regulatory
authority located in any city, county, state or country where Pledgor or the
Issuers engage in business, in order to transfer or to more effectively transfer
the Pledged Interests or otherwise enforce Agent's rights hereunder; and
(v) do or cause to be done all such other acts and things
as may be commercially reasonable to make such sale of the Collateral or any
part thereof valid and binding and in compliance with applicable law.
Pledgor acknowledges that there is no adequate remedy at law for failure by it
to comply with the provisions of this Section and that such failure would not be
adequately compensable in damages, and therefore agrees that its agreements
contained in this Section may be specifically enforced.
(e) PLEDGOR EXPRESSLY WAIVES TO THE MAXIMUM EXTENT PERMITTED BY LAW:
(i) ANY CONSTITUTIONAL OR OTHER RIGHT TO A JUDICIAL HEARING PRIOR TO THE TIME
AGENT DISPOSES OF ALL OR ANY PART OF THE PLEDGED COLLATERAL AS PROVIDED IN THIS
SECTION; (ii) ALL RIGHTS OF REDEMPTION, STAY, OR APPRAISAL THAT IT NOW HAS OR
MAY AT ANY TIME IN THE FUTURE HAVE UNDER ANY RULE OF LAW OR STATUTE NOW EXISTING
OR HEREAFTER ENACTED; AND (iii) EXCEPT AS SET FORTH IN SUBSECTION (a) OF THIS
SECTION, ANY REQUIREMENT OF NOTICE, DEMAND, OR ADVERTISEMENT FOR SALE.
10. Application of Proceeds. Upon the occurrence and during the
continuance of an Event of Default, any cash held by Agent as Pledged Collateral
and all cash proceeds received by Agent in respect of any sale of, collection
from, or other realization upon all or any part of the Pledged Collateral
pursuant to the exercise by Agent of its remedies as a secured creditor as
provided in Section 9 shall be applied from time to time by Agent as provided in
the Loan Agreement.
-11-
11. Duties of Agent. The powers conferred on Agent hereunder are
solely to protect its interests in the Pledged Collateral and shall not impose
on it any duty to exercise such powers. Except as provided in Section 9207 of
the Code, Agent shall have no duty with respect to the Pledged Collateral or any
responsibility for taking any necessary steps to preserve rights against any
Persons with respect to any Pledged Collateral.
12. Choice of Law and Venue. THE VALIDITY OF THIS AGREEMENT, ITS
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF THE PARTIES
HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF CALIFORNIA. THE PARTIES AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA OR, AT THE SOLE OPTION OF AGENT, IN ANY OTHER COURT
IN WHICH AGENT SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS
SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. PLEDGOR AND AGENT
WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO
ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT
ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 12.
13. Amendments; Etc. No amendment or waiver of any provision of this
Agreement nor consent to any departure by Pledgor herefrom shall in any event be
effective unless the same shall be in writing and signed by Agent and Pledgor,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. No failure on the part of Agent to
exercise, and no delay in exercising any right under this Agreement, any other
Loan Document, or otherwise with respect to any of the Secured Obligations,
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right under this Agreement, any other Loan Document, or otherwise with
respect to any of the Secured Obligations preclude any other or further exercise
thereof or the exercise of any other right. The remedies provided for in this
Agreement or otherwise with respect to any of the Secured Obligations are
cumulative and not exclusive of any remedies provided by law. Notwithstanding
the foregoing, Pledgor may amend Schedule A to include Subsidiaries formed or
acquired as permitted by Section 6.15 of the Loan Agreement by providing a copy
thereof to Agent along with a notice complying with the applicable provisions
herein with respect thereto.
14. Notices. Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to be given shall be
in writing and shall be delivered in the manner set forth in the Loan Agreement.
15. Continuing Security Interest. This Agreement shall create a
continuing security interest in the Pledged Collateral and shall: (i) remain in
full force and effect until the indefeasible payment in full of the Secured
Obligations, including the cash collateralization, expiration, or cancellation
of all Secured Obligations, if any, consisting of letters of credit, and the
full and final termination of any commitment to extend any financial
accommodations under the Loan Agreement; (ii) be binding upon Pledgor and its
successors and assigns; and (iii) inure
-12-
to the benefit of Agent and its successors, transferees, and assigns. Upon the
indefeasible payment in full of the Secured Obligations, including the cash
collateralization, expiration, or cancellation of all Secured Obligations, if
any, consisting of letters of credit, and the full and final termination of any
commitment to extend any financial accommodations under the Loan Agreement, the
security interests granted herein shall automatically terminate and all rights
to the Pledged Collateral shall revert to Pledgor. Upon any such termination,
Agent will, at Pledgor's expense, execute and deliver to Pledgor such documents
as Pledgor shall reasonably request to evidence such termination. Such documents
shall be prepared by Pledgor.
16. Security Interest Absolute. To the maximum extent permitted by
law, all rights of Agent, all security interests hereunder, and all obligations
of Pledgor hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any of the Secured
Obligations or any other agreement or instrument relating thereto, including any
of the Loan Documents;
(b) any change in the time, manner, or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other amendment or
waiver of or any consent to any departure from any of the Loan Documents, or any
other agreement or instrument relating thereto;
(c) any exchange, release, or non-perfection of any other collateral,
or any release or amendment or waiver of or consent to departure from any
guaranty for all or any of the Secured Obligations; or
(d) any other circumstances that might otherwise constitute a defense
available to, or a discharge of, Pledgor.
To the maximum extent permitted by law, Pledgor hereby waives any right to
require Agent to: (A) proceed against or exhaust any security held by Pledgor;
or (B) pursue any other remedy in Agent's power whatsoever.
17. Headings. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement or be given any substantive effect.
18. Severability. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
19. Counterparts; Telefacsimile Execution. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original
and all of which together shall constitute one and the same Agreement. Delivery
of an executed counterpart of this Agreement by telefacsimile shall be equally
as effective as delivery of an original executed counterpart of this Agreement.
Any party delivering an executed counterpart of this Agreement by telefacsimile
also shall deliver an original executed counterpart of this Agreement but the
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failure to deliver an original executed counterpart shall not affect the
validity, enforceability, or binding effect hereof.
20. Waiver of Marshaling. Pledgor and Agent acknowledge and agree
that in exercising any rights under or with respect to the Pledged Collateral:
(i) Agent is under no obligation to marshal any Pledged Collateral; (ii) may, in
its absolute discretion, realize upon the Pledged Collateral in any order and in
any manner it so elects; and (iii) may, in its absolute discretion, apply the
proceeds of any or all of the Pledged Collateral to the Secured Obligations in
any order and in any manner it so elects. Pledgor and Agent waive any right to
require the marshaling of any of the Pledged Collateral.
21. Waiver of Jury Trial. PLEDGOR AND AGENT HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. PLEDGOR AND AGENT REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A
COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
[Signature page to follow.]
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IN WITNESS WHEREOF, Pledgor and Agent have caused this Agreement to be
duly executed and delivered as of the date first written above.
RIVER HOLDING CORP.,
a Delaware corporation
By:
------------------------------------
Title:
▇▇▇▇▇ FARGO FOOTHILL, INC.
a California corporation, as Agent
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
S-1
SCHEDULE A
----------
TO
STOCK PLEDGE AGREEMENT
----------------------
Pledgor: River Holding Corp.
Pledged Interests
-----------------
Pledgor's
Number of Certificate Percentage Percentage Jurisdiction of Certificated /
Issuer Shares Class Number(s) Ownership Pledged Organization Uncertificated
------------------ --------- --------- ----------------- ------------ ---------- --------------- --------------
▇▇▇▇▇▇ Respiratory 13, 14, 15, 16,
Care Inc. 9,154,293 Common 17, 22, 23, 24,
25, 27, 85.92% 100% California Certificated
▇▇▇▇▇▇ Respiratory
Care Inc. 525,938 Senior 1, 2, 3, 4, 6, 7,
Preferred 8, 9, 10, 11, 12 100% 100% California Certificated
▇▇▇▇▇▇ Respiratory
Care Inc. 3,000 Junior
Preferred 1 100% 100% California Certificated
A-1
SCHEDULE B
----------
TO
STOCK PLEDGE AGREEMENT
----------------------
Pledgor:River Holding Corp.
Address of Chief Executive Office:
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
B-1