PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement") is made as of this 21st day of
August 2000, by and between LAZAR & COMPANY I.G., LLC, a New York limited
liability company (hereinafter, together with its successors and assigns, the
"Pledgor") and CONTINENTAL CHOICE CARE, INC., a New Jersey corporation
(hereinafter, together with its successors and assigns, the "Pledgee").
Capitalized terms used in this Agreement but not defined upon their first usage
are defined in Section 9.1, unless otherwise noted.
WHEREAS, the Pledgor and the Pledgee have entered into a
Purchase Agreement dated as of June 7, 2000 (the "Purchase Agreement"), upon the
terms and subject to the conditions of which the Pledgee has agreed to sell to
the Pledgor certain "Shares" and a "Warrant" (as defined in the Purchase
Agreement); and
WHEREAS, in connection with the Purchase Agreement, the
Pledgor has executed and delivered to the Pledgee a promissory note dated
August 21, 2000 in the original principal amount of $1,050,000 (the
"Promissory Note") in partial payment of the "Purchase Price" (as defined in the
Purchase Agreement) for the Shares and the Warrant; and
WHEREAS, it is a condition to the Pledgee's execution and
delivery of the Purchase Agreement and the receipt and acceptance of the
Promissory Note that, in order to secure the payment and performance in full of
all of the obligations of the Pledgor under the Promissory Note, the Pledgor
pledge to the Pledgee: (1) all of the Shares, and (2) 840,000 shares of common
stock of Tutor 2000, Inc. (the "Tutor 2000 Shares"), upon the terms and
conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements herein contained, the parties agree as follows:
ARTICLE 1
PLEDGE AND ASSIGNMENT BY THE PLEDGOR
1.1 Pledge and Assignment. Pursuant to the Purchase Agreement and the
Promissory Note, and in order to secure the payment and performance in full of
all of the Pledgor's Obligations (whether existing on the date of this Agreement
or arising at any time or times thereafter), the Pledgor, as beneficial owner,
hereby pledges, hypothecates and assigns to the Pledgee, and hereby grants to
the Pledgee a continuing security interest in, the following: (a) each of the
Initial Pledged Securities and all of the certificates representing the Initial
Pledged Securities; (b) all of the Pledged Securities which shall be issued,
distributed or transferred at any time or times after the date of this Agreement
and all of the certificates representing such Pledged Securities; (c) all of the
Pledged Securities Dividends; and (d) all of the Pledgor's rights, title,
interests, claims and remedies and all other benefits whatever now existing or
hereafter arising in, to, under or in respect of all of the Initial Pledged
Securities, all of the other Pledged Securities, all of the Pledged Securities
Dividends and all of the income and proceeds of any thereof.
TO HAVE AND TO HOLD all of the foregoing unto the Pledgee,
subject, however, to the terms and conditions set forth in this Agreement.
1.2 Delivery of Certificates Representing Pledged Securities.
(a) All of the certificates representing the Initial Pledged
Securities have been delivered by the Pledgor to the Pledgee in pledge on the
date of this Agreement. Each of such certificates names the Pledgor as the owner
of record of the Initial Pledged Securities represented thereby. Each of the
Initial Pledged Securities has been duly transferred by the Pledgor pursuant to
instruments of transfer which have been duly executed in blank and delivered to
the Pledgee by the Pledgor.
(b) If (and on each occasion that) any Additional Pledged
Securities shall, at any time after the date of this Agreement, be issued,
distributed or otherwise transferred, the Pledgor will forthwith (i) cause all
of the certificates representing such Additional Pledged Securities to be
delivered to the Pledgee, and (ii) execute in blank and deliver to the Pledgee
instruments of securities transfer, satisfactory to the Pledgee in form and
substance, by which each of such Additional Pledged Securities shall be duly
transferred by the Pledgor to the Pledgee. Each of such certificates will name
the Pledgor as the owner of record of such Additional Pledged Securities
represented thereby.
1.3 Voting Power.
(a) Until a Notice of Acceleration is given to the Pledgor,
the Pledgor will be permitted to exercise all voting powers pertaining to
Pledged Securities for any purpose not inconsistent with the terms of this
Agreement or the Promissory Note.
(b) The Pledgor acknowledges and agrees with the Pledgee that,
unless the Pledgee otherwise consents, the Pledgor shall have no rights whatever
to exercise any voting powers pertaining to any Pledged Securities at any time
after a Notice of Acceleration is given by the Pledgee to the Pledgor.
1.4 Cash Dividends.
(a) Until a Notice of Acceleration is given by the Pledgee to
the Pledgor, the Pledgor will be permitted to receive, collect and recover
ordinary cash dividends payable in respect of the Pledged Securities (subject to
the covenants and obligations of the Pledgor under Article 3 of this Agreement)
except that all such cash dividends shall be immediately applied by the Pledgor
in payment of any outstanding amounts under the Promissory Note.
(b) The Pledgor acknowledges and agrees with the Pledgee that
the Pledgor shall have no rights prior to the release of all of the Collateral
pursuant to Section 5.4(a) (whether before or after a Notice of Acceleration is
given by the Pledgee to the Pledgor) to receive, collect or recover any Pledged
Securities Dividends payable (i) in shares of any class of the capital stock of
the Pledgee or of the capital stock of any other entity, (ii) in securities
convertible into or exchangeable for or carrying any rights to acquire any
shares of any class in the capital stock of the Pledgee or the capital stock of
any other entity, (iii) in options or any other rights to acquire any shares of
any class in the capital stock of the Pledgee or of the capital stock of any
other entity, or (iv) in any other property of any kind other than cash.
(c) The Pledgor hereby covenants with the Pledgee that, if
(and on each occasion that) the Pledgor shall receive, collect or recover any
Pledged Securities Dividends in violation or contravention of the provisions of
this Agreement or the Promissory Note prior to the release of all of the
Collateral pursuant to Section 5.4(a), then the Pledgor will hold the dividends
so received, collected or recovered in trust for the Pledgee without commingling
the same with any other property or funds of the Pledgor, and, promptly after
any such dividends shall be received, collected or recovered by the Pledgor, the
Pledgor will pay or deliver the same directly to the Pledgee.
ARTICLE 2
REPRESENTATIONS
The Pledgor hereby represents and warrants to the Pledgee as follows:
2.1 Beneficial Ownership of Initial Pledged Securities. The Pledgor is
the sole record and beneficial owner of each of the Initial Pledged Securities.
None of the Initial Pledged Securities is subject to any pledge, hypothecation,
assignment, mortgage, lien, security interest, charge or other encumbrance of
any kind except that created by this Agreement (unless created by the Pledgee
after the date of this Agreement). None of the Initial Pledged Securities is
subject to any shareholder agreements, voting agreements, voting trusts, trust
deeds, irrevocable proxies or any other similar agreements or instruments,
except this Agreement (unless created by the Pledgee after the date of this
Agreement).
2.2 Binding Effect of Agreement. This Agreement has been duly
authorized, executed and delivered by the Pledgor and is in full force and
effect. All of the agreements and obligations of the Pledgor contained in this
Agreement constitute legal, valid and binding obligations of the Pledgor
enforceable against the Pledgor in accordance with their respective terms.
ARTICLE 3
COVENANTS
3.1 Defense of the Pledgee's Title and Rights. The Pledgor hereby
covenants with the Pledgee that the Pledgor will defend the Pledgee's right,
title and property interest in and to all of the Pledged Securities. So long as
the Pledgor's Obligations remain outstanding and subject to Article 5, the
Pledgor will not sell, assign or otherwise transfer or dispose of any of the
Pledged Securities, and it will not create, assume, incur or permit to exist any
mortgage, lien, pledge, charge, security interest or other encumbrance of any
kind in respect of any of the Pledged Securities; excluding, however, the lien,
pledge, and security interest created under this Agreement.
3.2 Shareholders Agreements. The Pledgor hereby covenants with the
Pledgee that the Pledgor will not, with respect to any of the Pledged
Securities, enter into any shareholder agreements, voting agreements, voting
trusts, trust deeds, irrevocable proxies or any other similar agreements or
instruments, except this Agreement, which would restrain, prohibit or adversely
affect the satisfaction by the Pledgor of its obligations under this Agreement.
ARTICLE 4
POWER OF ATTORNEY
The Pledgor hereby absolutely and irrevocably constitutes and appoints
the Pledgee the Pledgor's true and lawful agent and attorney-in-fact, with full
power of substitution, in the name of the Pledgor or in the name of the Pledgee
or in the name of any of the Pledgee's substitute agents or attorneys: (a) to
execute such documents and instruments and do all such acts and things which the
Pledgor ought to do under the covenants and provisions contained in this
Agreement; (b) to take any and all such action as the Pledgee or any of its
substitute agents or attorneys may, in its or their sole and absolute
discretion, determine to be necessary or advisable for the purpose of
maintaining, preserving or protecting the security constituted by this Agreement
or any of the rights, remedies, powers or privileges of the Pledgee under this
Agreement; and (c) generally, in the name of the Pledgor or in the name of the
Pledgee or in the name of any of the Pledgee's substitute agents or attorneys,
to exercise all or any of the powers, authorities and discretions conferred on
or reserved to the Pledgee by or pursuant to this Agreement, and (without
prejudice to the generality of any of the foregoing) to seal and deliver or
otherwise perfect any deed, assurance, agreement, instrument or act which the
Pledgee or any of the Pledgee's substitute agents or attorneys may deem proper
in or for the purpose of exercising any of such powers, authorities or
discretions. The Pledgor hereby ratifies and confirms, and hereby agrees to
ratify and confirm, whatever the Pledgee or any of the Pledgee's substitute
agents or attorneys shall do or purport to do in the exercise of the power of
attorney granted to the Pledgee pursuant to this Article 4, which power of
attorney, being given for security, is irrevocable. The Pledgee shall not
exercise the power of attorney granted pursuant to this Article 4 unless the
Pledgee gives the Pledgor seven days' prior written notice of the action
required to be taken by the Pledgor and the Pledgor fails to take such action
during the seven day period.
ARTICLE 5
TERMS OF THE SECURITY HELD AND RELEASE OF SECURITY
5.1 Continuing Security. The security created by this Agreement shall
be held by the Pledgee as a continuing security for the payment and performance
of all of the Pledgor's Obligations (whether existing on the date of this
Agreement or arising from time to time thereafter). This Agreement, all of the
rights, remedies, powers and privileges of the Pledgee hereunder and the
security created hereby shall be in addition to, and shall not in any way be
prejudiced or affected by, any other collateral or any other security now or at
any time or times hereafter held by the Pledgee for all or any part of the
Pledgor's Obligations. Each and every right, remedy, power and privilege
conferred on or reserved to the Pledgee shall be cumulative and in addition to,
and not in limitation of, each and every other right, remedy, power or privilege
conferred on or reserved to the Pledgee under this Agreement or otherwise
existing or arising. All of the rights, remedies, powers and privileges vested
in the Pledgee may be exercised at such time or times and in such order and
manner as the Pledgee may, in its sole and absolute discretion, deem expedient.
5.2 Waivers of Notice; Assent. The agreements and obligations of the
Pledgor to the Pledgee hereunder and the security constituted hereby shall not
be, to any extent or in any way or manner whatsoever, satisfied, discharged,
impaired, diminished, released or otherwise affected by any of the following,
whether or not the Pledgor shall have had any notice or knowledge of any
thereof: (a) the absorption, consolidation, merger or amalgamation of, or the
effectuation of any other change whatsoever in the name, membership,
constitution or place of formation of, the Pledgor, the Pledgee, or any of their
respective subsidiaries or affiliates; (b) any extension or postponement of the
time for the payment or performance of all or any part of the Pledgor's
Obligations, the acceptance of any partial payment on all or any part of the
Pledgor's Obligations, any and all other indulgences whatsoever by the Pledgee
in respect of all or any part of the Pledgor's Obligations, the taking,
addition, substitution or release, in whole or in part, of any security for all
or any part of the Pledgor's Obligations, or the addition, substitution or
release, in whole or in part, of any person or persons primarily or secondarily
liable in respect of all or any part of the Pledgor's Obligations; (c) any
action or delay in acting or failure to act on the part of the Pledgee under
this Agreement or the Promissory Note or in respect of all or any part of the
Pledgor's Obligations, (d) any modification or amendment of, or any supplement
or addition to, the Promissory Note; (e) any waiver, consent or other action or
acquiescence by the Pledgee at any time in respect of any default by the Pledgor
in the performance or observance of or the compliance with any term, covenant,
condition, agreement or obligation contained in the Promissory Note; or (f) the
Promissory Note or any provisions of any thereof shall at any time and for any
reason whatsoever cease to be in full force and effect or shall be declared null
and void or illegal, invalid, unenforceable or inadmissible in evidence. The
Pledgor hereby absolutely and irrevocably assents to and waives notice of any
and all events, conditions, matters and things hereinbefore specified in clauses
(a) to (f), inclusive, of this Section 5.2.
5.3 No Implied Waivers. No course of dealing between the Pledgor and
the Pledgee, and no delay on the part of the Pledgee in exercising any right,
remedy, power or privilege hereunder or provided by statute or by law or in
equity or otherwise, shall impair, prejudice or constitute a waiver of any such
right, remedy, power or privilege or be construed as a waiver of any default or
as an acquiescence therein; and any single or partial exercise of any such
right, remedy, power or privilege shall not preclude any other or further
exercise thereof or the exercise of any other rights, remedies, powers or
privileges.
5.4 Release of Collateral.
(a) Satisfaction of all of the Pledgor's Obligations. Upon the
payment and satisfaction in full of all of the Pledgor's Obligations to the
Pledgee, the Pledgee will, at the cost and expense of the Pledgor, (i) release
all of the Pledged Securities and reassign to the Pledgor all such Pledged
Securities, and (ii) do and execute all such acts, things and instruments as in
the reasonable opinion of the Pledgor are necessary to effect such release or
reassignment.
(b) Satisfaction of a Portion of the Pledgor's Obligations.
Upon the payment and satisfaction in full of a portion of the Pledgor's
Obligations to the Pledgee, and in accordance with Section 5.5, the Pledgee
will, at the cost and expense of the Pledgor, (i) release a pro-rated portion of
the Collateral and reassign to the Pledgor such pro-rated portion of the
Collateral, and (ii) do and execute all such acts, things and instruments as in
the reasonable opinion of the Pledgor are necessary to effect such release or
reassignment.
(c) Additional Pledged Securities. Upon the request of the
Pledgor, and subject to Section 5.5, the Pledgee will, at the cost and expense
of the Pledgor, (i) release all or a portion of the Collateral and reassign to
the Pledgor all or such portion of the Collateral upon the pledge by the Pledgor
of Additional Pledged Securities in exchange for such Collateral, so long as
such Additional Pledged Securities are equal or greater in value than the
Collateral requested to be released, and (ii) do and execute all such acts,
things and instruments as in the reasonable opinion of the Pledgor are necessary
to effect such release or reassignment.
5.5 Value of Collateral. Collateral may be released pursuant to Section
5.4 so long as the value of the Collateral remaining after any such proposed
release would equal 115% of the then outstanding principal amount of the Note
and unpaid accrued interest thereon. In the event that the Pledgor pledges any
Additional Pledged Securities in exchange for Initial Pledged Securities, the
value of the Collateral at all times thereafter shall equal or exceed 115% of
the then outstanding principal amount of the Note and unpaid accrued interest
thereon, to be calculated as follows:
(a) remaining Initial Pledged Securities comprised of Shares
shall be valued at 100% of the last market closing price of Continental Choice
Care, Inc.'s Common Stock on the Nasdaq SmallCap (or such other market or
exchange on which Continental Choice Care, Inc.'s Common Stock is then listed);
and
(b) remaining Initial Pledged Securities comprised of Tutor
2000 Shares and/or Additional Pledged Securities shall be valued at (i) the last
market closing price of such Additional Pledged Security if such Additional
Pledged Security is then freely tradeable in an established public market, or
(ii) such value as determined in good faith by the Pledgor and the Pledgee if
such Additional Pledged Security is not then freely tradeable in an established
public market, provided, however, if the Pledgor and the Pledgee are unable to
agree upon a value for any such proposed Additional Pledged Security after using
reasonable efforts to do so, the Pledgor may not pledge such security in
exchange for any Collateral.
Following any release or exchange of all or a portion of the Collateral pursuant
to Section 5.4(c), in the event that the value of the Collateral is less than
100% of the then outstanding principal amount of the Note for 30 consecutive
days, the Pledgor shall pledge such Additional Pledged Securities as necessary
to increase the value of the Collateral to 115% of the then outstanding
principal amount of the Note.
ARTICLE 6
ENFORCEMENT OF THE SECURITY
6.1 Conditions of Enforceability of the Security. If any Event of
Default (as defined in the Promissory Note) shall at any time occur, the Pledgee
may, by giving notice to the Pledgor, declare all of the Pledgor's Obligations
immediately due and payable. Upon the giving of any such notice, all of the
Pledgor's Obligations shall (to the extent not already due and payable) become
and be immediately due and payable, and the security constituted by this
Agreement shall become immediately enforceable by the Pledgee, without any
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly and irrevocably waived by the Pledgor.
6.2 Evidence of Pledgor's Obligations. In any legal proceedings against
the Pledgor for enforcing any agreements or obligations of the Pledgor under
this Agreement, a certificate of the Pledgee as to the aggregate amount of all
of the Pledgor's Obligations shall be conclusive evidence thereof absent
manifest error.
6.3 Manner of Enforcement of Security. At any time after the security
constituted by this Agreement shall have become enforceable, the Pledgee shall
have, in any jurisdiction where enforcement is sought, all of the rights,
remedies, powers and privileges conferred on the Pledgee, as secured party,
under the Uniform Commercial Code of the State of New Jersey, and, without
limiting the generality of the foregoing, the Pledgee shall have the full right
and power in respect of the Collateral or any part thereof in the Pledgee's sole
and complete discretion to do all and any of the following things:
(a) to cause all or any of the Initial Pledged Securities
comprised of Shares to be reacquired by the Pledgee and thereafter canceled, and
the value thereof (as determined pursuant to Section 5.5) applied to the
original principal amount of the Note;
(b) to take possession of the Collateral or any part thereof,
wherever the same may be, without legal process and without compliance with any
other condition precedent imposed by statute, rule of law or otherwise (all of
which the Pledgor hereby expressly and irrevocably waives), and to call in,
collect, convert into money or otherwise deal with the Collateral or any part
thereof with full power to sell (including the power to postpone such sale) the
Collateral or any part thereof, either together or in lots, and either by public
auction or private contract, and either for a lump sum or for a sum payable by
installments or for a sum on account and a mortgage or charge for the balance,
and with full power upon every sale to make any special or other stipulation as
to title or evidence thereof or otherwise which the Pledgee shall deem proper,
and with full power to buy in or rescind or vary any contract for sale of the
Collateral or any part thereof and to resell the same without being responsible
for any loss which may be occasioned thereby, and with full power to compromise
and effect compositions, and, for the purposes aforesaid or any of them, to
execute and do all such assurances and things as the Pledgee may think fit;
(c) to settle, adjust, compromise and arrange all accounts,
reckonings, controversies, questions, claims and demands whatsoever in relation
to all or any part of the Collateral;
(d) to cause all or any of the Pledged Securities and all or
any other Collateral to be sold, assigned or transferred to the Pledgee or to
any other person or persons and to be registered in the name of the Pledgee or
any other person or persons and to exercise or permit the exercise of any powers
or rights incident to all or any part of the Collateral in such manner as the
Pledgee shall think fit, and, in respect of all or any of the Pledged
Securities, to exercise or permit the exercise of all rights and powers
conferred by statute or otherwise upon a registered holder or owner of record
thereof, including, without limitation, the calling or causing to be called of
meetings, and proposing or causing to be proposed resolutions (whether ordinary
or special resolutions), including resolutions for winding up and voting at
meetings;
(e) to execute and do all such contracts, agreements, deeds,
documents and things, and to bring, defend and abandon all such actions, suits
and proceedings in relation to all or any part of the Collateral as the Pledgee
shall think expedient;
(f) to appoint managers, agents, officers and servants for any
of the purposes mentioned in the foregoing provisions of this Section 6.3 for
such periods as the Pledgee shall think fit and to dismiss the same; and
(g) generally, to do all such other acts and things as may be
considered incidental or conducive to any of the matters or powers mentioned in
the foregoing provisions of this Section 6.3 and which the Pledgee may or can do
lawfully and to use the name of the Pledgor for the purposes aforesaid and in
any proceedings arising therefrom.
Without limiting the foregoing and so long as the Shares are
not registered for resale under a then effective registration statement, at any
bona fide public sale, and to the extent permitted by law, at any private sale,
the Pledgee shall be free to purchase all or any part of the Collateral, free of
any right or equity of redemption in the Pledgor, which right or equity is
hereby waived and released. Any such sale may be on cash or credit. Following
any such sale, the value of the Collateral sold (as determined pursuant to
Section 5.5), shall be applied to the original principal amount of the Note. The
Pledgee shall be authorized at any such sale (if it deems it advisable to do so)
to restrict the prospective bidders or purchasers to persons who will represent
and agree that they are purchasing the Collateral for their own account in
compliance with Section 4(1) or Section 4(2) or Regulation D of the Securities
Act of 1933, as amended (the "Act") or any other applicable exemption available
under the Act. The Pledgee will not be obligated to make any sale if it
determines not to do so, regardless of the fact that notice of the sale may have
been given. The Pledgee may adjourn any sale and sell at the time and place to
which the sale is adjourned. If the Collateral is customarily sold on a
recognized market or threatens to decline speedily in value, the Pledgee may
sell such Collateral at any time without giving prior notice to the Pledgor.
Whenever notice is otherwise required by law to be sent by the Pledgee to the
Pledgor of any sale or other disposition of the Collateral, five days written
notice sent to the Pledgor will be deemed reasonable.
The Pledgor recognizes that the Pledgee may, if the Shares are
not registered for resale under a then effective registration statement, be
unable to effect or cause to be effected a public sale of the Collateral by
reason of certain prohibitions contained in the Act, so that the Pledgee may be
compelled to resort to one or more private sales to a restricted group of
purchasers who will be obligated to agree, among other things, to acquire the
Collateral for their own account, for investment and without a view to the
distribution or resale thereof. The Pledgor understands that private sales so
made may be at prices and on other terms less favorable to the seller than if
the Collateral were sold at public sales, and agrees that the Pledgee has no
obligation to delay or agree to delay the sale of any of the Collateral for the
period of time necessary to permit the issuer of the securities which are part
of the Collateral (even if the issuer would agree) to register such securities
for sale under the Act. The Pledgor agrees that private sales made under the
foregoing circumstances shall be deemed to have been made in a commercially
reasonable manner.
6.4 Cooperation of the Pledgor. The Pledgor recognizes that the Initial
Pledged Securities are not readily marketable and that the Initial Pledged
Securities or any Additional Pledged Securities may not be marketable at all. In
order, therefore, to enable the Pledgee to use such means as the Pledgee may
determine necessary or advisable to realize upon the Collateral from time to
time, and in order to induce the Pledgee to enter into the Purchase Agreement in
reliance upon the Collateral, the Pledgor hereby absolutely and irrevocably
consents that the Pledgee may use whatever means the Pledgee may reasonably
consider necessary or advisable to sell any or all of the Collateral at any time
or times after the security constituted by this Agreement shall have become
enforceable, including, without limitation, the giving of options to purchase
any or all of the Collateral and the giving of credit to any purchaser of the
Collateral.
6.5 Protection of Persons Dealing with Agent. No purchaser, mortgagor,
mortgagee, lender, debtor or other person dealing with the Pledgee or with any
attorney or agent of the Pledgee shall be concerned to inquire (a) whether the
security constituted by this Agreement has become enforceable, (b) whether any
power exercised or purported to be exercised hereunder has become exercisable,
(c) whether any money remains due upon the security of this Agreement, (d) as to
the propriety, regularity or purpose of the exercise of any power hereunder, or
(e) as to the application of any money paid to the Pledgee or to any such
attorney or agent.
6.6 Protection of Security. In addition to the rights and powers
hereinabove given, the Pledgee may, whether or not any Event of Default shall
have occurred and whether or not the security constituted by this Agreement
shall have become enforceable, enter into possession of and hold, or appoint a
receiver to take possession of and hold, any part of the Collateral which may at
any time appear to the Pledgee in danger of being taken under any process of law
by any creditor of the Pledgor or to be in jeopardy or otherwise endangered.
ARTICLE 7
APPLICATION OF MONEY IN COLLATERAL
Cash realized by the Pledgee after the security constituted by this
Agreement shall have become enforceable as well as all cash then held or at any
time or times thereafter received by the Pledgee as realizations of all or any
part of the Collateral shall be held by the Pledgee to apply the same as
follows:
FIRST: in or towards the payment and discharge of all (if any) debts,
damages and liabilities, the payment of which shall be secured by any
assignments, mortgages, security interests, charges, liens or other encumbrances
having priority over the rights of the Pledgee in and to such money;
SECOND: in or towards the payment of, or (as the case may be) the
reimbursement of, the Pledgee for or in respect of all costs, expenses,
disbursements and losses which shall have been incurred or sustained by the
Pledgee in or about or incidental to the collection of such money by the Pledgee
or the exercise, protection or enforcement by the Pledgee of all or any of the
rights, remedies, powers and privileges of the Pledgee under this Agreement or
in respect of the Collateral and in or towards the provision of adequate
indemnity to the Pledgee against all taxes or liens which by law shall have, or
may have, priority over the rights of the Pledgee in and to such money;
THIRD: in or towards the payment of all of the Pledgor's Obligations;
FOURTH: to the payment of the surplus (if any) to the Pledgor or to
such other person or persons as shall be entitled to receive such surplus.
If after exhausting all of the Collateral there is a deficiency, the
Pledgor will be liable therefor to the Pledgee; provided, however, that nothing
contained herein will obligate the Pledgee to proceed against the Pledgor or any
other party obligated under the Pledgor's Obligations or against any other
collateral for the Pledgor's Obligations prior to proceeding against the
Collateral.
ARTICLE 8
PROVISIONS OF GENERAL APPLICATION
8.1 Notices.
(a) All demands, notices, communications and reports
("notices") provided for in this Agreement will be in writing and will be either
personally delivered, mailed by registered or certified mail (return receipt
requested) or sent by reputable overnight courier service (delivery charges
prepaid) to any party at the address specified below, or at such address, to the
attention of such other person, and with such other copy, as the recipient party
has specified by prior written notice to the sending party pursuant to the
provisions of this Section 8.1.
If to the Pledgor:
------------------
Lazar & Company I.G., LLC
One Penn Plaza, 36th Floor
New York, New York 10119
Attention: President
with a copy, which will not constitute notice to the Pledgor, to:
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Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, New York 10022
Attention: Steven H. Scheinman
Facsimile Number: (212) 872-1002
If to the Pledgee:
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Continental Choice Care, Inc.
44 Aspen Drive
Livingston, New Jersey 07039
Attention: President
with a copy, which will not constitute notice to the Pledgee, to:
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Pitney, Hardin, Kipp & Szuch LLP
200 Campus Drive
P.O. Box 1945
Morristown, New Jersey 07962-1945
Attention: Joseph Lunin
Facsimile Number: (973) 966-1550
(b) Any such notice will be deemed to have been given when
delivered, on the third business day after deposit postage pre-paid in the U.S.
mail, or on the business day after deposit with a reputable overnight courier
services delivery charges pre-paid, as the case may be.
8.2 Indemnification. Following the occurrence of an Event of Default
and while such Event of Default is continuing, without prejudice to any of the
other provisions of this Agreement, the Pledgor will pay to the Pledgee, on
demand by the Pledgee at any time and as often as the occasion therefor may
require, any and all reasonable costs, charges, expenses and other sums
expended, paid or debited in account by the Pledgee, whether by itself or
through any receiver, attorney, substitute or agent, for any of the purposes
referred to in this Agreement or otherwise howsoever in relation to the security
over the Collateral or any part thereof created by this Agreement, including
(without prejudice to the generality of the foregoing) the reasonable
remuneration of any such receivers, attorneys, substitutes or agents employed by
the Pledgee for any such purposes and any and all other reasonable costs,
charges and expenses (whether in respect of litigation or not) incurred in the
maintenance, preservation, protection, realization or enforcement of, or the
collection and recovery of any moneys from time to time arising under, such
security (or any security collateral or supplemental thereto), or in realizing
or exercising any other power, authority or discretion in relation to the
Collateral or any part thereof, or otherwise incurred under any provision of
this Agreement, to the intent that the Pledgee shall be afforded a full and
unlimited indemnity in respect thereof, and, until so repaid, such costs,
charges, expenses and other sums shall be charged on the Collateral (but without
prejudice to any other remedy, lien or security available to the Pledgee).
8.3 Further Assurances. The Pledgor hereby further agrees with the
Pledgee to execute, acknowledge and deliver any and all such further assurances
and other deeds, agreements or instruments, and to take or cause to be taken all
such other action, as shall be reasonably requested by the Pledgee from time to
time in order to give full effect to this Agreement and to maintain, preserve,
safeguard and continue at all times all or any of the rights, remedies, powers
and privileges of the Pledgee under this Agreement, all without any cost or
expense to the Pledgee. Without limiting the foregoing, if the Collateral
includes securities or any other financial or other assets maintained in a
securities account, then the Pledgor agrees to cause the financial or securities
intermediary on whose books and records the ownership interest of the Pledgor in
the Collateral appears to execute and deliver a notification and control
agreement satisfactory to the Pledgee in order to perfect and protect the
Pledgee's security interests in the Collateral.
8.4 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the Pledgor and the Pledgee and their respective successors and
assigns; except that (i) the Pledgor shall not have the right to assign its
obligations hereunder or any interest herein without the prior written consent
of the Pledgee, and (ii) the Pledgor shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
Pledgee unless any such assignment is to any successor to its business, by
operation of law, or pursuant to a pledge by the Pledgee to secure obligations
of the Pledgee.
8.5 Severability. In the event that any one or more of the provisions
contained in this Agreement shall be invalid, illegal or unenforceable in any
respect under any law applicable thereto, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby, and the Pledgor hereby agrees with the Pledgee
to execute any new agreement, deed or other instrument necessary to remedy such
invalidity, illegality or unenforceability or in order to preserve the security
constituted by the Collateral.
8.6 Governing Law. This Agreement will be governed by and construed in
accordance with the domestic laws of the State of New Jersey, without giving
effect to any choice of law or conflict rule of any jurisdiction that would
cause the laws of any other jurisdiction to be applied. In furtherance of the
foregoing, the internal law of the State of New Jersey will control the
interpretation and construction of this Agreement, even if under any choice of
law or conflict of law analysis, the substantive law of some other jurisdiction
would ordinarily apply.
8.7 Jurisdiction. Each of the parties hereby (a) irrevocably submits to
the exclusive jurisdiction of the state courts of, and the federal courts
located in, the State of New Jersey in any action or proceeding arising out of
or relating to, this Agreement, (b) waives, and agrees to assert, by way of
motion, as a defense, or otherwise, in any such suit, action or proceeding, any
claim that it is not subject personally to the jurisdiction of the above-named
courts, that its property is exempt or immune from attachment or execution under
the law of another jurisdiction, that the suit, action or proceeding is brought
in an inconvenient forum, that the venue of the suit, action or proceeding is
improper or that this Agreement or the subject matter hereof may not be enforced
in or by such court, and agrees not to seek, any review by any court of any
other jurisdiction which may be called upon to grant an enforcement of the
judgment of any such court.
8.8 Effect of Headings. The headings used in this Agreement are for the
purpose of reference only and will not affect the meaning or interpretation of
any provision of this Agreement.
8.9 Execution in Counterparts. The parties may execute this Agreement
in separate counterparts (no one of which need contain the signatures of all
parties), each of which will be an original and all of which together will
constitute one and the same instrument.
ARTICLE 9
DEFINITIONS
9.1 Provisions Pertaining to Definitions. For purposes of this
Agreement:
(a) "Additional Pledged Securities" means other shares of
capital stock, bonds, notes or other securities from time to time pledged to the
Pledgee (i) in exchange for any of the Pledged Securities in accordance with
Section 5.4(b), or (ii) in order to increase the value of the Collateral in
accordance with Section 5.5; and "Additional Pledged Security" means any one of
the Additional Pledged Securities.
(b) "Collateral" means, collectively, all of the Pledged
Securities, all of the Pledged Securities Dividends, and all other property,
assets, accounts and money, and all of the income, proceeds and products of any
thereof, in, to, under or in respect of which the Pledgee or any of the
nominees, agents or representatives of the Pledgee, by this Agreement or by any
agreement or agreements supplemental hereto, shall acquire any rights or
interests as security for the payment or performance of all or any part of the
Pledgor's Obligations.
(c) "Initial Pledged Securities" means (i) the Shares, and
(ii) the Tutor 2000 Shares; all of which the Pledgor warrants are legally and
beneficially owned by the Pledgor on the date of this Agreement, and the
certificates for which shall be delivered by the Pledgor to the Pledgee in
pledge upon the terms contained in this Agreement.
(d) "Notice of Acceleration" means a notice from the Pledgee
to the Pledgor by which the Pledgee shall, as provided in the Promissory Note,
declare all of the Pledgor's Obligations immediately due and payable.
(e) "Pledged Securities" means, collectively, (i) the Initial
Pledged Securities, (ii) any Additional Pledged Securities, and (iii) all other
shares of capital stock into which any Initial Pledged Securities or Additional
Pledged Securities may be converted, exchanged or reclassified or otherwise
which may be issued, transferred or distributed on or in respect of all of any
of the Initial Pledged Securities, the Additional Pledged Securities or other
Pledged Securities.
(f) "Pledged Securities Dividends" means, collectively, (i)
all dividends and distributions of every kind whatever which shall become and be
due and payable or distributable on or in respect of all or any of the Pledged
Securities, (ii) all payments of every kind whatever which shall become and be
due and payable or distributable on account of the purchase, redemption,
repurchase or other retirement of all or any of the Pledged Securities, and
(iii) all other distributions of every kind whatever (including, without
limitation, all capital distributions) which shall become and be due and payable
or distributable on or in respect of all or any of the Pledged Securities; and
"Pledged Securities Dividend" means any one of the Pledged Securities Dividends.
(g) "Pledgor's Obligations" means, collectively, all of the
indebtedness, obligations and liabilities existing on the date of this Agreement
or arising from time to time thereafter, whether direct or indirect, joint or
several, actual, absolute or contingent, matured or unmatured, liquidated or
unliquidated, secured or unsecured, arising by contract, operation of law or
otherwise, of the Pledgor to the Pledgee under the Promissory Note and this
Agreement; and "Pledgor's Obligation" means any one of the Pledgor's
Obligations.
IN WITNESS WHEREOF, this Pledge Agreement has been duly executed by or
on behalf of each of the parties hereto as of the day and in the year first
above written in the State of New Jersey.
LAZAR & COMPANY I.G., LLC
By: LAZAR & COMPANY I.G., INC.
Managing Member
SHLOMO LAZAR
By: _________________________
Shlomo Lazar
Chief Executive Officer
CONTINENTAL CHOICE CARE, INC.
STEVEN L. TRENK
By: ________________________________
Steven L. Trenk
President