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EXHIBIT 2.3
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT is made as of the 21th day of August,
1995, by and between JAMES R. LEININGER (the "Pledgor") and KINETIC CONCEPTS,
INC., a Texas corporation (the "Secured Party" or the "Company").
ARTICLE I
GRANT OF SECURITY INTEREST
Section 1.01. Security Interest. The Pledgor hereby grants to the
Secured Party a security interest in the Collateral described in Section 2.01
of this Stock Pledge Agreement to secure (a) the indebtedness evidenced by the
promissory note (the "Note") of even date herewith in the original principal
amount of $10,000,000.00 executed by the Pledgor and made payable to the order
of the Secured Party, and any renewals, modifications, extensions or
rearrangements thereof, and (b) the due and punctual performance and observance
of all covenants required to be performed or observed by the Pledgor contained
in this Stock Pledge Agreement.
ARTICLE II
COLLATERAL
Section 2.01. Description of Collateral. The collateral subject to
this Stock Pledge Agreement (the "Collateral") is the shares of Common Stock of
the Company owned by Pledgor and described in Schedule 1 attached hereto and
made a part hereof for all purposes (the "Pledged Stock"), together with and
including (i) all dividends, cash, instruments, securities and other property
from time to time received, receivable or otherwise distributed in respect of
or in exchange for any or all of the Pledged Stock; and (ii) any and all other
proceeds of the Pledged Stock, of whatever kind, nature or description.
Section 2.02. Delivery of Collateral. Upon the execution and
delivery hereof, and at all times thereafter, all instruments and certificates
representing or evidencing the Collateral shall be delivered to the Secured
Party and shall be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in blank.
In the event that the Pledgor shall become entitled to receive or shall receive
any instrument and/or certificate including, without limitation, any
certificate representing a stock dividend or a distribution in connection with
any reclassification, increase or reduction of capital or issued in connection
with any reorganization, consolidation, sale of all or substantially all of the
assets of the Company or merger, which such instrument and/or certificate
evidences the Collateral, such instrument and/or certificate shall be promptly
delivered to the Secured Party upon receipt by the Pledgor and shall be
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in suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank.
Section 2.03. Absence of Restrictions. No Restriction (hereinafter
defined) is in effect with respect to the Collateral, and no Restriction will
be in effect with respect to any Collateral hereafter delivered to Secured
Party, other than Restrictions described in Schedule 2 attached hereto. The
execution, delivery, and performance of this Stock Pledge Agreement (including
the exercise of any and all remedies provided for herein) will not result in or
permit the imposition of any Restriction upon any present or future Collateral,
and neither Pledgor nor Company shall cause, permit, or suffer to exist the
imposition of any Restriction upon any of the Collateral, other than
Restrictions described in Schedule 2 attached hereto. As used herein the term
"Restriction" means any voting agreement, voting trust, proxy, power of
attorney, dividend order, shareholder agreement, stock transfer agreement,
restrictive bylaw, or other document, instrument, or agreement, whether
revocable or irrevocable, limiting or affecting the rights of the holder of the
Collateral to vote, transfer, receive dividends or distributions on, or
otherwise enjoy any of the benefits of, the Collateral.
ARTICLE III
REPRESENTATIONS AND WARRANTIES AND COVENANTS
OF THE PLEDGOR
Section 3.01. Representations and Warranties. The Pledgor hereby
represents and warrants that the Pledgor is the legal and equitable owner and
holder of the Pledged Stock, subject to no pledges, liens, security interests,
charges, options, restrictions or other encumbrances except (i) the security
interest created by this Stock Pledge Agreement, (ii) restrictions, if any,
noted on the certificates evidencing the Pledged Stock, and (iii) matters set
forth in Schedule 2 attached hereto.
ARTICLE IV
VOTING RIGHTS AND DIVIDENDS
Section 4.01. While No Default Exists. So long as no Event of
Default (as defined in Section 6.01 hereof) is continuing:
(a) The Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Collateral or any part thereof for
any purpose not inconsistent with the terms of this Stock Pledge Agreement; and
(b) The Pledgor shall be entitled to receive all dividends paid in
respect of the Collateral.
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Section 4.02. While Default Exists. During the continuance of an
Event of Default:
(a) All rights of the Pledgor to exercise the voting and other
consensual rights which the Pledgor would otherwise be entitled to exercise
pursuant to Section 4.01(a) shall cease, and all such rights shall be vested in
the Secured Party who shall thereupon have the sole right (but no obligation)
to exercise such voting and other consensual rights.
(b) The Secured Party shall be entitled to apply to debts secured by
this Stock Pledge Agreement all dividends and distributions paid in respect of
the Collateral and any of same received by the Pledgor shall be received in
trust for the benefit of the Secured Party, shall be segregated from other
funds of the Pledgor and shall be forthwith paid over to the Secured Party as
Collateral in the same form as so received with any endorsement necessary for
payment or transfer to bearer.
ARTICLE V
TRANSFERS AND OTHER LIENS
Section 5.01. Transfers by the Pledgor. The Pledgor agrees that,
until payment of the Note in full and subject to any other existing applicable
agreements, the Pledgor will not:
(a) sell or otherwise dispose of, or grant any option not disclosed
inSchedule 2 hereto with respect to, any of the Collateral except to the
Secured Party;
(b) modify any option or other encumbrance identified inSchedule 2
hereof; or
(c) create or permit to exist any lien, security interest or other
charge or encumbrance not disclosed in Schedule 2 hereto upon or with respect
to any of the Collateral superior or prior to the security interest created
under this Stock Pledge Agreement.
ARTICLE VI
EVENT OF DEFAULT
Section 6.01. Definition of Event of Default. The term "Event of
Default", wherever used in this Stock Pledge Agreement, shall mean any one or
more of the following events, whether or not the occurrence of such event
shall, on the part of the Pledgor, be voluntary or involuntary or result or be
effected by operation of law
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or pursuant to or in compliance with any judgment, decree or order of a court
of competent jurisdiction or any order, rule or regulation of any
administrative or governmental body or otherwise:
(a) a Default (as such term is used and defined in the Note) shall
occur;
(b) any representation of the Pledgor contained in Article III hereof
shall be inaccurate in any material respect;
(c) failure by the Pledgor to perform and comply with any term,
covenant, agreement or condition contained in this Stock Pledge Agreement if
such failure continues for a period of thirty (30) days after Secured Party
gives notice to Pledgor of such failure;
(d) the Pledgor shall (i) file, or consent by answer or otherwise to
the filing against the Pledgor of, a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, or take advantage of any
bankruptcy or insolvency law of any jurisdiction, (ii) make an assignment for
the benefit of its creditors, (iii) consent to the appointment of a custodian,
receiver or similar officer with similar powers with respect to the Pledgor or
of any substantial part of the property of the Pledgor, (iv) be adjudicated
insolvent or (v) take, approve or permit action for the purpose of any of the
foregoing; or
(e) a court or governmental authority of competent jurisdiction shall
enter an order appointing, without consent of the Secured Party, a custodian,
receiver or similar officer with similar powers with respect to the Pledgor or
with respect to any substantial part of the property of the Pledgor, or if an
order for relief shall be entered in any case or proceeding to take advantage
of any bankruptcy or insolvency law of any jurisdiction, or if any petition for
any such relief shall be filed against the Pledgor.
ARTICLE VII
PROCEDURES UPON DEFAULT
Section 7.01. Remedies Upon Default. During the continuance of an
Event of Default, the Secured Party shall have, the rights and remedies of a
secured party under the Uniform Commercial Code as adopted and in effect in
Texas as amended from time to time, including without limitation thereto, the
right to sell or otherwise dispose of any or all of the Collateral. The
Secured Party will send the Pledgor reasonable notice of the time and place of
any public sale thereof or of the time after which any private sale or other
disposition thereof is to be made. The requirement of sending reasonable
notice shall be met if such notice is mailed, postage prepaid, certified or
registered mail, to the Pledgor at the address
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designated in this Stock Pledge Agreement at least ten (10) days before the
time of the sale or disposition.
Section 7.02 Matters Regarding Collateral. Since some or all of the
Pledged Stock has not been registered under the Securities Act of 1933 (the
"Act"), the Pledgor recognizes that the Secured Party may be required to sell
the Collateral privately and that such sale may be made (i) without
advertisement or public notice, (ii) after solicitation of only a limited
number of sophisticated investors, (iii) pursuant to an investment
representation intent and letter from the purchaser thereof, or (iv) pursuant
to other procedures that may be necessary, proper or convenient to qualify as a
transaction exempt from registration under the Securities Act of 1933 and
applicable state securities laws. Pledgor further recognizes that such
procedures and restrictions may cause the Pledged Stock to have less value than
it otherwise would have, and that the private sale by the Secured Party may
result in a lower sales price than if the sale were otherwise held. With
knowledge of such facts, the Pledgor specifically agrees that the sale of the
Collateral privately by the Secured Party shall be commercially reasonable for
all purposes. Pledgor and Secured Party agree that, since other shares of
stock of the Company that are of the same class of stock as the Pledged Stock
are registered under the Act (the "Registered Stock") and are sold in the
National Association of Securities Dealers Automated Quotation System
("NASDAQ") market, the Pledged Stock is of a type customarily sold in a
recognized market and is of a type which is the subject of widely distributed
standard price quotations, to-wit, price quotations in the NASDAQ market.
Accordingly, Pledgor and Secured Party agree that Secured Party may buy at a
private sale of the Collateral held pursuant to this Stock Pledge Agreement,
and that a purchase price for the Pledged Stock at such a private sale equal
to the then current NASDAQ market price applicable to the Registered Stock is
commercially reasonable.
Section 7.03. Marshaling. The Secured Party shall not be required to
marshal any present or future security for (including but not limited to this
Stock Pledge Agreement and the Collateral pledged hereunder), or guaranties of,
the indebtedness evidenced by the Note or any of them, or to resort to such
security or guaranties in any particular order; and all of Secured Party's
rights hereunder and in respect of such securities and guaranties shall be
cumulative and in addition to all other rights, however, existing or arising.
To the extent that it lawfully may, the Pledgor hereby agrees that it will not
invoke any law relating to the marshaling of collateral which might cause delay
in or impede the enforcement of the Secured Party's rights under this Stock
Pledge Agreement or under any other instrument evidencing any of the
indebtedness evidenced by the Note or under which any of the indebtedness
evidenced by the Note is outstanding or by which any of the indebtedness
evidenced by the Note is secured or guaranteed, and to the extent that it
lawfully may the Pledgor hereby irrevocably waives the benefits of all such
laws.
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ARTICLE VIII
MISCELLANEOUS
Section 8.01. Rights Cumulative; No Waiver. The rights and
privileges hereunder granted are additional, cumulative and concurrent, and the
enumeration of certain rights, privileges and options herein shall not be
construed as a waiver of, nor to impair, any other rights existing either at
law or in equity independently of this Stock Pledge Agreement concerning this
or any other liability, obligation, indebtedness or collateral security.
Either party may waive any default without waiving any other prior or
subsequent default.
Section 8.02. Notice. Notices shall be personally delivered or sent
by registered or certified mail, postage prepaid, return receipt requested, to
the party to receive same at the following addresses or such other addresses as
may be specified to the other party hereto in writing:
Pledgor's Address: James R. Leininger Copy to: Mission City Management
200 Canada Verde 8122 Datapoint Dr., #900
San Antonio, Texas 78232 San Antonio, Texas 78229
Attn: Timothy Lyles
Secured Party's Address: Kinetic Concepts, Inc.
8023 Vantage Drive, 12th Floor
San Antonio, Texas 78230
Section 8.03. Further Assurances. The Pledgor will do all such acts
reasonably designed to secure the Collateral, and will furnish to the Secured
Party all such financing statements, certificates and other documents and will
do or cause to be done all such other things as the Secured Party may
reasonably request from time to time in order to confirm or perfect the
security interest granted hereby.
Section 8.04. Secured Party's Exoneration. Except to the extent
otherwise required by applicable law, under no circumstances shall the Secured
Party be deemed to assume any responsibility for or obligation or duty with
respect to any part or all of the Collateral of any nature or kind, other than
the physical custody thereof, or any matter or proceedings arising out of or
relating thereto. The Secured Party shall not be required to take any action
of any kind to collect, preserve or protect its or the Pledgor's rights in the
Collateral or against other parties thereto. The Secured Party's prior
recourse to any part or all of the Collateral shall not constitute a condition
of any demand, suit or proceeding for payment or collection of the indebtedness
evidenced by the Note.
Section 8.05. No Waiver, Etc. No act (except for an express written
waiver), failure or delay by the Secured Party shall constitute a waiver of its
rights and remedies hereunder or otherwise. No single or partial waiver by the
Secured Party
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of any default, right or remedy which it may have shall operate as a waiver of
any other default, right or remedy or of the same default, right or remedy on a
future occasion.
Section 8.06. Section and Other Headings. The section and other
headings contained in this Stock Pledge Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Stock Pledge Agreement.
Section 8.07. Parties in Interest. This Stock Pledge Agreement shall
inure to the benefit of and be binding upon the Secured Party, the Pledgor and
their respective successors, assigns and transferees. Nothing in this Stock
Pledge Agreement, expressed or implied, is intended to confer upon any other
person any rights or remedies under or by reason of this Stock Pledge
Agreement.
Section 8.08. Entire Agreement. This Stock Pledge Agreement embodies
the entire agreement and understanding between the parties hereto with respect
to the pledge of the Collateral and supersedes all prior agreements and
understandings relating to the subject matter hereof.
Section 8.09. Severability. If any provision of this Stock Pledge
Agreement, or the application thereto to any person or circumstance, shall, for
any reason and to any extent, be invalid or unenforceable, the remainder of
this Stock Pledge Agreement and the application of such provision to other
persons or circumstances shall not be affected thereby, but rather shall be
enforced to the greatest extent permitted by law.
Section 8.10. Amendments. This Stock Pledge Agreement may be amended
or modified by, and only by, a written instrument executed by the Pledgor, and
Secured Party or their respective successors, assigns and transferees.
Section 8.11. Counterparts. This Stock Pledge Agreement may be
executed in counterparts, each of which shall be an original, but all of which
together shall constitute one agreement, binding on all of the parties hereto
notwithstanding that all of the parties hereto are not signatories to the same
counterpart.
EXECUTED as of the day and year first above written.
PLEDGOR:
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/s/ JAMES R. LEININGER
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JAMES R. LEININGER
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SECURED PARTY:
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KINETIC CONCEPTS, INC.,
a Texas corporation
By: /s/ DENNIS E. NOLL
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Printed Name: DENNIS E. NOLL
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Title: Vice President
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SCHEDULE 1
Number of Shares
Certificate Date Certificate Number Registered Name represented by Certificate
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12/15/88 810 James R. Leininger 1,000,000
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SCHEDULE 2
The Pledged Stock has not been registered under the Securities Act of
1933, as amended (the "Act"), or the securities laws of any state. Moreover,
Leininger may be deemed to be an "affiliate" of KCI, as that term is defined in
Rule 144 promulgated under the Act, and, as such, there may be certain
additional restrictions on the sale or other transfer of the Pledged Stock or
any part thereof.