Voting Trust Agreement

EXECUTION COPY


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VOTING TRUST AGREEMENT


BY AND AMONG


TRANSWORLD HOLDINGS (UK) LIMITED


TRANSWORLD HEALTHCARE (UK) LIMITED


TRANSWORLD HEALTHCARE, INC.


TRIUMPH PARTNERS III, L.P.


AND


THE TRUSTEE


December 17, 1999


VOTING TRUST AGREEMENT


VOTING TRUST AGREEMENT (this "Agreement") made the 17th day of December 1999, by and among Transworld Holdings (UK) Limited, a company incorporated in England and Wales with registered number 3370146, ("UK Parent"), Transworld Healthcare (UK) Limited, a company incorporated in England and Wales with registered number 3370146 ("TW UK"), Transworld Healthcare, Inc., a New York corporation ("US Parent"), Triumph Partners III, L.P., a Delaware limited partnership ("Triumph"), and Richard Green (hereinafter sometimes referred to, together with his successor in trust, as the "Trustee"). UK Parent and US Parent are hereinafter referred to collectively as the "Initial Shareholders." Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Securities Purchase Agreement (the "Purchase Agreement"), dated as of the date hereof, among UK Parent, TW UK, the Purchasers and US Parent (solely for the purposes of certain Sections of the Purchase Agreement).


W I T N E S S E T H


WHEREAS, as of the date hereof, TW UK, the Initial Shareholders, Triumph and the other Purchasers have entered into the Purchase Agreement, which, as a condition precedent to the investment by the Purchasers in the securities of UK Parent and TW UK, requires the Initial Shareholders and the other parties to this Agreement to enter into this Agreement for the benefit of the Purchasers as beneficial holders of up to 22,600,000 warrants (the "Warrants") to acquire in the aggregate up to 22,600,000 ordinary shares of 5p each of TW UK (the "Warrant Shares");


WHEREAS, the Purchasers have on the date hereof agreed to subscribe for the Warrants and Triumph, as the majority Investor, has been issued one special share of 5p of TW UK (the "Special Share") for the purpose of exercising the voting rights that would be exercisable by the Warrant Shares if all of the Warrants were exercised prior to the vote being taken in the manner set forth in the Memorandum and Articles of Association of TW UK (as in effect from time to time, the "TW UK Charter");


WHEREAS, as of the date hereof, US Parent is the holder of 100 ordinary shares of (pounds sterling)1 each of UK Parent, representing all of the issued shares of UK Parent as of such date, and UK Parent is the holder of 48,000,000 ordinary shares of 5p each of TW UK respectively of all of the issued shares of TW UK as of such date (collectively the "Issued Shares");


WHEREAS, it is the intention of the parties that for so long as the Warrants are exercisable but have not been exercised, the Special Shareholder (as defined in the TW UK Charter) is to be afforded the right to vote on an as exercised basis on matters submitted to a vote of the holders of ordinary shares of TW UK for all purposes on the basis of one vote per Warrant Share;


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WHEREAS, the Purchasers have required as a condition of their investment in UK Parent and TW UK that the voting rights attributable to the Special Share and the Warrant Shares be coupled with and supplemented by the mechanisms provided in this Agreement for exercising the voting rights attributable to the Issued Shares, so as to give effect to the commercial understanding between the Purchasers, on the one hand, and the Initial Shareholders, on the other hand, with respect to the exercise of control over the business and policies of TW UK and UK Parent and other matters of corporate governance as between majority and minority shareholders;


WHEREAS, it has been agreed between the Purchasers and TW US that Triumph on behalf of the Purchasers will be entitled to select one member of each of the Boards of Directors of UK Parent and TW UK and the Initial Shareholders will be entitled to select one member of each of the Boards of Directors of UK Parent and TW UK, with the total number of members of each such Board of Directors being fixed at five and the remaining members of such Boards of Directors to be selected as provided in this Agreement, provided that the size of such Boards of Directors is subject to increase upon the occurrence of a Covenant Breach and Triumph on behalf of the Purchasers will be entitled to select the additional director or directors as provided herein;


WHEREAS, pursuant to the Purchase Agreement, Triumph has been appointed as the representative of the Purchasers for the purposes of exercising the rights of the Purchasers under the Transaction Documents, including this Agreement, and as such representative, Triumph is a party hereto;


WHEREAS, this Agreement, together with the Purchase Agreement and various provisions of the Charter Documents of UK Parent and TW UK are designed to protect the Purchasers from the risk of, among other things, UK Parent or TW UK (i) entering into any transaction with or contributions to US Parent in the form of dividends, fees, re-charges, loans, guarantees or any other benefit, in any form, unless they have been previously agreed upon by the Purchasers and (ii) being exposed to any liabilities of US Parent or claims of creditors of US Parent of a security interest or other right to any assets of UK Parent or TW UK;


WHEREAS, in consideration of the foregoing, the Initial Shareholders desire to grant the voting power with respect to the Issued Shares legally and beneficially owned by them as of this date, as well as any other ordinary shares of UK Parent or TW UK hereafter legally and beneficially hereafter acquired or held by them, to the Trustee in all matters on the terms and conditions set forth herein; and


WHEREAS, the Trustee has consented to act under this Agreement for the purposes hereinafter provided.


NOW, THEREFORE, in consideration of the mutual covenants herein contained and for other good, valuable and sufficient consideration, the receipt of which is hereby acknowledged, the parties hereto promise, covenant, undertake and agree as follows:


1. Transfer of Shares to the Trustee. Immediately upon executing this Agreement, each of the Initial Shareholders shall deposit with the Trustee one or more certificates


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representing the number of Issued Shares listed opposite its name on Schedule 1 hereto, and shall also deposit with the Trustee immediately upon receipt certificates representing any other shares of any class or series of TW UK and UK Parent having voting powers which they acquire, legally or beneficially, during the term of this Agreement, including any such shares acquired through the exercise of any rights, warrants, options, conversion rights, as dividends, on a consolidation, reorganization, by way of bonus issue or otherwise (the Issued Shares and such other shares collectively the "Shares"). All such share certificates shall be accompanied by such instruments of transfer duly executed and stamped by or on behalf of the Initial Shareholders depositing such certificates and such other documents as may be required so as to enable the Trustee to cause such shares to be transferred into the name of the Trustee. Subject to stamping, each of UK Parent and TW UK (as appropriate) shall immediately register the transfer of the Shares in the register of members. All certificates for the Shares transferred and delivered to the Trustee pursuant hereto shall be canceled and new certificates therefor shall promptly be issued to and held by the Trustee in its own name in its capacity as Trustee hereunder and shall bear a legend indicating that the Shares represented by such certificate are subject to this Agreement. Upon receipt by the Trustee of the certificates for any such Shares and the transfer of such Shares into the name of the Trustee, the Trustee shall hold such Shares, and any dividends and other distributions in respect thereof on trust for US Parent and UK Parent, respectively, absolutely, subject to the terms of this Agreement and shall issue and deliver to each Initial Shareholder voting trust certificates representing its interest in such Shares deposited pursuant to this Agreement ("Voting Trust Certificates"). Each Voting Trust Certificate to be issued and delivered by the Trustee in respect of the Shares shall state the number of Shares which it represents, shall identify the company in which such Shares represent an interest in shall be signed by the Trustee and shall be in substantially the same form as Exhibit A attached hereto and bear the restrictive legends set forth thereon. The Trustee shall at all times keep, or cause to be kept, complete and accurate records of all Shares or other securities deposited with it hereunder, the identity, addresses and ownership of the depositing Initial Shareholders, and all certificates of beneficial interest issued by the Trustee. Such records shall be open to inspection by any depositing Initial Shareholder or holder of Voting Trust Certificates at all reasonable times. If any Initial Shareholder shall fail to transfer, or procure the transfer of, any Shares held or acquired by it or any of its Affiliates in accordance with the provisions of this Section 1 within 2 days of first becoming bound so to do, such Initial Shareholder (for itself and (as the case may be) as trustee on behalf of its Affiliates) shall be deemed to have irrevocably appointed hereunder the Trustee as its true and lawful attorney for and in its name and on its behalf to do all such things and execute as a deed or under hand (as the case may be) all such documents as may be necessary to transfer the entire legal interest in any such Shares to the Trustee in accordance with, and for the purposes of, this Agreement. The Trustee shall be obliged and hereby undertakes to take such action as may be necessary as true and lawful attorney for that shareholder and for its Affiliates to effect any transfer of shares pursuant to this Section 1 and the power of attorney granted hereunder.


2. Dividends. If any dividend in respect of the Shares deposited with or acquired by the Trustee hereunder is paid, in whole or in part, in shares of TW UK or UK Parent having voting powers, the Trustee shall likewise hold on trust for the registered holders of the Voting Trust Certificates, absolutely, subject to the terms of this Agreement, the shares and the related


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share certificates which are received by TW UK or UK Parent on account of such dividend, and the holder of each outstanding Voting Trust Certificate representing shares on which such dividend has been paid shall be entitled to receive a further Voting Trust Certificate issued under this Agreement for the number and class of shares received as such dividend with respect to the shares represented by such outstanding Voting Trust Certificate. Holders entitled to receive the Voting Trust Certificates issued in respect of the shares received as such dividends shall be those registered as such on the books of the Trustee at the close of business on the record date for such dividend.


The Trustee shall at all times direct TW UK and UK Parent, and they are hereby directed, with respect to the Shares of which the Trustee is the registered member to pay all cash dividends or other cash distributions whether of income or capital paid in respect of or in relation to the Shares (other than any dividends or distributions paid in shares of TW UK or of UK Parent having voting powers) to the registered holders of the Voting Trust Certificates or such other person(s) as they may direct. If the Trustee shall receive any such cash dividends or distributions or other monies, it shall account to UK Parent or US Parent, as the case may be, for such monies.


3. Transfer of Securities. No Initial Shareholder shall, directly or indirectly, Transfer any Voting Trust Certificates except in circumstances where an identical Transfer of Shares would be permitted by the Purchase Agreement, subject to the condition precedent that the transferee shall have entered into an enforceable written agreement satisfactory to the Board of Directors of TW UK agreeing to be bound by all of the provisions of this Agreement to the same extent as the transferring Initial Shareholder as if such Voting Trust Certificates were still owned by the Initial Shareholders.


Subject to the preceding paragraph, the provisions of the Charter Documents of UK Parent and TW UK shall apply to any transfer or purported transfer of any Voting Trust Certificates as they shall to any transfer or purported transfer of any Shares represented thereby. Any Transfer in violation of such restrictions shall cause the transferring holder to lose its rights and privileges with respect to (but shall continue to be bound by), as applicable, (i) Articles 7, 8, 9, 10, 11 and 12 of the TW UK Charter, (ii) the corresponding provisions of the Articles and Memorandum of Association of UK Parent, (iii) Articles 10, 11, 12, 13 and 14 of the Purchase Agreement and (iv) all rights to vote or direct the voting of Shares held by the Trustee hereunder pursuant to Section 6 hereof. The Trustee shall not register such transfer or recognize the intended transferee as the holder of the Voting Trust Certificate for any purpose. To the extent permitted by law, Voting Trust Certificates shall not be subject to attachment, garnishment, judicial order, levy, execution or similar process, however instituted, for satisfaction of a judgment or otherwise.


Subject to the provisions of the foregoing paragraphs, the Voting Trust Certificates shall be transferable on the books of the Trustee, at such office as the Trustee may designate, by the registered owner thereof, either in person or by attorney duly authorized, upon surrender thereof, according to the rules established for that purpose by the Trustee, and the Trustee may treat the registered holder as owner thereof for all purposes whatsoever, but it shall not be required to deliver new Voting Trust Certificates hereunder without the surrender of such existing Voting Trust Certificates.


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If a Voting Trust Certificate is lost, stolen, mutilated or destroyed, the Trustee, in its discretion, may issue a duplicate of such certificate upon receipt of (a) evidence of such fact satisfactory to it; (b) indemnity satisfactory to it, including, without limitation, an indemnity bond, sufficient in the judgment of the Trustee, to protect the Trustee, or any agent, from any loss which any of them may suffer if a Voting Trust Certificate is replaced; (c) the existing certificate, if mutilated; and (d) its reasonable fees and expenses in connection with the issuance of a new trust certificate.


4. Withdrawal of Shares from Voting Trust. Any registered holder of Voting Trust Certificates hereunder may from time to time withdraw Shares represented thereby from the voting trust arrangements created hereby only upon the occurrence of any of the following circumstances:


(a) at any time after the fifteenth anniversary of the date hereof, provided that all Obligations of UK Parent and TW UK arising from (i) an exercise of Warrants for Warrant Shares, (ii) an exercise of a Purchasers' Warrant Put or (iii) an exercise of a Purchasers' Warrant Shares Put, shall have been duly and fully satisfied; or


(b) at any time after a Qualified Public Offering in connection with and immediately prior to any bona fide sale of the Shares to be so withdrawn which are represented by a Voting Trust Certificate to any Person who is not an Affiliate of any of the Initial Shareholders, subject to such sale being in compliance with all applicable provisions of the Charter Documents; provided, however, that only the portion of the Shares represented by a Voting Trust Certificate which are actually sold to such Person shall be so withdrawn.


Any Shares withdrawn from the voting trust arrangements created pursuant to this Agreement, when so withdrawn in compliance with this Section 4, shall be free of any restrictions imposed by this Agreement, but shall remain subject to any and all other restrictions imposed by the Charter Documents of TW UK and UK Parent, as the case may be, the Transaction Documents or other agreements or by law. Such withdrawal shall be effected only by a written amendment to this Agreement in the form of Exhibit B hereto executed by the Trustee. Upon the surrender by such holder to the Trustee of the Voting Trust Certificate or Certificates designated in such amendment, the Trustee is authorized to deliver or cause to be delivered to such holder a certificate or certificates for the Shares so withdrawn, with any appropriate restrictive legends, accompanied by such instruments of transfer duly executed by or on behalf of the Trustee and such other documents of title as may be required so as to enable such holder to cause such shares to be transferred into its, his or her own name, and a Voting Trust Certificate in respect of the remaining shares, if any. Nothing in this Section 4 or in any such amendment shall modify, amend, limit or terminate any other restrictions contained in, or be construed as a consent to any transfer of Shares subject to, this Agreement under the Charter Documents of TW UK and UK Parent, the other Transaction Documents or any other agreement or instrument, unless such amendment specifically refers to such other agreement or instrument and satisfies all requirements for amendment or waiver thereof (including execution and delivery by appropriate parties).


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5. Rights, Powers and Duties of the Trustee; Obligations of Initial Shareholders.


(a) Until the actual delivery to the holders of Voting Trust Certificates of share certificates in exchange therefor, and until the surrender of the Voting Trust Certificates representing such shares for cancellation, in each case in accordance with the terms of this Agreement, title to all Shares deposited hereunder shall be vested in the Trustee, and the Trustee shall have the sole and exclusive right, acting as hereinafter provided, to exercise, in person or by its nominees or proxies, all voting rights and powers of the Initial Shareholders in respect of all Shares deposited with or acquired by the Trustee hereunder, including the right to take part in or consent to any shareholders action of any kind whatsoever, whether ordinary or extraordinary, subject to the provisions hereinafter set forth; provided that the Trustee shall only exercise such rights with respect to the Shares deposited or acquired hereunder in accordance with the provisions of Section 6 hereof. Any exercise or purported exercise by the Trustee of any rights or powers attaching to the Shares shall be void ab initio unless the same is strictly in accordance with Section 6 hereof.


The Trustee shall act only in accordance with the terms of this Agreement and the Charter Documents of TW UK and UK Parent. A certificate signed by the Trustee shall be conclusive evidence to all persons of any action taken by the Trustee.


(b) The right to vote shall include, without limitation, the right to vote for the election of directors and in favor of or against any resolution or proposed action of any character whatsoever, which may be presented at any meeting or require the consent of shareholders of TW UK or UK Parent. It is expressly understood and agreed that except as otherwise expressly provided in Section 6 hereof, the holders of Voting Trust Certificates shall not have any right, either under said Voting Trust Certificates or under this Agreement, or under any agreement express or implied, or otherwise, with respect to any Shares held by the Trustee hereunder, to vote such Shares or to take part in or consent to any corporate action, or to do or perform any other act or thing which the holders of TW UK's or UK Parent's shares are now or may hereafter become entitled to do or perform by virtue of their being shareholders.


(c) The Trustee shall not incur any responsibility in its capacity as trustee, or individually or otherwise, in voting the Shares held hereunder or in any matter or act committed or omitted to be done under or in connection with this Agreement, or for any vote or act committed or omitted to be done by any predecessor or successor Trustee, except for such Trustee's willful misconduct or fraud.


(d) The Trustee shall maintain, or cause to be maintained, complete and accurate records of all the Shares deposited with it hereunder, the identity, addresses and ownership of the depositing shareholders, and all Voting Trust Certificates issued by the Trustee. Such records shall be open to inspection by any depositing shareholder or other party to or beneficiary under this Agreement on reasonable notice during business hours.


(e) The Trustee shall forward to the registered holders of the Voting Trust Certificates all notices, resolutions and other documents delivered by TW UK and UK Parent,


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respectively, to the Trustee as the registered holder of the Shares. The Trustee, at the request of US Parent, shall forward to UK Parent or TW UK, as reasonably directed by US Parent, any requests for information provided to the Trustee by US Parent and, subject to the requirements of Applicable Law, shall take all such actions as the registered holders of the Trust Certificates may reasonably require to obtain information on matters relating to the Companies or the Shares.


(f) Subject to the requirements of Applicable Law, each of the Initial Shareholders shall instruct the Trustee to vote their Shares (whether at a general or extraordinary meeting of shareholders or by consent in lieu of a meeting of shareholders) and where appropriate to give effect to such matters, shall convene any necessary shareholders meeting for the purpose of passing (and, unless pursuant to an amending resolution required for the purpose of authorizing and giving effect to the Purchasers' Share Put against TW UK pursuant to Article VIII of the Purchase Agreement, not revoking) such resolutions as may be required by Applicable Law to approve or authorize any purchase of Securities pursuant to Articles VII and VIII of the Purchase Agreement, including without limitation, any special resolutions required under Sections 165 and/or 171 of the Companies Act 1985 in connection with a purchase by TW UK of its shares (whether out of distributable profits or out of the proceeds of a new issue of shares).


6. Voting by the Trustee.


(a) The Trustee shall, subject to the provisions of this Agreement, have the sole and exclusive right and power to, and shall be obliged and hereby undertakes to, vote all of the Shares held under the voting trust arrangements created hereby, whether at a general or extraordinary meeting of shareholders or by consent in lieu of a meeting of shareholders and where appropriate to give effect to such matters, shall convene all necessary shareholder meetings, with such voting being strictly in accordance with this Section 6(a) as follows:


(i) With respect to the election of members of the Board of
Directors of TW UK, the Trustee shall vote the Shares so as to
elect, and to continue in office until their resignation or
removal, the persons designated in the manner set forth in
Section 6(c) below (including without limitation, votes required
to increase the size of the Board of Directors of TW UK and to
elect Additional Investor Directors following the occurrence of
a Covenant Breach, the registered holders of the Voting Trust
Certificates if applicable), unless an "Extraordinary Event" or
"Put Bre ...