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3rd Amdmt To Stock Pledge Agrmt

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THIRD AMENDMENT TO STOCK PLEDGE AGREEMENT


This Third Amendment Agreement (this "Amendment") to that certain Stock Pledge Agreement (as amended, the "Stock Pledge Agreement") entered into as of April 18, 2000 by and among Balanced Care Corporation, a Delaware corporation ("BCC"), the other parties identified as Pledgors on the signature pages hereto, all of which are Delaware corporations and are wholly-owned subsidiaries of BCC (collectively referred to herein as "Subsidiaries", and together with BCC, collectively the "Pledgor"), the parties identified as Companies on the signature pages hereto, all of which are Delaware corporations (individually, a "Company" and collectively, the "Companies"), FRR Investments Limited, a Cayman Islands corporation ("FRR"), and IPC Advisors S.A.R.L., a Luxembourg corporation ("IPC"), is entered into as of this 5th day of January, 2001 by and among the Pledgor, the Companies, FRR, IPC, HR Investments Limited, a Cayman Islands corporation ("HR"), RH Investments Limited, a Cayman Islands corporation ("RH") and VXM Investments Limited, a Cayman Islands corporation ("VXM") (FRR, IPC, HR, RH and VXM are collectively referred to as the "Secured Party").


WITNESSETH:


WHEREAS BCC has issued certain Promissory Notes (the "Promissory Notes") dated (i) November 6, 2000 in favor of each of RH, HR and VXM, in each case, in the original principal amount of $2,166,666.66, and (ii) December 7, 2000 in favor of each of RH, HR and VXM, in each case, in the original principal amount of $500,000, evidencing a loan (the "Loan") to BCC by RH, HR and VXM in the aggregate amount of $8,000,000, the proceeds of which have been advanced to BCC;


AND WHEREAS Pledgor agreed as a condition precedent to the advance of the Loan to provide collateral security to the Secured Party and to execute and deliver this Amendment in favor of the Secured Party;


AND WHEREAS the security interest in the shares of BCC at Darlington, Inc., Balanced Care at Butler, Inc., Balanced Care at Eyers Grove, Inc., Balanced Care at North Ridge, Inc. and Balanced Care at Sarver, Inc. created hereunder in favor of the Secured Party is part of such collateral security and was 2 intended by the parties to be part of the same transaction as the advance of the Loan;


AND WHEREAS Pledgor, being all of the shareholders of the Companies, has received a direct benefit from the consummation of the transactions evidenced by the Promissory Notes;


NOW THEREFORE, the parties hereby agree as follows:


1. INCORPORATION OF RECITALS; DEFINITIONS.


The recitals set forth above are incorporated herein by reference and are made a part hereof to the same extent as if such recitals were set forth herein. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Stock Pledge Agreement.


2. EQUITY PLEDGE.


(a) Schedules 2 and Schedule 3 to the Pledge Agreement are each
hereby amended by incorporating Schedules A and B attached
hereto into such schedules, respectively.


3. MISCELLANEOUS.


(a) Except as expressly amended or modified by this Amendment, the
terms and conditions of the Stock Pledge Agreement shall
remain in full force and effect.


(b) Other than with respect to the restriction on the Secured
Party's right to foreclose on the Pledged Interests identified
as numbers 22 through and including number 42 on Schedule 2 of
the Stock Pledge Agreement, each Pledgor hereby reaffirms and
restates the representations and warranties set forth in the
Stock Pledge Agreement, as amended by this Agreement, and all
such representations and warranties shall be true and correct
on the date hereof (unless expressly related to an earlier
date) with the same force and effect as if made on such date.
Each Pledgor represents and warrants (which representations
and warranties shall survive the execution and delivery
hereof) to the Secured Party that on the date hereof: 3
i. It has the corporate power and authority to execute,
deliver and carry out the terms and provisions of
this Agreement and the transactions contemplated
hereby and has taken or caused to be taken all
necessary corporate action to authorize the
execution, delivery and performance of this Agreement
and the transactions contemplated hereby;


ii. Except as already obtained, no consent of any other
person (including, without limitation, shareholders
or creditors of any Pledgor), and no action of, or
filing with any governmental or public body or
authority is required to authorize, or is otherwise
required in connection with the execution, delivery
and performance of this Agreement;


iii. This Agreement has been duly executed and delivered
on behalf of each Pledgor by a duly authorized
officer, and constitutes a legal, valid and binding
obligation of each Pledgor enforceable in accordance
with its terms, subject to bankruptcy,
reorganization, insolvency, moratorium and other
similar laws affecting the enforcement of creditors'
rights generally and the exercise of judicial
discretion in accordance with general principles of
equity; and


iv. The execution, delivery and performance of this
Agreement will not violate any law, statute or
regulation, or any order or decree of any court or
governmental instru
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