Doc 24-7 CSHM v Kuhn-Response-Stock Pledge Agreement

STOCK PLEDGE AGREEMENT

THIS STOCK PLEDGE AGREEMENT ("Agreement") is entered into as of January 1, 2013, by and

between Jodi Kuhn, DDS ("Owner"), an individual, and CSHM LLC, a Delaware limited liability company

("CSHM").

RECITALS:

A. Children’s Dental Clinic of Thornton, P.C. (the "Company") is a Colorado Professional Corporation that conducts a dental practice in the Thornton, Colorado area, and Owner is a shareholder of the

Company.

B. Pursuant to the Management Services Agreement (the "Management Services Agreement"), dated as of July 1, 2007, between FORBA HOLDINGS, LLC a/k/a Church Street Health Management, LLC ("FORBA") as assigned to CSHM on June 1, 2012 and the Company, CSHM provides certain business services to the Company.

C. Randy Ellis, DDS (the "Prior Owner") is a party to a Stock Pledge Agreement, dated as of August 12, 2008, with CSHM (the "Prior Stock Pledge Agreement") with respect to his ownership interests in the Company. As an inducement for CSHM to release the Prior Owner from his obligations under the Prior Stock Pledge Agreement, so that Owner may purchase the outstanding ownership interests of the Company, Owner is willing to guaranty the Company’s performance under the Management Services Agreement, including payment of the

management fees, subject to the terms and conditions of this Agreement.

D. Owner desires to pledge to, and grant a security interest in, all of the shares of capital stock or other ownership or equity interests or securities in the Company that are owned or held by Owner, whether now or hereafter, to CSHM, in order to secure Owner’s obligations under such guaranty. Owner desires to transfer all of such ownership interests to a designee of CSHM for value, and CSHM desires that such designee to purchase such ownership interests, if certain events of default occur, subject to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the premises and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby

agree as follows:

ARTICLE I

OBLIGATIONS AND COVENANTS OF OWNER

1.l Guaranty of Management Fee.

(a) Owner hereby irrevocably and unconditionally guarantees to CSHM, on behalf of the Company, the full and timely payment and performance of all of the Company’s duties and obligations under the Management Services Agreement, including, without limitation, the payment of management fees and other amounts payable or reimbursable to CSHM under the Management Services Agreement (collectively, the "Guaranteed Obligations"); provided, however, that Owner shall be liable to CSHM with respect to the Guaranteed Obligations only to the extent of the Collateral and C SHM shall have no recourse against any assets of Owner other than the Collateral with

respect to the Guaranteed Obligations.

(b) The obligations of Owner under this Section 1.1 are continuing, absolute and unconditional and shall remain in full force and effect until the entire amount of the Guaranteed Obligations shall have been paid in

full and discharged, and such obligations shall not be affected, modified or impaired by any state of facts or the

happening fi’om time to time of any event whatsoever.

(c) Owner hereby waives each of the following with respect to the Guaranteed Obligations and this Section 1.1: diligence, presentment, demand of payment, protest, filing of claims with a court in the event of bankruptcy of the Company or any other person or entity liable in respect of the Guaranteed Obligations, any right to require CSHM to proceed first against the Company or any other person or entity, notice of dishonor or nonpayment of any such liabilities, notice of the release of any other guarantor of the Guaranteed Obligations, notice of the release or sale of any Collateral, and any other notice and all demands whatsoever. Owner hereby waives

2103870.4

Kuhn 000224

EXHIBIT

7Case 3:14-cv-01025 Document 24-7 Filed 05/06/14 Page 1 of 8 PageID #: 367

notice from CSHM of the Guaranteed Obligations, of the issuance of the instruments evidencing the Guaranteed

Obligations, and of acceptance of, or notice and proof of reliance on, the benefits of this Section 1.1.

(d) The obligations of Owner hereunder shall not be discharged except by full and final payment and

discharge of the Guaranteed Obligations or transfer of the Collateral to Transferee (as defined below).

1.2 Collateral. Owner hereby represents and warrants to CSHM that:

(a) Owner is or, upon the consummation of the purchase of all shares of capital stock of and other equity and ownership interests in the Company (the "Purchase"), will be the record and beneficial holder and owner of 1,000 shares of common stock, no par value per share, of the Company (such shares, together with any and all extensions, modifications, renewals and/or replacements thereof, and any and all dividends and rights declared or granted in connection therewith and all other products and proceeds thereof, collectively, the "Collateral"). Except for the Collateral, Owner holds and owns no shares of capital stock or other ownership or equity interests or securities in the Company ("Equity Interests"), and no options, warrants, subscriptions, convertible securities or other rights,

agreements or commitments to purchase or acquire any Equity Interests in the Company.

(b) Owner holds and owns (or upon the closing of the Purchase, will hold and own) the Collateral, beneficially and of record, free and clear of any restrictions on transfer, taxes, mortgage, pledge, lien, encumbrance, charge or other security interest, option, warrant, purchase rights, contracts, commitments, equities, claims and demands (collectively, "Encumbrances"), other than the pledge to CSHM hereunder and the Buy-Sell Agreement (as defmed below). Owner has (or upon the closing of the Purchase, will have) the full, absolute and unrestricted right, power, capacity and authority to pledge the Collateral to CSHM and to sell, transfer, assign and deliver the Collateral to the Transferee (as defined below), and the delivery of such Collateral to the Transferee will convey to the Transferee valid, marketable and indefeasible title to such Collateral, fi’ee and clear of any and all Encumbrancbs. The Collateral is duly authorized, validly issued, fully paid and non-assessable and was not issued in violation of any preemptive rights or any right of first refusal or other similar right in favor of any person. Owner is not a party to any option, warrant, purchase right, or other contract or commitment that could require Owner to sell, transfer or otherwise dispose of any of the Collateral, other than pursuant to this Agreement and the Buy-Sell Agreement. Owner is not a party to any voting trust, proxy or other agreement or understanding with respect to the

voting of any of the Collateral with any party.

(c) The authorized Equity Interests of the Company consists of 100,000 shares of common stock, no par value per share, 1,000 shares of which are issued and outstanding as of the date hereof. There are no other classes of securities of the Company outstanding. Other than the Buy-Sell Agreement, this Agreement and a comparable Stock Pledge Agreement (the "Buyer Pledge Agreement") entered into by Randy Ellis, DDS ("Buyer"), there are no options, warrants, preemptive rights, calls, subscriptions, convertible securities or other contracts, understandings, arrangements, rights, agreements or commitments that obligate the Company or a shareholder of the Company to issue, transfer or sell any Equity Interests or any other securities of the Company.

1.3 Grant of Security Interest. Owner hereby pledges to, and grants a security interest in, the Collateral to CSHM to secure the full ~nd timely payment and performance of Owner’s obligations set forth in Section 1.1 above. Concurrently with the execution and delivery of this Agreement, Owner shall deliver to CSHM the capital stock certificate(s), if any, representing the Collateral, duly endorsed in blank or, if not endorsed in blank, Owner shall give CSHM a duly executed stock power in blank. Owner agrees to execute a UCC financing statement with respect

to the Collateral promptly upon request by CSHM.

1.4 Conditional Agreement to Transfer Collateral To Designee.

(a) Owner shall immediately given written notice, in reasonable detail, to CSHM if any of the

following events occurs:

(i) Owner breaches or defaults under this Agreement, including, without limitation, the full and timely performance of Owner’s guaranty under Section 1.1 hereof (each, an "Event of Default"); or

(ii) The Company breaches or defaults under the Management Services Agreement.

2103870.4

Kuhn 000225 Case 3:14-cv-01025 Document 24-7 Filed 05/06/14 Page 2 of 8 PageID #: 368

(b) Upon an Event of Default, Owner shall, at the request of CSHM, transfer the Collateral to the Transferee at such time and place as shall be determined solely by CSHM, for the Purchase Price set forth in Article

III below.

1.5 Covenants of Owner. Owner hereby covenants and agrees that, during the term of this Agreement, in order

to protect the rights of CSHM hereunder:

(a) Owner shall not, directly or indirectly, sell, assign, encumber, pledge, transfer, hypothecate, bequeath or otherwise dispose of (each, a "Transfer") any item of Collateral nor any legal or beneficial interest therein, except for the pledge to CSHM and conveyance to the Transferee as provided in this Agreement or otherwise with CSHM’s prior, express written consent, which consent may be withheld in CSHM’s sole discretion. The parties acknowledge that, concurrently herewith, Owner and Buyer are entering into a written Buy-Sell Agreement pursuant to which Buyer or her designee may purchase the Equity Interests of Owner upon the occurrence of certain events (the "Buy-Sell Agreement"). CSHM hereby consents to such Buy-Sell Agreement; provided that Buyer enters into the Buyer Pledge Agreement and Owner hereby agrees that such Buy-Sell Agreement shall not be terminated, amended, supplemented or altered at any time during the term of this Agreement without the prior, express written consent of CSHM. If any item of Collateral or any right therein is Transferred contrary to this Agreement, such Transfer shall be void, and CSHM shall retain a security interest in such item and

in the proceeds of such disposition.

(b) The Company shall not issue any additional shares of capital stock of the Company without CSHM’s prior, express written consent, which consent may be withheld in CSHM’s sole discretion.

(c) The Articles of Incorporation, the Bylaws and the other governing or organizational documents of the Company shall not be amended, altered, terminated or supplemented without the prior, express written consent

of CSHM, which consent may be withheld in CSHM’s sole discretion.

(d) Upon the occurrence of any Event of Default and transfer of the Collateral to the Transferee, Owner shall immediately resign all positions held as an officer, manager or director of the Company.

1.6 After Acquired Interests. In the event of any issuance or Transfer of any Equity Interests hereafter to Owner (including, without limitation, in connection with any stock split, stock dividend, option or warrant exercises, recapitalization, reorganization or the like), such Equity Interests shall be automatically included in the Collateral

and subject to this Agreement.

ARTICLE II

DESIGNATION OF TRANSFEREE AND TRANSFER OF COLLATERAL

Upon an Event of Default, CSHM may designate a Transferee to purchase the Collateral from Owner, with notice to Owner, and Owner shall transfer the Collateral and all of Owner’s rights, title and interest therein to such Transferee at the time and place designated by CSHM in such notice in exchange for the Purchase Price, free and clear of all Encumbrances, and Owner shall deliver to the Transferee any and all certificates evidencing such

Collateral, duly endorsed for transfer, and duly executed stock powers with respect to such Collateral. For purposes of this Agreement, "Transferee" means one or more individuals who is eligible to own an ownership interest in the Company under the laws of the State of Colorado, and who is designated by CSHM to be the transferee of the

Collateral.

ARTICLE III

PAYMENT OF PURCHASE PRICE

The purchase price for the Collateral purchased by such Transferee (the "Purchase Price") shall be a total of $100. The Purchase Price shall be payable to Owner or her or her personal representative in cash upon transfer of

the Collateral to such Transferee.

ARTICLE IV

COMMERCIALLY REASONABLE DISPOSITION

The parties acknowledge that it would be impossible to realize a commercially reasonable price on the disposition of the pledged Collateral by public sale and very difficult to do so by private sale, except on the terms

2103870.4


and conditions in Articles II and III of this Agreement. Therefore, the parties hereto acknowledge that a disposition of the Collateral under Articles II and III is a commercially reasonable disposition, and agree that the determination of the Purchase Price under Article III is commercially reasonable and that they will be bound by such price.

ARTICLE V TERM

This Agreement shall continue for as long as the Management Services Agreement, or any renewal thereof, is in effect.

ARTICLE VI REPRESENTATIONS AND WARRANTIES OF OWNER

Owner hereby represents and warrants to CSHM that:

6.1 Qualification and Individual Power. Owner is an individual licensed to practice dentistry in the State of Colorado. Owner has all required individual power and authority and all licenses, permits and authorizations necessary to own and operate a dental practice in the State of Colorado, and to execute, deliver and perform this Agreement.

6.2 No Conflicts. Neither the execution or the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will conflict with, result in a breach of, constitute a default under, result in a violation of, result in the creation of any lien, security interest, charge or encumbrance upon the Collateral other than that contained in this Agreement, give any third party the right to accelerate any obligation, or require any authorization, consent, approval, exemption or other action by or notice to any court, other governmental body, or other third party, under any indenture, mortgage, lease, loan agreement or other agreement or instrument to which Owner or the Company is bound or affected, or any law, statute, rule, regulation, judgment or decree to which Owner or the Company is subject.

6.3 Legal Proceedings. There are no actions, suits, proceedings, orders or investigations pending or threatened against Owner, at law or in equity, or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, and to the best of Owner’s knowledge, there is no basis for the foregoing.

ARTICLE VII INDEMNIFICATION

7.1 Indemnification of CSHM. Owner shall indemnify and hold harmless CSHM and its officers, directors, managers, employees, agents and Affiliates, and will reimburse such persons, from, against and for any loss, liability, damage or expense (including reasonable legal expenses and costs) incurred or suffered by any of them as a result of or in connection with the breach by Owner of any representation, warranty or covenant of Owner contained in this Agreement.

7.2 Indemnification of Owner. CSHM shall indemnify and hold harmless Owner, and will reimburse Owner, from, against and for any loss, liability, damage or expense (including reasonable legal expenses and costs) arising from or in connection with the breach by CSHM of any representations, warranty or covenant of CSHM in this Agreement.

ARTICLE VIII DEFAULT AND REMEDIES

8.1 Remedies Upon Occurrence of Event of Default. Upon the occurrence of any Event of Default and continuously thereafter until waived in writing, CSHM shall have the right and option to cause Owner to immediately transfer the Collateral to Transferee, free of any equity of redemption or other claims, or to exercise

any other remedy available to CSHM as a secured party under law or equity.

8.2 Construction of Rights and Remedies and Waiver of Notice and Consent.

(a) This Article applies to all rights and remedies provided by this Agreement or by law or equity.

2103870.4


(b) Unless otherwise expressly provided herein, any right or remedy may be pursued without notice to or further consent of Owner, both of which Owner waives.

(c) No right, power or remedy conferred upon or reserved to CSHM by this Agreement is intended to be exclusive of any other right, power or remedy, but each and every such right, power and remedy shall be cumulative and concurrent and shall be in addition to any other right, power and remedy given hereunder, now or hereafter existing at law, in equity or by statute. No delay, forbearance or omission by CSHM in exercising any right, power or remedy accruing upon any default shall exhaust or impair any such right, power or remedy or shall be construed to be a waiver of any such default or an acquiescence therein, and every right, power and remedy given to CSHM by this Agreement may be exercised from time to time, in any order, and as often as may be deemed expedient by CSHM. No delay, forbearance or omission in exercising any right or remedy on any one or more occasions shall operate as a waiver thereof on any future occasion, and no single or partial exercise of any right or remedy shall preclude any other exercise thereof or the exercise of any other right or remedy.

8.3 Distributions on Stock; Voting Rights. So long as no Event of Default has occurred, Owner shall (a) have the right, from time to time, to vote and give proxies and consents with respect to the Collateral and consent to or ratify action taken at, or waive notice of, any meeting of shareholders of the Company with the same force and effect as if such Collateral were not pledged hereunder, and (b) be entitled to receive any and all cash dividends and other distributions with respect to the Collateral.

ARTICLE IX MISCELLANEOUS

9.1 Notices. Any notice, demand or communication required, permitted, or desired to be given hereunder shall be deemed effectively given only when personally delivered, when received by facsimile or other electronic means or overnight courier, or 10 days after being deposited in the United States mail, with postage prepaid thereon, certified or registered mail, return receipt requested, addressed as follows:

If to CSHM:

CSHM LLC 618 Church Street, Suite 520 Nashville TN 37219 Fax No. (615) 750-0303 Attention: David R. Wilson, President and CEO

If to Owner:

Jodi Kuhn, DDS 8223 E. 24th Drive Denver, CO 80238

or to such other address, and to the attention of such other person or officer as any party may designate.

9.2 Arbitration. Except for claims for injunctive relief, all disputes arising out of or in connection with this Agreement shall be settled by binding arbitration in Nashville, Tennessee. Evidentiary matters shall be determined in accordance with the Federal Rules of Evidence. The arbitrator shall be selected by mutual agreement of the parties or, failing such agreement, shall be a single qualified (in light of the subject matter hereof) arbitrator selected by the American Arbitration Association. Following a demand for arbitration, the parties shall have discovery rights in accordance with the Federal Rules of Civil Procedure. Judgment upon the award entered by the arbitrator may be entered in any court having jurisdiction hereof. The prevailing party shall be entitled to an award of reasonable costs of arbitration, including reasonable attorneys’ fees, incurred in connection therewith as determined by the arbitrator.

9.3 No Control or Ownership of Practice or Company By CSHM. The parties acknowledge and agree that this Agreement is commercially reasonable and is intended to provide economic protection to CSHM in the event of a default under the Management Services Agreement by the Company. By entering into and performing under this Agreement, Owner and the Company expressly do not delegate to CSHM, and CSHM expressly does not accept or assume and hereby disclaims, any power, duties, responsibilities or control vested in the Company as the owner,

2103870.4


proprietor and operator of its dental practice, nor any ownership interest or control of the Company or its dental practice or Equity Interests. The Company is the owner, operator and proprietor of its dental practice and shall be responsible for and have authority over the practice of dentistry at such practice. If a court or other governmental authority of competent jurisdiction makes a final decision that any term of this Agreement causes CSHM to engage in the practice of dentistry, as defined under the laws of the State of Colorado, or to otherwise violate the statutes, regulations and other laws governing the practice of dentistry in the State of Colorado, or if legal counsel to Owner and CSHM mutually conclude the same, then the parties to this Agreement shall negotiate in good faith to amend this Agreement to preserve the underlying economic and financial arrangements between the parties under this Agreement to the greatest extent possible in a manner consistent with any such decision, determination or mutual conclusion, and pending the effectiveness of any such amendment, such term shall be deemed waived and unenforceable and its non-performance shall not constitute a breach or default of this Agreement.

9.15 Consent of Spouse. If Owner is married on the date of this Agreement, then Owner’s spouse shall concurrently execute and deliver to CSHM a consent of spouse in the form of Exhibit 9.15 hereto ("Consent of Spouse"), effective on the date hereof. Notwithstanding the execution and delivery thereof, such consent shall not be deemed to confer or convey to the spouse any rights in the Collateral or other Equity Interests that do not otherwise exist by operation of law or the agreement of the parties. If Owner should marry or remarry subsequent to the date of this Agreement, then Owner shall within 30 days thereafter obtain her or her new spouse’s acknowledgement of and consent to the existence and binding effect of all restrictions contained in this Agreement by causing such spouse to execute and deliver a Consent of Spouse acknowledging the restrictions and obligations contained in this Agreement and agreeing and consenting to the same.

9.3 Miscellaneous. This Agreement: (i) shall be governed by Tennessee law, without reference to its conflict of law principles; (ii) sets forth the entire understanding and agreement of the parties, and supersedes all prior oral or written understandings and agreements, with respect to the subject matter hereof; (iii) shall not be amended or terminated nor any provision hereof waived unless in a writing signed by all parties that expressly sets forth such amendment, termination or waiver; (iv) shall not be transferred or assigned by either party, in whole or part, without the prior written consent of the other party; (v) shall be binding upon and inure to the benefit of the parties and her respective successors and permitted assigns; (vi) if held to be invalid or unenforceable, in whole or part, such term or provision shall be ineffective only to the extent of such invalidity or unenforceability without invalidating or rendering unenforceable the remaining terms and provisions of this Agreement; and (vii) may be executed in counterparts, each of which shall be deemed an original and which together shall constitute one and the same instrument. It is the intent of the parties that each part hereof shall be given its plain meaning, and that rules of construction that would construe any ambiguity against the draftsman, by virtue of being the draftsman, shall not apply. In the event of litigation relating to this Agreement, the prevailing party shall be entitled to recover attorneys’ fees and costs of litigation in addition to all other remedies available at law or in equity. All expenses incurred in connection herewith shall be borne by the respective party incurring such expense. The representations, warranties and covenants of the parties contained in this Agreement shall survive the date hereof and shall not be extinguished thereby notwithstanding any investigation or other examination by any party. From time to time, at CSHM’s request, and without further consideration, Owner will execute, acknowledge and deliver all instruments of further assurance and do all such acts and things as may reasonably be required more effectively to convey, transfer to and vest in CSHM and its assignees, all rights and interests conveyed pursuant to the terms hereof.

[Remainder of page intentionally left blank. Signature page follows.]

2103870.4


1N WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

CSHM LLC

By: David R. Wilson, President and CEO

OWNER

Jodi Kuhn, DDS

2103870.4


EXHIBIT 9.15

FORM OF CONSENT OF SPOUSE

N/A

2103870.4


Documents

Doc 24-7 CSHM v Kuhn-Response-Stock Pledge Agreement