EXHIBIT E
PLEDGE AGREEMENT
This PLEDGE
AGREEMENT (as the same may from time to time be amended,
restated or otherwise modified, this
"Agreement") is entered into as of
October 24, 2005, by DIALYSIS CORPORATION
OF AMERICA, a Florida corporation
("Pledgor"), in favor of KEYBANK NATIONAL
ASSOCIATION (the "Lender").
Recitals:
A. Pledgor is
entering into the Credit Agreement, as hereinafter
defined, with the Lender.
B. Pledgor deems
it to be in its direct pecuniary and business interests
that Pledgor obtain from the Lender the
Revolving Commitment, as defined in
the Credit Agreement, and the Loans
provided for in the Credit Agreement.
C. Pledgor understands
that the Lender is willing to grant such
financial accommodations to Pledgor only
upon certain terms and conditions,
one of which is that Pledgor grant to the
Lender a security interest in and
an assignment of the Collateral, as
hereinafter defined.
D. This
Agreement is being executed and delivered in consideration of
each financial accommodation granted to
Pledgor by the Lender and for other
valuable considerations, the receipt and
sufficiency of which is hereby duly
acknowledged.
Agreement:
In consideration
of the premises and the covenants hereinafter
contained, Pledgor agrees as follows:
Section 1.
Definitions. Except as
specifically defined herein,
-----------
capitalized terms used herein that are
defined in the Credit Agreement shall
have the respective meanings ascribed to
such terms in the Credit Agreement.
Unless otherwise defined in this Section 1,
terms that are defined in Chapter
1308 or 1309 of the Ohio Revised Code, as
in effect from time to time, are
used herein as so defined. As used in this Agreement, the
following terms
have the following meanings:
"Collateral"
means, collectively, (i) the Pledged Securities and each
----------
addition, if any, thereto and each
substitution, if any, therefor, in whole
or in part, (ii) the certificates, if any,
representing the Pledged
Securities, and (iii) the dividends, cash,
instruments and other property
distributed in respect of and other
Proceeds of any of the foregoing.
"Credit
Agreement" means the Credit Agreement, dated as of October 24,
----------------
2005, between Pledgor and the Lender, as
the same may from time to time be
amended, restated or otherwise
modified.
"Event of
Default" has the meaning provided in Section 5(a) hereof.
----------------
"Pledged
Securities" means all of the shares of stock or other equity
------------------
interest of each Subsidiary of Pledgor
owned by Pledgor, as listed on
Schedule 1 hereto, and all additional
shares of stock or other equity
interest of each Subsidiary (including any
Subsidiary created, acquired or
held after the date hereof) of Pledgor
owned by Pledgor from time to time or
acquired by Pledgor in any manner.
<PAGE>
Section 2.
Security Interest.
Pledgor hereby grants to the Lender a
-----------------
security interest in and an assignment of
the Collateral as security for the
Obligations, whether now existing or
hereafter arising. To
the extent any of
the Pledged Securities are certificated,
Pledgor has executed appropriate
transfer powers, in substantially the form
of Exhibit A hereto, with respect
to the Pledged Securities and, concurrently
herewith, is depositing the
Pledged Securities and the aforesaid
transfer powers with the Lender. In
addition, Pledgor shall have taken all such
actions necessary to grant to the
Lender a first preferred security interest
in or pledge of such stock (or
other equity interest). Pledgor authorizes
the Lender, (a) to file UCC
financing statements, in form and substance
satisfactory to the Lender, with
respect to the Collateral and, (b) after
the occurrence of an Event of
Default, to transfer the Pledged Securities
into the name of the Lender or
the Lender's nominee, but the Lender shall
be under no duty to do so.
Notwithstanding any provision or inference
herein or elsewhere to the
contrary, (i) the Lender has no right to
vote the Pledged Securities at any
time unless and until an Event of Default
has occurred, and (ii) prior to the
occurrence of an Event of Default, Pledgor
will be permitted to receive all
dividends and other distributions with
respect to the Pledged Securities.
Section 3.
Pledgor's Representations and Warranties. Pledgor represents
----------------------------------------
and warrants to the Lender as follows:
(a) Pledgor is
the legal record and beneficial owner of, and has good
and marketable title to, the Pledged
Securities, and the Pledged Securities
are not subject to any pledge, lien,
mortgage, hypothecation, security
interest, charge, option, warrant or other
encumbrance whatsoever, nor to any
agreement purporting to grant to any third
party a security interest in the
property or assets of Pledgor that would
include such Pledged Securities,
except the security interest created by
this Agreement or otherwise securing
only the Lender;
(b) all of the
Pledged Securities have been duly authorized and validly
issued (or, to the extent not issued,
validly established) and are fully paid
and non-assessable (except for capital
calls under applicable provisions of
any Subsidiary's Organizational
Documents);
(c) Pledgor has
full power, authority and legal right to pledge all of
the Pledged Securities pursuant to the
terms of this Agreement;
(d) no consent,
license, permit, approval or authorization, filing or
declaration with any governmental
authority, domestic or foreign, and no
consent of any other Person, is required to
be obtained by Pledgor in
connection with the pledge of the Pledged
Securities hereunder, that has not
been obtained or made, and is not in full
force and effect;
(e) this
Agreement creates a valid first lien on, and a first perfected
security interest in, the Pledged
Securities and the Proceeds thereof;
(f) set forth on
Schedule 1 hereto is the number and percentage of the
outstanding shares of stock or other equity
interest of each Subsidiary of
Pledgor owned by Pledgor as of the Closing
Date;
(g) Pledgor
fully anticipates that the Obligations will be repaid
without the necessity of selling the
Pledged Securities; and
(h) Pledgor (i)
has received consideration that is the reasonable
equivalent value of the obligations and
liabilities that Pledgor has incurred
to the Lender, (ii) is not insolvent, as
defined in any applicable state or
federal statute, nor will Pledgor be
rendered insolvent by the execution and
delivery of this Agreement to the Lender,
(iii) is not engaged or about to
engage in any business or transaction for
which the assets retained by
Pledgor are or will be an unreasonably
small amount of capital, taking into
<PAGE>
consideration the obligations to the Lender
incurred hereunder, and (iv) does
not intend to incur debts beyond Pledgor's
ability to pay them as they
mature.
Section 4.
Additional Covenants of Pledgor.
-------------------------------
(a) Subject to
the rights of option holders described in subpart (b)(ii)
below, Pledgor covenants and agrees to
defend the right, title and security
interest of the Lender in and to the
Pledged Securities and the Proceeds
thereof, and to maintain and preserve the
lien and security interest provided
for by this Agreement against the claim and
demands of all Persons, so long
as this Agreement remains in effect.
(b) Pledgor
covenants and agrees not
