PLEDGE AGREEMENT
Exhibit
10.3
This
PLEDGE AGREEMENT (this “Agreement”),
effective as of the 1st
day of
January 2007 by and between THE X.X. XXXXXX COMPANY (the “Pledgor”)
and
BIOSPECIFICS TECHNOLOGIES CORP., a Delaware corporation (the “Secured
Party”).
RECITALS
WHEREAS,
the Secured Party has loaned to the general partner of the Pledgor and to
Xxxxxx
Street Corp., a New York corporation wholly-owned by Pledgor (“Pledgor
Subsidiary”),
the
aggregate principal amount of $1,016, 595 and $304,390, respectively, and
simultaneously herewith the general partner of Pledgor and Xxxxxx Street
Corp.
are delivering to the Secured Party two Promissory Notes (the “Notes”)
evidencing such loans.
WHERAS,
the Pledgor wishes to grant a first priority security interest in the Collateral
(as defined below) to Secured Party in order to secure the Notes and all
other
obligations and amounts owing at any time by Pledgor to Secured Party hereunder
(the “Secured
Obligations”).
NOW,
THEREFORE, in consideration of the premises and understandings contained
herein
and for good and valuable consideration, receipt of which is hereby
acknowledged, the parties agree as follows:
1. Pledge
Agreement.
To secure the full, prompt and complete payment and performance of the Secured
Obligations, Pledgor hereby pledges to, grants to, and creates in favor of,
Secured Party, a first priority and continuing security interest in, the
following property, whether now owned or hereafter acquired:
a. all
shares of the common stock of the Secured Party held by the Pledgor and all
certificates evidencing the same and all successor stock to said shares,
replacement stock for said shares, substituted stock for said shares or
additional shares of the Secured Party’s stock issued or transferred as a
dividend on or stock split of or otherwise received because of or in lieu
of the
ownership of said shares of common stock of the Secured Party during the
term of
this Agreement, whether the same resulted from merger, consolidation,
reorganization or otherwise;
b. any
and
all other instruments or cash or, in kind, dividends or other property which
anyone is or may hereafter become entitled to receive with respect to
replacement of, substitution for, or succession to the aforesaid
shares;
c. all
of
the rights, interests and privileges with respect to the foregoing.
All
of
the foregoing property and instruments shall be individually and collectively
hereinafter referred to as “Collateral.”
The
Collateral shall be held by the Secured Party in accordance with the terms
and
provisions contained in this Agreement.
2. Delivery
of Pledged Shares.
Contemporaneously herewith, Pledgor has delivered to Secured Party all of
the
certificates representing the Collateral, together with separate stock or
other
transfer forms duly endorsed, in blank, for the transfer of the Collateral.
If
at any time prior to the termination of this Agreement, Pledgor obtains
possession of any other certificate, document or other evidence representing
any
of the Collateral, Pledgor shall immediately deliver such certificate, document
or other evidence to the Secured Party. During such time as any such
certificate, document or other evidence representing any of the Collateral
are
in Pledgor’s possession or control, Pledgor shall hold or control such
certificate, document or other evidence in accordance with this Agreement
and
the Uniform Commercial Code in effect in the State of New York (the
“UCC”).
All
certificates, documents or other evidence delivered to Secured Party shall
be
accompanied by separate stock or other powers duly indorsed, in blank, for
transfer.
3. Voting
and Dividend Rights.
During the term of this Agreement, and until such time, if any, that there
is a
default in the payment of the Secured Obligations, and only until such default
has not been cured, the Pledgor or his assigns shall have the right to vote
the
shares now or hereafter pledged. In the event the Pledgor is in default of
any
of the Secured Obligations, then the Board of Directors of the Secured Party,
acting through its officers, in its sole and absolute discretion, shall have
the
right (but not the obligation) to vote the shares of the Secured Party’s stock
held pursuant to this escrow and exercise and receive all other rights and
privileges, including dividends, which are associated with the ownership
of such
shares. Other than as set forth above, the Pledgor shall exercise the rights
of
a stockholder of the Secured Party (or its successors).
4. Events
of Default.
Each of the following shall constitute an event of default under this agreement
so long as the event occurs or continues to occur and is not waived (each
an
“Event
of Default”):
a. There
shall be a default in the payment, when due and payable, of the Secured
Obligations; or
b. Pledgor
shall be dissolved or become insolvent, or shall make a transfer in fraud
of
creditors, or shall make any assignment for the benefit of creditors, or
shall
admit in writing his inability to pay his debts as they become due; or
c. Pledgor
shall file a petition or an answer under any title, section or chapter of
the
United States Bankruptcy Code, as amended, or under any present or future
law or
statute of the United States of America or any state or other jurisdiction
thereof relevant to bankruptcy, insolvency or other relief of debtors.
5. Remedies.
Upon the occurrence of an Event of Default as defined herein:
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a. The
Company shall have in each case all of the remedies of a secured party under
the
UCC, and, without limiting the generality of the foregoing, shall have the
right, in its sole discretion, to sell, resell, assign and deliver all or,
from
time to time, any part of the Collateral, or any interest in or option or
right
to purchase any part thereof, on any securities exchange on which the Collateral
may be listed (in the case of the shares of the Secured Party), at any private
sale or at public auction, with or without demand of performance or other
demand, advertisement or notice of the time or place of sale or adjournment
thereof or otherwise (except that the Secured Party shall give ten days’ notice
to the Pledgor of the time and place of any sale pursuant to this Section
5),
for cash, on credit or for other property, for immediate or future delivery,
and
for such price or prices and on such terms as the Secured Party shall, in
its
sole discretion, determine, the Pledgor hereby waiving and releasing any
and all
right or equity of redemption whether before or after sale hereunder. At
any
such sale the Secured Party may bid for and purchase the whole or any part
of
the Collateral so sold free from any such right or equity of
redemption.
b. The
Secured Party shall apply the proceeds of any such sale first to the payment
of
all costs and expenses, including reasonable attorney’s fees, incurred by the
Secured Party in enforcing its rights under this Agreement, and second to
the
payment of accrued and unpaid interest on and then of unpaid principal of
the
Note, and thereafter to the payment of any other Secured Obligations, and
the
Pledgor shall continue to be liable for any deficiency.
c. The
Pledgor recognizes that the Secured Party may be unable to effect a public
sale
of all or part of any shares of the Secured Party constituting part of the
Collateral by reason of certain prohibitions contained in the Securities
Act of
1933 or in the rules and regulations promulgated thereunder or in applicable
state securities or “blue sky” laws, but may be compelled to resort to one or
more private sales to a restricted group of purchasers who will be obliged
to
agree, among other things, to acquire the shares of the Secured Party
constituting part of the Collateral for their own account, for investment
and
not with a view to the distribution or resale thereof. The Pledgor agrees
that
private sales so made may be at prices and on other terms less favorable
to the
seller than if the shares of the Secured Party constituting part of the
Collateral were sold at public sale, and that the Secured Party has no
obligation to delay the sale of such shares for the period of time necessary
to
permit the registration of the shares for public sale under the Securities
Act
of 1933 and under applicable state securities or “blue sky” laws. The Pledgor
agrees that a private sale or sales made under the foregoing circumstances
shall
be deemed to have been made in a commercially reasonable manner.
d. If
any
consent, approval or authorization of any state, municipal or other governmental
department, agency or other governmental department, agency or authority
should
be necessary to effectuate any sale or disposition by the Secured Party pursuant
to this Section 5 of the Collateral, the Pledgor will execute all such
applications and other instruments as may be required in connection with
securing any such consent, approval or authorization and will otherwise use
the
Pledgor’s best efforts to secure the same.
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e. The
remedies provided in this Agreement and the Notes are cumulative and not
exclusive of any remedies provided by law. Exercise of one or more remedy(ies)
by Secured Party does not require that all or any other remedy(ies) be exercised
and does not preclude later exercise of the same remedy.
6. Transfer
by Pledgor.
The Pledgor will not sell, assign, transfer or otherwise dispose of, grant
any
option with respect to, or mortgage, pledge or otherwise encumber any of
the
Collateral or any interest therein. In the event of a sale, assignment, or
transfer, the Collateral so sold, assigned transferred or otherwise disposed
of
shall be released from the pledge hereunder and the proceeds shall be applied
as
set forth in the Note and in this Agreement.
7. Further
Assurances.
Pledgor will, at his expense and from time to time, promptly execute and
deliver
all further instruments, documents and agreements, and take all further action
that may be reasonably necessary or desirable, or that Secured Party may
reasonably request, in order to (i) continue, perfect and protect the security
interest granted or purported to be granted hereby or (ii) enable Secured
Party
to exercise and enforce its rights and remedies hereunder with respect to
any of
the Collateral, or both. Without prejudice to the generality of the foregoing,
each such instrument or document shall be in such form as Secured Party shall
reasonably request and may contain provisions such as are herein contained
or
provisions to the like effect or such other provisions of whatsoever kind
as
Secured Party shall reasonably consider requisite for the improvement (on and
subject to the terms hereof), perfection or enforcement of the security
constituted by, or pursuant to, this Agreement. If Secured Party has the
right
to exercise its right to sell all or any of the Collateral hereunder and
under
the UCC, Pledgor will, upon the request of Secured Party, at Pledgor’s expense,
do or cause to be done all such acts and things as may be reasonably necessary
or desirable, or that Secured Party may reasonably request, to make any sale
of
the Collateral or any part thereof valid and binding and in compliance with
applicable law.
8. Power
of Attorney.
Pledgor irrevocably appoints the Secured Party (and each person to whom Secured
Party shall from time to time have delegated the exercise of the power of
attorney conferred by this Section
8)
jointly
and severally to be his attorney or attorneys and in his name and otherwise
on
his behalf, provided an Event of Default which has not been waived, has occurred
and is continuing, to do all acts and things and to sign, seal, execute,
deliver, perfect and do all instruments, documents, acts and things which
may be
required (or which Secured Party shall consider requisite) for carrying out
any
obligation imposed on Pledgor by or pursuant to this Agreement (including
the
obligations of Pledgor under Section
7),
for
carrying any sale or other dealing by Secured Party into effect and generally
for enabling Secured Party to exercise the powers conferred on it by or pursuant
to this Agreement or by law. Secured Party shall have full power to delegate
the
power conferred on it by this Section
8,
but no
such delegation shall preclude the subsequent exercise of such power by Secured
Party itself or preclude Secured Party from making a subsequent delegation
thereof to some other person; any such delegation may be revoked by Secured
Party at any time.
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9. Amendment.
No amendment or modification of this Agreement or waiver of its terms shall
affect the rights and duties of a party hereto unless executed by the party
against whom enforcement is sought.
10. Severability.
If any term of this Agreement is found invalid under New York law or laws
of
mandatory application by a court of competent jurisdiction, the invalid term
will be considered excluded from this Agreement and will not invalidate the
remaining terms of this Agreement.
11. Entire
Agreement.
This Agreement and the Note set forth the entire agreement of the parties
with
respect to subject matter of this Agreement and the Note and supersedes all
previous understandings, written or oral, in respect thereof.
12. Governing
Law.
This Agreement shall be governed by and construed in accordance with the
internal laws of the New York without regard to the choice or conflict of
law
provisions contained therein.
5
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on
the date set forth below to be effective upon receipt of the Collateral by
the
Secured Party.
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SECURED
PARTY:
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By:
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/s/
Xxxxxx X. Xxxxxx
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Name:
Xxxxxx X. Xxxxxx
Title:
President
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PLEDGOR:
THE
X.X. XXXXXX COMPANY
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By:
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/s/
Xxxxx X. Xxxxxx
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Name:
Xxxxx X. Xxxxxx
Title:
General Partner
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