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STOCK PLEDGE AGREEMENT
STOCK
PLEDGE AGREEMENT ("
Agreement ")
entered into as of the 30
th day
of June 2008 by and among ___________________________ (the
“Secured Party”), and those persons identified on the
signature page hereof (each a “
Pledgor” ).
RECITALS
A.
Pledgor
has agreed to pledge certain shares as security for: (i) the
performance by Power3Medical Products, Inc. A New York
corporation of its obligations under its Series 2006 Debenture
in an aggregate face amount of Two Hundred Thousand and 00/100
Dollars ($200,000.00) payable to the Secured Party (the
“
Debenture” )
and (ii) the performance by Pledgor of its Guaranty delivered to
Secured Party of even date herewith. Capitalized terms in this
Agreement which are not identified herein will have the meanings
given such terms in the Debenture.
B.
The
Secured Party is willing to accept the Debenture from the
Company only upon receiving Pledgor’s Guaranty and
pledge of certain stock as set forth in this
Agreement.
NOW,
THEREFORE, in consideration of the premises, the mutual
covenants and conditions contained herein, and for other good
and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree
as follows:
1.
Grant of Security Interest .
Pledgor hereby pledges to the Secured Party as collateral and
security for the Secured Obligations (as defined in paragraph 2)
the securities initially set forth on the attached Schedule 1 of
this Agreement, (the “
Pledged Shares” ).
Unless otherwise set forth on Schedule 1 of this Agreement, Pledgor
is the beneficial and record owner of the Pledged Shares set forth
opposite such Pledgor ’
s
name on such Schedule. Such Pledged Shares, together with any
additions, replacements, accessions substitutes therefor, or
proceeds thereof, are hereinafter referred to collectively as the
“
Collateral .”
Market
Value means the average closing bid price for the ten trading days
prior to the date on which the Collateral is valued for purposes of
this Section 1.
2.
Secured Obligations .
During the term hereof, the Collateral shall secure the
following:
a.
The
performance by the Company of its obligations, covenants, and
agreements under the Debenture.
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b.
The performance by the Pledgor of its obligations, covenants, and
agreements under the Guaranty.
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The
obligations, covenants and agreements described in clause (a)
and (b) are the “Secured
Obligations.”
3.
Perfection of Security Interests .
(a) Upon execution of this Agreement by each Pledgor, such Pledgor
shall deliver the Pledge Shares, together with Stock Powers (with
Medallion Guarantees annexed).
(b)
The
Company and each Pledgor will, at its expense, cause to be
searched the public records with respect to the Collateral and
will execute, deliver, file and record (in such manner and
form as each Secured Party may require), or permit each
Secured Party to file and record, as its attorney in fact, any
financing statements, any carbon, photographic or other
reproduction of a financing statement or this Agreement (which
shall be sufficient as a financing statement hereunder), any
specific assignments or other paper that may be reasonably
necessary or desirable, or that such Secured Party may
request, in order to create, preserve, perfect or validate any
Security Interest or to enable such Secured Party to exercise
and enforce its rights hereunder with respect to any of the
Collateral. The Company and each of the Pledgor hereby
appoints each Secured Party as the Company's or such
Pledgor’s attorney-in-fact to execute in the name and
behalf of the Company or such Pledgor, as the case may be,
such additional financing statements as such Secured Party may
request.
4.
Assignment .
In connection with the transfer of the Debenture in accordance with
their terms, a Secured Party may assign or transfer the whole or
any part of its security interest granted hereunder, and may
transfer as collateral security the whole or any part of Secured
Party's security interest in the Collateral. Any transferee of the
Collateral shall be vested with all of the rights and powers of
Secured Party hereunder with respect to the
Collateral.
5.
Pledgor’s Warranty .
(A) Title. Pledgor represents and warrants hereby to the Secured
Party as follows with respect to the Pledged Shares set forth
opposite such Pledgor’s name on Schedule 1 to this
Agreement:
(i)
that the Collateral is free and clear of any encumbrances of
every nature whatsoever, and such Pledgor is the sole owner of
the Pledged Shares;
(ii)
Such Pledgor further agree not to grant or create, any
security interest, claim, lien, pledge or other encumbrance
with respect to such Collateral or attempt to sell, transfer
or otherwise dispose of the Collateral, until the Secured
Obligations have been paid in full or this Agreement
terminates; and
(iii)
this
Agreement constitutes a legal, valid and binding obligation of
such Pledgor enforceable in accordance with its terms (except
as the enforcement thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium,
and similar laws, now or hereafter in effect),
B.
Other:
(i)
Pledgor has made necessary inquiries of the Company and
believes that the Company fully intends to fulfill and has the
capability of fulfilling the Secured Obligations to be
performed by the Company in accordance with the terms of the
Debentures.
(ii)
The
Pledgor is not acting, and has not agreed to act, in any plan
to sell or dispose of any Shares in a manner intended to
circumvent the registration requirements of the Securities Act
of 1933, as amended, or any applicable state law.
(iii)
Pledgor
has been advised by counsel of the elements of a bona-fide
pledge for purposes of Rule 144(d)(3)(iv) under the Securities
Act of 1933, as amended, including the relevant SEC
interpretations and affirm the pledge of shares by each of the
undersigned pursuant to this Pledge Agreement will constitute
a bona-fide pledge of such shares for purposes of such
Rule.
6.
Collection of Dividends and Interest .
During the term of this Agreement and so long as Pledgor is not in
default under the Debentures, Pledgor is authorized to collect all
dividends, distributions, interest payments, and other amounts that
may be, or may become, due on any of the Collateral.
7.
Voting Rights .
During the term of this Agreement and until such time as this
Agreement has terminated or Secured Party has exercised its rights
under this Agreement to foreclose its security interest in the
Collateral, Pledgor shall have the right to exercise any voting
rights evidenced by, or relating to, the Collateral.
8.
Warrants and Options. In
the event that, during the term of this Agreement, subscription,
spin-off, warrants, dividends, or any other rights or option shall
be issued in connection with the Collateral, such warrants,
dividends, rights and options shall be immediately delivered to
Secured Party to be held under the terms hereof in the same manner
as the Collateral.
9.
Preservation of the Value of the Collateral .
Pledgor shall pay all taxes, charges, and assessments against the
Collateral and do all acts necessary to preserve and maintain the
value thereof.
10.
Secured Party as Pledgor's Attorney-in-Fact .
(a)
Pledgor
hereby irrevocably appoints Secured Party as Pledgor's
attorney-in-fact, with full authority in the place and stead
of Pledgor and in the name of Pledgor, Secured Party or
otherwise, from time to time at Secured Party's discretion, to
take any action and to execute any instrument that Secured
Party may reasonably deem necessary or advisable to accomplish
the purposes of this Agreement, including: (i) upon the
occurrence and during the continuance of an Event of Default,
to receive, indorse, and collect all instruments made payable
to Pledgor representing any dividend, interest payment or
other distribution in respect of the Collateral or any part
thereof to the extent permitted hereunder and to give full
discharge for the same and to execute and file governmental
notifications and reporting forms; (ii) to arrange for the
transfer of the Collateral on the books of any of the Company
or any other Person to the name of Secured Party or to the
name of Secured Party's nominee.
(b)
In
addition to the designation of Secured Party as Pledgor's
attorney-in-fact in subsection (a), Pledgor hereby irrevocably
appoints Secured Party as Pledgor's agent and attorney-in-fact
to make, execute and deliver any and all documents and
writings which may be necessary or appropriate for approval
of, or be required by, any regulatory authority located in any
city, county, state or country where Pledgor or any of the
Company engage in business, in order to transfer or to more
effectively transfer any of the Pledged Interests or otherwise
enforce Secured Party's rights hereunder.
11.
Remedies upon Default .
Upon
the occurrence and during the continuance of an Event of
Default under the Debenture and/or the Guaranty “Event
of Default”):
(a)
Secured
Party may exercise in respect of the Collateral, in addition
to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured
party on default under the Code (irrespective of whether the
Code applies to the affected items of Collateral), and Secured
Party may also without notice (except as specified below) sell
the Collateral or any part thereof in one or more parcels at
public or private sale, at any exchange, broker's board or at
any of Secured Party's offices or elsewhere, for cash, on
credit or for future delivery, at such time or times and at
such price or prices and upon such other terms as Secured
Party may deem commercially reasonable, irrespective of the
impact of any such sales on the market price of the
Collateral. To the maximum extent permitted by applicable law,
Secured Party may be the purchaser of any or all of the
Collateral at any such sale and shall be entitled, for the
purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Collateral sold
at any such public sale, to use and apply all or any part of
the Secured Obligations as a credit on account of the purchase
price of any Collateral payable at such sale. Each purchaser
at any such sale shall hold the property sold absolutely free
from any claim or right on the part of Pledgor, and Pledgor
hereby waives (to the extent permitted by law) all rights of
redemption, stay, or appraisal that it now has or may at any
time in the future have under any rule of law or statute now
existing or hereafter enacted. Pledgor agrees that, to the
extent notice of sale shall be required by law, at least ten
(10) calendar days notice to Pledgor of the time and place of
any public sale or the time after which a private sale is to
be made shall constitute reasonable notification. Secured
Party shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. Secured Party
may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and
place to which it was so adjourned. To the maximum extent
permitted by law, Pledgor hereby waives any claims against
Secured Party arising because the price at which any
Collateral may have been sold at such a private sale was less
than the price that might have been obtained at a public sale,
even if Secured Party accepts the first offer received and
does not offer such Collateral to more than one
offeree.
(b)
Pledgor
hereby agrees that any sale or other disposition of the
Collateral conducted in conformity with reasonable commercial
practices of banks, insurance companies, or other financial
institutions in the city and state where Secured Party is
located in disposing of property similar to the Collateral
shall be deemed to be commercially reasonable.
(c)
Pledgor
hereby acknowledges that the sale by Secured Party of any
Collateral pursuant to the terms hereof in compliance with the
Securities Act of 1933 as now in effect or as hereafter
amended, or any similar statute hereafter adopted with similar
purpose or effect (the "Securities Act"), as well as
applicable "Blue Sky" or other state securities laws, may
require strict limitations as to
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