EXHIBIT 10.10
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PLEDGE AGREEMENT
PLEDGE AGREEMENT made as June 4, 2002, by and between Xxx X. Xxxxxxxxx,
a Massachusetts resident ("Xxxxxxxxx"), and Gemstone Investment Company, Inc.
("Secured Party").
IN CONSIDERATION OF A LOAN TO BE MADE BY THE SECURED PARTY IN FAVOR OF
LOCATEPLUS HOLDINGS CORPORATION (THE "BORROWER"), OF WHICH XXXXXXXXX HOLDS A
MAJORITY OF THE VOTING CAPITAL STOCK, AND FOR OTHER CONSIDERATION, THE RECEIPT
AND SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, ALL AS PROVIDED IN A CERTAIN
LOAN AGREEMENT OF EVEN DATE HEREWITH (ANY SUCH AGREEMENT OR NOTE IN EFFECT FROM
TIME TO TIME BEING HEREINAFTER REFERRED TO AS THE "LOAN AGREEMENT"), IT IS
HEREBY AGREED AS FOLLOWS:
SECTION 1. GRANT OF SECURITY INTEREST. As security for all obligations
of the Borrower to the Secured Party described in Section 2 below, Xxxxxxxxx
hereby delivers and pledges to the Secured Party, and grants to the Secured
Party a security interest in and lien on 5,000,000 shares of Xxxxxxxxx'x Class A
Voting Common Stock, par value $.01 (the "Class A Shares"), together with all
dividends, interest, distributions, accessions, additions and substitutions
therefor, thereto or thereon and the proceeds and products of all the foregoing
(collectively, the "Collateral"). All stock certificates included in the
Collateral have been duly endorsed or are or will be accompanied by stock powers
duly executed in blank by Xxxxxxxxx as the registered owner of such stock
certificates.
SECTION 2. OBLIGATIONS SECURED. The Collateral from time to time held
hereunder shall secure the payment and performance of all liabilities and
obligations of Borrower to Secured Party, whether such liabilities and
obligations be direct or indirect, absolute or contingent, secured or unsecured,
due or to become due, primary or secondary, now existing or hereafter arising or
acquired, whether or not arising under this Agreement or evidenced by any
writing, including the obligations of the Borrower under the Loan Agreement
(collectively, the "Obligations").
SECTION 3. REPRESENTATIONS AND WARRANTIES. Xxxxxxxxx hereby represents
and warrants to the Secured Party that:
(A) Xxxxxxxxx is the legal and beneficial owner of and has
good title to all of the Collateral, free and clear of any claim,
mortgage, pledge, lien, security interest or other encumbrance of any
nature whatsoever, except to or in favor of the Secured Party
hereunder; and
(B) As to any Collateral consisting of shares of stock (the
"Pledged Shares"), Xxxxxxxxx is the record owner thereof, and all of
such shares have been duly and validly issued and are fully paid and
non-assessable and any such registered bonds have been duly and validly
issued.
SECTION 4. ISSUANCE OR SALE OF COLLATERAL. Xxxxxxxxx hereby covenants
and agrees that, except as consented to by the Secured Party in writing,
Xxxxxxxxx will not directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of the Collateral or any interest therein; and
SECTION 5. VOTING RIGHTS OF XXXXXXXXX. Provided that no Event of
Default (as defined in Section 3 of the Loan Agreement) shall have occurred and
be continuing, for so long as Xxxxxxxxx shall be the record owner of the
Collateral, he shall be entitled, to
the extent permitted by applicable law, to exercise voting power with respect to
any Pledged Shares; PROVIDED, HOWEVER, that in no event shall he exercise such
voting power in any manner contrary to or inconsistent with the terms hereof or
with the terms of the Loan Agreement.
SECTION 6. DISTRIBUTION ON LIQUIDATION, STOCK DIVIDENDS, ETC. In the
event that the Secured Party is dissolved, wound up, liquidated or reorganized,
whether in bankruptcy, insolvency or receivership proceedings, or upon an
assignment by Secured Party for the benefit of creditors, any sum to be paid or
any property to be distributed upon or with respect to any Collateral shall be
paid over to the Secured Party to be held by it as collateral security for the
Obligations. In the event that any stock dividend shall be declared on any of
the Collateral, or any shares of stock or fractions thereof shall be issued
pursuant to any stock split involving any of such stock, or any property of any
kind shall be distributed upon or with respect to any of such stock pursuant to
any recapitalization, reclassification, merger, consolidation, or reorganization
of the capital of the issuing corporation, the shares or other property so
distributed shall be delivered to the Secured Party, to be held by the Secured
Party as part of the Collateral.
SECTION 7. DIVIDENDS, VOTING RIGHTS, ETC. ON DEFAULT. If an Event of
Default shall occur and be continuing, the Secured Party, for so long as said
Event of Default shall continue to exist, shall be entitled to receive and
retain as collateral security for the Obligations any and all dividends and
other distributions at any time and from time to time declared upon or paid with
respect to any of the Collateral and to exercise any and all voting rights and
all rights of payment, conversion, exchange, subscription or any other rights,
privileges or options pertaining to the Collateral as if the Secured Party were
the absolute owner thereof, including, without limitation, the right to
exchange, at the discretion of the Secured Party any and all of the Collateral
upon any merger, consolidation, reorganization, recapitalization or other
readjustment of the issuing corporation, and upon the exercise of any such
right, privilege or option pertaining to the Collateral, to deposit and deliver
any and all of the Collateral with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as the
Secured Party may determine, all without liability except to account for
property actually received by the Secured Party; PROVIDED, HOWEVER, that the
Secured Party shall have no duty to Xxxxxxxxx to exercise any of the aforesaid
rights, privileges or options and shall not be responsible for any failure or
delay with respect to the exercise of any such rights, privileges or options.
SECTION 8. DEFAULT. If an Event of Default shall occur, then, upon the
occurrence of any such Event of Default or at any time or times thereafter,
unless such Event of Default shall have been waived in writing by the Secured
Party, the Secured Party shall have all of the rights and remedies of a secured
party under the Uniform Commercial Code of Massachusetts and shall have full
power and authority to sell or otherwise dispose of the Collateral or any part
thereof, and to vote the Pledged Shares with respect to any and all matters. Any
such sale or other disposition, subject to the provisions of applicable law, may
be by public or private proceedings and may be made by one or more contracts, as
a unit or in parcels, at such time and place, by such method, in such manner and
on such terms as the Secured Party may determine. Except as required by law,
such sale or other disposition may be made without advertisement or notice of
any kind or to any person. Where reasonable notification of the time or place of
such sale or other disposition is required by law, such requirement shall have
been met if such notice is telegraphed, cabled or mailed, postage prepaid, at
least five days before the time of such sale or other disposition to each person
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entitled thereto at each such person's address (which in the case of Xxxxxxxxx
is as specified in Section 15 below). The Secured Party or any other holder of
the Obligations may buy any or all Collateral so purchased shall be held by the
purchaser absolutely free from any claims or rights of whatsoever kind or
nature, including any equity of redemption or any similar rights, all such
equity of redemption any similar rights being hereby expressly waived and
released by Xxxxxxxxx to the extent permitted by applicable law. In the event
any consent, approval or authorization of any governmental agency shall be
necessary to effectuate any such sale or sales, Xxxxxxxxx shall execute, as
necessary, all applications or other instruments as may be required. After
deducting all reasonable costs and expenses of collection, custody, sale or
other disposition or delivery (including legal costs and reasonable attorneys'
fees) and all other charges due with respect to the Collateral (including any
charges of the type described in Section 10 below), the residue of the proceeds
of any such sale or other disposition shall be applied to the payment of the
Obligations in such order of priorities as is determined at the time by the
Secured Party except as otherwise required by law or directed by any court
purporting to have jurisdiction thereof, and any surplus shall be returned to
Xxxxxxxxx, except as otherwise provided by law. Xxxxxxxxx shall be liable for
any deficiency.
XXXXXXXXX RECOGNIZES IT MAY NOT BE POSSIBLE OR FEASIBLE FOR SECURED PARTY TO
EFFECT A PUBLIC SALE OF ALL OR A PART OF THE COLLATERAL BY REASON OF RULE 144
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
SECURITIES LAWS, AND THAT SECURED PARTY 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 SUCH COLLATERAL FOR THEIR OWN ACCOUNT FOR
INVESTMENT AND NOT WITH A VIEW TO THE DISTRIBUTION OR RESALE THEREOF. XXXXXXXXX
AGREES THAT PRIVATE SALES SO MADE MAY BE AT A PRICE AND ON OTHER TERMS LESS
FAVORABLE TO THE SELLER THAN IF SUCH COLLATERAL WERE SOLD AT PUBLIC SALES, AND
THAT THE SECURED PARTY HAS NO OBLIGATION TO DELAY THE SALE OF ANY SUCH
COLLATERAL FOR THE PERIOD OF TIME NECESSARY TO PERMIT THE SAME TO BE REGISTERED
FOR PUBLIC SALE UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE
SECURITIES LAWS. XXXXXXXXX FURTHER AGREES THAT SALES MADE UNDER THE FOREGOING
CIRCUMSTANCES SHALL NOT BE DEEMED TO HAVE BEEN MADE IN A COMMERCIALLY
UNREASONABLE MANNER BY VIRTUE OF ANY SALE BEING MADE ON TERMS LESS FAVORABLE TO
THE SELLER THAN A PUBLIC SALE DUE TO THE PRIVATE NATURE OF THE SALE. Subject to
the foregoing, the Secured Party agrees that any sale of the Collateral made by
the Secured Party shall be made in a commercially reasonable manner.
SECTION 9. TRANSFER OF PLEDGED STOCK AND OTHER COLLATERAL. Xxxxxxxxx
hereby irrevocably appoints the Secured Party as agent of Xxxxxxxxx to arrange
for any and all transfers of the Collateral as the Secured Party may from time
to time deem advisable to assist the Secured Party in obtaining the benefit of
the Secured Party's security interest therein, including, but not limited to,
the transfer of the Collateral into the name of the Secured Party or its nominee
at any time, the foregoing appointment being deemed a power coupled with an
interest.
SECTION 10. PAYMENT OF TAXES, CHARGES, ETC. The Secured Party, at its
option, may discharge any taxes, charges, assessments, security interests, liens
or other encumbrances upon the Collateral and otherwise take such actions and
incur or pay such expenses as Secured Party deems necessary or advisable to
protect the value of the Collateral. Any such expenditures incurred by the
Secured Party shall bear interest at a rate per annum which shall at all times
be equal to the 10% per annum from the date incurred to the date of payment, and
shall be secured by the Collateral.
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SECTION 11. DUTIES WITH RESPECT TO COLLATERAL. The Secured Party shall
have no duty to Xxxxxxxxx with respect to the Collateral other than the duty to
use reasonable care in the safe custody of any Collateral in its possession.
Without limiting the generality of the foregoing, the Secured Party, although it
may do so at its option, shall be under no obligation to Xxxxxxxxx to take any
steps necessary to preserve rights in the Collateral against other parties.
SECTION 12. SECURED PARTY'S RIGHTS AND REMEDIES NOT EXCLUSIVE. All of
the Secured Party's rights and remedies on the Obligations or the Collateral,
whether evidenced hereby or by any other agreement, instrument or paper, shall
be cumulative and may be exercised singly or concurrently, and nothing herein
shall be deemed to limit in any way any rights the Secured Party might otherwise
have under any other instrumentor by law, including, without limiting the
generality thereof, the right to negotiate any note or other instrument together
with any collateral specifically described therein.
SECTION 13. WAIVERS BY XXXXXXXXX. Xxxxxxxxx (A) waives presentment,
notice, protest, notice of acceptance of this Agreement, notice of any loans
made, extensions granted, collateral received or delivered or other action taken
in reliance hereon and all demands and notices of every kind in connection with
the delivery, acceptance, performance, default or enforcement of this Agreement,
the Collateral or the Obligations, including without limitation any and all
rights to judicial hearing in advance of the enforcement of any of the Secured
Party's rights hereunder, (B) assents to any one or more renewals, extensions or
postponements of the time of payment of any of the Obligations or any other
indulgence with respect thereto, to any acquisition, substitution, exchange or
release of collateral therefor and to the addition or release of any person
primarily or secondarily liable thereon, to the acceptance of partial payment
and the settlement, compromise, adjustment or discharge of any thereof, all in
such manner and at such time or times as Secured Party may deem advisable, (C)
agrees to the provisions of any instrument, security or other writing evidencing
any of the Obligations, and (D) shall not assert any right arising from the
discharge of any of the Obligations through realization upon Collateral or from
other payment or performance hereunder until all of the Obligations shall have
been paid, performed and fulfilled.
SECTION 14. TERMINATION. The Obligations of Xxxxxxxxx under this
Agreement shall continue regardless of any reduction or increase in the
Obligations until all Collateral has been either applied thereto or returned to
Xxxxxxxxx. The Secured Party shall, upon written request therefor by Xxxxxxxxx,
return the Collateral to Xxxxxxxxx at any time after the payment in full of all
Obligations.
SECTION 15. NOTICES. All notices and other communications hereunder
shall be deemed to have been sufficiently given when mailed, postage prepaid by
certified or registered mail, return receipt requested,
if to the Secured Party, to: [_____________________]
if to Xxxxxxxxx, to: Xxx X. Xxxxxxxxx
c/o LocatePLUS Holdings Corporation
000 Xxxxxxxx Xxxxxx
Xxxxx 000X
Xxxxxxx, Xxxxxxxxxxxxx 00000
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or at such other address as the party to whom such notice or demand is directed
may have designated in writing to the other party hereto in the manner provided
above.
SECTION 16. RIGHTS, AMENDMENTS AND WAIVERS. No course of dealing
between Xxxxxxxxx and the Secured Party, nor any delay in exercising, on the
part of the Secured Party, any right, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege. Secured Party may exercise its rights with respect to
the Collateral without resorting or regard to other collateral or sources of
reimbursement for the Obligations. No amendment, modification, consent or waiver
of any provision of this Agreement or of any of the rights of Secured Party
hereunder or with respect to the Obligations or the Collateral shall be
effective unless in a writing executed by Secured Party, and then such
amendment, modification, consent or waiver shall be effective only in the
specific instance and for the purpose for which given. No notice or demand on
Xxxxxxxxx in any case shall entitle Xxxxxxxxx to any other or further notice or
demand in similar or other circumstances, or constitute a waiver of any right of
Secured Party to take action without notice or demand. To the extent permitted
by applicable law, Xxxxxxxxx waives its right to trial by jury with respect to
this Agreement and all rights to require Secured Party to elect among any of its
remedies with respect to this Agreement or any other collateral for or sources
of payment of the Obligations.
SECTION 17. CONSENT TO JURISDICTION; GOVERNING LAW; MISCELLANEOUS.
Xxxxxxxxx hereby submits to the jurisdiction of the courts of the Commonwealth
of Massachusetts and the United States District Court for the District of
Massachusetts, as well as to the jurisdiction of all courts to which an appeal
may be taken or other review sought from the aforesaid courts, for the purpose
of any suit, action or other proceeding arising out of any of Xxxxxxxxx'x
obligations under or with respect to this Agreement, expressly waives any and
all objections it may have as to venue in any of such courts, and agrees that
service of process may be made by mailing a copy of the summons to Xxxxxxxxx at
its address as set forth in Section 15 of this Agreement. Whenever possible each
provision of this Agreement shall be interpreted in such manner as to be
effective, valid and enforceable under applicable law. The provisions of this
Agreement are severable, however, and if any of the provisions of this Agreement
shall be held by any court of competent jurisdiction to be unenforceable, such
holding shall not affect or impair any other provision hereof or, to the extent
not invalidated, the effect of aid unenforceable provisions in other
jurisdictions. This Agreement shall take effect as a sealed instrument and inure
to the benefit of the Secured Party and its successors and assigns and shall be
binding upon Xxxxxxxxx and the heirs, executors, administrators, other legal
representatives, successors and assigns of Xxxxxxxxx. This Agreement and all the
rights and remedies of the Secured Party and Xxxxxxxxx shall be determined as to
their validity, construction, effect and enforcement by the laws of the
Commonwealth of Massachusetts, notwithstanding Massachusetts' choice of law
rules to the contrary.
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IN WITNESS WHEREOF, Xxxxxxxxx has caused this Pledge Agreement to be duly
executed as of the date first set forth above.
/s/ Xxx X. Xxxxxxxxx
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Xxx X. Xxxxxxxxx, individually
ACCEPTED:
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