THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL
OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED.
US
$575,000
________________________________________
SECURED ORIGINAL ISSUE DISCOUNT
PROMISSORY NOTE
DUE JUNE 17, 2009
FOR VALUE RECEIVED, BEYOND COMMERCE, INC., a
corporation organized and existing under the laws of the State of
Nevada (the “Company”), promises to pay to
OMNIRELIANT HOLDINGS, INC. , the registered holder hereof
(the “Holder”), the principal sum of Five Hundred and
Seventy Five Thousand and 00/100 Dollars (US
$575,000) on the Maturity Date (as defined below) , forty-five
days from June 17, 2009, the date of initial issuance of this Note
(the “Issue Date”).
This Note is being issued pursuant to the terms
of the Purchase Agreement, dated as of June 17, 2009 (the
“Purchase Agreement”), to which the Company and the
Holder (or the Holder’s predecessor in interest) are
parties. Capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Purchase
Agreement.
This Note is
subject to the following additional provisions:
1. The
term “Maturity Date” means August 1, 2009.
2. (i) This
Note may be prepaid in whole or in part at any time prior to the
Maturity Date, without penalty. Any payment shall be
applied as provided in Section 3.
(ii)
TIME IS OF THE ESSENCE WITH RESPECT TO ANY PAYMENT DUE
HEREUNDER. The Company shall be in default
hereunder if any payment is not made in a timely manner, without
any right to cure unless such right to cure is granted by the
Holder in each instance; provided, however, that the grant of such
right is in the sole discretion of the Holder and may be withheld
for any reason or for no reason whatsoever.
(iii) If,
at the end of any Trading Day, the value of the Pledged Shares
(using the closing price of the Common Stock on the Principal
Trading Market on such day) is less than 300% of the aggregate
principal amount outstanding on the Note, then the Company shall
within three Trading Days either (i) pay to the Purchaser an amount
sufficient to reduce the outstanding principal amount on the Note
or (ii) provide the Purchaser a first priority perfected security
interest in additional collateral (which may include additional
shares of common stock of the Company or other collateral
acceptable to Purchaser in its sole discretion) such that the value
of the Pledged Shares (plus the value of any additional collateral
delivered to the Purchaser) is at least 300% of the aggregate
principal amount outstanding on the Note.
3. Any
payment made on account of the Note shall be applied to the
principal of this Note.
4. All
payments contemplated hereby to be made “in cash” shall
be made in immediately available good funds of United States of
America currency by wire transfer to an account designated in
writing by the Holder to the Company (which account may be changed
by notice similarly given). For purposes of this Note,
the phrase “date of payment” means the date good funds
are received in the account designated by the notice which is then
currently effective.
5. Subject
to the terms of the Purchase Agreement, no provision of this Note
shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, and interest
on, this Note at the time, place, and rate, and in the coin or
currency, as herein prescribed. This Note is direct
obligations of the Company.
6. The
obligations of the Company under this Note are secured by the
pledge of certain common stock of the Company. The stock
is pledged to the Holder under the terms of the Pledge Agreements,
to which the Holder and the Pledgors are parties. If the
Holder forecloses on any of the Pledged Shares, the obligations of
the Company will be reduced only to the extent of the proceeds
actually realized from such foreclosure, in the priority specified
in Section 3 hereof.
a) Voluntary
Conversion . At any time after the Original Issue Date until
this Note is no longer outstanding, this Note shall be convertible
into shares of Common Stock at the option of the Holder, in whole
or in part at any time and from time to time (subject to the
limitations on conversion set forth in Section 7(d)
hereof). The Holder shall effect conversions by
delivering to the Company the form of Notice of Conversion attached
hereto (a “Notice of Conversion”), specifying therein
the principal amount of Notes to be converted and the date on which
such conversion is to be effected (a “Conversion
Date”). If no Conversion Date is specified in a
Notice of Conversion, the Conversion Date shall be the date that
such Notice of Conversion is provided hereunder. To
effect conversions hereunder, the Holder shall not be required to
physically surrender Notes to the Company unless the entire
principal amount of this Note plus all accrued and unpaid interest
thereon has been so converted. Conversions hereunder shall have the
effect of lowering the outstanding principal amount of this Note in
an amount equal to the applicable conversion. The Holder
and the Company shall maintain records showing the principal amount
converted and the date of such conversions. The Company
shall deliver any objection to any Notice of Conversion within 3
Business Days of receipt of such notice. In the event of
any dispute or discrepancy, the records of the Holder shall be
controlling and determinative in the absence of manifest error. The
Holder and any assignee, by acceptance of this Note, acknowledge
and agree that, by reason of the provisions of this paragraph,
following conversion of a portion of this Note, the unpaid and
unconverted principal amount of this Note may be less than the
amount stated on the face hereof. However, at the
Company’s request, the Holder shall surrender the Note to the
Company within five (5) Trading Days following such request so that
a new Note reflecting the correct principal amount may be issued to
Holder.
b) Conversion
Price . Subject to adjustment as provided for
in Section 8, the initial conversion price in effect on any
Conversion Date shall be $0.70.
d) Conversion
Limitations ; Holder’s Restriction on Conversion .
The Company shall not effect any conversion of this Note, and the
Holder shall not have the right to convert any portion of this
Note, pursuant to Section 7(a) or otherwise, to the extent that
after giving effect to such conversion, the Holder (together with
the Holder’s affiliates), as set forth on the applicable
Notice of Conversion, would beneficially own in excess of 4.99% of
the number of shares of the Common Stock outstanding immediately
after giving effect to such conversion. For purposes of the
foregoing sentence, the number of shares of Common Stock
beneficially owned by the Holder and its affiliates shall include
the number of shares of Common Stock issuable upon conversion of
this Note with respect to which the determination of such sentence
is being made, but shall exclude the number of shares of Common
Stock which would be issuable upon (A) conversion of the remaining,
nonconverted portion of this Note beneficially owned by the Holder
or any of its affiliates and (B) exercise or conversion of the
unexercised or nonconverted portion of any other securities of the
Company (including, without limitation, any other Notes or the
Warrants) subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by
the Holder or any of its affiliates. Except as set forth in
the preceding sentence, for purposes of this Section 7(d),
beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act. To the extent that the
limitation contained in this section applies, the determination of
whether this Note is convertible (in relation to other securities
owned by the Holder) and of which a portion of this Note is
convertible shall be in the sole discretion of such Holder. To
ensure compliance with this restriction, the Holder will be deemed
to represent to the Company each time it delivers a Notice of
Conversion that such Notice of Conversion has not violated the
restrictions set forth in this paragraph and the Company shall have
no obligation to verify or confirm the accuracy of such
determination. For purposes of this Section 7(d), in
determining the number of outstanding shares of Common Stock, the
Holder may rely on the number of outstanding shares of Common Stock
as reflected in (x) the Company’s most recent Form 10-QSB or
Form 10-KSB (or such related form), as the case may be, (y) a more
recent public announcement by the Company or (z) any other notice
by the Company or the Company’s Transfer Agent setting forth
the number of shares of Common Stock outstanding. Upon the
written or oral request of the Holder, the Company shall within two
Trading Days confirm orally and in writing to the Holder the number
of shares of Common Stock then outstanding. In any case, the
number of outstanding shares of Common Stock shall be determined
after giving effect to the conversion or exercise of securities of
the Company, including this Note, by the Holder or its affiliates
since the date as of which such number of outstanding shares of
Common Stock was reported. The provisions of this
Section 7(d) may be waived by the Holder upon, at the election of
the Holder, not less than 61 days’ prior notice to the
Company, and the provisions of this Section 7(d) shall continue to
apply until such 61st day (or such later date, as determined by the
Holder, as may be specified in such notice of waiver).
e) Mechanics of
Conversion
i. Conversion
Shares Issuable Upon Conversion of Principal Amount
. The number of shares of Common Stock issuable upon a
conversion hereunder shall be determined by the quotient obtained
by dividing (x) the outstanding principal amount of this Note to be
converted by (y) the Conversion Price.
ii. Delivery of
Certificate Upon Conversion . Not later than three Trading Days
after any Conversion Date, the Company will deliver to the Holder
(A) a certificate or certificates representing the Conversion
Shares which shall be free of restrictive legends and trading
restrictions (other than those required by the Purchase Agreement)
representing the number of shares of Common Stock being acquired
upon the conversion of Notes (including, if so timely elected by
the Company, shares of Common Stock representing the payment of
accrued interest) and (B) a bank check in the amount of accrued and
unpaid interest (if the Company is required to pay accrued interest
in cash). The Company shall, if available and if allowed under
applicable securities laws, use its best efforts to deliver any
certificate or certificates required to be delivered by the Company
under this Section electronically through the Depository Trust
Corporation or another established clearing corporation performing
similar functions.
iii. Failure to
Deliver Certificates . If in the case of any Notice
of Conversion such certificate or certificates are not delivered to
or as directed by the applicable Holder by the third Trading Day
after a Conversion Date, the Holder shall be entitled by written
notice to the Company at any time on or before its receipt of such
certificate or certificates thereafter, to rescind such conversion,
in which event the Company shall immediately return the
certificates representing the principal amount of Notes tendered
for conversion.
iv. Obligation
Absolute; Partial Liquidated Damages . If the Company
fails for any reason to deliver to the Holder such certificate or
certificates pursuant to Section 7(d)(ii) by the third Trading Day
after the Conversion Date, the Company shall pay to such Holder, in
cash, as liquidated damages and not as a penalty, for each $1,000
of principal amount being converted, $10 per Trading Day
(increasing to $20 per Trading Day after 5 Trading Days after such
damages begin to accrue) for each Trading Day after such third
Trading Day until such certificates are delivered. The
Company’s obligations to issue and deliver the Conversion
Shares upon conversion of this Note in accordance with the terms
hereof are absolute and unconditional, irrespective of any action
or inaction by the Holder to enforce the same, any waiver or
consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or
any setoff, counterclaim, recoupment, limitation or termination, or
any breach or alleged breach by the Holder or any other Person of
any obligation to the Company or any violation or alleged violation
of law by the Holder or any other person, and irrespective of any
other circumstance which might otherwise limit such obligation of
the Company to the Holder in connection with the issuance of such
Conversion Shares; provided , however , such delivery
shall not operate as a waiver by the Company of any such action the
Company may have against the Holder. In the event a
Holder of this Note shall elect to convert any or all of the
outstanding principal amount hereof, the Company may not refuse
conversion based on any claim that the Holder or any one associated
or affiliated with the Holder of has been engaged in any violation
of law, agreement or for any other reason, unless, an injunction
from a court, on notice, restraining and or enjoining conversion of
all or part of this Note shall have been sought and obtained and
the Company posts a surety bond for the benefit of the Holder in
the amount of 150% of the principal amount of this Note
outstanding, which is subject to the injunction, which bond shall
remain in effect until the completion of arbitration/litigation of
the dispute and the proceeds of which shall be payable to such
Holder to the extent it obtains judgment. In the absence
of an injunction precluding the same, the Company shall issue
Conversion Shares or, if applicable, cash, upon a properly noticed
conversion. Nothing herein shall limit a Holder’s
right to pursue actual damages or declare an Event of Default
pursuant to Section 9 herein for the Company’s failure to
deliver Conversion Shares within the period specified herein and
such Holder shall have the right to pursue all remedies available
to it at law or in equity including, without limitation, a decree
of specific performance and/or injunctive relief. The
exercise of any such rights shall not prohibit the Holders from
seeking to enforce damages pursuant to any other Section hereof or
under applicable law.
v. Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon
Conversion . In addition to any other rights available to the
Holder, if the Company fails for any reason to deliver to the
Holder such certificate or certificates pursuant to Section
7(d)(ii) by the third Trading Day after the Conversion Date, and if
after such third Trading Day the Holder is required by its
brokerage firm to purchase (in an open market transaction or
otherwise) Common Stock to deliver in satisfaction of a sale by
such Holder of the Conversion Shares which the Holder anticipated
receiving upon such conversion (a “Buy-In”), then the
Company shall (A) pay in cash to the Holder (in addition
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