SECURITY INTEREST AND PLEDGE
AGREEMENT
SECURITY INTEREST AND PLEDGE AGREEMENT
(“Pledge Agreement”) dated as of May 20, 2009, by and
among Linlithgow Holdings LLC (“Secured Party”), Beyond
Commerce, Inc., a Nevada corporation with its principal business
address at 9029 Pecos Road, Suite 2800, Henderson, NV 89074 (the
“Company” or the “Debtor”), and Beyond
Commerce, Inc., as pledgor, (the “Pledgor”)
RECITALS
A. Reference
is made to (i) that certain Note of even date herewith (the
“Note”), which the Company issued to the Secured Party
are parties. Capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in the
Note.
B. Pursuant
to the Note, the Debtor has certain obligations to the Secured
Party (all such obligations, the “Obligations”),
including, but not limited to, obligations to pay principal and
interest of the Note, which was issued in the original aggregate
principal amount of $1,600,000, on the Maturity
Date. The Note Obligations are secured by the pledge of
certain common stock of Beyond Commerce, Inc. The
obligations of the Company and of the Pledgor, if any, under the
Note are referred to collectively as the “Note
Obligations.”
C. To
secure the Note Obligations, the Pledgor have agreed to pledge
certain shares of Common Stock of Beyond Commerce, Inc.
held by the Pledgor to the Secured Party as security for the
performance of the Note Obligations.
D. The
Pledgor is a shareholder, subsidiary and/or affiliates of the
Debtor and has determined that it is in the Pledgor’ best
interests, including to the benefit of the other interests of the
Pledgor in the Company, to provide the pledge referred to
herein.
E. The
Secured Party is willing to accept the Note only upon receiving the
Pledgor’ pledge of certain stock of the Company, as set forth
in this Pledge 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 .
(a) To
secure the Note Obligations of Debtor, the Pledgor hereby pledges
to the Secured Party (i) all of the shares of Common Stock (the
“Pledged Shares”) set forth on the attached Schedule 2
of this Agreement. Unless otherwise set forth on
Schedule 2 of this Agreement, the Pledgor is the beneficial and
record owner of the Pledged Shares set forth opposite the
Pledgor’s name on such Schedule. Such Pledged
Shares are hereinafter referred to as the
“Collateral.”
(b) The
Company represents and warrants to the Secured Party that the
Pledged Shares are duly authorized, validly issued, fully paid and
non-assessable and that it will not permit the transfer of the
Pledged Shares except in accordance with this Pledge Agreement
while the same is in effect.
(c) (i) The
Company has given written notice to the Transfer
Agent regarding the creation of the security interest of
the Secured Party in the Collateral. The Company has
instructed the Transfer Agent (A) to record on its books the
existence of such security interest with respect to the Pledged
Shares, (B) to transfer Pledged Shares in accordance with the
instructions of the Secured Party without further action of the
Company, and (C) except upon such instructions of the Secured Party
or until written notice is given by the Secured Party that such
security interest has been released to the Pledgor in whole or in
part, to not allow a transfer of the shares representing any part
of the Collateral or to replace the certificates representing the
Collateral; and
(ii) The
Pledgor hereby consent to the provisions of the preceding
subparagraph (i) and authorizes the Company to provide such notice
and instructions to the Transfer Agent.
2.
Obligations Secured . During the term hereof, the
Collateral shall secure the following:
(a) The
performance by the Company of the Note Obligations; and
(b) The
payment of all fees and the delivery of all stock other than
principal and interest under the Note.
(c) The
performance by the Pledgor of their obligations, covenants, and
agreements under this Agreement.
The
obligations, covenants and agreements described in clauses (a), (b)
and (c) are the “Obligations.”
3.
Perfection of Security Interests . Upon execution
of this Pledge Agreement by the Debtor and the Pledgor, the Pledgor
shall deliver and transfer possession of the stock certificates
identified opposite the Pledgor’s name on Schedule 2 of this
Agreement together with stock transfer powers duly executed in
blank by the registered owner of the shares represented by such
Certificates, with appropriate Medallion signature guaranty
(“Stock Powers”), to the Secured Party.
The Collateral
will be held by the Secured Party or the Brokerage Firm, to perfect
the security interest of the Secured Party, until the earlier
of
(i) the payment
in full of all amounts due under the Note, or
(ii)
foreclosure of Secured Party's security interests as provided
herein.
(c) The
Debtor and the Pledgor hereby appoint the Secured Party, as
attorney-in-fact with powers of substitution, to execute all
documents and perform all acts in order to perfect and maintain a
valid security interest for Secured Party in the
Collateral.
5.
Pledgor’s Warranty . The Pledgor represent
and warrant hereby to the Secured Party as follows with respect to
the Pledged Shares set forth opposite the Pledgor’s name on
Schedule 2 to this Agreement:
A.
With respect to title to the Transferred Shares
(i) that
upon transfer by the Pledgor of the Pledgor’s Certificates
and Stock Powers to Secured Party pursuant to this Agreement at
such time, if any, as contemplated hereby upon the occurrence of an
Event of Default, the purchaser of the Pledged Shares or the
Secured Party, as contemplated herein, as the case may be, will
have good title (both record and beneficial) to the relevant
Pledged Shares;
(ii) that
there are no restrictions upon transfer and pledge of the Pledged
Shares pursuant to the provisions of this Agreement except the
restrictions, to the extent applicable, imposed by Rule 144 under
the Securities Act of 1933;
(iii) that
the Pledged Shares are free and clear of any encumbrances of every
nature whatsoever, the Pledgor is the sole owner of the Pledged
Shares, and such shares are duly authorized, validly issued, fully
paid and non-assessable;
(iv) that
the Pledgor has owned the Pledged Shares since the date specified
on Schedule 2 to this Agreement and that such shares were fully
paid for as of such specified date; and
(v) that
the Pledgor agrees not to grant or create, any security interest,
claim, lien, pledge or other encumbrance with respect to the
Pledgor’s Pledged Shares or attempt to sell, transfer or
otherwise dispose of any of such shares until the Obligations have
been paid in full or this Agreement has terminated.
B.
With respect to certain other matters :
(i) that
the Pledgor has made necessary inquiries of the Company and
believes that the Company fully intends to fulfill and has the
capability of fulfilling the Obligations to be performed by the
Company in accordance with the terms of the Transaction
Documents;
(ii) that
the Pledgor is not acting, and has not agreed to act, in any plan
to sell or dispose of the Pledged Shares in a manner intended to
circumvent the registration requirements of the Securities Act of
1933, as amended, or any applicable state law;
(iii) that
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
affirms the pledge of shares by the Pledgor pursuant to this Pledge
Agreement will constitute a bona-fide pledge of such shares for
purposes of such Rule;
(iv) that
this Pledge Agreement constitutes a legal, valid and binding
obligation of the 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); and
(v) that
the Pledgor’s address is as provided under the
Pledgor’s signature on the signature page hereof.
6.
Reports under Securities Act and Exchange Act
. With a view to making available to Secured Party the
benefits of Rule 144 promulgated under the Securities Act or any
other similar rule or regulation of the SEC that may at any time
permit Secured Party to sell securities of the Company to the
public without Registration (“Rule 144”), the Company
agrees to:
(i) make
and keep public information available, as those terms are
understood and defined in Rule 144;
(ii) file
with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange
Act; and
