SECURITY INTEREST AND PLEDGE
AGREEMENT
SECURITY INTEREST AND PLEDGE AGREEMENT
(“Pledge Agreement”) dated as of June 17, 2009, by and
among OmniReliant Holdings, Inc. (“Secured Party”),
Beyond Commerce, Inc. a Nevada corporation with its principal
business address at 9029 South Pecos, Suite 2800, Henderson, NV
89074 (the “Company” or the “Debtor”), and
Linlithgow Holdings LLC (the “Pledgor”)
RECITALS
A. Reference
is made to (i) that certain Purchase Agreement of even date
herewith (the “Purchase Agreement”) to which the
Company and the Secured Party are parties, and (ii) the Transaction
Agreements (as that term is defined in the Loan Agreement),
including, without limitation, the Note. Capitalized
terms not otherwise defined herein shall have the meanings ascribed
to them in the relevant Transaction Agreements.
B. Pursuant
to the Transaction Agreements, 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 $575,000, on
the Maturity Date. The Note Obligations and the Warrant
Obligations are secured by the pledge of certain stock of the
Company. The obligations of the Company and of the
Pledgor, if any, under the Note are referred to collectively as the
“Note Obligations.” The obligations of the
Company and of the Pledgor, if any, under the Warrant are referred
to collectively as the “Warrant
Obligations.”
C. To
secure the Note Obligations and the Warrant Obligations, the
Pledgor have agreed to pledge certain shares of Common Stock of the
Company held by the Pledgor to the Secured Party as security for
the performance of the Note Obligations and the Warrant
Obligations.
D. The
Pledgor are shareholders, subsidiaries and/or affiliates of the
Debtor and have 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 enter into the Purchase Agreement and
the other Transaction Agreements 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 and the Warrant Obligations of Debtor,
the Pledgor hereby pledge 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
are 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 the Warrant
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.
Pledgors’ Warranty . The Pledgor represents
and warrants 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
Agreements;
(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 report
