PLEDGE AND ESCROW AGREEMENT

 

THIS PLEDGE AND ESCROW AGREEMENT (this “Agreement”) is made as of June 19, 2013,
by and among Beacon Enterprise Solutions Group, Inc., a corporation organized
and existing under the laws of the State of Nevada (the "Company"); Focus
Venture Partners, Inc., a corporation organized and existing under the laws of
Nevada ("Focus"); the shareholders of Focus identified on the signature page
hereto (the “Pledgors”) and Sichenzia Ross Friedman Ference LLP (the "Escrow
Agent").

 

W I T N E S S E T H  T H A T:

 

WHEREAS, the Company, Focus and Beacon Acquisition Sub, Inc. have entered into
an Amended and Restated Agreement and Plan of Merger dated June 19, 2013 (the
"Merger Agreement") which, among other matters, provides for the issuance of
562,276 shares of Series D Preferred Stock of the Company to the Pledgors (the
“Pledged Shares”); and

 

WHEREAS, the Pledgors have agreed to pledge the Pledged Shares in favor of the
Secured Parties to secure the Secured Liabilities (as defined below); and

 

WHEREAS, to perfect the pledge and security interest in the Pledged Shares, the
parties have agreed that the Pledged Shares shall be held in escrow under the
terms set forth herein.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements herein contained, and in consideration of the parties thereto
entering into the Merger Agreement, the parties hereto covenant and agree as
follows:

 

I. Definitions

 

“Collateral” means, whether now existing or hereafter acquired, arising, or
coming into existence, (a) all Pledged Shares; (b) all other shares, securities,
membership interests, partnership interests, or other interests representing a
dividend on any of the Pledged Shares, or representing a distribution or return
of capital upon or in respect of the Pledged Shares, or resulting from a stock
split, revision, conversion, reclassification, or other exchange therefor, and
any subscriptions, warrants, rights, or options issued to the holder of, or
otherwise in respect of, the Pledged Shares; (c) in the event of any
consolidation, merger, amalgamation, or reorganization involving the Company and
in which the Company is not the surviving entity, all shares of each class of
the capital stock of the successor issuer formed by or resulting from such
consolidation, merger, amalgamation, or reorganization; and (d) all proceeds and
products of the foregoing, however and whenever acquired and in whatever form.

 

“Secured Liabilities” means any losses, damages, liabilities or amounts incurred
by the Secured Parties in connection with the legal proceedings identified on
Part 3.10 of the Focus Disclosure Schedule to the Merger Agreement, including,
but not limited to, reasonable legal fees and any other costs to satisfy and/or
defend any and all claims that may arise in connection with such claims.

 

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“Secured Parties” means the Company, Focus, Optos Capital Partners, LLC and each
subsidiary of Optos Capital Partners, LLC as of the date hereof.

 

II.A. Pledge

 

Pledgors agree, solely to the extent of their interest in the Collateral, to
cause all Secured Liabilities to be promptly paid and satisfied. To secure the
full and final payment and performance of the Secured Liabilities, each Pledgor
hereby pledges and grants to the Secured Parties a lien and security interest in
and to all of its present and future right, title, and interest in and to the
Collateral. Neither the Secured Parties nor the Collateral Agent shall be under
any obligation to sell any of the Collateral or otherwise to take any steps
necessary to preserve the value of any of the Collateral or to preserve rights
in the Collateral against any other persons, but may do so at its option.

 

B. Delivery of Shares

 

Concurrently with the execution and delivery of this Agreement, (i) the Pledgors
direct and authorize the Company to deliver the Pledged Shares to the Escrow
Agent, and (ii) the Pledgors shall execute and deliver stock powers separate
from the certificate (“Stock Powers”) in a form attached hereto as Exhibit A,
executed in blank and medallion guaranteed. In addition, the Pledgors hereby
agree to execute such documents as the Secured Parties or the Escrow Agent may
request to transfer the Pledged Shares or the Collateral as may be required
pursuant to the terms of this Agreement, including but not limited to executing
Stock Powers with respect to shares received in exchange for the Pledged Shares.

 

C. Conversion of Pledged Shares

 

Without limiting any of the foregoing, the parties acknowledge that the Pledged
Shares are subject to automatic conversion into common stock of the Company
under the terms of the Certificate of Designation of Series D Preferred Stock
filed with the Secretary of State of Nevada on June 17, 2013, and the parties
agree that Escrow Agent is hereby authorized to deliver certificates for the
Pledged Shares to the Company or the Company’s transfer agent and to take any
other necessary steps in connection with any such conversion. Each Pledgor
hereby consents that from time to time with or without notice to, or assent
from, such Pledgor, any other security at any time held by or available to
Secured Parties or Escrow Agent for any of the Secured Liabilities may be
exchanged, surrendered, or released and any of the Secured Liabilities may be
changed, altered, renewed, extended, continued, surrendered, compromised,
waived, or released, in whole or in part, as Secured Parties or Escrow Agent may
see fit, and such Pledgor shall remain bound under this Agreement
notwithstanding any such exchange, surrender, release, alteration, renewal,
extension, continuance, compromise, waiver or inaction, extension of further
credit, or other dealing.

 

D. Voting of Collateral

 

For the avoidance of doubt, during the term of this Agreement and except for
Collateral that has been transferred into the name of the Secured Parties or
their nominees in connection with the Secured Parties’ rights hereunder, each
Pledgor shall have the right to vote all or any portion of the Pledged Shares on
all entity questions on which the Pledged Shares are entitled to vote. Each
Pledgor represents to Secured Parties and Escrow Agent that such Pledgor has
made its own arrangements for keeping informed of changes or potential changes
affecting the Collateral (including rights to convert, rights to subscribe,
payment of dividends, reorganization or other exchanges, tender offers, and
voting rights), and such Pledgor agrees that neither the Secured Parties nor the
Escrow Agent shall have any responsibility or liability for informing such
Pledgor of any such changes or potential changes or for taking any action or
omitting to take any action with respect thereto.

 

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III.Release of Collateral

 

A. Release to Satisfy Secured Liabilities

 

The Secured Parties shall have the right to apply the Collateral or the proceeds
from sale thereof against any and all Secured Liabilities incurred or suffered
by the Secured Parties. From time to time on or before the expiration of the
term provided in Section III.B, the Secured Parties may give written notice (a
“Notice of Claim”) to the Escrow Agent and the Pledgors specifying, in the form
attached hereto as Exhibit B, the nature and amount of the claim, the value of
the Collateral at the time of the Notice of Claim, and the number of shares of
Collateral to be transferred to the Secured Parties. If any Pledgor gives
written notice to the Secured Parties and Escrow Agent disputing any Notice of
Claim (a “Counter Notice”) within ten (10) days following the date of the Notice
of Claim, such Notice of Claim shall be resolved as provided below. If no
Counter Notice is delivered by a Pledgor to the Secured Parties and Escrow Agent
within such ten (10) day period, then the information set forth in the Notice of
Claim shall be deemed established, and the Escrow Agent shall promptly assign,
pay, transfer and convey to the Secured Parties the number of shares of
Collateral specified in the Notice of Claim. If a Counter Notice is given with
respect to a Claim, the Escrow Agent shall make payment of all or a portion with
respect thereto only (i) to the extent a Claim is not disputed by a Counter
Notice; (ii) in accordance with the joint written instructions of the Secured
Parties and Pledgor; or (iii) in accordance with a final non-appealable order of
a court of competent jurisdiction. Any court order shall be accompanied by a
legal opinion by counsel for the presenting party to the effect that the order
is final and non-appealable. The Escrow Agent shall act on such court order and
legal opinion without further question.

 

B. Release upon Expiration of Term. Upon expiration of a period of one (1) year
from the date hereof (the “Escrow Period”), the Escrow Agent shall release to
the respective Pledgors such number of shares of the Collateral which it is
holding pursuant to this Agreement and this Agreement shall be deemed terminated
and this Agreement shall be released and discharged from all further obligations
hereunder. Notwithstanding the foregoing, if any Notices of Claims have been
asserted in a writing furnished to the Escrow Agent by the Company and remain
unresolved on the date of the expiration of the Escrow Period, the escrow shall
continue with respect to the amounts set forth in the Notices of Claims until
the resolution of such Notices of Claims, and during such continuance, Escrow
Agent shall continue to hold the Collateral up to the amount of the outstanding
and unresolved Notices of Claims.

 

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C. Litigation Pending Upon Expiration of Term. If any of the legal proceedings
disclosed in Part 3.10 of the Focus Disclosure Schedule have not been settled,
or if a final judgment (with no further right of appeal) has not been entered
with respect to any such legal proceeding, at the end of the Escrow Period, the
Secured Parties may submit a Notice of Claim specifying the nature of the claim,
the estimated amounts to be incurred by the Secured Parties in connection with
any such legal proceeding, the fair market value of the Collateral at the time
of such Notice of Claim, and the number of Pledged Shares representing the
estimated amounts to be incurred by the Secured Parties. Any Notice of Claim
filed pursuant to this Section III.C shall be treated as a disputed Notice of
Claim, and the Escrow Agent shall release the number of Pledged Shares set forth
in the Notice of Claim only (i) in accordance with the joint written
instructions of the Secured Parties and Pledgor; or (ii) in accordance with a
final non-appealable order of a court of competent jurisdiction, pursuant to the
procedures set forth in Section III.A.

 

IV.Termination by the Parties

 

If at any time the Escrow Agent shall receive a notice signed by or on behalf of
the Secured Parties and a Pledgor that this Agreement has been terminated with
respect to such Pledgor’s Collateral and instructing the Escrow Agent with
respect to the disposition of the Collateral, the Escrow Agent shall release the
Collateral in accordance with the instructions contained in such notice, and
upon such release this Agreement shall be deemed terminated with respect to such
Pledgor, and the Escrow Agent shall be released and discharged from all further
obligations hereunder.

 

V.Nature of Duties; No Conflict; Liability

 

It is understood and agreed that the duties of the Escrow Agent hereunder are
purely ministerial in nature and do not represent a conflict of interest for the
Escrow Agent to act, or continue to act, as counsel for any party to this
Agreement with respect to any litigation or other matters arising out of this
Agreement or otherwise. The Escrow Agent shall not be liable for any error of
judgment, fact, or law, or any act done or omitted to be done, except for its
own willful misconduct or gross negligence or that of its partners, employees,
and agents. The Escrow Agent's determination as to whether an event or condition
has occurred, or been met or satisfied, or as to whether a provision of this
Agreement has been complied with, or as to whether sufficient evidence of the
event or condition or compliance with the provision has been furnished to it,
shall not subject the Escrow Agent to any claim, liability, or obligation
whatsoever, even if it shall be found that such determination was improper and
incorrect; provided that the Escrow Agent and its partners, employees, and
agents shall not have been guilty of willful misconduct or gross negligence in
making such determination. In the event that the Escrow Agent shall be uncertain
as to its duties or rights hereunder, the Escrow Agent shall be entitled to (i)
refrain from taking any action other than to keep safely the Collateral until it
shall be directed otherwise by a court of competent jurisdiction, or (ii)
deliver the Collateral to a court of competent jurisdiction or to the Company’s
transfer agent.

 

VI.Indemnification

 

The Company and Pledgors jointly and severally agree to indemnify the Escrow
Agent for, and to hold it harmless against, any loss, liability, or expense
("Cost") incurred without gross negligence or willful misconduct on the part of
the Escrow Agent, arising out of or in connection with its entering into this
Agreement and carrying out its duties hereunder, including costs and expenses of
defending itself against any claim of liability in connection herewith or
therewith. The right to indemnification set forth in the preceding sentence
shall include the right to be paid by the Company and Focus in respect of Costs
as they are incurred (including Costs incurred in connection with defending
itself against any claim of liability in connection herewith). The Escrow Agent
shall repay any amounts so paid if it shall ultimately be determined by a final
order of a court of competent jurisdiction from which no appeal is or can be
taken that the Escrow Agent is not entitled to such indemnification.

 

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VII.Documents and Instructions

 

The Escrow Agent may act in reliance upon any notice, instruction, certificate,
statement, request, consent, confirmation, agreement or other instrument which
it believes to be genuine and to have been signed by a proper person or persons,
and may assume that any of the officers of the Company purporting to act on
behalf of the Company in giving any such notice or other instrument in
connection with the provisions hereof has been duly authorized to do so. The
Escrow Agent acts hereunder as a depository only and shall not be responsible or
liable in any manner whatsoever for the genuineness, sufficiency, correctness,
or validity of any agreement, document, certificate, instrument, or item
deposited with it or any notice, consent, approval, direction, or instruction
given to it, and the Escrow Agent shall be fully protected, under Sections IV
and V above, for all acts taken in accordance with any written instruction or
instrument given to it hereunder, and reasonably believed by the Escrow Agent to
be genuine and what it purports to be.

 

VIII.Conflicting Notices, Claims, Demands, or Instructions

 

If at any time the Escrow Agent shall receive conflicting notices, claims,
demands, or instructions with respect to the Collateral, or if for any other
reason it shall in good faith be unable to determine the party or parties
entitled to receive the Collateral, or any part thereof, the Escrow Agent may
refuse to make any distribution and may retain the Collateral in its possession
until it shall have received instructions in writing concurred in by all parties
in interest, or until directed by a final order or judgment of a court of
competent jurisdiction from which no appeal is or can be taken, whereupon the
Escrow Agent shall make such disposition in accordance with such instructions or
such order. The Escrow Agent shall also be entitled to commence as interpleader
action in any court of competent jurisdiction to seek an adjudication of the
rights of the Company and Focus.

 

IX.Advice of Counsel

 

The Escrow Agent may consult with, and obtain advice from, legal counsel in the
event of any dispute or question as to the construction of any of the provisions
hereof or its duties hereunder, and it shall incur no liability and shall be
fully protected and indemnified under Section VI above for all acts taken, in
the absence of gross negligence or willful misconduct, in accordance with the
advice and instructions of such counsel. In the event that the Escrow Agent
retains counsel or otherwise incurs any legal fees by virtue of any provision of
this Agreement, the reasonable fees and disbursements of such counsel and any
other liability, loss or expense which the Escrow Agent may thereafter suffer or
incur in connection with this Agreement or the performance or attempted
performance in good faith of its duties hereunder shall be paid (or reimbursed
to it) by the Company and Focus, jointly and severally. In the event that the
Escrow Agent shall become a party to any litigation in connection with its
functions as Escrow Agent pursuant to this Agreement, whether such litigation
shall be brought by or against it, the reasonable fees and disbursements of
counsel to the Escrow Agent including the amounts attributable to services
rendered by partners or associates of Escrow Agent at the then prevailing hourly
rate charged by them and disbursements incurred by them, together with any other
liability, loss or expense which it may suffer or incur in connection therewith,
shall be paid (or reimbursed to it) by the Company and the Pledgors, jointly and
severally, unless such loss, liability or expense is due to the willful breach
by the Escrow Agent of its duties hereunder.

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X.Compensation and Expenses

 

Escrow Agent shall be entitled, for the duties to be performed by it hereunder,
to a fee of $3,500, which fee shall be paid by the Company upon the signing of
this Agreement. In addition, the Company shall be obligated to reimburse Escrow
Agent for all fees, costs and expenses incurred or that become due in connection
with this Agreement, including reasonable attorney’s fees. Neither the
modification, cancellation, termination or rescission of this Agreement nor the
resignation or termination of the Escrow Agent shall affect the right of Escrow
Agent to retain the amount of any fee which has been paid, or to be reimbursed
or paid any amount which has been incurred or becomes due, prior to the
effective date of any such modification, cancellation, termination, resignation
or rescission. To the extent the Escrow Agent has incurred any such expenses, or
any such fee becomes due, prior to any closing, the Escrow Agent shall advise
the Company and the Company shall direct all such amounts to be paid directly at
any such closing.

 

XI.Resignation of Escrow Agent

 

The Escrow Agent may resign at any time by giving 30 days’ prior written notice
of such resignation to the Company and the Pledgors. Upon providing such notice,
the Escrow Agent shall have no further obligation hereunder except to hold as
depositary the Collateral. In such event, the Escrow Agent shall not take any
action until the Company and Pledgors have jointly designated a banking
corporation, trust company, attorney or other person as successor. Upon receipt
of such written designation signed by the Pledgors and the Company, the Escrow
Agent shall promptly deliver the Collateral to such successor and shall
thereafter have no further obligations hereunder. If such instructions are not
received within 30 days following the effective date of such resignation, then
the Escrow Agent may, in its sole and absolute discretion, deposit the
Collateral held by it pursuant to this Agreement with a clerk of a court of
competent jurisdiction or the Company’s transfer agent pending the appointment
of a successor. In either case provided for in this paragraph, the Escrow Agent
shall be relieved of all further obligations and released from all liability
thereafter arising with respect to the Collateral.

  

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XII.Notices

 

All notices, consents, approvals, directions, and instructions required or
permitted under this Agreement shall be effective when received and shall be
given in writing and delivered either by hand or by registered or certified
mail, postage prepaid, or by telecopier, and addressed as follows:

 

 

If to the Company or the Secured Parties:

Beacon Enterprise Solutions Group, Inc.

 

If to the Company or the Secured Parties:   Beacon Enterprise Solutions Group,
Inc.         Address: 9300 Shelbyville Road, Suite 1020     Louisville, KY 40222
    Attention:  Bruce W. Widener   Fax No.: (502) 657-6601  

E-mail Address:  bruce.widener@askbeacon.com

  

With a copy to:

 

Miller Wells PLLC

 

Address:   300 East Main Street     Suite 360     Lexington, KY  40507    
Attention:  Mason L. Miller, Esq.   Fax No.: (859) 281-0079  

E-mail Address: mmiller@millerwells.com

 

If to TBK 327 Partners LLC:

1758 Red Hawk Way

Bethlehem, PA 18015

Email Address: CFerguson@focusventurepartners.com

 

If to TLP Investments, LLC:

1464 Palma Blanca Court

Naples, FL 34119

If to Richard J. Coyle, Jr.:

6355 Rockmine Court

Las Vegas, NV 89118

Email Address: rjcddc@msn.com

If to Theresa Carlise:

4647 Saucon Creek Road, Suite 201

Center Valley, Pennsylvania 18034

 

If to Focus:

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Focus Venture Partners, Inc.

 

Address: 4647 Saucon Creek Road, Suite 201   Center Valley, Pennsylvania 18034  
Attention:   Christopher Ferguson   Fax No.: (610) 672-9999  

Email Address: CFerguson@focusventurepartners.com

 

With a copy to:

 

Fox Rothschild LLP   Address: 2700 Kelly Road, Suite 300   Warrington,
Pennsylvania 18976   Attention:   Adam G. Silverstein, Esq.   Fax No.: (215)
345-7507  

Email Address:  asilverstein@foxrothschild.com

 

If to the Escrow Agent:

 

Sichenzia Ross Friedman Ference LLP

 

Address: 61 Broadway, 32nd Floor     New York, NY 10006   Attention:   Richard
A. Friedman, Esq.   Fax No.: (212) 930-9725  

Email Address:  rfriedman@srff.com

 

or to such other persons or addresses as any party may have furnished in writing
to the other parties. Copies of all communications hereunder shall be sent to
the Escrow Agent.

 

XII. Remedies

 

Secured Parties shall have, in addition to any other rights given by applicable
law, all of the rights and remedies with respect to the Collateral of a secured
party under the Uniform Commercial Code. Secured Parties may sell or cause the
Collateral, or any part thereof, to be sold at any broker’s board or at public
or private sale, in one or more sales or lots, at such price as Secured Parties
may deem best, for cash or on credit or for future delivery, and the purchaser
of any or all of such Collateral shall thereafter hold the same absolutely, free
from any lien, claim, or right of any kind whatsoever. Unless the Collateral
threatens to decline speedily in value or is or becomes of a type sold on a
recognized market, Secured Parties will give each applicable Pledgor reasonable
notice of the time and place of any public sale thereof or of the time after
which any private sale or other intended disposition is to be made. Any sale of
the Collateral conducted in conformity with standard practices of banks,
insurance companies, or other financial institutions disposing of property
similar to the Collateral shall be deemed to be commercially reasonable. Secured
Parties shall be under no obligation to delay a sale of any of the Collateral
for the period of time necessary to permit the issuer of such securities to
register such securities for public sale under the Securities Act of 1933, even
if such issuer would agree to do so.

 

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XIV.Entire Agreement, Etc.

 

This Agreement contains the entire agreement among the parties with respect to
the subject matter hereof. This Agreement may not be amended, supplemented, or
discharged, and no provision hereof may be modified or waived, except by an
instrument in writing signed by all of the parties hereto. No waiver of any
provision hereof by any party shall be deemed a continuing waiver of any matter
by such party. If a conflict between the terms and provisions hereof and of the
Merger Agreement occurs, the terms and provisions hereof shall govern the
rights, obligations, and liabilities of the Escrow Agent.

 

XV.Successors and Assigns

 

This Agreement shall be binding upon and shall inure to the benefit of each of
the parties hereto, and their respective heirs, successors, assigns,
distributees, and legal representatives.

 

XVI.Counterparts

 

This Agreement may be executed in several counterparts, each of which shall be
deemed original, but such counterparts together shall constitute one and the
same instrument.

 

XVII.Governing Law

 

This Agreement shall be governed by and construed and enforced in accordance
with the law (other than the law governing conflict of law questions) of the
State of New York. Any action to enforce, arising out of, or relating in any way
to any of the provisions of this Agreement may be brought and prosecuted in such
court or courts located within New York County, New York as is provided by law;
and the parties hereto consent to the jurisdiction of the court or courts
located within New York, New York and to service of process by registered or
certified mail, return receipt requested, or by any other manner provided by
law.

 

XVIII.Additional Documents and Act

 

The Company and Focus shall, from time to time, execute such documents and
perform such acts as Escrow Agent may reasonably request and as may be necessary
to enable Escrow Agent to perform its duties hereunder or effectuate the
transactions contemplated by this Agreement.

 

 

[Signature page follows.]

 

 

 

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IN WITNESS WHEREOF, the parties hereto have executed or caused this Agreement to
be duly executed as a sealed instrument as of the day and year first above
written.

  

   BEACON ENTERPRISE SOLUTIONS GROUP, INC.         By:   Name:       Title:    
(the “Company”)         FOCUS VENTURE PARTNERS, INC.         By:     Name:    
Title:     (“Focus”)         SICHENZIA ROSS FRIEDMAN   FERENCE LLP         By:  
  Name: Richard Friedman   Title: Partner   (“Escrow Agent”)         TBK 327
Partners LLC         By:     Name:     Title:           TLP Investments, LLC    
    By:     Name:     Title:               Richard J. Coyle, Jr.            
Theresa Carlise   (“Pledgors”)

 

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Exhibit A

 

Irrevocable Stock Power

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to
__________________________________ the following shares of Series D Preferred
Stock of BEACON ENTERPRISE SOLUTIONS GROUP, INC., a Nevada corporation:

  

No. of Shares Certificate No.    

  

and irrevocably appoints __________________________________ its agent and
attorney-in-fact to transfer all or any part of such capital stock and to take
all necessary and appropriate action to effect any such transfer. The agent and
attorney-in-fact may substitute and appoint one or more persons to act for him.

 

Dated as of _____________ ___, 20__.

 

 

  By:   Name:       Title:  

 

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Exhibit B

 

Notice of Claim

  

[Letterhead of Secured Party]

 

  

Gentlemen:

 

You are hereby instructed to release from escrow the number of shares (the
“Pledged Shares”) specified below. The Company is entitled to receive the
Pledged Shares in connection with the matter specified below:

  

Number of Pledged Shares:

  

Nature of Claim:

  

Dollar Value of Claim:

  

Dated:

 

 

  Name of Secured Party         By:   Name:       Title:  

 

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