ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the “Agreement”) is dated
as of March 15, 2010 by and among (i) CoConnect, Inc., a Nevada corporation (the
"Company”),
(ii) Noctua Fund Manager, LLC, a Delaware limited liability company (“NFM”), and (iii)
Action Stock Transfer Corporation (the “Escrow Agent”) (The
Company, NFM and the Escrow Agent may hereinafter be referred to individually as
a “Party” and
collectively as the “Parties”).
RECITALS
WHEREAS,
on or about March 15, 2010, the Company issued NFM a convertible
promissory note in the amount of $181,000 (the “Note,” a copy of
which has been attached hereto as Exhibit A)
(Capitalized terms used and not otherwise defined herein that are defined in the
Note shall have the meanings given to such terms in the Note);
WHEREAS,
pursuant to the terms of the Note, the Company is required to reserve three
times the number of shares of Common Stock convertible under the Note as of the
Issuance Date equal to 54,300,000 shares of Common Stock (the “Escrow Pool”) which
shall be held in the Company’s name and disbursed to NFM pursuant to the terms
of this Agreement and the Note; and
WHEREAS,
the Note may be converted, in whole or in part, at the sole discretion of NFM,
into shares of the Company’s common stock from the shares held in the Escrow
Pool (such converted shares being the “Conversion Shares”)
pursuant to the terms of this Agreement and the Note;
AGREEMENT
NOW,
THEREFORE, in consideration of the mutual covenants and other agreements
described in this Agreement and the Note, and for good and valuable
consideration, receipt of which is hereby acknowledged, the Parties hereby agree
as follows:
ARTICLE
I
GENERAL
TERMS
1.1 Company
Reservation. The Escrow Agent shall reserve from the Company’s
treasury the Escrow Pool which shall be reserved for the benefit of NFM and held
in escrow pursuant to the terms of the Agreement and Note.
1.2 Intention to Restrict
Issuance of the Escrow Pool. The Company intends that Escrow
Pool shall be reserved by the Escrow Agent pursuant to this Agreement and the
Note. The Company hereby instructs the Escrow Agent to reserve the Escrow Pool
as security pursuant to the terms of the Note and acknowledges these shares may
not be issued for any other purpose other than pursuant to the Note at the
instruction of NFM.
1.3 Escrow Agent
Deliveries. The Escrow Agent shall hold and release the Escrow
Pool only in accordance with the terms and conditions of this Agreement and the
Note.
1.4 Escrow Agent
Compensation. The
Escrow Agent’s compensation for acting as escrow agent pursuant to the terms of
this Agreement shall consist of their normal transfer fees associated with the
issuance of shares pursuant to this Agreement. The Escrow Agent shall receive an
initial non-refundable deposit of $200 which shall be held by the Escrow Agent
and credited against any subsequent issuance of Conversion Shares.
1.5 Ownership and Dispositive
Rights. All shares held in the Escrow Pool shall be issued and held in
the name of CoConnect, Inc. and shall deemed owned and under the voting control
of the Company until or if released (and, once released, deemed owned by the
person to whom released) from escrow, for purposes of Section 13 and Section 16
of the Securities Exchange Act of 1934, as amended. No other documentation,
including, but not limited to a stock power, from any other party, including the
Company, other than a Conversion Demand (as defined below) shall be required for
the issuance of Conversion Shares as described in this Agreement.
1.5 Maximum
Conversion. NFM shall not be entitled to the issuance of any
Conversion Shares which would result in beneficial ownership by NFM and its
affiliates of more than 4.99% of the outstanding shares of the Company’s common
stock on any conversion date. For the purposes of this Section, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13d-3
thereunder. Subject to the foregoing, NFM shall not be limited to
aggregate conversions of only 4.99% and aggregate conversion by NFM may exceed
4.99%. NFM may waive the issuance limitations described in this Section, in
whole or in part, upon and effective after 61 days prior written notice to the
Company.
ARTICLE
II
RELEASE
OF CONVERSION SHARES
2.1 Disbursement of Conversion
Shares. The Conversion Shares may be utilized to pay down the
Note. In the event NFM elects to use such Conversion Shares to reduce the Note,
the Escrow Agent shall release the Conversion Shares from the Escrow Pool upon
NFM’s delivery to the Escrow Agent of a notice of conversion (a “Conversion Demand” a
form of which has been attached hereto as Exhibit B)
which shall state: (i) the amount of the NFM Note being converted; (ii) the
Conversion Price; (iii) the number of Conversion Shares being converted from the
Escrow Pool; and (iv) the current balance of the Note remaining after each
Conversion Demand. The Company and the Escrow Agent shall record such reduction
in the Note on their books and records. Such issuance of Conversion Shares
pursuant to a Conversion Demand as described herein shall be at the sole
discretion of NFM and shall require no action on the part of the Company or any
other party.
2.2 Acknowledgement of NFM, the
Company and Escrow Agent; Disputes. The
Parties acknowledge that the only terms and conditions upon which the Escrow
Pool are to be released are set forth in this Agreement. The Parties
reaffirm their agreement to abide by the terms and conditions of this Agreement
with respect to the release of the Conversion Shares from the Escrow Pool. Any
dispute with respect to the release of Escrow Pool shall be resolved pursuant to
this Agreement or by written agreement between NFM and the Company.
2.3 Continuity of Escrow Agent
Relationship. As
long as any of the shares underlying the Escrow Pool remain in escrow for NFM’s
benefit under this Agreement, the Company hereby warrants and represents they
will not terminate, and pursuant to the terms of this Agreement, shall not be
entitled to terminate, their relationship with the Escrow Agent without prior
written consent of NFM. This Section 2.3 shall survive and supercede
any prior agreements between the Escrow Agent and the Company or any other
party.
ARTICLE
III
CONCERNING
THE ESCROW AGENT
3.1 Escrow Agent
Fees. Any Escrow Agent fees associated with the issuance of
Conversion Shares hereunder shall be due and payable to the Escrow Agent by the
Company.
3.2 Duties and Responsibilities
of the Escrow Agent. The Escrow Agent's duties and
responsibilities shall be subject to the following terms and
conditions:
(a) The
Parties acknowledge and agree that the Escrow Agent (i) once in receipt of a
Conversion Demand from NFM, shall not be responsible for or bound by, and shall
not inquire into whether NFM is entitled to receipt of Conversion Shares
pursuant to any other agreement or otherwise; (ii) shall be obligated only for
the performance of such duties as are specifically assumed by the Escrow Agent
pursuant to this Agreement; (iii) may rely on and shall be protected in acting
or refraining from acting upon any written notice, including notice by facsimile
transmission, instruction, instrument, statement, request or document furnished
to it hereunder and believed by the Escrow Agent in good faith to be genuine and
to have been signed or presented by the proper person or Party, without being
required to determine the authenticity or correctness of any fact stated therein
or the propriety or validity or the service thereof; and (iv) may assume that
any person believed by the Escrow Agent in good faith to be authorized to give
notice or make any statement or execute any document in connection with the
provisions hereof is so authorized.
(b) The
Escrow Agent may at any time resign as Escrow Agent hereunder by giving fifteen
(15) days prior written notice of resignation to NFM and the
Company. Prior to the effective date of the resignation as specified
in such notice, NFM will issue to the Escrow Agent instructions authorizing
delivery of the Escrow Pool to a substitute Escrow Agent selected by, and in the
sole discretion of NFM. Only in the event no successor Escrow Agent
is named by NFM, the Escrow Agent may apply to a court of competent jurisdiction
in the State of California for appointment of a successor Escrow
Agent, and to deposit the Escrow Pool with the clerk of any such
court.
(c) In
the event of a dispute with respect to entitlement to any properties held by the
Escrow Agent, the Escrow Agent may deposit said disputed properties with the
Courts of the State or California after giving thirty (30) days notice to NFM
and shall be absolved from all further liability with respect
thereto.
(d) The
provisions of this Section shall survive the resignation of the Escrow Agent or
the termination of this Agreement.
3.3 Dispute Resolution:
Judgments. If any dispute shall arise with respect to
the delivery, ownership, right of possession or disposition of the Escrow Pool
the Escrow Agent shall continue to follow the terms of the Agreement and issue
the Conversion Shares pursuant to a Conversion Demand unless the Escrow Agent
(i) receives written instructions from NFM, or (ii) deposits the Escrow Pool
with any court of competent jurisdiction in California, in which event the
Escrow Agent shall give thirty (30) days written notice thereof to the Company
and NFM and shall after such period be relieved and discharged from all further
obligations pursuant to this Agreement.
ARTICLE
IV
GENERAL
MATTERS
4.1 Termination. This
Agreement shall terminate upon the final release of Conversion Shares sufficient
to satisfy all amount due and owing pursuant to the Note, or at any time upon
written notice by NFM.
4.2 Notices. All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such Party shall have specified most recently
by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The
addresses for such communications shall be:
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If to the Company, to:
CoConnect,
Inc.
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If to NFM, to:
Noctua
Fund Manager, LLC
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If to the Escrow Agent, to:
Action
Stock Transfer Corporation
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4.3 Assignment; Binding
Agreement. The rights and obligations pursuant to this
Agreement shall be freely assignable by NFM without the prior written consent of
any other Party. Except as otherwise provided for herein, the rights
and obligations of the Company and the Escrow Agent pursuant to this Agreement
may not be assigned without prior written consent from NFM. This
Agreement shall enure to the benefit of and be binding upon the Parties hereto
and their respective legal representatives, successors and assigns.
4.4 Severability. In
the event that any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal, or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be in any way impaired thereby, it being
intended that all of the rights and privileges of the Parties hereto shall be
enforceable to the fullest extent permitted by law.
4.5 Indemnification. The
Company agrees to hold harmless and indemnify the Escrow Agent and/or NFM from
any claims or future claims, as the case may be, related to this Agreement.
Additionally, the Company agrees to reimburse the Escrow Agent and/or NFM
immediately for any and all expenses, including, without limitation, attorney
fees, incurred by the Escrow Agent and/or NFM in connection with investigating,
preparing to defend or defending, or otherwise being involved in, any lawsuits,
claims or other proceedings arising out of or in connection with or relating in
any manner, directly or indirectly, to this Agreement (as defendant, nonparty,
or in any other capacity other than as a plaintiff, including, without
limitation, as a party in an interpleader action). The Company further agrees
that the indemnification and reimbursement commitments set forth in this
paragraph shall extend to any controlling person, strategic alliance, partner,
member, shareholder, director, officer, employee, agent or subcontractor of the
Escrow Agent and/or NFM and their heirs, legal representatives, successors and
assigns. The provisions set forth in this section shall survive any termination
of this Agreement.
4.6 Counterparts/Execution. This
Agreement may be executed in any number of counterparts and by different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but one
and the same instrument. This Agreement may be executed by facsimile
transmission and delivered by facsimile transmission.
4.7 Entire
Agreement. This Agreement along with Note constitute the
entire agreement between the Parties hereto pertaining to the Escrow Pool and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the Parties. There are no warranties,
representations and other agreements made by the Parties in connection with the
subject matter hereof except as specifically set forth in this Agreement and the
Note.
4.8 Waivers and
Amendments. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by all Parties, or, in the
case of a waiver, by the Party waiving compliance. Except as
expressly stated herein, no delay on the part of any Party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any Party of any right, power or privilege hereunder
preclude any other or future exercise of any other right, power or privilege
hereunder.
4.9 Headings. The
division of this Agreement into articles, sections, subsections and paragraphs
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of this Agreement.
4.10 Law Governing this
Agreement. This Agreement shall be governed by and construed
in accordance with the laws of the State of California without regard to
principles of conflicts of laws. Any action brought by any Party
against the other concerning the transactions contemplated by this Agreement
shall be brought only in the state courts of California located inSan Diego
County. All
Parties and the individuals executing this Agreement agree to submit to the
jurisdiction of such courts and waive trial by jury. The prevailing party
shall be entitled to recover from the other Party its reasonable attorney's fees
and costs. In the event that any provision of this Agreement or any other
agreement delivered in connection herewith is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of any
agreement.
4.11 Specific Enforcement,
Consent to Jurisdiction. The Parties acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the Parties
shall be entitled to an injuction or injunctions to prevent or cure breaches of
the provisions of this Agreement and to enforce specifically the terms and
provisions hereof or thereof, this being in addition to any other remedy to
which any of them may be entitled by law or equity. The Parties hereby waives,
and agrees not to assert in any such suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. Nothing in this Section
shall affect or limit any right to serve process in any other manner permitted
by law.
SIGNATURE
PAGE
IN WITNESS WHEREOF, the Parties have
duly executed this Escrow Agreement as of the day and year first written
above.
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COMPANY:
CoConnect,
Inc.
___________________________
By:
Its:
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NFM:
Noctua
Fund Manager, LLC
___________________________
By:
Its:
|
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ESCROW
AGENT
Action
Stock Transfer Corporation
___________________________
By:
Its:
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A FACSIMILE COPY OF THIS AGREEMENT
SHALL HAVE THE SAME LEGAL EFFECT AS AN ORIGINAL OF THE SAME.
EXHIBIT
A
Note
EXHIBIT
B
Form
of Conversion Demand
Dated
_______________
Pursuant
to the terms of the Note and Escrow Agreement (collectively the “Agreements”) by and
between (i) CoConnect, Inc., a Nevada corporation ("CCON"), (ii) Noctua
Fund Manager, LLC, a Delaware limited liability company (“NFM”), and (iii)
Action Stock Transfer Corporation (the “Escrow Agent”),
copies of which have already been delievered the Escrow Agent’s offices, NFM
hereby demands the issuance of ____________ shares of CCON’s common stock (the
“Conversion
Shares”) pursuant to the Agreements. The Conversion Shares are to be
issued via immediate mail delivery or, if applicable, via DWAC transfer as
follows:
Account
No.:
Broker:
Clearing
Firm:
Clearing
Firm DTC No.:
Issuer
Name:
Issuer
CUSIP No.
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Amount
of Note converted………………………
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$
|
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Conversion
Price…………………………………………………….
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$
|
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Number
of Conversion Shares to be Issued………………………..
|
|
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Remaining
Note balance…………………………………….
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$
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Regards,
Noctua
Fund Manager, LLC
_________________________
By:
Its:
