Document:

ex101.htm

    ADVISORY
SERVICES AGREEMENT

    

    This
Advisory Services Agreement (the “Agreement”), is
effective as of November 15, 2009 (the “Effective Date”), by
and between (i) CoConnect, Inc. (hereinafter referred to as the “Company”), a Nevada
corporation and (ii) Noctua Fund Manager, LLC (hereinafter referred to as the
“Consultant”),
a Delaware limited liability company.  Individually, the Company and
the Consultant may be referred to herein as a “Party,” and
collectively as the “Parties.”

    

    RECITALS

    

    WHEREAS,
as disclosed in the Company’s recent quarterly filings with the United States
Securities and Exchange Commission, the Company is seeking to acquire assets
and/or a business in order to add value to the Company for the benefit of the
Company’s shareholders.

    

    WHEREAS,
the Company has contacted the Consultant to assist with certain Services (as
defined herein) related to the above described corporate actions.

    

    AGREEMENT

    

    NOW,
THEREFORE, in consideration of the mutual covenants hereinafter stated and for
other good and valuable consideration, it is agreed as follows:

    

    1.           APPOINTMENT.

    

    The
Company hereby engages Consultant and Consultant agrees to render the Services
to the Company as a consultant upon the terms and conditions hereinafter set
forth.

    

    2.           TERM.

    

    The term
of this Consulting Agreement shall begin as of the Effective Date, and shall
terminate upon the earlier of: (i) a Closing (as defined herein); or (ii)
the one year anniversary following the Effective Date (the “Termination
Date”).

    

    3.           SERVICES.

    

    The
Company seeks to enter into an agreement to acquire and manage new assets and/or
a business (a “Transaction”). During
the term of this Agreement, Consultant shall provide the Company with the
following “Services” as outlined
in this section below related to the final goal of effectuating a Transaction.
The Parties understand and confirm the Services contemplated herein are
front-end loaded and substantial efforts are to be expended in commencing such
Services, regardless of the occurrence of a Closing. The Services shall be
limited to making recommendations and offering advice to the Company’s Officers,
Directors and other key Company personnel. As offsite advisors, Consultant will
rely upon the Company’s management to, in the Company’s sole discretion, accept
or reject its recommendations. Under no circumstances, even in the event that
Consultant is asked to perform onsite analysis, shall Consultant be responsible
for making any decisions on behalf of the Company.

    

    The
Services shall include:

    

    (a)           Assist
the Company in locating qualified management candidates for the Company to
interview. It is the Company’s goal to utilize the Consultant’s services to
locate a new Chief Executive Officer and two (2) new members to be appointed to
the Board of Directors;

    

    (b)           Assist
in the review of the Company’s historical operational and financial activities
and advise management, with a particular focus on preparing a corporate due
diligence book. In addition, the Consultant shall provide assistance with
general corporate strategic planning with the objective of preparing the Company
to effectuate a target Transaction;

    

    (c)           Assist
the Company in locating target Transaction candidates; and

    

    (d)           Assist
in the review of any target Transaction candidate’s historical, operational and
financial activities.

    

    Consultant
agrees to provide the Services on a timely basis via meetings with Company
representatives which may include other professionals, conferences calls with
Company representatives and other professionals and/or written correspondence
and documentation. Consultant cannot guarantee the results on behalf of the
Company, but shall pursue all avenues that it deems reasonable through its
network of contacts.  Consultant is not
a law firm, and shall not provide the Company with legal work
product.  All documents produced by Consultant should be thoroughly
reviewed (including this one) by the Company’s independent legal counsel prior
to the same documents being executed by an executive of the
Company.

    

    Upon
completion of each individual Service described in this section, the Consultant
may, at its discretion, deliver to the Company a written verification of the
completion of such Services. In the event the Consultant delivers such
verification, the Company shall execute and return such verification within
fifteen (15) days of such notice. In the event such verification notice is
delivered and the Company does not contest the completion of such Services
within the fifteen (15) day period provided for herein, such Service shall be
deemed fulfilled and completed by the Consultant and the Company shall forever
waive any right to dispute the valid delivery of such Services (each a “Release”). Each
release shall contain a waiver of rights under California Civil Code Section
1542 which provides as follows: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.

    

    4.           COMPENSATION.                                           

     

           Due to the
fact the Services are front-end loaded and substantial efforts are expended in
commencing such Services, all compensation (hereinafter referred to as “Compensation” and
more further described in this Section 4) delivered and paid to Consultant
pursuant to this Agreement shall be deemed completely earned, due, payable, free
of liens or encumbrances, and non-assessable.  Once Compensation is
tendered to Consultant, there shall be no refunds or diminishment of the same
regardless of any event.  In connection with this Agreement, the
Company shall pay Consultant the following fees:

    

    (a)           Service Compensation
Fee.  As compensation for the Services to be provided by the
Consultant and the Extension (as defined below), the Company hereby agrees to
pay the Consultant a fee of $181,000 (the “Service Fee”);
and

    

    (b)           Transaction Closing Bonus
Fee.  In the event the Company executes any agreement related
to a Transaction with a target company (a “Closing”), the
Company shall pay the Consultant a bonus fee of $250,000 (the “Bonus Fee”) (The
Bonus Fee and Service Fee may sometimes be referred to hereinafter collectively
as the “Fees”).

    

    The
Service Fee shall be deemed completely earned, due, payable, free of liens or
encumbrances, and non-assessable within thirty days of the Effective Date and
shall accrue as owing, due and payable on the Company’s balance sheet. In the
event there is not adequate capital resources available, the Consultant hereby
agrees to defer the delivery of the Fees until the earlier of: (i) a Closing; or
(ii) the Termination Date.  To the extent deferment is required, any
amount due and owing at such time shall be paid and delivered to the Consultant
in the form of a convertible promissory note (the “Note,” an exact
specimen copy to be issued outlining the terms and conditions of which has been
attached hereto as Exhibit
A). In the event a Closing occurs prior to the Termination Date, the Note
shall be issued to the Consultant in the total amount of $431,000 reflecting the
combined Fees. In the event a Closing does not occur before the Termination Date
and no extension of such Termination Date is negotiated and agreed upon by the
Parties, the Note shall be issued to the Consultant in the total amount of
$181,000 reflecting the Service Fee earned pursuant to this
Section.

    

    (c)           Preferred Stock
Designation.   Until such time as the Fees are paid in
full, either through an initial payment of cash or through the complete
re-payment of the Note, in the event the Company amends it’s Articles of
Incorporation, designates any new class of stock, affects a reverse split of its
stock, affects a forward split of its stock or alters its capital structure in
any way, shape or form, the Company shall immediately designate a preferred
class of stock (the “Series A Preferred
Stock”) with such rights, powers, privileges and preferences as outlined
in the specimen Certificate of Amendment to the Articles of Incorporation
designating the Series A Preferred Stock attached hereto as Exhibit B
and immediately issue 100,000 shares of the Series A Preferred Stock (which
shall represent 100% of the Series A Preferred Stock authorized, issued and
outstanding) to the Consultant who shall hold such shares until the Fees are
paid in full. The Company shall notify its transfer agent of its obligations to
issue such shares of Series A Preferred Stock by delivering irrevocable transfer
agent instructions to its transfer agent (the “Irrevocable TA Instruction
Letter,” a copy of which has been attached hereto as Exhibit
C). The transfer agent shall, immediately upon demand by the Consultant,
provide the Consultant information regarding the Company’s capital structure and
stock issuance history, including, but not limited to: (i) the number of shares
of common stock authorized, issued and outstanding; (ii) the number of shares of
preferred stock authorized, issued and outstanding; and (iii) a complete
issuance history of any class of stock and for any period so
requested.

    

    (d)           Waiver. The Company
has currently outstanding Secured Convertible Promissory Notes issued to the
Consultant in the total amount of $26,414, and to Noctua Fund, LP, an entity
which is managed by the Consultant, in the total amount of $56,333 (collectively
the “Existing
Notes”), with the Existing Notes due and payable as of the date of this
Agreement. As an inducement to both Parties to enter into this Agreement, the
Consultant shall waive the default of their Consultant Notes and extend the
Maturity Date (as defined in the Existing Notes) to February 8, 2010 (the “Extension”). In
addition, the Consultant shall request a similar waiver and Extension of Noctua
Fund, LP from the appropriate parties. All other terms of the Existing Notes
shall remain in effect; provided, however, the rate
of interest as defined in Section 1.2 of the Existing Notes shall continue at
the default rate of interest of fifteen percent (15%) until the Existing Notes
are paid in full.

    

    5.           REPRESENTATIONS
AND WARRANTIES OF COMPANY.

    

     The
Company hereby represents, warrants and agrees as follows:

     

    (a)           This
Agreement has been authorized, executed and delivered by the Company and, when
executed by the Consultant will constitute the valid and binding agreement of
the Company enforceable against the Company in accordance with its terms, except
as enforcement thereof may be limited by bankruptcy, insolvency or
reorganization, moratorium or other similar laws relating to or affecting
creditors’ rights generally or by general equitable principles.

    

    (b)           Any
financial statements, audited and unaudited (including the notes thereto)
provided to Consultant, (the “Financial
Statements”), will present fairly the financial position of the Company
as of the dates indicated and the results of operations and cash flows of the
Company for the periods specified. Such Financial Statements will be prepared in
conformity with generally accepted accounting principles applied on a consistent
basis throughout the periods involved except as otherwise stated
therein.

    

    (c)           The
Company is validly organized, existing and with active status under the laws the
State of Nevada.

    

    (d)           The
securities to be issued to Consultant, if any, have all been authorized for
issuance and when issued, delivered and tendered to the Consultant by the
Company will be validly issued, fully paid and non-assessable.

     

    (e)           Since
date of the most recent of the Financial Statements, there has not been any
undisclosed (i) material adverse change in the business, properties, assets,
rights, operations, condition (financial or otherwise) or prospects of the
Company, (ii) transaction that is material to the Company, except transactions
in the ordinary course of business, (iii) obligation that is material to the
Company, direct or contingent, incurred by the Company, except obligations
incurred in the ordinary course of business, (iv) change that is material to the
Company or in the common shares or outstanding indebtedness of the Company, or
(v) dividend or distribution of any kind declared, paid, or made in respect of
the common shares.

    

    (f)           The
Company shall be deemed to have been made a continuing representation of the
accuracy of any and all facts, material information and data which it supplies
to Consultant and acknowledges its awareness that Consultant will rely on such
continuing representation in disseminating such information and otherwise
performing its advisory functions.  Consultant in the absence of
notice in writing from the Company, will rely on the continuing accuracy of
material, information and data supplied by the Company. Following the issuance
of the Note, the Company shall not provide the Consultant with any material
non-public information. In the event such information is provided to the
Consultant, including any information regarding the Company’s capital structure,
such information shall be made public within four (4) business days following
the release of such information to the Consultant in a Form 8-K filed with the
United States Securities and Exchange Commission.

    

    6.           INDEMNIFICATION.                                           
The Company agrees to indemnify the Consultant and hold it harmless against any
losses, claims, damages or liabilities incurred by the Consultant, in connection
with, or relating in any manner, directly or indirectly, to the Consultant
rendering the Services in accordance with the Agreement, unless it is determined
by a court of competent jurisdiction that such losses, claims, damages or
liabilities arose out of the Consultant’s gross negligence, willful misconduct,
dishonesty, or fraud. Additionally, the Company agrees to reimburse the
Consultant immediately for any and all expenses, including, without limitation,
attorney fees, incurred by the Consultant 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 the rendering of any Services by the
Consultant in accordance with the 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
Consultant and their heirs, legal representatives, successors and
assigns.  The provisions set forth in this Section shall survive any
termination of this Agreement.

    

    7.           COMPLIANCE
WITH SECURITIES LAWS.  The Company
understands that any and all Compensation outlined in this Agreement shall be
paid solely and exclusively as consideration for the aforementioned consulting
efforts made by Consultant on behalf of the Company as an independent
contractor.

    

    8.           MISCELLANEOUS.

    

    (a)           Termination.  This
Agreement shall terminate upon the earlier of: (i) a Closing; or (ii) the
Termination Date; provided,
however, during the term of this Agreement, in the event of a material
breach of this Agreement by the Consultant, the Company shall send written
notice to the Consultant advising Consultant of such material breach. Upon
receipt of such notice from the Company, the Consultant shall have 45 days to
cure such material breach.  This Agreement may be terminated by the
Company only upon written notice to the Consultant and Consultant’s failure to
cure said material breach within 45 days from receipt of said
notice.

    

    (b)           Entire Agreement;
Modifications; Waiver.  This Agreement constitutes the entire
agreement between the Parties pertaining to the subject matter contained herein,
except for any other agreements referenced herein. This Agreement supersedes all
prior and contemporaneous agreements (other than those entered into in writing
simultaneously with this Agreement), representations, and understandings of the
Parties. No supplement, modification, or amendment of this Agreement shall be
binding unless executed in writing by all the Parties. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver of
any other provisions, whether or not similar, nor shall any waiver constitute a
continuing waiver.  No waiver shall be binding unless executed in
writing by the Party making the waiver.

    

    (c)           Notices.  Any
notice required or permitted to be given hereunder shall be in writing and shall
be mailed, e-mailed faxed or otherwise delivered in person to the Parties at the
addresses set forth below:

    

    
      	
              Consultant:

            	
              Company:

            
	 
      	 
      
	
              Noctua
      Fund Manager, LLC

            	
              CoConnect,
      Inc.

            
	
              c/o
      Morrison & Foerster, LLP

            	
              Attn:
      Brad Bingham, Esq.

            
	
              Attn:
      Steve Rowles

            	 
      
	
              12531
      High Bluff Drive, Suite 100

            	 
      
	
              San
      Diego, CA 92130-2040

            	 
      
	
              Fax:  (858)
      720-5125

            	 
      

    

    

    (d)           Necessary
Acts.  Each Party to this Agreement agrees to perform any
further acts and execute and deliver any further documents that may be
reasonably necessary to carry out the provisions of this Agreement.

    

    (e)           Waiver.  Any
waiver by either Party of a breach of any provision of this Agreement shall not
operate as or be construed to be a waiver of any other breach of that provision
or of any breach of any other provision of this Agreement.  The
failure of a Party to insist upon strict adherence to any term of this Agreement
on one or more occasions will not be considered a waiver or deprive that Party
of the right thereafter to insist upon adherence to that term of any other term
of this Agreement.

    

    (f)           Assignment.  Compensation
under this Agreement is assignable at the sole discretion of the Consultant. The
Company may not assign any of its rights, powers or privileges pursuant to this
Agreement without the express written consent of the Consultant.

    

    (g)           Severability.  If
any provision of this Agreement is invalid, illegal, or unenforceable, the
balance of this Agreement shall remain in effect.  If any provision is
inapplicable to any person or circumstance, it shall nevertheless remain
applicable to all other persons and circumstances.

    

    (h)           Governing
Law.  The subject matter of this Agreement shall be governed by
and construed in accordance with the laws of the State of California (without
reference to its choice of law principles), and to the exclusion of the law of
any other forum, without regard to the jurisdiction in which any action or
special proceeding may be instituted.  EACH PARTY HERETO AGREES TO
SUBMIT TO THE PERSONAL JURISDICTION AND VENUE OF THE STATE COURTS LOCATED IN THE
COUNTY OF SAN DIEGO, CALIFORNIA FOR RESOLUTION OF ALL DISPUTES ARISING OUT OF,
IN CONNECTION WITH, OR BY REASON OF THE INTERPRETATION, CONSTRUCTION, AND
ENFORCEMENT OF THIS AGREEMENT, AND HEREBY WAIVES THE CLAIM OR DEFENSE THEREIN
THAT SUCH COURTS CONSTITUTE AN INCONVENIENT FORUM.  AS A MATERIAL
INDUCEMENT FOR THIS AGREEMENT, EACH PARTY SPECIFICALLY WAIVES THE RIGHT TO TRIAL
BY JURY OF ANY ISSUES SO TRIABLE.

    

    (i)           Attorneys’
Fees.  Should any Party hereto employ an attorney for the
purpose of enforcing or constituting this Agreement, or any judgment based on
this Agreement, in any legal proceeding whatsoever, including insolvency,
bankruptcy, arbitration, declaratory relief or other litigation, the prevailing
party shall be entitled to receive from the other Party or Parties thereto
reimbursement for all reasonable attorneys’ fees and all reasonable costs,
including but not limited to service of process, filing fees, court and court
reporter costs, investigative costs, expert witness fees, and the cost of any
bonds, whether taxable or not, and that such reimbursement shall be included in
any judgment or final order issued in that proceeding.

    

    (j)           Specific
Performance.  The Parties hereby 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 have the
right to demand specific performance of the terms, and each of them, of this
Agreement. This shall include orders, in the form of a temporary restraining
order and preliminary restraining order, to order the Company transfer agent to
make issuances of securities consistent with the terms and conditions of this
Agreement.

    

    (k)           Execution of the
Agreement.  The Company, the party executing this Agreement on
behalf of the Company, and the Consultant, have the requisite corporate power
and authority to enter into and carry out the terms and conditions of this
Agreement, as well as all transactions contemplated hereunder. All corporate
proceedings have been taken and all corporate authorizations and approvals have
been secured which are necessary to authorize the execution, delivery and
performance by the Company and the Consultant of this Agreement.  This
Agreement has been duly and validly executed and delivered by the Company and
the Consultant and constitutes a valid and binding obligation, enforceable in
accordance with the respective terms herein.  Upon delivery of this
Agreement, this Agreement, and the other agreements and exhibits referred to
herein, will constitute the valid and binding obligations of Company, and will
be enforceable in accordance with their respective terms.  Delivery
may take place via facsimile transmission.

    

    (l)           Joint Drafting and Exclusive
Agreement.  This Agreement is the only Agreement executed by
and between the Parties related to the performance of the Services described
herein.  There are no additional oral agreements or other
understandings related to the performance of the Services described
herein.  This Agreement shall be deemed to have been drafted jointly
by the Parties hereto, and no inference or interpretation against any one Party
shall be made solely by virtue of such Party allegedly having been the
draftsperson of this Agreement.  The Parties have each conducted
sufficient and appropriate due diligence with respect to the facts and
circumstances surrounding and related to this Agreement.  The Parties
expressly disclaim all reliance upon, and prospectively waive any fraud,
misrepresentation, negligence or other claim based on information supplied by
the other Party, in any way relating to the subject matter of this
Agreement.

    

    (m)           Conflicts of
Interest.  The Parties understand and acknowledge that due to
the nature of the Consultant’s line of businesses, inherent conflicts of
interest exist at the time of execution of this Agreement, and future conflicts
of interest may arise at future dates. The Company has been advised of and
agrees to waive such current conflicts of interest as they exist as of the
Effective Date. Disclosure of future conflicts of interest may be made in
writing or through oral communication.  Acknowledgement of future
conflicts of interest and Company’s waiver of any cause of action against
Consultant related to such conflict of interest may be made in writing or
through oral communication.

    

    (n)           Acknowledgments and
Assent.  The Parties acknowledge that they have been given at
least ten (10) days to consider this Agreement and that they were advised to
consult with an independent attorney prior to signing this Agreement and that
they have in fact consulted with counsel of their own choosing prior to
executing this Agreement.  The Parties may revoke this Agreement for a
period of three (3) calendar days after signing this Agreement, and the
Agreement shall not be effective or enforceable until the expiration of this
three (3) day revocation period.  The Parties agree that they have
read this Agreement and understand the content herein, and freely and
voluntarily assent to all of the terms herein.

    

    ***SIGNATURE
PAGE FOLLOWS***

    

    SIGNATURE
PAGE

    

    IN
WITNESS WHEREOF, this Agreement has been executed by the Parties as of the date
first above written.

    

    
      	
               NOCTUA FUND MANAGER,
      LLC

               

               

               

               

              ___________________________________

              By:  James
      B. Panther, II

              Its:  Managing
      Director

               

            	
              COCONNECT,
      INC.

               

               

               

               

              _________________________________

              By:
      Brad M. Bingham, Esq.

                 Its:  Interim
      Chief Executive Officer

            

    

    

    A FACSIMILE COPY OF THIS AGREEMENT
SHALL HAVE THE SAME LEGAL EFFECT AS AN ORIGINAL OF THE SAME.

    

    

    

    

    LIST
OF EXHIBITS

    

    Exhibit
A............ Specimen Convertible Promissory Note

    
      Exhibit
B............ Specimen Certificate of Amendment to the Articles of Incorporation
designating the Series A Preferred Stock

      
        Exhibit
C............Irrevocable TA Instruction Letter

         

         

         

         

         

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        ]

        
          THIS
SECURED CONVERTIBLE PROMISSORY NOTE (THE “NOTE”) AND THE COMMON SHARES ISSUABLE
UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”).  THIS NOTE AND THE COMMON
SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THIS NOTE OR
THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE UNDER SAID SECURITIES
ACT, OR ANY OTHER VALID EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH
SECURITIES ACT OR AN OPINION OF COUNSEL FROM THE HOLDER (AS DEFINED HEREIN) THAT
REGISTRATION IS NOT REQUIRED UNDER SAID SECURITIES ACT OR UNLESS SOLD PURSUANT
TO RULE 144 UNDER SAID SECURITIES ACT.

          

          COCONNECT,
INC.

          

          SECURED
CONVERTIBLE PROMISSORY NOTE

          

          
            	
                    Principal
      Amount:        $____________

                  	 
      	
                    Issuance
      Date:                                       ______________

                  
	 
      	 
      	 
      
	
                    Interest
      Rate:                                   12%

                  	 
      	 
      

          

          

          

          FOR
VALUE RECEIVED, CoConnect, Inc., a Nevada corporation (the “Borrower”),
has entered into this Secured Convertible Promissory Note (the “Note”)
and hereby promises to pay to Noctua Fund Manager, LLC, a Delaware limited
liability company (the “Holder”)
as further described herein, the sum of $__________. The Holder and the
Borrower may hereinafter be referred to individually as a “Party”
and collectively as the “Parties.”

           

          NOW,
THEREFORE, in consideration of the mutual covenants and other agreements
contained herein, and for good and valuable consideration, receipt of which is
hereby acknowledged, the Borrower hereby issues this Note and the Parties hereby
agree as follows:

           

          SECTION
1

          GENERAL
PROVISIONS

           

          1.1            Issuance
of Note.  Upon the following terms and conditions, the Borrower
hereby issues to the Holder, and the Holder hereby accepts from the Borrower,
this Note, convertible into shares of the Borrower's common stock, par value
$0.01 per share (the “Common
Stock”), due and payable on or before one hundred and eighty (180) days
following the Issuance Date (the “Maturity
Date”). Subject to the conversion rights of the Holder as described
herein, the Note may only be repaid by the Borrower in its entirety, including
all principal and interest due and owing at such time of repayment, and may not
be repaid by the Borrower in installments or increments without the express
prior written consent of the Holder. The Borrower and the Holder are executing
and delivering this Note in accordance with and in reliance upon the exemption
from securities registration afforded by Section 4(2) of the U.S. Securities Act
of 1933, as amended, and the rules and regulations promulgated thereunder (the
"Securities
Act"), including Regulation D, and/or upon such other exemption from the
registration requirements of the Securities Act as may be available with respect
to any or all of the investments to be made hereunder.

           

          ­1.2           Interest.  Beginning
on the Issuance Date, the outstanding principal balance of this Note shall bear
interest, in arrears, at a rate per annum equal to twelve percent (12%), of the
Note, payable upon the Maturity Date at the option of the Holder in (i) cash, or
(ii) in registered shares of Common Stock. If Holder elects to receive interest
in Common Stock, the price of the Common Stock shall be determined in accordance
with Section 2 herein. Interest shall be computed on the basis of a 360-day year
of twelve (12) 30-day months and shall accrue commencing on the Issuance Date.
Furthermore, upon the occurrence of an Event of Default (as defined in Section 5
below), then to the extent permitted by law, the Borrower will pay interest to
the Holder, payable on demand, on the outstanding principal balance of the Note
from the date of the Event of Default until such Event of Default is cured at
the rate of the lesser of (i) fifteen percent (15%); and (ii) the maximum
applicable legal rate per annum. Nothing contained herein or in any document
referred to herein or delivered in connection herewith shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law.  In the event that
the rate of interest or dividends required to be paid or other charges hereunder
exceed the maximum permitted by such law, any payments in excess of such maximum
shall be credited against any principal amount owed by the Borrower to the
Holder and thus refunded to the Borrower.

           

          1.3            Conversion.  Pursuant
to the terms of the Escrow Agreement (the “Escrow
Agreement,” attached hereto as Exhibit
A), the Borrower has authorized, and has reserved and covenants to
continue to reserve in escrow, free of preemptive rights and other similar
contractual rights of stockholders, three (3) times the number of shares of
Common Stock convertible under the Note as of the Issuance Date equal to
__________________ shares of Common Stock (the “Escrow
Pool”). In the event the shares held in the Escrow Pool are exhausted
through conversion of the Note and any principal or interest under the Note
remains outstanding, from time to time and upon sole demand by the Holder and
with no further consent needed from the Company, the Company’s transfer agent
shall issue into the Escrow Pool additional shares such that the number of
shares in the Escrow Pool as of such demand date maintains the three times
multiple described above. Any shares of Common Stock issuable upon conversion of
the Note and any interest accrued and outstanding on the Note are herein
referred to as the “Conversion
Shares”. The Note and the Conversion Shares are sometimes collectively
referred to herein as the “Securities”.
The conversion privileges set forth in Section 2 shall remain in full force and
effect immediately from Issuance Date and until the Note is paid in full
regardless of the occurrence of an Event of Default.  The Note shall
be payable in full upon demand, unless previously converted into Common Stock in
accordance with Section 2 hereof.

           

          1.4           Security
Interest.  The Note shall be secured by all of the assets of
the Borrower up to the amount of this Note (the “Collateral”).
The Borrower hereby provides the Holder express consent to file a UCC-1
Financing Statement for the purpose of securing the Holder’s interest in the
Collateral.

           

           

          SECTION
2

          CONVERSION
RIGHTS

           

          The
Holder shall have the right to convert the principal and any interest due under
this Note into Conversion Shares as set forth below.

           

          2.1           Conversion
into the Borrower's Common Stock.

           

          (a)          The
Holder shall have the right from and after the date of the issuance of this Note
and then at any time until this Note is fully paid, to convert any outstanding
and unpaid principal portion of this Note, at the election of the Holder (the
date of giving of such notice of conversion being a "Conversion
Date") into fully paid and non-assessable shares of Common Stock as such
stock exists on the date of issuance of this Note, or any shares of capital
stock of Borrower into which such Common Stock shall hereafter be changed or
reclassified, at the conversion price per share of $0.01 (the “Conversion
Price”), subject to adjustment as provided herein. Upon delivery to the
Borrower of a notice of conversion, the Borrower shall issue and deliver to the
Holder within three (3) business days after the Conversion Date (such third day
being the “Delivery
Date”) that number of shares of Common Stock for the portion of the Note
converted in accordance with the foregoing. At the election of the Holder, the
Borrower will deliver accrued but unpaid interest on the Note, if any, through
the Conversion Date directly to the Holder. The number of shares of Common Stock
to be issued upon each conversion of this Note shall be determined by dividing
that portion of the principal of the Note to be converted by the Conversion
Price.

           

          (b)           
The Conversion Price and number and kind of shares or other securities to be
issued upon conversion determined pursuant to this Section 2, shall be subject
to adjustment from time to time upon the happening of certain events while this
conversion right remains outstanding, as follows:

           

          (i)           Merger,
Sale of Assets, etc.  If the Borrower at any time shall
consolidate with or merge into or sell or convey all or substantially all its
assets to any other corporation, this Note, as to the unpaid principal portion
thereof and accrued interest thereon, shall thereafter be deemed to evidence the
right to purchase such number and kind of shares or other securities and
property as would have been issuable or distributable on account of such
consolidation, merger, sale or conveyance, upon or with respect to the
securities subject to the conversion or purchase right immediately prior to such
consolidation, merger, sale or conveyance.  The foregoing provision
shall similarly apply to successive transactions of a similar nature by any such
successor or Holder. Without limiting the generality of the foregoing, the
anti-dilution provisions of this Section shall apply to such securities of such
successor or Holder after any such consolidation, merger, sale or
conveyance.

           

          (ii)           Reclassification,
etc.  If the Borrower at any time shall, by reclassification or
otherwise, change the Common Stock into the same or a different number of
securities of any class or classes that may be issued or outstanding, this Note,
as to the unpaid principal portion thereof and accrued interest thereon, shall
thereafter be deemed to evidence the right to purchase an adjusted number of
such securities and kind of securities as would have been issuable as the result
of such change with respect to the Common Stock immediately prior to such
reclassification or other change.

           

          (iii)           Stock
Splits, Combinations and Dividends.  In the event of any
capital restructuring of the Borrower including, but not limited to, any event
in which the shares of Common Stock are subdivided or combined into a greater or
smaller number of shares of Common Stock or if a dividend is paid on the Common
Stock in shares of Common Stock, the Conversion Price shall be adjusted to the
lesser of: (i) $0.01; or (ii) 70% of the lowest closing bid price of the Common
Stock as quoted by Bloomberg, LP for the thirty (30) day period prior to such
Conversion Date.

           

          (iv)           Ratchet
Provision.   If the Borrower shall issue or agree to issue
any shares of Common Stock for a consideration less than the Conversion Price in
effect at the time of such issuance, then, and thereafter successively upon each
such issuance, the Conversion Price shall be reduced to match such subsequent
lower issuance price. For purposes of this adjustment, the issuance of any
security carrying the right to convert such security into shares of Common Stock
or of any warrant, right or option to purchase Common Stock shall result in an
adjustment to the Conversion Price upon the issuance of the above-described
security and again upon the issuance of shares of Common Stock upon exercise of
such conversion or purchase rights if such issuance is at a price lower than the
then applicable Conversion Price.

           

          (v)          Event
of Default.   The Conversion Price shall be adjusted
pursuant to Section 5.2 herein.

           

           (c)           Borrower
represents that upon the issuance of any Conversion Shares, such shares will be
duly and validly issued, fully paid and non-assessable.  Borrower
agrees that its issuance of this Note shall constitute full authority to its
officers, agents, and transfer agents who are charged with the duty of executing
and issuing stock certificates to execute and issue the necessary certificates
for shares of Common Stock upon the conversion of this Note.

           

          2.2           Method
of Conversion.  This Note may be converted by the Holder in
whole or in part as described in this Section.  Upon partial
conversion of this Note, a new Note containing the same date and provisions of
this Note shall, at the request of the Holder, be issued by the Borrower to the
Holder for the principal balance of this Note and interest which shall not have
been converted or paid.

           

          2.3           Maximum
Conversion.  The Holder shall not be entitled to convert an
amount of the Note which would result in beneficial ownership by the Holder and
its affiliates of more than 4.99% of the outstanding shares of Common Stock of
the Borrower on such Conversion Date; provided,
however, the Holder may waive the limitations set forth herein at its
sole and absolute discretion by written notice of not less than sixty-one (61)
days to the Borrower.  For the purposes of the provision to the
immediately preceding sentence, 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, the Holder
shall not be limited to aggregate conversions of only 4.99% and aggregate
conversion by the Holder may exceed 4.99%.The Holder shall have the authority
and obligation to determine whether the restriction contained in this Section
will limit any conversion hereunder and to the extent that the Holder determines
that the limitation contained in this Section applies, the determination of
which portion of the Note are convertible shall be the responsibility and
obligation of the Holder.  The Holder may waive the conversion
limitation described in this section, in whole or in part, upon and effective
after ten (10) days prior written notice to the Borrower to increase such
percentage to up to 9.99%. The Holder may allocate which of the equity of the
Borrower deemed beneficially owned by the Holder shall be included in the 4.99%
amount or up to 9.99% amount as described above.

           

          2.4            Buy-In.  In
addition to any other rights available to the Holder, if the Borrower fails to
deliver to the Holder shares issuable upon conversion of a Note by the Delivery
Date (as defined herein) and if after seven (7) business days after such date
the Holder or a broker on the Holder’s behalf, purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by such Holder of the Common Stock which the Holder was entitled to receive
upon such conversion (a "Buy-In"),
then the Borrower shall pay in cash to the Holder (in addition to any remedies
available to or elected by the Holder) the amount by which (i) the Holder's
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (ii) the aggregate principal and/or interest
amount of the Note for which such conversion, exercise or required delivery was
not timely honored, together with interest thereon at a rate of 15% per annum,
accruing until such amount and any accrued interest thereon is paid in full
(which amount shall be paid as liquidated damages and not as a penalty). For
example, if the Holder purchases shares of Common Stock having a total purchase
price of $11,000 to cover a Buy-In with respect to an attempted conversion of
$10,000 of note principal having an aggregate purchase price of $10,000, then
the Borrower shall be required to pay the Holder $1,000, plus interest. The
Holder shall provide the Borrower written notice indicating the amounts payable
to the Holder in respect of the Buy-In.

           

          SECTION
3

          REPRESENTATIONS
AND WARRANTIES

           

          3.1           Representations
and Warranties of the Borrower.  The Borrower hereby represents
and warrants to the Holder as follows:

           

          (a)          Due
Incorporation.  The Borrower is a corporation duly organized,
validly existing and in good standing under the laws of Nevada and has the
requisite corporate power to own its properties and to carry on its business.
The Borrower is duly qualified as a foreign corporation to do business and is in
good standing in each jurisdiction where the nature of the business conducted or
property owned by it makes such qualification necessary, other than those
jurisdictions in which the failure to so qualify would not have a Material
Adverse Effect.  For purpose of this Note, a “Material
Adverse Effect” shall mean a material adverse effect on the financial
condition, results of operations, properties or business of the Borrower taken
individually, or in the aggregate, as a whole.  For purposes of this
Note, “Subsidiary”
means, with respect to any entity at any date, any corporation, limited or
general partnership, limited liability company, trust, estate, association,
joint venture or other business entity of which more than 50% of
(i) the outstanding capital stock having (in the absence of contingencies)
ordinary voting power to elect a majority of the board of directors or other
managing body of such entity, (ii) in the case of a partnership or limited
liability company, the interest in the capital or profits of such partnership or
limited liability company or (iii) in the case of a trust, estate,
association, joint venture or other entity, the beneficial interest in such
trust, estate, association or other entity business is, at the time of
determination, owned or controlled directly or indirectly through one or more
intermediaries, by such entity.

           

          (b)            Capitalization.  All
issued and outstanding shares of capital stock of the Borrower have been duly
authorized and validly issued and are fully paid and nonassessable. In the event
the Borrower receives a demand for conversion pursuant to the Note and the
Borrower does not have sufficient shares in its treasury of authorized but
unissued shares of Common Stock, the Borrower shall immediately, through
whatever legal means necessary, amend its corporate charter to increase its
authorized stock such that the Borrower is able to maintain the number of shares
of Common Stock held in the Escrow Pool required pursuant to this Note and the
Escrow Agreement.

           

          (c)            Authority;
Enforceability.  This Note has been duly authorized, executed
and delivered by the Borrower and Subsidiaries (as the case may be) and are
valid and binding agreements enforceable in accordance with their terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
generally and to general principles of equity.  The Borrower and
Subsidiaries have full corporate power and authority necessary to enter into and
deliver the Note and to perform their obligations thereunder.

           

          (d)            Additional
Issuances.   Other than previously disclosed in the
Borrower’s public filings, there are no outstanding agreements or preemptive or
similar rights affecting the Common Stock or equity and no outstanding rights,
warrants or options to acquire, or instruments convertible into or exchangeable
for, or agreements or understandings with respect to the sale or issuance of any
shares of Common Stock or equity of the Borrower or other equity interest in any
of the Subsidiaries of the Borrower.

           

          (e)            No
Violation or Conflict.  Neither the issuance nor sale of the
Securities nor the performance of the Borrower’s obligations under this Note and
all other agreements entered into by the Borrower relating thereto by the
Borrower will:

           

          (i)           violate,
conflict with, result in a breach of, or constitute a default (or an event which
with the giving of notice or the lapse of time or both would be reasonably
likely to constitute a default in any  material respect) of a material
nature under (1) the articles or certificate of incorporation, charter or bylaws
of the Borrower, (2) any decree, judgment, order, law, treaty, rule, regulation
or determination applicable to the Borrower of any court, governmental agency or
body, or arbitrator having jurisdiction over the Borrower or over the properties
or assets of the Borrower or any of its affiliates, (3) the terms of any bond,
debenture, note or any other evidence of indebtedness, or any agreement, stock
option or other similar plan, indenture, lease, mortgage, deed of trust or other
instrument to which the Borrower or any of its affiliates is a party, by which
the Borrower or any of its affiliates is bound, or to which any of the
properties of the Borrower or any of its affiliates is subject, or (4) the terms
of any “lock-up” or similar provision of any underwriting or similar agreement
to which the Borrower, or any of its affiliates is a party except the violation,
conflict, breach, or default of which would not have a Material Adverse
Effect;

           

          (ii)           result
in the creation or imposition of any lien, charge or encumbrance upon the
Securities or any of the assets of the Borrower or any of its affiliates, except
as contemplated herein;

           

          (iii)           result
in the activation of any anti-dilution rights or a reset or repricing of any
debt or security instrument of any other creditor or equity holder of the
Borrower, nor result in the acceleration of the due date of any obligation of
the Borrower; or

           

           

          (iv)           result
in the activation of any piggy-back registration rights of any person or entity
holding securities or debt of the Borrower or having the right to receive
securities of the Borrower.

           

          (f)            The
Securities.  The Securities upon issuance:

           

          (i)           are,
or will be, free and clear of any security interests, liens, claims or other
encumbrances, subject to restrictions upon transfer under the Securities Act and
any applicable state securities laws;

           

          (ii)           have
been, or will be, duly and validly authorized and on the date of issuance of the
Conversion Shares, the Conversion Shares will be duly and validly issued, fully
paid and nonassessable or if registered pursuant to the Securities Act, and
resold pursuant to an effective registration statement will be free trading and
unrestricted;

           

          (iii)           will
not have been issued or sold in violation of any preemptive or other similar
rights of the holders of any securities of the Borrower;

           

          (iv)           will
not subject the holders thereof to personal liability by reason of being such
holders, provided Holder’s representations herein are true and accurate and
Holder takes no actions or fails to take any actions required for their purchase
of the Securities to be in compliance with all applicable laws and regulations;
and

           

          (v)           provided
Holder’s representations herein are true and accurate, will have been issued in
reliance upon an exemption from the registration requirements of and will not
result in a violation of Section 5 under the Securities Act.

           

          (g)            Stop
Transfer.  The Borrower will not issue any stop transfer order
or other order impeding the sale, resale, removal of restrictive legend pursuant
to Section 4.10 herein or any other exemption to the Securities Act or delivery
of any of the Securities, except as may be required by any applicable federal or
state securities laws. In addition, the Borrower hereby warrants to the transfer
agent of record at the time any Conversion Shares are submitted for restriction
removal pursuant to Section 4.10 herein that such a removal of restriction and
subsequent transfer is a “routine” transfer as defined in the Securities
Exchange Act of 1934.

           

          (h)            Defaults.   The
Borrower is not in violation of its articles of incorporation or bylaws and is
(i) not in default under or in violation of any other material agreement or
instrument to which it is a party or by which it or any of its properties are
bound or affected, which default or violation would have a Material Adverse
Effect, (ii) not in default with respect to any order of any court, arbitrator
or governmental body or subject to or party to any order of any court or
governmental authority arising out of any action, suit or proceeding under any
statute or other law respecting antitrust, monopoly, restraint of trade, unfair
competition or similar matters, or (iii) to the Borrower’s knowledge not in
violation of any statute, rule or regulation of any governmental authority which
violation would have a Material Adverse Effect.

           

          (i)            Not an
Integrated Offering.  Neither the Borrower, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would cause the offer of the
Securities pursuant to this Note to be integrated with prior offerings by the
Borrower for purposes of the Securities Act or any applicable stockholder
approval provisions, including, without limitation, under the rules and
regulations of the principal market which would impair the exemptions relied
upon herein or the Borrower’s ability to timely comply with its obligations
hereunder. Nor will the Borrower or any of its affiliates take any action or
steps that would cause the offer or issuance of the Securities to be integrated
with other offerings which would impair the exemptions relied upon in this
offering or the Borrower’s ability to timely comply with its obligations
hereunder. The Borrower will not conduct any offering other than the
transactions contemplated hereby that will be integrated with the offer or
issuance of the Securities which would impair the exemptions relied upon in this
offering or the Borrower’s ability to timely comply with its obligations
hereunder.

           

          (j)            No
Undisclosed Liabilities.  The Borrower has no liabilities or
obligations which are material, individually or in the aggregate, which are not
disclosed herein, other than those incurred in the ordinary course of the
Borrower’s businesses and which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.

           

          (k)            Investment
Company.   Neither the Borrower nor any affiliate is an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended.

           

          (l)            Survival.  The
foregoing representations and warranties shall survive until three (3) years
after the Issuance Date.

           

          3.2            Representations
and Warranties of the Holder.  The Holder hereby represents and
warrants to the Borrower with respect solely to itself and not with respect to
any other Holder as follows:

           

          (a)            Organization
and Standing of the Holder.  The Holder is a limited liability
company duly organized, validly existing and in good standing under the laws of
the jurisdiction of its Delaware.

           

          (b)            Authorization
and Power.  The Holder has the requisite power and authority to
enter into this Note and to receive the Securities being sold to it
hereunder.  The execution, delivery and performance of the Securities
by the Holder and the consummation by it of the transactions contemplated hereby
have been duly authorized by all necessary corporate or partnership action, and
no further consent or authorization of such Holder or its Board of Directors,
stockholders, or partners, as the case may be, is required. When executed and
delivered by the Holder, the Note shall constitute valid and binding obligations
of the Holder enforceable against such Holder in accordance with their terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, conservatorship,
receivership or similar laws relating to, or affecting generally the enforcement
of, creditor's rights and remedies or by other equitable principles of general
application.

           

          (c)            Acquisition
for Investment.  The Holder is purchasing the Securities solely
for its own account and not with a view to or for sale in connection with
distribution. The Holder does not have a present intention to sell any of the
Securities, nor a present arrangement (whether or not legally binding) or
intention to effect any distribution of any of the Securities to or through any
person or entity; provided, however, that by making the representations herein,
such Holder does not agree to hold the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time in
accordance with Federal and state securities laws applicable to such
disposition. The Holder acknowledges that it (i) has such knowledge and
experience in financial and business matters such that Holder is capable of
evaluating the merits and risks of Holder's investment in the Borrower, (ii) is
able to bear the financial risks associated with an investment in the Securities
and (iii) has been given full access to such records of the Borrower and the
Subsidiaries and to the officers of the Borrower and the Subsidiaries as it has
deemed necessary or appropriate to conduct its due diligence
investigation.

           

          (d)            No
General Solicitation.  The Holder acknowledges that the
Securities were not offered to such Holder by means of any form of general or
public solicitation or general advertising, or publicly disseminated
advertisements or sales literature, including (i) any advertisement, article,
notice or other communication published in any newspaper, magazine, or similar
media, or broadcast over television or radio, or (ii) any seminar or meeting to
which such Holder was invited by any of the foregoing means of communications.
The Holder, in making the decision to purchase the Securities, has relied upon
independent investigation made by it and has not relied on any information or
representations made by third parties.

           

          (e)            Certain
Fees.  Other than as described herein, the Holder has not
employed any broker or finder or incurred any liability for any brokerage or
investment banking fees, commissions, finders' structuring fees, financial
advisory fees or other similar fees in connection with the Note.

           

          SECTION
4

          COVENANTS

           

          The
Borrower covenants with the Holder as follows, which covenants are for the
benefit of the Holder and their respective permitted assignees.

           

          4.1           Inspection
Rights.  The Borrower shall permit, during normal business
hours and upon reasonable request and reasonable notice, the Holder or any
employees, agents or representatives thereof, so long as such Holder shall be
obligated hereunder to purchase the Note or shall beneficially own any
Conversion Shares for purposes reasonably related to such Holder's interests as
a stockholder, to examine the publicly available, non-confidential records and
books of account of, and visit and inspect the properties, assets, operations
and business of the Borrower and any Subsidiary, and to discuss the publicly
available, non-confidential affairs, finances and accounts of the Borrower and
any Subsidiary with any of its officers, consultants, directors, and key
employees.

           

          4.2           Compliance
with Laws.  The Borrower shall comply, and cause each
Subsidiary to comply, with all applicable laws, rules, regulations and orders,
noncompliance with which would be reasonably likely to have a Material Adverse
Effect.

           

          4.3           Keeping
of Records and Books of Account.  The Borrower shall keep and
cause each Subsidiary to keep adequate records and books of account, in which
complete entries will be made in accordance with GAAP consistently applied,
reflecting all financial transactions of the Borrower and its Subsidiaries, and
in which, for each fiscal year, all proper reserves for depreciation, depletion,
obsolescence, amortization, taxes, bad debts and other purposes in connection
with its business shall be made.

           

          4.4           Other
Agreements.  The Borrower shall not enter into any agreement in
which the terms of such agreement would restrict or impair the right or ability
to perform of the Borrower or any Subsidiary under the Note.

           

          4.5           Disclosure
of Material Information.  The Borrower covenants and agrees
that neither it nor any other person acting on its behalf has provided or will
provide any Holder or its agents or counsel with any information that the
Borrower believes constitutes material non-public information, unless prior
thereto such Holder shall have executed a written agreement regarding the
confidentiality and use of such information.  The Borrower understands and
confirms that the Holder shall be relying on the foregoing representations in
effecting transactions in securities of the Borrower. In the event such
information is disclosed to the Holder, the Borrower shall publicly disclose
such information in a Form 8-K filed with the United States Securities and
Exchange Commission (the “SEC”)
within four days of the disclosure of such information.

           

          4.6           Pledge
of Securities.  The Borrower acknowledges that the Securities
may be pledged by a Holder in connection with a bona fide margin agreement or
other loan or financing arrangement that is secured by the Securities. The
pledge of Securities shall not be deemed to be a transfer, sale or assignment of
the Securities hereunder, and no Holder effecting a pledge of the Securities
shall be required to provide the Borrower with any notice thereof or otherwise
make any delivery to the Borrower pursuant to this Note; provided that a Holder
and its pledgee shall be required to comply with the provisions herein in order
to effect a sale, transfer or assignment of Securities to such
pledgee.

           

           

          4.7           Corporate
Document Amendments.  The Borrower shall not amend or waive any
provision of the Articles of Incorporation or Bylaws of the Borrower without the
express written consent of the Holder.

           

          4.8           Stock
Splits.   The Borrower shall not alter its capital
structure in any way, including but not limited to, a reverse or forward split
of its Common Stock, without express written consent from the
Holder.

           

          4.9           Distributions.  So
long as the Note remains outstanding, the Borrower agrees that it shall not (i)
declare or pay any dividends or make any distributions to any holder(s) of
Common Stock or other equity security of the Borrower or (ii) purchase or
otherwise acquire for value, directly or indirectly, any Common Stock or other
equity security of the Borrower.

           

          4.10           Reservation
of Shares.  So long as the Note remains outstanding, the
Borrower shall take all action necessary to at all times have authorized and
reserved for the purpose of issuance, one hundred and fifty percent (150%) of
the aggregate number of shares of Common Stock needed to provide for the
issuance of the Conversion Shares.

           

          4.11           Transfer
Agent.  The Borrower’s current transfer agent is Action Stock
Transfer Corporation. So long as the Note remains outstanding, the Borrower
shall not change transfer agents without the express written consent of the
Holder. In addition, the Borrower shall issue irrevocable instructions (the
“Irrevocable
Transfer Agent Instructions” attached hereto as Exhibit
B) to its transfer agent, and any subsequent transfer agent which shall
reference this Note and the rights, powers and privileges provided to the Holder
hereunder which shall be acknowledged and agreed to by the transfer agent. The
Borrower warrants that no instruction other than the Escrow Agreement and the
Irrevocable Transfer Agent Instructions referred to in this Section will be
given by the Borrower to its transfer agent and that the Conversion Shares shall
otherwise be freely transferable on the books and records of the Borrower as and
to the extent provided in this Note. If the Holder provides the Borrower or the
Borrower’s transfer agent with an opinion of counsel of the Holder’s choosing to
the effect that a public sale, assignment or transfer of the Conversion Shares
may be made without registration under the Securities Act or the Holder provides
the Borrower with reasonable assurances that the Conversion Shares can be sold
pursuant to Rule 144 (or any other exemption to the Securities Act) without any
restriction as to the number of securities acquired as of a particular date that
can then be immediately sold, the Borrower hereby expressly authorizes the
transfer agent to accept such opinion or assurances without any Borrower
approval required and expressly authorizes and instructs the transfer agent to
affect such transfer, and, in the case of the Conversion Shares, issue one or
more certificates (or transfer via electronic DWAC transfer if applicable) in
such name and in such denominations as specified by such Holder and without any
restrictive legend.  The Borrower acknowledges that a breach by it of
its obligations under this Section will cause irreparable harm to the Holder by
vitiating the intent and purpose of the transaction contemplated hereby.
Accordingly, the Borrower acknowledges that the remedy at law for a breach of
its obligations under this Section will be inadequate and agrees, in the
event of a breach or threatened breach by the Borrower of the provisions of this
Section, that the Holder shall be entitled, in addition to all other available
remedies, to an order and/or injunction restraining any breach and requiring
immediate issuance and transfer of such shares, without the necessity of showing
economic loss and without any bond or other security being
required.

           

          4.12           Disposition
of Assets.  So long as the Note remains outstanding, neither
the Borrower nor any Subsidiary shall sell, transfer or otherwise dispose of any
of its properties, assets and rights including, without limitation, its
intellectual property to any person except for sales with the prior written
consent of the Holder.

           

          4.13           Restrictions
on Issuances of Securities.  So long as any amount of the
principal or interest of the Note remains outstanding, the Borrower shall not
issue any additional securities, including any class of common or preferred
shares, nor designate any new class of securities without the prior written
consent of the Holder.

           

          4.14           Restrictions
and Conditions on Subsequent Financings.  So long as any amount
of the principal or interest of the Note remains outstanding, the Borrower shall
not offer or sell to, or exchange with (or other type of distribution to) any
third party any debt instrument, including, but not limited to securities
convertible, exercisable or exchangeable into Common Stock or any other equity
security of the Borrower (a “Subsequent
Financing”), without notice to the Holder and prior written consent of
the Holder with such consent not, provided adequate security to the Holder, to
be unreasonably withheld. In the event the Borrower enters into a Subsequent
Financing with consent from the Holder, then, and thereafter successively upon
each such issuance, the Conversion Price shall be reduced to match such
subsequent lower issuance price in such Subsequent Financing. For purposes of
this adjustment, the issuance of any security carrying the right to convert such
security into shares of Common Stock or of any warrant, right or option to
purchase Common Stock shall result in an adjustment to the Conversion Price upon
the issuance of the above-described security and again upon the issuance of
shares of Common Stock upon exercise of such conversion or purchase rights if
such issuance is at a price lower than the then applicable Conversion Price. In
addition, in the event the Borrower enters into any Subsequent Financing with
consent from the Holder, the Holder shall maintain the right to convert any
outstanding principal balance and interest of the Note at such time into the
financial instrument and under the same terms of such Subsequent Financing. In
the event the Borrower offers any Subsequent Financing with consent from the
Holder, the Holder shall maintain a right of first refusal such that the Holder
shall have the right, at its sole and exclusive option, to purchase up to one
hundred percent (100%) of the debt or equity instruments offered in such
Subsequent Financing.

           

          SECTION
5

          EVENT OF DEFAULT

           

          5.1           Event
of Default.  The occurrence of any of the following events shall be
deemed an "Event
of Default":

           

          a.           Failure
to Pay Principal or Interest.  The Borrower fails to pay any
installment of principal amount, interest or other sum due under this Note when
due and such failure continues for a period of five (5) business days after the
due date.

           

          b.          Failure
to Convert. The Borrower provides notice to the Holder, including by way
of public announcement, at any time, of its inability to comply or its intention
not to comply with proper requests for conversion of this Note into shares of
Common Stock.

           

          c.          Breach
of Covenant.  The Borrower breaches any material covenant or
other term or condition of this Note in any material respect and such breach, if
subject to cure, continues for a period of five (5) business days. The Parties
hereby specifically agree that Section 4 Covenants including, but not limited
to, Sections 4.4 through 4.13, are material covenants and as such, if breached,
shall be considered an Event of Default. Such specific reference to Sections 4.4
through 4.13 shall in no way signify that any other covenant contained herein is
not a material covenant.

           

          d.          Breach
of Representations and Warranties.  Any material representation
or warranty of the Borrower made herein or in any agreement, statement or
certificate given in writing pursuant hereto or in connection herewith or
therewith shall be false or misleading in any material respect as of the date
made.

           

          e.          Receiver
or Trustee.  The Borrower or any Subsidiary of Borrower shall
make an assignment for the benefit of creditors, or apply for or consent to the
appointment of a receiver or trustee for them or for a substantial part of their
property or business; or such a receiver or trustee shall otherwise be
appointed.

           

          f.          Bankruptcy.  Bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings or
relief under any bankruptcy law or any law, or the issuance of any notice in
relation to such event, for the relief of debtors shall be instituted by or
against the Borrower or any Subsidiary of Borrower and if instituted against
them are not dismissed within forty-five (45) days of initiation.

           

          g.          Delisting.   The
Borrower currently trades of the Over The Counter Bulletin Board (“OTCBB”).
Any delisting of the Common Stock from the OTCBB, failure to comply with the
requirements for continued listing on the OTCBB for a period of seven
consecutive trading days or notification from the OTCBB that the Borrower is not
in compliance with the conditions for such continued listing on such Principal
market.

           

          h.          Stop
Trade.  An SEC or judicial stop trade order or OTCBB trading
suspension with respect to Borrower’s Common Stock that lasts for five (5) or
more consecutive trading days.

           

          i.          Failure
to Deliver Common Stock or Replacement Note.  Borrower's
failure to deliver any Common Stock to the Holder, including but not limited to
Conversion Shares, pursuant to and in the form required by this Note, and, if
requested by Borrower, a replacement Note within five (5) business
days.

           

          j.          Failure
to Remove Restrictive Legend. The failure of the Borrower or its transfer
agent to remove any legend from shares of Common Stock pursuant to Section 4.10
herein and issue such un-legended certificates to the Holder within five (5)
business days of the Holder’s request.

           

          k.          Reservation
Default.  The occurrence of reservation default as described in
this Note.

           

          5.2           Effects
of Event of Default.

           

          a.          In
the event an Event of Default occurs: (i) at the option of the Holder, all sums
of principal and interest then remaining unpaid hereon and all other amounts
payable hereunder shall become immediately due and payable upon demand, without
presentment, or grace period, all of which hereby are expressly waived, except
as set forth below; and (ii) the Conversion Price shall be adjusted to the lower
of: (a) the Conversion Price in effect at the time of such Event of Default; or
(b) $.00003. Such default Conversion Price shall not be adjusted or affected in
any way by any corporate actions, including any forward or reverse split of the
borrower’s Common Stock.

           

          b.          In
the event of an Event of Default pursuant to Section 4.7 or 4.8 herein, or in
the event the Holder waives the restrictive provisions of Section 4.7 or 4.8,
the Borrower shall amend their Articles of Incorporation and designate One
Hundred Thousand (100,000) shares of a class of preferred stock (the “Series
A Preferred Stock”) with such rights, powers, privileges and preferences
as outlined in the specimen Certificate of Amendment to the Articles of
Incorporation designating the Series A Preferred Stock attached hereto as Exhibit
C. Immediately upon such Event of Default described in this Section and
subsequent amendment and designation, the Borrower shall have the sole and
exclusive option to convert 25% of the then outstanding principal and interest
due and owing under the Note at such time into all 100,000 shares of the Series
A Preferred Stock.

           

          SECTION
6

          INDEMNIFICATION

           

          6.1           General
Indemnity.  The Borrower agrees to indemnify the Holder and
hold it harmless against any losses, claims, damages or liabilities incurred by
the Holder, in connection with, or relating in any manner, directly or
indirectly, to the Holder in connection with the Note. Additionally, the
Borrower agrees to reimburse the Holder immediately for any and all expenses,
including, without limitation, attorney fees, incurred by the Holder 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, from the
Note (as defendant, nonparty, or in any other capacity other than as a
plaintiff, including, without limitation, as a party in an interpleader
action).  The Borrower 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 Holder and their heirs, legal
representatives, successors and assigns.  The provisions set forth in
this Section shall survive any termination of this Note.

           

          SECTION
7

          MISCELLANEOUS

           

          7.1           Fees
and Expenses.  Each Party shall pay the fees and expenses of
its advisors, counsel, accountants and other experts, if any, and all other
expenses, incurred by such Party incident to the negotiation, preparation,
execution, delivery and performance of this Note; provided however, the Borrower
shall pay all reasonable fees and expenses incurred by the Holder in connection
with the enforcement of this Note, including, without limitation, all reasonable
attorneys' fees and expenses.  

           

          7.2           Specific
Performance; Consent to Jurisdiction; Venue.

           

          (a)            The
Borrower and the Holder acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Note was not performed in
accordance with its specific terms or were otherwise breached.  It is
accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Note 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.

           

          (b)            This
Note shall be governed by and construed in accordance with the laws of the State
of California without reference to applicable conflict of law
principles.  All Parties consent to the exclusive jurisdiction of the
state courts sitting in San Diego County, California in any action, suit or
other proceeding arising out of or relating to this Note and each Party
irrevocably agrees that all claims and demands in respect of any such action,
suit or proceeding may be heard and determined in any such court and irrevocably
waives any objection it may now or hereafter have as to the venue of any such
action, suit or proceeding brought in any such court or that such court is an
inconvenient forum. EACH
PARTY WAIVES ITS RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF OR RELATED TO THIS NOTE IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY PARTY
HERETO.  Whenever possible, each provision of this Note shall
be interpreted in such manner as to be effective and valid under applicable law,
but, if any provision of this Note shall be held to be prohibited or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Note.

           

          7.3           Entire
Agreement; Amendment.  This Note contains the entire
understanding and agreement of the Parties with respect to the matters covered
hereby and, except as specifically set forth herein, neither the Borrower nor
any Holder make any representation, warranty, covenant or undertaking with
respect to such matters, and they supersede all prior understandings and
agreements with respect to said subject matter, all of which are merged
herein.  No provision of this Note may be waived or amended other than
by a written instrument signed by the Borrower and the Holder holding at least a
majority of the principal amount of the Note then held by the Holder. Any
amendment or waiver effected in accordance with this Section shall be binding
upon the Holder (and their permitted assigns) and the Borrower.

           

           

          7.4           Notices.  Any
notice, demand, request, waiver or other communication required or permitted to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery, by telecopy, facsimile or electronic mail transmission 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:

           

          
            	
                    If to the Borrower,
      to:

                  	
                    If to the Holder,
      to:

                  
	 
      	 
      
	
                    CoConnect,
      Inc.

                  	
                    Noctua
      Fund Manager, LLC

                  
	 
      	 
      
	 
      	 
      
	 
      	 
      

          

           

          Any
Party hereto may from time to time change its address for notices by giving
written notice of such changed address to the other Party hereto.

           

          7.5           Waivers.  No
waiver by either Party of any default with respect to any provision, condition
or requirement of this Note shall be deemed to be a continuing waiver in the
future or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of any Party to exercise any right hereunder in any
manner impair the exercise of any such right accruing to it
thereafter.

           

          7.6           Headings.  The
article, section and subsection headings in this Note are for convenience only
and shall not constitute a part of this Note for any other purpose and shall not
be deemed to limit or affect any of the provisions hereof.

           

          7.7           Assignability.  This
Note shall be binding upon the Borrower and its successors and assigns, and
shall inure to the benefit of the Holder and its successors and assigns. This
Note, and all of the terms and conditions described herein, is assignable and
may be transferred sold, or pledged, hypothecated or otherwise granted as
security freely by the Holder. The Borrower may not assign any of its
obligations under this Note without the express written consent of the
Holder.

           

          7.8           No
Third Party Beneficiaries.  This Note is intended for the
benefit of the Parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

           

          7.9           Survival.  The
representations and warranties of the Borrower and the Holder shall survive the
execution and delivery hereof.

           

          7.10           Counterparts.  This
Note may be executed in any number of counterparts, all of which taken together
shall constitute one and the same instrument and shall become effective when
counterparts have been signed by each Party and delivered to the other Parties
hereto, it being understood that all Parties need not sign the same counterpart.
A facsimile copy of this Note shall have the same legal effect as an original of
the same.

           

          7.11           Severability.  The
provisions of this Note are severable and, in the event that any court of
competent jurisdiction shall determine that any one or more of the provisions or
part of the provisions contained in this Note shall, for any reason, be held to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision or part of a provision
of this Note and this Note shall be reformed and construed as if such invalid or
illegal or unenforceable provision, or part of such provision, had never been
contained herein, so that such provisions would be valid, legal and enforceable
to the maximum extent possible.

           

          7.12           Further
Assurances.  From and after the date of this Note, upon the
request of the Holder or the Borrower, the Borrower and the Holder shall execute
and deliver such instruments, documents and other writings as may be reasonably
necessary or desirable to confirm and carry out and to effectuate fully the
intent and purposes of this Note

           

          7.13           Shareholder
Status.  The Holder shall not have rights as a shareholder,
including any voting right, of the Borrower with respect to unconverted portions
of this Note. However, the Holder will have all the rights of a shareholder of
the Borrower with respect to the shares of Common Stock to be received by Holder
after delivery by the Holder of a Conversion Notice to the
Borrower.

           

          7.14           Acknowledgments
and Assent.  The Parties individually and collectively
acknowledge that they have been given adequate time to consider this Note and
that they were advised to consult with an independent attorney prior to signing
this Note and that they have in fact consulted with counsel of their own
choosing prior to executing this Note. The Parties agree that they have read
this Note and understand the content herein, and freely and voluntarily assent
to all of the terms herein.

           

           

          ***SIGNATURE
PAGE FOLLOWS***

           

          SIGNATURE
PAGE

           

          IN
WITNESS WHEREOF, the Borrower has signed and sealed this Note and delivered it
as of the date first set forth above.

           

          
            	 
      	
                    COCONNECT,
      INC.

                    A
      Nevada corporation

                     

                     

                     

                     

                  
	 
      	
                    By:

                    Its:

                  

          

           

           

           

          FACSIMILE
COPY OF THIS NOTE SHALL HAVE THE SAME LEGAL EFFECT AS AN ORIGINAL OF THE
SAME.

           

           

           

           

           

          
            LIST
OF EXHIBITS

            

            Exhibit
A............Escrow Agreement

            Exhibit
B............Irrevocable Transfer Agent Instruction Letter

            
              Exhibit
C............Specimen Certificate of Amendment to the Articles of Incorporation
designating the Series A Preferred Stock

            

          

          

          

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

          
 

          
            

             

            ESCROW
AGREEMENT

             

            THIS
ESCROW AGREEMENT (the “Agreement”)
is dated as of _______, _____ 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 ________, ______, the Company issued NFM  a convertible
promissory note in the amount of $__________ (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 __________________ 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. In the event the
shares held in the Escrow Pool are exhausted through conversion of the Note and
any principal or interest under the Note remains outstanding, from time to time
and upon sole demand by the NFM and with no further consent needed from the
Company, the Company’s transfer agent shall issue into the Escrow Pool
additional shares such that the number of shares in the Escrow Pool as of such
demand date maintains the three times multiple described
above.

             

            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:

             

            
              	
                      If to the Company,
      to:

                      CoConnect,
      Inc.

                       

                    	
                      If to NFM,
      to:

                      Noctua
      Fund Manager, LLC

                       

                       

                       

                       

                       

                    
	
                       

                      If to the Escrow Agent,
      to:

                      Action
      Stock Transfer Corporation

                       

                       

                       

                       

                    	 
      

            

             

            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 FOLLOWS***

             

             

             

            SIGNATURE
PAGE

             

            IN
WITNESS WHEREOF, the Parties have duly executed this Agreement as of the day and
year first written above.

             

             

            
              	
                      COMPANY:

                       

                      CoConnect,
      Inc.

                       

                       

                       

                      ___________________________

                      By:

                      Its:

                       

                       

                    	
                      NFM:

                       

                      Noctua
      Fund Manager, LLC

                       

                       

                       

                      ___________________________

                      By:

                      Its:

                       

                    
	
                      ESCROW
      AGENT

                       

                      Action
      Stock Transfer Corporation

                       

                       

                      ___________________________

                      By:

                      Its:

                    	 
      

            

             

             

            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.

             

            
              	
                      Amount
      of Note converted...........................

                    	
                      $

                    
	
                       

                      Conversion
      Price.............................................................

                    	
                       

                      $

                    
	
                       

                      Number
      of Conversion Shares to be Issued.............................

                    	 
      
	
                       

                      Remaining
      Note balance...........................................

                    	
                       

                      $

                    

            

             

             

            Regards,

             

            Noctua
Fund Manager, LLC

             

             

             

            _________________________

            By:

            Its:

             

           

           

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

          
 

        

        
          IRREVOCABLE
TRANSFER AGENT INSTRUCTIONS

          

          
 

          Action
Stock Transfer Corporation

          Attn:
Justeene Blankenship

          7069 S.
Highland Dr., Suite 300

          Salt Lake
City, UT 84121

          

          

          Dear
Ms. Blankenship

           

          Reference
is made to the Convertible Promissory Note (the “Note,”
a copy of which has been attached hereto as Exhibit
A) dated as of ___________, 2010 by and among CoConnect, Inc., a Nevada
corporation (the “Company”)
and Noctua Fund Manager, LLC, a Delaware limited liability company (“NFM”).
Pursuant to the terms of the Note, NFM is entitled to shares of the Company’s
common stock (the “Conversion
Shares”) held in escrow pursuant to the related escrow agreement (the
“Escrow
Agreement”) upon conversion of the Note. This letter shall serve as our
irrevocable authorization and direction to you (provided that you are the
transfer agent of the Company at such time, or to the transfer agent of record
at such time) to issue any Conversion Shares to or upon the order of NFM from
time to time, pursuant to the terms of the Note.

           

          In
addition, pursuant to the terms of the Note and Escrow Agreement, the Company is
required to reserve in escrow, free of preemptive rights and other similar
contractual rights of stockholders, three times the number of shares of the
Company’s common stock convertible under the Note as of the Issuance Date equal
to __________________ shares of common stock (the “Escrow
Pool”). In the event the shares held in the Escrow Pool are exhausted
through conversion of the Note and any principal or interest under the Note
remains outstanding, from time to time and upon sole demand by NFM and with no
further consent needed from the Company, the Company’s transfer agent is
required to issue into the Escrow Pool additional shares such that the number of
shares in the Escrow Pool as of such demand date maintains the three times
multiple described above. This letter shall serve as our irrevocable
authorization and direction to you (provided that you are the transfer agent of
the Company at such time, or to the transfer agent of record at such time) to
issue such additional shares into escrow described herein upon the order of NFM
from time to time, pursuant to the terms of the Note and the Escrow
Agreement.

           

          In
connection with the Conversion Shares, so long as you have previously received
written confirmation from counsel to the Company or
NFM that (a) a registration statement covering resale of Conversion Shares has
been declared effective by the United States Securities and Exchange Commission
under the Securities Act of 1933, as amended (the “1933
Act”), or (b) the Conversion may be sold pursuant to Rule 144 or any
other such exemption of the 1933 Act, then certificates representing the
Conversion Shares shall not bear any legend restricting transfer of the
Conversion Shares and should not be subject to any stop-transfer
restriction.

           

          Please
be advised that NFM is relying upon this letter as an inducement to enter into
the Note and, accordingly, NFM is a third party beneficiary to these
instructions.

           

          Please
execute this letter in the space indicated to acknowledge your agreement to act
in accordance with these instructions.

           

          Very
truly
yours,                                                                   Acknowledged,
agreed and accepted:

           

          
            	
                    CoConnect,
      Inc.

                     

                     

                     

                    ____________________________________

                    By:.

                    Its:

                  	
                    Action
      Stock Transfer Corporation

                     

                     

                     

                    __________________________________

                    By:

                    Its:

                  

          

           

           

           

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

          

          
 

          
            CERTIFICATE
OF AMENDMENT

            TO
THE

            ARTICLES
OF INCORPORATION

            OF

            COCONNECT,
INC.

            A
Nevada Corporation

            

            COCONNECT,
INC., a Nevada corporation (the “Corporation”)
organized and existing under and by virtue of the provisions of the Nevada
Revised Statutes of the State of Nevada (the “NRS”)
DOES HEREBY CERTIFY:

             

            Pursuant
to the NRS, the Board of Directors of the Corporation hereby files this
Certificate of Amendment to the Articles of Incorporation (the “Certificate”)
and amends Article Three as follows:

             

            RESOLVED,
that the Articles of Incorporation of this corporation be amended as
follows:

             

            ARTICLE
THREE. [CAPITAL STOCK].

             

            3.1           Authorized
Capital Stock.  The aggregate number of shares which this
Corporation shall have authority to issue is Ten Billion (10,000,000,000)
shares, consisting of (a) Nine Billion Nine Hundred and Ninety Nine Thousand
(9,999,000,000) shares of common stock, par value $0.001 per share (the “Common
Stock”) and (b) One Million (1,000,000) shares of preferred stock, par
value $0.001 per share (the “Preferred
Stock”), issuable in one or more series as hereinafter provided. A
description of the classes of shares and a statement of the number of shares in
each class and the relative rights, voting power, and preferences granted to,
and restrictions imposed upon, the shares of each class are as
follows:

             

            3.2           Common
Stock. Each outstanding share of Common Stock of the Corporation shall be
entitled to one vote and each fractional share of Common Stock shall be entitled
to a corresponding fractional vote on each matter submitted to a vote of the
shareholders.  A majority of all shares of stock, both Common Stock
and Preferred Stock, entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. Except as otherwise provided
by these Articles of Incorporation or the NRS, if a quorum is present, the
affirmative vote of a majority of the shares represented at the meeting and
entitled to vote on the subject matter shall be the act of the shareholders.
Cumulative voting shall not be allowed in the election of directors of the
Corporation.

             

            3.3           Preferred
Stock. Shares of Preferred Stock may be issued in any number of series
from time to time by the Board of Directors, subject to the rights of any
holders of Preferred Stock as described herein, and the Board of Directors,
pursuant to the Corporation’s Articles of Incorporation and Bylaws, is expressly
authorized to fix by resolution or resolutions the designations and the voting
powers, preferences, rights and qualifications, limitations or restrictions
thereof, of the shares of each series of Preferred Stock. The voting powers,
designations, preferences, and relative, participating, optional, or other
rights, if any, and the qualifications, limitations, or restrictions, if any, of
the preferred stock, in one or more series, shall be as follows:

             

            A.           Series
A Preferred Stock. The Corporation is
authorized to issue up to One Million (1,000,000) shares of Preferred Stock. One
Hundred Thousand (100,000) shares of the authorized and unissued Preferred Stock
of the Corporation are hereby designated “Series
A Preferred Stock” with the following rights, preferences, privileges and
restrictions, qualifications and limitations.

             

            1.           Voting
Rights.  The holders of the Series A Preferred Stock (the
“Series
A Holders”), shall be entitled to notice of any stockholders’ meeting and
to vote as a single class upon any matter submitted to the stockholders for a
vote as follows: the Series A Holder shall have such number of votes as is
determined by multiplying (a) the number of shares of Series A Preferred Stock
held by such holder, (b) the number of issued and outstanding shares of the
Corporation’s Series A Preferred Stock, any other series of Preferred Stock and
Common Stock on a Fully-Diluted Basis1 as of the record date for the vote, or, if no
such record date is established, as of the date such vote is taken or any
written consent of stockholders is solicited, and (c) 0.000006. Such voting
calculation is hereby authorized by the Corporation and the Corporation
acknowledges such calculation may result in the total number of possible votes
cast by the Series A Holders and all other classes of the Corporation’s stock in
any given voting matter exceeding the total aggregate number of shares which
this Corporation shall have authority to issue. 

            
               

              1          “Fully-Diluted
Basis” shall mean the total number of issued and outstanding shares of
Common Stock calculated to include the shares of Common Stock issuable upon
exercise and/or conversion of all of the following outstanding: (a) securities
convertible into or exchangeable for Common Stock, whether or not then
convertible or exchangeable (collectively, “Convertible
Securities”), (b) subscriptions, rights, options and warrants to purchase
shares of Common Stock, whether or not then exercisable (collectively, “Options”),
and (c) securities convertible into or exchangeable or exercisable for Options
or Convertible Securities and any such underlying Options and/or Convertible
Securities.

               

            

            2.          Liquidation
Rights.

             

            a.           Liquidation.  In
the event of any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary (a “Liquidation”),
the assets of the Corporation available for distribution to its stockholders
shall be distributed as follows:

             

            i.           The
Series A Holders shall be entitled to receive, prior to the holders of all other
series of Preferred Stock and Common stock and prior and in preference to any
distribution of the assets or surplus funds of the Corporation to the holders of
any other shares of stock of the corporation by reason of their ownership of
such stock, an amount equal to $1.25 per share.

             

            ii.           If
upon occurrence of a Liquidation the assets and funds thus distributed among the
Series A Holders shall be insufficient to permit the payment to such holders of
the full preferential amount, then the entire assets and funds of the
Corporation legally available for distribution shall be distributed among the
Series A Holders ratably in proportion to the full amounts to which they would
otherwise be respectively entitled.

             

            iii.           After
payment of the full amounts to the Series A Holders as set forth herein, any
remaining assets of the Corporation shall be distributed pro rata to the holders
of any other Preferred Stock and then Common Stock (in the case of the Preferred
Stock, on an “as converted” basis into Common Stock).

             

            For
purposes of this Section , and unless a majority of the Series A Holders
affirmatively vote or agree by written consent to the contrary, a Liquidation
shall be deemed to include: (i) the acquisition of the Corporation by another
entity by means of any transaction or series of related transactions (including,
without limitation, any reorganization, merger or consolidation) and; (ii) a
sale of all or substantially all of the assets of the Corporation, unless the
Corporation’s stockholders of record as constituted immediately prior to such
acquisition or sale will, immediately after such acquisition or sale (by virtue
of securities issued as consideration for the Corporation’s acquisition or sale
or otherwise) hold at least fifty percent (50%) of the voting power of the
surviving or acquiring entity. If any of the assets of the Corporation are to be
distributed other than in cash under this Section, then the Board of Directors
of the Corporation shall promptly engage independent competent appraisers to
determine the value of the assets to be distributed to the holders of Preferred
Stock or Common Stock. The Corporation shall, upon receipt of such appraiser’s
valuation, give prompt written notice to each holder of shares of Preferred
Stock or Common Stock of the appraiser’s valuation.

             

            3.           Series
A Protective Provisions.   In addition to any other rights
provided by law, at any time any shares of Series A Preferred Stock are
outstanding, as a legal party in interest, the Corporation, through action
directly initiated by the Corporation’s Board of Directors or indirectly
initiated by the Corporation’s Board of Directors through judicial action or
process, including any action by common shareholders, shall not, either directly
or indirectly by amendment, merger, consolidation or otherwise, take any of the
following actions without first obtaining the affirmative written consent of
100% of the Series A Holders:

             

            a.           provide
any Series A Holder or its agents or counsel with any information that the
Borrower believes constitutes material non-public information, unless prior
thereto such Series A Holder shall have, initially and separate from the content
of such material non-public information, executed a written agreement regarding
the confidentiality and use of such information.  In the event such
information is disclosed to a Series A Holder, the Corporation shall publicly
disclose such information in a Form 8-K filed with the United States Securities
and Exchange Commission (the “SEC”)
within four days of the disclosure of such information.;

             

            b.           amend,
alter or repeal any provision of the Articles of Incorporation, this Certificate
or Bylaws of the Corporation;

             

            c.           alter
the Corporation’s capital structure in any way, including but not limited to, a
reverse or forward split of its Common Stock or increase or decrease in the
total number of shares authorized in the Corporation’s treasury;

             

            d.           declare
or pay any dividends or make any distributions to any holder(s) of Common Stock
or other equity security of the Corporation or purchase or otherwise acquire for
value, directly or indirectly, any Common Stock or other equity security of the
Corporation;

             

            e.           sell,
transfer or otherwise dispose of any properties, assets and rights including,
without limitation, its intellectual property;

             

            f.           issue
any additional securities, including any class of common or preferred
shares;

             

            g.           issue
any debt instrument or any other securities (or otherwise enter into agreements
to issue any securities including the issuance of any form of option agreement,
issuance of options or warrants);

             

            h.           alter
either the number of seats available on the Board of Directors or the membership
of the Board of Directors as of the date of this Certificate, either through
action by the Board of Directors itself or shareholder consent; or

             

            i.           initiate
any action with a regulatory, governmental, administrative, judicial entity or
individual in an attempt to abrogate or diminish in any way the rights,
preferences and privileges of these Series A Preferred Stock.

             

             

            4.           Transfer
Agent.  The Corporation’s current transfer agent is Action
Stock Transfer Corporation. So long as any shares of Series A Preferred Stock
remain outstanding, the Corporation shall not change transfer agents without the
express written consent of 100% of the Series A Holders..

             

            5.           Re-issuance.  No
share or shares of Series A Preferred Stock acquired by the Corporation by
reason of conversion, redemption or otherwise shall be reissued as Series A
Preferred Stock, and all such shares thereafter shall be returned to the
Corporation’s treasury under the status of undesignated and un-issued shares of
Preferred Stock of the Corporation.

             

            6.           Notices.
Unless otherwise specified in the Corporation’s Certificate of Incorporation or
Bylaws, all notices or communications given hereunder shall be in writing and,
if to the Corporation, shall be delivered to it as its principal executive
offices, and if to any holder of Series A Preferred Stock, shall be delivered to
it at its address as it appears on the stock books of the
Corporation.

             

            7.           Transfer
Agent Notice.   The Corporation shall immediately, upon
filing of this Certificate of Amendment, provide its transfer agent with copies
of this Certificate of Amendment and notify its transfer agent of all rights,
conditions, terms and requirements hereunder. In the event the Corporation
changes transfer agents following the filing of this Certificate of Amendment,
any new transfer agent shall immediately receive copies of these Articles and be
notified of all rights, conditions, terms and requirements
hereunder.

             

            8.           Severability.  If
any word, phrase, provision or clause of this Certificate is deemed to be
invalid, illegal, or unenforceable, only specific content shall be deemed
stricken from this Certificate and all remaining language, content, rights,
restrictions and privileges of this Certificate shall remain in
effect.  If any word, phrase, provision or clause of this Certificate
is inapplicable to any person or circumstance, it shall nevertheless remain
applicable to all other persons and circumstances.

             

            *     *     *

             

             IN
WITNESS WHEREOF, the undersigned has executed this Certificate of Amendment to
the Articles of Incorporation of CoConnect, Inc. on __________,
20__.

             

             

            
              	 
      	
                      COCONNECT,
      INC.

                       

                       

                       

                       

                    
	 
      	
                      By:

                      Its:

                    

            

             

             

             

             

            
 

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

          

          
 

          
            

            IRREVOCABLE
TRANSFER AGENT INSTRUCTIONS

            

            

            Action
Stock Transfer Corporation

            Attn:
Justeene Blankenship

            7069 S.
Highland Dr., Suite 300

            Salt Lake
City, UT 84121

            

            

            Dear
Ms. Blankenship

             

            Reference
is made to the Advisory Services Agreement (the “Agreement,”
a copy of which has been attached hereto as Exhibit
A) dated as of November 15, 2009 by and among CoConnect, Inc., a Nevada
corporation (the “Company”)
and Noctua Fund Manager, LLC, a Delaware limited liability company (“NFM”)
in which the Company has agreed to compensate NFM with certain Fees and/or the
issuance of a Note (Capitalized terms not defined herein shall have the meanings
provided for in the Agreement).

             

            Pursuant
to the terms of the Agreement, until such time as the Fees are paid in full, in
the event the Company takes any corporate action included in Section 4(c) of the
Agreement, including but not limited to amending it’s Articles of Incorporation,
designating any new class of stock, affecting a reverse split of its stock,
affecting a forward split of its stock or altering its capital structure in any
way, shape or form (the “Corporate
Actions”), the Company is required to designate a preferred class of
stock (the “Series
A Preferred Stock”) with such rights, powers, privileges and preferences
as outlined in the specimen Certificate of Amendment to the Articles of
Incorporation designating the Series A Preferred Stock attached hereto as Exhibit
B, and immediately issue 100,000 shares of the Series A Preferred Stock
(which shall represent 100% of the Series A Preferred Stock authorized, issued
and outstanding) to NFM who shall hold such shares until the Fees and/or Note
are paid in full.

             

            In
addition, pursuant to the same Section 4(c), the transfer agent shall,
immediately upon demand by the NFM, provide NFM information regarding the
Company’s capital structure and stock issuance history, including, but not
limited to: (i) the number of shares of common stock authorized, issued and
outstanding; (ii) the number of shares of preferred stock authorized, issued and
outstanding; and (iii) a complete issuance history of any class of stock and for
any period so requested.

             

            This
letter shall serve as our irrevocable authorization and direction to you
(provided that you are the transfer agent of the Company at such time and if
not, then such instruction shall be directed to the Company’s transfer agent at
such time), to: (i) refuse to enact any of the Corporate Actions until such time
as the Company designates the Series A Preferred Stock with the Nevada Secretary
of State and issues the Series A Preferred Stock to NFM; and (ii) provide NFM
with any of the information regarding the Company’s capital structure and
issuance history as outlined above.

             

            Please
be advised that NFM is relying upon this letter as an inducement to enter into
the Agreement and, accordingly, NFM is a third party beneficiary to these
instructions.

             

            Please
execute this letter in the space indicated to acknowledge your agreement to act
in accordance with these instructions.

             

            Very
truly
yours,                                                                   Acknowledged,
agreed and accepted:

             

            
              	
                      CoConnect,
      Inc.

                       

                       

                       

                      ____________________________________

                      By:
      Brad Bingham, Esq.

                      Its:  Interim
      Chief Executive Officer

                    	
                      Action
      Stock Transfer Corporation

                       

                       

                       

                      __________________________________

                      By:
      Justeene Blankenship

                      Its:
      PresidentTHIS INSTRUMENT CONTAINS INDEMNIFICATION PROVISIONS LIMITING LENDER'S LIABILITY FOR NEGLIGENCE
	 	
NOTICE OF CONFIDENTIALITY RIGHTS:  If you are a natural person, you may remove or strike any or all of the following information from any instrument that transfers an interest in real property before it is filed for record in the public records:  YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S LICENSE NUMBER.

 

DEED OF TRUST, SECURITY AGREEMENT, FIXTURE FILING, AND ASSIGNMENT OF LEASES AND RENTS

This Deed of Trust, Security Agreement, Fixture Filing and Assignment of Leases and Rents (this "Deed of Trust") is executed as of February _10_, 2010, by WESTWAY FEED PRODUCTS LLC, a Delaware limited liability company ("Grantor"), whose address for notice hereunder is 365 Canal Street, Suite 2900, New Orleans, LA 70130, to Jack Smith, Trustee ("Trustee"), whose address is 707 Travis, 12th Floor

Houston, TX  77002, for the benefit of JPMorgan Chase Bank, N.A., as administrative agent for the Lenders, a national banking association ("Beneficiary"), whose address for notice is 10 South Dearborn, 7th Floor, Chicago, IL  60603.

WHEREAS, Grantor is the owner of certain Realty (as defined below);

WHEREAS, the Grantor will derive substantial direct and indirect economic and other benefits under that certain Credit Agreement, dated effective as of November 16, 2009 (as amended, modified, supplemented or restated from time to time, the "Credit Agreement"), among the Westway Group, Inc. ("Borrower"), on the one hand, and Beneficiary (as Administrative Agent and Syndication Agent for Lenders) and Lenders, on the other hand;

WHEREAS, among other conditions precedent, it is a condition precedent to the making of the loans and the extensions of credit under the Credit Agreement that the Grantor execute this Deed of Trust in order to, among other things, grant to Beneficiary a first deed of trust lien on Grantor's fee estate in the Realty and certain other property of Grantor, as more particularly set forth herein; 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Grantor, Beneficiary, and the Trustee hereby agree as follows:

	

DEFINITIONS

	Definitions.  As used herein, the following terms shall have the following meanings:

	"Governmental Requirement": Shall be as defined in the Credit Agreement.

	"Indemnitee": Shall be as defined in the Credit Agreement, but shall, for the purposes of this Deed of Trust, expressly and additionally include the Trustee.

	"Indebtedness":  The sum of all  all principal, interest and other amounts due under or secured by the Loan Documents,  all principal, interest, and other amounts which may hereafter be loaned by Lenders, their successors or assigns, to or for the benefit of Borrower or the other Loan Parties, when evidenced by a promissory note or other instrument which, by its terms, is secured hereby, and  all other indebtedness, obligations and liabilities now or hereafter existing of any kind of the Loan Parties to Lenders under documents which provide, directly or indirectly, that they are intended to be secured by this Deed of Trust.

	"Land":  The real estate or interest therein described in Exhibit A attached hereto, and where the context permits or requires, all Improvements and Fixtures, and all rights, titles and interests appurtenant thereto.

	"Loan Documents":  Shall have the meaning ascribed to such term in the Credit Agreement.

	"Mortgaged Property":  All estate, right, title, interest, claim and demand whatsoever which Grantor now has or hereafter acquires, either in law or in equity, in possession or expectancy, of, in and to:  the Realty,  all buildings, structures and other improvements, now or at any time situated, placed or constructed upon the Land (the "Improvements"),  all materials, supplies, appliances, equipment (as such term is defined in the UCC), apparatus and other items of personal property now owned or hereafter attached to, installed in or used in connection with any of the Improvements or the Land, and water, gas, electrical, storm and sanitary sewer facilities and all other utilities whether or not situated in easements (the "Fixtures"),  all goods, inventory, accounts, general intangibles, software, instruments, letters of credit, letter of credit rights, deposit accounts, documents, chattel paper and supporting obligations, as each such term is presently or hereafter defined in the UCC, and all other personal property of any kind or character, now or hereafter affixed to, placed upon, used in connection with, arising from or otherwise related to the Land and Improvements or which may be used in or relating to the planning, development, financing or operation of the Mortgaged Property, including, without limitation, furniture, furnishings, equipment, machinery, money, insurance proceeds, accounts, contract rights, software, trademarks, goodwill, promissory notes, electronic and tangible chattel paper, payment intangibles, documents, trade names, licenses and/or franchise agreements, rights of Grantor under leases of Fixtures or other personal property or equipment, inventory, all refundable, returnable or reimbursable fees, deposits or other funds or evidences of credit or indebtedness deposited by or on behalf of Grantor with any governmental authorities, boards, corporations, providers of utility services, public or private, including specifically, but without limitation, all refundable, returnable or reimbursable tap fees, utility deposits, commitment fees and development costs, and commercial tort claims arising from the development, construction, use, occupancy, operation, maintenance, enjoyment, acquisition or ownership of the Mortgaged Property (the "Personalty"),  all reserves, escrows or impounds required under the Credit Agreement and all deposit accounts (including accounts holding security deposits) maintained by Grantor with respect to the Mortgaged Property,  all plans, specifications, shop drawings and other technical descriptions prepared for construction, repair or alteration of the Improvements, and all amendments and modifications thereof (the "Plans"),  all leases, subleases, licenses, concessions, occupancy agreements or other agreements (written or oral, now or at any time in effect) which grant a possessory interest in, or the right to use, all or any part of the Mortgaged Property, together with all related security and other deposits (the "Leases"),  all of the rents, revenues, income, proceeds, profits, security and other types of deposits, lease cancellation payments and other benefits paid or payable by parties to the Leases other than Grantor for using, leasing, licensing, possessing, operating from, residing in, selling, terminating the occupancy of or otherwise enjoying the Mortgaged Property (the "Rents"),  all other agreements, such as construction contracts, architects' agreements, engineers' contracts, utility contracts, maintenance agreements, management agreements, service contracts, permits, licenses, certificates and entitlements in any way relating to the development, construction, use, occupancy, operation, maintenance, enjoyment, acquisition or ownership of the Mortgaged Property (the "Property Agreements"),  all rights, privileges, tenements, hereditaments, rights of way, easements, appendages and appurtenances appertaining to the foregoing, and all right, title and interest, if any, of Grantor in and to any streets, ways, alleys, strips or gores of land adjoining the Land or any part thereof,  all accessions, replacements and substitutions for any of the foregoing and all proceeds thereof,  all insurance policies (regardless of whether required by Beneficiary), unearned premiums therefor and proceeds from such policies covering any of the above property now or hereafter acquired by Grantor, and   any awards, remunerations, reimbursements, settlements or compensation heretofore made or hereafter to be made by any governmental authority pertaining to the Realty, Improvements, Fixtures or Personalty.  As used in this Deed of Trust, the term "Mortgaged Property" shall mean all or, where the context permits or requires, any portion of the above or any interest therein, wherever located.  Notwithstanding anything herein to the contrary, in no event shall the Mortgaged Property include, and Grantor shall not be deemed to have granted a security interest in, any of Grantor's right, title or interest (a) in any contracts, instruments, licenses or other agreements, as to which the grant of a security interest therein would (i) constitute a violation of a valid and enforceable restriction in favor of a third party on such grant, unless and until any required consents shall have been obtained or (ii) give any other party to such contract, instrument, license or other agreement the right to terminate its obligations thereunder in any asset, or (b) the granting of a security interest in which would be void, voidable or illegal under any applicable Governmental Requirement, that would result in, or permit the termination of the right, title or interest of Grantor in or to such asset; provided that any of the foregoing exclusions set forth in clause (a) or (b) above shall not apply if (x) such prohibition has been waived or such other party has otherwise consented to the creation hereunder of a security interest in such asset or (y) such prohibition would be rendered ineffective pursuant to Section 9-406, 9-407 or 9-408 of Article 9 of the UCC or any other Governmental Requirement; and provided further that immediately upon the ineffectiveness, lapse or termination of any such provision, Grantor shall be deemed to have granted a security interest in all its rights, title and interests in and to such contract or agreement.

	"Obligations":  All of the agreements, covenants, conditions, warranties, representations and other obligations (other than to repay the Indebtedness) made or undertaken by the Loan Parties or any other person or entity to Beneficiary, Lenders, Trustee or others as set forth in the Loan Documents.

	Organizational Documents:  Grantor's present or subsequently effective articles or certificate of incorporation, articles or certificate or organization or formation, bylaws, regulations, or partnership, limited partnership, limited liability company, joint venture, trust or other form of business association agreement, as the case may be.

	"Permitted Encumbrances":  Shall mean Excepted Liens (as that term is defined in the Credit Agreement).

	"Proceeds":  So much of the proceeds of insurance or condemnation awards as remains after payment of all expenses, costs, and taxes, including reasonable attorney's fees and extraordinary expenses, incurred in obtaining such proceeds or award; provided, however, that this term does not include proceeds from business interruption insurance.

	"Realty" means (a) all of the fee interests, easements, rights-of-way, servitudes, and other interests in and to the Land, (b) all present and future real property acquired for use in connection with such properties, and (c) all present and future tenements, hereditaments, privileges, easements, franchises, rights, appendages, and appurtenances belonging or in any way appertaining to any and all such properties.

	"UCC":  The Uniform Commercial Code as enacted and in effect in the state where the Land is located (and as it may from time to time be amended); provided that, to the extent that the UCC is used to define any term herein or in any other Loan Documents and such term is defined differently in different Articles or Divisions of the UCC, the definition of such term contained in Article or Division 9 shall govern; provided further, however, that if, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, any security interest herein granted is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the state where the Land is located, the term "UCC" shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for the purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.

All initially capitalized, undefined terms used in this Deed of Trust shall have the meanings ascribed to such terms in the Credit Agreement.

	

GRANT

	Grant.  To secure the full and timely payment of the Indebtedness and the full and timely performance of the Obligations, Grantor GRANTS, BARGAINS, SELLS and CONVEYS to Trustee the Mortgaged Property, subject, however, to the Permitted Encumbrances;

TO HAVE AND TO HOLD, IN TRUST, WITH POWER OF SALE, and Grantor does hereby bind itself, its successors and assigns to WARRANT AND FOREVER DEFEND the title to the Mortgaged Property unto Trustee; provided, however, that if the Loan Parties shall pay (or cause to be paid) the Indebtedness and shall perform and discharge (or cause to be performed and discharged) the Obligations, then in that case only (and subject to the limitations contained in this Deed of Trust), the liens, security interests, estates and rights granted by this Deed of Trust shall terminate and be released by Beneficiary at Grantor's expense; otherwise same shall remain in full force and effect.  A certificate or statement from Beneficiary confirming that the Indebtedness has not been paid in full or that the Obligations have not been fully performed and discharged shall be sufficient evidence thereof for the purposes of reliance by third parties on that fact.

	

WARRANTIES, REPRESENTATIONS AND COVENANTS

Grantor warrants, represents and covenants to, and agrees with, Beneficiary as follows:

	Organization and Power.  Grantor has all requisite power and all governmental certificates of authority, licenses, permits, qualifications and documentation to own, lease and operate its properties and to carry on its business as now being, and as proposed to be, conducted.  

	Validity and Enforceability of Loan Documents.  The execution, delivery and performance by Grantor of the Loan Documents to which it is a party: (a) are within the powers of Grantor and have been duly authorized by Grantor (and all requisite actions for such authorization have been taken); (b) have received all (if any) requisite prior governmental approval in order to be legally binding and enforceable against Grantor in accordance with the terms thereof; and (c) will not violate, be in conflict with, result in a breach of or constitute (with due notice or lapse of time, or both) a default under, any Organizational Documents or any Governmental Requirement or result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of Grantor's property or assets, except as contemplated by the provisions of the Loan Documents.  The Loan Documents to which Grantor is a party constitute the legal, valid and binding obligations of Grantor enforceable in accordance with their respective terms.

	Information.  Grantor has fully disclosed to Beneficiary all known facts material to the Mortgaged Property.  All financial statements and other information, reports, papers and data given to Beneficiary with respect to Borrower or other Loan Parties, or the Mortgaged Property, are accurate, complete and correct in all material respects and do not omit any fact, the inclusion of which is necessary to prevent the facts contained therein from being materially misleading.  All such financial statements fairly present the financial condition and results of operations of such applicable person or the other subject of such financial statements, and since the date thereof there has been no material adverse change in such financial condition or operation.

	Litigation.  There are no actions, suits or proceedings pending, or to the knowledge of Grantor threatened, against or affecting the Mortgaged Property, or involving the validity or enforceability of this Deed of Trust or any of the other Loan Documents or the priority of the liens and security interests created by the Loan Documents that individually or in the aggregate, if resolved adversely to Grantor, would reasonably be expected to result in a Material Adverse Effect, and no event has occurred which will violate, be in conflict with, result in the breach of, or constitute (with due notice or lapse of time, or both) a material default under, any Organizational Document or any Governmental Requirement or result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of Grantor's property other than the liens and security interests created by the Loan Documents.  

	Use of Loan Proceeds.  No part of the proceeds from the Loans evidenced by the Loan Documents will be used for the purposes (whether immediate, incidental or ultimate) of "purchasing" or "carrying" any "margin stock", as such terms are defined in Regulation U (12 CFR part 221) of the Board of Governors of the Federal Reserve System, or for the purpose of reducing or retiring any indebtedness which was originally incurred for such purpose.

	Title to Mortgaged Property and Lien of This Instrument.  Grantor owns the Mortgaged Property free and clear of any liens, claims or interests, except the Permitted Encumbrances, and has rights and the power to transfer each item of the Mortgaged Property.  This Deed of Trust creates valid, enforceable first priority liens and security interests against the Mortgaged Property.  Where any of the Mortgaged Property is in the possession of a third party, Grantor will join with Beneficiary in notifying the third party of Beneficiary's security interest and obtaining an acknowledgment from the third party that it is holding such Mortgaged Property for the benefit of Beneficiary.  Grantor will cooperate with Beneficiary in obtaining control (for lien perfection purposes under the UCC) with respect to any Mortgaged Property consisting of deposit accounts, letter of credit rights or electronic chattel paper.

	First Lien Status.  Grantor shall preserve and protect the first lien and security interest status of this Deed of Trust and the other Loan Documents.  If any lien or security interest other than the Permitted Encumbrances is asserted against the Mortgaged Property, Grantor shall promptly, and at its expense,  give Beneficiary a detailed written notice of such lien or security interest (including origin, amount and other terms), and  pay the underlying claim in full or take such other action so as to cause it to be released or contest the same in compliance with the requirements of the Credit Agreement (including the requirement of providing a bond or other security satisfactory to Beneficiary).

	No Other Liens.  Grantor will not, without the prior written consent of the Beneficiary, create, place or permit to be created or placed, or through any act or failure to act, acquiesce in the placing of, or allow to remain, any deed of trust, mortgage, voluntary or involuntary lien, whether statutory, constitutional or contractual, security interest, encumbrance or charge, or conditional sale or other title retention document, against or covering the Mortgaged Property, or any part thereof, other than the Permitted Encumbrances and liens and security interests on the Mortgaged Property to the extent such liens and security interests are permitted by the other Loan Documents, and should any of the foregoing become attached hereafter in any manner to any part of the Mortgaged Property without the prior written consent of the Beneficiary, Grantor will cause the same to be promptly discharged and released.  Grantor will own all parts of the Mortgaged Property, subject to Permitted Encumbrances, and will not acquire any fixtures, equipment or other property forming a part of the Mortgaged Property pursuant to a lease, license, security agreement or similar agreement, whereby any party has or may obtain the right to repossess or remove same, without the prior written consent of the Beneficiary.

	Payment and Performance.  Grantor shall fully pay and perform the Obligations in the Loan Documents to which Grantor is a party in full as and when they are required to be performed.

	Taxes and Other Impositions.  Grantor, and each constituent member of Grantor, have filed all federal, state, county, municipal and city income and other tax returns required to have been filed by such person and have paid all taxes which have become due pursuant to such returns or pursuant to any assessments received by them, and Grantor knows of no basis for any additional assessment in respect of any such taxes.  In addition, Grantor has paid in full all sums owing or claimed for labor, material, supplies, personal property (whether or not forming a Fixture hereunder) and services of every kind and character used, furnished or installed in or on the Mortgaged Property.  Grantor will pay, or cause to be paid, all taxes, assessments and other charges or levies imposed upon or against or with respect to the Mortgaged Property or the ownership, use, occupancy or enjoyment of any portion thereof, or any utility service thereto, before the same become delinquent, including but not limited to all ad valorem taxes assessed against the Mortgaged Property or any part thereof, and shall deliver promptly to the Beneficiary such evidence of the payment thereof as the Beneficiary may reasonably require.  The Grantor may, after notifying the Beneficiary, and at the Grantor's expense, in good faith contest any such taxes, assessments, other charges or levies or utility and other charges and, in the event of any such contest, may permit the taxes, assessments or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom.  Pending such contest, Grantor shall not be deemed in default hereunder because of such nonpayment if, prior to delinquency of the asserted tax or assessment, Grantor deposits with the Beneficiary an amount equal to at least 110% of the tax or assessment being contested by Grantor plus a reasonable additional sum to pay all costs, interest and penalties which may be imposed or incurred in connection therewith, conditioned that such tax or assessment, with interest, cost and penalties, be paid as herein stipulated, and if Grantor is diligently and in good faith contesting the validity, amount, or application of the asserted tax or assessment, and if Grantor promptly pays any amount adjudged by a court of competent jurisdiction to be due, with all costs, penalties and interest thereon, on or before the date such judgment becomes final; and provided, further, that in any event, the tax, assessment, penalties, interest and costs shall be paid prior to the date on which any writ or order is issued under which the Mortgaged Property may be sold in satisfaction thereof.

	Insurance.  Subject to the Credit Agreement, Grantor will keep the Mortgaged Property insured as is customary for similarly situated property and, in any event, as reasonably required by Beneficiary.  Grantor further agrees that Grantor will deliver to the Beneficiary the original policies evidencing such insurance and any additional insurance which shall be taken out upon any part of the Mortgaged Property and, upon request by Beneficiary, receipts evidencing the payment of all premiums, and will deliver certificates evidencing renewals of all such policies of insurance to the Beneficiary at least 15 days before any such insurance shall expire in and to such policies then in force concerning the Mortgaged Property.

	Condemnation.  Grantor shall notify the Beneficiary as provided herein of any threatened or pending proceeding for condemnation affecting the Mortgaged Property or arising out of damage to the Mortgaged Property, and Grantor shall, at Grantor's expense, diligently prosecute any such proceedings.  The Beneficiary shall have the right (but not the obligation) to participate in any such proceeding and to be represented by counsel of its own choice, such participation and legal representation to be at the Beneficiary's expense.

	Damage, Destruction, and Condemnation; Use of Proceeds.  

	Condemnation Awards.  Grantor assigns all awards and compensation for any condemnation or other taking, or any purchase in lieu thereof, to Beneficiary and authorizes Beneficiary to collect and receive such awards and compensation and to give proper receipts and acquittances therefor, subject to the terms of the Credit Agreement.

	Insurance Proceeds.  Subject to the terms of the Credit Agreement, Grantor assigns to Beneficiary all Proceeds of any insurance policies insuring against loss or damage to the Mortgaged Property, and Grantor authorizes Beneficiary to collect and receive such Proceeds and authorizes and directs the issuer of each of such insurance policies to make payment for all such losses directly to Beneficiary, instead of to Grantor and Beneficiary jointly, subject to the terms of the Credit Agreement.

	Casualty Events.  Within ten (10) days of its occurrence, the Grantor shall notify the Beneficiary of any Casualty Event.  If, as a result of any Casualty Event, the Mortgaged Property, or any part of the Mortgaged Property, is damaged or destroyed, or the Mortgaged Property, or any part of the Mortgaged Property, shall be condemned or acquired for public use and the Proceeds as a result of such a Casualty Event exceed $250,000, the Grantor shall, within thirty (30) days after receiving actual notice of such damage, and written notice of the amount of insurance Proceeds or condemnation Proceeds, as the case may be, available to Grantor for repair and restoration of the damage or destruction, destruction or condemnation and, after written notice to the Beneficiary, elect to follow one of the two courses of action described below:

	 Alternative A: Repair and Restoration.  If the Mortgaged Property can be repaired or restored to substantially the same condition as existed prior to the event causing such damage or destruction, or the effect of the combination can be relieved so that the status of the Mortgaged Property will be restored to substantially the same status as existed prior to the event causing such condemnation, without, in either case, jeopardizing repayment of the principal of and interest on the Indebtedness, and Grantor elects to repair and restore the Mortgaged Property, the Proceeds will be deposited with the Beneficiary and held in a special escrow account of the Beneficiary to be applied to repair, replace, or improve the Mortgaged Property.  Proceeds held in such escrow account held by the Beneficiary shall be disbursed by the Beneficiary for the repair, replacement, or improvement of the Mortgaged Property upon receipt by the Beneficiary from the Grantor of (A) an architect's certificate with each draw submitted by Grantor stating that the repairs, replacements, or improvements completed through the date of such draw are practical and necessary, have been completed in accordance with plans and specifications previously provided to the Beneficiary, and that such repairs, replacements, or improvements comply with all applicable statutes, codes, and regulations; (B) a certificate stating that sufficient moneys are available to cause such repair, restoration, replacements, or improvements; (C) requisitions and certificates from the Grantor in the form reasonably acceptable to the Beneficiary; (D) applicable lien waivers; and (E) an endorsement to the title insurance policy insuring the continued priority of the lien of this Mortgage.  The Beneficiary shall retain ten percent (10%) of the requested disbursements to be disbursed upon final completion of the repairs, replacements, or improvements as certified by an independent architect and receipt of waivers of liens and an endorsement to the title policy for the Mortgaged Property insuring the continued priority of the lien of this Mortgage.  If at any time during the restoration, the Proceeds are less than the estimated cost to repair the Mortgaged Property, the Grantor shall pay an amount equal to the shortfall.  The Grantor may rely upon the advice of architects, engineers, accountants, financial consultants, attorneys, or other experts selected by it in the foregoing matters.  Any Proceeds in excess of the amount required to repair and restore the Mortgaged Property under this Alternative A, at the direction of the Grantor, shall either be used to prepay the Indebtedness or disbursed to the Grantor.

	Alternative B: Prepayment of Indebtedness.  The Grantor shall apply, or cause to be applied, the Proceeds relating to such Casualty Event to prepay the Indebtedness.

	If, in accordance with this Section, the Grantor elects to repair, restore, or replace the Mortgaged Property and the Proceeds are insufficient to pay in full the cost of any repair, restoration, modification, or improvement, the Grantor will nonetheless complete the work and will pay any costs in excess of the amount of the Proceeds held by the Beneficiary, and, upon the request of Beneficiary, will deposit with Beneficiary amounts sufficient to cover the full amount of such shortfall.  The Grantor agrees that if by any reason any of such insufficiency of the Proceeds, the Grantor shall make any payment pursuant to the provisions of this Section, the Grantor shall not be entitled to any reimbursement therefor from the Beneficiary, nor shall the Grantor be entitled to any diminution of the amounts payable under the Indebtedness.

	Compliance with Governmental Requirements.  The Mortgaged Property and the use, operation and maintenance thereof and all activities thereon do and shall at all times comply with all applicable Governmental Requirements in all material respects.  The Mortgaged Property is not, and shall not be, dependent on any other property or premises or any interest therein other than the Mortgaged Property to fulfill any requirement of any Governmental Requirement.  Grantor shall not, by act or omission, permit any building or other improvement not subject to the lien of this Mortgage to rely on the Mortgaged Property or any interest therein to fulfill any requirement of any Governmental Requirement.  To Grantor's knowledge, no part of the Mortgaged Property constitutes a nonconforming use under any zoning law or similar law or ordinance.  Grantor has obtained and shall preserve in force all requisite zoning, utility, building, health and operating permits from the governmental authorities having jurisdiction over the Mortgaged Property.  If Grantor receives a notice or claim from any person that the Mortgaged Property, or any use, activity, operation or maintenance thereof or thereon, is not in compliance with any Governmental Requirement, Grantor will promptly furnish a copy of such notice or claim to the Beneficiary.  Grantor has received no notice and has no knowledge of any such noncompliance. 

	 Maintenance and Repair.  Grantor will keep the Mortgaged Property in good working order, repair, and condition (reasonable wear and tear excepted), causing all necessary repairs, renewals, replacements, additions and improvements to be promptly made, and will not allow any of the Mortgaged Property to be misused, abused or wasted or to deteriorate.  Notwithstanding the foregoing, Grantor will not, without the prior written consent of the Beneficiary, which consent shall not be unreasonably withheld make any structural alteration to the Mortgaged Property or any other alteration thereto that impairs the value thereof.

	Operation of Mortgaged Property.  Grantor will operate the Mortgaged Property in a good and workmanlike manner and in accordance with all Governmental Requirements in all material respects and will pay all fees or charges of any kind in connection therewith.  Grantor will keep the Mortgaged Property occupied so as not to impair the insurance carried thereon.  Grantor will not use or occupy or conduct any activity on, or allow the use or occupancy of or the conduct of any activity on, the Mortgaged Property in any manner that violates any Governmental Requirement in any material respect or that constitutes a public or private nuisance or that makes void, voidable or cancelable, any insurance then in force with respect thereto. Grantor will not initiate or permit any zoning reclassification of the Mortgaged Property or seek any variance under existing zoning ordinances applicable to the Mortgaged Property or use or permit the use of the Mortgaged Property in such a manner that would result in such use becoming a nonconforming use under applicable zoning ordinances or any other Governmental Requirement without the prior written consent of the Beneficiary, which consent shall not be unreasonably withheld.  With the exception of the Permitted Encumbrances, Grantor will not impose any easement, restrictive covenant or encumbrance upon the Mortgaged Property, execute or file any subdivision plat or condominium declaration affecting the Mortgaged Property without the prior written consent of the Beneficiary.  Grantor will preserve, protect, renew, extend and retain all material rights and privileges granted for or applicable to the Mortgaged Property.  Without the prior written consent of the Beneficiary, there shall be no drilling or exploration for or extraction, removal or production of any mineral, hydrocarbon, gas, natural element, compound or substance (including sand and gravel) from the surface or subsurface of the Land regardless of the depth thereof or the method of mining or extraction thereof.  Grantor will cause all debts and liabilities of any character (including without limitation all lawful and valid debts and liabilities for labor, material and equipment and all debts and charges for utilities servicing the Mortgaged Property) incurred in the maintenance, operation and development of the Mortgaged Property to be promptly paid.

	Status of Grantor; Suits and Claims; Loan Documents.  Grantor is and will continue to be (i) duly organized, validly existing and in good standing under the laws of its state of organization, (ii) authorized to do business in, and in good standing in, each state in which the Mortgaged Property is located, and (iii) possessed of all requisite power and authority to carry on its business and to own and operate the Mortgaged Property.  Each Loan Document executed by Grantor has been duly authorized, executed and delivered by Grantor, and the obligations thereunder and the performance thereof by Grantor in accordance with their terms are and will continue to be within Grantor's power and authority (without the necessity of joinder or consent of any other person), are not and will not be in contravention of any Governmental Requirement to which Grantor or the Mortgaged Property is subject, and do not and will not result in the creation of any encumbrance against any assets or properties of Grantor, or any other person liable, directly or indirectly, for any of the Indebtedness, except as expressly contemplated by the Loan Documents.  There is no suit, action, claim, investigation, inquiry, proceeding or demand pending (or, to Grantor's knowledge, threatened) that affects the Mortgaged Property (including, without limitation, any that challenges or otherwise pertains to Grantor's title to the Mortgaged Property) or the validity, enforceability or priority of any of the Loan Documents.  There is no judicial or administrative action, suit or proceeding pending (or, to Grantor's knowledge, threatened) against Grantor, except as has been disclosed in writing to the Beneficiary in connection with the debt evidenced by the Indebtedness.  The Loan Documents constitute legal, valid and binding obligations of Grantor enforceable in accordance with their terms, except as the enforceability thereof may be limited by the bankruptcy laws or any other debtor relief laws of the United States or any state or any other competent jurisdiction and except as the availability of certain remedies may be limited by general principles of equity.  Grantor is not a "foreign person" within the meaning of the Internal Revenue Code of 1986, as amended, Sections 1445 and 7701 (i.e. Grantor is not a non-resident alien, foreign corporation, foreign partnership, foreign trust or foreign estate as those terms are defined therein and in any regulations promulgated thereunder).  The debt evidenced by the Indebtedness is solely for business purposes, and is not for personal, family, household or agricultural purposes.  Grantor will not cause or permit any change to be made in its name, identity, or corporate or partnership structure, unless Grantor shall have notified the Beneficiary of such change prior to the effective date of such change, and shall have first taken all action required by the Beneficiary for the purpose of further perfecting or protecting the lien and security interest of the Beneficiary in the Mortgaged Property.

	Further Assurances.  Grantor will, promptly on request of Beneficiary, (i) correct any defect, error or omission that may be discovered in the contents, execution or acknowledgment of this Mortgage or any other Loan Document; (ii) execute, acknowledge, deliver, procure and record and/or file such further documents (including, without limitation, further deeds of trust, security agreements, financing statements, continuation statements, and assignments of rents or leases) and do such further acts as may be necessary or proper to carry out more effectively the purposes of this Mortgage and the other Loan Documents, to more fully identify and subject to the liens and security interests hereof any property intended to be covered hereby (including specifically, but without limitation, any renewals, additions, substitutions, replacements, or appurtenances to the Mortgaged Property) or as deemed advisable by Beneficiary to protect the lien or the security interest hereunder against the rights or interests of third persons; and (iii) provide such certificates, documents, reports, information, affidavits and other instruments and do such further acts as may be necessary or proper in the reasonable determination of Beneficiary to enable Beneficiary to comply with the requirements or requests of any agency having jurisdiction over Beneficiary or any examiners of such agencies with respect to the indebtedness secured hereby, Grantor or the Mortgaged Property.  Grantor shall pay all costs connected with any of the foregoing, which shall be a demand obligation owing by Grantor (which Grantor hereby promises to pay) to Beneficiary pursuant to this Mortgage.

	Fees and Expenses.  Without limitation of any other provision of this Mortgage or of any other Loan Document, but as expressly limited by the terms of such other Loan Documents, and to the extent not prohibited by applicable law, Grantor will pay, and will reimburse to Beneficiary and/or Trustee on demand to the extent paid by Beneficiary and/or Trustee: (i) all appraisal fees, filing and recording fees, taxes, brokerage fees and commissions, abstract fees, title search or examination fees, title policy and endorsement premiums and fees, uniform commercial code search fees, escrow fees, reasonable attorneys' fees, architect fees, construction consultant fees, environmental inspection fees, survey fees, and all other out-of-pocket reasonable costs and expenses of every character incurred by Beneficiary and/or Trustee in connection with the preparation of the Loan Documents, the evaluation, closing and funding of the debt evidenced by the Loan Documents, and any and all amendments and supplements to this Deed of Trust, the Indebtedness or any other Loan Documents or any approval, consent, waiver, release or other matter requested or  required hereunder or thereunder, or otherwise attributable or chargeable to Grantor as owner of the Mortgaged Property; and (ii) all costs and expenses, including reasonable attorneys' fees and expenses, incurred or expended in connection with the exercise of any right or remedy, or the enforcement of any obligation of Grantor, hereunder or under any other Loan Document.

	Assignment and Transfer.  Grantor expressly agrees that if Grantor, without the prior written consent of Beneficiary, which may be withheld in Beneficiary's sole discretion, sells, exchanges, assigns or otherwise disposes of all or any portion of the Mortgaged Property or rents or leases any of the Mortgaged Property for any period in excess of one (1) year, other than intercompany leases with other Loan Parties that are expressly made subordinate to the lien of this Deed of Trust, Beneficiary shall have the right and option to declare the entire amount of the Indebtedness immediately due and payable.  Any Change in Control of Grantor shall be deemed to be within the prohibition contained within this paragraph and shall require the prior written consent of Beneficiary, without which the rights of Beneficiary contained in this paragraph shall be triggered.  The right and option granted hereunder, to the extent permitted by law, shall be absolute, irrespective of whether the sale, exchange, assignment or transfer would or might: (i) diminish the value of the security for the Indebtedness; (ii) result in an Event of Default hereunder; (iii) compel the Beneficiary hereof to seek any remedies available to it, whether at law or in equity; or (iv) add or remove the liability of any person or entity for payment or performance of the Indebtedness or any covenant or obligation under this Deed of Trust.

	Grantor to Benefit.  Grantor confirms that it is an Affiliate of Borrower.  In this regard, the conveyance of the Mortgaged Property in trust to Trustee pursuant to this Deed of Trust, and Grantor's representations, warranties and obligations pursuant to this Deed of Trust, reasonably may be expected to benefit, directly or indirectly, Grantor; and Grantor has determined that the execution, delivery, and performance of this Deed of Trust is necessary and convenient to the conduct, promotion and attainment of the business of the Grantor and of  Borrower.

	Replacement of Fixtures and Personalty.  Grantor shall not, without the prior written consent of Beneficiary, permit any of the Fixtures or Personalty to be removed at any time from the Land or Improvements, unless the removed item is removed temporarily for maintenance and repair or, if removed permanently, is obsolete and is replaced by an article of equal or better suitability and value, owned by Grantor subject to the liens and security interests of this Deed of Trust and the other Loan Documents, and free and clear of any other lien or security interest except such as may be first approved in writing by Beneficiary.  Grantor shall not incorporate into the Mortgaged Property any item of personalty, fixtures or other property that is not owned by Grantor free and clear of all liens or security interests except the liens and security interests in favor of Beneficiary created by the Loan Documents.

	Maintenance of Rights of Way, Easements and Licenses.  Grantor shall maintain all rights of way, easements, grants, privileges, licenses, certificates, permits, entitlements, and franchises necessary for the use of the Mortgaged Property and will not, without the prior consent of Beneficiary, consent to any public restriction (including any zoning ordinance) or private restriction as to the use of the Mortgaged Property.  Grantor shall comply with all restrictive covenants affecting the Mortgaged Property, and all zoning ordinances and other public or private restrictions as to the use of the Mortgaged Property.

	Inspection.  Grantor shall permit Trustee and Beneficiary, and their agents, representatives and employees, upon reasonable prior notice to Grantor, to inspect the Mortgaged Property and conduct such environmental and engineering studies as Beneficiary may require, provided that such inspections and studies shall not materially interfere with the use and operation of the Mortgaged Property.

	Compliance with Anti-Forfeiture Laws.  Grantor will not commit any act or omission affording the federal government or any state or local government the right of forfeiture as against the Mortgaged Property or any part thereof or any money paid in performance of Grantor's obligations under the Loan Documents. 

	Post-Closing Costs.  Grantor will promptly pay to Beneficiary any administrative fees and reimburse Beneficiary for all of Beneficiary's costs and expenses (including without limitation reasonable attorneys' fees) associated with reviewing and processing requests of Grantor made after the date hereof.

	Performance of Leases.  Grantor shall (a) duly and punctually perform and comply with any and all representations, warranties, covenants and agreements binding upon it under each of the Leases, (b) except in the ordinary course of business, and exercising reasonable care of a prudent operator or manager of properties similarly situated to the Mortgaged Property, not voluntarily terminate, cancel or waive its rights or the obligations of any other party under any of the Leases, (c) use commercially reasonable efforts to maintain each of the Leases in force and effect during the full term thereof, and (d) appear in and defend any action or proceeding arising under or in any manner connected with any of the Leases or the representations, warranties, covenants and agreements of it or the other party or parties thereto.

	INDEMNIFICATION AND HOLD HARMLESS. GRANTOR SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS EACH INDEMNITEE FROM AND AGAINST, AND GRANTOR SHALL BE RESPONSIBLE FOR, ANY AND ALL LIABILITIES (INCLUDING WITHOUT LIMITATION STRICT LIABILITY), ACTIONS, DEMANDS, PENALTIES, FINES, LOSSES, COSTS OR EXPENSES (INCLUDING WITHOUT LIMITATION REASONABLE ATTORNEYS' AND EXPERTS' FEES AND EXPENSES), SUITS, COSTS OF ANY SETTLEMENT OR JUDGMENT, AND CLAIMS OF ANY AND EVERY KIND WHATSOEVER, WHETHER ARISING IN EQUITY, AT COMMON LAW, OR BY STATUTE, OR UNDER THE LAW OF CONTRACTS, TORTS (INCLUDING WITHOUT LIMITATION, NEGLIGENCE AND STRICT LIABILITY WITHOUT REGARD TO FAULT) OR PROPERTY, OF EVERY KIND OR CHARACTER (INCLUDING, WITHOUT LIMITATION, CLAIMS FOR PERSONAL INJURY, EMOTIONAL DISTRESS, REAL AND PERSONAL PROPERTY DAMAGE, AND ECONOMIC LOSS), WHICH MAY NOW OR IN THE FUTURE (WHETHER BEFORE OR AFTER THE RELEASE OF THIS DEED OF TRUST) BE PAID, INCURRED OR SUFFERED BY OR ASSERTED OR AWARDED AGAINST EACH INDEMNITEE, BY ANY PERSON OR ENTITY OR GOVERNMENTAL AUTHORITY, OR AFFECTING THE MORTGAGED PROPERTY OR THE LOAN DOCUMENTS, RESULTING FROM, ARISING OUT OF, BY REASON OF, ON ACCOUNT OF, OR IN CONNECTION WITH: (I) THE FAILURE OF GRANTOR TO TIMELY PAY THE INDEBTEDNESS OR TO PERFORM OR DISCHARGE THE OBLIGATIONS OR OTHERWISE TO COMPLY WITH THE PROVISIONS OF THE LOAN DOCUMENTS, (II) ANY BODILY INJURY OR DEATH OR PROPERTY DAMAGE OCCURRING IN OR UPON THE MORTGAGED PROPERTY THROUGH ANY CAUSE WHATSOEVER; (III) ANY act performed or omitted to be performed hereunder or on account of any transaction arising out of or in any way connected with the Mortgaged Property or with thE LOAN DOCUMENTS; (iv) ANY INACCURACY OF ANY REPRESENTATION OR WARRANTY OF GRANTOR SET FORTH IN ANY OF THE LOAN DOCUMENTS OR ANY INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS DELIVERED IN CONNECTION THEREWITH; OR (V) ANY ACTS PERFORMED BY BENEFICIARY PURSUANT TO THE PROVISIONS OF SECTION 9.7 OF THIS DEED OF TRUST, NOTWITHSTANDING THE NEGLIGENCE OR STRICT LIABILITY (WITHOUT REGARD TO FAULT), OF EACH INDEMNITEE, AND ALL COSTS AND EXPENSES INCURRED BY EACH INDEMNITEE IN PROTECTING THEIR INTERESTS HEREUNDER IN SUCH AN EVENT (INCLUDING ALL COURT COSTS AND REASONABLE ATTORNEYS' FEES) SHALL BE BORNE BY GRANTOR.  However, such indemnities shall not apply to any indemnITEE party to the extent the subject of the indemnification is caused by or arises out of the gross negligence or willful misconduct of such indemniTEE.  The obligations of the Grantor contained in this SEction 3.28 shall survive the foreclosure of this Deed of Trust and shall further survive the repayment of the Indebtedness, the termination hereof and the discharge of the other Obligations under this Deed of Trust and the other Loan Documents.

	Other Covenants.  All of the covenants in the Loan Documents to which Grantor is a party are expressly incorporated herein by reference and, together with covenants in this Article 3, shall be covenants running with the land.

	

DEFAULT AND FORECLOSURE

	Remedies.  If an Event of Default shall occur and be continuing, Beneficiary may, at Beneficiary's election and by or through Trustee or otherwise, exercise any one or more of the following rights, remedies and recourses:

	Acceleration.  Declare the Indebtedness to be immediately due and payable, without further notice, presentment, protest, notice of intent to accelerate, notice of acceleration, demand or action of any nature whatsoever (each of which hereby is expressly waived by Grantor), whereupon the same shall become immediately due and payable.

	Entry Upon Mortgaged Property.  Enter upon the Mortgaged Property and take exclusive possession thereof and of all books, records and accounts relating thereto.  If Grantor remains in possession of all or any part of the Mortgaged Property after an Event of Default and without Beneficiary's prior written consent thereto, Beneficiary may invoke any and all legal remedies to dispossess Grantor, including specifically one or more actions for forcible entry and detainer, trespass to try title and writ of restitution.  Nothing contained in the foregoing sentence shall, however, be construed to impose any greater obligation or any prerequisites to acquiring possession of the Mortgaged Property after an Event of Default than would have existed in the absence of such sentence.

	Operation of Mortgaged Property.  Hold, lease, manage, operate or otherwise use or permit the use of the Mortgaged Property, either itself or by other persons, firms or entities, in such manner, for such time and upon such other terms as Beneficiary may deem to be prudent and reasonable under the circumstances (making such repairs, alterations, additions and improvements thereto and taking any and all other action with reference thereto, from time to time, as Beneficiary shall deem necessary or desirable), and apply all Rents and other amounts collected by Trustee or Beneficiary in connection therewith in accordance with the provisions of Section 4.9 hereinbelow.

	Foreclosure and Sale.  Sell or offer for sale the Mortgaged Property (i) in such portions, order and parcels as Beneficiary may determine, with or without having first taken possession of same, to the highest bidder for cash at public auction at the county courthouse of any county in which any of the Land to be sold is situated, in the area in such courthouse or other area designated for real property foreclosure sales in accordance with applicable law (or in the absence of any such designation, in the area set forth in the notice of sale hereinafter described), on the first Tuesday of any month between the hours of 10:00 A.M. and 4:00 P.M. (commencing no earlier than such time as may be designated in the hereinafter described notice of sale), after giving legally adequate notice of the time, place and terms of sale and that portion of the Mortgaged Property to be sold, by (1) posting or causing to be posted written or printed notices thereof at least 21 days before the date of said sale at the county courthouse door of each county in which the Land is situated, (2) filing or causing to be filed a copy of such notice in the office of the county clerk of each county in which the Land is situated at least 21 days before the date of such sale, and (3) at least 21 days before the date of such sale, serving written notice (by the Beneficiary or any person chosen by the Beneficiary) of such proposed sale by certified mail on each debtor obligated to pay the indebtedness evidenced by the Loan Documents according to the records of Beneficiary's mortgage servicer; such notice shall designate the earliest time at which the sale will begin; service of such notice to each debtor to be completed upon deposit of the notice, marked certified mail, enclosed in a postpaid wrapper, properly addressed to each debtor at the most recent address as shown by the records of Beneficiary's mortgage servicer, in a post office or official depository under the care and custody of the United States Postal Service (it being expressly understood that the affidavit of any person having knowledge of the facts to the effect that such service was completed shall be prima facie evidence of the fact of such service), or (ii) accomplishing all or any of the aforesaid in such manner as permitted or required by Section 51.002 of the Property Code of the State of Texas (as amended and in effect from time to time and/or any successor statute; herein called the "Property Code") relating to the sale of real estate or by Chapter 9 of the Texas Business and Commerce Code relating to the sale of collateral after default by a debtor (as said section and chapter now exist or as may be hereafter amended), or by any other present or subsequent articles or enactments relating to same; provided, however, that nothing contained in this Section 4.1(d) shall be construed so as to limit in any way Trustee's rights to sell the Mortgaged Property, or any portion thereof, by private sale if, and to the extent that, such private sale is permitted under the laws of the State of Texas or by public or private sale after entry of a judgment by any court of competent jurisdiction ordering same.  At any such sale (i) whether made under the power herein contained, the aforesaid Property Code Section 51.002, the Texas Business and Commerce Code or any other legal enactment, or by virtue of any judicial proceedings or any other legal right, remedy or recourse, it shall not be necessary for Trustee to have physically present, or to have constructive possession of, the Mortgaged Property (Grantor hereby covenanting and agreeing to deliver to Trustee any portion of the Mortgaged Property not actually or constructively possessed by Trustee immediately upon demand by Trustee) and the title to and right of possession of any such property shall pass to the purchaser thereof as completely as if the same had been actually present and delivered to purchaser at such sale, (ii) each instrument of conveyance executed by Trustee shall contain a special warranty of title, binding upon Grantor and its successors and assigns, (iii) each and every recital contained in any instrument of conveyance made by Trustee shall constitute prima facie evidence of the truth and accuracy of the matters recited therein, including, without limitation, nonpayment of the Indebtedness, advertisement and conduct of such sale in the manner provided herein and otherwise by law and appointment of any successor Trustee hereunder, (iv) any and all prerequisites to the validity thereof shall be presumed to have been performed, (v) the receipt of Trustee or of such other party or officer making the sale shall be a sufficient discharge to the purchaser or purchasers for its purchase money and no such purchaser or purchasers, or its assigns or personal representatives, shall thereafter be obligated to see to the application of such purchase money, or be in any way answerable for any loss, misapplication or nonapplication thereof, (vi) to the fullest extent permitted by law, Grantor shall be completely and irrevocably divested of all of its right, title, interest, claim and demand whatsoever, either at law or in equity, in and to the property sold and such sale shall be a perpetual bar both at law and in equity against Grantor, and against any and all other persons claiming or to claim the property sold or any part thereof, by, through or under Grantor, and (vii) to the extent and under such circumstances as are permitted by law, Beneficiary may be a purchaser at any such sale, and shall have the right, after paying or accounting for all costs of said sale or sales, to credit the amount of the bid upon the amount of the Indebtedness (in the order of priority set forth in Section 4.9 hereof) in lieu of cash payment.

	Receiver.  Make application to a court of competent jurisdiction as a matter of strict right and without notice to Grantor or regard to the adequacy of the Mortgaged Property for the repayment of the Indebtedness or the solvency of any person or entity liable for the repayment of the Indebtedness, for appointment of a receiver of the Mortgaged Property, and Grantor does hereby irrevocably consent to such appointment.  Any such receiver shall have all the usual powers and duties of receivers in similar cases, including the full power to rent, maintain and otherwise operate the Mortgaged Property upon such terms as may be approved by the court, and shall apply such Rents in accordance with the provisions of Section 4.9 hereinbelow.  The right to the appointment of a receiver shall apply regardless of whether Beneficiary has commenced procedures for the foreclosure of the liens and security interests created herein, or has commenced any other legal proceedings to enforce payment of the Indebtedness or performance or discharge of the Obligations, and shall also apply upon the actual or threatened waste to any part of the Mortgaged Property.

	Foreclosure for Installments.  Beneficiary shall also have the option to proceed with foreclosure in satisfaction of any installments of the Indebtedness which have not been paid when due either through the courts or by directing the Trustee or his successors in trust to proceed with foreclosure in satisfaction of the matured but unpaid portion of the Indebtedness as if under a full foreclosure, conducting the sale as herein provided and without declaring the entire Indebtedness due and payable; such sale may be made subject to the unmatured portion of the Indebtedness, and any such sale shall not in any manner affect the unmatured portion of the Indebtedness, but as to such unmatured portion of the Indebtedness this Deed of Trust shall remain in full force and effect just as though no sale had been made hereunder.  It is further agreed that several sales may be made hereunder without exhausting the right of sale for any unmatured part of the Indebtedness, it being the purpose hereof to provide for a foreclosure and sale of the security for any matured portion of the Indebtedness without exhausting the power to foreclose and sell the Mortgaged Property for any subsequently maturing portion of the Indebtedness.

	Other.  Exercise any and all other rights, remedies and recourses granted under the Loan Documents or now or hereafter existing in equity, at law, by virtue of statute or otherwise.

	Separate Sales.  The Mortgaged Property may be sold in one or more parcels and in such manner and order as Trustee, in his sole discretion, may elect, it being expressly understood and agreed that the right of sale arising out of any Event of Default shall not be exhausted by any one or more sales.

	Remedies Cumulative, Concurrent and Nonexclusive.  Beneficiary shall have all rights, remedies and recourses granted in the Loan Documents and available at law or equity (including specifically those granted by the UCC  in effect and applicable to the Mortgaged Property or any portion thereof) and same: (a) shall be cumulative and concurrent; (b) may be pursued separately, successively or concurrently against Grantor or others obligated for payment of the Indebtedness, or against the Mortgaged Property, or against any one or more of them, at the sole discretion of Beneficiary; (c) may be exercised as often as occasion therefor shall arise, it being agreed by Grantor that the exercise or failure to exercise any of same shall in no event be construed as a waiver or release thereof or of any other right, remedy or recourse; and (d) are intended to be, and shall be, nonexclusive.

	No Conditions Precedent to Exercise of Remedies.   Neither Grantor nor any other person hereafter obligated for payment of all or any part of the Indebtedness or fulfillment of all or any of the Obligations shall be relieved of such obligation by reason of: (a) the failure of Trustee to comply with any request of Grantor or any other person so obligated to foreclose the lien of this Deed of Trust or to enforce any provisions of the other Loan Documents; (b) the release, regardless of consideration, of the Mortgaged Property or any portion thereof or interest therein or the addition of any other property to the Mortgaged Property; (c) any agreement or stipulation between any subsequent owner of the Mortgaged Property and Beneficiary extending, renewing, rearranging or in any other way modifying the terms of the Loan Documents without first having obtained the consent of, given notice to or paid any consideration to Grantor or such other person, and in such event Grantor and all such other persons shall continue to be liable to make payment according to the terms of any such extension or modification agreement unless expressly released and discharged in writing by Beneficiary; or (d) by any other act or occurrence save and except the complete payment of the Indebtedness and the complete fulfillment of all of the Obligations.

	Release of and Resort to Collateral.  Beneficiary may release, regardless of consideration, any part of the Mortgaged Property without, as to the remainder, in any way impairing, affecting, subordinating or releasing the lien or security interest created in or evidenced by the Loan Documents and without in any way releasing or diminishing the liability of any person or entity liable for the repayment of the Indebtedness or the performance of the Obligations.  For payment of the Indebtedness, Beneficiary may resort to any other security therefor held by Beneficiary or Trustee in such order and manner as Beneficiary may elect.

	Waiver of Redemption, Notice and Marshaling of Assets.  To the fullest extent permitted by law, Grantor hereby irrevocably and unconditionally waives and releases: (a) all benefits that might accrue to Grantor by virtue of any present or future moratorium law or other law exempting the Mortgaged Property from attachment, levy or sale on execution or providing for any appraisement, valuation, stay of execution, exemption from civil process, redemption or extension of time for payment; (b) all notices of any Event of Default or of Beneficiary's intention to accelerate maturity of the Indebtedness or of Beneficiary's election to exercise or its actual exercise of any right, remedy or recourse provided for under the Loan Documents; and (c) any right to a marshaling of assets or a sale in inverse order of alienation.

	Discontinuance of Proceedings.  In case Beneficiary shall have proceeded to invoke any right, remedy or recourse permitted under the Loan Documents and shall thereafter elect to discontinue or abandon same for any reason, Beneficiary shall have the unqualified right so to do and, in such an event, Grantor and Beneficiary shall be restored to their former positions with respect to the Indebtedness, the Obligations, the Loan Documents, the Mortgaged Property and otherwise, and the rights, remedies, recourses and powers of Beneficiary shall continue as if same had never been invoked.

	Occupancy After Foreclosure.  The purchaser at any foreclosure sale pursuant to Section 4.1(d), shall become the legal owner of the Mortgaged Property.  Except for tenants holding under Leases (if any) not subject to being extinguished by virtue of a foreclosure of this Deed of Trust, all occupants of the Mortgaged Property or any part thereof shall become tenants at sufferance of the purchaser at the foreclosure sale and shall deliver possession thereof immediately to the purchaser upon demand.  It shall not be necessary for the purchaser at said sale to bring any action for possession of the Mortgaged Property other than the statutory action of forcible detainer in any Justice Court having jurisdiction over the Mortgaged Property.  Furthermore, the purchaser at any such foreclosure sale of the Mortgaged Property shall not be obligated to perform or discharge any obligation, duty or liability under the Leases, including, without limitation, the obligation to return any deposits made by tenants under the Leases, or to reimburse any tenants under the Leases for any expenditures made by such tenant for improvements to the spaces being leased by the tenants under the Leases.

	Application of Proceeds.  The proceeds of any sale of, and the Rents and other amounts generated by the holding, leasing, management, operation or other use of, the Mortgaged Property, shall be applied by Beneficiary or Trustee (or the receiver, if one is appointed) in the following order unless otherwise required by applicable law or by the Credit Agreement:

	first, to that portion (if any) of the Indebtedness then remaining unpaid (including without limitation principal and accrued interest and the costs and expenses of taking possession of the Mortgaged Property and of holding, managing, operating, using, leasing, repairing, improving and selling the same, including by way of illustration but not by way of limitation any one or more of the following to the extent Beneficiary deems appropriate:  (i) reasonable trustees' and receivers' fees, (ii) court costs, (iii) reasonable attorneys', brokers', managers', accountants' and appraisers' fees and expenses, (iv) costs of advertisement, and (v) the payment of any and all real estate ad valorem taxes and similar impositions, liens, security interests or other rights, titles or interests equal or superior to the lien and security interest of this Deed of Trust except those to which the Mortgaged Property has been or will be sold subject to and without in any way implying Beneficiary's prior consent to the creation thereof) as to which the Loan Parties (or any of them) are not fully personally liable, it being agreed that the application of such proceeds shall be in such a manner as to preserve (and not extinguish or reduce) the Loan Parties' personal liability under the Loan Documents until all the Indebtedness as to which the Loan Parties are not personally liable has been paid in full;

	second, to the payment of that portion of the Indebtedness as to which the Loan Parties (or any of them) are fully liable;

	third, to the extent permitted by law and funds are available therefor out of the sale proceeds or the Rents, to the payment of any indebtedness or obligation secured by a subordinate deed of trust on or security interest covering the Mortgaged Property if Beneficiary has actual knowledge of such subordinate deed of trust or security interest (but without in any way implying Beneficiary's prior consent to the creation thereof); and

	fourth, the balance, if any, to the payment of the persons legally entitled thereto, which may include Grantor.

	Additional Advances and Disbursements; Costs of Enforcement.

	If any Event of Default exists, Beneficiary shall have the right, but not the obligation, to cure such Event of Default in the name and on behalf of Grantor.  All sums advanced and expenses incurred at any time by Beneficiary under this Section 4.10, or otherwise under this Deed of Trust or any of the other Loan Documents or applicable law, shall bear interest from the date that such sum is advanced or expense incurred, to and including the date of reimbursement, computed at the Post-Default Rate (as calculated pursuant to Section 3.02(c) of the Credit Agreement), and all such sums, together with interest thereon, shall be secured by this Deed of Trust.

	Grantor shall pay all expenses (including reasonable attorneys' fees and expenses) of or incidental to the perfection and enforcement of this Deed of Trust and the other Loan Documents, or the enforcement, compromise or settlement of the Indebtedness or any claim under this Deed of Trust and the other Loan Documents, and for the curing thereof, or for defending or asserting the rights and claims of Beneficiary in respect thereof, by litigation or otherwise.

	No Mortgagee in Possession.  Neither the enforcement of any of the remedies under this Article 4, the assignment of the Rents and Leases under Article 5, the security interests under Article 6, nor any other remedies afforded to Beneficiary under the Loan Documents, at law or in equity shall cause Beneficiary or Trustee to be deemed or construed to be a mortgagee in possession of the Mortgaged Property, to obligate Beneficiary or Trustee to lease the Mortgaged Property or attempt to do so, or to take any action, incur any expense, or perform or discharge any obligation, duty or liability whatsoever under any of the Leases or otherwise.

	

ASSIGNMENT OF LEASES and Rents

	Assignment of Leases and Rents.  Grantor hereby assigns to Beneficiary the Rents and all of Grantor's rights in and under all Leases as further security for the payment of the Indebtedness and the performance of the Obligations, and Grantor grants to Beneficiary the right to enter the Mortgaged Property for the purpose of collecting the same and to let the Mortgaged Property or any part thereof, and to apply the Rents on account of the Indebtedness and Obligations.  The foregoing assignment and grant is present and absolute (and not only as collateral) and shall continue in effect until the Indebtedness and all of the Obligations are fully paid and performed, but Beneficiary hereby waives the right to enter the Mortgaged Property for the purpose of collecting the Rents, and Grantor shall have a revocable license to collect, receive, use and retain the Rents unless an Event of Default has occurred and for so long as such Event of Default continues; such right of Grantor to collect, receive, use and retain the Rents may be revoked by Beneficiary upon the occurrence and during the continuance of any Event of Default by giving not less than two (2) days' written notice of such revocation to Grantor.  In the event such notice is given, Grantor shall pay over to Beneficiary, or to any receiver appointed to collect the Rents, any lease security deposits, and shall pay monthly in advance to Beneficiary, or to any such receiver, the fair and reasonable rental value as determined by Beneficiary for the use and occupancy of such part of the Mortgaged Property as may be in the possession of Grantor or any affiliate of Grantor, and upon default in any such payment Grantor and any such affiliate will vacate and surrender the possession of the Mortgaged Property to Beneficiary or to such receiver, and in default thereof may be evicted by summary proceedings or otherwise.  Grantor shall not accept prepayments of installments of Rent to become due for a period of more than one month in advance (except for security deposits and estimated payments of percentage rent, if any).

	No Impairment by Grantor.  Grantor has not done, nor shall it do, any act that would prevent Beneficiary from, or limit Beneficiary in, acting under any of the provisions of the foregoing assignment.

	No Claims.  No action has been brought or, so far as is known to Grantor, is threatened, that would interfere in any way with the right of Grantor to execute the foregoing assignment and perform all of Grantor's obligations contained in this Article 5 and in the Leases.

	No Merger of Estates.  So long as any part of the Indebtedness and the Obligations secured hereby remain unpaid and undischarged, the fee and leasehold estates to the Mortgaged Property shall not merge, but shall remain separate and distinct, notwithstanding the union of such estates either in Grantor, Beneficiary, any lessee or any third party by purchase or otherwise.

	No Liability of the Beneficiary.  The Beneficiary's acceptance of this assignment shall not be deemed to constitute Beneficiary a "mortgagee in possession," nor obligate the Beneficiary to appear in or defend any proceeding relating to any Lease or to the Mortgaged Property, or to take any action hereunder, expend any money, incur any expenses, or perform any obligation or liability under any Lease, or assume any obligation for any deposit delivered to Grantor by any tenant and not as such delivered to and accepted by the Beneficiary.  The Beneficiary shall not be liable for any injury or damage to person or property in or about the Mortgaged Property, or for the Beneficiary's failure to collect or to exercise diligence in collecting Rents, but shall be accountable only for Rents that it shall actually receive.  Neither the assignment of Leases or the Rents nor enforcement of the Beneficiary's rights regarding Leases and Rents (including collection of Rents) nor possession of the Mortgaged Property by the Beneficiary nor the Beneficiary's consent to or approval of any Lease (nor all of the same), shall render the Beneficiary liable on any obligation under or with respect to any Lease or constitute affirmation of, or any subordination to, any Lease, occupancy, use or option.  If the Beneficiary seeks or obtains any judicial relief regarding Rents or Leases, the same shall in no way prevent the concurrent or subsequent employment of any other appropriate rights or remedies nor shall same constitute an election of judicial relief for any foreclosure or any other purpose.  The Beneficiary neither has nor assumes any obligations as lessor or landlord with respect to any Lease.  The rights of the Beneficiary under this Article 5 shall be cumulative of all other rights of the Beneficiary under the Loan Documents or otherwise.

	

SECURITY AGREEMENT

	Security Interest.  This Deed of Trust shall be construed as a deed of trust on real property and it shall also constitute and serve (a) as a security agreement on personal property within the meaning of, and shall constitute a first and prior security interest under, the UCC with respect to that portion of the Mortgaged Property within the scope of the UCC (collectively, the "UCC Property") and (b) as an assignment of rents and leases of the Rents and Leases.  To this end, Grantor has GRANTED, BARGAINED, CONVEYED, ASSIGNED, TRANSFERRED, AND SET OVER, and by these presents does GRANT, BARGAIN, CONVEY, ASSIGN, TRANSFER AND SET OVER, unto Trustee and unto Beneficiary a first and prior security interest and all of Grantor's right, title and interest in, to and under the Personalty, Fixtures, Plans, Leases and Rents and the other UCC Property; to secure the full and timely payment of the Indebtedness and the full and timely performance and discharge of the Obligations.

	Financing Statements.  Grantor hereby irrevocably authorizes Beneficiary at any time and from time to file in any filing office in any UCC jurisdiction one or more financing or continuation statements and amendments thereto, relative to all or any part of the Mortgaged Property, without the signature of Grantor where permitted by law.  Grantor agrees to furnish Beneficiary, promptly upon request, with any information required by Beneficiary to complete such financing or continuation statements.  If Beneficiary has filed any initial financing statements or amendments in any UCC jurisdiction prior to the date hereof, Grantor ratifies and confirms its authorization of all such filings.  Grantor acknowledges that it is not authorized to file any financing statement or amendment or termination statement with respect to any financing statement without the prior written consent of Beneficiary, and agrees that it will not do so without Beneficiary's prior written consent, subject to Grantor's rights under Section 9-509(d)(2) of the UCC.  Grantor shall execute and deliver to Beneficiary, in form and substance satisfactory to Beneficiary, such additional financing statements and such further assurances as Beneficiary may, from time to time, reasonably consider necessary to create, perfect and preserve Beneficiary's security interest hereunder and Beneficiary may cause such statements and assurances to be recorded and filed, at such times and places as may be required or permitted by law to so create, perfect and preserve such security interest.

	Uniform Commercial Code Remedies.  Beneficiary and/or Trustee shall have all the rights, remedies and recourses with respect to the UCC Property afforded to it by the UCC, in addition to, and not in limitation of, the other rights, remedies and recourses afforded by the Loan Documents.

	No Obligation of Trustee or Beneficiary.  The assignment and security interest herein granted shall not be deemed or construed to constitute Trustee or Beneficiary as a trustee in possession of the Mortgaged Property, to obligate Trustee or Beneficiary to lease the Mortgaged Property or attempt to do same, or to take any action, incur any expense or perform or discharge any obligation, duty or liability whatsoever under any of the Leases or otherwise.

	Fixture Filing.  A part of the Mortgaged Property is or is to become fixtures pursuant to applicable Law.  In this regard, to the extent that the Mortgaged Property includes items of personal property which are or are to become fixtures under applicable Law, and to the extent permitted under applicable Law, the filing hereof in the real estate records of the county in which such Mortgaged Property is located shall also operate from the time of filing as a "fixture filing" for all purposes under the UCC with respect to such Mortgaged Property, and the following information is applicable for the purpose of such fixture filing, to wit:  

	
Name and Address of the debtor:

The Grantor having the address described in the Preamble hereof.

The Grantor is a limited liability company organized under the laws of the State of Delaware whose Organization Number is 4625314
	
Name and Address of the secured party:

The Beneficiary having the address described in the Preamble hereof, from which address information concerning the security interest may be obtained.

	
This Financing Statement covers the following types or items of property:

The Mortgaged Property.  This instrument covers goods or items of personal property which are or are to become fixtures upon the real property included in the Mortgaged Property.

	
The name of the record owner of the real property on which such fixtures are or are to be located is: Westway Feed Products LLC.

	Remedies.  If an Event of Default remains uncured, Beneficiary may elect, in addition to exercising any and all other rights, remedies and recourses set forth in Article 4 or elsewhere in this Deed of Trust, to collect and receive all of the Rents and to proceed in the manner set forth in Section 9.604 of the UCC in effect relating to the procedure to be followed when a security agreement covers both real and personal property.  Except as otherwise set forth in this Section 6.6, at any foreclosure and sale as described in Section 4.1(d) hereinabove, it shall be deemed that the Trustee proceeded under such Section 9.604 and that such sale passed title to all of the Mortgaged Property and other property described herein to the purchaser thereat, including without limitation, the UCC Property.  Beneficiary, acting by and through the Trustee or any other representative, may elect either prior to or at such sale not to proceed under such Section 9.604 by notifying Grantor of the manner in which Beneficiary intends to proceed with regard to the UCC Property.

	Location of Chief Executive Office.  Grantor hereby warrants and represents to Beneficiary that Grantor's chief executive office is located at the address set forth in the opening recital of this Deed of Trust and that it is organized under the laws of the State of Delaware.  Grantor shall notify Beneficiary immediately if Grantor changes the location of its chief executive office or its state of organization.

	

HAZARDOUS MATERIALS

	Definitions.  Grantor, Beneficiary and Trustee agree that, for purposes of this Article 7 only, the following terms shall have the meaning herein specified:

	"Governmental Authority" shall mean the United States, the state, the county, the city, or any other political subdivision in which the Mortgaged Property is located, and any other political subdivision, agency, or instrumentality exercising jurisdiction over Grantor or the Mortgaged Property.

	"Environmental Laws" shall mean all laws, ordinances, orders, interpretations, rules and regulations of any Governmental Authority applicable to Grantor or the Mortgaged Property relating to human health or the environment, including, without limitation, RCRA and CERCLA (as hereinafter defined), the Toxic Substances Control Act, 15 U.S.C. Section 2601, et seq., the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 et seq., the Clean Water Act, 33 U.S.C. Section 1251, et seq., the Clean Air Act, 42 U.S.C. Section 7401 et seq., the Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq., all as now or hereafter amended, as well as any common law or any other rule of law of any Governmental Authority applicable to the Grantor or the Mortgaged Property and relating to human health or the environment.

	"Hazardous Materials" shall mean any of the following: (i) any "hazardous waste" as defined by the Resource Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.), as amended from time to time, and regulations promulgated thereunder ("RCRA"); (ii) any "hazardous substance", "pollutant" or "contaminant", as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. Section 9601 et seq.), as amended from time to time, and regulations promulgated thereunder ("CERCLA"); (iii) asbestos (whether or not friable) and asbestos-containing materials; (iv) any volatile organic compounds, including oil and petroleum products; (v) any substances which because of their quantitative concentration, chemical, radioactive, flammable, explosive, infectious or other characteristics, constitute or may reasonably be expected to constitute or contribute to a danger or hazard to public health, safety or welfare or to the environment, including, without limitation, any polychlorinated biphenyls (PCBs), toxic metals, etchants, pickling and plating wastes, explosives, reactive metals and compounds, pesticides, herbicides, urea formaldehyde foam insulation and chemical, biological and radioactive wastes; (vi) radon gas; (vii) any other substance the presence of which on the Mortgaged Property is prohibited by any Environmental Laws; and (viii) any other substance which by any Environmental Laws requires special handling or notification of any federal, state or local governmental entity in its collection, storage, treatment, or disposal.  However, for the purposes of the representations, warranties and covenants, but not the indemnification obligations, set forth in this Deed of Trust, the term "Hazardous Materials" shall not include materials, chemicals or substances normally used in connection with the use, management, operation, or ownership of the Mortgaged Property, provided that such materials, chemicals or substances are stored, handled and used in a safe and prudent manner and in accordance with all Environmental Laws.

	"Hazardous Materials Contamination" shall mean the contamination (whether presently existing or hereafter occurring) of the Land, facilities, soil, groundwater, air or other elements on or of the Mortgaged Property by Hazardous Materials, or the contamination of the buildings, facilities, soil, groundwater, air or other elements on or of any other property as a result of Hazardous Materials at any time (whether before or after the date of this Deed of Trust) emanating or otherwise released from the Mortgaged Property.

	"Environmental Reports" shall mean any environmental reports relating to the Land (which, for all purposes of this Article 7 is deemed to include the Improvements and the Fixtures) provided to Beneficiary by Grantor prior to the effective date hereof.

	Grantor's Warranties.  Grantor hereby represents and warrants that:

	Grantor has performed or caused to be performed reasonable investigations, studies and tests as to any possible environmental contamination, remedial obligation, liabilities or problems with respect to the Land and such investigations, studies and tests have disclosed no Hazardous Materials or Violations of Environmental Laws, except as set forth in the Environmental Reports.  As used in this Article 7, any references to "Violations" of an Environmental Law shall also include any failure to comply with any such Environmental Law and any act, omission or condition which subjects any past, present or future owner or operator of, or lienholder secured by, the Land, to liability, or imposes remedial obligations on such owner, operator or lienholder, under such Environmental Law.

	Except as set forth in the Environmental Reports, to the knowledge of Grantor, there have been no releases of Hazardous Materials either at, upon, under or within the Land, and no Hazardous Materials have migrated to the Land from neighboring properties.

	Except as set forth in the Environmental Reports, to the knowledge of Grantor, no Hazardous Materials are located on or have been stored, processed or disposed of on, or released or discharged from (including discharges to groundwater), the Land or any other adjoining property currently owned or operated by Grantor or any affiliate of Grantor, and no above or underground storage tanks exist on the Land.

	Grantor has not received notice from any Governmental Authority, any tenant or other occupant of the Mortgaged Property or from any other person with respect to any release of Hazardous Materials at, upon, under or within the Land, and no investigation, administrative order, consent order and agreement, litigation or settlement with respect to Hazardous Materials or Hazardous Materials Contamination is proposed, threatened, anticipated or in existence with respect to the Land.  The Land is not currently on, and has never been on, any federal or state "Superfund" or "Superlien" list.

	Except as set forth in the Environmental Reports, Grantor possesses all permits, licenses, registrations, and similar authorizations required to operate the Mortgaged Property under Environmental Laws, and the Mortgaged Property and all operations conducted thereon are currently in compliance with all Environmental Laws.

	Except as set forth in the Environmental Reports, neither Grantor nor, to the knowledge of Grantor, any prior owner or operator of the Mortgaged Property has been or is involved in operations at the Land which could lead to the imposition on Grantor or any subsequent owner of the Land of liability under Environmental Laws.

	Grantor's Covenants.  Grantor hereby covenants and agrees as follows:

	Grantor will strictly comply with all Environmental Laws, and, as soon as practicable, will notify Beneficiary of the presence of or any release of Hazardous Materials at, upon, under or within the Land, or of the receipt by Grantor of any notice from any Governmental Authority or from any tenant or other occupant or from any other person with respect to any alleged such release or presence, promptly upon discovery of such release or presence or receipt of such notice, and will send to Beneficiary copies of all results of environmental assessments and tests at the Land.  Without limiting the generality of the foregoing, Grantor, as soon as practicable, will give to Beneficiary notice of the commencement of any litigation or threat of litigation relating to any alleged release of any Hazardous Materials at, upon, under or within the Land.  Grantor, as soon as practicable, will deliver to Beneficiary any documentation or records Beneficiary may reasonably request and which are susceptible of being obtained by Grantor without undue cost or expense and without the necessity for initiating legal proceedings to obtain the same in connection with all such notices, inquiries, and communications, and shall endeavor to advise Beneficiary of any subsequent developments.

	Grantor shall, at its own cost and expense, take all actions as shall be necessary or advisable for the clean-up of the Land or any other Section 7.3 Property (as hereinafter defined), including all removal, containment and remedial action in accordance with all applicable Environmental Laws (and in all events in a manner reasonably satisfactory to Beneficiary), and shall further pay or cause to be paid at no expense to Beneficiary all clean-up, administrative, and enforcement costs of all Governmental Authorities or the parties protected by Environmental Laws which may be asserted against the Land or any other Section 7.3 Property, the owner or operator thereof or a lienholder secured thereby.  All costs (including, without limitation, those costs described above), damages, liabilities, losses, claims, expenses (including, without limitation, reasonable attorneys' fees and disbursements) which are reasonably incurred by Beneficiary, without the requirement that Beneficiary wait for the ultimate outcome of any litigation, claim or other proceeding, shall be paid by Grantor to Beneficiary within ten (10) days after written notice to Grantor from Beneficiary itemizing the amounts incurred to the effective date of such notice, with interest thereon commencing ten (10) days after the effective date of such notice at the default or post-maturity rate of interest provided for in the Loan Documents.  Until such amounts shall be paid by Grantor, they shall be added to and become a part of the Indebtedness secured hereby.  As used herein, the term "Section 7.3 Property" shall mean any property (other than the Land) owned or operated by Grantor or any affiliate of Grantor to the extent that any Governmental Authority could obtain a lien on the Land for the clean-up, removal, containment or any remedial action with respect to such other property in accordance with applicable Environmental Laws.

	Grantor will notify Beneficiary in writing, as soon as practicable, upon learning that any information provided by Grantor in connection with the loan evidenced by the Loan Documents either was not true in any material respect when made or is no longer true in any material respect.  

	Site Assessments.  If Beneficiary reasonably believes that there exists on the Mortgaged Property any environmental condition which could reasonably be expected to result in any material liability, cost or expense to the owner, occupier or operator of such Mortgaged Property arising under any Environmental Laws (a "Material Condition"), Beneficiary (by its officers, employees and agents) at any time and from time to time, either prior to or after the occurrence of an Event of Default, may contract for the services of persons (the "Site Reviewers") to perform environmental site assessments ("Site Assessments") on the Mortgaged Property for the purpose of determining whether there exists a Material Condition.  The Site Assessments may be performed at any time or times, upon reasonable notice, and under reasonable conditions established by Grantor (including, without limitation, those designed to prevent unreasonable interference with use of the Mortgaged Property) which do not impede the performance of the Site Assessments.  The Site Reviewers are hereby authorized to enter upon the Mortgaged Property for such purposes.  The Site Reviewers are further authorized to perform both above and below ground testing for environmental damage or the presence of Hazardous Materials on the Mortgaged Property and such other tests on the Mortgaged Property as may be necessary to conduct the Site Assessments in the reasonable opinion of the Site Reviewers.  Grantor will supply to the Site Reviewers such historical and operational information regarding the Mortgaged Property in Grantor's possession as may be reasonably requested by the Site Reviewers to facilitate the Site Assessments and will make available for meetings with the Site Reviewers appropriate personnel having knowledge of such matters.  If such Site Assessment discloses that the Mortgaged Property is in Violation of any Environmental Law, then the cost of performing such Site Assessments shall be paid by Grantor to Beneficiary within ten (10) days after notice to Grantor from Beneficiary itemizing the amounts incurred to the effective date of such notice, with interest thereon commencing ten (10) days after the effective date of such notice at the default or post-maturity rate of interest provided for in the Loan Documents.  If Grantor is not obligated to pay the cost of performing such Site Assessment pursuant to the immediately preceding sentence, Beneficiary shall pay such cost.  Until such amounts shall be paid by Grantor, they shall be added to and become a part of the indebtedness secured hereby.

	INDEMNIFICATION.  GRANTOR SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS EACH INDEMNITEE FROM AND AGAINST, AND GRANTOR SHALL BE RESPONSIBLE FOR, ANY AND ALL LIABILITIES (INCLUDING WITHOUT LIMITATION STRICT LIABILITY), ACTIONS, DEMANDS, PENALTIES, FINES, LOSSES, COSTS OR EXPENSES (INCLUDING WITHOUT LIMITATION REASONABLE ATTORNEYS' AND EXPERTS' FEES AND EXPENSES, CLEAN-UP COSTS, WASTE DISPOSAL COSTS AND OTHER SIMILAR COSTS), SUITS, COSTS OF ANY SETTLEMENT OR JUDGMENT AND CLAIMS OF ANY AND EVERY KIND WHATSOEVER, WHETHER ARISING IN EQUITY, AT COMMON LAW, OR BY STATUTE, OR UNDER THE LAW OF CONTRACTS, TORTS (INCLUDING WITHOUT LIMITATION, NEGLIGENCE AND STRICT LIABILITY WITHOUT REGARD TO FAULT) OR PROPERTY, OF EVERY KIND OR CHARACTER (COLLECTIVELY, THE "SECTION 7.5 LOSSES") WHICH MAY NOW OR IN THE FUTURE (WHETHER BEFORE OR AFTER THE RELEASE OF THIS DEED OF TRUST) BE PAID, INCURRED OR SUFFERED BY OR ASSERTED OR AWARDED AGAINST EACH INDEMNITEE BY ANY PERSON OR ENTITY OR GOVERNMENTAL AUTHORITY AS A RESULT OF, OR ARISING OUT OF, THE PRESENCE ON OR UNDER, OR THE ESCAPE, SEEPAGE, LEAKAGE, SPILLAGE, DISCHARGE, EMISSION OR RELEASE (COLLECTIVELY, THE "RELEASE") FROM THE MORTGAGED PROPERTY OF ANY HAZARDOUS MATERIALS OR ANY HAZARDOUS MATERIALS CONTAMINATION OR ARISE OUT OF OR RESULT FROM THE ENVIRONMENTAL CONDITION OF THE MORTGAGED PROPERTY OR THE APPLICABILITY OF ANY ENVIRONMENTAL LAWS RELATING TO HAZARDOUS MATERIALS (INCLUDING, WITHOUT LIMITATION, CERCLA OR ANY FEDERAL, STATE OR LOCAL SO-CALLED "SUPERFUND" OR "SUPERLIEN" LAWS, STATUTE, LAW, ORDINANCE, CODE, RULE, REGULATION, ORDER OR DECREE), PRESENT AT OR RELEASED FROM THE MORTGAGED PROPERTY, REGARDLESS OF WHETHER CAUSED BY OR WITHIN THE CONTROL OF GRANTOR OR EACH INDEMNITEE, AND NOTWITHSTANDING THE NEGLIGENCE OR STRICT LIABILITY (WITHOUT REGARD TO FAULT) OF EACH INDEMNITEE.  WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNITEE WITH RESPECT TO SECTION 7.5 LOSSES WHICH ARE CAUSED BY OR ARISE OUT OF IN WHOLE OR IN PART THE NEGLIGENCE OF SUCH (AND/OR ANY OTHER) INDEMNITEE.  HOWEVER, SUCH INDEMNITY SHALL NOT APPLY TO A PARTICULAR INDEMNITEE TO THE EXTENT THAT THE SUBJECT OF THE INDEMNIFICATION IS CAUSED BY OR ARISES OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THAT PARTICULAR INDEMNITEE.  IN ADDITION, AND FURTHER NOTWITHSTANDING THE FOREGOING PROVISIONS OF THIS SECTION 7.5, GRANTOR SHALL NOT BE OBLIGATED TO INDEMNIFY EACH INDEMNITEE FROM ANY SECTION 7.5 LOSSES TO THE EXTENT PROVEN TO HAVE RESULTED FROM THE RELEASE OF HAZARDOUS MATERIALS OR ANY HAZARDOUS MATERIALS CONTAMINATION WHICH (I) FIRST BEGINS AFTER THE CUT-OFF DATE AND (II) IS PROVEN NOT TO HAVE BEEN CAUSED BY GRANTOR OR ANY EMPLOYEE, OFFICER, PARTNER, AGENT, INDEPENDENT CONTRACTOR, TENANT, INVITEE OR OCCUPANT OF GRANTOR.  GRANTOR SHALL HAVE THE BURDEN OF PROVING THAT THE CONDITIONS IN THE FOREGOING CLAUSES (I) AND (II) ARE SATISFIED, AND SHALL CONTINUE TO DEFEND, INDEMNIFY AND HOLD HARMLESS EACH INDEMNITEE FOR ALL MATTERS SET FORTH IN THIS SECTION 7.5 UNLESS AND UNTIL A COURT OF COMPETENT JURISDICTION ISSUES A FINAL, NON-APPEALABLE ORDER THAT GRANTOR HAS MET THIS BURDEN.  THE TERM "CUT-OFF DATE" MEANS THE EARLIER OF: (1) THE DATE ON WHICH GRANTOR, ITS AGENTS, AFFILIATES, EMPLOYEES AND INDEPENDENT CONTRACTORS SURRENDER POSSESSION OF THE MORTGAGED PROPERTY TO BENEFICIARY, AN AFFILIATE OF BENEFICIARY OR THE PURCHASER AT ANY SUCH FORECLOSURE SALE FOLLOWING EITHER (Y) A FORECLOSURE SALE OF THE MORTGAGED PROPERTY OR (Z) THE ACCEPTANCE BY BENEFICIARY OR AN AFFILIATE OF BENEFICIARY OF THE MORTGAGED PROPERTY BY DEED IN LIEU OF FORECLOSURE OR OTHERWISE; OR (2) THE DATE ON WHICH GRANTOR HAS CONVEYED TITLE TO THE PROPERTY TO A BONA FIDE ARMS-LENGTH PURCHASER FOR VALUE WHO IS NOT AN AFFILATE OF GRANTOR.  THE PROVISIONS OF THIS ARTICLE 7 REPRESENT A FAIR AND REASONABLE ALLOCATION OF RESPONSIBILITY AND RISK RELATING TO HAZARDOUS MATERIALS, HAZARDOUS MATERIALS CONTAMINATION, ENVIRONMENTAL LAWS AND THE ENVIRONMENTAL CONDITION OF THE MORTGAGED PROPERTY.

	Cure Violations of Environmental Laws.  If Grantor fails to comply with the requirements of any Environmental Laws applicable to the Mortgaged Property, Beneficiary shall have the right (but not the obligation) prior or subsequent to an Event of Default, to give such notices or cause such work to be performed at, upon, under or within the Land, or to take any and all other actions as Beneficiary deems necessary, to cure said failure of compliance.  However, except in the case of an emergency or other circumstances which, in Beneficiary's reasonable judgment, require quicker action, or except if any Event of Default then remains uncured under the Loan Documents, Beneficiary will not undertake any such work or other actions without first giving Grantor written notice of Grantor's failure to comply and ten (10) days after such notice (or such longer period of time as is reasonably necessary to cure such non-compliance if such non-compliance is curable but cannot be cured within such ten (10) day period, and Grantor promptly commences and diligently pursues the curing of such non-compliance) to cure such non-compliance.  All reasonable amounts paid or incurred by Beneficiary in the exercise of any such rights shall be paid by Grantor to Beneficiary within ten (10) days after notice to Grantor from Beneficiary itemizing the amounts incurred to the effective date of such notice, with interest thereon commencing ten (10) days after the effective date of such notice at the default or post-maturity rate of interest provided for in the Loan Documents.  Until such amounts shall be paid by Grantor, they shall be added to and become a part of the Indebtedness secured hereby.

	The representations, warranties, covenants, indemnifications, and other obligations of the Grantor contained in this Article 7 shall survive the foreclosure of this Deed of Trust and shall further survive the repayment of the Indebtedness, the termination hereof and the discharge of the Obligations under this Deed of Trust and the other Loan Documents.

	

CONCERNING THE TRUSTEE

	Certain Rights.  With the approval of Beneficiary, Trustee shall have the right to select, employ and consult with counsel.  Trustee shall have the right to rely on any instrument, document or signature authorizing or supporting any action taken or proposed to be taken by it hereunder, believed by it in good faith to be genuine.  Trustee shall be entitled to reimbursement for actual, reasonable expenses incurred by it in the performance of its duties.  Grantor shall, from time to time, pay the compensation due to Trustee hereunder and reimburse Trustee for, and indemnify, defend and save Trustee harmless against, all liability and reasonable expenses which may be incurred by it in the performance of its duties, including those arising from the sole, joint, concurrent, or comparative negligence of Trustee; however, Grantor shall not be liable under such indemnification to the extent such liability or expenses result from Trustee's gross negligence or willful misconduct hereunder.  Grantor's obligations under this Section 8.1 shall not be reduced or impaired by principles of comparative or contributory negligence.

	Retention of Money.  All moneys received by Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated in any manner from any other moneys (except to the extent required by law), and Trustee shall be under no liability for interest on any moneys received by it hereunder.

	Successor Trustees.  Trustee may resign by the giving of notice of such resignation in writing to Beneficiary.  If Trustee shall die, resign or become disqualified from acting in the execution of this trust or shall fail or refuse to execute the same when requested by Beneficiary so to do, or if, for any reason, with or without cause, Beneficiary shall prefer to appoint a substitute trustee to act instead of the aforenamed Trustee, Beneficiary shall have full power to appoint a substitute trustee and, if preferred, several substitute trustees in succession who shall succeed to all the estate, rights, powers and duties of the aforenamed Trustee.  Such appointment may be executed by any authorized officer or agent of Beneficiary and such appointment shall be conclusively presumed to be executed with authority and shall be valid and sufficient without proof of any action by the Board of Directors or any superior officer of the Beneficiary.

	Perfection of Appointment.  Should any deed, conveyance or instrument of any nature be required from Grantor by any successor Trustee to more fully and certainly vest in and confirm to such successor Trustee such estates, rights, powers and duties, then, upon request by such Trustee, all such deeds, conveyances and instruments shall be made, executed, acknowledged and delivered and shall be caused to be recorded and/or filed by Grantor.

	Trustee Liability.  TRUSTEE SHALL NOT BE LIABLE FOR ANY ERROR OF JUDGMENT OR ACT DONE BY TRUSTEE IN GOOD FAITH, OR BE OTHERWISE RESPONSIBLE OR ACCOUNTABLE UNDER ANY CIRCUMSTANCES WHATSOEVER, NOTWITHSTANDING THE SOLE, CONCURRENT OR COMPARATIVE NEGLIGENCE OF TRUSTEE.  TRUSTEE SHALL NOT BE PERSONALLY LIABLE IN CASE OF ENTRY BY IT, OR ANYONE ENTERING BY VIRTUE OF THE POWERS HEREIN GRANTED IT, UPON THE MORTGAGED PROPERTY FOR DEBTS CONTRACTED OR LIABILITY OR DAMAGES INCURRED IN THE MANAGEMENT OR OPERATION OF THE MORTGAGED PROPERTY.  HOWEVER, THE AFOREMENTIONED EXCULPATION FROM LIABILITY IN THIS SECTION 8.5 SHALL not apply to THE EXTENT OF ANY ACT OR OMISSION OF THE TRUSTEE THAT IS A RESULT OF THe gross negligence or willful misconduct of THE TRUSTEE.  TRUSTEE SHALL HAVE THE RIGHT TO RELY ON ANY INSTRUMENT, DOCUMENT OR SIGNATURE AUTHORIZING OR SUPPORTING ANY ACTION TAKEN OR PROPOSED TO BE TAKEN BY IT HEREUNDER, BELIEVED BY IT IN GOOD FAITH TO BE GENUINE.  TRUSTEE SHALL BE ENTITLED TO REIMBURSEMENT FOR EXPENSES INCURRED BY IT IN THE PERFORMANCE OF ITS DUTIES HEREUNDER (INCLUDING WITHOUT LIMITATION ANY AMOUNTS PAYABLE TO ATTORNEYS, ACCOUNTANTS, ENGINEERS OR OTHERS SELECTED BY TRUSTEE TO AID TRUSTEE IN THE PERFORMANCE OF ITS DUTIES HEREUNDER) AND TO REASONABLE COMPENSATION FOR SUCH OF ITS SERVICES HEREUNDER AS SHALL BE RENDERED.  GRANTOR WILL, FROM TIME TO TIME, PAY THE COMPENSATION DUE TO TRUSTEE HEREUNDER AND REIMBURSE TRUSTEE FOR, AND SAVE TRUSTEE HARMLESS AGAINST, ANY AND ALL LIABILITY AND EXPENSES WHICH MAY BE INCURRED BY IT IN THE PERFORMANCE OF ITS DUTIES.  GRANTOR HEREBY ABSOLUTELY RATIFIES AND CONFIRMS ANY AND ALL ACTS THAT THE TRUSTEE OR ANY SUCCESSOR OR SUBSTITUTE TRUSTEE MAY LAWFULLY DO BY VIRTUE OF THIS DEED OF TRUST.  THE FOREGOING OBLIGATION ON THE PART OF GRANTOR TO REIMBURSE TRUSTEE FOR, AND SAVE TRUSTEE HARMLESS AGAINST, ANY AND ALL LIABILITY AND EXPENSES WHICH MAY BE INCURRED BY IT IN THE PERFORMANCE OF ITS DUTIES SHALL APPLY WITH RESPECT TO SUCH LIABILITIES AND EXPENSES THAT ARISE OUT OF IN WHOLE OR IN PART THE NEGLIGENCE OF THE TRUSTEE.  HOWEVER, SUCH OBLIGATION SHALL NOT APPLY TO THE EXTENT THAT SUCH LIABILITIES OR EXPENSES ARISE OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE TRUSTEE.

	

MISCELLANEOUS

	Notices.  Any notice required or permitted to be given under this Deed of Trust shall be in writing and either shall be mailed by certified mail, postage prepaid, return receipt requested, or sent by overnight air courier service, or personally delivered to a representative of the receiving party, or sent by telecopy (provided an identical notice is also sent simultaneously by mail, overnight courier, or personal delivery as otherwise provided in this Section 9.1).  All such communications shall be mailed, sent or delivered, addressed to the party for whom it is intended at its address set forth on the first page of this Deed of Trust.  Any communication so addressed and mailed shall be deemed to be given on the earliest of  when actually delivered,  on the first Business Day (as defined in the Credit Agreement) after deposit with an overnight air courier service, or  on the third Business Day after deposit in the United States mail, postage prepaid, in each case to the address of the intended addressee, and any communication so delivered in person shall be deemed to be given when receipted for by, or actually received by, Beneficiary or Grantor, as the case may be.  If given by telecopy, a notice shall be deemed given and received when the telecopy is transmitted to the party's telecopy number specified in the Credit Agreement and confirmation of complete receipt is received by the transmitting party during normal business hours or on the next Business Day if not confirmed during normal business hours, and an identical notice is also sent simultaneously by mail, overnight courier, or personal delivery as otherwise provided in this Section 9.1.  Any party may designate a change of address by written notice to the other by giving at least ten (10) days prior written notice of such change of address.

	Performance at Grantor's Expense.  The cost and expense of performing or complying with any and all of the Obligations shall be borne solely by Grantor, and no portion of such cost and expense shall be, in any way or to any extent, credited against the Indebtedness.

	Survival of Obligations.  Each and all of the Obligations shall survive the execution and delivery of the Loan Documents and the consummation of the Loan called for therein and shall continue in full force and effect until the Indebtedness shall have been paid in full (it being acknowledged that certain Obligations shall survive the repayment of the Indebtedness as provided herein and in the other Loan Documents).

	Recording and Filing.  Grantor will cause the Loan Documents and all amendments and supplements thereto and substitutions therefor to be recorded, filed, re-recorded and refiled in such manner and in such places as Trustee or Beneficiary shall reasonably request, and will pay all such recording, filing, re-recording and refiling taxes, fees and other charges.

	Covenants Running with the Land.  All Obligations contained in this Deed of Trust are intended by Grantor, Beneficiary and Trustee to be, and shall be construed as, covenants running with the Mortgaged Property.  As used herein, "Grantor" shall refer to the party named in the first paragraph of this Deed of Trust and to any subsequent owner of all or any portion of the Mortgaged Property (without in any way implying that Beneficiary has or will consent to any such conveyance or transfer of the Mortgaged Property).

	Attorney-in-Fact.  Grantor hereby irrevocably appoints Beneficiary and its successors and assigns, as its attorney in fact, which agency is coupled with an interest,  to execute and/or record any notices of completion, cessation of labor, or any other notices that Beneficiary deems appropriate to protect Beneficiary's interest, if Grantor shall fail to do so within ten (10) days after written request by Beneficiary,  upon the issuance of a deed pursuant to the foreclosure of this Deed of Trust or the delivery of a deed in lieu of foreclosure, to execute all instruments of assignment, conveyance or further assurance with respect to the Leases, Rents, Personalty, Fixtures, Plans and Property Agreements in favor of the grantee of any such deed and as may be necessary or desirable for such purpose,  to prepare, execute and file or record financing statements, continuation statements, applications for registration and like papers necessary to create, perfect or preserve Beneficiary's security interests and rights in or to any of the collateral, and  while any Event of Default exists and is continuing, to perform any obligation of Grantor hereunder; however:   Beneficiary shall not under any circumstances be obligated to perform any obligation of Grantor;  any sums advanced by Beneficiary in such performance shall be added to and included in the Indebtedness and shall bear interest at the Default Rate;  Beneficiary as such attorney in fact shall only be accountable for such funds as are actually received by Beneficiary; and  Beneficiary shall not be liable to Grantor or any other person or entity for any failure to take any action which it is empowered to take under this Section.

	Beneficiary's Right to Perform the Obligations.  If Grantor shall fail, refuse or neglect to make any payment or perform any act required by the Loan Documents, then at any time thereafter, and without notice to or demand upon Grantor and without waiving or releasing any other right, remedy or recourse Beneficiary may have because of same, Beneficiary may (but shall not be obligated to) make such payment or perform such act for the account of and at the expense of Grantor, and shall have the right to enter upon or in the Land and Improvements for such purpose and to take all such action thereon and with respect to the Mortgaged Property as Beneficiary may reasonably deem necessary or appropriate.  However, except in the case of an emergency or other circumstances which, in Beneficiary's reasonable judgment, require prompt action to avoid injury to persons or damage to the Mortgaged Property, Beneficiary shall not make any such payment or perform any such act pursuant to this Section 9.7 unless an Event of Default then exists.  If Beneficiary shall elect to pay any Imposition or other sums due with reference to the Mortgaged Property, Beneficiary may do so in reliance on any bill, statement or assessment procured from the appropriate Governmental Authority or other issuer thereof without inquiring into the accuracy or validity thereof.  Similarly, in making any payments to protect the security intended to be created by the Loan Documents, Beneficiary shall not be bound to inquire into the validity of any apparent or threatened adverse title, lien, encumbrance, claim or charge before making an advance for the purpose of preventing or removing the same.  All sums paid by Beneficiary pursuant to this Section 9.7 and all other sums expended by Beneficiary to which it shall be entitled to be indemnified, and all reasonable attorneys' fees and expenses incurred by Beneficiary in enforcing the provisions of or otherwise preserving the Loan Documents or appearing in any suit or action relating to the Loan Documents or the Mortgaged Property, together with interest thereon at the default rate or post-maturity rate of interest provided for in the Loan Documents from the date of such payment or expenditure, shall constitute additions to the Indebtedness, shall be secured by the Loan Documents and shall be paid by Grantor to Beneficiary upon demand.  In addition, Beneficiary shall be subrogated to all liens, equities and claims of any person to whom any payments are made pursuant to this Section 9.7.

	Successors and Assigns.  This Deed of Trust shall be binding upon and inure to the benefit of Beneficiary and Grantor and their respective successors and assigns.  Grantor shall not, without the prior written consent of Beneficiary, assign any rights, duties or obligations hereunder.

	No Waiver.  Any failure by Trustee or Beneficiary to insist upon strict performance of any of the terms, provisions or conditions of the Loan Documents shall not be deemed to be a waiver of same, and Trustee or Beneficiary shall have the right at any time to insist upon strict performance of all of such terms, provisions and conditions.

	Subrogation:  If any or all of the proceeds of the Indebtedness have been used to extinguish, extend or renew any indebtedness heretofore existing against the Mortgaged Property, then, to the extent of such funds so used, the Indebtedness and this Deed of Trust shall be subrogated to all of the rights, claims, liens, titles and interests (herein collectively called the "Prior Liens") heretofore existing against the Mortgaged Property to secure the indebtedness so extinguished, extended or renewed, regardless of whether same have been released of record, and the Prior Liens, if any, are not waived but rather are continued in full force and effect in favor of Beneficiary and are merged with the lien and security interest created herein as cumulative security for the repayment of the Indebtedness and the satisfaction of the Obligations.

	Credit Agreement.  If any conflict or inconsistency exists between this Deed of Trust and the Credit Agreement, the Credit Agreement shall govern.

	Release or Reconveyance.  If all of the Indebtedness be paid as the same becomes due and payable and all of the Obligations (including, without limitation, all of the covenants, warranties, undertakings and agreements made in this Deed of Trust) are kept and performed, then, and in that event only, all rights under this Deed of Trust shall terminate (except to the extent expressly provided herein with respect to indemnifications, representations and warranties and other rights that are to continue following the release hereof) and the Mortgaged Property shall become wholly clear of the liens, security interests, conveyances and assignments evidenced hereby, and such liens and security interests shall be released by the Beneficiary in due form at Grantor's cost.  

	Waiver of Stay, Moratorium and Similar Rights.  Grantor agrees, to the full extent that it may lawfully do so, that it will not at any time insist upon or plead or in any way take advantage of any appraisement, valuation, stay, marshalling of assets, extension, redemption or moratorium law now or hereafter in force and effect so as to prevent or hinder the enforcement of the provisions of this Deed of Trust or the indebtedness secured hereby, or any agreement between Grantor and Beneficiary or any rights or remedies of Beneficiary.

	Obligations of Grantor, Joint and Several.  If more than one person or entity has executed this Deed of Trust as "Grantor," the obligations of all such persons or entities hereunder shall be joint and several.

	Governing Law.  This Deed of Trust shall be governed by the laws of the State of Texas without regard to conflicts of laws principles that would require the application of the laws of another jurisdiction.

	Headings.  The Article, Section and Subsection titles hereof are inserted for convenience of reference only and shall in no way alter, modify or define, or be used in construing, the text of such Articles, Sections or Subsections.

	No Partnership:  Nothing contained in the Loan Documents is intended to, or shall be construed as, creating to any extent and in any manner whatsoever, any partnership, joint venture, or association between Grantor, Trustee and Beneficiary, or in any way make Beneficiary or Trustee co-principals with Grantor with reference to the Mortgaged Property, and any inferences to the contrary are hereby expressly negated.

	Gender.  Each gender used herein shall include and apply to all genders, including the neuter.

	Agents.  Any right, remedy, privilege, duty or action available to or to be performed by Beneficiary under the Loan Documents may, if and to the extent determined by Beneficiary, be exercised or performed by any agent, attorney, correspondent or other representative of Beneficiary.

	Subordination by Beneficiary.  From time to time at Beneficiary's option, by instrument executed by Beneficiary and recorded in the real property records where this Deed of Trust has been recorded, Beneficiary may subordinate the lien created by this Deed of Trust to any interest in the Mortgaged Property, including, without limitation, any or all leases relating to any part or all of the Mortgaged Property.  Any such subordination shall be solely at Beneficiary's option, and in no event shall Beneficiary be obligated to subordinate the lien created by this Deed of Trust.

	No Presumption Arising.  Although the initial draft of the Loan Documents was drafted by Beneficiary and its legal counsel, Grantor and Grantor's legal counsel have had full opportunity to review, negotiate and approve the final form of the Loan Documents.  Accordingly, in the event of any ambiguity in the construction or interpretation of any provision of this Deed of Trust, or the Loan Documents, no presumption shall be indulged in favor of either party in the resolution of such ambiguity.

	Waiver of Deficiency Offset.  To the maximum extent permitted by applicable law, Grantor hereby waives any right to a determination of fair market value and to an offset against any deficiency resulting from a foreclosure sale of the Mortgaged Property (or any portion thereof) pursuant to Section 51.002 of the Texas Property Code, or pursuant to a judicial foreclosure, including, without limitation, any such rights that Grantor may otherwise have had under Section 51.003, Section 51.004 and/or Section 51.005 of the Property Code.  Grantor expressly recognizes that this section will constitute a waiver of the above-cited provisions of the Property Code which would otherwise permit Grantor and other persons against whom recovery of deficiencies is sought or guarantors independently (even absent the initiation of deficiency proceedings against them) to present competent evidence of the fair market value of the Mortgaged Property as of the date of foreclosure and offset against any deficiency the amount by which the foreclosure sale price is determined to be less than such fair market value.  Grantor further recognizes and agrees that this waiver will create an irrebuttable presumption that the foreclosure sale price is equal to the fair market value of the Mortgaged Property for purposes of calculating deficiencies owed by Grantor, other borrowers on the Loan Documents, guarantors, and others against whom recovery of a deficiency is sought.  Alternatively, in the event this waiver is determined by a court of competent jurisdiction to be unenforceable, the following shall be the basis for the finder of fact's determination of the fair market value of the Mortgaged Property as of the date of the foreclosure sale in proceedings governed by Sections 51.003, 51.004, and 51.005 of the Property Code:

	The Mortgaged Property shall be to valued "AS IS" and "WITH ALL FAULTS" and there shall be no assumption of restoration of or refurbishment of improvements, if any, after the date of the foreclosure;

	There shall be an assumption of a prompt resale of the Mortgaged Property for an all cash sales price by the purchaser at the foreclosure sale (but no later than twelve (12) months following the foreclosure sale) so that no extensive holding period should be factored into the determination of "fair market value" of the Mortgaged Property;

	An offset to the fair market value of the Mortgaged Property as determined hereunder shall be made by deducting from such value the reasonable estimated closing costs relating to the sale of the Mortgaged Property, including but not limited to brokerage commissions, title policy expenses, tax prorations, escrow fees, and other common charges which are incurred by a seller of property;

	The gross fair market value of the Mortgaged Property shall be further discounted to account for any estimated holding costs associated with maintaining the Mortgaged Property pending sale, including, without limitation, utilities expenses, property management fees, taxes and assessments, and other maintenance expenses; 

	Any expert opinion testimony given or considered in connection with a determination of the fair market value of the Mortgaged Property must be given by persons having at least five years experience in appraising property similar to the Mortgaged Property and who have conducted and prepared a complete written appraisal of the Mortgaged Property taking into consideration the factors set forth above; and

	After consideration of the factors required by law and those required above, and if not already taken into consideration, an additional discount factor shall be calculated based upon the estimated time it would take to effectuate such sale of the Mortgaged Property so that if appropriate, "fair market value" as so determined is discounted to be as of the date of the foreclosure sale of the Mortgaged Property.

	Entire Agreement and Modification. There are no oral agreements between the parties.  The Loan Documents contain the entire agreements between the parties relating to the subject matter hereof and thereof and all prior agreements relative thereto which are not contained herein or therein are terminated.  The Loan Documents may not be amended, revised, waived, discharged, released or terminated orally but only by a written instrument or instruments executed by the party against which enforcement of the amendment, revision, waiver, discharge, release or termination is asserted.  Any alleged amendment, revision, waiver, discharge, release or termination which is not so documented shall not be effective as to any party.  To the extent that Beneficiary is a "financial institution" as defined in Section 26.02 of the Texas Business & Commerce Code, the following shall apply: THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. 

	Time is of the Essence.  Time is of the essence in this Deed of Trust and in the other Loan Documents.

	Counterparts.  This Deed of Trust may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute but one instrument (and original signature pages and notary pages from each counterpart may be assembled into one original document to be recorded).  

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

EXECUTED as of the date first above written.
WESTWAY FEED PRODUCTS LLC, a Delaware limited liability company

 

By: _/s/ Thomas A. Masilla, Jr._____

Name: Thomas A. Masilla, Jr.

Title: Chief Financial Officer

STATE OF LOUISIANAS

S

PARISH OF ORLEANSS

This instrument was acknowledged before me on February __10__, 2010, by THOMAS A. MASILLA, JR., Chief Financial Officer of WESTWAY FEED PRODUCTS LLC, a Delaware limited liability company, on behalf of said limited liability company.

__/s/ James E.A. Slaton_________

Notary Public, State of Louisiana

James E.A. Slaton

State of Louisiana - Bar No. 27880

My commission is issued for life

 

 

	

LEGAL DESCRIPTION OF THE LAND

 

Parcel 1

Lots 1 through 6, both inclusive, in Block 102 of Manchester Addition, Harris County, Texas, according to the map or plat thereof recorded in Volume 6, Page 26 of the Map Records of Harris County, Texas.

Parcel 2

All of Lots Seven (7) and Eight (8) in Block One Hundred Two (102) in Manchester Addition, Harris County, Texas according to the map or plat hereof recorded in Volume 6, Page 26, of the Map Records of Harris County, Texas.

Parcel 3

Lots Nine (9) and Ten (10) in Block One Hundred Two (102) of Manchester Subdivision, a subdivision in Harris County, Texas, according to the map or plat thereof recorded in Volume 6, Page 26 of the Map Records of Harris County, Texas.

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