EXHIBIT 10.1
JOINT VENTURE
INVESTMENT AGREEMENT
This Joint Venture Agreement (hereafter "Agreement"), effective
as of May ___, 2005, is made and entered into by and among
Innofone, Inc., a Nevada Corporation having a principal office at
3470 Olney-Laytonsville Road, Suite #118, Olney, Maryland 20832
(“INFN”), Frederic Richardson, CEO of INFN
(“FR”) and Ascot Investments, Inc., a Nevada
corporation having its principal mailing address at 149 South
Barrington Court, Suite # 709, Los Angeles, California 90049
(“ASCOT”), (the foregoing being hereinafter
collectively referred to as the “Parties”).
RECITALS
WHEREAS, the Parties wish to
change the name of INFN from “Innofone, Inc.” to
“The Ascot Aggressive Growth Fund I, Inc.” (as such,
hereinafter the “Fund”) and to file with the Securities
and Exchange Commission (“SEC”) a Notice of Election on
Form N-54A to be regulated as a business development company
(“BDC”) under Sections 55 through 65 of the Investment
Company Act of 1940, as amended (hereinafter, the “1940
Act”); and
WHEREAS, INFN, FR and ASCOT wish
to enter into this Agreement for the purpose of investing, trading
and reinvesting the Fund’s assets in securities of portfolio
companies, including restricted stocks, publicly tradable stocks,
bonds, and other securities for the sole purpose and financial
benefit of the Parties including but not limited to new and
existing shareholders on the terms and conditions set forth herein
and to set forth their mutual understanding with respect to
management and control of the Fund and other organizational aspects
of the Fund’s business; and
NOW THEREFORE, in consideration of the foregoing recitals and
the mutual covenants and agreements set forth herein and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties agree as follows:
1. Issuance of Shares . INFN and FR wish to
contribute to the joint venture by causing the issuance of common
stock of INFN (hereafter “INFN Contribution”) as
follows: (i) 41,000,000 (hereinafter referred to as
“Collateral”) to be issued and placed into escrow with
the Escrow Agent (as hereinafter defined), (ii) 40,000,000 shares
issued in the name of Ascot Investments, Inc. and sent to the
address of record of Ascot Investments, Inc. These shares shall be
held outside of Escrow(hereinafter referred to as “Ascot
Shares”) and (iii) 20,000,000 shares to be issued to Ascot
Management Corp. when NAV performance has been attained in
accordance with the Management Bonus Plan (the “Management
Shares”). The Management Shares will be authorized and
unissued but shall be reserved for issuance in the name of Ascot
Management Corp. These shares are being authorized as a bonus
for meeting and or exceeding the Fund’s annual investment
strategy.
The Parties agree that they will take any and all necessary
action to ensure that FR retains voting control of the Fund until
such time as the conditions of Section 2 of this Agreement are
waived or satisfied, including granting of anti-dilution rights and
instructing the Fund’s transfer agent to issue additional
shares if necessary. Accordingly, the Parties agree that FR
shall have the right to vote the Collateral held in escrow until
such time as the conditions of Section 2 of this Agreement are
waived or satisfied at which point the shares comprising the
Collateral will be returned to the Fund’s transfer agent for
re-issuance at the discretion of ASCOT as set forth below, and the
16,000,000 shares held by FR will remain the property of FR.
2. Management Services and Other Actions to be
Performed by ASCOT . ASCOT hereby agrees to:
a. Place the Collateral into the custody of the Escrow
Agent.
b. Manage and control the portfolio of the Fund for the
sole purpose and financial benefit of the Parties hereto, including
but not limited to new and existing shareholders.
c. Compensate FR quarterly in the amount of 50%
percent of the performance fees earned by the Fund’s
portfolio adviser (calculated at 50% of the yield above 8%), until
the aggregate sum of one million five hundred thousand dollars
($1,500,000) has been received by FR. Upon receipt by FR of
the said one million five hundred thousand dollars ($1,500,000) in
cash, the Escrow Agent shall be instructed to return the Collateral
to the Transfer Agent of record and have the shares re-issued at
the discretion of ASCOT. Upon completion of the re-issuance
of these shares by the Transfer Agent pursuant to ASCOT’s
instructions, the holder thereof will have the right to vote such
reissued shares.
3. Shares Previously Held by FR . The Parties
agree and acknowledge that the approximately 16,000,000 shares of
INFN’s common stock currently held by FR will remain in the
possession of FR and are not subject to the escrow provisions of
this Agreement.
4. Registration Rights . FR shall have demand
registration rights for the above-specified shares, pursuant to the
terms of a Registration Rights Agreement, a copy of which is
attached hereto and marked “Exhibit C”.
5. Establishment of Escrow; Appointment of Escrow
Agent . (a) The Parties hereby appoint, as the Escrow Agent,
the following (the “Escrow Agent”):
BONDY & SCHLOSS LLP
60 East 42nd Street, 37 th Floor
New York, NY 10165-0150
Attention: Jeffrey A. Rinde, Esq.
Phone: 212.661.3535
Fax: 212.972.1677
The Parties agree to establish an Escrow Account to be monitored
and maintained by the Escrow Agent who will be instructed to
provide for the distribution of the Collateral, the dividends
generated by the Fund, and the collateral documents (hereafter
collectively referred to as “Escrow Property”) as
provided for in this Agreement.
The Parties further acknowledge that the Escrow Agent has in the
past represented ASCOT, and desires to continue in the future to
represent ASCOT, as its attorney in various legal matters.
(b) Distribution of the Collateral and Escrow Property shall be
in accordance with the instructions set forth in this Agreement.
The Escrow Agent, by its execution and delivery of this Agreement,
hereby agrees to receive the Collateral, accept its appointment as
Escrow Agent to hold the Collateral in escrow, and agrees to
deliver the Escrow Property out of escrow, all upon the terms,
provisions, and conditions hereof. The Escrow Property shall remain
the property of ASCOT, INFN and FR respectively until such time as
the conditions of Section 2 are waived or satisfied in full and
shall not be subject to any lien or charges by Escrow Agent or
judgments or creditors claims against the Parties until released in
the manner hereinafter provided, unless ASCOT defaults with respect
to the conditions set forth in Section 2.
(c) Disbursement of Escrow Property . The Escrow
Agent shall notify FR and ASCOT respectively of the receipt by it
of Escrow Property and any notification of the amount of Net
Profits. Unless otherwise specifically provided herein, and
upon satisfaction of conditions precedent, Escrow Agent shall
automatically and without further instruction, disburse Escrow
Property and Net Profits, including currency (USD), collateral
documents, and other considerations. On a quarterly basis,
Escrow Agent shall disburse, via wire transfer or certified check,
to all parties the proceeds, if any, from the sale of the
Fund’s assets less normal and customary escrow fees.
These instructions may be modified only in writing by all of the
Parties to this Agreement.
(d) Escrow Duties Ministerial . It is understood
and agreed that the duties of the Escrow Agent are entirely
ministerial, being limited to receiving Escrow Funds from ASCOT, FR
and INFN and holding and disbursing such Escrow Funds in accordance
with the within Agreement. The Escrow Agent’s duties
are only such as are specifically provided herein, and Escrow Agent
shall incur no liability whatsoever to INFN, FR or ASCOT, or any
other third party or third party beneficiaries, except as may arise
from its willful misconduct. The Escrow Agent shall have no
responsibility hereunder other than to follow faithfully the
instructions herein contained. The Escrow Agent may consult
with counsel and shall be fully protected in any action taken in
good faith in accordance with such advice. The Escrow Agent
shall be fully protected in acting in accordance with any written
instructions given to it hereunder and believed by it to have been
executed by all of the parties hereto.
(e) The Escrow Agent is not a party to, and is not bound by, any
agreement between ASCOT and INFN which may be evidenced by or arise
out of the foregoing instructions. Escrow Agent shall not be
liable for acting on any notice, request, waiver, consent, receipt,
or other paper or document believed by Escrow Agent to be genuine
and to have been signed by the proper party or parties.
The Escrow Agent shall not be liable for any error of judgment
or for any act done or step taken or omitted by the Escrow Agent in
good faith, or for any mistake of fact or law, or for anything
which Escrow Agent may do or refrain from doing in connection
herewith, except the Escrow Agent’s willful misconduct.
The Escrow Agent shall not be answerable for the default or
misconduct of any agent, attorney, or employee appointed by the
Escrow Agent if such agent attorney or employee shall have been
selected with reasonable care.
The Escrow Agent may consult with legal counsel in the event of
any dispute or question as to the consideration of the foregoing
instructions or the Escrow Agent’s duties hereunder, and the
Escrow Agent shall incur no liability and shall be fully protected
in acting in accordance with the terms of this Agreement.
The Escrow Agent shall carry out all of the terms of this
Agreement without the requirement of further instruction.
However, in the event of any disagreement of terms and conditions
or items not included in this Agreement between the undersigned or
any of them, the person or persons named in the foregoing
instructions, and/or any other person, resulting in adverse claims
and/or demands being made in connection with or for any papers,
money, or property involved herein or affected hereby, the Escrow
Agent shall be entitled, at its option, to refuse to comply with
any such claim, or demand so long as such disagreement shall
continue, and, in so refusing, the Escrow Agent shall not be or
become liable to the undersigned or any of them or to any person
named in the foregoing instructions for the failure or refusal to
comply with such conflicting or adverse demands, and the Escrow
Agent shall be entitled to continue to so refrain and refuse to so
act until (1) the rights of adverse claimants have been fully
adjudicated in a court assuming and having jurisdiction of the
parties and the securities, money, papers, and property involved
herein or affected hereby; and/or (2) all differences shall have
been adjusted by agreement and the Escrow Agent shall have been
notified in writing signed by all of the interested parties.
ASCOT, FR and INFN acknowledge that:
Escrow Agent is providing no advice to the Parties;
Escrow Agent is acting as an independent agent to facilitate the
purchase of assets, the sale of those assets and the distribution
of proceeds from said sales; and
Escrow Agent has in the past and will continue in the future to
represent ASCOT in various legal matters, including the preparation
of this Agreement, as its attorney but is not representing any of
the Parties in its capacity hereunder as escrow agent.
(f) Indemnification of Escrow Agent . INFN, FR and
ASCOT shall hold Escrow Agent harmless and ASCOT shall indemnify
Escrow Agent against any loss, liability, expense (including
reasonable attorneys’ fees and expenses), claim or demand
arising out of or in connection with the performance of its
obligations in accordance with the terms of this Agreement, except
for willful misconduct of Escrow Agent. The foregoing indemnities
in this paragraph shall survive the resignation of Escrow Agent or
the termination of this Agreement.
(g) Fees of Escrow Agent . Parties shall each be
jointly and severally responsible for Escrow Agent’s fees and
expenses. Such fees shall be payable as compensation for the
ordinary administrative services to be rendered by Escrow Agent
hereunder.
6. Term . The Joint Venture shall begin on
the effective date of this Agreement, and shall continue until the
conditions of Section 2 hereof have been waived or satisfied in
full unless sooner terminated by the occurrence of any of the
events enumerated in Section 13 hereof.
7. Management of the Joint Venture . With the
consent and approval of FR and the direction of the portfolio
advisor, ASCOT shall conduct the investment affairs of the
Fund.
ASCOT shall have management and trading discretion over the
Fund’s portfolio, subject to discretionary approval by INFN
and FR, collectively represented by FR.
Election of Directors. ASCOT shall be entitled to appoint two
(2) new members to the board of directors in its sole
discretion. FR shall vote its shares so as to maintain three
(3) positions on the Fund’s board of directors (for a total
of five (5) members of the board of directors) until all funds due
FR hereunder are paid in full.
Books of Account: Books of account of the transactions of
the Fund shall be kept FR until such time as the Collateral is
released and conditions of Section 2 are met. At such time,
these records shall be held by auditors and CPA’s appointed
jointly by ASCOT, the Fund and FR, unless otherwise instructed by a
regulatory body including but not limited to the SEC. Said
books of account shall be available and open to inspection and
examination at all reasonable times by any Party to this
Agreement.
Accounting: The Fund shall be fully compliant and fully
reporting as required by the 1940 Act.
Bank Accounts: Pursuant to a Resolution of the Board of
Directors of the Fund, the Fund shall authorize the opening of a
Bank account with City National Bank-Private Banking Division in
Beverly Hills, California.
Broker Account: The Fund shall authorize the opening of a
brokerage account with an NASD registered firm. The Fund will
utilize “leverage” as permitted by the 1940 Act.
The account will be used for the sole purpose of investing no more
than 30% of the Fund’s assets in “quality
investments” such as marginable securities, as permitted by
the 1940 Act.
Any transfer agent called upon to transfer securities to or from
the name specified on the individual items included in the
Collateral shall be entitled to rely on instructions or assignments
only if signed by all Parties hereto, without inquiry as to the
authority of the person(s) signing such instructions or
assignments, or as to the validity of any transfer to or from the
name of the Fund.
At the time of a transfer of securities, the transfer agent
shall be entitled to assume that: (1) the Fund is still in
existence, and (2) this Agreement is in full force and effect and
has not been amended unless the transfer agent has received written
notice to the contrary.
8. Rights, Duties and Obligations of the Parties
(a) Duties and Contributions of INFN
Upon ASCOT’S payment to FR of the one million five hundred
thousand dollars ($1,500,000), as herein specified, FR shall:
Cause the Escrow Agent to return the Collateral to the
Fund’s transfer agent, thereby enabling the Collateral to be
re-issued pursuant to the direction of ASCOT.
Return the certificate(s) representing the Collateral shares and
any subsequent “fill-up” shares issued pursuant to
Section __ to the Fund’s transfer agent.
Cancel any and all other evidence of Collateral indebtedness by
ASCOT to FR pursuant to this Agreement.
(b) Duties and Contributions of ASCOT
Upon receipt of the above-specified INFN contribution, ASCOT
shall:
Initiate the purchase and sale of assets of the portfolio for
the benefit of the Parties hereto, as set forth in Exhibit A.
The Advisory Fees realized from such activity shall be distributed
by Escrow for the specific use of the Fund as defined in section 9
(c).
Assign to FR the specified Collateral having an aggregate value,
at time of transfer, of no less than One Million Five Hundred
Thousand Dollars ($1,500,000). Said shares shall be delivered
to the Escrow Agent not more than seven days after the effective
date of this Agreement, and held pursuant to the provisions of
Sections 2 and 5 hereof.
If the per share value of the Collateral diminishes below $0.037
per share for more than twenty-one (21) consecutive trading days,
the Parties shall take any and all necessary action to bring the
value of the Collateral back to an agreed amount of at least one
million five hundred thousand dollars ($1,500,000), including
depositing additional shares with the Escrow Agent to supplement
the Collateral.
The Fund shall compensate FR quarterly in the amount of 50%
percent of the net profits realized by the portfolio advisor of the
portfolio (calculated at 50% of the yield above 8%), until the
aggregate sum of one million five hundred thousand dollars
($1,500,000) has been received by FR. Said payment of net
profits, if any, shall be paid by the Escrow Agent upon receipt
thereof. The Escrow Agent shall maintain records of all
income generated and payments made.
9. Representations, Warranties and Covenants of
ASCOT.
ASCOT represents and warrants to the Escrow Agent that the
Escrow Property is free and clear of any liens or encumbrances and
covenants not to encumber the Escrow Property in any way during the
term of this Agreement. Subject to the receipt, examination
and approval of legal counsel, the execution, delivery and
performance by ASCOT of this Agreement are within ASCOT’s
powers, and do not violate any contractual restriction contained in
any agreement which binds or affects or purports to bind or affect
ASCOT. This Agreement, when executed and delivered by ASCOT,
will constitute the legal, valid and binding obligations of ASCOT,
enforceable against ASCOT in accordance with its terms, except as
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally.
10. Representations, Warranties and Covenants of
FR
FR is the lawful owner of Sixteen Million (16,000,000) shares of
INFN (which will remain in his possession) and has authority to
issue the Collateral shares described herein (which have been duly
authorized by INFN’s Certificate of Incorporation, as
amended) and deposit these shares with the Escrow Agent. The
execution, delivery and performance of this Agreement by INFN and
FR are within INFN and FR’s powers and do not violate any
contractual restriction contained in any agreement which binds or
affects or purports to bind or affect INFN and FR. This Agreement,
when executed and delivered by INFN and FR with current Board
approvals will constitute the legal, valid and binding obligations
of INFN and FR, enforceable against INFN and FR in accordance with
its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally or
if it is determined by INFN or FR's counsel that the transaction
violates any SEC rules regulations or procedures. Performance
by INFN or FR is subject to the receipt, examination and approval
of INFN and FR's legal counsel, and no action maybe taken until
opinion of counsel is attached to this document as an addendum.
11. Disputes
INFN, FR and ASCOT understand and agree that should any dispute
arise with respect to the payment and/or ownership or right of
possession of the Escrow Property, documents, and Collateral, the
Escrow Agent is irrevocably authorized and directed to disburse
funds, documents, and other Collateral as provided in this
Agreement. Any change to this Agreement must be done in
writing and by mutual agreement of the undersigned Parties.
If a dispute occurs which cannot be settled by written mutual
agreement by the Parties, INFN, FR and ASCOT understand and agree
to settle the dispute(s) by the final order, decree or judgment of
a court or other tribunal of competent jurisdiction in the United
States of America, but the Escrow Agent shall be under no duty
whatsoever to institute or defend any such proceedings.
12. Notices
Whenever the service or the giving of any document or consent by
or on behalf of any party hereto upon any other party is herein
provided for, or becomes necessary or convenient under the
provisions of this Agreement or any document related hereto, a
valid and efficient service of such document shall be effected by
delivering the same in writing to such party in person, by Federal
Express or other reputable courier, or by sending the same by
registered or certified mail, return receipt requested, and shall
be deemed received upon personal delivery if delivered personally,
by Federal Express or other reputable courier, or four (4) business
days after deposit in the mail in the United States, postage
prepaid, addressed to the person to receive such notice or
communication at the following address:
Escrow
Agent:
To its address as set forth in Section 5 of this Agreement.
ASCOT: Ascot
Investments, Inc.
149 South Barrington Court, Suite 709
Los Angeles, CA 90049
Telephone: (888) 561.1724
Facsimile: (888) 561.1724
Contact: Michael Osborn, CEO
INFN/FR:
Frederic Richardson
3470 Olney Laytonsville RD
Olney MD 20832
Telephone:301-774-7913
Facsimile:301-340-9641
13. Termination of Joint Venture
This Joint Venture shall commence on execution of this Agreement
and shall continue until the first of any of the following events
occur:
-
The satisfactory completion of all conditions specified pursuant to
Section 2 of this Agreement.
-
Insolvency of either Party.
-
Any voluntary or involuntary assignment or transfer by any of the
Parties hereto, without the consent of the other Party, of his
interest in this Joint Venture.
-
Mutual agreement of the Parties.
-
Substantial default or breach of this Agreement by any of the
Parties hereto.
-
Any violation of any NASD, SEC or applicable regulatory Rules,
regulations or procedures.
-
Failure to get SEC counsel to opine as to the legality of this
agreement and all the matters contemplated herein.
-
Failure to share equally in all fees generated by this
transaction.
14. General Provisions
(a) Attorneys' Fees: If any legal action, including an
action for declaratory relief, is brought to enforce or interpret
the provisions of this Agreement, the prevailing party shall be
entitled to recover reasonable attorneys' fees from the other
party. These fees, which may be set by the court in the same
action or in a separate action brought for that purpose, are in
addition to any other relief to which the prevailing party may be
entitled.
(b) Entire Agreement: This Agreement supersedes any and
all other agreements, either oral or in writing, between INFN, FR
and ASCOT, with respect to the subject of this joint venture.
This Agreement contains all of the covenants and agreements between
the parties with respect to this joint venture, and each party to
this Agreement acknowledges that no representations, inducements,
promises, or agreements have been made by or on behalf of any party
except those covenants and agreements embodied in this
Agreement. No agreement, statement, or promise not
contained
