SUBJECT: EQUITY SWAP TRANSACTION
Date: June
2,
2006
To:
Xxxxxxxx.xxx,
Incorporated
From:
Cogent
Capital Financial LLC
SUBJECT:
EQUITY SWAP TRANSACTION
The
purpose of this communication is to set forth the terms and conditions of the
Swap transaction entered into on the Trade Date referred to below (the "Swap
Transaction"), between Cogent Capital Financial LLC, a Delaware Limited
Liability Company ("Cogent" or “we”) and Xxxxxxxx.xxx, Incorporated, a Nevada
corporation ("INFN", “Counterparty” or “you”). This communication constitutes a
"Confirmation" as referred to in the ISDA Master Agreement specified
below.
This
Confirmation incorporates the definitions and provisions contained in the 2002
ISDA Equity Derivatives Definitions as published by the International Swaps
and
Derivatives Association, Inc. (the "Equity Definitions"). In the event of any
inconsistency between the Definitions and this Confirmation, this Confirmation
will govern.
1.
This
Confirmation will supplement, form a part of, and be subject to the ISDA Master
Agreement dated as of June 2, 2006 between INFN and Cogent (the “Master
Agreement”). All provisions contained in, or incorporated by reference to, the
Master Agreement shall govern this Confirmation except as expressly modified
below. In the event of any inconsistency between the provisions of that Master
Agreement and this Confirmation, this Confirmation shall prevail for the purpose
of this Swap Transaction. In addition, this Confirmation shall itself evidence
a
complete and binding agreement between you and us as to the terms and conditions
of the Swap Transaction to which this Confirmation relates.
1
Cogent
and INFN each represents that entering into the Swap Transaction is authorized
and does not violate any laws of its jurisdiction of organization or residence
or the terms of any agreement to which it is a party. Cogent and INFN each
represents that (i) it is not relying on the other party in connection with
its
decision to enter into this Swap Transaction, and neither party is acting as
an
advisor or fiduciary of the other party in connection with this Swap Transaction
regardless of whether the other party provides it with market information or
its
views; (ii) it understands the risks of the Swap Transaction and any legal,
regulatory, tax, accounting and economic consequences resulting therefrom;
and
(iii) it has determined based upon its own judgment and upon any advice received
from its own professional advisors as it has deemed necessary to consult that
entering into the Swap Transaction is appropriate for such party in light of
its
financial capabilities and objectives.
2.
The
terms of the particular Transaction to which this Confirmation relates are
as
follows:
General
Terms:
| Trade Date: | June 2, 2006 | |
| Effective Date: | June 2, 2006 | |
|
Termination
Date:
|
The
later of: (i) December 2, 2010 and (ii) the 30th
day after the Calculation Agent has determined that the Resale Condition
(as defined below) has been satisfied with respect to all of the
Equity
Shares (as defined below) or, if such day is not an Exchange Business
Day,
the first Exchange Business Day thereafter; provided that, if the
Preferred Stock (as defined below) has been redeemed by INFN, then
the
Termination Date shall be the redemption date for the Preferred
Stock.
|
|
|
Shares:
|
Xxxxxxxx.xxx,
Incorporated common shares (“INFN”) CUSIP number
00000X000
|
|
|
Exchange:
|
The
primary exchange on which the shares are traded
|
|
|
Related
Exchange(s):
|
The
primary exchange on which listed options or futures on the Shares
are
traded.
|
|
|
Knock-in
Event:
|
Applicable.
The “Knock-in Event” shall occur at the time that the disbursements
contemplated by Section 2 of the Escrow Agreement (as defined in
the
Schedule to the Master Agreement) have been completed, but only if
such
disbursements are completed on or before the Knock-in Determination
Day.
|
|
|
Knock-in
Determination Day:
|
July
2, 2006
|
|
|
Knock-out
Event:
|
Applicable.
The “Knock-out Event” shall occur if the INFN has exercised its right to
optionally redeem all of INFN’s Series A non-voting, convertible preferred
stock (the “Preferred Stock”) as of the “Optional Redemption Date”
specified in the Certificate of Designations therefor.
|
|
2
|
Knock-out
Price:
|
The
“Knock-Out Price” shall equal the Final Price as of the Termination Date
(which shall be the Optional Redemption Date of the Preferred Stock)
and
shall be determined in the manner provided below (including the use
of
Averaging as specified below).
|
|
|
Knock-out
Reference Security:
|
Xxxxxxxx.xxx,
Incorporated shares (“INFN”)
|
|
|
Knock-out
Determination Day(s):
|
June
2, 2008
|
|
|
Knock-out
Valuation Time:
|
The
closing time on the Exchange
|
|
| Equity Amounts | ||
|
Equity
Amount Payer:
|
Cogent
|
|
|
Equity
Amount Receiver:
|
Counterparty
|
|
|
Equity
Amount:
|
An
amount determined by the Calculation Agent as of the Valuation Time
on the
Valuation Date equal to the product of the Equity Notional Amount
as of
the day and the Rate of Return, provided that, if the Equity Amount
is a
negative number, then the Equity Amount Receiver will pay (in addition
to
any other amounts payable by the Equity Amount Receiver) to the Equity
Amount Payer the absolute value of the Equity Amount on the Termination
Date.
|
|
|
Number
of Shares:
|
37,500,000
(subject to reduction as provided below)
|
|
|
Equity
Notional Amount:
|
Number
of Shares multiplied by the Initial Price
|
|
|
Equity
Notional Reset:
|
Inapplicable
|
|
|
Type
of Return:
|
Price
Return
|
|
|
Initial
Price:
|
$1.333333
per Share, subject to adjustment under the “Adjustments” provisions set
forth below.
|
|
|
Final
Price:
|
For
any Valuation Date, the average of the Relevant Prices for the Averaging
Dates relating to that Valuation Date.
|
|
|
Valuation
Time:
|
The
closing time on the Exchange
|
|
3
|
Valuation
Date:
|
The
Termination Date
|
|
|
Averaging
Dates:
|
For
any Valuation Date, the ten trading days up to and including that
Valuation Date
|
|
|
Averaging
Date Disruption:
|
Modified
Postponement
|
|
|
Relevant
Price:
|
For
each Averaging Date, the average of the bid and ask price per Share
as
determined by the Calculation Agent at the Valuation Time on that
Averaging Date.
|
|
| Interim Equity Amounts: | ||
|
General:
|
For
each reduction in the Number of Shares that occurs before the Termination
Date (each, a “Share Reduction”), the aggregate amount of Shares equal to
that reduction shall be the “Share Reduction Amount” and an interim
settlement amount (“Interim Equity Amount”) shall be calculated and due
and payable with respect to that Share Reduction Amount pursuant
to the
following terms.
|
|
|
Determination
of
|
||
|
Interim
Equity Amount:
|
For
each Share Reduction, the Interim Equity Amount shall equal the product
of
the Reduction Notional Amount for that Share Reduction and the Rate
of
Return for that Share Reduction.
|
|
|
Payment
of Interim
|
||
|
Equity
Amount:
|
If
the Interim Equity Amount is positive, then Cogent will pay such
amount to
Counterparty on the Reduction Payment Date and if the Interim Equity
Amount is a negative number, then Counterparty will pay (in addition
to
any other amounts payable by Counterparty) to Cogent the absolute
value of
the Interim Equity Amount on the Reduction Payment
Date.
|
|
|
Type
of Return:
|
Price
Return, which for each Share Reduction shall be calculated as
follows:
|
|
|
Interim
Final Price-Initial Price
|
||
|
Initial
Price
|
||
|
Reduction
Notional Amount:
|
For
each Share Reduction Amount, the “Reduction Notional Amount” will equal
the product of that Share Reduction Amount and the Initial
Price.
|
|
|
Reduction
Payment Date:
|
For
each Share Reduction, the date on which that Share Reduction
occurs.
|
|
|
Interim
Final Price:
|
For
any Interim Valuation Date, the average of the Relevant Prices for
the
Averaging Dates relating to that Interim Valuation
Date.
|
|
4
|
Valuation
Time:
|
The
closing time on the Exchange
|
|
|
Interim
Valuation Date:
|
The
Share Reduction Date
|
|
|
Averaging
Dates:
|
For
any Interim Valuation Date, the ten trading days up to and including
that
Interim Valuation Date
|
|
|
Averaging
Date Disruption:
|
Modified
Postponement
|
|
|
Relevant
Price:
|
For
each Averaging Date, the average of the bid and ask price per Share
as
determined by the Calculation Agent at the Valuation Time on that
Averaging Date.
|
|
| Floating Amounts payable by Counterparty: | ||
|
Floating
Amount Payer:
|
Counterparty
|
|
|
Notional
Amount:
|
The
Equity Notional Amount
|
|
|
Payment
Dates:
|
1st
day of each month
|
|
|
Floating
Rate Option:
|
USD-LIBOR-BBA-30
day
|
|
|
Spread:
|
1.45%
|
|
|
Floating
Rate Day Count Fraction:
|
Actual/360
|
|
|
Reset
Dates:
|
1st
day of each month
|
|
| Initial Exchange Amount payable by Counterparty: | ||
|
Counterparty
Initial Exchange Amount:
|
(1)
$1,375,000, (2) 5,000,000 shares of INFN common stock, par value
$0.001
per share, CUSIP number 00000X000 and (3) a warrant to purchase 5,000,000
shares of INFN common stock, during a 5-year term, at an initial
exercise
price per share of $1.20; provided that (x) on the Counterparty Initial
Exchange Date Party A and Party B shall have entered into registration
rights agreement, in form and substance reasonably satisfactory to
Party
A, under which Party A is granted piggy-back registration rights
with
respect to the shares of common stock referred to in clause (2) and
demand
registration rights with respect to (3) above and (y) only $568,750
of the
amount referred to in clause (1) above shall be due on such date,
with the
balance of $831,250 (plus interest accrued thereon) to be paid by
Party B
as provided below under “Deferral of Portion of Initial Exchange
Amount”.
|
|
5
|
Counterparty
Initial
|
||
|
Exchange
Date:
|
July
2, 2006 or completion of Knock-In Event whichever is
earlier.
|
|
|
Deferral
of Portion of
|
||
|
Initial
Exchange Amount:
|
The
$831,250 portion of the Initial Exchange Amount not required to be
paid on
the Initial Exchange Date (the “Deferred Exchange Amount”) shall accrue
interest at same rate and on the same basis as the computation of
the
Floating Amounts referred to above from and including the Initial
Exchange
Date to and excluding the date on which such amount and accrued interest
are paid. If the Deferred Exchange Amount plus any accrued interest
thereon remains unpaid as of the first date on which the Number of
Shares
is reduced as provided below under “Adjustment of Number of Shares”, then
Party A shall cause such amount plus accrued interest to be paid
to it out
of the first three releases of Bonds pursuant to Section 4(b) below
resulting from the reduction in the Number of Shares, in which case
the
Portion of Bonds to be received by Party B shall be reduced by the
amount
so paid to Party A. The amounts to be paid to Party A shall be in
approximately equal installments of the Deferred Exchange Amount,
plus all
accrued interest thereon.
|
|
| Other Terms: | ||
|
Adjustment
of
|
||
|
Number
of Shares:
|
If
no Knock-out Event has occurred, and this Transaction has not been
otherwise terminated, then from and after the Trigger Date, the Number
of
Shares shall be reduced as follows:
|
|
|
(i)
If on the day occurring 1 month after the Trigger Date, the Resale
Condition (as defined below) is then satisfied with respect to not
less
than 18,500,000 of
the Equity
Shares (as defined below), the Number of Shares shall be reduced
to
36,750,000 shares
on the first Exchange Business Day thereafter,
|
||
|
(ii)
If on the day occurring 2 months after the Trigger Date, the Resale
Condition is then satisfied with respect to not less than 19,000,000
of
the
Equity
Shares, the Number of Shares shall be reduced to 36,000,000 shares
on the
first Exchange Business Day thereafter,
|
||
|
(iii)
If on the day occurring 3 months after the Trigger Date, the Resale
Condition is then satisfied with respect to not less than 19,750,000
of
the Equity Shares, the Number of Shares shall be reduced to 35,250,000
shares on the first Exchange Business Day thereafter,
|
||
6
|
(iv)
If on the day occurring 4 months after the Trigger Date, the Resale
Condition is then satisfied with respect to not less than 20,500,000
of
the Equity Shares, the Number of Shares shall be reduced to
34,500,000
shares
on the first Exchange Business Day thereafter,
|
||
|
(v)
If on the day occurring 5 months after the Trigger Date, the Resale
Condition (as defined below) is then satisfied with respect to not
less
than 21,250,000 of
the Equity
Shares (as defined below), the Number of Shares shall be reduced
to
33,750,000 shares
on the first Exchange Business Day thereafter,
|
||
|
(vi)
If on the day occurring 6 months after the Trigger Date, the Resale
Condition is then satisfied with respect to not less than 22,000,000
of
the
Equity
Shares, the Number of Shares shall be reduced to 33,000,000 shares
on the
first Exchange Business Day thereafter,
|
||
|
(vii)
If on the day occurring 7 months after the Trigger Date, the Resale
Condition is then satisfied with respect to not less than 23,250,000
of
the Equity Shares, the Number of Shares shall be reduced to 31,750,000
shares on the first Exchange Business Day thereafter,
|
||
|
(viii)
If on the day occurring 8 months after the Trigger Date, the Resale
Condition is then satisfied with respect to not less than 24,500,000
of
the Equity Shares, the Number of Shares shall be reduced to
30,500,000
shares
on the first Exchange Business Day thereafter,
|
||
|
(ix)
If on the day occurring 9 months after the Trigger Date, the Resale
Condition is then satisfied with respect to not less than 25,750,000
of
the Equity
Shares,
the Number of Shares shall be reduced to 29,250,000 shares on the
first
Exchange Business Day thereafter,
|
||
|
(x)
If on the day occurring 10 months after the Trigger Date, the Resale
Condition (as defined below) is then satisfied with respect to not
less
than 27,250,000 of
the Equity
Shares (as defined below), the Number of Shares shall be reduced
to
27,750,000 shares
on the first Exchange Business Day thereafter,
|
||
|
(xi)
If on the day occurring 11 months after the Trigger Date, the Resale
Condition is then satisfied with respect to not less than 28,750,000
of
the
Equity
Shares, the Number of Shares shall be reduced to 26,250,000 shares
on the
first Exchange Business Day thereafter,
|
||
7
|
(xii)
If on the day occurring 12 months after the Trigger Date, the Resale
Condition is then satisfied with respect to not less than 30,250,000
of
the Equity Shares, the Number of Shares shall be reduced to 24,750,000
shares on the first Exchange Business Day thereafter,
|
||
|
(xiii)
If on the day occurring 13 months after the Trigger Date, the Resale
Condition is then satisfied with respect to not less than 31,750,000
of
the Equity Shares, the Number of Shares shall be reduced to
23,250,000
shares
on the first Exchange Business Day thereafter,
|
||
|
(xiv)
If on the day occurring 14 month after the Trigger Date, the Resale
Condition (as defined below) is then satisfied with respect to not
less
than 33,250,000 of
the Equity
Shares (as defined below), the Number of Shares shall be reduced
to
21,750,000 shares
on the first Exchange Business Day thereafter,
|
||
|
(xv)
If on the day occurring 15 months after the Trigger Date, the Resale
Condition is then satisfied with respect to not less than 34,750,000
of
the
Equity
Shares, the Number of Shares shall be reduced to 20,250,000 shares
on the
first Exchange Business Day thereafter,
|
||
|
(xvi)
If on the day occurring 16 months after the Trigger Date, the Resale
Condition is then satisfied with respect to not less than 36,500,000
of
the Equity Shares, the Number of Shares shall be reduced to 18,500,000
shares on the first Exchange Business Day thereafter,
|
||
|
(xvii)
If on the day occurring 17 months after the Trigger Date, the Resale
Condition is then satisfied with respect to not less than 38,250,000
of
the Equity Shares, the Number of Shares shall be reduced to
16,750,000
shares
on the first Exchange Business Day thereafter,
|
||
|
(xviii)
If on the day occurring 18 months after the Trigger Date, the Resale
Condition is then satisfied with respect to not less than 40,000,000
of
the Equity
Shares,
the Number of Shares shall be reduced to 15,000,000 shares on the
first
Exchange Business Day thereafter,
|
||
|
(xix)
If on the day occurring 19 months after the Trigger Date, the Resale
Condition is then satisfied with respect to not less than 41,500,000
of
the
Equity
Shares, the Number of Shares shall be reduced to 13,500,000 shares
on the
first Exchange Business Day thereafter,
|
||
|
(xx)
If on the day occurring 20 months after the Trigger Date, the Resale
Condition is then satisfied with respect to not less than 43,000,000
of
the Equity Shares, the Number of Shares shall be reduced to 12,000,000
shares on the first Exchange Business Day thereafter,
|
||
8
|
(xxi)
If on the day occurring 21 months after the Trigger Date, the Resale
Condition is then satisfied with respect to not less than 44,500,000
of
the Equity Shares, the Number of Shares shall be reduced to
10,500,000
shares
on the first Exchange Business Day thereafter,
|
||
|
(xxii)
If on the day occurring 22 months after the Trigger Date, the Resale
Condition is then satisfied with respect to not less than 45,750,000
of
the Equity
Shares,
the Number of Shares shall be reduced to 9,250,000 shares on the
first
Exchange Business Day thereafter,
|
||
|
(xxiii)
If on the day occurring 23 months after the Trigger Date, the Resale
Condition (as defined below) is then satisfied with respect to not
less
than 47,000,000 of
the Equity
Shares (as defined below), the Number of Shares shall be reduced
to
8,000,000 shares
on the first Exchange Business Day thereafter,
|
||
|
(xxiv)
If on the day occurring 24 months after the Trigger Date, the Resale
Condition is then satisfied with respect to not less than 48,250,000
of
the
Equity
Shares, the Number of Shares shall be reduced to 6,750,000 shares
on the
first Exchange Business Day thereafter,
|
||
|
(xxv)
If on the day occurring 25 months after the Trigger Date, the Resale
Condition is then satisfied with respect to not less than 49,500,000
of
the Equity Shares, the Number of Shares shall be reduced to 5,500,000
shares on the first Exchange Business Day thereafter,
|
||
|
(xxvi)
If on the day occurring 26 months after the Trigger Date, the Resale
Condition is then satisfied with respect to not less than 50,750,000
of
the Equity Shares, the Number of Shares shall be reduced to
4,250,000
shares
on the first Exchange Business Day thereafter,
|
||
|
(xxvii)
If on the day occurring 27 month after the Trigger Date, the Resale
Condition (as defined below) is then satisfied with respect to not
less
than 52,000,000 of
the Equity
Shares (as defined below), the Number of Shares shall be reduced
to
3,000,000 shares
on the first Exchange Business Day
thereafter,
|
9
|
(xxviii)
If on the day occurring 28 months after the Trigger Date, the Resale
Condition is then satisfied with respect to not less than 53,000,000
of
the
Equity
Shares, the Number of Shares shall be reduced to 2,000,000 shares
on the
first Exchange Business Day thereafter,
|
||
|
(xxix)
If on the day occurring 29 months after the Trigger Date, the Resale
Condition is then satisfied with respect to not less than 54,000,000
of
the Equity Shares, the Number of Shares shall be reduced to 1,000,000
shares on the first Exchange Business Day thereafter,
and
|
||
|
(xxx)
If on the day occurring 30 months after the Trigger Date, the Resale
Condition is then satisfied with respect to not less than 55,000,000
of
the Equity Shares, the Number of Shares shall be reduced to
zero
shares
on the first Exchange Business Day thereafter.
|
||
|
The
“Resale Condition” shall be deemed satisfied as of any day with respect to
the number of Equity Shares that, as of such day, are then subject
to an
effective resale registration statement under the Securities Act
of 1933,
as amended, with the holders of such shares being named therein as
selling
shareholders or fully eligible for resale under paragraph (k) of
Rule 144
adopted under the Securities Act of 1933.
|
||
|
“Equity
Shares” mean 55,000,000 Shares; provided that the number of Equity Shares
and the corresponding number of shares referred to in clauses (i)
through
(xxx) above shall be adjusted from time to time by the Calculation
Agent
as provided in Section 11.2 of the Equity Definitions.
|
||
|
The
“Trigger Date” shall mean the first date as of which the Resale Condition
has been satisfied with respect to at least 10,000,000
Shares.
|
||
|
Each
reduction of the Number of Shares pursuant to the foregoing terms
shall
result in an Interim Equity Amount becoming due.
|
||
|
If,
as of any date referred to in clauses (i) through (xxx) above, the
Resale
Condition is not satisfied, then Party B may, at its option, defer
the
reduction in the Number of Shares contemplated by that clause until
such
later date on or prior to the Termination Date as of which the Resale
Condition is satisfied.
|
||
|
Optional
Reduction:
|
Cogent
may, from time to time, elect to reduce the Number of Shares as of
any
Exchange Business Day by giving Counterparty written notice of such
reduction as least 10 Exchange Business Day prior to the date on
which (as
indicated in such notice) that reduction is to occur. Each such reduction
shall result in an Interim Equity Amount becoming due.
|
|
10
|
Knock-out
Event Reduction:
|
If
a Knock-out Event occurs, then the Number of Shares shall be reduced
to
zero and an Interim Equity Amount shall become due on the Termination
Date
(which shall be the Redemption Date of the Preferred
Stock).
|
|
| Settlement Terms: | ||
|
Cash
Settlement:
|
Applicable
|
|
|
Settlement
Currency:
|
USD
|
|
|
Cash
Settlement Payment Date:
|
USD
Currency Business Days after the relevant Valuation
Date
|
|
|
Settlement
Method Election:
|
Not
Applicable
|
|
|
Default
Settlement Method:
|
Cash
Settlement
|
|
| Adjustments: | ||
|
Method
of Adjustment:
|
Calculation
Agent Adjustment
|
|
|
Special
Adjustment:
|
In
addition to any adjustments made as a result of any Potential Adjustment
Event, the Initial Price shall be adjusted in accordance with the
following terms:
|
|
|
(i)
An adjustment to the Initial Price shall be made each time that INFN
(a)
issues any Shares at per Share price below the Threshold Price, (b)
issues
any other securities that are convertible into or exercisable or
exchangeable for Shares at a per Share price below the Threshold
Price or
(c) enters into any transaction that is indexed to or provides a
return
based on a price per Share that is below the Threshold Price (provided
that no adjustment shall be made under this provision with respect
to (x)
any shares, options or warrants that are outstanding on the Trade
Date and
(y) up to 5,000,000 Shares issued as a result of any shares, options
or
warrants that are issued or granted after the Trade Date to any directors
or employees of INFN under any stock incentive plan duly adopted
and
maintained by INFN).
|
||
11
|
(ii)
Each time the condition in clause (i) above is satisfied, the Initial
Price then in effect shall be increased by an amount equal to the
product
of (a) the excess of the Threshold Price over the relevant issue,
conversion, exercise, exchange, index or other reference price that
resulted in such condition being satisfied and (b) 1.2.
|
||
|
(iii)
The Threshold Price shall initially be $1.00. The Initial Price and
the
Threshold Price shall each from time to time be adjusted by the
Calculation Agent as provided in Section 11.2 of the Equity
Definitions.
|
||
|
|
||
| Extraordinary Events: | ||
| Consequences of Merger Events: | ||
|
Share-for-Share:
|
Calculation
Agent Adjustment
|
|
|
Share-for-Other:
|
Calculation
Agent Adjustment
|
|
|
Share-for-Combined:
|
Calculation
Agent Adjustment
|
|
|
Determining
Party:
|
|
|
| Tender Offer: |
Applicable
|
|
| Consequences of Tender Offers: | ||
|
Share-for-Share:
|
Calculation
Agent Adjustment
|
|
|
Share-for-Other:
|
Calculation
Agent Adjustment
|
|
|
Share-for-Combined:
|
Component
Adjustment
|
|
|
Determining
Party:
|
Cogent
|
|
| Composition of Combined Consideration: |
Applicable
|
|
| Nationalization, Insolvency or Delisting: |
Negotiated
Close-out
|
|
|
Determining
Party:
|
Cogent
|
|
|
Additional
Disruption Events:
|
||
|
Change
in Law:
|
Applicable
|
|
|
Failure
to Deliver:
|
Applicable
|
|
|
Insolvency
Filing:
|
Applicable
|
|
|
Determining
Party:
|
Cogent
|
|
| Non-Reliance: |
Applicable
|
|
| Agreements and Acknowledgments | ||
| Regarding Hedging Activities: |
Not
Applicable
|
|
| Additional Acknowledgments: |
Applicable
|
|
12
4.
Credit
Support Annex:
(a)
For
purposes of Paragraph 13 of the Credit Support Annex to the Master Agreement,
the “Independent Amount” for this Transaction shall equal the Equity Notional
Amount.
(b)
Upon
a reduction in the Equity Notional Amount pursuant to the terms hereof, and
provided all amounts then owing to Party A hereunder have been paid and there is
no Event of Default or Potential Event of Default then outstanding with respect
to Party B, Party A shall direct the Escrow Agent to distribute to Party B
from
the Collateral Account the Applicable Portion of the Bonds with respect to
that
reduction in the Equity Notional Amount. If any amounts are owing to Party
A
hereunder, it may first apply such amounts in reduction of the amount to be
distributed to Party B and, in such case, Party A shall direct the Escrow Agent
to distribute from the Collateral Account, first to Party A, the amounts owing
to it and then to Party B, the amount equal to the Applicable Portion of the
Bonds with respect to that reduction in the Equity Notional Amount less the
amount distributed to Party A. Party A may defer any distributions to Party
B
from the Collateral Account for so long as any Event of Default or Potential
Event of Default is outstanding with respect to Party B. The “Applicable Portion
of the Bonds” with respect to any reduction in the Equity Notional Amount shall
mean the portion of the Bonds equal to (i) the amount of Bonds originally
deposited in the Collateral Account pursuant to Section 2(a) of the Escrow
Agreement multiplied by (ii) a fraction the number of which is the amount of
the
reduction in the Equity Notional Amount and the denominator of which is the
initial Equity Notional Amount of $50,000,000.
(c)
Provided the Equity Notional Amount is reduced in accordance with the schedule
set forth above under “Other Terms: Adjustment of Number of Shares” as if all
applicable conditions thereunder are satisfied at all times, there is no Event
of Default or Potential Event of Default with respect to Party B and no other
amounts become due to Party A that are distributed to it from the Collateral
Account, then the amount of collateral to be released to Party B each month
correspond to the percentage as set forth on Schedule A annexed hereto of the
Bonds originally deposited in the Collateral Account. Party B shall bear the
full risk with respect to any fluctuations in the value of the
Bonds.
13
5.
Additional Termination Events:
The
parties agree that, for purposes of the Master Agreement, each of the following
shall constitute an “Additional Termination Event” (for purposes of each of
these Additional Termination Events, INFN shall be the sole Affected
Party):
(i)
the
Resale Condition shall not been satisfied with respect to all of the Equity
Shares by no later than December 2, 2010.
(ii)
failure to make timely monthly cash payments due under the Floating Amounts
Payable by Counterparty.
6.
Calculation Agent: Cogent
14
7.
Account Details:
Account
for payments to Cogent: To
be
provided.
Account
for payments to INFN: To
be
provided.
8.
Relationship between the parties:
|
(a)
|
Except
as expressly provided herein, each party acknowledges that in connection
with entering into this Transaction, it has not entered into any
agreements, arrangements or understandings with the other party or
any
related entity of such party in relation to timing or manner of any
acquisition or disposal of any Shares, the voting rights attaching
to any
Shares or the management of the
Issuer.
|
9.
Governing Law: the laws of the State of New York (without reference to choice
of
law doctrine).
Please
confirm that the foregoing correctly sets forth the terms of our agreement
by
executing the copy of this Confirmation enclosed for that purpose and returning
it to us
by
facsimile at (000) 000-0000.
| Yours sincerely, | ||
| Cogent Capital Financial LLC | ||
| |
|
|
| By: | /s/ Xxxxxxx X. Xxxxxxx | |
|
Xxxxxxx X. Xxxxxxx |
||
| Senior Principal | ||
Confirmed
as of the date first above written:
Xxxxxxxx.xxx,
Incorporated
By: /s/
Xxxx Xxxxxxxx
Xxxx
Xxxxxxxx
Chief
Executive Officer
15
Schedule
A
|
|
|
|
|
Month
|
Portion
of Bonds to
be
Released
|
Reduction
in Number of Shares
|
|
|
||
|
1
|
2%
|
750,000
|
|
2
|
2%
|
750,000
|
|
3
|
2%
|
750,000
|
|
4
|
2%
|
750,000
|
|
5
|
2%
|
750,000
|
|
6
|
2%
|
750,000
|
|
7
|
3⅓%
|
1,250,000
|
|
8
|
3⅓%
|
1,250,000
|
|
9
|
3⅓%
|
1,250,000
|
|
10
|
4%
|
1,500,000
|
|
11
|
4%
|
1,500,000
|
|
12
|
4%
|
1,500,000
|
|
13
|
4%
|
1,500,000
|
|
14
|
4%
|
1,500,000
|
|
15
|
4%
|
1,500,000
|
|
16
|
4⅔%
|
1,750,000
|
|
17
|
4⅔%
|
1,750,000
|
|
18
|
4⅔%
|
1,750,000
|
|
19
|
4%
|
1,500,000
|
|
20
|
4%
|
1,500,000
|
|
21
|
4%
|
1,500,000
|
|
22
|
3⅓%
|
1,250,000
|
|
23
|
3⅓%
|
1,250,000
|
|
24
|
3⅓%
|
1,250,000
|
|
25
|
3⅓%
|
1,250,000
|
|
26
|
3⅓%
|
1,250,000
|
|
27
|
3⅓%
|
1,250,000
|
|
28
|
2⅔%
|
1,000,000
|
|
29
|
2⅔%
|
1,000,000
|
|
30
|
2⅔%
|
1,000,000
|
16
