ESCROW AGREEMENT
This
Escrow Agreement, dated as of June 2, 2006 (“Escrow Agreement”), is entered into
by and among Cogent Capital Investments LLC, a Delaware Limited Liability
Company (“Cogent”), Cogent Capital Financial LLC, a Delaware Limited Liability
Company (“CCF”), Xxxxxxxx.xxx, Incorporated, a Nevada corporation (“INFN”) and
Investors Bank & Trust Company, a Massachusetts trust company (“Escrow
Agent”).
Whereas,
Cogent and INFN are parties to a Securities Purchase Agreement, dated as of
June
2, 2006; and
Whereas,
CCF and INFN are parties to the ISDA Master Agreement (the “Master Agreement”),
the Equity Swap Confirmation, and the ISDA Credit Support Annex, each dated
June
2, 2006 (collectively the “Swap Agreements”); and
Whereas,
the Securities Purchase Agreement provides for the delivery of certain
consideration and property to effect the transactions contemplated thereby;
and
Whereas,
the Swap Agreements provide for the delivery of the “Initial Exchange Amount” at
the inception of the transactions contemplated thereby, which consists of (i)
$1,375,000, of which $568,750 is due on closing and the balance of which is
due
on a deferred basis, (ii) 5,000,000 shares of INFN common stock and (iii) 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 (the “Warrant”);
and
Whereas,
Escrow Agent has agreed to serve as Escrow Agent pursuant to the terms set
forth
herein.
Now,
therefore, the parties hereto agree to the following terms:
1. Deliveries
in Escrow.
On or
before June 2, 2006 or, if the Extension (as defined below) has occurred, June
9, 2006 (the “Delivery Date”), Cogent and INFN shall deliver or deposit with the
Escrow Agent according to the delivery instructions as outlined in Exhibit
“B”
the following (collectively the “Deliveries”):
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(a)
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By
Cogent, US Treasury Notes and Strips with a market value on the date
immediately preceding the date of delivery to the Escrow Agent of
at least
$50,000,000 based on current market quote at the time of delivery,
together with a schedule listing for each Note and Strip the exact
amount,
maturity, and CUSIP number (the “Bonds”);
and
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(b)
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By
INFN,
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(i)
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1,850,000
shares of INFN common stock, par value $0.001 per share, CUSIP number
00000X000, in one certificate with standard restrictions as defined
in the
Securities Purchase Agreement issued in the name of Cogent (the “Common
Shares”); and
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(ii)
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4,815,000
shares of INFN non-voting convertible redeemable preferred stock,
par
value $0.001 per share (each of which shares being initially convertible
into 10 shares of Common Stock), in one certificate with standard
restrictions as defined in the Securities Purchase Agreement issued
in the
name of Cogent (the “Preferred Shares”);
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(iii)
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the
Initial Exchange Amount, consisting of (i) $568,750, (ii) 5,000,000
shares
of Common Stock, CUSIP number 00000X000, in one certificate with
standard
restrictions as defined in the Securities Purchase Agreement issued
in the
name of CCF and (iii) the Warrant to purchase 5,000,000 shares of
Common
Stock (CUSIP number 00000X000), during a 5-year term, at an initial
exercise price per share of $1.20, in one certificate with standard
restrictions as defined in the Securities Purchase Agreement issued
in the
name of CCF; and
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(iv)
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$181,250
interest impound.
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If
all of
the foregoing Deliveries are not received by the Escrow Agent on or before
the
Delivery Date or either of the Additional Conditions (as defined below) has
not
been satisfied on or before the Delivery Date, then the Escrow Agent shall
be
directed by either Cogent or INFN to terminate the Escrow Agreement and to
return to Cogent and INFN their respective Deliveries, if any, made to the
Escrow Agent on or before that date. An “Extension” shall occur if the Company
shall pay to CCF and CCF shall receive, by no later than 5:00 p.m., New York
time, on June 5, 2006, the sum of $250,000 (the “Extension Fee”), which shall be
made in accordance with the wire transfer instructions set forth in Section
2(d)
below and shall in all circumstances be non-refundable. If the Extension Fee
is
so received in a timely manner, Cogent and CCF shall promptly notify the Escrow
Agent in writing of that an Extension has occurred. If an Extension occurs,
the
Delivery Date shall thereafter refer to June 9, 2006.
2. Disbursement
of Deliveries.
If the
Escrow Agent receives all of the Deliveries on or before the Delivery Date
and
both of the Additional Conditions have been satisfied on or before the Delivery
Date, then within three business days following the Delivery Date the Escrow
Agent will be directed by Cogent or INFN to disburse the Deliveries as
follows:
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(a)
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The
Bonds will
be
transferred to account number 0000000 at
Escrow Agent titled “Cogent Capital Financial for the benefit of
Xxxxxxxx.xxx” (the “Collateral
Account”);
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(b)
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The
Common Shares will be transferred to account number 0000000 at
the Escrow Agent;
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(c)
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The
Preferred Shares will be transferred to account number 0000000 at
the Escrow Agent;
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(d)
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The
5,000,000 shares of Common Stock and the Warrant included in the
Initial
Exchange Amount will be transferred to account number 0000000
at
the Escrow Agent. The $1,375,000 included in the Initial Exchange
Amount
shall be paid by wire transfer to Cogent’s account in accordance with the
following instructions: Cogent
Capital Financial account number 0000000
at
Escrow Agent [(ABA no. 000000000; Short Name: Investors Xx Xxx; ABA
Lookup: Investors Bank & Trust Co., Boston, MA; Beneficiary’s Bank:
569530395; Beneficiary: 4739698; Reference for Beneficiary: Cogent
Capital
Financial)];
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(e)
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The
interest impound will be transferred to account number 0000000 at
Escrow Agent.
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3. Collateral
Account.
(a)
CCF
and INFN are parties to that certain ISDA Master Agreement, dated as of June
2,
2006 (the “Master Agreement”) and the Credit Support Annex thereto (the “CSA”),
and have executed one Confirmation, dated as of June 2, 2006, evidencing the
Transaction that is subject to the Master Agreement. CCF and INFN hereby notify
the Escrow Agent that pursuant to the CSA and the Confirmation INFN has granted
CCF a security interest in the Collateral Account and all financial assets
and
other items therein. The Escrow Agent acknowledges being so notified and
confirms that it has no actual knowledge or notice of any restraint, security
interest, lien or other adverse claim in or to the Collateral Account or any
item therein. All items in the Collateral Account shall be treated as “financial
assets” within the meaning of the New York Uniform Commercial Code (the
“Code”).
(b)
The
Escrow Agent shall comply with all withdrawal, transfer, payment and redemption
instructions, and all other entitlement orders (as defined in the Code)
(collectively, “orders”) received from CCF (without further consent from INFN)
concerning the Collateral Account. The Escrow Agent shall not honor any orders
from INFN with respect to the Collateral Account, unless otherwise authorized
to
do so pursuant to written instructions from CCF. The Escrow Agent shall not
change the name or account number of the Collateral Account without having
received CCF’s prior express written consent thereto. INFN acknowledges that
from time to time CCF may direct that amounts be distributed to CCF in payment
of amounts due to CCF under the Equity Swap Confirmation and the other documents
relating thereto, including payment of the Deferred Exchange Amount and any
other amount owing to CCF thereunder. In providing orders or instructions to
the
Escrow Agent as contemplated by this Section 3(b), CCF shall do so acting in
good faith and in accordance with the terms of the other Transaction
Documents.
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(c)
The
Escrow Agent waives, releases and agrees not to assert, exercise or claim any
lien, encumbrance, right (including setoff right) or other claim against the
Collateral Account or any financial asset, cash balance or other item therein,
except with respect to payment (i) of customary fees and commissions with
respect to the routine maintenance and operation of the Collateral Account
or
(ii) for financial assets duly purchased for the Collateral Account in
accordance with the provisions hereof, in each case as provided for under any
agreements between CCF and INFN relating to the Collateral Account. The Escrow
Agent shall neither advance margin or other credit against the Collateral
Account, nor hypothecate any financial assets carried in the Collateral Account,
without the prior written consent of CCF. Except as required by law, the Escrow
Agent shall not agree with any other person or entity that it will comply with
any withdrawal, transfer, payment and redemption instructions, or any other
entitlement or other orders, from such person or entity concerning the
Collateral Account or any items therein, without the prior written consent
of
CCF and any such agreement entered into without such consent shall be null
and
void.
4. Additional
Conditions.
(a)
The
“Registration Rights Condition” shall be deemed to have been satisfied upon
CCF’s providing written notice to the Escrow Agent confirming that CCF and INFN
have entered into a registration rights agreement, in form and substance
reasonably satisfactory to CCF, granting CCF demand and piggyback registration
rights with respect to the shares to be delivered to CCF pursuant to Section
1(b) above.
(b)
The
“Swap Documents Condition” shall be deemed to have been satisfied upon CCF’s
providing written notice to the Escrow Agent confirming that CCF has received
all of the documents referred to in Section 3(b) of the Schedule to the Master
Agreement.
(c)
The
Registration Rights Condition and the Swap Documents Condition are collectively
referred to herein as the “Additional Conditions.”
5. Duty
of the Escrow Agent.
The
sole duties and responsibilities of the Escrow Agent shall be to receive and
hold the Deliveries, and disburse the Deliveries pursuant to Section 2 of this
Agreement and to perform the
duties and responsibilities with respect to the Collateral Account expressly
set
forth in writing herein (and in its standard securities accounts documentation
and terms and conditions as in effect from time to time, all of which shall
apply to the Accounts to the extent not inconsistent with this
Agreement).
Escrow
Agent is not responsible for any of the respective duties or obligations of
INFN
or CCF under the Master Agreement, the CSA or the Confirmations, and all
references in this Agreement to the Master Agreement, the CSA or the
Confirmations or any other agreements are for the convenience of the parties
hereto, and Escrow Agent shall have no duties or responsibilities with respect
thereto. Escrow Agent is not responsible for accounting or maintaining any
records other than to document the property received and Deliveries disbursed
as
directed.
Notwithstanding any item discussed herein, Escrow Agent has no discretion over
the Deliveries deposited with it and cannot be held liable for any problem
or
dispute relating to such assets. All
property received by the Escrow Agent in the Collateral Account will be reported
for accounting purposes only.
6. Documents.
The
Escrow Agent may conclusively rely upon and shall be protected in acting upon
any statement, certificate, notice, request, consent, order or other document
believed by it to be genuine and to have been signed or presented by the proper
party or parties. The Escrow Agent shall have no duty or liability to verify
any
such statement, certificate, notice, request, consent, order, or other document
and its sole responsibility shall be to act only as expressly set forth in
this
Escrow Agreement. The Escrow Agent shall be under no obligation to institute
or
defend any action, suit or proceeding in connection with this Escrow Agreement
unless first indemnified to its satisfaction by CCF and INFN.
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7. Fees.
The
Escrow Agent shall be entitled to compensation for its services as stated in
the
fee schedule attached hereto as Exhibit A, which compensation shall be paid
by
INFN. The fee agreed upon for the services rendered hereunder is intended as
full compensation for the Escrow Agent’s services as contemplated by this Escrow
Agreement; provided, however, that in the event that the conditions for the
disbursement of property under the Escrow Agreement are not fulfilled, or the
Escrow Agent renders any material service not contemplated in the Escrow
Agreement, or there is any assignment of interest in the subject matter of
the
Escrow Agreement, or any material modification hereof, or if any material
controversy arises hereunder, or the Escrow Agent is made a party to any
litigation pertaining to the Escrow Agreement, or the subject matter hereof,
then the Escrow Agent shall be reasonably compensated for such extraordinary
services and reimbursed for all costs and expenses, including reasonable
attorney’s fees, occasioned by any delay, controversy, litigation or event, and
the same shall be recoverable from INFN; provided, however, that to the extent
INFN is required to pay any such costs or expenses to the Escrow Agent pursuant
to the provisions of this Section 7 as a result of the fault or negligence
of
CCF, INFN shall be entitled to recover such amount from CCF.
8. Indemnification
of Escrow Agent.
CCF and
INFN,
both jointly and severally hereby indemnify and hold harmless the Escrow Agent
from and against, any and all loss, liability, cost, damage and expense,
including, without limitation, reasonable counsel fees, which the Escrow Agent
may suffer or incur by reason of any action, claim or proceeding brought against
the Escrow Agent arising out of or relating in any way to this Escrow Agreement
or any transaction to which this Escrow Agreement relates unless such action,
claim or proceeding is the result of the gross negligence of the Escrow Agent.
To the extent INFN or CCF is required to pay any such loss, liability, damage,
cost or expense to the Escrow Agent pursuant to the provisions of this Section
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as a result of the fault or negligence of the other party, INFN or CCF, as
applicable, shall be entitled to recover such amount from the other party.
The
Escrow Agent may consult counsel with respect of any question arising under
the
Escrow Agreement and the Escrow Agent shall not be liable for any action taken
or omitted in good faith upon advice of such counsel. The obligation of CCF
and
INFN under this Section 8 shall survive the termination of this Agreement or
the
resignation or removal of the Escrow Agent.
9. Notices.
All
notices, requests, demands, and other communications under this Escrow Agreement
shall be in writing and shall be deemed to have been duly given (a) on the
date
of service if served personally on the party to whom notice is to be given,
(b)
on the day of transmission if sent by facsimile/email transmission to the
facsimile number/email address given below, and telephonic confirmation of
receipt is obtained promptly after completion of transmission, (c) on the day
after delivery to Federal Express or similar overnight courier or the Express
Mail service maintained by the United States Postal Service, or (d) on the
fifth
day after mailing, if mailed to the party to whom notice is to be given, by
first class mail, registered or certified, postage prepaid, and properly
addressed, return receipt requested, to the party as follows:
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If
to
Cogent:
Cogent
Capital Investments LLC
Attn:
Xxxxxxx X. Xxxxxxx, Senior Principal
00000
Xxxxx 0000 Xxxx
Xxxxx,
Xxxx 00000
Telephone:
(000) 000-0000
Fax:
(000) 000-0000
If
to
CCF:
Cogent
Capital Financial LLC
Attn:
Xxxxxxx X. Xxxxxxx, Senior Principal
00000
Xxxxx 0000 Xxxx
Xxxxx,
Xxxx 00000
Telephone:
(000) 000-0000
Fax:
(000) 000-0000
If
to
INFN:
Xxxxxxxx.xxx,
Incorporated
Attn:
Xxxx Xxxxxxxx
0000
Xxxxx Xxxxxx, Xxxxx 0000
Xxxxx
Xxxxxx, XX 00000
Telephone:
000-000-0000
Fax:
000-000-0000
If
to
Escrow Agent:
Investor’s
Bank & Trust Company
For
address and other contact information, see Exhibit B hereto.
Any
party
may change its address for purposes of this paragraph by giving the other
parties written notice of the new address in the manner set forth
above.
10. Successors
and Assigns.
Except
as otherwise provided in this Escrow Agreement, no party hereto shall assign
this Escrow Agreement or any rights or obligations hereunder without the prior
written consent of the other parties hereto and any such attempted assignment
without such prior written consent shall be void and of no force and effect.
This Escrow Agreement shall inure to the benefit of and shall be binding upon
the successors and permitted assigns of the parties hereto.
11. Governing
Law; Jurisdiction.
This
Escrow Agreement shall be construed, performed, and enforced in accordance
with,
and governed by, the laws of the Commonwealth of Massachusetts, without giving
effect to the principles of conflicts of laws thereof. This is intended to
be
“an agreement” within the meaning of Section 8-110(e) of the Code and
the terms “financial assets” and “entitlement orders” herein shall include the
respective meanings given such terms in Article 8 of such Code.
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12. Severability.
In the
event that any part of this Escrow Agreement is declared by any court or other
judicial or administrative body to be null, void, or unenforceable, said
provision shall survive to the extent it is not so declared, and all of the
other provisions of this Escrow Agreement shall remain in full force and
effect.
13. Amendments;
Waivers.
This
Escrow Agreement may be amended or modified, and any of the terms, covenants,
or
conditions hereof may be waived, only by a written instrument executed by the
parties hereto, or in the case of a waiver, by the party waiving compliance.
Any
waiver by any party of any condition, or of the breach of any provision, term,
or covenant contained in this Escrow Agreement, in any one or more instances,
shall not be deemed to be nor construed as further or continuing waiver of
any
such condition, or of the breach of any other provision, term, or covenant
of
this Escrow Agreement.
14. Entire
Agreement.
This
Escrow Agreement contains the entire understanding among the parties hereto
with
respect to the escrow contemplated hereby and supersedes and replaces all prior
and contemporaneous agreements and understandings, oral or written, with regard
to such escrow.
15. Section
Headings.
The
section headings in this Escrow Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Escrow
Agreement.
16. Counterparts.
This
Escrow Agreement may be executed in counterparts, each of which shall be deemed
an original, but all of which shall constitute the same instrument.
17. Resignations
and Termination.
Escrow
Agent may resign upon 30 days advance written notice to the parties hereto.
If a
successor Escrow Agent is not appointed within the 30-day period following
such
notice, Escrow Agent may petition any court of competent jurisdiction to name
a
successor Escrow Agent or interplead the Deliveries with such court, whereupon
Escrow Agent’s duties hereunder shall terminate upon the naming of a successor
or interpleader of the Deliveries. This Escrow Agreement shall terminate upon
completion of the final disbursement by the Escrow Agent pursuant to paragraph
2
above.
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IN
WITNESS WHEREOF,
the
parties hereto have caused this Escrow Agreement to be executed the day and
year
first set forth above.
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Xxxxxxxx.xxx,
Incorporated
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By:/s/
Xxxx Xxxxxxxx
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Xxxx
Xxxxxxxx, Chief Executive Officer
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Cogent
Capital Investments LLC
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By:
/s/
Xxxxxxx X. Xxxxxxx
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Xxxxxxx
X. Xxxxxxx, Senior Principal
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Cogent
Capital Financial LLC
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By:
/s/
Xxxxxxx X. Xxxxxxx
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Xxxxxxx
X. Xxxxxxx, Senior Principal
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Investors
Bank & Trust Company
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By:
/s/
Xxxxxx Xxxxxx
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Name:
Xxxxxx Xxxxxx
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Its:
Director
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8
Exhibit
A
Escrow
Agent fees
Annual
Escrow Agent Fee: $3,000
9
Exhibit
B
INVESTORS
BANK & TRUST COMPANY
Delivery
Instructions for Accounts Serviced out of:
BOSTON
Trust,
Institutional Custody and Retirement Plan Services
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0000000
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Account
Name:
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Cogent
Capital Financial Escrow
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Xxxxx
Xxxxxxx
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Phone
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(000)
000-0000
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Investors
Bank Mailing Instructions
Investors
Bank and Trust Company
Overnight
000
Xxxxxxxxx Xxxxxx, XXX 058, 16th
Floor
Attn:
Xxxxx Xxxxxxx
Xxxxxx,
XX 00000
Regular
Mail
X.X.
Xxx 000, XXX 000
Attn:
Xxxxx Xxxxxxx
Boston,
MA 02117-0300
DTC
Eligible Securities
Agent
Bank Name: Investors Bank & Trust Company
*Agent
Bank Number 26016
Institutional
ID: 28166
DTC
Participant Number: 2132
4739700
- Cogent Capital Investments Escrow
Government
Issues Delivered Through Fed Book Entry
ABA
#000000000
INV
XX XXX/0000
Xxxxxx
Xxxxxxx Xxxxxxxxxxx Xxxxxx - 0000000
GNMA
Securities Delivered through Fed Book Entry effective
00/0/00
Xxxxxxx
Xxxxxxx Xxxx xx Xxxxxx
XXX
#000000000 -
Investors
Bank & Trust Co. - Boston
Sub
Account: #1020
FFC:
(0000000 Cogent Capital Investments Escrow)
ACH
Transfers
ABA
# 000000000
4739700
Cogent
Capital Investments Escrow
Fed
Wire Cash Transfers
{3400}
Receiving Bank:
ABA
number: 000000000
Short
Name: Investors Xx Xxx
ABA
Lookup: Investors Bank & Trust Co.
Boston,
MA
{4100}
Beneficiary’s Bank: 569530395
{4200}
Beneficiary: 4739700
{4320}
Reference for Beneficiary: Cogent Capital Investments Escrow
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DTC
Ineligible Securities -Unrestricted
The
Bank of New York
One
Wall Street, 3rd Floor
Window
A
Xxx
Xxxx, XX 00000
A/C
Name: Investors Bank & Trust Company
A/C#:
017198
4739700
Cogent Capital Investments Escrow
DTC
Ineligible - Restricted / Non-transferable Securities (must be held
in
client name)
The
Bank of New York
One
Wall Street, 3rd Floor
Window
A
Xxx
Xxxx, XX 00000
A/C
Name: Investors Bank & Trust Company
A/C#:
017200
4739700
Cogent Capital Investments Escrow
DTC
Ineligible - Restricted Securities (will be reregistered into nominee
name)
The
Bank of New York
One
Wall Street, 3rd Floor
Window
A
Xxx
Xxxx, XX 00000
A/C
Name: Investors Bank & Trust Company
A/C#:
017195
Cogent
Capital Investments Escrow - 4739700
Registration
Instructions for Broker Accounts
Saturn
& Co. Tax ID No. 00-0000000
IBT
A/C #: 0000000
Account
Name: Cogent Capital Investments Escrow
Attn:
Trade Processing TAD 58
X.X.
Xxx 0000
Xxxxxx,
XX 00000-0000
DTC
Eligible Physical Certificates Instructions
Depository
Trust Company
00
Xxxxx Xxxxxx
Xxx
Xxxx Window - Concourse Level
Xxx
Xxxx, XX 00000
Attn:
Participant # 2132 - IBT
Attn:
Xxxxxx Xxxxxx
IBT
Acct #: 4739700
Note:
Send all legal documentation (ex. Stock powers) to the administrator
at
Investors Bank & Trust via mail
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