Exhibit 10.4
[LOGO COGENT CAPITAL CORP.]
Date: May 31, 2005
To: Xstream Beverage Network, Inc.
From: Cogent Capital Corp.
SUBJECT: EQUITY OPTION TRANSACTION
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The purpose of this communication is to set forth the terms and conditions of
the Call Option transaction entered into on the Trade Date referred to below
(the "Option Transaction"), between Cogent Capital Corp., a Utah corporation
("Cogent" or "we") and Xstream Beverage Network, Inc., a Nevada corporation
("XSBV" 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 Swap
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 May 31, 2005 between Xstream Beverage Network 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 Equity Option 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 Equity Option Transaction to
which this Confirmation relates.
Cogent and Xstream Beverage Network each represents that entering into the
Equity 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 Xstream Beverage Network each represents that (i) it
is not relying on the other party in connection with its decision to enter into
this Option Transaction, and neither party is acting as an advisor or fiduciary
of the other party in connection with this Option Transaction regardless of
whether the other party provides it with market information or its views; (ii)
it understands the risks of the Option 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
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professional advisors as it has deemed necessary to consult that entering into
the Option 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: May 31, 2005
Option Style: European
Option Type: Call
Seller: Cogent
Buyer: Xstream Beverage Network
Shares: Xstream Beverage Network, Inc.
common shares ("XSBV") CUSIP number
Number of Options: 6,315,789
Option Entitlement: 1 Share per Option
Strike Price: The "Strike Price" shall equal the
average of the Relevant Prices for
the Averaging Dates relating to that
Expiration Date.
Averaging Dates: The ten trading days up to and
including that Expiration 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.
Valuation Time: The closing time on the Exchange
Premium: $1
Premium Payment Date: Trade Date
Exchange: All Exchanges
Related Exchange(s): All Exchanges
Clearance System(s): DTC or Physical Certificate(s)
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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(s): May 31, 2005
Procedures for Exercise:
Latest Exercise Time: Notice given 12:00 noon, New York
time, April 30, 2007
Expiration Time: The official closing time on the
Exchange
Expiration Date: May 31, 2007
Multiple Exercise: Not Applicable
Automatic Exercise: Not Applicable
Minimum Number of Options: The Number of Options. As a result,
this Option may only be exercised in
whole, and not in part.
Seller's Telephone
Number and Telex and/or
Facsimile Number and Contact
Details for purpose of giving
Notice: Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Settlement Terms:
Physical Settlement: Applicable. Certificates with
standard Rule 144 transfer
restrictions may be used for good
delivery.
Settlement Currency: USD
Settlement Method Election: Not Applicable
Default Settlement Method: Physical Settlement
Adjustments:
Method of Adjustment: Calculation Agent Adjustment
Options Exchange: Related Exchange
Extraordinary Events:
Consequences of Merger Events:
Share-for-Share: Calculation Agent Adjustment
Share-for-Other: Calculation Agent Adjustment
Share-for-Combined: Calculation Agent Adjustment
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Tender Offer: Applicable
Consequences of Tender Offers:
Share-for-Share: Calculation Agent Adjustment
Share-for-Other: Calculation Agent Adjustment
Share-for-Combined: Calculation Agent Adjustment
Composition of Combined Consideration: Applicable
Nationalization, Insolvency or Delisting: Negotiated Close-Out
Additional Disruption Events:
Change in Law: Applicable
Failure to Deliver: Applicable
Insolvency Filing: Applicable
Determining Party: Cogent
Non-Reliance: Applicable
4. Calculation Agent: Cogent
5. Account Details:
Account for payments to Cogent: To be provided.
Account for payments to Xstream Beverage Network: To be provided.
Account for delivery of Shares to
Xstream Beverage Network: To be provided.
6. 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.
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7. 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 or by sending to us a letter or telex substantially
similar to this letter, which letter or telex sets forth the material terms of
the Transaction to which this Confirmation relates and indicates your agreement
to those terms.
Yours sincerely,
Cogent Capital Corp.
By: /s/_____________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
Confirmed as of the date first above written:
Xstream Beverage Network, Inc.
By: /s/________________________________
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: CEO
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