General Statement of Beneficial Ownership — Schedule 13D
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Exhibit 2
PARTICIPATION AGREEMENT
(Delaware and Bermuda Partnerships)
PARTICIPATION AGREEMENT dated as of May 15, 2001 (this "Agreement")
by and between CSFB Global Opportunities Partners, L.P. a Delaware limited
partnership (the "Delaware Partnership"), and CSFB Global Opportunities
Partners (Bermuda), L.P. (the "Bermuda Partnership", and together with the
Delaware Partnership, the "Partnerships").
Preliminary Statement
This Agreement sets forth the terms and conditions on which the
Bermuda Partnership will participate in, and be a beneficial owner of, a
portion of each investment (and certain other assets) held by the Delaware
Partnership.
Each of the Partnerships is a private investment fund managed by
CSFB Global Opportunities Advisers, LLC and each is in the process of raising
funds. The Partnerships intend to invest proportionately with each other in
the same investments. This Agreement is being entered into as a convenience to
enable the Delaware Partnership and the Bermuda Partnership to adjust after
each closing their respective ownership interests in their investments to be
proportionate to the aggregate Capital Commitments made to each Partnership,
as contemplated under each Partnership's respective partnership agreement,
without the additional expense and administrative burden of transferring the
ownership (or partial ownership) of investments between the Delaware
Partnership and the Bermuda Partnership after each such closing.
1. Definitions. Capitalized terms not defined herein shall have the
meanings given to them in the partnership agreement of the Delaware
Partnership.
2. Participations.
(a) From and after the date of this Agreement, at the time each
Investment Asset (as defined below) is acquired, the Delaware Partnership
hereby agrees to sell to the Bermuda Partnership, and the Bermuda Partnership
agrees to purchase from the Delaware Partnership, without further action, a
participation interest (each, a "Participation") in the Delaware Partnership's
right, title and interest in such Investment Asset. The amount of the Bermuda
Partnership's Participation in each Investment Asset shall equal its Pro Rata
Share of such Investment Asset.
"Investment Asset" means each investment (including expenses
related to such investment) of the Delaware Partnership acquired at any time
during the term of this Agreement, whether such investment is in the form of
debt or equity securities, commodities, currencies, loans, derivatives, trade
claims, short positions or any other type of asset acquired or held by the
Delaware Partnership for investment purposes, together with all interest,
dividends, income distributions and other earnings in respect of each such
Investment Asset and cash, to the extent the Bermuda Partnership has provided
cash to the Delaware Partnership, or an Investment Asset has been liquidated.
The Bermuda Partnership's "Pro Rata Share" of each Investment
Asset shall be a fraction (expressed as a percentage), the numerator of which
is the amount of the aggregate Capital Commitments made to the Bermuda
Partnership and the denominator of which is the Overall Capital Commitments.
(b) Each Investment Asset shall be held by the Delaware
Partnership in its own name but, to the extent of the Bermuda Partnership's
interest therein, subject to the Bermuda Partnership's rights with respect
thereto, as herein set forth.
(c) The Bermuda Partnership shall have no direct interest in
any Investment Asset except that, as a participant, the Bermuda Partnership
shall participate, based upon its Pro Rata Share of each such Investment
Asset, in any and all benefits, payments, recoveries and any other amounts
received by the Delaware Partnership from or in connection with the Investment
Assets.
(d) The Bermuda Partnership's Pro Rata Share shall be adjusted
immediately after each closing of the Delaware Partnership, each closing of
the Bermuda Partnership and any other event (each such event, an "Adjustment
Event") which causes a change in the relative proportions of Capital
Commitments made to the Bermuda Partnership and the Delaware Partnership.
Immediately after each Adjustment Event, the Delaware Partnership shall sell
to the Bermuda Partnership, and the Bermuda Partnership shall purchase from
the Delaware Partnership, or the Bermuda Partnership shall sell to the
Delaware Partnership, and the Delaware Partnership shall purchase from the
Bermuda Partnership, as may be required, such amount of the Participation
Interest in each Investment Asset as will result in the Bermuda Partnership
owning a Participation equal to its adjusted Pro Rata Share of each Investment
Asset.
(e) As soon as practicable after the Last Closing Date, the
Bermuda Partnership's Pro Rata Share of each Investment Asset shall be
transferred to the Bermuda Partnership.
3. Manner of Payment. On the date the Delaware Partnership
acquires an Investment Asset, the Bermuda Partnership shall deposit with, or
otherwise make available to, the Delaware Partnership, cash to fund the
Bermuda Partnership's Participation in such Investment Asset in an amount
equal to the cost of the Bermuda Partnership's Pro Rata Share of such
Investment Asset.
4. Relationship of Parties. The Delaware Partnership neither is
nor shall be deemed to be a fiduciary of, or otherwise have a trust
relationship with, or be an agent of, the Bermuda Partnership in connection
with this Agreement or any transaction contemplated herein, and the Delaware
Partnership shall have no obligation, duty or responsibility to the Bermuda
Partnership except as expressly set forth herein. Each Participation in an
Investment Asset sold hereunder shall constitute an assignment, without
recourse to the Delaware Partnership, of an undivided interest in and to such
Investment Asset. This Agreement shall not be construed as a loan by the
Bermuda Partnership to the Delaware Partnership. Nothing in this Agreement
shall be construed as creating a partnership, joint venture, association,
syndicate, unincorporated business or other separate entity.
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5. Obligations Absolute. The obligations of the Bermuda
Partnership hereunder shall be absolute, unconditional and irrevocable and
shall be paid and performed strictly in accordance with the terms hereof.
6. Delivery of Documents and Information.
(a) Unless prohibited from doing so by any document governing
any Investment Asset (each, a "Document"), the Delaware Partnership will
furnish to the Bermuda Partnership (i) a copy of each material financial
statement, subscription agreement, transfer agreement or tax form the Delaware
Partnership receives from time to time pursuant to any Document and (ii) a
copy of each amendment or other modification of, or waiver or consent granted
in connection with, any Document.
(b) Failure of the Delaware Partnership to provide any
information referred to in the foregoing subsection (a) above shall not result
in any liability of the Delaware Partnership or excuse the Bermuda Partnership
from the performance of any of its obligations hereunder.
7. Modification of Documents. Etc. The Delaware Partnership may
(in its sole discretion), without the approval or consent of the Bermuda
Partnership, (a) agree to any amendment or other modification of any Document
and (b) exercise or refrain from exercising any right or remedy the Delaware
Partnership may have under any Document.
8. Limitation on the Liability of the Delaware Partnership.
(a) The Delaware Partnership shall not be liable to the Bermuda
Partnership for any error in judgment or for any action taken or omitted to be
taken by the Delaware Partnership, except for gross negligence, willful
misconduct, fraud or bad faith of the Delaware Partnership. Subject to the
preceding sentence, the Delaware Partnership will exercise the same care in
administering the Bermuda Partnership's interest in each Investment Asset as
the Delaware Partnership exercises with respect to each such Investment Asset
for its own account and risk, and the Delaware Partnership shall have no
further responsibility to the Bermuda Partnership. Without limiting the
foregoing, the Delaware Partnership may rely on the advice of counsel
concerning legal matters and on any written communication or telephone
conversation which it believes to be genuine and correct and to have been
signed, sent or made by the proper person or persons.
(b) The Delaware Partnership makes no representation or
warranty in connection with, and assumes no responsibility for, the financial
or other condition of any borrower or company to which an Investment Asset
relates, or other party to any Document or the performance of the obligations
of any such Person under any Document, or for the due execution, authenticity,
validity, enforceability or colleetibility of any thereof. The Delaware
Partnership shall have no duty to file any document relating to any collateral
or to maintain any such filing. The Delaware Partnership shall have no
obligation to make any claim on, or assert any lien upon or assert any setoff
against any property held by it. The Delaware Partnership may make loans or
otherwise extend credit to, or purchase equity in, and generally engage in any
kind of investment business with, any borrower or other person obligated in
respect of an Investment
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Asset, or any bank that may have originated a loan or acquired an Investment
Asset (if the originator or acquirer (as applicable) is not the Delaware
Partnership).
9. Independent Investigation. The Bermuda Partnership
represents that it has entered into this Agreement on the basis of its own
credit evaluation, the Delaware Partnership has not made any representations
or warranties to the Bermuda Partnership, except as otherwise set forth
herein, and no act hereafter taken by the Delaware Partnership, including,
without limitation, any review of the affairs of any Borrower or any other
party to any Document, shall be deemed to constitute any representation or
warranty by the Delaware Partnership to the Bermuda Partnership. The Bermuda
Partnership represents and warrants to, and agrees with, the Delaware
Partnership that it has made and will continue to make, independently and
without reliance upon the Delaware Partnership or counsel to the Delaware
Partnership and based on such documents and information as it deems
appropriate, (A) its own appraisal of and investigation into the operations,
financial condition, creditworthiness, affairs, status and nature of each
Borrower and other party to any Document, and (B) its own decision to enter
into this Agreement and to take any action hereunder.
10. Existing Agreements. The parties hereto acknowledge that
Hemisphere Global Opportunities, Ltd. is the general partner of each of the
Partnerships, and agree that notwithstanding anything to the contrary
contained in this Agreement, this Agreement shall not be deemed to modify,
supersede, amend or otherwise effect the duties and obligations of the general
partner under the partnership agreements of either Partnership.
11. Indemnification. The Bermuda Partnership agrees to
indemnify and hold harmless the Delaware Partnership for the Bermuda
Partnership's respective Pro Rata Share of any and all liabilities, claims,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever (collectively,
"Losses") which may be imposed on, incurred by or asserted against the
Delaware Partnership in connection with an Investment Asset.
The Delaware Partnership hereby agrees that, in the event it
incurs any Losses which are not related to an Investment Asset in which the
Bermuda Partnership has a Participation under this Agreement, it will not hold
the Bermuda Partnership liable for any of the foregoing.
This section 11 shall survive termination of this Agreement.
12. Notices. Unless otherwise specified herein, all notices and
other communications provided for hereunder shall be in writing and shall be
mailed, by certified or registered mail, postage prepaid (return receipt
requested), telecopied, telexed, telegraphed or delivered, to such party at
its address or at such other address as shall be designated by such party in a
written notice to the other party complying as to delivery with the terms of
this section. All such notices and other communications shall be effective {a}
if mailed, when received or three days after matting, whichever is earlier;
(b) if telegraphed, when delivered to the telegraph company; (c) if
telecopied, when transmitted; (d) if telexed, when the appropriate answerback
has been received; or (e) if delivered, upon delivery.
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13. Termination. This Agreement shall terminate upon the
transfer of all the Investment Assets as provided in section 2(e) hereof
and/or distribution of all Proceeds of all Investment Assets to the Bermuda
Investors.
14. Miscellaneous. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement. This Agreement shall be governed
by and construed and interpreted in accordance with the laws of the State of
New York.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by their duly authorized officers as of the date above first
written.
CSFB GLOBAL OPPORTUNITIES PARTNERS, L.P.
By: Hemisphere Global Opportunities Partners, Ltd.,
In its capacity as General Partner of CSFB
Global Opportunities Partners, L.P.
By: /s/ Marty Brandt
------------------------------------------------
Name: Marty Brandt
Title: Director
CSFB GLOBAL OPPORTUNITIES PARTNERS (BERMUDA), L.P.
By: Hemisphere Global Opportunities Partners, Ltd.,
In its capacity as the General Partner of CSFB
Global Opportunities Partners (Bermuda), L.P.
By: /s/ Marty Brandt
------------------------------------------------
Name: Marty Brandt
Title: Director
Dates Referenced Herein and Documents Incorporated by Reference
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