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EXHIBIT 11
SAILS MANDATORILY EXCHANGEABLE SECURITIES CONTRACT
dated as of
June 23, 2000
among
ZG NEVADA LIMITED PARTNERSHIP,
CSFB SAILS CORP.
and
CREDIT SUISSE FIRST BOSTON CORPORATION, as Agent
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TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions...................................................1
ARTICLE 2
SALE AND PURCHASE
SECTION 2.01. Sale and Purchase.............................................6
SECTION 2.02. Purchase Price................................................6
SECTION 2.03. Payment for and Delivery of Contract Shares...................6
SECTION 2.04. Cash Settlement Option........................................7
ARTICLE 3
TERMINATION BY SELLER
SECTION 3.01. Termination by Seller.........................................7
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
SECTION 4.01. Representations and Warranties of Seller......................8
ARTICLE 5
CONDITIONS TO BUYER'S OBLIGATIONS
SECTION 5.01. Conditions...................................................11
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PAGE
ARTICLE 6
COVENANTS
SECTION 6.01. Taxes.........................................................12
SECTION 6.02. Forward Contract..............................................12
SECTION 6.03. Notices.......................................................13
SECTION 6.04. Further Assurances............................................13
SECTION 6.05. Securities Contract...........................................13
ARTICLE 7
ADJUSTMENTS
SECTION 7.01. Dilution Adjustments..........................................14
SECTION 7.02. Reorganization Events.........................................15
SECTION 7.03. Provisions Relating to Reorganization Events and Spin-Offs....16
SECTION 7.04. Termination and Payment.......................................16
ARTICLE 8
ACCELERATION
SECTION 8.01. Acceleration..................................................17
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices.......................................................19
SECTION 9.02. Governing Law; Submission to Jurisdiction; Severability; Waiver
of Jury Trial; Service of Process......................................20
SECTION 9.03. Entire Agreement; Other.......................................21
SECTION 9.04. Amendments, Waivers...........................................21
SECTION 9.05. No Third Party Rights, Successors and Assigns.................21
SECTION 9.06. Calculation Agent............................................22
SECTION 9.07. Set-off.......................................................22
SECTION 9.08. Matters Related to Credit Suisse First Boston Corporation, as
Agent..................................................................23
SECTION 9.09. Counterparts..................................................23
SECTION 9.10. Limited Recourse..............................................23
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SAILS MANDATORILY EXCHANGEABLE SECURITIES CONTRACT
THIS AGREEMENT is made as of this 23rd day of June, 2000 among ZG NEVADA
LIMITED PARTNERSHIP ("SELLER"), a Nevada limited partnership, CREDIT SUISSE
FIRST BOSTON CORPORATION, as agent (the "AGENT") hereunder, and CSFB SAILS CORP.
("BUYER").
WHEREAS, Seller owns shares of common stock, par value $0.0001 per share,
of Digital Lightwave, Inc., a Delaware corporation (the "ISSUER"), or security
entitlements in respect thereof (the "COMMON STOCK");
WHEREAS, Seller has agreed, pursuant to the Pledge Agreement (as defined
herein), to grant Buyer a security interest in certain shares of Common Stock to
secure the obligations of Seller hereunder;
WHEREAS, Seller and Buyer are willing to sell and purchase such shares of
Common Stock at the time and on the terms set forth herein;
NOW, THEREFORE, in consideration of their mutual covenants herein
contained, the parties hereto, intending to be legally bound, hereby mutually
covenant and agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. As used herein, the following words and
phrases shall have the following meanings:
"ACCELERATION AMOUNT" has the meaning provided in Section 8.01.
"ACCELERATION AMOUNT NOTICE" has the meaning provided in Section 8.01.
"ACCELERATION DATE" has the meaning provided in Section 8.01.
"ACCELERATION DELIVERY DATE" has the meaning provided in Section 8.01.
"ACCELERATION EVENT" has the meaning provided in Section 8.01.
"ACQUIRING CORPORATION" has the meaning provided in Section 7.02.
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"BANKRUPTCY CODE" has the meaning provided in Section 6.05.
"BASE AMOUNT" has the meaning provided in Section 2.01.
"BUSINESS DAY" means any day on which commercial banks are open for
business in New York City.
"CALCULATION AGENT" means Credit Suisse First Boston International.
"CASH SETTLEMENT AMOUNT" means an amount of cash equal to the product of
the Maturity Price and the number of shares of Common Stock equal to the product
of (i) the Base Amount and (ii) the Exchange Rate.
"CLOSING PRICE" of any security on any date of determination means the
closing sale price (or, if no closing sale price is reported, the last reported
sale price) of such security on the Exchange for the regular trading session on
such date or, if such security is not listed on a national securities exchange
or quoted on a national automated quotation system, the last quoted bid price
for such security in the over-the-counter market for the regular trading session
for such date, as reported by the National Quotation Bureau or similar
organization, or, if such bid price is not available, the market value of such
security on such date as determined by the Calculation Agent.
"COLLATERAL ACCOUNT" has the meaning provided in the Pledge Agreement.
"CONTRACT SHARE AMOUNT" has the meaning provided in Section 2.03(b).
"CONTRACT SHARES" has the meaning provided in Section 2.03(b).
"CUSTODIAN" has the meaning provided in the Pledge Agreement.
"EXCHANGE" means, at any time, the principal national securities exchange
or automated quotation system, if any, on which the Common Stock is listed or
quoted at such time.
"EXCHANGE BUSINESS DAY" means any day that is (or, but for the occurrence
of a Market Disruption Event, would have been) a trading day on the Exchange,
other than a day on which trading on the Exchange is scheduled to close prior to
its regular weekday closing time.
"EXCHANGE RATE" has the meaning provided in Section 2.03(c).
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"FREE STOCK" means Common Stock that is not subject to any Transfer
Restrictions (other than Transfer Restrictions arising solely from the fact that
Seller is an "affiliate", within the meaning of Rule 144 under the Securities
Act, of the Issuer) in the hands of Seller immediately prior to delivery to
Buyer hereunder and would not upon delivery to Buyer be subject to any Transfer
Restrictions in the hands of Buyer.
"GENERAL PARTNER" means ZG Nevada, Inc., a Nevada corporation.
"ISSUE PRICE" has the meaning provided in Section 2.03(c).
"LIEN" means any lien, mortgage, security interest, pledge, charge or
encumbrance of any kind.
"LIMITED PARTNER" means Bryan J. Zwan.
"MARKET DISRUPTION EVENT" means the occurrence or the existence on any
Exchange Business Day during the one-half hour period ending at the close of the
regular trading session on the relevant exchange of any suspension of or
limitation in trading (by reason of movements in price exceeding limits
permitted by the relevant exchange or otherwise) in the Common Stock or in
listed options on the Common Stock, if any, if, in the determination of the
Calculation Agent, such suspension or limitation is material.
"MARKET VALUE" means, as of any date with respect to any share of Common
Stock, the Closing Price per share of Common Stock for the Exchange Business Day
prior to such date.
"MARKETABLE SECURITIES" means shares of common stock of a Publicly-Traded
Entity that are not subject to any Transfer Restrictions.
"MATURITY DATE" means June 23, 2004.
"MATURITY PRICE" means the average of the Closing Prices per share of the
Common Stock on the 20 Trading Days beginning 30 Exchange Business Days
immediately prior to the Maturity Date; provided that if there are not 20
Trading Days during the period beginning 30 Exchange Business Days immediately
prior to the Maturity Date and ending on the Exchange Business Day immediately
prior to the Maturity Date, the Maturity Price shall be the market value of one
share of Common Stock during such period as determined by the Calculation Agent.
"NEW COMMON STOCK" has the meaning provided in Section 7.01(c).
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"NON-STOCK CONSIDERATION" has the meaning provided in Section 7.02.
"OPTIONAL TERMINATION DATE" has the meaning provided in Section 3.01.
"ORGANIZATIONAL DOCUMENTS" means the Certificate of Limited Partnership
of Seller and the Amended and Restated Agreement of Limited Partnership of
Seller dated as of December 24, 1997 between the General Partner and the Limited
Partner, as amended from time to time.
"ORIGINAL COMMON STOCK" has the meaning provided in Section 7.01(c).
"PAYMENT DATE" has the meaning provided in Section 2.03(a).
"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"PLEDGE AGREEMENT" means the SAILS Pledge Agreement dated as of the date
hereof among Seller, Buyer and the Agent, as amended from time to time.
"POTENTIAL ADJUSTMENT EVENT" has the meaning provided in Section 7.01.
"PUBLICLY-TRADED ENTITY" means an Acquiring Corporation or a surviving or
continuing corporation of the Issuer (or any successor) following a
Reorganization Event, or a corporation the capital stock of which is distributed
in a Spin-Off, the common stock of which is traded on any national securities
exchange or automatic interdealer quotation system in the United States;
provided that in the case of a Reorganization Event, the product of (i) the
Closing Price per share of common stock of such Acquiring Corporation or such
surviving or continuing corporation, as the case may be, on the Exchange
Business Day immediately succeeding such Reorganization Event multiplied by (ii)
the number of shares of such corporation's common stock held by non-affiliates
of such corporation shall not be less than the product of (A) the Closing Price
per share of Common Stock on the Exchange Business Day immediately preceding
such Reorganization Event and (B) the number of shares of Common Stock held by
non-affiliates of the Issuer.
"PURCHASE PRICE" has the meaning provided in Section 2.02.
"REORGANIZATION EVENT" has the meaning provided in Section 7.02.
"REORGANIZATION TERMINATION DATE" has the meaning provided in Section
7.02.
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"REPLACEMENT VALUE" has the meaning provided in Section 8.01.
"SECURED PARTY" has the meaning provided in the Pledge Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SPIN-OFF" has the meaning provided in Section 7.01.
"TERMINATION AMOUNT NOTICE" has the meaning provided in Section 7.04.
"TERM SHEET" has the meaning provided in the Pledge Agreement.
"THRESHOLD PRICE" has the meaning provided in Section 2.03(c).
"TRADING DAY" is defined as any Exchange Business Day on which there is
not a Market Disruption Event.
"TRANSFER RESTRICTION" means, with respect to any share of Common Stock
or item of collateral pledged under the Pledge Agreement, any condition to or
restriction on the ability of the holder thereof to sell, assign or otherwise
transfer such share of Common Stock or item of collateral or to enforce the
provisions thereof or of any document related thereto whether set forth in such
item of collateral itself or in any document related thereto, including, without
limitation, (i) any requirement that any sale, assignment or other transfer or
enforcement of such share of Common Stock or item of collateral be consented to
or approved by any Person, including, without limitation, the issuer thereof or
any other obligor thereon, (ii) any limitations on the type or status, financial
or otherwise, of any purchaser, pledgee, assignee or transferee of such share of
Common Stock or item of collateral, (iii) any requirement of the delivery of any
certificate, consent, agreement, opinion of counsel, notice or any other
document of any Person to the issuer of, any other obligor on or any registrar
or transfer agent for, such share of Common Stock or item of collateral, prior
to the sale, pledge, assignment or other transfer or enforcement of such share
of Common Stock or item of collateral and (iv) any registration or qualification
requirement or prospectus delivery requirement for such share of Common Stock or
item of collateral pursuant to any federal, state or foreign securities law
(including, without limitation, any such requirement arising as a result of Rule
144 or Rule 145 under the Securities Act); provided that the required delivery
of any assignment, instruction or entitlement order from the seller, pledgor,
assignor or transferor of such share of Common Stock or item of collateral,
together with any evidence of the corporate or other authority of such Person,
shall not constitute a "TRANSFER RESTRICTION".
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"UCC" means the Uniform Commercial Code as in effect in the State of New
York.
ARTICLE 2
SALE AND PURCHASE
SECTION 2.01. Sale and Purchase. Upon the terms and subject to the
conditions of this Agreement, Seller agrees to sell to Buyer, and Buyer agrees
to purchase and acquire from Seller, the number of shares of Common Stock equal
to the product of 475,000 (subject to reduction as provided in Section 3.01, the
"BASE AMOUNT") and the Exchange Rate.
SECTION 2.02. Purchase Price. The purchase price (the "PURCHASE PRICE")
shall be $24,094,001 in cash.
SECTION 2.03. Payment for and Delivery of Contract Shares. (a) Upon the
terms and subject to the conditions of this Agreement, Buyer shall deliver to
Seller the Purchase Price on June 23, 2000 (the "PAYMENT DATE") at the offices
of Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017, or at
such other place as shall be agreed upon by Buyer and Seller, paid in
immediately available funds by wire transfer to an account designated by Seller.
(b) On the Maturity Date, Seller agrees, subject to Section 2.04, to
deliver to Buyer (i) a number of shares of Free Stock (the "CONTRACT SHARES")
equal to the product (the "CONTRACT SHARE AMOUNT"), rounded down to the nearest
whole number, of (A) the Base Amount and (B) the Exchange Rate and (ii) cash in
an amount equal to the value (based on the Maturity Price) of any fractional
share not delivered as a result of such rounding. If (x) by 10:00 A.M., New York
City time on the Maturity Date, Seller has not otherwise effected such delivery
of Common Stock or delivered cash in lieu thereof pursuant to Section 2.04 and
(y) the Common Stock then held by or on behalf of Secured Party as collateral
under the Pledge Agreement is Free Stock, then (i) Seller shall be deemed not to
have elected to deliver cash in lieu of shares of Free Stock pursuant to Section
2.04 (notwithstanding any notice by Seller to the contrary) and (ii) the
delivery provided by this Section 2.03(b) shall be effected by delivery to Buyer
from the Collateral Account in the manner set forth in the Pledge Agreement of a
number of shares of Free Stock then held by or on behalf of Secured Party as
collateral under the Pledge Agreement equal to the number thereof required to be
delivered by Seller to Buyer pursuant to this Section 2.03(b); provided that,
notwithstanding the foregoing and without limiting the generality of Section
8.01, if Seller gives notice of Seller's election to deliver cash in lieu of
shares of Free
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Stock on the Maturity Date pursuant to Section 2.04 and fails to deliver the
Cash Settlement Amount on the Maturity Date as provided in Section 2.04, Seller
shall be in breach of this Agreement and shall be liable to Buyer for any
damages suffered by Buyer as a result of such breach, including without
limitation damages suffered in connection with any decrease in the Closing Price
per share of Common Stock subsequent to the 30th Exchange Business Day
immediately preceding the Maturity Date.
(c) The "EXCHANGE RATE" shall be determined by the Calculation Agent in
accordance with the following formula, and is subject to adjustment as a result
of certain events as provided in Article 7 and as provided in Section 5(i) of
the Pledge Agreement: (i) if the Maturity Price is less than $77.4837 (the
"THRESHOLD PRICE") but greater than $64.5697 (the "ISSUE PRICE"), the Exchange
Rate shall be a ratio (rounded upward or downward to the nearest 1/10,000th or,
if there is not a nearest 1/10,000th, to the next lower 1/10,000th) equal to the
Issue Price divided by the Maturity Price, (ii) if the Maturity Price is equal
to or greater than the Threshold Price, the Exchange Rate shall be 0.8333 and
(iii) if the Maturity Price is equal to or less than the Issue Price, the
Exchange Rate shall be one (1).
SECTION 2.04. Cash Settlement Option. Seller may, upon written notice
delivered to Buyer at least 35 Exchange Business Days prior to the Maturity
Date, elect to deliver the Cash Settlement Amount to Buyer on the Maturity Date
by wire transfer of immediately available funds to an account designated by
Buyer, in lieu of the shares of Common Stock to be delivered on the Maturity
Date pursuant to Section 2.03(b).
ARTICLE 3
TERMINATION BY SELLER
SECTION 3.01. Termination by Seller. Seller may terminate this Agreement
in whole or in part upon 35 Exchange Business Days' prior written notice to
Buyer (the termination date specified in such notice, the "OPTIONAL TERMINATION
DATE"). If Seller terminates this Agreement in whole, Seller shall make a cash
payment, by wire transfer of immediately available funds to an account
designated by Buyer, to Buyer on the Optional Termination Date in an amount
equal to the Replacement Value (calculated in the manner set forth in Section
8.01 as if the Optional Termination Date were the Acceleration Date). If Seller
terminates this Agreement in part, Seller shall specify the number of shares of
Common Stock with respect to which this Agreement is to be terminated and (i)
Seller shall make a cash payment, by wire transfer of immediately available
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funds to an account designated by Buyer, to Buyer on the Optional Termination
Date in an amount equal to the Replacement Value (calculated in the manner set
forth in Section 8.01 as if the Optional Termination Date were the Acceleration
Date; provided that for purposes of such calculation, the Base Amount shall be
deemed to be such number of shares of Common Stock with respect to which this
Agreement is to be terminated) and (ii) the Base Amount shall be reduced by such
number of shares of Common Stock with respect to which this Agreement is to be
terminated.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
SECTION 4.01. Representations and Warranties of Seller. Seller represents
and warrants to Buyer that:
(a) Seller is a limited partnership duly organized and existing in
good standing under the laws of the State of Nevada and has the requisite
power to own its properties and to carry on its business as now being
conducted.
(b) The execution and delivery of this Agreement and the Pledge
Agreement and the performance by Seller of Seller's obligations hereunder
and thereunder do not violate or conflict with any provision of the
Organizational Documents, any law applicable to Seller, any order or
judgment of any court or other agency of government applicable to Seller
or any of Seller's assets or any contractual restriction binding on or
affecting Seller or any of Seller's assets.
(c) All government and other consents that are required to have
been obtained by Seller with respect to this Agreement or the Pledge
Agreement have been obtained and are in full force and effect and all
conditions of any such consents have been complied with. Seller has
complied and will comply with all applicable disclosure or reporting
requirements in respect of the transactions contemplated hereby and by
the Pledge Agreement, including without limitation any requirements
imposed by Section 13 or Section 16 of the Securities Exchange Act of
1934, as amended, or the rules and regulations thereunder.
(d) Seller has the requisite power and authority to enter into and
perform this Agreement and the Pledge Agreement and to deliver the
Contract Shares in accordance with the terms hereof. The execution and
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delivery of this Agreement and the Pledge Agreement by Seller and the
consummation by Seller of the transactions contemplated hereby and
thereby (including the delivery by Seller of the Contract Shares) have
been duly authorized by Seller. This Agreement and the Pledge Agreement
have been duly executed and delivered by Seller. Seller's obligations
under this Agreement and the Pledge Agreement constitute Seller's legal,
valid and binding obligations, enforceable in accordance with their
respective terms (subject to applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors' rights
generally and subject, as to enforceability, to equitable principles of
general application (regardless of whether enforcement is sought in a
proceeding in equity or at law)).
(e) No Acceleration Event or event that, with the giving of notice
or the lapse of time or both, would constitute an Acceleration Event has
occurred and is continuing and no such event would occur as a result of
Seller's entering into or performing Seller's obligations under this
Agreement or the Pledge Agreement.
(f) There is not pending or, to Seller's knowledge, threatened
against Seller, the General Partner or the Limited Partner any action,
suit or proceeding at law or in equity or before any court, tribunal,
governmental body, agency or official or any arbitrator (including
without limitation any bankruptcy, insolvency or similar proceeding) that
is likely to affect the legality, validity or enforceability against
Seller of this Agreement or the Pledge Agreement or Seller's ability to
perform Seller's obligations under this Agreement or the Pledge
Agreement.
(g) Seller is acting for Seller's own account, and has made
Seller's own independent decision to enter into this Agreement and the
Pledge Agreement and as to whether this Agreement and the Pledge
Agreement are appropriate or proper for Seller based upon Seller's own
judgment and upon advice of such advisors as Seller deems necessary.
Seller acknowledges and agrees that Seller is not relying, and has not
relied, upon any communication (written or oral) of Buyer or any
affiliate, employee or agent of Buyer with respect to the legal,
accounting, tax or other implications of this Agreement and the Pledge
Agreement and that Seller has conducted Seller's own analyses of the
legal, accounting, tax and other implications hereof and thereof; it
being understood that information and explanations related to the terms
and conditions of this Agreement or the Pledge Agreement shall not be
considered investment advice or a recommendation to enter into this
Agreement or the Pledge Agreement. Seller is entering into this Agreement
and the Pledge
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Agreement with a full understanding of all of the terms and risks hereof
and thereof (economic and otherwise) and is capable of evaluating and
understanding (on Seller's own behalf or through independent professional
advice), and understands and accepts, the terms, conditions and risks.
Seller is also capable of assuming (financially and otherwise), and
assumes, those risks. Seller acknowledges that neither Buyer nor any
affiliate, employee or agent of Buyer is acting as a fiduciary for or an
advisor to Seller in respect of this Agreement or the Pledge Agreement.
(h) Seller is not, on the date of this Agreement, in possession of
any material non-public information regarding the Issuer. Seller does not
know or have any reason to believe that the Issuer has not complied with
the reporting requirements contained in Rule 144(c)(1) under the
Securities Act. Neither Seller nor any person who would be considered to
be the same "person" (as such term is used in Rule 144(a)(2) under the
Securities Act) as Seller has, without the written consent of Buyer
(which consent shall not be unreasonably withheld), sold any shares of
Common Stock or hedged (through swaps, options, short sales or otherwise)
any long position in the Common Stock during the period beginning on the
date three months prior to the date hereof and ending on the date hereof,
except (i) the sale by Seller of 500,000 shares of Common Stock on
February 22, 2000, (ii) the sale by Seller of 50,000 shares of Common
Stock on February 23, 2000, (iii) the sale by The Bryan J. and June B.
Zwan Foundation, Inc. of 37,500 shares of Common Stock on February 22,
2000, (iv) the transaction contemplated by the SAILS Mandatorily
Exchangeable Securities Contract dated as of December 8, 1999 among the
Limited Partner, Buyer and Credit Suisse First Boston Corporation, as
Agent, maturing on December 8, 2004, (v) the transaction contemplated by
the SAILS Mandatorily Exchangeable Securities Contract dated as of March
1, 2000 among Seller, Buyer and Credit Suisse First Boston Corporation,
as Agent, maturing on March 1, 2005, (vi) the transaction contemplated by
the SAILS Mandatorily Exchangeable Securities Contract dated as of March
1, 2000 among Seller, Buyer and Credit Suisse First Boston Corporation,
as Agent, maturing on March 1, 2003 and (vii) the transaction
contemplated by the SAILS Mandatorily Exchangeable Securities Contract
dated as of March 8, 2000 among Seller, Buyer and Credit Suisse First
Boston Corporation, as Agent, maturing on March 8, 2005.
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(i) Delivery of shares of Common Stock by Seller pursuant to this
Agreement on the Maturity Date or an Acceleration Delivery Date will pass
to Buyer title (or security entitlements) to such shares free and clear
of any Liens or Transfer Restrictions (other than Transfer Restrictions
arising solely from the fact that Seller is an "affiliate", within the
meaning of Rule 144 under the Securities Act, of the Issuer), except for
those created pursuant to the Pledge Agreement.
(j) Seller has a valid business purpose for entering into this
Agreement, and the transaction contemplated hereby is consistent with
Seller's overall investment strategy. Seller currently expects that
Seller will not elect to deliver cash in lieu of Common Stock on the
Maturity Date pursuant to Section 2.04. Seller intends, however, to
consider all relevant economic, market and business factors in ultimately
determining whether to deliver cash in lieu of Common Stock on the
Maturity Date.
ARTICLE 5
CONDITIONS TO BUYER'S OBLIGATIONS
SECTION 5.01. Conditions. The obligation of Buyer to deliver the
Purchase Price on the Payment Date is subject to the satisfaction of the
following conditions, each of which shall be conclusively deemed to be satisfied
upon payment of the Purchase Price on the Payment Date:
(a) The representations and warranties of Seller contained in
Article 4 and in the Pledge Agreement shall be true and correct as of the
Payment Date.
(b) The Pledge Agreement shall have been executed by the parties
thereto, and Seller shall have delivered to Secured Party the Initial
Pledged Items in the manner described in the Term Sheet and the Pledge
Agreement, and Seller shall have executed UCC-1 financing statements in
the form of Exhibit B to the Pledge Agreement for filing in the filing
offices specified in Exhibit C to the Pledge Agreement.
(c) Seller shall have performed all of the covenants and
obligations to be performed by Seller hereunder and under the Pledge
Agreement on or prior to the Payment Date.
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(d) Seller shall have delivered to Buyer on or prior to the
Payment Date an opinion of counsel acceptable to Buyer to the effect set
forth in Annex A.
(e) Seller shall have filed, or shall have caused to be filed, in
the manner contemplated by Rule 144(h) under the Securities Act, a notice
on Form 144 relating to the transactions contemplated hereby in form and
substance acceptable to Buyer.
ARTICLE 6
COVENANTS
SECTION 6.01. Taxes. Seller shall pay any and all documentary, stamp,
transfer or similar taxes and charges that may be payable in respect of the
entry into this Agreement and the transfer and delivery of any Common Stock
pursuant hereto. Seller further agrees to make all payments in respect of this
Agreement free and clear of, and without withholding or deduction for or on
account of, any present or future taxes, duties, fines, penalties, assessments
or other governmental charges of whatsoever nature (or interest on any taxes,
duties, fines, penalties, assessments or other governmental charges of
whatsoever nature) imposed, levied, collected, withheld or assessed by, within
or on behalf of (a) the United States or any political subdivision or
governmental authority thereof or therein having power to tax or (b) any
jurisdiction from or through which payment on the Agreement is made by Seller,
or any political subdivision or governmental authority thereof or therein having
power to tax. In the event such withholding or deduction is imposed, Seller
agrees to indemnify Buyer for the full amount of such withholding or deduction,
as well as any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto.
SECTION 6.02. Forward Contract. Seller hereby agrees that: (i) Seller
will not treat this Agreement, any portion of this Agreement, or any obligation
hereunder as giving rise to any interest income or other inclusions of ordinary
income; (ii) Seller will not treat the delivery of any portion of the shares of
Common Stock or cash to be delivered pursuant to this Agreement as the payment
of interest or ordinary income; (iii) Seller will treat this Agreement in its
entirety as a forward contract for the delivery of such shares of Common Stock
or cash; and (iv) Seller will not take any action (including filing any tax
return or form or taking any position in any tax proceeding) that is
inconsistent with the obligations contained in (i) through (iii).
Notwithstanding the preceding sentence, Seller may take any action or position
required (A) by any taxing authority or (B) by law, provided that Seller
delivers to Buyer an opinion of counsel, nationally recognized
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as expert in Federal tax matters and acceptable to Buyer, to the effect that
such action or position is required by a statutory change or a Treasury
regulation or applicable court decision published after the date of this
Agreement.
SECTION 6.03. Notices. Seller will cause to be delivered to Buyer:
(a) Immediately upon the occurrence of any Acceleration Event
hereunder, notice of such occurrence; and
(b) In case at any time prior to the Maturity Date, Seller or the
General Partner of Seller receives notice that any event requiring that
an adjustment be calculated pursuant to Article 7 hereof shall have
occurred or be pending, then Seller shall promptly cause to be delivered
to Buyer a notice identifying such event and stating, if known to Seller,
the date on which such event occurred or is to occur and, if applicable,
the record date relating to such event. Seller shall cause further
notices to be delivered to Buyer if Seller or the General Partner of
Seller shall subsequently receive notice of any further or revised
information regarding the terms or timing of such event or any record
date relating thereto.
SECTION 6.04. Further Assurances. From time to time from and after the
date hereof through the Maturity Date, each of the parties hereto shall use such
party's reasonable best efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper and advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement in accordance with the terms and conditions
hereof, including (i) using reasonable best efforts to remove any legal
impediment to the consummation of such transactions and (ii) the execution and
delivery of all such deeds, agreements, assignments and further instruments of
transfer and conveyance necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement in accordance with the
terms and conditions hereof.
SECTION 6.05. Securities Contract. The parties hereto recognize that the
Custodian is a "financial institution" within the meaning of Section 101(22) of
Title 11 of the United States Code (the "BANKRUPTCY CODE") and is acting as
agent and custodian for Buyer in connection with this Agreement and that Buyer
is a "customer" of the Custodian within the meaning of said Section 101(22). The
parties hereto further recognize that this Agreement is a "securities contract,"
as such term is defined in Section 741(7) of the Bankruptcy Code, entitled to
the protection of Section 555 of the Bankruptcy Code.
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ARTICLE 7
ADJUSTMENTS
SECTION 7.01. Dilution Adjustments. (a) Following the declaration by the
Issuer of the terms of any Potential Adjustment Event occurring prior to the
Maturity Date, the Calculation Agent will determine whether such Potential
Adjustment Event has a diluting or concentrative effect on the theoretical value
of the Common Stock and, if so, will (i) make the corresponding adjustment, if
any, to any one or more of the Base Amount, the Exchange Rate, the Threshold
Price, the Issue Price, the Maturity Price, the Cash Settlement Amount, any
Closing Price and any other variable relevant to the exercise, settlement or
payment terms hereof or of the Pledge Agreement as the Calculation Agent
determines appropriate to account for that diluting or concentrative effect and
(ii) determine the effective date of the adjustment. The Calculation Agent may
(but need not) determine the appropriate adjustment by reference to the
adjustment in respect of such Potential Adjustment Event made by an options
exchange to options on the Common Stock traded on that options exchange.
(b) For these purposes, "POTENTIAL ADJUSTMENT EVENT" means any of the
following:
(i) a subdivision, consolidation or reclassification of shares of
Common Stock (which does not constitute a Reorganization Event), or a
free distribution or dividend of any shares of Common Stock to existing
holders of Common Stock by way of bonus, capitalization or similar issue;
(ii) a distribution or dividend to existing holders of Common
Stock of (A) shares of Common Stock, or (B) other share capital or
securities granting the right to payment of dividends and/or the proceeds
of liquidation of the Issuer equally or proportionately with such
payments to holders of Common Stock, or (C) other types of securities,
rights or warrants or other assets, in any case for payment (cash or
other) at less than the prevailing market price as determined by the
Calculation Agent;
(iii) a cash dividend;
(iv) a call by the Issuer in respect of shares of Common Stock
that are not fully paid;
(v) a repurchase by the Issuer of shares of Common Stock, whether
out of profits or capital and whether the consideration for such
repurchase is cash, securities or otherwise; or
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<PAGE> 18
(vi) any other similar event that may have a diluting or
concentrative effect on the theoretical value of the Common Stock.
Without limiting the foregoing, the parties acknowledge that the
Calculation Agent will make adjustments to the Base Amount, the Exchange Rate,
the Threshold Price, the Issue Price, the Maturity Price, the Cash Settlement
Amount, any Closing Price and any other variable relevant to the exercise,
settlement or payment terms hereof or of the Pledge Agreement as the Calculation
Agent determines appropriate to account for the value of all cash dividends
(ordinary or extraordinary) with respect to the Common Stock.
(c) Notwithstanding the foregoing, in the event of a distribution of
shares of capital stock of a subsidiary of the Issuer that is a Publicly-Traded
Entity (a "SPIN-OFF") made to holders of shares of Common Stock, (i) the
"Contract Shares" shall include, in addition to the number of shares of Free
Stock equal to the Contract Share Amount, a number of shares of New Common Stock
equal to the product of (A) the Base Amount immediately prior to the
consummation of the Spin-Off and (B) the number of shares of New Common Stock
that a holder of one share of Original Common Stock receives in connection with
such Spin-Off and (ii) the "Maturity Price" shall be equal to the sum of (A) the
Maturity Price of the Original Common Stock and (B) the product of (x) Maturity
Price of the New Common Stock and (y) the number of shares of New Common Stock
that a holder of one share of Original Common Stock would have owned or been
entitled to receive immediately following such Spin-Off. Following a Spin-Off,
"ORIGINAL COMMON STOCK" shall mean the common stock of the entity that is the
Issuer immediately prior to the Spin-Off and "NEW COMMON STOCK" shall mean the
common equity securities of the Publicly-Traded Entity resulting from such
Spin-Off.
SECTION 7.02. Reorganization Events. In the event of (i) any
consolidation or merger of the Issuer with or into another entity (other than a
merger or consolidation in which the Issuer is the continuing corporation and in
which the Common Stock outstanding immediately prior to the merger or
consolidation is not exchanged for cash, securities or other property of the
Issuer or another corporation), (ii) any sale, transfer, lease or conveyance of
the property of the Issuer as an entirety or substantially as an entirety, (iii)
any statutory exchange of securities of the Issuer with another corporation
(other than in connection with a merger or acquisition) or (iv) any liquidation,
dissolution or winding up of the Issuer (any such event, a "REORGANIZATION
EVENT"), then (A) if there is a surviving or continuing corporation and (1) such
surviving or continuing corporation is a Publicly-Traded Entity or (2) the
entity (the "ACQUIRING CORPORATION") issuing the consideration received by
holders of Common Stock in such Reorganization Event is a Publicly-Traded
Entity, "Base Amount" shall
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<PAGE> 19
mean the product of (x) the Base Amount immediately prior to the consummation of
the Reorganization Event and (y) the number of shares of common stock of such
Publicly-Traded Entity that a holder of one share of Common Stock receives in
connection with such Reorganization Event and, if the consideration received by
holders of Common Stock includes cash or property other than common stock of
such Publicly-Traded Entity ("NON-STOCK CONSIDERATION"), Seller shall make a
cash payment as if this Agreement were terminated in part pursuant to Section
3.01, by wire transfer of immediately available funds to an account designated
by Buyer, to Buyer on the date on which the Reorganization Event is consummated
(the "REORGANIZATION TERMINATION DATE") in an amount equal to the Replacement
Value (calculated in the manner set forth in Section 8.01 as if the
Reorganization Termination Date were the Acceleration Date; provided that for
purposes of such calculation, the Base Amount shall be equal to the product of
(I) the Base Amount immediately prior to consummation of the Reorganization
Event and (II) the percentage of the value of the consideration received by
holders of Common Stock represented by the Non-Stock Consideration, as
determined by the Calculation Agent) or (B) if there is no surviving or
continuing corporation in such Reorganization Event or if the consideration
received by holders of Common Stock consists solely of Non-Stock Consideration,
this Agreement shall terminate and Seller shall make a payment or delivery to
Buyer as provided in Section 7.04.
SECTION 7.03. Provisions Relating to Reorganization Events and Spin-Offs.
If a Reorganization Event occurs and clause (B) of Section 7.02 does not apply,
(a) the surviving or continuing corporation or the Acquiring Corporation, as the
case may be, shall be deemed to be the "Issuer" and the common equity securities
of such corporation shall be deemed to be the "Common Stock" and (b) the
Calculation Agent shall calculate corresponding adjustments, if any, to the Base
Amount, the Exchange Rate, the Threshold Price, the Issue Price, the Maturity
Price, the Cash Settlement Amount, any Closing Price and any other variable
relevant to the exercise, settlement or payment terms hereof as the Calculation
Agent determines appropriate to account for such event. If a Spin-Off occurs,
the entity that is the Issuer immediately prior to the Spin-Off and the
Publicly-Traded Entity resulting from the Spin-Off shall each be deemed to be
the "Issuer" and the Original Common Stock and the New Common Stock shall each
be deemed to be the "Common Stock". Following any Spin-Off, the Calculation
Agent shall calculate further adjustments pursuant to this Article 7 by applying
the methodology set forth in this Article 7 to both the Original Common Stock
and the New Common Stock.
SECTION 7.04. Termination and Payment. Following termination of this
Agreement pursuant to clause (B) of Section 7.02 as a result of any
Reorganization Event, the Calculation Agent shall determine the Replacement
Value in the manner provided in Section 8.01 (calculated, for purposes of this
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Section 7.04, as if the Reorganization Termination Date were the Acceleration
Date, and representing the fair replacement value (including both intrinsic and
time value) to Buyer of an agreement with terms that would preserve for Buyer
the economic equivalent of the payments and deliveries that Buyer and its
affiliates would, but for the occurrence of the Reorganization Event, have been
entitled to receive after the Reorganization Termination Date hereunder). As
promptly as reasonably practicable after calculation of the Replacement Value,
the Calculation Agent shall deliver to Buyer and Seller a notice (the
"TERMINATION AMOUNT NOTICE") specifying the Replacement Value. Not later than
three Business Days following delivery of a Termination Amount Notice, Seller
shall make a cash payment, by wire transfer of immediately available funds to an
account designated by Buyer, to Buyer in an amount equal to the Replacement
Value. Notwithstanding the foregoing, to the extent that any Marketable
Securities are received by holders of Common Stock in such Reorganization Event,
then in lieu of delivering cash as provided in the immediately preceding
sentence, Seller may deliver Marketable Securities with an equal value (as
determined by the Calculation Agent).
ARTICLE 8
ACCELERATION
SECTION 8.01. Acceleration. If one or more of the following events (each
an "ACCELERATION EVENT") shall occur:
(a) any legal proceeding shall have been instituted or any other
event shall have occurred or condition shall exist that in Buyer's
reasonable judgment is highly likely to have a material adverse effect on
the financial condition of Seller or on Seller's ability to perform
Seller's obligations hereunder, or that is likely to affect the validity
or binding effect of any agreement of Seller hereunder or under the
Pledge Agreement;
(b) Seller is dissolved, makes an assignment for the benefit of
creditors, files a petition in bankruptcy, is adjudicated insolvent or
bankrupt, petitions or applies to any tribunal for any receiver of or any
trustee for it or any substantial part of its property, commences any
proceeding relating to it under any reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect, or there is commenced
against or with respect to it or any substantial portion of its property
any
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such proceeding and an order for relief is issued or such proceeding
remains undismissed for a period of 30 days;
(c) at any time, representations made by Seller in Sections
4.01(b), 4.01(c), 4.01(d) and 4.01(i) under this Agreement or in Section
3 under the Pledge Agreement or any certificate delivered pursuant to
Section 5(b) of the Pledge Agreement would be incorrect or misleading in
any material respect if made as of such time;
(d) Seller fails to deliver shares of Common Stock (or the Cash
Settlement Amount) on the Maturity Date as required by this Agreement;
(e) Seller fails to fulfill or discharge when due any of Seller's
obligations, covenants or agreements under or relating to this Agreement
or the Pledge Agreement (other than the obligation referred to in Section
8.01(d)) and such failure remains unremedied for 60 days following notice
from Buyer;
(f) due to the adoption of, or any change in, any applicable law
after the date hereof, or due to the promulgation of, or any change in,
the interpretation by any court, tribunal or regulatory authority with
competent jurisdiction of any applicable law after the date hereof, it
becomes unlawful for Seller to perform any absolute or contingent
obligation to make payment or delivery hereunder or to comply with any
other material provision of this Agreement or the Pledge Agreement;
(g) in the reasonable judgment of the Calculation Agent, Buyer is
unable to hedge Buyer's exposure to this Agreement because of the lack of
sufficient shares of Common Stock being made available for share
borrowing by lenders;
(h) there occurs a default under any indebtedness for money
borrowed by Seller, the General Partner or the Limited Partner whether
such indebtedness now exists or shall hereafter be created, which
indebtedness, individually or in the aggregate, is in excess of
$10,000,000 principal amount, which default shall constitute a failure to
pay any portion of the principal of such indebtedness when due and
payable after the expiration of any applicable grace or cure period with
respect thereto or shall have resulted in such indebtedness becoming or
being declared due and payable prior to the date on which it would
otherwise have become due and payable; or
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(i) a Collateral Event of Default within the meaning of the Pledge
Agreement shall occur;
then, upon notice to Seller from Buyer at any time following an Acceleration
Event, an "ACCELERATION DATE" shall occur, and Seller shall become obligated to
deliver to Buyer on the date (the "ACCELERATION DELIVERY DATE") three Exchange
Business Days following delivery of the Acceleration Amount Notice a number of
shares of Free Stock equal to the Acceleration Amount; provided that if Secured
Party proceeds to realize upon any collateral pledged under the Pledge Agreement
and to apply the proceeds of such realization as provided in the second
paragraph of Section 7(d) thereof, then, to the extent of such application of
proceeds, Seller's obligation to deliver Free Stock pursuant to this paragraph
shall be deemed to be an obligation to deliver an amount of cash equal to the
aggregate Market Value of such Free Stock on the Acceleration Date. The
"ACCELERATION AMOUNT" means the quotient obtained by dividing: (i) the
Replacement Value by (ii) the Market Value per share of the Common Stock on the
Acceleration Date.
The "REPLACEMENT VALUE" means an amount determined by the Calculation
Agent representing the fair replacement value (including both intrinsic and time
value) to Buyer of an agreement with terms that would preserve for Buyer the
economic equivalent of the payments and deliveries that Buyer would, but for the
occurrence of the Acceleration Date, have been entitled to receive after the
Acceleration Date hereunder (taking into account any adjustments pursuant to
Section 7.01 or pursuant to Section 5(i) of the Pledge Agreement that may have
been calculated on or prior to the Acceleration Date), including any loss of
bargain, cost of funding or, without duplication, loss or cost incurred as a
result of Buyer's terminating, liquidating, obtaining or reestablishing any
hedge or related trading position.
As promptly as reasonably practicable after calculation of the
Replacement Value, the Calculation Agent shall deliver to Seller and Buyer a
notice (the "ACCELERATION AMOUNT NOTICE") specifying the Acceleration Amount of
shares of Common Stock required to be delivered by Seller.
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard forms of telecommunication. Notices to Buyer shall
be directed to it care of Credit Suisse First Boston Corporation, Eleven Madison
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Avenue, New York, New York 10010, Telecopy No. (212) 325-8175, Attention:
Ricardo Harewood, with a copy to QSPV Limited, Queensgate House, George Town,
Grand Cayman, Cayman Islands, Telecopy No. (345) 945-7100, Attention: Martin
Couch. Notices to Seller shall be directed to Seller at Suite 850, 101
Convention Center Drive, Las Vegas, Nevada 89019, Telecopy No. (702) 598-3651,
with a copy to Robert E. Freitas, Orrick, Herrington & Sutcliffe LLP, 600 Hansen
Way, Palo Alto, California 94304, Telecopy No. (650) 614-7301.
SECTION 9.02. Governing Law; Submission to Jurisdiction; Severability;
Waiver of Jury Trial; Service of Process. (a) This Agreement shall be governed
by and construed in accordance with the laws of the State of New York without
reference to choice of law doctrine and each party hereto submits to the
jurisdiction of the Courts of the State of New York and the United States
District Court located in the Borough of Manhattan in New York City.
(b) To the extent permitted by law, the unenforceability or invalidity of
any provision or provisions of this Agreement shall not render any other
provision or provisions herein contained unenforceable or invalid.
(c) SELLER AND BUYER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(d) Seller irrevocably appoints Corporation Trust Company of Nevada as
process agent to receive for Seller and on Seller's behalf, service of process
in any action, suit or other proceeding arising out of this Agreement, the
Pledge Agreement or any transaction contemplated hereby or thereby. If for any
reason Corporation Trust Company of Nevada is unable to act as such, Seller will
promptly notify Buyer and within 30 days appoint a substitute process agent
acceptable to Seller. Nothing in this Agreement will affect the right of either
party to serve process in any other manner permitted by law. Buyer irrevocably
appoints CT Corporation System as process agent to receive for Buyer and on
Buyer's behalf, service of process in any action, suit or other proceeding
arising out of this Agreement, the Pledge Agreement or any transaction
contemplated hereby or thereby. If for any reason CT Corporation System is
unable to act as such, Buyer will promptly notify Seller and within 30 days
appoint a substitute process agent acceptable to Seller. Nothing in this
Agreement will affect the right of either party to serve process in any other
manner permitted by law.
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SECTION 9.03. Entire Agreement; Other. Except as expressly set forth
herein, this Agreement constitutes the entire agreement and understanding among
the parties with respect to its subject matter hereof and supersedes all oral
communications and prior writings with respect thereto. The parties hereby agree
that (i) Seller is not obligated to keep confidential or otherwise limit the use
of any element of any description contained in this Agreement or the Pledge
Agreement that is necessary to understand or support any United States federal
income tax treatment and (ii) Buyer does not assert any claim of proprietary
ownership in respect of any description contained herein or therein relating to
the use of any entities, plans or arrangements to give rise to a particular
United States federal income tax treatment for Seller.
SECTION 9.04. Amendments, Waivers. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Buyer and Seller or, in the case of a
waiver, by the party against whom the waiver is to be effective. No failure or
delay by either party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.
SECTION 9.05. No Third Party Rights, Successors and Assigns. This
Agreement is not intended and shall not be construed to create any rights in any
person other than Seller, Buyer and their respective successors and assigns and
no other person shall assert any rights as third party beneficiary hereunder.
Whenever any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party. All the covenants
and agreements herein contained by or on behalf of Seller and Buyer shall bind,
and inure to the benefit of, their respective successors and assigns whether so
expressed or not, and shall be enforceable by and inure to the benefit of Seller
and Buyer and their respective successors and assigns. The rights and duties
under this Agreement may not be assigned or transferred by any party hereto
without the prior written consent of the other parties hereto; provided that (i)
Buyer may assign or transfer any of its rights or duties hereunder without the
prior written consent of Seller and (ii) the Agent may assign or transfer any of
its rights or duties hereunder without the prior written consent of the other
parties hereto to any affiliate of Credit Suisse First Boston, so long as such
affiliate is a broker-dealer registered with the Securities and Exchange
Commission.
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SECTION 9.06. Calculation Agent. All determinations and calculations of
the Calculation Agent made pursuant to this Agreement or the Pledge Agreement
shall be made in a commercially reasonable manner and shall be binding in the
absence of manifest error. The Calculation Agent will have no responsibility for
good faith errors or omissions in the determination so made of any Closing
Price, the Maturity Price, the Exchange Rate, the Cash Settlement Amount or any
other amount as provided herein or in the Pledge Agreement. The Calculation
Agent shall promptly advise Seller in writing of any adjustments, calculations
or determinations made by it under this Agreement or the Pledge Agreement. The
Calculation Agent shall in good faith consider and respond in writing to any
objection of Seller to any determination or calculation of the Calculation Agent
hereunder or under the Pledge Agreement.
SECTION 9.07. Set-off. In addition to and without limiting any rights of
set-off that a party hereto may have as a matter of law, pursuant to contract or
otherwise, upon the occurrence of a Reorganization Termination Date or an
Acceleration Date, Buyer shall have the right to terminate, liquidate and
otherwise close out the transactions contemplated by this Agreement pursuant to
the terms of this Agreement, and to set off any obligation that Buyer or any
affiliate of Buyer may have to Seller pursuant to this Agreement or the Pledge
Agreement, including without limitation any obligation to make any release,
delivery or payment to Seller pursuant to the Pledge Agreement, against any
right Buyer or any of its affiliates may have against Seller pursuant to this
Agreement or the Pledge Agreement, including without limitation any right to
receive a payment or delivery pursuant to this Agreement. In the case of a
set-off of any obligation to release, deliver or pay assets against any right to
receive assets of the same type, such obligation and right shall be set off in
kind. In the case of a set-off of any obligation to release, deliver or pay
assets against any right to receive assets of any other type, the value of each
of such obligation and such right shall be determined by the Calculation Agent
and the result of such set-off shall be that the net obligor shall pay or
deliver to the other party an amount of cash or assets, at the net obligor's
option, with a value (determined, in the case of a delivery of assets, by the
Calculation Agent) equal to that of the net obligation. In determining the value
of any obligation to release or deliver Common Stock or right to receive Common
Stock, the value at any time of such obligation or right shall be determined by
reference to the Market Value of the Common Stock at such time. If an obligation
or right is unascertained at the time of any such set-off, the Calculation Agent
may in good faith estimate the amount or value of such obligation or right, in
which case set-off will be effected in respect of that estimate, and the
relevant party shall account to the other party at the time such obligation or
right is ascertained.
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SECTION 9.08. Matters Related to Credit Suisse First Boston Corporation,
as Agent. (a) Credit Suisse First Boston Corporation shall act as "agent" for
Buyer and Seller within the meaning of Rule 15a-6 under the Securities Exchange
Act of 1934 in connection with the transactions contemplated by this Agreement
and by the Pledge Agreement.
(b) The Agent shall have no responsibility or liability (including,
without limitation, by way of guarantee, endorsement or otherwise) to Buyer or
Seller or otherwise in respect of this Agreement or the Pledge Agreement,
including, without limitation, in respect of the failure of Buyer or Seller to
pay or perform under this Agreement or the Pledge Agreement, except for its
gross negligence or willful misconduct in performing its duties as Agent
hereunder or thereunder.
(c) Each of Buyer and Seller agrees to proceed solely against the other
to collect or recover any securities or money owing to Buyer or Seller, as the
case may be, in connection with or as a result of this Agreement or the Pledge
Agreement.
(d) As a broker-dealer registered with the Securities and Exchange
Commission, Credit Suisse First Boston Corporation, in its capacity as Agent,
will be responsible for (i) effecting the transactions contemplated by this
Agreement and the Pledge Agreement, (ii) issuing all required notices,
confirmations and statements to Buyer and Seller and (iii) maintaining books and
records relating to this Agreement and the Pledge Agreement.
SECTION 9.09. Counterparts. This Agreement may be executed in any number
of counterparts, and all such counterparts taken together shall be deemed to
constitute one and the same agreement.
SECTION 9.10. Limited Recourse. Seller hereby agrees that it shall not
institute against, or join any other person in instituting against, Buyer any
bankruptcy, reorganization, arrangement, insolvency, moratorium or liquidation
proceedings. Seller hereby acknowledges and agrees that Buyer's obligations
under this Agreement will be solely the corporate obligations of Buyer, and that
Seller will not have any recourse to any of the directors, officers or employees
of Buyer with respect to any claims, losses, damages, liabilities, indemnities
or other obligations in connection with any transactions contemplated by this
Agreement. Recourse in respect of any obligations of Buyer under this Agreement
will be limited to the assets of Buyer and no debt shall be owed by Buyer in
respect of any shortfall after realization of such assets.
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IN WITNESS WHEREOF, the parties have signed this Agreement as of the date
and year first above written.
SELLER:
ZG NEVADA LIMITED PARTNERSHIP
By: ZG Nevada, Inc.,
its General Partner
By:
-----------------------------
Name:
Title:
BUYER:
CSFB SAILS CORP.
By:
-----------------------------
Name:
Title:
AGENT:
CREDIT SUISSE FIRST BOSTON
CORPORATION
By:
-----------------------------
Name:
Title:
<PAGE> 28
ANNEX A
(a) Seller is a limited partnership duly organized and existing in good
standing under the laws of the State of Nevada.
(b) The execution and delivery of this Agreement and the Pledge Agreement
and the performance by Seller of Seller's obligations hereunder and thereunder
do not violate or conflict with any provision of the Organizational Documents,
any law applicable to Seller, any order or judgment of any court or other agency
of government known to such counsel applicable to Seller or any of Seller's
assets or any contractual restriction known to such counsel binding on or
affecting Seller or any of Seller's assets.
(c) All government and other consents that are known to such counsel to
be required to have been obtained by Seller with respect to this Agreement or
the Pledge Agreement have been obtained and are in full force and effect and all
conditions of any such consents have been complied with.
(d) Seller has the requisite partnership power and authority to enter
into and perform this Agreement and the Pledge Agreement and to deliver the
Contract Shares in accordance with the terms hereof. The execution and delivery
of this Agreement and the Pledge Agreement by Seller and the consummation by
Seller of the transactions contemplated hereby and thereby (including the
delivery by Seller of the Contract Shares) have been duly authorized by all
necessary partnership action. This Agreement and the Pledge Agreement have been
duly executed and delivered by Seller. Seller's obligations under this Agreement
and the Pledge Agreement constitute Seller's legal, valid and binding
obligations, enforceable in accordance with their respective terms (subject to
applicable bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors' rights generally and subject, as to enforceability, to
equitable principles of general application (regardless of whether enforcement
is sought in a proceeding in equity or at law)).
(e) To such counsel's knowledge, no registration, recordation or filing
with any governmental body, agency or official is required by Seller in
connection with the execution and delivery by Seller of this Agreement or the
Pledge Agreement, other than any such registration, recordation or filing that
(i) has previously been made or (ii) will be made by Seller in connection with
Section 13(d) or 16 of the Securities Exchange Act of 1934, as amended.
(f) The Pledge Agreement creates in favor of Buyer a security interest in
Seller's rights in the Initial Pledged Items. Upon the Custodian's indicating by
<PAGE> 29
book entry that such Collateral has been credited to Buyer's securities account
pursuant to the Pledge Agreement, Buyer will have control (within the meaning of
Section 8-106 of the UCC) of a security entitlement with respect to such
Collateral and such security interest will be perfected. Assuming that Buyer
acquires such security entitlement without notice of any adverse claim, then an
action based on an adverse claim to the financial asset relating to such
Collateral, whether framed in conversion, replevin, constructive trust,
equitable lien, or other theory, may not be asserted against Buyer.
(g) Assuming that Buyer purchases Common Stock pursuant to the Securities
Contract and that, at the time of such purchase the Custodian has indicated by
book entry that such Common Stock has been credited to Buyer's account, and that
Buyer acquires such security entitlement without notice of any adverse claim,
then an action based on an adverse claim to the financial asset relating to such
Common Stock, whether framed in conversion, replevin, constructive trust,
equitable lien, or other theory, may not be asserted against Buyer.
A-2
