Exhibit 3
PARTICIPATION AGREEMENT
(Opt-Out Partnership)
PARTICIPATION AGREEMENT dated as of July 16, 2002 (this
"Agreement") by and between Matlin Xxxxxxxxx Global Opportunities Partners
L.P. (f/k/a CSFB Global Opportunities Partners, L.P.), a Delaware limited
partnership (the "Delaware Partnership"), and Matlin Xxxxxxxxx Global
Opportunities Partners B, L.P. (the "Opt-Out Partnership", and together with
the Delaware Partnership, the "Partnerships"), permit the Delaware Partnership
to own and manage the Investments in which the Opt-Out Investors have an
interest as determined under the Fifth Amended and Restated Agreement of
Limited Partnership of the Delaware Partnership, dated July 1, 2002, as such
agreement may be amended from time to time (the "Delaware Partnership
Agreement").
Preliminary Statement
This Agreement sets forth the terms and conditions on which the
Opt-Out Partnership will participate in, and be a beneficial owner of, a
portion of certain Investments held by the Delaware Partnership.
Each of the Partnerships is a private investment fund managed by
Matlin Xxxxxxxxx Global Advisers LLC (the "Investment Adviser"). The Opt-Out
Investors are limited partners of the Delaware Partnership who, in connection
with the Spin-off of the Investment Professionals of the Investment Adviser
from CSFB, elected not to participate in future Investments (other than
Convertible Investments) and to receive the Proceeds of their share of
existing Investments as such Investments are realized and Proceeds become
available. The General Partner of the Delaware Partnership used its authority
under the Delaware Partnership Agreement to transfer the Opt-Out Investors to
the Opt-Out Partnership on the date hereof.
This Agreement is being entered into as a convenience to permit
the Delaware Partnership to own and manage the Investments in which the
Opt-Out Investors have an interest, as determined under the Delaware
Partnership Agreement without the additional expense and administrative burden
of transferring the ownership (or partial ownership) of Investments between
the Delaware Partnership and the Opt-Out Partnership.
1. Definitions. Capitalized terms not defined herein shall
have the meanings given to them in the Delaware Partnership Agreement.
2. Participations.
(a) In consideration for the Opt-Out Investors becoming
limited partners in the Opt-Out Partnership, the Delaware Partnership as of
the date of this Agreement, hereby agrees to sell to the Opt-Out Partnership,
and the Opt-Out 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 each Opt-Out Asset.
The amount of the Opt-Out Partnership's Participation in each Opt-Out Asset
shall equal, at all times, its Pro Rata Share (as defined below) of such
Opt-Out Asset.
"Opt-Out Asset" means each investment (including expenses related
to such investment) of the Delaware Partnership listed on Schedule A hereto,
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 Opt-Out Asset and
cash, to the extent the Opt-out Partnership has provided cash to the Delaware
Partnership, or an Opt-Out Asset has been liquidated; provided that any asset
of the Delaware Partnership from which an Opt-Out Investor was excluded from
participating shall not be an Opt-Out Asset.
The Opt-Out Partnership's "Pro Rata Share" of each Opt-Out Asset
shall be a fraction (expressed as a percentage), the numerator of which is the
amount of the aggregate Capital Commitments of the Opt-Out Investors and the
denominator of which is the Overall Capital Commitments.
(b) Each Opt-Out Asset shall be held by the Delaware
Partnership in its own name but, to the extent of the Opt-Out Partnership's
interest therein, subject to the Opt-Out Partnership's rights with respect
thereto, as herein set forth.
(c) The Opt-Out Partnership shall have no direct interest in
any Opt-Out Asset except that, as a participant, the Opt-Out Partnership shall
participate, based upon its Pro Rata Share of each such Opt-Out Asset, in any
and all benefits, payments, recoveries and any other amounts received by the
Delaware Partnership from or in connection with the Opt-Out Assets.
(d) The Delaware Partnership shall not reinvest the Proceeds
of any Opt-Out Asset, except to the extent assets attributable to Opt-Out
Investors may be reinvested under the Delaware Partnership Agreement, and the
Delaware Partnership shall either distribute such Proceeds to the Opt-Out
Partnership (or to the Opt-Out Investors on behalf of the Opt-Out Partnership)
or apply such Proceeds to reserves or to pay expenses and management fees as
required under the Delaware Partnership Agreement.
(e) As soon as practicable after the Last Closing Date, the
Opt-Out Partnership's Pro Rata Share of each Opt-Out Asset shall be
transferred to the Opt-Out Partnership.
3. Manner of Payment. The Opt-Out Partnership shall deposit with,
or otherwise make available to, the Delaware Partnership, cash to fund the
Opt-Out Partnership's Participation in each Opt-Out Asset in an amount equal
to the cost of the Opt-Out Partnership's Pro Rata Share of such Opt-Out 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 Opt-Out Partnership in connection
with this Agreement or any transaction contemplated herein, and the Delaware
Partnership shall have no obligation, duty or responsibility to the Opt-Out
Partnership except as expressly set forth herein. Each Participation in an
Opt-Out Asset sold hereunder shall constitute an assignment, without recourse
to the Delaware Partnership, of an
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undivided interest in and to such Opt-Out Asset. This Agreement shall not be
construed as a loan by the Opt-Out 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.
5. Obligations Absolute. The obligations of the Opt-Out
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 Opt-Out Asset (each, a "Document"), the Delaware Partnership
will furnish to the Opt-Out 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 Opt-Out 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 Opt-Out
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
Opt-Out 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 Opt-Out Partnership's interest in each Opt-Out Asset as
the Delaware Partnership exercises with respect to each such Opt-Out Asset for
its own account and risk, and the Delaware Partnership shall have no further
responsibility to the Opt-Out 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 Opt-Out 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 collectibility of any thereof. The Delaware
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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 Opt-Out Asset, or any bank that may have originated a loan or
acquired an Opt-Out Asset (if the originator or acquirer (as applicable) is
not the Delaware Partnership).
9. Independent Investigation. The Opt-Out 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 Opt-Out 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 Opt-Out Partnership. The Opt-Out 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 the Delaware
Partnership and Matlin Xxxxxxxxx Global Partners LLC is the general partner of
the Opt-Out Partnership, and agree that notwithstanding anything to the
contrary contained in this Agreement, this Agreement shall not be deemed to
modify, supercede, amend or otherwise effect the duties and obligations of the
general partners, or their successors under partnership agreements of either
Partnership.
11. Indemnification. The Opt-Out Partnership agrees to indemnify
and hold harmless the Delaware Partnership for the Opt-Out 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 Opt-Out Asset.
The Delaware Partnership hereby agrees that, in the event it
incurs any Losses which are not related to an Opt-Out Asset in which the
Opt-Out Partnership has a Participation under this Agreement, it will not hold
the Opt-Out 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
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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 mailing, 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.
13. Termination. This Agreement shall terminate upon the transfer
of all the Opt-Out Assets as provided in section 2(e) hereof and/or
distribution of all Proceeds of all Opt-Out Assets to the Opt-Out 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.
MATLIN XXXXXXXXX GLOBAL OPPORTUNITIES PARTNERS L.P.
By: Hemisphere Global Opportunities, Ltd.,
In its capacity as General Partner of Matlin
Xxxxxxxxx Global Opportunities Partners L.P.
By: /s/ Xxxxx Xxxxxx
------------------------------------------------
Name: Xxxxx Xxxxxx
Title: Director
MATLIN XXXXXXXXX GLOBAL OPPORTUNITIES PARTNERS B,
L.P.
By: Matlin Xxxxxxxxx Global Partners LLC,
In its capacity as the General Partner of
Matlin Xxxxxxxxx Global Opportunities Partners
B, L.P.
By: /s/ Xxxx X. Xxxxxxxxx
------------------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Director
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