UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)*
KORN/FERRY INTERNATIONAL
(Name of Issuer)
COMMON STOCK, $.01 PAR VALUE PER SHARE
(Title of Class of Securities)
500643200
(CUSIP Number)
DAVID L. LOWE
FRIEDMAN FLEISCHER & LOWE GP, LLC
ONE MARITIME PLAZA, SUITE 1000
SAN FRANCISCO, CALIFORNIA 94111
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)
OCTOBER 1, 2004
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7 for other
parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 10 Pages)
--------------------------------
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
CUSIP NO. 500643200 SCHEDULE 13D PAGE 2 OF 8 PAGES
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
FRIEDMAN FLEISCHER & LOWE CAPITAL PARTNERS, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
NOT APPLICABLE
6 CITIZENSHIP OR PLACE OF ORGANIZATION
FRIEDMAN FLEISCHER & LOWE CAPITAL PARTNERS, L.P. IS ORGANIZED
UNDER THE LAWS OF THE STATE OF DELAWARE.
7 SOLE VOTING POWER
NUMBER OF
SHARES 2,508,438 (INCLUDING SHARES ISSUABLE UPON EXERCISE OF WARRANTS)
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 0
PERSON WITH
9 SOLE DISPOSITIVE POWER
2,508,438 (INCLUDING SHARES ISSUABLE UPON EXERCISE OF WARRANTS)
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,508,438 (INCLUDING SHARES ISSUABLE UPON EXERCISE OF WARRANTS) (SEE ITEM 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
NOT APPLICABLE
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
APPROXIMATELY 6.43% (SEE ITEM 5)
14 TYPE OF REPORTING PERSON *
PN
* SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP NO. 500643200 SCHEDULE 13D PAGE 3 OF 8 PAGES
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
2 FFL EXECUTIVE PARTNERS, L.P.
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d)or 2(e) [ ]
NOT APPLICABLE
6 CITIZENSHIP OR PLACE OF ORGANIZATION
FFL EXECUTIVE PARTNERS, L.P. IS ORGANIZED UNDER THE LAWS OF THE
STATE OF DELAWARE.
7 SOLE VOTING POWER
NUMBER OF 45,380 (INCLUDING SHARES ISSUABLE UPON EXERCISE OF WARRANTS)
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING
PERSON WITH 9 SOLE DISPOSITIVE POWER
45,380 (INCLUDING SHARES ISSUABLE UPON EXERCISE OF WARRANTS)
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
45,380 (INCLUDING SHARES ISSUABLE UPON EXERCISE OF WARRANTS) (SEE ITEM 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
NOT APPLICABLE
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
APPROXIMATELY .12% (SEE ITEM 5)
14 TYPE OF REPORTING PERSON *
PN
* SEE INSTRUCTIONS BEFORE FILLING OUT!
KORN/FERRY INTERNATIONAL SCHEDULE 13D
AMENDMENT NO. 2
NOTE: This Amendment No. 2 amends a Statement on Schedule 13D/A filed on June
30, 2004 by Friedman Fleischer & Lowe Capital Partners, L.P., a Delaware
limited partnership ("FFL Capital Partners"), and FFL Executive Partners, L.P.,
a Delaware limited partnership ("FFL Executive Partners," and together with FFL
Capital Partners, the "FFL Funds" or the "Reporting Persons"). This Amendment
No. 2 is filed on behalf of FFL Funds.
This Amendment No. 2 is being filed to reflect the sale by FFL Funds of
3,323 shares of 7.5% Convertible Series A Preferred Stock, of Korn/Ferry
International (the "Issuer") and 7.5% Convertible Subordinated Notes Due 2010
of the Issuer with an aggregate principal amount of $13,294,000 (collectively,
the "Convertible Securities"), all of which are convertible into the aggregate
amount of 1,630,716 shares of the Issuer's Common Stock, to Credit Suisse First
Boston Capital LLC pursuant to a Forward Sale Contract entered into as of
October 1, 2004. The Forward Sale Contract provides that the Reporting Persons
will be required to deliver the Convertible Securities in October, 2006. There
has been no change in the information set forth in response to Item 1 or 2 of
the Schedule 13D. Accordingly, those Items are omitted from this Amendment No.
2.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Item 3 is amended to add the following:
On October 1, 2004 FFL Funds sold 3,323 shares of the 7.5% Convertible
Series A Preferred Stock and 7.5% Convertible Subordinated Notes Due 2010 with
an aggregate principal amount of $13,294,000, all of which are convertible into
the aggregate amount of 1,630,716 shares of the Issuer's Common Stock, to
Credit Suisse First Boston Capital LLC pursuant to a Forward Sale Contract. The
Forward Sale Contract provides that the Reporting Persons will be required to
deliver the Convertible Securities in October, 2006.
ITEM 4. PURPOSE OF TRANSACTION
Item 4 is amended to read as follows:
As described above, FFL Funds entered into a Forward Sale Contract whereby
it sold the Convertible Securities. On an evaluation of the Issuer's business
prospects and financial condition, the market for the Common Stock and other
equity securities, other available investment opportunities, money and stock
market conditions and other future developments, the Reporting Persons have
decided to sell part of its holdings of the Issuer's Common Stock in such
forward sale contract for the purpose of raising capital.
Except as set forth in this Schedule 13D/A, none of the Reporting Persons
has a present plan or proposal that relate to or would result in any of the
actions specified in clauses (a) through (j) of Item 4 of Schedule 13D.
However, each of the Reporting Persons reserves the right to propose or
participate in future transactions, subject to any applicable terms and
conditions in the Investor Rights Agreement, which may result in one or more of
such actions, including but not limited to, an extraordinary corporate
transaction, such as a merger, reorganization or liquidation, of a material
amount of assets of the Issuer or its subsidiaries, or other transactions which
might have the effect of causing the Issuer's Common Stock to cease to be
listed on the New York Stock Exchange or causing the Common Stock to become
eligible for termination of registration under Section 12(g) of the Exchange
Act.
ITEM 5. INTEREST IN SECURITIES OF ISSUER
Items 5(a), 5(b) and 5(c) are amended to read as follows:
(a) The following table describes the number of shares of Common Stock
issuable upon exercise or conversion of derivative securities and the
percentage of outstanding shares of Common Stock that would be owned by the
Reporting Persons upon such issuance. All percentages below are based on
38,984,692 shares of Common Stock issued and outstanding on September 7, 2004,
as represented by the Issuer in its quarterly report on Form 10-Q for the
quarter ended July 31, 2004, as filed on September 9, 2004.
Name Warrants Preferred Stock Notes Total Percent Ownership
---- -------- --------------- ----- ----- -----------------
FFL Capital Partners 269,335 447,898 1,791,205 2,508,438 6.43%
FFL Executive 4,872 8,103 32,405 45,380 .12%
Partners
Total (FFL Funds) 274,207 456,001 1,823,610 2,553,818 6.55%
(b) FFL Capital Partners. FFL Capital Partners has the sole power to vote,
or direct the vote of, and to dispose, or direct the disposition of 2,508,438
shares of Common Stock.
FFL Executive Partners. FFL Executive Partners has the sole power to vote,
or direct the vote of, and to dispose, or direct the disposition of 45,380
shares of Common Stock.
FFL GP. FFL GP may be deemed to have the power to vote, and direct the
vote of, or to dispose, or direct the disposition of, the 2,553,818 shares of
Common Stock owned by FFL GP, as the general partner of each of the FFL Funds.
FFL GP disclaims beneficial ownership of any shares of Common Stock owned by
the FFL Funds, except to the extent of its pecuniary interest therein, if any.
The Managing Members. The Managing Members may be deemed to have the power
to vote, and direct the vote of, or to dispose, or direct the disposition of,
the 2,553,818 shares of Common Stock owned by the FFL Funds as managing members
of FFL GP. Each of the Managing Members disclaims beneficial ownership of any
shares of Common Stock owned by the FFL Funds, except to the extent of his
pecuniary interest therein, if any.
(c) Except as otherwise described herein or in any Exhibit filed herewith,
to the knowledge of the Reporting Persons, none of the persons named in
response to paragraph (a) above has effected any transaction in shares of
Common Stock (or in Common Stock equivalents) during the past 60 days.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Reference is hereby made to the information disclosed under Items 3 and 4
of the Schedule 13D, Schedule 13D/A (No. 1) and Schedule 13D/A (No. 2) and is
incorporated by reference in response to this Item 6.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 1 - Which was previously filed, is the Certificate of Designations
of 7.5% Convertible Series A Preferred Stock (incorporated by
reference to the Issuer's Form 8-K filed with the SEC on June
18, 2002).
Exhibit 2 - Which was previously filed, is the Form of 7.5% Convertible
Subordinated Notes Due 2010 (incorporated by reference to the
Issuer's Form 8-K filed with the SEC on June 18, 2002).
Exhibit 3 - Which was previously filed, is the Credit Agreement, dated as of
February 14, 2003, made by the Issuer, the Lenders (as defined
therein) and Wells Fargo Bank, National Association
(incorporated by reference to the Issuer's Form 10-Q filed with
the SEC on March 17, 2003).
Exhibit 4 - Which was previously filed, is the Form of Stock Purchase
Warrant (incorporated by reference to the Issuer's Form 8-K
filed with the SEC on June 18, 2002).
Exhibit 5 - Which was previously filed, is the Investor Rights Agreement,
dated as of June 13, 2002, made by and among the Issuer and the
FFL Funds (incorporated by reference to the Issuer's Form 8-K
filed with the SEC on June 18, 2002).
Exhibit 6 - Form of Forward Sale Contracts, dated October 4, 2004, by and
between FFL Funds and Credit Suisse First Boston Capital LLC.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
INVESTORS:
Dated: October 5, 2004 Friedman Fleischer & Lowe CAPITAL
PARTNERS, L.P.
By: Friedman Fleischer & Lowe GP, LLC,
its general partner
By: /s/ David Lowe
Name: David Lowe
Title: Senior Managing Member
Dated: October 5, 2004 FFL Executive Partners, L.P.
By: Friedman Fleischer & Lowe GP, LLC,
its general partner
By: /s/ David Lowe
Name: David Lowe
Title: Senior Managing Member
EXHIBIT INDEX
Exhibit Description
1 Certificate of Designations of 7.5% Convertible Series A
Preferred Stock (incorporated by reference to the Issuer's Form
8-K filed with the SEC on June 18, 2002)
2 Form of 7.5% Convertible Subordinated Notes Due 2010
(incorporated by reference to the Issuer's Form 8-K filed with
the SEC on June 18, 2002).
3 Credit Agreement, dated as of February 14, 2003, made by the
Issuer, the Lenders (as defined therein) and Wells Fargo Bank,
National Association (incorporated by reference to the Issuer's
Form 10-Q filed with the SEC on March 17, 2003).
4 Form of Stock Purchase Warrant (incorporated by reference to the
Issuer's Form 8 K filed with the SEC on June 18, 2002).
5 Investor Rights Agreement, dated as of June 13, 2002, made by
and among the Issuer and the FFL Funds (incorporated by
reference to the Issuer's Form 8-K filed with the SEC on June
18, 2002).
6 Form of Forward Sale Contracts, dated October 4, 2004, by and
between FFL Funds and Credit Suisse First Boston Capital LLC.
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PREPAID FORWARD TRANSACTION
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October 4, 2004
Friedman Fleischer & Lowe Capital Partners, L.P.
One Maritime Plaza, Suite 1000
San Francisco, CA 94111
Credit Suisse First Boston Capital LLC
Eleven Madison Avenue
New York, NY 10010
External ID: - Risk ID:
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Dear Sir or Madam,
The purpose of this letter agreement (this "CONFIRMATION") is to confirm the
terms and conditions of the Transaction entered into between us on the Trade
Date specified below (the "TRANSACTION"). This Confirmation constitutes a
"Confirmation" as referred to in the Agreement specified below.
In this Confirmation, "CSFB" means Credit Suisse First Boston Capital LLC,
"COUNTERPARTY" means Friedman Fleischer & Lowe Capital Partners, L.P. and
"AGENT" means Credit Suisse First Boston LLC, solely in its capacity as agent
for CSFB and Counterparty.
1. The definitions and provisions contained in the 2000 ISDA Definitions
(the "2000 DEFINITIONS") and the 2002 ISDA Equity Derivatives
Definitions (the "2002 DEFINITIONS" and, together with the 2000
Definitions, the "DEFINITIONS"), each as published by the International
Swaps and Derivatives Association, Inc. ("ISDA"), are incorporated into
this Confirmation. In the event of any inconsistency between the 2000
Definitions and the 2002 Definitions, the 2002 Definitions will govern.
In the event of any inconsistency between the Definitions and this
Confirmation, this Confirmation will govern. The Transaction shall be
deemed to be a Share Forward Transaction within the meaning set forth in
the Equity Definitions.
This Confirmation shall supplement, form a part of and be subject to an
agreement (the "AGREEMENT") in the form of the 1992 ISDA Master
Agreement (Multicurrency - Cross Border) (the "ISDA FORM"), as published
by the International Swaps and Derivatives Association, Inc., as if CSFB
and Counterparty had executed the ISDA Form (without any Schedule
thereto) on the date hereof. All provisions contained in the Agreement
are incorporated into and shall govern this Confirmation except as
expressly modified below. This Confirmation evidences a complete and
binding agreement between you and us as to the terms of the Transaction
and relates and replaces any previous agreement between us with respect
to the subject matter hereof, including the agreement entitled
"Physically Settled Forward Contract on Korn Ferry 7.5% Convertible
Series A Preferred Stock Executable Terms as of October 1, 2004" (the
"TERM SHEET"). This Confirmation, together with all other confirmations
or agreements between us referencing the ISDA Form, shall be deemed to
supplement, form part of and be subject to the same, single Agreement.
If there exists any ISDA Master Agreement between CSFB and Counterparty
or any confirmation or other agreement between CSFB and Counterparty
pursuant to which an ISDA Master Agreement is deemed to exist between
CSFB and Counterparty, then notwithstanding anything to the contrary in
such ISDA Master Agreement, such confirmation or agreement or any other
agreement to which CSFB and Counterparty are parties, this Transaction
shall not be considered a Transaction under, or otherwise governed by,
such existing or deemed ISDA Master Agreement.
2. The terms of the particular Transaction to which this Confirmation
relates are as follows:
General Terms:
Trade Date: October 1, 2004
Seller: Counterparty
Buyer: CSFB
Securities: 7.5% Convertible Series A
Preferred Stock of Korn/Ferry
International (the "ISSUER").
Number of Securities: 3,263.955 shares as of the
Trade Date; the Number of
Securities shall be increased
to reflect any payments
thereon of dividends in
additional Securities;
further, in the event of any
exchange, substitution,
redemption, repurchase or
similar transaction (whether
in whole or in part) with
respect to the Number of
Securities pursuant to the
terms thereof and the
instruments governing them or
applicable law, the Number of
Securities shall consist of
any and all property received
upon such transaction and any
remaining Securities, as
determined by the Calculation
Agent.
Shares: Common stock of the Issuer
(Exchange Symbol: "KFY")
Number of Shares: the number of Shares into
which the Number of
Securities is convertible
(320,309.63 as of the Trade
Date); provided, however,
that any references to Number
of Shares to be Delivered
shall be to the Number of
Securities
Prepayment: Applicable
Conditions to CSFB's Obligation
to Pay Prepayment Amount: It shall be a condition to
CSFB's obligation to pay any
Prepayment Amount hereunder
on any Prepayment Date that
Counterparty shall have
performed its obligations
under paragraphs
4(a)-"Delivery of Collateral"
and 5-"Agreements to Deliver
Documents", below.
Prepayment Date: The later of (i) October 6,
2004 and (ii) the earliest
date on which all conditions
to CSFB's obligation to pay
the Prepayment Amount have
been satisfied, provided,
however, that in the case of
(ii) above, if such
conditions were not satisfied
by 12:00 p.m. New York City
time on such date, then the
Prepayment Date would be the
following Business Day
Prepayment Amount: USD 5,920,678.52
Variable Obligation: Not applicable
Exchange: The New York Stock Exchange
Related Exchange(s): All Exchanges
Settlement Terms:
Physical Settlement: Applicable
Settlement Method Election: Not applicable
Settlement Date: 2 years from the Trade Date,
provided that CSFB may elect
to accelerate the Settlement
Date at anytime upon 1
Business Day's notice and
take immediate delivery of
the Number of Securities.
Automatic Physical Settlement: If (x) by 10:00 A.M., New
York City time, on the
Settlement Date, Counterparty
has not otherwise effected
delivery of the Number of
Shares to be Delivered and
(y) the Representation and
Agreement set forth in
Section 9.11 of the 2002
Definitions are true and
satisfied (or, at the
absolute discretion of CSFB,
such Representation and
Agreement are not true or
satisfied) with respect to
the collateral then held
hereunder by or on behalf of
CSFB, then the delivery
required by Section 9.2 of
the Equity Definitions shall
be effected, in whole or in
part, as the case may be by
delivery from the Collateral
Account (as defined below
under "Collateral") to CSFB
of the Number of Securities.
Settlement Currency: USD
Dividends and Other Payments:
Payment Obligation by Counterparty: Counterparty shall
immediately upon receipt
thereof pay to CSFB any and
all dividends, distributions,
coupons and other payments
(other than dividend payments
in kind which shall be added
to the Number of Securities
and the Collateral) received
in respect of the Securities.
Sections 11 and 12 of the
2002 Definitions: Not Applicable
Non-Reliance: Applicable
Agreements and Acknowledgments
Regarding Hedging Activities: Applicable
Additional Acknowledgments: Applicable
Credit Support Documents: Section 4 shall be a Credit
Support Document under the
Agreement with respect to
Counterparty.
Guarantee dated May 16, 2001
made by Credit Suisse First
Boston (USA), Inc., a Delaware
corporation, in favor of each
and every counterparty to one
or more Financial Transactions
(as defined therein) with CSFB
shall be a Credit Support
Document under the Agreement
with respect to CSFB.
Account Details:
Payments to CSFB: To be advised under separate
cover prior to the Trade Date
Payments to Counterparty: Bank: Bank of America
Address: 345 Montgomery Street
Concourse Level
San Francisco, CA 94104
ABA #: 121-000-358
Account #: 14994-05999
Account Name:
Friedman Fleischer & Lowe
Capital Partners, L.P.
Delivery of Securities/Shares
to CSFB: Credit Suisse First Boston
Corp. DTC # 355
Account # 2HRY60
Account Name: CSFB
Capital LLC Collateral
Management Account
Office: CSFB is acting through its New
York Office for the purposes
of the Transaction;
Counterparty is not a
Multibranch Party.
Calculation Agent: CSFB. The Calculation Agent
will have no responsibility
for good faith errors or
omissions in any determination
under the Transaction.
3. Other Provisions:
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF COUNTERPARTY:
Counterparty hereby represents and warrants to CSFB as of the date
hereof that:
1. From the date three months prior to the date of the Term
Sheet, neither Counterparty nor any person who would be
considered to be the same "person" as Counterparty or "acting
in concert" with Counterparty (as such terms are used in
clauses (a)(2) and (e)(3)(vi) of Rule 144 under the Securities
Act of 1933, as amended (the "SECURITIES ACT")) has, without
the written consent of CSFB, sold any Shares or hedged
(through swaps, options, short sales or otherwise) any long
position in the Shares. Counterparty 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. Shares of common stock of the Issuer issuable
upon conversion of the Securities would, upon sale of such
shares, be considered securities "acquired from the issuer for
a consideration consisting solely of other securities of the
same issuer surrendered for conversion" for the purposes of
Rule 144.
2. Counterparty is an "eligible contract participant" as such
term is defined in Section 1(a)(12) of the Commodity Exchange
Act, as amended.
3. Counterparty was not on the Trade Date, and is not on the date
hereof, in possession of any material non-public information
regarding the Issuer. None of the transactions contemplated
herein will violate any corporate policy of the Issuer or
other rules or regulations of the Issuer applicable to
Counterparty or its affiliates, including, but not limited to,
the Issuer's window period policy.
4. On the Trade Date, Counterparty filed, in the manner
contemplated by Rule 144(h) under the Securities Act, a notice
on Form 144 relating to the Transaction contemplated hereby in
form and substance that CSFB has informed Counterparty is
acceptable to CSFB.
5. All representations and warranties of Counterparty contained
in the Term Sheet were true and correct as of the times such
representations and warranties were made or repeated or deemed
to be made or repeated under the Term Sheet and Counterparty
has performed all of the covenants and obligations to be
performed by Counterparty on or prior to the date hereof under
the Term Sheet.
6. Counterparty is not and, after giving effect to the
transactions contemplated hereby, will not be an "investment
company" as such term is defined in the Investment Company Act
of 1940, as amended.
7. Counterparty is, and shall be as of the date of any payment or
delivery by Counterparty hereunder, solvent and able to pay
its debts as they come due, with assets having a fair value
greater than liabilities and with capital sufficient to carry
on the businesses in which it engages.
8. Counterparty's holding period (calculated in accordance with
Rule 144(d) under the Securities Act) with respect to the
Initial Pledged Items commenced on June 13, 2002. Counterparty
agrees that Counterparty has not (i) created or permitted to
exist any Lien (other than the Security Interests) or any
Transfer Restriction (other than the Existing Transfer
Restrictions) upon or with respect to the Collateral, (ii)
sold or otherwise disposed of, or granted any option with
respect to, any of the Collateral or (iii) entered into or
consented to any agreement (other than, in the case of clause
(x), this Confirmation) (x) that restricts in any manner the
rights of any present or future owner of any Collateral with
respect thereto or (y) pursuant to which any person other than
Counterparty, CSFB and any securities intermediary through
whom any of the Collateral is held (but in the case of any
such securities intermediary only in respect of Collateral
held through it) has or will have Control in respect of any
Collateral. "CONTROL" means "control" as defined in Section
8-106 and 9-106 of the Uniform Commercial Code as in effect in
the State of New York ("UCC").
9. Other than financing statements or other similar or equivalent
documents or instruments with respect to the Security
Interests, no financing statement, security agreement or
similar or equivalent document or instrument covering all or
any part of the Collateral is on file or of record in any
jurisdiction in which such filing or recording would be
effective to perfect a lien, security interest or other
encumbrance of any kind on such Collateral.
10. All Collateral consisting of securities and all financial
assets underlying Collateral consisting of security
entitlements (each as defined in Section 8-102 of the UCC) at
any time pledged hereunder is and will be issued by an issuer
organized under the laws of the United States, any State
thereof or the District of Columbia and is and will be (i)
certificated (and the certificate or certificates in respect
of such securities or financial assets are and will be located
in the United States) and registered in the name of
Counterparty or held through a securities intermediary whose
securities intermediary's jurisdiction (within the meaning of
Section 8-110(e) of the UCC) is located in the United States
or (ii) uncertificated and either registered in the name of
Counterparty or held through a securities intermediary whose
securities intermediary's jurisdiction (within the meaning of
Section 8-110(e) of the UCC) is located in the United States;
provided that this representation shall not be deemed to be
breached if, at any time, any such Collateral is issued by an
issuer that is not organized under the laws of the United
States, any State thereof or the District of Columbia, and the
parties hereto agree to procedures or amendments hereto
necessary to enable CSFB to maintain a valid and continuously
perfected security interest in such Collateral, in respect of
which CSFB will have Control, subject to no prior Lien. The
parties hereto agree to negotiate in good faith any such
procedures or amendments.
11. Counterparty's "location" (as defined in Section 9-307 of UCC)
is the state of Delaware. The following is the mailing
address, county and state of each chief executive office not
at such "location" maintained by Counterparty at any time
during the past five years: One Maritime Plaza, Suite 1000,
San Francisco, CA 94111.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF CSFB:
1. CSFB represents to Counterparty that an affiliate of CSFB (the
"CSFB AFFILIATE") is registered as a broker and a dealer with
the Securities and Exchange Commission and is a "market maker"
or a "block positioner", as such terms are used in Rule 144
under the Securities Act, with respect to the Shares.
2. CSFB agrees that CSFB Affiliate shall, as promptly as
practicable consistent with market conditions, introduce into
the public market a quantity of securities of the same class
as the Shares equal to the Number of Shares.
U.S. PRIVATE PLACEMENT REPRESENTATIONS:
Each of CSFB and Counterparty hereby represents and warrants to the
other party as of the date hereof that:
1. It is an "accredited investor" (as defined in Regulation D
under the Securities Act) and has such knowledge and
experience in financial and business matters as to be capable
of evaluating the merits and risks of the Transaction, and it
is able to bear the economic risk of the Transaction.
2. It is entering into the Transaction for its own account and
not with a view to the distribution or resale of the
Transaction or its rights thereunder except pursuant to a
registration statement declared effective under, or an
exemption from the registration requirements of, the
Securities Act.
COVENANTS OF COUNTERPARTY:
Counterparty agrees that each of Counterparty and its affiliates
will comply with all applicable disclosure or reporting
requirements in respect of the Transaction, including, without
limitation, any requirement imposed by Section 13 or Section 16 of
the Securities and Exchange Act of 1934, as amended, if any, and
Counterparty will provide CSFB with a copy of any report filed in
respect of the Transaction promptly upon filing thereof.
BINDING COMMITMENT/FINAL AGREEMENT:
The parties intend that this Confirmation constitutes a "Final
Agreement" as described in the letter dated December 14, 1999
submitted by Robert W. Reeder and Alan L. Beller to Michael Hyatte
of the staff of the Securities and Exchange Commission (the
"STAFF") to which the Staff responded in an interpretative letter
dated December 20, 1999.
PAYMENTS ON EARLY TERMINATION:
Upon the occurrence or effective designation of an Early
Termination Date in respect of the Transaction (an "EARLY
TERMINATION EVENT"), if Counterparty would owe any amount to CSFB
pursuant to Section 6(d)(ii) of the Agreement (determined as if the
Transaction were the only Transaction under the Agreement) (any
such amount, a "COUNTERPARTY PAYMENT AMOUNT" and any Early
Termination Event that would so result in Counterparty owing any
such amount, a "COUNTERPARTY PAYMENT EVENT"), then, except to the
extent that CSFB proceeds to realize upon the Collateral and to
apply the proceeds of such realization to any obligation of
Counterparty hereunder and under the Agreement:
(i) on the date on which any Counterparty Payment Amount is due,
in lieu of any payment or delivery of such Counterparty
Payment Amount, Counterparty shall deliver to CSFB the Number
of Securities; and
(ii) for purposes of determining any Loss under Section 6(e) of the
Agreement in respect of any other Transactions under the
Agreement, the Transaction shall be deemed not to be a
Transaction under the Agreement; provided that, for the
avoidance of doubt, if Counterparty fails to deliver
Securities pursuant to clause (i) above at the time required,
then the Transaction (including such delivery obligation)
shall be included for the purpose of determining CSFB's Loss
for all Transactions (including the Transaction) under the
Agreement.
SECURITIES CONTRACT:
The parties hereto acknowledge and agree that each of CSFB and the
Custodian is a "stockbroker" within the meaning of Section 101
(53A) of Title 11 of the United States Code (the "BANKRUPTCY CODE")
and that the Custodian is acting as agent and custodian for CSFB in
connection with the Transaction and that CSFB is a "customer" of
the Custodian within the meaning of Section 741(2) of the
Bankruptcy Code. The parties hereto further recognize that the
Transaction is a "securities contract", as such term is defined in
Section 741(7) of the Bankruptcy Code, entitled to the protection
of, among other provisions, Sections 555 and 362(b)(6) of the
Bankruptcy Code, and that each payment or delivery of cash, Shares
or other property or assets hereunder is a "settlement payment"
within the meaning of Section 741(8) of the Bankruptcy Code.
ASSIGNMENT:
The rights and duties under this Confirmation may not be assigned
or transferred by any party hereto without the prior written
consent of the other parties hereto, such consent not to be
unreasonably withheld; provided that (i) CSFB may assign or
transfer any of its rights or duties hereunder to any of its
affiliates without the prior written consent of Counterparty 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.
NON-CONFIDENTIALITY:
The parties hereby agree that (i) effective from the date of
commencement of discussions concerning the Transaction,
Counterparty and each of its employees, representatives, or other
agents may disclose to any and all persons, without limitation of
any kind, the tax treatment and tax structure of the Transaction
and all materials of any kind, including opinions or other tax
analyses, provided by CSFB and its affiliates to Counterparty
relating to such tax treatment and tax structure; provided that the
foregoing does not constitute an authorization to disclose the
identity of CSFB or its affiliates, agents or advisers, or, except
to the extent relating to such tax structure or tax treatment, any
specific pricing terms or commercial or financial information, and
(ii) CSFB 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
Counterparty.
MATTERS RELATING TO CREDIT SUISSE FIRST BOSTON CAPITAL LLC AND CREDIT
SUISSE FIRST BOSTON LLC:
1. Agent shall act as "agent" for CSFB and Counterparty in
connection with the Transaction.
2. Agent will furnish to Counterparty upon written request a
statement as to the source and amount of any remuneration
received or to be received by Agent in connection herewith.
3. Agent has no obligation hereunder, by guaranty, endorsement or
otherwise, with respect to performance of CSFB's obligations
hereunder or under the Agreement.
4. Credit Suisse First Boston Capital LLC is an "OTC derivatives
dealer" as such term is defined in the Exchange Act and is an
affiliate of Agent.
5. Credit Suisse First Boston Capital LLC is not a member of the
Securities Investor Protection Corporation.
STAGGERED SETTLEMENT:
If CSFB determines reasonably and in good faith that the Number of
Shares to be Delivered to CSFB hereunder or, in receiving such
Number of Shares to be Delivered, its "beneficial ownership"
(within the meaning of Section 16 of the Exchange Act and rules
promulgated thereunder) on the Settlement Date would exceed 9.9% of
all outstanding Shares, then CSFB may, by notice to Counterparty on
or prior to the Settlement Date (a "NOMINAL SETTLEMENT DATE"),
elect to receive the Number of Shares to be Delivered on two or
more dates (each, a "STAGGERED SETTLEMENT DATE") as follows:
(a) in such notice, CSFB will specify to Counterparty the related
Staggered Settlement Dates (the first of which will be such Nominal
Settlement Date and the last of which will be no later than the
twentieth (20th) Exchange Business Day following such Nominal
Settlement Date) and the related portion of the Number of Shares to
be Delivered on each Staggered Settlement Date; and
(b) the aggregate number of Shares that Counterparty will deliver
to CSFB hereunder on all such Staggered Settlement Dates will equal
the Number of Shares to be Delivered that Counterparty would
otherwise be required to deliver on such Nominal Settlement Date.
Notwithstanding anything herein to the contrary, to the extent
Counterparty receives or is entitled to receive any distribution or
payment in respect of Shares by reason of Counterparty's being a
holder of record of such Shares on any date after the Nominal
Settlement Date but for the provisions of the foregoing,
Counterparty shall deliver such distribution or payment to CSFB at
the time Counterparty delivers to CSFB the related portion of the
Number of Shares to be Delivered in accordance with the foregoing,
if such distribution or payment has already been received by
Counterparty at such time, or within a reasonable period of time
following Counterparty's receipt of the distribution or payment, if
such distribution or payment has not been already received by
Counterparty at the time Counterparty delivers the related portion
of the Number of Shares to be Delivered in accordance with the
foregoing.
4. Collateral Provisions:
Counterparty has granted to CSFB a security interest in the Initial
Pledged Items to secure Counterparty's obligations under the Term Sheet
and the Transaction. Counterparty and CSFB now wish to (i) set forth
additional understandings and agreements relating to such security
interest and (ii) confirm, on the terms set forth herein, the
continuation of such security interest.
A. DELIVERY OF COLLATERAL:
As soon as practicable after the Trade Date, Counterparty shall deliver
to CSFB in pledge hereunder, Eligible Collateral consisting of the
Number of Securities (the "INITIAL PLEDGED ITEMS"). "ELIGIBLE
COLLATERAL" means Securities; provided that Counterparty has good and
marketable title thereto, free of all of any and all lien, mortgage,
interest, pledge, charge or encumbrance of any kind (other than the
security interests in the Collateral created hereby, a "LIEN") and
Transfer Restrictions (other than the Existing Transfer Restrictions)
and that CSFB has a valid, first priority perfected security interest
therein, a first lien thereon and Control with respect thereto.
"TRANSFER RESTRICTION" means, with respect to any item of collateral
pledged hereunder, any condition to or restriction on the ability of
the owner thereof to sell, assign or otherwise transfer such item of
collateral or 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 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
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 item of collateral, prior to
the sale, pledge, assignment or other transfer or enforcement of such
item of collateral and (iv) any registration or qualification
requirement or prospectus delivery requirement for such item of
collateral pursuant to any federal, state or foreign securities law
(including, without limitation, any such requirement arising under
Section 5 of the Securities Act as a result of such security being a
"restricted security" or Counterparty being an "affiliate" of the
issuer of such security, as such terms are defined in Rule 144 under
the Securities Act, or as a result of the sale of such security being
subject to paragraph (c) of Rule 145 under the Securities Act);
provided that the required delivery of any assignment, instruction or
entitlement order from the seller, Counterparty, assignor or transferor
of such item of collateral, together with any evidence of the corporate
or other authority of such Person, shall not constitute a "Transfer
Restriction". "EXISTING TRANSFER RESTRICTIONS" means Transfer
Restrictions existing with respect to any securities by virtue of the
fact that Counterparty is an "affiliate", within the meaning of Rule
144 under the Securities Act, of the Issuer. "PERSON" means an
individual, a corporation, a limited liability company, a partnership,
an association, a trust or any other entity or organization, including
a government or political subdivision or an agency or instrumentality
thereof.
Any delivery of any securities or security entitlements (each as
defined in Section 8-102 of the UCC) as Collateral to CSFB by
Counterparty shall be effected (A) in the case of Collateral consisting
of certificated securities registered in the name of Counterparty, by
delivery of certificates representing such securities to the Custodian,
accompanied by any required transfer tax stamps, and in suitable form
for transfer by delivery or accompanied by duly executed instruments of
transfer or assignment in blank, with signatures appropriately
guaranteed, all in form and substance satisfactory to CSFB, and the
crediting by the Custodian of such securities to a securities account
(as defined in Section 8-501 of the UCC) (the "COLLATERAL ACCOUNT") of
CSFB maintained by the Custodian, (B) in the case of Collateral
consisting of uncertificated securities registered in the name of
Counterparty, by transmission by Counterparty of an instruction to the
issuer of such securities instructing such issuer to register such
securities in the name of the Custodian or its nominee, accompanied by
any required transfer tax stamps, the issuer's compliance with such
instructions and the crediting by the Custodian of such securities to
the Collateral Account, (C) in the case of securities in respect of
which security entitlements are held by Counterparty through a
securities intermediary, by the crediting of such securities,
accompanied by any required transfer tax stamps, to a securities
account of the Custodian at such securities intermediary or, at the
option of CSFB, at another securities intermediary satisfactory to CSFB
and the crediting by the Custodian of such securities to the Collateral
Account or (D) in any case, by complying with such alternative delivery
instructions as CSFB shall provide to Counterparty in writing.
"CUSTODIAN" means Credit Suisse First Boston LLC, or any other
custodian appointed by CSFB and identified to Counterparty.
B. GRANT OF SECURITY INTERESTS IN THE COLLATERAL:
In order to secure the full and punctual observance and performance of
the covenants and agreements contained in this Confirmation and in the
Agreement, Counterparty hereby assigns and pledges to CSFB, and grants
to CSFB, as secured party, security interests in and to, and a lien
upon and right of set-off against, and transfers to CSFB, as and by way
of a security interest having priority over all other security
interests, with power of sale, all of Counterparty's right, title and
interest in and to (i) the Initial Pledged Items; (ii) all additions to
and substitutions for the Initial Pledged Items (including, without
limitation, any securities, instruments or other property delivered or
pledged hereunder) (such additions and substitutions, the "ADDITIONS
AND SUBSTITUTIONS"); (iii) the Collateral Account of CSFB maintained by
the Custodian and all securities and other financial assets (each as
defined in Section 8-102 of the UCC) and other funds, property or
assets from time to time held therein or credited thereto; and (iv)
other than the payments made to CSFB pursuant to the provision entitled
"Payment Obligation by Counterparty" of paragraph 2 of this
Confirmation, all income, proceeds and collections received or to be
received, or derived or to be derived, at the time that the Initial
Pledged Items were delivered to the Custodian or any time thereafter
(whether before or after the commencement of any proceeding under
applicable bankruptcy, insolvency or similar law, by or against
Counterparty, with respect to Counterparty) from or in connection with
the Initial Pledged Items or the Additions and Substitutions
(collectively, the "COLLATERAL"). The parties hereto expressly agree
that all rights, assets and property at any time held in or credited to
the Collateral Account shall be treated as financial assets (as defined
in Section 8-102 of the UCC).
C. CERTAIN COVENANTS OF COUNTERPARTY RELATING TO THE COLLATERAL:
Counterparty agrees that, so long as any of Counterparty's obligations
under the Agreement remain outstanding:
1. Counterparty shall ensure at all times that a Collateral Event of
Default shall not occur, and shall pledge additional Collateral in
the manner described hereunder as necessary to cause such
requirement to be met. "COLLATERAL EVENT OF DEFAULT" means, at any
time, the occurrence of either of the following: (A) failure of the
Collateral to include, as Eligible Collateral, the Number of
Securities or (B) failure at any time of the security interests in
the Collateral created hereby to constitute valid and perfected
security interests in all of the Collateral, subject to no prior,
equal or junior Lien, and, with respect to any Collateral
consisting of securities or security entitlements (each as defined
in Section 8-102 of the UCC), as to which CSFB has Control, or, in
each case, assertion of such by Counterparty in writing.
2. Counterparty shall, at its own expense and in such manner and form
as CSFB may require, give, execute, deliver, file and record any
financing statement, notice, instrument, document, agreement or
other papers that may be necessary or desirable in order to (i)
create, preserve, perfect, substantiate or validate any security
interest granted pursuant hereto, (ii) create or maintain Control
with respect to any such security interests in any investment
property (as defined in Section 9-102(a) of the UCC) or (iii)
enable CSFB to exercise and enforce its rights hereunder with
respect to such security interest.
3. Counterparty shall warrant and defend Counterparty's title to the
Collateral, subject to the rights of CSFB, against the claims and
demands of all persons. CSFB may elect, but without an obligation
to do so, to discharge any Lien of any third party on any of the
Collateral.
4. Counterparty agrees that Counterparty shall not change (i)
Counterparty's name in any manner or (ii) Counterparty's "location"
(as defined in Section 9-307 of UCC), unless Counterparty shall
have given CSFB not less than 10 days' prior notice thereof.
5. Counterparty agrees that Counterparty has not and shall not (i)
create or permit to exist any Lien (other than the security
interests in the Collateral created hereby) or any Transfer
Restriction upon or with respect to the Collateral, (ii) sell or
otherwise dispose of, or grant any option with respect to, any of
the Collateral or (iii) enter into or consent to any agreement (x)
that restricts in any manner the rights of any present or future
owner of any Collateral with respect thereto (other than this
Confirmation) or (y) pursuant to which any person other than
Counterparty, CSFB and any securities intermediary through whom any
of the Collateral is held (but in the case of any such securities
intermediary only in respect of Collateral held through it) has or
will have Control in respect of any Collateral and represents that
it has not previously created any such Lien, effected any such
sale, disposition or grant or entered in or consented to any such
agreement.
D. ADMINISTRATION OF THE COLLATERAL AND VALUATION OF SECURITIES:
1. CSFB shall determine on each Business Day whether a Collateral
Event of Default shall have occurred. If on any Business Day CSFB
determines that a Collateral Event of Default shall have occurred,
CSFB shall promptly notify Counterparty of such determination by
telephone call to Counterparty followed by a written confirmation
of such call. If on any Business Day CSFB determines that no
Default Event or failure by Counterparty to meet any of
Counterparty's obligations under "Certain Covenants of Counterparty
relating to the Collateral" or under this section has occurred and
is continuing, Counterparty may obtain the release from the
security interests in the Collateral created hereby of any
Collateral upon delivery to CSFB of a written notice from
Counterparty indicating the items of Collateral to be released so
long as, after such release, no Collateral Event of Default shall
have occurred. "DEFAULT EVENT" means any Collateral Event of
Default, any Event of Default with respect to Counterparty or any
Termination Event with respect to which Counterparty is the
Affected Party or an Affected Party or an Extraordinary Event that
results in an obligation of Counterparty to pay an amount pursuant
to Section 12.7 or Section 12.9 of the 2002 Definitions.
2. Counterparty may pledge additional Eligible Collateral hereunder at
any time by delivering the same pursuant to the provisions of
"Delivery of Collateral" above. Concurrently with the delivery of
any additional Eligible Collateral, Counterparty shall deliver to
CSFB a certificate, dated the date of such delivery, (i)
identifying the additional items of Eligible Collateral being
pledged and (ii) certifying that with respect to such items of
additional Eligible Collateral the representations and warranties
contained in paragraph 4.c.5. above are true and correct with
respect to such Eligible Collateral on and as of the date thereof.
3. [RESERVED]
4. CSFB may at any time or from time to time, in its sole discretion,
cause any or all of the Collateral that is registered in the name
of Counterparty or Counterparty's nominee to be transferred of
record into the name of the Custodian, CSFB or its nominee.
Counterparty shall promptly give to CSFB copies of any notices or
other communications received by Counterparty with respect to
Collateral that is registered, or held through a securities
intermediary, in the name of Counterparty or Counterparty's nominee
and CSFB shall promptly give to Counterparty copies of any notices
and communications received by CSFB with respect to Collateral that
is registered, or held through a securities intermediary, in the
name of Custodian, CSFB or its nominee.
5. Counterparty agrees that Counterparty shall forthwith upon demand
pay to CSFB:
(i) the amount of any taxes that CSFB or the Custodian may have
been required to pay by reason of the security interests in
the Collateral created hereby or to free any of the Collateral
from any Lien thereon; and
(ii) the amount of any and all costs and expenses, including the
fees and disbursements of counsel and of any other experts,
that CSFB or the Custodian may incur in connection with (A)
the enforcement of this pledge upon a Default Event, including
such expenses as are incurred to preserve the value of the
Collateral and the validity, perfection, rank and value of the
security interests in the Collateral created hereby, (B) the
collection, sale or other disposition of any of the Collateral
pursuant to the terms and conditions of the Agreement, (C) the
exercise by CSFB of any of the rights conferred upon it
hereunder or (D) any Default Event.
Any such amount not paid on demand shall bear interest (computed on
the basis of a year of 360 days and payable for the actual number
of days elapsed) at a rate per annum equal to 5% plus the prime
rate as published from time to time in The Wall Street Journal,
Eastern Edition.
E. REHYPOTHECATION OF COLLATERAL:
The parties hereto agree that CSFB may sell, lend, pledge,
rehypothecate, assign, invest, use, commingle or otherwise dispose of,
or otherwise use in its business any Collateral.
F. INCOME RIGHTS IN COLLATERAL:
Other than the payments made to CSFB pursuant to the provision entitled
"Payment Obligation by Counterparty" of paragraph 2 of this
Confirmation, CSFB shall have the right to receive and retain as
Collateral hereunder all proceeds and interest of the Collateral (such
proceeds as CSFB shall have the right to receive and retain at any
time, "RETAINED PROCEEDS"), and Counterparty shall take all such action
as CSFB shall deem necessary or appropriate to give effect to such
right. All such Retained Proceeds that are received by Counterparty
shall be received in trust for the benefit of CSFB and, if CSFB so
directs, shall be segregated from other funds of Counterparty and
shall, forthwith upon demand by CSFB, be delivered over to the
Custodian on behalf of CSFB as Collateral in the same form as received
(with any necessary endorsement).
G. REMEDIES UPON DEFAULT EVENTS:
If any Default Event shall have occurred and be continuing, CSFB may
exercise all the rights of a secured party under the UCC (whether or
not in effect in the jurisdiction where such rights are exercised) and,
in addition, without being required to give any notice, except as
herein provided or as may be required by mandatory provisions of law,
may sell all of the Collateral, or such lesser portion thereof as may
be necessary to generate proceeds sufficient to satisfy in full all of
the obligations of Counterparty under the Agreement or hereunder.
Counterparty hereby irrevocably appoints CSFB as Counterparty's true
and lawful attorney (which power of attorney is coupled with an
interest), with full power of substitution, in the name of
Counterparty, CSFB or otherwise, for the sole use and benefit of CSFB,
but at the expense of Counterparty, to the extent permitted by law, to
exercise, at any time and from time to time while a Default Event has
occurred and is continuing, all or any of the following powers with
respect to all or any of the Collateral:
(i) to demand, sue for, collect, receive and give acquittance for any
and all monies due or to become due upon or by virtue thereof;
(ii) to settle, compromise, compound, prosecute or defend any action
or proceeding with respect thereto;
(iii) to sell, transfer, assign or otherwise deal in or with the same
or the proceeds or avails thereof, as fully and effectually as if
CSFB were the absolute owner thereof and in connection therewith,
to make all necessary deeds, bills of sale, instruments of
assignment, transfer or conveyance of the property, and all
instructions and entitlement orders in respect of the property
thus to be (or that is being or has been) sold, transferred,
assigned or otherwise dealt in; and
(iv) to extend the time of payment of any or all thereof and to make
any allowance and other adjustments with reference thereto;
provided that CSFB shall give Counterparty not less than one day's
prior written notice of the time and place of any sale or other
intended disposition of any of the Collateral, except any Collateral
that threatens to decline speedily in value, including, without
limitation, equity securities, or is of a type customarily sold on a
recognized market. CSFB and Counterparty agree that such notice
constitutes "reasonable authenticated notification" within the meaning
of Section 9-611(b) of the UCC.
H. TERMINATION:
The rights hereby granted by Counterparty in the Collateral shall
cease, terminate and be void upon fulfillment of all of the obligations
of Counterparty under this Confirmation. Any Collateral remaining at
the time of such termination shall be fully released and discharged
from the security interests in the Collateral created hereby and
delivered to Counterparty by CSFB, all at the request and expense of
Counterparty.
5. The Agreement is further supplemented by the following provisions:
TERMINATION PROVISIONS.
1. "SPECIFIED ENTITY" means in relation to CSFB and Counterparty,
none.
2. The "DEFAULT UNDER SPECIFIED TRANSACTION" provision of Section
5(a)(v) of the Agreement will not apply to CSFB and
Counterparty.
3. The "CROSS DEFAULT" provision of Section 5(a)(vi) will not
apply to CSFB and will apply to Counterparty.
4. The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv)
will not apply to CSFB and Counterparty.
5. The "AUTOMATIC EARLY TERMINATION" provisions of Section 6(a)
will not apply to CSFB and Counterparty.
6. PAYMENTS ON EARLY TERMINATION. For the purpose of Section
6(e), Second Method and Loss will apply.
7. "TERMINATION CURRENCY" means United States Dollars.
8. NETTING. The provisions of Section 2(c) of the Agreement shall
apply, provided that Section 2(c) shall be amended by deleting
"and" at the end of clause (i) thereof and deleting clause
(ii) thereof.
9. 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 an
Early Termination Event, such Party ("PARTY X") shall have the
right to terminate, liquidate and otherwise close out the
transactions contemplated by this Confirmation pursuant to the
terms hereof, and to set off any obligation that Party X or
any affiliate of Party X may have to the other party ("PARTY
Y") hereunder, thereunder or otherwise, including without
limitation any obligation to make any release, delivery or
payment to Party Y pursuant to this Confirmation or any other
agreement between Party X or any of its affiliates and Party
Y, against any right Party X or any of its affiliates may have
against Party Y, including without limitation any right to
receive a payment or delivery pursuant to this Confirmation or
any other agreement between Party X or any of its affiliates
and Party Y. 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 Shares or right to
receive Shares, the value at any time of such obligation or
right shall be determined by reference to the market value of
the Shares 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.
TAX REPRESENTATIONS. None.
AGREEMENTS TO DELIVER DOCUMENTS. For the purpose of Sections 4(a)(i)
and (ii), each of CSFB and Counterparty agrees to deliver the
following documents, as applicable:
1. The Issuer shall have executed and delivered to CSFB, upon
execution of this Confirmation and upon request of such other
party, an Issuer Acknowledgement in the form attached as Annex
A hereto.
2. Each of CSFB and Counterparty will deliver to the other party,
upon execution of this Confirmation, evidence reasonably
satisfactory to the other party as to the names, true
signatures and authority of the officers or officials signing
this Confirmation on its behalf.
Such documents shall be covered by the representation set forth in
Section 3(d).
MISCELLANEOUS:
1. ADDRESSES FOR NOTICES. For the purpose of Section 12(a):
Address for notices or communications to CSFB (other than by
facsimile) (for all purposes):
Address: Credit Suisse First Boston Capital LLC
c/o Credit Suisse First Boston LLC
11 Madison Avenue
New York, NY 10010
Attn: Senior Legal Officer
Tel: (212) 538 4488
Fax: (212) 325 4585
With a copy to: Credit Suisse First Boston LLC
1 Madison Avenue, 3rd Floor
New York, New York 10010
For payments and deliveries:
Attn: Ricardo Harewood
Tel: (212) 538-9810
Fax: (212) 325- 8175
For all other communications:
Attn: Carlos Moscoso / John Ryan
Tel.: (212) 538-4437 / (212) 538-8297/
(212) 325-5119
Fax: (212) 325-8173
Designated responsible employee for the purposes of Section
12(a)(iii): Senior Legal Officer
Address for notices or communications to Counterparty:
Address: Friedman Fleischer & Lowe Capital Partners, L.P.
One Maritime Plaza, Suite 1000
San Francisco, CA 94111
Attention: Rajat Duggal
Facsimile No.: (415) 402-2111
Telephone No.: (415) 402-2100
With a copy to:
Address: Bingham McCutchen LLP
399 Park Avenue
New York, NY 10022
Attention: Neil Townsend
Facsimile No.: (212) 702-3644 Telephone No.: (212) 318-7722
2. The date and time of the Transaction will be furnished by CSFB
to Counterparty upon written request by Counterparty.
3. [RESERVED]
4. WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING RELATING TO THIS CONFIRMATION OR ANY CREDIT SUPPORT
DOCUMENT. Each party (i) certifies that no representative,
agent or attorney of the other party has represented,
expressly or otherwise, that such other party would not, in
the event of such a suit action or proceeding, seek to enforce
the foregoing waiver and (ii) acknowledges that it and the
other party have been induced to enter into this Confirmation
by, among other things, the mutual waivers and certifications
in this Section.
5. SERVICE OF PROCESS. The parties irrevocably consent to service
of process given in the manner provided for notices in Section
in paragraph 1 immediately above. Nothing in this Confirmation
will affect the right of either party to serve process in any
other manner permitted by law.
6. THE AGREEMENT AND EACH CONFIRMATION THEREUNDER WILL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REFERENCE TO CHOICE OF LAW DOCTRINE
(PROVIDED THAT AS TO PLEDGED ITEMS LOCATED IN ANY JURISDICTION
OTHER THAN THE STATE OF NEW YORK, CSFB SHALL, IN ADDITION TO
ANY RIGHTS UNDER THE LAWS OF THE STATE OF NEW YORK, HAVE ALL
OF THE RIGHTS TO WHICH A SECURED PARTY IS ENTITLED UNDER THE
LAWS OF SUCH OTHER JURISDICTION). EACH PARTY HEREBY SUBMITS TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK. THE
PARTIES HERETO HEREBY AGREE THAT THE CUSTODIAN'S JURISDICTION,
WITHIN THE MEANING OF SECTION 8-110(E) OF THE UCC, INSOFAR AS
IT ACTS AS A SECURITIES INTERMEDIARY HEREUNDER OR IN RESPECT
HEREOF, IS THE STATE OF NEW YORK.
7. This Confirmation is not intended and shall not be construed
to create any rights in any person other than Counterparty,
CSFB 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 Counterparty and CSFB shall bind,
and inure to the benefit of, their respective successors and
assigns whether so expressed or not.
8. Any provision of this Confirmation may be amended or waived
if, and only if, such amendment or waiver is in writing and
signed, and in the case of an amendment, by Counterparty and
CSFB or, in the case of a waiver, by the party against whom
the waiver is to be effective.
Please confirm that the foregoing correctly sets forth the terms of our
agreement by signing and returning this Confirmation.
Yours faithfully,
CREDIT SUISSE FIRST BOSTON CAPITAL LLC
By:_____________________________
Name:
Title:
Confirmed as of the date first written above:
FRIEDMAN FLEISCHER & LOWE CAPITAL PARTNERS, L.P.
BY: FRIEDMAN FLEISCHER & LOWE GP, LLC, ITS GENERAL PARTNER
By:________________________________
Name: Spencer C. Fleischer
Title: Senior Managing Member
CREDIT SUISSE FIRST BOSTON LLC,
as Agent
By:________________________________
Name:
Title:
Our Reference Number: External ID: /Risk ID:
ANNEX A
[FORM OF ISSUER ACKNOWLEDGEMENT]
[DATE]
Credit Suisse First Boston Capital LLC
c/o Credit Suisse First Boston LLC
Eleven Madison Avenue
New York, New York 10010
Re: PROPOSED TRANSACTION BY FRIEDMAN FLEISCHER & LOWE CAPITAL PARTNERS,
L.P.
Ladies and Gentlemen:
Korn/Ferry International (the "COMPANY") understands that Friedman
Fleischer & Lowe Capital Partners, L.P. ("COUNTERPARTY") proposes to enter into
a hedging transaction (the "TRANSACTION") with Credit Suisse First Boston
Capital LLC ("CSFB") with respect to shares of the 7.5% Convertible Series A
Preferred Stock of the Company (the "CONVERTIBLE SHARES") convertible into
shares of common stock of the Company (the "COMMON STOCK"). Specifically, the
Company understands that Counterparty proposes to enter into a forward sale and
purchase transaction with CSFB, pursuant to which CSFB will pay cash to
Counterparty on or shortly after the date of execution of the Transaction and
Counterparty will deliver to CSFB on or about October 1, 2006 or such other
date specified by CSFB upon 1 Business Day's notice (the "SETTLEMENT DATE"),
3,263.955 Convertible Shares (subject to applicable adjustments). In addition,
the Company understands that Counterparty initially will pledge 3,263.955
Convertible Shares owned by Counterparty to CSFB to secure Counterparty's
obligations under the Transaction (the "PLEDGE").
The Company has no objection to the proposed Transaction or to the Pledge.
The Company confirms that the Transaction and the Pledge will not violate any
insider trading or other policy or rule of the Company.
The Company agrees that if CSFB forecloses on the Convertible Shares, or
the Convertible Shares are transferred to CSFB pursuant to the terms of the
Transaction, that promptly, upon delivery to the Company or its transfer agent
of:
(i) any required tax stamps; and
(ii) a duly executed notice of conversion (attached hereto as Exhibit 1)
the Company (x) will effect the conversion of such Convertible Shares without
any further action or delivery of any documents or instruments on the part of
CSFB or Counterparty and notwithstanding any policy or objection the Company
may have at the time that would prevent or delay any sale or transfer of any
shares of Common Stock or Convertible Shares by Counterparty at the time of
such foreclosure or transfer and (y) will instruct its transfer agent to
convert any such Convertible Shares held by CSFB in Pledge, in accordance with
the provisions of the Convertible Shares, into the such number of shares of
fully paid and non-assessable shares of Common Stock as provided for by the
terms of the Convertible Shares and issue shares of Common Stock without any
legends thereon that relate to restrictions on the disposition thereof under
the Securities Act of 1933 or otherwise register in such name or names as CSFB
shall request and deliver such shares directly to CSFB or its designee without
the return thereof to Counterparty.
KORN/FERRY INTERNATIONAL
By:
Name:
Title:
EXHIBIT 1 TO ANNEX A
[FORM OF NOTICE OF CONVERSION]
[DATE]
Korn/Ferry International
1800 Century Park East, Suite 900
Los Angeles, CA 90067
Attn: Secretary
Ladies and Gentlemen:
Please be advised that Friedman Fleischer & Lowe Capital Partners, L.P., a
Delaware limited partnership ("SELLER"), has entered into a Prepaid Forward
Confirmation (the "AGREEMENT") dated as of October 1, 2004 with Credit Suisse
First Boston Capital LLC ("BUYER"), by Credit Suisse First Boston LLC as its
agent (the "AGENT").
Seller is the record holder of shares of 7.5% Convertible Series A
Preferred Stock (evidenced by the certificates attached hereto, the
"CONVERTIBLE SHARES") of Korn/Ferry International, a Delaware corporation (the
"COMPANY"). The Convertible Shares are convertible into shares of common stock
("COMMON STOCK") of the Company. Seller and Buyer are willing to sell and
purchase 3,263.955 Convertible Shares at the times and on the terms set forth
in the Agreement. Seller has agreed, pursuant to the Agreement, to grant Buyer
a security interest (the "PLEDGE") in Convertible Shares (the "PLEDGED SHARES")
to secure the obligations of Seller under the Agreement.
This letter constitutes written notice of conversion (the "NOTICE OF
CONVERSION") required by the Convertible Shares and instruments governing the
Convertible Shares. In the event that Seller delivers Convertible Shares
pursuant to its obligations under the Agreement, or in the event of the
exercise by Buyer of any of its rights under the Pledge with respect to the
Pledged Shares, the Seller and Buyer hereby elect that such Convertible Shares
be converted into such number of shares of Common Stock as provided for by the
terms of the Convertible Shares and its governing instruments.
Pursuant to this Notice of Conversion and upon delivery of certificates
evidencing the Convertible Shares subject to conversion duly endorsed by Seller
or in blank or accompanied by a duly executed proper instrument of transfer in
a form satisfactory to the Company, please convert the Convertible Shares into
the applicable number of shares of Common Stock and, at Buyer's direction,
either (i) issue them in the name of Credit Suisse First Boston Capital LLC and
deliver the certificate evidencing such shares of Common Stock directly to the
following address:
Credit Suisse First Boston Capital LLC
1 Madison Avenue, 3rd Floor
New York, New York 10010
Attn: Ricardo Harewood
OTC Derivative Operations
or (ii) deliver them in electronic equivalent form to an account specified by
Buyer at such time.
PLEASE DO NOT DELIVER THE CERTIFICATES REPRESENTING SUCH SHARES OF COMMON
STOCK TO SELLER UNDER ANY CIRCUMSTANCES PURSUANT TO THE TERMS OF THIS NOTICE OF
CONVERSION.
This Notice of Conversion will be irrevocable by the Seller. This Notice
of Conversion will automatically terminate upon the satisfaction of Seller's
delivery obligations under the Agreement, as determined in good faith by the
Buyer.
Very truly yours,
FRIEDMAN FLEISCHER & LOWE CAPITAL PARTNERS, L.P.
BY: FRIEDMAN FLEISCHER & LOWE GP, LLC,
ITS GENERAL PARTNER
By:
Name:
Title:
CREDIT SUISSE FIRST BOSTON CAPITAL LLC
By:
Name:
Title:
PREPAID FORWARD TRANSACTION
October 4, 2004
Friedman Fleischer & Lowe Capital Partners, L.P.
One Maritime Plaza, Suite 1000
San Francisco, CA 94111
Credit Suisse First Boston Capital LLC
Eleven Madison Avenue
New York, NY 10010
External ID: - Risk ID:
---------------------------------------------------------------------------
Dear Sir or Madam,
The purpose of this letter agreement (this "CONFIRMATION") is to confirm the
terms and conditions of the Transaction entered into between us on the Trade
Date specified below (the "TRANSACTION"). This Confirmation constitutes a
"Confirmation" as referred to in the Agreement specified below.
In this Confirmation, "CSFB" means Credit Suisse First Boston Capital LLC,
"COUNTERPARTY" means Friedman Fleischer & Lowe Capital Partners, L.P. and
"AGENT" means Credit Suisse First Boston LLC, solely in its capacity as agent
for CSFB and Counterparty.
1. The definitions and provisions contained in the 2000 ISDA Definitions (the
"2000 DEFINITIONS") and the 2002 ISDA Equity Derivatives Definitions (the
"2002 DEFINITIONS" and, together with the 2000 Definitions, the
"DEFINITIONS"), each as published by the International Swaps and
Derivatives Association, Inc. ("ISDA"), are incorporated into this
Confirmation. In the event of any inconsistency between the 2000
Definitions and the 2002 Definitions, the 2002 Definitions will govern. In
the event of any inconsistency between the Definitions and this
Confirmation, this Confirmation will govern. The Transaction shall be
deemed to be a Share Forward Transaction within the meaning set forth in
the Equity Definitions.
This Confirmation shall supplement, form a part of and be subject to an
agreement (the "AGREEMENT") in the form of the 1992 ISDA Master Agreement
(Multicurrency - Cross Border) (the "ISDA FORM"), as published by the
International Swaps and Derivatives Association, Inc., as if CSFB and
Counterparty had executed the ISDA Form (without any Schedule thereto) on
the date hereof. All provisions contained in the Agreement are
incorporated into and shall govern this Confirmation except as expressly
modified below. This Confirmation evidences a complete and binding
agreement between you and us as to the terms of the Transaction and
relates and replaces any previous agreement between us with respect to the
subject matter hereof, including the agreement entitled "Physically
Settled Forward Contract on Korn Ferry 7.5% Convertible Subordinated Note
Executable Terms as of October 1, 2004" (the "TERM SHEET"). This
Confirmation, together with all other confirmations or agreements between
us referencing the ISDA Form, shall be deemed to supplement, form part of
and be subject to the same, single Agreement.
If there exists any ISDA Master Agreement between CSFB and Counterparty or
any confirmation or other agreement between CSFB and Counterparty pursuant
to which an ISDA Master Agreement is deemed to exist between CSFB and
Counterparty, then notwithstanding anything to the contrary in such ISDA
Master Agreement, such confirmation or agreement or any other agreement to
which CSFB and Counterparty are parties, this Transaction shall not be
considered a Transaction under, or otherwise governed by, such existing or
deemed ISDA Master Agreement.
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
General Terms:
Trade Date: October 1, 2004
Seller: Counterparty
Buyer: CSFB
Securities: 7.5% Convertible Subordinated Notes due
2010 of Korn/Ferry International (the
"ISSUER").
Number of Securities: $13,057,784.79 aggregate principal
amount as of the Trade Date; the Number
of Securities shall be increased to
reflect any payments of interest
thereon in additional Securities;
further, in the event of any exchange,
substitution, redemption, repurchase or
similar transaction (whether in whole
or in part) with respect to the Number
of Securities pursuant to the terms
thereof and the instruments governing
them or applicable law, the Number of
Securities shall consist of any and all
property received upon such transaction
and any remaining Securities, as
determined by the Calculation Agent.
Shares: Common stock of the Issuer (Exchange
Symbol: "KFY")
Number of Shares: the number of Shares into which the
Number of Securities is convertible
(1,281,431.28 as of the Trade Date);
provided, however, that any references
to Number of Shares to be
------------------ Delivered shall be
to the Number of Securities
Prepayment: Applicable
Prepayment Date: The later of (i) October 6, 2004 and
(ii) the earliest date on which all
conditions to CSFB's obligation to pay
the Prepayment Amount have been
satisfied, provided, however, that in
the case of (ii) above, if such
conditions were not satisfied by 12:00
p.m. New York City time on such date,
then the Prepayment Date would be the
following Business Day
Conditions to CSFB's Obligation
to Pay Prepayment Amount: It shall be a condition to CSFB's
obligation to pay any Prepayment Amount
hereunder on any Prepayment Date that
Counterparty shall have performed its
obligations under paragraphs
4(a)-"Delivery of Collateral" and
5-"Agreements to Deliver Documents",
below.
Prepayment Amount: USD 23,686,277.55
Variable Obligation: Not applicable
Exchange: The New York Stock Exchange
Related Exchange(s: All Exchanges
Settlement Terms:
Physical Settlement: Applicable
Settlement Method Election: Not applicable
Settlement Date: 2 years from the Trade Date, provided
that CSFB may elect to accelerate the
Settlement Date at anytime upon 1
Business Day's notice and take
immediate delivery of the Number of
Securities.
Automatic Physical
Settlement: If (x) by 10:00 A.M., New York City
time, on the Settlement Date,
Counterparty has not otherwise effected
delivery of the Number of Shares to be
Delivered and (y) the Representation
and Agreement set forth in Section 9.11
of the 2002 Definitions are true and
satisfied (or, at the absolute
discretion of CSFB, such Representation
and Agreement are not true or
satisfied) with respect to the
collateral then held hereunder by or on
behalf of CSFB, then the delivery
required by Section 9.2 of the Equity
Definitions shall be effected, in whole
or in part, as the case may be, by
delivery from the Collateral Account
(as defined below under "Collateral")
to CSFB of the Number of Securities.
Settlement Currency: USD
Interest and Other Payments:
Payment Obligation by
Counterparty: Counterparty shall immediately upon
receipt thereof pay to CSFB any and all
interest, distributions, coupons and
other payments (other than interest
payments in kind which shall be added
to the Number of Securities and the
Collateral) received in respect of the
Securities.
Sections 11 and 12 of the
2002 Definitions: Not Applicable
Non-Reliance: Applicable
Agreements and Acknowledgments
Regarding Hedging Activities: Applicable
Additional Acknowledgments: Applicable
Credit Support Documents: Section 4 shall be a Credit Support
Document under the Agreement with
respect to Counterparty.
Guarantee dated May 16, 2001 made by
Credit Suisse First Boston (USA), Inc.,
a Delaware corporation, in favor of
each and every counterparty to one or
more Financial Transactions (as defined
therein) with CSFB shall be a Credit
Support Document under the Agreement
with respect to CSFB.
Account Details:
Payments to CSFB: To be advised under separate cover
prior to the Trade Date
Payments to Counterparty: Bank: Bank of America
Address: 345 Montgomery Street
Concourse Level
San Francisco, CA 94104
ABA #: 121-000-358
Account #: 14994-05999
Account Name: Friedman Fleischer & Lowe
Capital Partners, L.P.
Delivery of Securities/
Shares to CSFB: Credit Suisse First Boston Corp.
DTC# 355 Account # 2HRY60
Account Name: CSFB
Capital LLC Collateral Management
Account
Office: CSFB is acting through its New York
Office for the purposes of the
Transaction; Counterparty is not a
Multibranch Party.
Calculation Agent: CSFB. The Calculation Agent will have
no responsibility for good faith errors
or omissions in any determination under
the Transaction.
3. Other Provisions:
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF COUNTERPARTY:
Counterparty hereby represents and warrants to CSFB as of the date
hereof that:
1. From the date three months prior to the date of the Term
Sheet, neither Counterparty nor any person who would be
considered to be the same "person" as Counterparty or "acting
in concert" with Counterparty (as such terms are used in
clauses (a)(2) and (e)(3)(vi) of Rule 144 under the Securities
Act of 1933, as amended (the "SECURITIES Act")) has, without
the written consent of CSFB, sold any Shares or hedged
(through swaps, options, short sales or otherwise) any long
position in the Shares. Counterparty 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. Shares of common stock of the Issuer issuable
upon conversion of the Securities would, upon sale of such
shares, be considered securities "acquired from the issuer for
a consideration consisting solely of other securities of the
same issuer surrendered for conversion" for the purposes of
Rule 144.
2. Counterparty is an "eligible contract participant" as such
term is defined in Section 1(a)(12) of the Commodity Exchange
Act, as amended.
3. Counterparty was not on the Trade Date, and is not on the date
hereof, in possession of any material non-public information
regarding the Issuer. None of the transactions contemplated
herein will violate any corporate policy of the Issuer or
other rules or regulations of the Issuer applicable to
Counterparty or its affiliates, including, but not limited to,
the Issuer's window period policy.
4. On the Trade Date, Counterparty filed, in the manner
contemplated by Rule 144(h) under the Securities Act, a notice
on Form 144 relating to the Transaction contemplated hereby in
form and substance that CSFB has informed Counterparty is
acceptable to CSFB.
5. All representations and warranties of Counterparty contained
in the Term Sheet were true and correct as of the times such
representations and warranties were made or repeated or deemed
to be made or repeated under the Term Sheet and Counterparty
has performed all of the covenants and obligations to be
performed by Counterparty on or prior to the date hereof under
the Term Sheet.
6. Counterparty is not and, after giving effect to the
transactions contemplated hereby, will not be an "investment
company" as such term is defined in the Investment Company Act
of 1940, as amended.
7. Counterparty is, and shall be as of the date of any payment or
delivery by Counterparty hereunder, solvent and able to pay
its debts as they come due, with assets having a fair value
greater than liabilities and with capital sufficient to carry
on the businesses in which it engages.
8. Counterparty's holding period (calculated in accordance with
Rule 144(d) under the Securities Act) with respect to the
Initial Pledged Items commenced on June 13, 2002. Counterparty
agrees that Counterparty has not (i) created or permitted to
exist any Lien (other than the Security Interests) or any
Transfer Restriction (other than the Existing Transfer
Restrictions) upon or with respect to the Collateral, (ii)
sold or otherwise disposed of, or granted any option with
respect to, any of the Collateral or (iii) entered into or
consented to any agreement (other than, in the case of clause
(x), this Confirmation) (x) that restricts in any manner the
rights of any present or future owner of any Collateral with
respect thereto or (y) pursuant to which any person other than
Counterparty, CSFB and any securities intermediary through
whom any of the Collateral is held (but in the case of any
such securities intermediary only in respect of Collateral
held through it) has or will have Control in respect of any
Collateral. "CONTROL" means "control" as defined in Section
8-106 and 9-106 of the Uniform Commercial Code as in effect in
the State of New York ("UCC").
9. Other than financing statements or other similar or equivalent
documents or instruments with respect to the Security
Interests, no financing statement, security agreement or
similar or equivalent document or instrument covering all or
any part of the Collateral is on file or of record in any
jurisdiction in which such filing or recording would be
effective to perfect a lien, security interest or other
encumbrance of any kind on such Collateral.
10. All Collateral consisting of securities and all financial
assets underlying Collateral consisting of security
entitlements (each as defined in Section 8-102 of the UCC) at
any time pledged hereunder is and will be issued by an issuer
organized under the laws of the United States, any State
thereof or the District of Columbia and is and will be (i)
certificated (and the certificate or certificates in respect
of such securities or financial assets are and will be located
in the United States) and registered in the name of
Counterparty or held through a securities intermediary whose
securities intermediary's jurisdiction (within the meaning of
Section 8-110(e) of the UCC) is located in the United States
or (ii) uncertificated and either registered in the name of
Counterparty or held through a securities intermediary whose
securities intermediary's jurisdiction (within the meaning of
Section 8-110(e) of the UCC) is located in the United States;
provided that this representation shall not be deemed to be
breached if, at any time, any such Collateral is issued by an
issuer that is not organized under the laws of the United
States, any State thereof or the District of Columbia, and the
parties hereto agree to procedures or amendments hereto
necessary to enable CSFB to maintain a valid and continuously
perfected security interest in such Collateral, in respect of
which CSFB will have Control, subject to no prior Lien. The
parties hereto agree to negotiate in good faith any such
procedures or amendments.
11. Counterparty's "location" (as defined in Section 9-307 of UCC)
is the state of Delaware. The following is the mailing
address, county and state of each chief executive office not
at such "location" maintained by Counterparty at any time
during the past five years: One Maritime Plaza, Suite 1000,
San Francisco, CA 94111.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF CSFB:
1. CSFB represents to Counterparty that an affiliate of CSFB (the
"CSFB AFFILIATE") is registered as a broker and a dealer with
the Securities and Exchange Commission and is a "market maker"
or a "block positioner", as such terms are used in Rule 144
under the Securities Act, with respect to the Shares.
2. CSFB agrees that CSFB Affiliate shall, as promptly as
practicable consistent with market conditions, introduce into
the public market a quantity of securities of the same class
as the Shares equal to the Number of Shares.
U.S. PRIVATE PLACEMENT REPRESENTATIONS:
Each of CSFB and Counterparty hereby represents and warrants to the
other party as of the date hereof that: It is an "accredited
investor" (as defined in Regulation D under the Securities Act) and
has such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of the
Transaction, and it is able to bear the economic risk of the
Transaction. It is entering into the Transaction for its own
account and not with a view to the distribution or resale of the
Transaction or its rights thereunder except pursuant to a
registration statement declared effective under, or an exemption
from the registration requirements of, the Securities Act.
COVENANTS OF COUNTERPARTY:
Counterparty agrees that each of Counterparty and its affiliates
will comply with all applicable disclosure or reporting
requirements in respect of the Transaction, including, without
limitation, any requirement imposed by Section 13 or Section 16 of
the Securities and Exchange Act of 1934, as amended, if any, and
Counterparty will provide CSFB with a copy of any report filed in
respect of the Transaction promptly upon filing thereof.
BINDING COMMITMENT/FINAL AGREEMENT:
The parties intend that this Confirmation constitutes a "Final
Agreement" as described in the letter dated December 14, 1999
submitted by Robert W. Reeder and Alan L. Beller to Michael Hyatte
of the staff of the Securities and Exchange Commission (the
"STAFF") to which the Staff responded in an interpretative letter
dated December 20, 1999.
PAYMENTS ON EARLY TERMINATION:
Upon the occurrence or effective designation of an Early
Termination Date in respect of the Transaction (an "EARLY
TERMINATION EVENT"), if Counterparty would owe any amount to CSFB
pursuant to Section 6(d)(ii) of the Agreement (determined as if the
Transaction were the only Transaction under the Agreement) (any
such amount, a "COUNTERPARTY PAYMENT AMOUNT" and any Early
Termination Event that would so result in Counterparty owing any
such amount, a "COUNTERPARTY PAYMENT EVENT"), then, except to the
extent that CSFB proceeds to realize upon the Collateral and to
apply the proceeds of such realization to any obligation of
Counterparty hereunder and under the Agreement:
(i) on the date on which any Counterparty Payment Amount is due,
in lieu of any payment or delivery of such Counterparty
Payment Amount, Counterparty shall deliver to CSFB the Number
of Securities; and
(ii) for purposes of determining any Loss under Section 6(e) of the
Agreement in respect of any other Transactions under the
Agreement, the Transaction shall be deemed not to be a
Transaction under the Agreement; provided that, for the
avoidance of doubt, if Counterparty fails to deliver
Securities pursuant to clause (i) above at the time required,
then the Transaction (including such delivery obligation)
shall be included for the purpose of determining CSFB's Loss
for all Transactions (including the Transaction) under the
Agreement.
SECURITIES CONTRACT:
The parties hereto acknowledge and agree that each of CSFB and the
Custodian is a "stockbroker" within the meaning of Section 101
(53A) of Title 11 of the United States Code (the "BANKRUPTCY CODE")
and that the Custodian is acting as agent and custodian for CSFB in
connection with the Transaction and that CSFB is a "customer" of
the Custodian within the meaning of Section 741(2) of the
Bankruptcy Code. The parties hereto further recognize that the
Transaction is a "securities contract", as such term is defined in
Section 741(7) of the Bankruptcy Code, entitled to the protection
of, among other provisions, Sections 555 and 362(b)(6) of the
Bankruptcy Code, and that each payment or delivery of cash, Shares
or other property or assets hereunder is a "settlement payment"
within the meaning of Section 741(8) of the Bankruptcy Code.
ASSIGNMENT:
The rights and duties under this Confirmation may not be assigned
or transferred by any party hereto without the prior written
consent of the other parties hereto, such consent not to be
unreasonably withheld; provided that (i) CSFB may assign or
transfer any of its rights or duties hereunder to any of its
affiliates without the prior written consent of Counterparty 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.
NON-CONFIDENTIALITY:
The parties hereby agree that (i) effective from the date of
commencement of discussions concerning the Transaction,
Counterparty and each of its employees, representatives, or other
agents may disclose to any and all persons, without limitation of
any kind, the tax treatment and tax structure of the Transaction
and all materials of any kind, including opinions or other tax
analyses, provided by CSFB and its affiliates to Counterparty
relating to such tax treatment and tax structure; provided that the
foregoing does not constitute an authorization to disclose the
identity of CSFB or its affiliates, agents or advisers, or, except
to the extent relating to such tax structure or tax treatment, any
specific pricing terms or commercial or financial information, and
(ii) CSFB 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
Counterparty.
MATTERS RELATING TO CREDIT SUISSE FIRST BOSTON CAPITAL LLC AND CREDIT
SUISSE FIRST BOSTON LLC:
1. Agent shall act as "agent" for CSFB and Counterparty in
connection with the Transaction.
2. Agent will furnish to Counterparty upon written request a
statement as to the source and amount of any remuneration
received or to be received by Agent in connection herewith.
3. Agent has no obligation hereunder, by guaranty, endorsement or
otherwise, with respect to performance of CSFB's obligations
hereunder or under the Agreement.
4. Credit Suisse First Boston Capital LLC is an "OTC derivatives
dealer" as such term is defined in the Exchange Act and is an
affiliate of Agent.
5. Credit Suisse First Boston Capital LLC is not a member of the
Securities Investor Protection Corporation.
STAGGERED SETTLEMENT:
If CSFB determines reasonably and in good faith that the Number of
Shares to be Delivered to CSFB hereunder or, in receiving such
Number of Shares to be Delivered, its "beneficial ownership"
(within the meaning of Section 16 of the Exchange Act and rules
promulgated thereunder) on the Settlement Date would exceed 9.9% of
all outstanding Shares, then CSFB may, by notice to Counterparty on
or prior to the Settlement Date (a "NOMINAL SETTLEMENT DATE"),
elect to receive the Number of Shares to be Delivered on two or
more dates (each, a "STAGGERED SETTLEMENT DATE") as follows:
(c) in such notice, CSFB will specify to Counterparty the related
Staggered Settlement Dates (the first of which will be such Nominal
Settlement Date and the last of which will be no later than the
twentieth (20th) Exchange Business Day following such Nominal
Settlement Date) and the related portion of the Number of Shares to
be Delivered on each Staggered Settlement Date; and
(d) the aggregate number of Shares that Counterparty will deliver
to CSFB hereunder on all such Staggered Settlement Dates will equal
the Number of Shares to be Delivered that Counterparty would
otherwise be required to deliver on such Nominal Settlement Date.
Notwithstanding anything herein to the contrary, to the extent
Counterparty receives or is entitled to receive any distribution or
payment in respect of Shares by reason of Counterparty's being a
holder of record of such Shares on any date after the Nominal
Settlement Date but for the provisions of the foregoing,
Counterparty shall deliver such distribution or payment to CSFB at
the time Counterparty delivers to CSFB the related portion of the
Number of Shares to be Delivered in accordance with the foregoing,
if such distribution or payment has already been received by
Counterparty at such time, or within a reasonable period of time
following Counterparty's receipt of the distribution or payment, if
such distribution or payment has not been already received by
Counterparty at the time Counterparty delivers the related portion
of the Number of Shares to be Delivered in accordance with the
foregoing.
4. Collateral Provisions:
Counterparty has granted to CSFB a security interest in the Initial
Pledged Items to secure Counterparty's obligations under the Term Sheet
and the Transaction. Counterparty and CSFB now wish to (i) set forth
additional understandings and agreements relating to such security
interest and (ii) confirm, on the terms set forth herein, the continuation
of such security interest.
A. DELIVERY OF COLLATERAL:
As soon as practicable after the Trade Date, Counterparty shall deliver to
CSFB in pledge hereunder, Eligible Collateral consisting of the Number of
Securities (the "INITIAL PLEDGED ITEMS"). "ELIGIBLE COLLATERAL" means
Securities; provided that Counterparty has good and marketable title
thereto, free of all of any and all lien, mortgage, interest, pledge,
charge or encumbrance of any kind (other than the security interests in
the Collateral created hereby, a "LIEN") and Transfer Restrictions (other
than the Existing Transfer Restrictions) and that CSFB has a valid, first
priority perfected security interest therein, a first lien thereon and
Control with respect thereto. "TRANSFER RESTRICTION" means, with respect
to any item of collateral pledged hereunder, any condition to or
restriction on the ability of the owner thereof to sell, assign or
otherwise transfer such item of collateral or 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 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 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 item of collateral, prior to the
sale, pledge, assignment or other transfer or enforcement of such item of
collateral and (iv) any registration or qualification requirement or
prospectus delivery requirement for such item of collateral pursuant to
any federal, state or foreign securities law (including, without
limitation, any such requirement arising under Section 5 of the Securities
Act as a result of such security being a "restricted security" or
Counterparty being an "affiliate" of the issuer of such security, as such
terms are defined in Rule 144 under the Securities Act, or as a result of
the sale of such security being subject to paragraph (c) of Rule 145 under
the Securities Act); provided that the required delivery of any
assignment, instruction or entitlement order from the seller,
Counterparty, assignor or transferor of such item of collateral, together
with any evidence of the corporate or other authority of such Person,
shall not constitute a "Transfer Restriction". "EXISTING TRANSFER
RESTRICTIONS" means Transfer Restrictions existing with respect to any
securities by virtue of the fact that Counterparty is an "affiliate",
within the meaning of Rule 144 under the Securities Act, of the Issuer.
"PERSON" means an individual, a corporation, a limited liability company,
a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency
or instrumentality thereof.
Any delivery of any securities or security entitlements (each as defined
in Section 8-102 of the UCC) as Collateral to CSFB by Counterparty shall
be effected (A) in the case of Collateral consisting of certificated
securities registered in the name of Counterparty, by delivery of
certificates representing such securities to the Custodian, accompanied by
any required transfer tax stamps, and in suitable form for transfer by
delivery or accompanied by duly executed instruments of transfer or
assignment in blank, with signatures appropriately guaranteed, all in form
and substance satisfactory to CSFB, and the crediting by the Custodian of
such securities to a securities account (as defined in Section 8-501 of
the UCC) (the "COLLATERAL ACCOUNT") of CSFB maintained by the Custodian,
(B) in the case of Collateral consisting of uncertificated securities
registered in the name of Counterparty, by transmission by Counterparty of
an instruction to the issuer of such securities instructing such issuer to
register such securities in the name of the Custodian or its nominee,
accompanied by any required transfer tax stamps, the issuer's compliance
with such instructions and the crediting by the Custodian of such
securities to the Collateral Account, (C) in the case of securities in
respect of which security entitlements are held by Counterparty through a
securities intermediary, by the crediting of such securities, accompanied
by any required transfer tax stamps, to a securities account of the
Custodian at such securities intermediary or, at the option of CSFB, at
another securities intermediary satisfactory to CSFB and the crediting by
the Custodian of such securities to the Collateral Account or (D) in any
case, by complying with such alternative delivery instructions as CSFB
shall provide to Counterparty in writing. "CUSTODIAN" means Credit Suisse
First Boston LLC, or any other custodian appointed by CSFB and identified
to Counterparty.
B. GRANT OF SECURITY INTERESTS IN THE COLLATERAL:
In order to secure the full and punctual observance and performance of the
covenants and agreements contained in this Confirmation and in the
Agreement, Counterparty hereby assigns and pledges to CSFB, and grants to
CSFB, as secured party, security interests in and to, and a lien upon and
right of set-off against, and transfers to CSFB, as and by way of a
security interest having priority over all other security interests, with
power of sale, all of Counterparty's right, title and interest in and to
(i) the Initial Pledged Items; (ii) all additions to and substitutions for
the Initial Pledged Items (including, without limitation, any securities,
instruments or other property delivered or pledged hereunder) (such
additions and substitutions, the "ADDITIONS AND SUBSTITUTIONS"); (iii) the
Collateral Account of CSFB maintained by the Custodian and all securities
and other financial assets (each as defined in Section 8-102 of the UCC)
and other funds, property or assets from time to time held therein or
credited thereto; and (iv) other than the payments made to CSFB pursuant
to the provision entitled "Payment Obligation by Counterparty" of
paragraph 2 of this Confirmation, all income, proceeds and collections
received or to be received, or derived or to be derived, at the time that
the Initial Pledged Items were delivered to the Custodian or any time
thereafter (whether before or after the commencement of any proceeding
under applicable bankruptcy, insolvency or similar law, by or against
Counterparty, with respect to Counterparty) from or in connection with the
Initial Pledged Items or the Additions and Substitutions (collectively,
the "COLLATERAL"). The parties hereto expressly agree that all rights,
assets and property at any time held in or credited to the Collateral
Account shall be treated as financial assets (as defined in Section 8-102
of the UCC).
C. CERTAIN COVENANTS OF COUNTERPARTY RELATING TO THE COLLATERAL:
Counterparty agrees that, so long as any of Counterparty's obligations
under the Agreement remain outstanding:
1. Counterparty shall ensure at all times that a Collateral Event of
Default shall not occur, and shall pledge additional Collateral in
the manner described hereunder as necessary to cause such requirement
to be met. "COLLATERAL EVENT OF DEFAULT" means, at any time, the
occurrence of either of the following: (A) failure of the Collateral
to include, as Eligible Collateral, the Number of Securities or (B)
failure at any time of the security interests in the Collateral
created hereby to constitute valid and perfected security interests
in all of the Collateral, subject to no prior, equal or junior Lien,
and, with respect to any Collateral consisting of securities or
security entitlements (each as defined in Section 8-102 of the UCC),
as to which CSFB has Control, or, in each case, assertion of such by
Counterparty in writing.
2. Counterparty shall, at its own expense and in such manner and form as
CSFB may require, give, execute, deliver, file and record any
financing statement, notice, instrument, document, agreement or other
papers that may be necessary or desirable in order to (i) create,
preserve, perfect, substantiate or validate any security interest
granted pursuant hereto, (ii) create or maintain Control with respect
to any such security interests in any investment property (as defined
in Section 9-102(a) of the UCC) or (iii) enable CSFB to exercise and
enforce its rights hereunder with respect to such security interest.
3. Counterparty shall warrant and defend Counterparty's title to the
Collateral, subject to the rights of CSFB, against the claims and
demands of all persons. CSFB may elect, but without an obligation to
do so, to discharge any Lien of any third party on any of the
Collateral.
4. Counterparty agrees that Counterparty shall not change (i)
Counterparty's name in any manner or (ii) Counterparty's "location"
(as defined in Section 9-307 of UCC), unless Counterparty shall have
given CSFB not less than 10 days' prior notice thereof.
5. Counterparty agrees that Counterparty has not and shall not (i)
create or permit to exist any Lien (other than the security interests
in the Collateral created hereby) or any Transfer Restriction upon or
with respect to the Collateral, (ii) sell or otherwise dispose of, or
grant any option with respect to, any of the Collateral or (iii)
enter into or consent to any agreement (x) that restricts in any
manner the rights of any present or future owner of any Collateral
with respect thereto (other than this Confirmation) or (y) pursuant
to which any person other than Counterparty, CSFB and any securities
intermediary through whom any of the Collateral is held (but in the
case of any such securities intermediary only in respect of
Collateral held through it) has or will have Control in respect of
any Collateral and represents that it has not previously created any
such Lien, effected any such sale, disposition or grant or entered in
or consented to any such agreement.
D. ADMINISTRATION OF THE COLLATERAL AND VALUATION OF SECURITIES:
1. CSFB shall determine on each Business Day whether a Collateral Event
of Default shall have occurred. If on any Business Day CSFB
determines that a Collateral Event of Default shall have occurred,
CSFB shall promptly notify Counterparty of such determination by
telephone call to Counterparty followed by a written confirmation of
such call. If on any Business Day CSFB determines that no Default
Event or failure by Counterparty to meet any of Counterparty's
obligations under "Certain Covenants of Counterparty relating to the
Collateral" or under this section has occurred and is continuing,
Counterparty may obtain the release from the security interests in
the Collateral created hereby of any Collateral upon delivery to CSFB
of a written notice from Counterparty indicating the items of
Collateral to be released so long as, after such release, no
Collateral Event of Default shall have occurred. "DEFAULT EVENT"
means any Collateral Event of Default, any Event of Default with
respect to Counterparty or any Termination Event with respect to
which Counterparty is the Affected Party or an Affected Party or an
Extraordinary Event that results in an obligation of Counterparty to
pay an amount pursuant to Section 12.7 or Section 12.9 of the 2002
Definitions.
2. Counterparty may pledge additional Eligible Collateral hereunder at
any time by delivering the same pursuant to the provisions of
"Delivery of Collateral" above. Concurrently with the delivery of any
additional Eligible Collateral, Counterparty shall deliver to CSFB a
certificate, dated the date of such delivery, (i) identifying the
additional items of Eligible Collateral being pledged and (ii)
certifying that with respect to such items of additional Eligible
Collateral the representations and warranties contained in paragraph
4.c.5. above are true and correct with respect to such Eligible
Collateral on and as of the date thereof.
3. [RESERVED]
4. CSFB may at any time or from time to time, in its sole discretion,
cause any or all of the Collateral that is registered in the name of
Counterparty or Counterparty's nominee to be transferred of record
into the name of the Custodian, CSFB or its nominee. Counterparty
shall promptly give to CSFB copies of any notices or other
communications received by Counterparty with respect to Collateral
that is registered, or held through a securities intermediary, in the
name of Counterparty or Counterparty's nominee and CSFB shall
promptly give to Counterparty copies of any notices and
communications received by CSFB with respect to Collateral that is
registered, or held through a securities intermediary, in the name of
Custodian, CSFB or its nominee.
5. Counterparty agrees that Counterparty shall forthwith upon demand pay
to CSFB:
(i) the amount of any taxes that CSFB or the Custodian may have
been required to pay by reason of the security interests in
the Collateral created hereby or to free any of the Collateral
from any Lien thereon; and
(ii) the amount of any and all costs and expenses, including the
fees and disbursements of counsel and of any other experts,
that CSFB or the Custodian may incur in connection with (A)
the enforcement of this pledge upon a Default Event, including
such expenses as are incurred to preserve the value of the
Collateral and the validity, perfection, rank and value of the
security interests in the Collateral created hereby, (B) the
collection, sale or other disposition of any of the Collateral
pursuant to the terms and conditions of the Agreement, (C) the
exercise by CSFB of any of the rights conferred upon it
hereunder or (D) any Default Event.
Any such amount not paid on demand shall bear interest (computed on
the basis of a year of 360 days and payable for the actual number
of days elapsed) at a rate per annum equal to 5% plus the prime
rate as published from time to time in The Wall Street Journal,
Eastern Edition.
E. REHYPOTHECATION OF COLLATERAL:
The parties hereto agree that CSFB may sell, lend, pledge, rehypothecate,
assign, invest, use, commingle or otherwise dispose of, or otherwise use
in its business any Collateral.
F. INCOME RIGHTS IN COLLATERAL:
Other than the payments made to CSFB pursuant to the provision entitled
"Payment Obligation by Counterparty" of paragraph 2 of this Confirmation,
CSFB shall have the right to receive and retain as Collateral hereunder
all proceeds and interest of the Collateral (such proceeds as CSFB shall
have the right to receive and retain at any time, "RETAINED PROCEEDS"),
and Counterparty shall take all such action as CSFB shall deem necessary
or appropriate to give effect to such right. All such Retained Proceeds
that are received by Counterparty shall be received in trust for the
benefit of CSFB and, if CSFB so directs, shall be segregated from other
funds of Counterparty and shall, forthwith upon demand by CSFB, be
delivered over to the Custodian on behalf of CSFB as Collateral in the
same form as received (with any necessary endorsement).
G. REMEDIES UPON DEFAULT EVENTS:
If any Default Event shall have occurred and be continuing, CSFB may
exercise all the rights of a secured party under the UCC (whether or not
in effect in the jurisdiction where such rights are exercised) and, in
addition, without being required to give any notice, except as herein
provided or as may be required by mandatory provisions of law, may sell
all of the Collateral, or such lesser portion thereof as may be necessary
to generate proceeds sufficient to satisfy in full all of the obligations
of Counterparty under the Agreement or hereunder.
Counterparty hereby irrevocably appoints CSFB as Counterparty's true and
lawful attorney (which power of attorney is coupled with an interest),
with full power of substitution, in the name of Counterparty, CSFB or
otherwise, for the sole use and benefit of CSFB, but at the expense of
Counterparty, to the extent permitted by law, to exercise, at any time and
from time to time while a Default Event has occurred and is continuing,
all or any of the following powers with respect to all or any of the
Collateral:
(i) to demand, sue for, collect, receive and give acquittance for any
and all monies due or to become due upon or by virtue thereof;
(ii) to settle, compromise, compound, prosecute or defend any action or
proceeding with respect thereto;
(iii) to sell, transfer, assign or otherwise deal in or with the same or
the proceeds or avails thereof, as fully and effectually as if CSFB
were the absolute owner thereof and in connection therewith, to
make all necessary deeds, bills of sale, instruments of assignment,
transfer or conveyance of the property, and all instructions and
entitlement orders in respect of the property thus to be (or that
is being or has been) sold, transferred, assigned or otherwise
dealt in; and
(iv) to extend the time of payment of any or all thereof and to make any
allowance and other adjustments with reference thereto;
provided that CSFB shall give Counterparty not less than one day's prior
written notice of the time and place of any sale or other intended
disposition of any of the Collateral, except any Collateral that threatens
to decline speedily in value, including, without limitation, equity
securities, or is of a type customarily sold on a recognized market. CSFB
and Counterparty agree that such notice constitutes "reasonable
authenticated notification" within the meaning of Section 9-611(b) of the
UCC.
H. TERMINATION:
The rights hereby granted by Counterparty in the Collateral shall cease,
terminate and be void upon fulfillment of all of the obligations of
Counterparty under this Confirmation. Any Collateral remaining at the time
of such termination shall be fully released and discharged from the
security interests in the Collateral created hereby and delivered to
Counterparty by CSFB, all at the request and expense of Counterparty.
5. The Agreement is further supplemented by the following provisions:
TERMINATION PROVISIONS.
1. "SPECIFIED ENTITY" means in relation to CSFB and Counterparty,
none.
2. The "DEFAULT UNDER SPECIFIED TRANSACTION" provision of Section
5(a)(v) of the Agreement will not apply to CSFB and
Counterparty.
3. The "CROSS DEFAULT" provision of Section 5(a)(vi) will not
apply to CSFB and will apply to Counterparty.
4. The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv)
will not apply to CSFB and Counterparty.
5. The "AUTOMATIC EARLY TERMINATION" provisions of Section 6(a)
will not apply to CSFB and Counterparty.
6. PAYMENTS ON EARLY TERMINATION. For the purpose of Section
6(e), Second Method and Loss will apply.
7. "TERMINATION CURRENCY" means United States Dollars.
8. NETTING. The provisions of Section 2(c) of the Agreement shall
apply, provided that Section 2(c) shall be amended by deleting
"and" at the end of clause (i) thereof and deleting clause
(ii) thereof.
9. 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 an
Early Termination Event, such Party ("PARTY X") shall have the
right to terminate, liquidate and otherwise close out the
transactions contemplated by this Confirmation pursuant to the
terms hereof, and to set off any obligation that Party X or
any affiliate of Party X may have to the other party ("PARTY
Y") hereunder, thereunder or otherwise, including without
limitation any obligation to make any release, delivery or
payment to Party Y pursuant to this Confirmation or any other
agreement between Party X or any of its affiliates and Party
Y, against any right Party X or any of its affiliates may have
against Party Y, including without limitation any right to
receive a payment or delivery pursuant to this Confirmation or
any other agreement between Party X or any of its affiliates
and Party Y. 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 Shares or right to
receive Shares, the value at any time of such obligation or
right shall be determined by reference to the market value of
the Shares 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.
TAX REPRESENTATIONS. None.
AGREEMENTS TO DELIVER DOCUMENTS. For the purpose of Sections 4(a)(i)
and (ii), each of CSFB and Counterparty agrees to deliver the
following documents, as applicable:
1. The Issuer shall have executed and delivered to CSFB, upon
execution of this Confirmation, an Issuer Acknowledgement in
the form attached as Annex A hereto.
2. Each of CSFB and Counterparty will deliver to the other party,
upon execution of this Confirmation and upon request of such
other party, evidence reasonably satisfactory to the other
party as to the names, true signatures and authority of the
officers or officials signing this Confirmation on its behalf.
Such documents shall be covered by the representation set
forth in Section 3(d).
MISCELLANEOUS:
1. ADDRESSES FOR NOTICES. For the purpose of Section 12(a):
Address for notices or communications to CSFB (other than by
facsimile) (for all purposes):
Address: Credit Suisse First Boston Capital LLC
c/o Credit Suisse First Boston LLC
11 Madison Avenue
New York, NY 10010
Attn: Senior Legal Officer
Tel: (212) 538 4488
Fax: (212) 325 4585
With a copy to: Credit Suisse First Boston LLC
1 Madison Avenue, 3rd Floor
New York, New York 10010
For payments and deliveries:
Attn: Ricardo Harewood
Tel: (212) 538-9810
Fax: (212) 325- 8175
For all other communications:
Attn: Carlos Moscoso / John Ryan
Tel.: (212) 538-4437 / (212) 538-8297/
(212) 325-5119
Fax: (212) 325-8173
Designated responsible employee for the purposes of Section
12(a)(iii): Senior Legal Officer
Address for notices or communications to Counterparty:
Address: Friedman Fleischer & Lowe Capital Partners, L.P.
One Maritime Plaza, Suite 1000
San Francisco, CA 94111
Attention: Rajat Duggal
Facsimile No.: (415) 402-2111 Telephone No.: (415) 402-2100
With a copy to:
Address: Bingham McCutchen LLP
399 Park Avenue
New York, NY 10022
Attention: Neil Townsend
Facsimile No.: (212) 702-3644 Telephone No.: (212) 318-7722
2. The date and time of the Transaction will be furnished by CSFB
to Counterparty upon written request by Counterparty.
3. [RESERVED]
4. WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING RELATING TO THIS CONFIRMATION OR ANY CREDIT SUPPORT
DOCUMENT. Each party (i) certifies that no representative,
agent or attorney of the other party has represented,
expressly or otherwise, that such other party would not, in
the event of such a suit action or proceeding, seek to enforce
the foregoing waiver and (ii) acknowledges that it and the
other party have been induced to enter into this Confirmation
by, among other things, the mutual waivers and certifications
in this Section.
5. SERVICE OF PROCESS. The parties irrevocably consent to service
of process given in the manner provided for notices in Section
in paragraph 1 immediately above. Nothing in this Confirmation
will affect the right of either party to serve process in any
other manner permitted by law.
6. THE AGREEMENT AND EACH CONFIRMATION THEREUNDER WILL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REFERENCE TO CHOICE OF LAW DOCTRINE
(PROVIDED THAT AS TO PLEDGED ITEMS LOCATED IN ANY JURISDICTION
OTHER THAN THE STATE OF NEW YORK, CSFB SHALL, IN ADDITION TO
ANY RIGHTS UNDER THE LAWS OF THE STATE OF NEW YORK, HAVE ALL
OF THE RIGHTS TO WHICH A SECURED PARTY IS ENTITLED UNDER THE
LAWS OF SUCH OTHER JURISDICTION). EACH PARTY HEREBY SUBMITS TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK. THE
PARTIES HERETO HEREBY AGREE THAT THE CUSTODIAN'S JURISDICTION,
WITHIN THE MEANING OF SECTION 8-110(E) OF THE UCC, INSOFAR AS
IT ACTS AS A SECURITIES INTERMEDIARY HEREUNDER OR IN RESPECT
HEREOF, IS THE STATE OF NEW YORK.
7. This Confirmation is not intended and shall not be construed
to create any rights in any person other than Counterparty,
CSFB 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 Counterparty and CSFB shall bind,
and inure to the benefit of, their respective successors and
assigns whether so expressed or not.
8. Any provision of this Confirmation may be amended or waived
if, and only if, such amendment or waiver is in writing and
signed, and in the case of an amendment, by Counterparty and
CSFB or, in the case of a waiver, by the party against whom
the waiver is to be effective.
Please confirm that the foregoing correctly sets forth the terms of our
agreement by signing and returning this Confirmation.
Yours faithfully,
CREDIT SUISSE FIRST BOSTON CAPITAL LLC
By:___________________________________
Name:
Title:
Confirmed as of the date first written above:
FRIEDMAN FLEISCHER & LOWE CAPITAL PARTNERS, L.P.
BY: FRIEDMAN FLEISCHER & LOWE GP, LLC, ITS GENERAL PARTNER
By:________________________________
Name: Spencer C. Fleischer
Title: Senior Managing Member
CREDIT SUISSE FIRST BOSTON LLC,
as Agent
By:________________________________
Name:
Title:
Our Reference Number: External ID: Risk ID:
ANNEX A
[FORM OF ISSUER ACKNOWLEDGEMENT]
[DATE]
Credit Suisse First Boston Capital LLC
c/o Credit Suisse First Boston LLC
Eleven Madison Avenue
New York, New York 10010
Re: PROPOSED TRANSACTION BY FRIEDMAN FLEISCHER & LOWE CAPITAL PARTNERS,
L.P.
Ladies and Gentlemen:
Korn/Ferry International (the "COMPANY") understands that Friedman
Fleischer & Lowe Capital Partners, L.P. ("COUNTERPARTY") proposes to enter into
a hedging transaction (the "TRANSACTION") with Credit Suisse First Boston
Capital LLC ("CSFB") with respect to the 7.5% Convertible Subordinated Notes
due 2010 of the Company (the "CONVERTIBLE NOTES") convertible into shares of
common stock of the Company (the "COMMON STOCK"). Specifically, the Company
understands that Counterparty proposes to enter into a forward sale and
purchase transaction with CSFB, pursuant to which CSFB will pay cash to
Counterparty on or shortly after the date of execution of the Transaction and
Counterparty will deliver to CSFB on or about October 1, 2006 or such other
date specified by CSFB upon 1 Business Day's notice (the "SETTLEMENT DATE"),
$13,057,784.79 aggregate principal amount of Convertible Notes (subject to
applicable adjustments). In addition, the Company understands that Counterparty
initially will pledge $13,057,784.79 aggregate principal amount of Convertible
Notes owned by Counterparty to CSFB to secure Counterparty's obligations under
the Transaction (the "PLEDGE").
The Company has no objection to the proposed Transaction or to the Pledge.
The Company confirms that the Transaction and the Pledge will not violate any
insider trading or other policy or rule of the Company.
The Company agrees that if CSFB forecloses on the Convertible Notes, or
the Convertible Notes are transferred to CSFB pursuant to the terms of the
Transaction, that promptly, upon delivery to the Company or its transfer agent
of:
(i) any required tax stamps; and
(ii) a duly executed notice of conversion (attached hereto as Exhibit 1)
the Company (x) will effect the conversion of such Convertible Notes without
any further action or delivery of any documents or instruments on the part of
CSFB or Counterparty and notwithstanding any policy or objection the Company
may have at the time that would otherwise prevent or delay any sale or transfer
of any shares of Common Stock or Convertible Notes by Counterparty at the time
of such foreclosure or transfer and (y) will instruct its transfer agent to
convert any such Convertible Notes held by CSFB in Pledge, in accordance with
the provisions of the Convertible Notes, into the such number of shares of
fully paid and non-assessable shares of Common Stock as provided for by the
terms of the Convertible Notes and issue shares of Common Stock without any
legends thereon that relate to restrictions on the disposition thereof under
the Securities Act of 1933 or otherwise register in such name or names as CSFB
shall request and deliver such shares directly to CSFB or its designee without
the return thereof to Counterparty.
KORN/FERRY INTERNATIONAL
By:
Name:
Title:
EXHIBIT 1 TO ANNEX A
[FORM OF NOTICE OF CONVERSION]
[DATE]
Korn/Ferry International
1800 Century Park East, Suite 900
Los Angeles, CA 90067
Attn: Secretary
Ladies and Gentlemen:
Please be advised that Friedman Fleischer & Lowe Capital Partners, L.P., a
Delaware limited partnership ("SELLER"), has entered into a Prepaid Forward
Confirmation (the "AGREEMENT") dated as of October 1, 2004 with Credit Suisse
First Boston Capital LLC ("BUYER"), by Credit Suisse First Boston LLC as its
agent (the "AGENT").
Seller is the record holder of 7.5% Convertible Subordinated Notes due
2010 (evidenced by the certificates attached hereto, the "SECURITIES") of
Korn/Ferry International, a Delaware corporation (the "COMPANY"). The
Securities are convertible into shares of common stock ("COMMON STOCK") of the
Company. Seller and Buyer are willing to sell and purchase $13,057,784.79
aggregate principal amount of the Securities at the times and on the terms set
forth in the Agreement. Seller has agreed, pursuant to the Agreement, to grant
Buyer a security interest (the "PLEDGE") in Securities (the "PLEDGED
SECURITIES") to secure the obligations of Seller under the Agreement.
This letter constitutes written notice of conversion (the "NOTICE OF
CONVERSION") required by the Securities and instruments governing the
Securities. In the event that Seller delivers Securities pursuant to its
obligations under the Agreement, or in the event of the exercise by Buyer of
any of its rights under the Pledge with respect to the Pledged Securities, the
Seller and Buyer hereby elect that such Securities be converted into such
number of shares of Common Stock as provided for by the terms of the Securities
and its governing instruments.
Pursuant to this Notice of Conversion and upon delivery of certificates
evidencing the Securities subject to conversion duly endorsed by Seller or in
blank or accompanied by a duly executed proper instrument of transfer in a form
satisfactory to the Company, please convert the Securities into the applicable
number of shares of Common Stock and, at Buyer's direction, either (i) issue
them in the name of Credit Suisse First Boston Capital LLC and deliver the
certificate evidencing such shares of Common Stock directly to the following
address:
Credit Suisse First Boston Capital LLC
1 Madison Avenue, 3rd Floor
New York, New York 10010
Attn: Ricardo Harewood
OTC Derivative Operations
or (ii) deliver them in electronic equivalent form to an account specified by
Buyer at such time.
PLEASE DO NOT DELIVER THE CERTIFICATES REPRESENTING SUCH SHARES OF COMMON
STOCK TO SELLER UNDER ANY CIRCUMSTANCES PURSUANT TO THE TERMS OF THIS NOTICE OF
CONVERSION.
This Notice of Conversion will be irrevocable by the Seller. This Notice
of Conversion will automatically terminate upon the satisfaction of Seller's
delivery obligations under the Agreement, as determined in good faith by the
Buyer.
Very truly yours,
FRIEDMAN FLEISCHER & LOWE CAPITAL
PARTNERS, L.P.
BY: FRIEDMAN FLEISCHER & LOWE GP,
LLC, ITS GENERAL PARTNER
By:
Name:
Title:
CREDIT SUISSE FIRST BOSTON CAPITAL
LLC
By:
Name:
Title:
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PREPAID FORWARD TRANSACTION
------------------------------------------------------------------------------
October 4, 2004
FFL Executive Partners, L.P.
One Maritime Plaza, Suite 1000
San Francisco, CA 94111
Credit Suisse First Boston Capital LLC
Eleven Madison Avenue
New York, NY 10010
External ID: - Risk ID:
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Dear Sir or Madam,
The purpose of this letter agreement (this "CONFIRMATION") is to confirm the
terms and conditions of the Transaction entered into between us on the Trade
Date specified below (the "TRANSACTION"). This Confirmation constitutes a
"Confirmation" as referred to in the Agreement specified below.
In this Confirmation, "CSFB" means Credit Suisse First Boston Capital LLC,
"COUNTERPARTY" means FFL Executive Partners, L.P. and "AGENT" means Credit
Suisse First Boston LLC, solely in its capacity as agent for CSFB and
Counterparty.
1. The definitions and provisions contained in the 2000 ISDA Definitions (the
"2000 DEFINITIONS") and the 2002 ISDA Equity Derivatives Definitions (the
"2002 DEFINITIONS" and, together with the 2000 Definitions, the
"DEFINITIONS"), each as published by the International Swaps and
Derivatives Association, Inc. ("ISDA"), are incorporated into this
Confirmation. In the event of any inconsistency between the 2000
Definitions and the 2002 Definitions, the 2002 Definitions will govern. In
the event of any inconsistency between the Definitions and this
Confirmation, this Confirmation will govern. The Transaction shall be
deemed to be a Share Forward Transaction within the meaning set forth in
the Equity Definitions.
This Confirmation shall supplement, form a part of and be subject to an
agreement (the "AGREEMENT") in the form of the 1992 ISDA Master Agreement
(Multicurrency - Cross Border) (the "ISDA FORM"), as published by the
International Swaps and Derivatives Association, Inc., as if CSFB and
Counterparty had executed the ISDA Form (without any Schedule thereto) on
the date hereof. All provisions contained in the Agreement are
incorporated into and shall govern this Confirmation except as expressly
modified below. This Confirmation evidences a complete and binding
agreement between you and us as to the terms of the Transaction and
relates and replaces any previous agreement between us with respect to the
subject matter hereof, including the agreement entitled "Physically
Settled Forward Contract on Korn Ferry 7.5% Convertible Series A Preferred
Stock Executable Terms as of October 1, 2004" (the "TERM SHEET"). This
Confirmation, together with all other confirmations or agreements between
us referencing the ISDA Form, shall be deemed to supplement, form part of
and be subject to the same, single Agreement.
If there exists any ISDA Master Agreement between CSFB and Counterparty or
any confirmation or other agreement between CSFB and Counterparty pursuant
to which an ISDA Master Agreement is deemed to exist between CSFB and
Counterparty, then notwithstanding anything to the contrary in such ISDA
Master Agreement, such confirmation or agreement or any other agreement to
which CSFB and Counterparty are parties, this Transaction shall not be
considered a Transaction under, or otherwise governed by, such existing or
deemed ISDA Master Agreement.
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
General Terms:
Trade Date: October 1, 2004
Seller: Counterparty
Buyer: CSFB
Securities: 7.5% Convertible Series A Preferred
Stock of Korn/Ferry International (the
"ISSUER").
Number of Securities: 59.045 shares as of the Trade Date; the
Number of Securities shall be increased
to reflect any payments thereon of
dividends in additional Securities;
further, in the event of any exchange,
substitution, redemption, repurchase or
similar transaction (whether in whole
or in part) with respect to the Number
of Securities pursuant to the terms
thereof and the instruments governing
them or applicable law, the Number of
Securities shall consist of any and all
property received upon such transaction
and any remaining Securities, as
determined by the Calculation Agent.
Shares: Common stock of the Issuer (Exchange
Symbol: "KFY")
Number of Shares: the number of Shares into which the
Number of Securities is convertible
(5,794.40 as of the Trade Date);
provided, however, that any references
to Number of Shares to be
Delivered shall be to the Number
of Securities
Prepayment: Applicable
Conditions to CSFB's Obligation
to Pay Prepayment Amount: It shall be a condition to CSFB's
obligation to pay any Prepayment Amount
hereunder on any Prepayment Date that
Counterparty shall have performed its
obligations under paragraphs
4(a)-"Delivery of Collateral" and
5-"Agreements to Deliver Documents",
below.
Prepayment Date: The later of (i) October 6, 2004 and
(ii) the earliest date on which all
conditions to CSFB's obligation to pay
the Prepayment Amount have been
satisfied, provided, however, that in
the case of (ii) above, if such
conditions were not satisfied by 12:00
p.m. New York City time on such date,
then the Prepayment Date would be the
following Business Day
Prepayment Amount: USD 107,105.03
Variable Obligation: Not applicable
Exchange: The New York Stock Exchange
Related Exchange(s): All Exchanges
Settlement Terms:
Physical Settlement: Applicable
Settlement Method Election: Not applicable
Settlement Date 2 years from the Trade Date, provided
that CSFB may elect to accelerate the
Settlement Date at anytime upon 1
Business Day's notice and take
immediate delivery of the Number of
Securities.
Automatic Physical
Settlement: If (x) by 10:00 A.M., New York City
time, on the Settlement Date,
Counterparty has not otherwise effected
delivery of the Number of Shares to be
Delivered and (y) the Representation
and Agreement set forth in Section 9.11
of the 2002 Definitions are true and
satisfied (or, at the absolute
discretion of CSFB, such Representation
and Agreement are not true or
satisfied) with respect to the
collateral then held hereunder by or on
behalf of CSFB, then the delivery
required by Section 9.2 of the Equity
Definitions shall be effected, in whole
or in part, as the case may be by
delivery from the Collateral Account
(as defined below under "Collateral")
to CSFB of the Number of Securities.
Settlement Currency: USD
Dividends and Other Payments:
Payment Obligation by
Counterparty: Counterparty shall immediately upon
receipt thereof pay to CSFB any and all
dividends, distributions, coupons and
other payments (other than dividend
payments in kind which shall be added
to the Number of Securities and the
Collateral) received in respect of the
Securities.
Sections 11 and 12 of the
2002 Definitions: Not Applicable
Non-Reliance: Applicable
Agreements and Acknowledgments
Regarding Hedging Activities: Applicable
Additional Acknowledgments: Applicable
Credit Support Documents: Section 4 shall be a Credit Support
Document under the Agreement with
respect to Counterparty.
Guarantee dated May 16, 2001 made by
Credit Suisse First Boston (USA), Inc.,
a Delaware corporation, in favor of
each and every counterparty to one or
more Financial Transactions (as defined
therein) with CSFB shall be a Credit
Support Document under the Agreement
with respect to CSFB.
Account Details:
Payments to CSFB: To be advised under separate cover
prior to the Trade Date
Payments to Counterparty: Bank: Bank of America
Address: 345 Montgomery Street
Concourse Level
San Francisco, CA 94104
ABA #: 121-000-358
Account #: 14991-06117
Account Name: FFL Executive Partners,
L.P.
Delivery of Securities/
Shares to CSFB: Credit Suisse First Boston Corp.
DTC# 355
Account # 2HRY60
Account Name: CSFB
Capital LLC Collateral Management
Account
Office: CSFB is acting through its New York
Office for the purposes of the
Transaction; Counterparty is not a
Multibranch Party.
Calculation Agent: CSFB. The Calculation Agent will have
no responsibility for good faith errors
or omissions in any determination under
the Transaction.
3. Other Provisions:
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF COUNTERPARTY:
Counterparty hereby represents and warrants to CSFB as of the date
hereof that:
1. From the date three months prior to the date of the Term
Sheet, neither Counterparty nor any person who would be
considered to be the same "person" as Counterparty or "acting
in concert" with Counterparty (as such terms are used in
clauses (a)(2) and (e)(3)(vi) of Rule 144 under the Securities
Act of 1933, as amended (the "SECURITIES ACT")) has, without
the written consent of CSFB, sold any Shares or hedged
(through swaps, options, short sales or otherwise) any long
position in the Shares. Counterparty 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. Shares of common stock of the Issuer issuable
upon conversion of the Securities would, upon sale of such
shares, be considered securities "acquired from the issuer for
a consideration consisting solely of other securities of the
same issuer surrendered for conversion" for the purposes of
Rule 144.
2. Counterparty is an "eligible contract participant" as such
term is defined in Section 1(a)(12) of the Commodity Exchange
Act, as amended.
3. Counterparty was not on the Trade Date, and is not on the date
hereof, in possession of any material non-public information
regarding the Issuer. None of the transactions contemplated
herein will violate any corporate policy of the Issuer or
other rules or regulations of the Issuer applicable to
Counterparty or its affiliates, including, but not limited to,
the Issuer's window period policy.
4. On the Trade Date, Counterparty filed, in the manner
contemplated by Rule 144(h) under the Securities Act, a notice
on Form 144 relating to the Transaction contemplated hereby in
form and substance that CSFB has informed Counterparty is
acceptable to CSFB.
5. All representations and warranties of Counterparty contained
in the Term Sheet were true and correct as of the times such
representations and warranties were made or repeated or deemed
to be made or repeated under the Term Sheet and Counterparty
has performed all of the covenants and obligations to be
performed by Counterparty on or prior to the date hereof under
the Term Sheet.
6. Counterparty is not and, after giving effect to the
transactions contemplated hereby, will not be an "investment
company" as such term is defined in the Investment Company Act
of 1940, as amended.
7. Counterparty is, and shall be as of the date of any payment or
delivery by Counterparty hereunder, solvent and able to pay
its debts as they come due, with assets having a fair value
greater than liabilities and with capital sufficient to carry
on the businesses in which it engages.
8. Counterparty's holding period (calculated in accordance with
Rule 144(d) under the Securities Act) with respect to the
Initial Pledged Items commenced on June 13, 2002. Counterparty
agrees that Counterparty has not (i) created or permitted to
exist any Lien (other than the Security Interests) or any
Transfer Restriction (other than the Existing Transfer
Restrictions) upon or with respect to the Collateral, (ii)
sold or otherwise disposed of, or granted any option with
respect to, any of the Collateral or (iii) entered into or
consented to any agreement (other than, in the case of clause
(x), this Confirmation) (x) that restricts in any manner the
rights of any present or future owner of any Collateral with
respect thereto or (y) pursuant to which any person other than
Counterparty, CSFB and any securities intermediary through
whom any of the Collateral is held (but in the case of any
such securities intermediary only in respect of Collateral
held through it) has or will have Control in respect of any
Collateral. "CONTROL" means "control" as defined in Section
8-106 and 9-106 of the Uniform Commercial Code as in effect in
the State of New York ("UCC").
9. Other than financing statements or other similar or equivalent
documents or instruments with respect to the Security
Interests, no financing statement, security agreement or
similar or equivalent document or instrument covering all or
any part of the Collateral is on file or of record in any
jurisdiction in which such filing or recording would be
effective to perfect a lien, security interest or other
encumbrance of any kind on such Collateral.
10. All Collateral consisting of securities and all financial
assets underlying Collateral consisting of security
entitlements (each as defined in Section 8-102 of the UCC) at
any time pledged hereunder is and will be issued by an issuer
organized under the laws of the United States, any State
thereof or the District of Columbia and is and will be (i)
certificated (and the certificate or certificates in respect
of such securities or financial assets are and will be located
in the United States) and registered in the name of
Counterparty or held through a securities intermediary whose
securities intermediary's jurisdiction (within the meaning of
Section 8-110(e) of the UCC) is located in the United States
or (ii) uncertificated and either registered in the name of
Counterparty or held through a securities intermediary whose
securities intermediary's jurisdiction (within the meaning of
Section 8-110(e) of the UCC) is located in the United States;
provided that this representation shall not be deemed to be
breached if, at any time, any such Collateral is issued by an
issuer that is not organized under the laws of the United
States, any State thereof or the District of Columbia, and the
parties hereto agree to procedures or amendments hereto
necessary to enable CSFB to maintain a valid and continuously
perfected security interest in such Collateral, in respect of
which CSFB will have Control, subject to no prior Lien. The
parties hereto agree to negotiate in good faith any such
procedures or amendments.
11. Counterparty's "location" (as defined in Section 9-307 of UCC)
is the state of Delaware. The following is the mailing
address, county and state of each chief executive office not
at such "location" maintained by Counterparty at any time
during the past five years: One Maritime Plaza, Suite 1000,
San Francisco, CA 94111.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF CSFB:
1. CSFB represents to Counterparty that an affiliate of CSFB (the
"CSFB AFFILIATE") is registered as a broker and a dealer with
the Securities and Exchange Commission and is a "market maker"
or a "block positioner", as such terms are used in Rule 144
under the Securities Act, with respect to the Shares.
2. CSFB agrees that CSFB Affiliate shall, as promptly as
practicable consistent with market conditions, introduce into
the public market a quantity of securities of the same class
as the Shares equal to the Number of Shares.
U.S. PRIVATE PLACEMENT REPRESENTATIONS:
Each of CSFB and Counterparty hereby represents and warrants to the
other party as of the date hereof that:
1. It is an "accredited investor" (as defined in Regulation D
under the Securities Act) and has such knowledge and
experience in financial and business matters as to be capable
of evaluating the merits and risks of the Transaction, and it
is able to bear the economic risk of the Transaction.
2. It is entering into the Transaction for its own account and
not with a view to the distribution or resale of the
Transaction or its rights thereunder except pursuant to a
registration statement declared effective under, or an
exemption from the registration requirements of, the
Securities Act.
COVENANTS OF COUNTERPARTY:
Counterparty agrees that each of Counterparty and its affiliates
will comply with all applicable disclosure or reporting
requirements in respect of the Transaction, including, without
limitation, any requirement imposed by Section 13 or Section 16 of
the Securities and Exchange Act of 1934, as amended, if any, and
Counterparty will provide CSFB with a copy of any report filed in
respect of the Transaction promptly upon filing thereof.
BINDING COMMITMENT/FINAL AGREEMENT:
The parties intend that this Confirmation constitutes a "Final
Agreement" as described in the letter dated December 14, 1999
submitted by Robert W. Reeder and Alan L. Beller to Michael Hyatte
of the staff of the Securities and Exchange Commission (the
"STAFF") to which the Staff responded in an interpretative letter
dated December 20, 1999.
PAYMENTS ON EARLY TERMINATION:
Upon the occurrence or effective designation of an Early
Termination Date in respect of the Transaction (an "EARLY
TERMINATION EVENT"), if Counterparty would owe any amount to CSFB
pursuant to Section 6(d)(ii) of the Agreement (determined as if the
Transaction were the only Transaction under the Agreement) (any
such amount, a "COUNTERPARTY PAYMENT AMOUNT" and any Early
Termination Event that would so result in Counterparty owing any
such amount, a "COUNTERPARTY PAYMENT EVENT"), then, except to the
extent that CSFB proceeds to realize upon the Collateral and to
apply the proceeds of such realization to any obligation of
Counterparty hereunder and under the Agreement:
(i) on the date on which any Counterparty Payment Amount is due,
in lieu of any payment or delivery of such Counterparty
Payment Amount, Counterparty shall deliver to CSFB the Number
of Securities; and
(ii) for purposes of determining any Loss under Section 6(e) of the
Agreement in respect of any other Transactions under the
Agreement, the Transaction shall be deemed not to be a
Transaction under the Agreement; provided that, for the
avoidance of doubt, if Counterparty fails to deliver
Securities pursuant to clause (i) above at the time required,
then the Transaction (including such delivery obligation)
shall be included for the purpose of determining CSFB's Loss
for all Transactions (including the Transaction) under the
Agreement.
SECURITIES CONTRACT:
The parties hereto acknowledge and agree that each of CSFB and the
Custodian is a "stockbroker" within the meaning of Section 101
(53A) of Title 11 of the United States Code (the "BANKRUPTCY CODE")
and that the Custodian is acting as agent and custodian for CSFB in
connection with the Transaction and that CSFB is a "customer" of
the Custodian within the meaning of Section 741(2) of the
Bankruptcy Code. The parties hereto further recognize that the
Transaction is a "securities contract", as such term is defined in
Section 741(7) of the Bankruptcy Code, entitled to the protection
of, among other provisions, Sections 555 and 362(b)(6) of the
Bankruptcy Code, and that each payment or delivery of cash, Shares
or other property or assets hereunder is a "settlement payment"
within the meaning of Section 741(8) of the Bankruptcy Code.
ASSIGNMENT:
The rights and duties under this Confirmation may not be assigned
or transferred by any party hereto without the prior written
consent of the other parties hereto, such consent not to be
unreasonably withheld; provided that (i) CSFB may assign or
transfer any of its rights or duties hereunder to any of its
affiliates without the prior written consent of Counterparty 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.
NON-CONFIDENTIALITY:
The parties hereby agree that (i) effective from the date of
commencement of discussions concerning the Transaction,
Counterparty and each of its employees, representatives, or other
agents may disclose to any and all persons, without limitation of
any kind, the tax treatment and tax structure of the Transaction
and all materials of any kind, including opinions or other tax
analyses, provided by CSFB and its affiliates to Counterparty
relating to such tax treatment and tax structure; provided that the
foregoing does not constitute an authorization to disclose the
identity of CSFB or its affiliates, agents or advisers, or, except
to the extent relating to such tax structure or tax treatment, any
specific pricing terms or commercial or financial information, and
(ii) CSFB 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
Counterparty.
MATTERS RELATING TO CREDIT SUISSE FIRST BOSTON CAPITAL LLC AND CREDIT
SUISSE FIRST BOSTON LLC:
1. Agent shall act as "agent" for CSFB and Counterparty in
connection with the Transaction.
2. Agent will furnish to Counterparty upon written request a
statement as to the source and amount of any remuneration
received or to be received by Agent in connection herewith.
3. Agent has no obligation hereunder, by guaranty, endorsement or
otherwise, with respect to performance of CSFB's obligations
hereunder or under the Agreement.
4. Credit Suisse First Boston Capital LLC is an "OTC derivatives
dealer" as such term is defined in the Exchange Act and is an
affiliate of Agent.
5. Credit Suisse First Boston Capital LLC is not a member of the
Securities Investor Protection Corporation.
STAGGERED SETTLEMENT:
If CSFB determines reasonably and in good faith that the Number of
Shares to be Delivered to CSFB hereunder or, in receiving such
Number of Shares to be Delivered, its "beneficial ownership"
(within the meaning of Section 16 of the Exchange Act and rules
promulgated thereunder) on the Settlement Date would exceed 9.9% of
all outstanding Shares, then CSFB may, by notice to Counterparty on
or prior to the Settlement Date (a "NOMINAL SETTLEMENT DATE"),
elect to receive the Number of Shares to be Delivered on two or
more dates (each, a "STAGGERED SETTLEMENT DATE") as follows:
(a) in such notice, CSFB will specify to Counterparty the related
Staggered Settlement Dates (the first of which will be such Nominal
Settlement Date and the last of which will be no later than the
twentieth (20th) Exchange Business Day following such Nominal
Settlement Date) and the related portion of the Number of Shares to
be Delivered on each Staggered Settlement Date; and
(b) the aggregate number of Shares that Counterparty will deliver
to CSFB hereunder on all such Staggered Settlement Dates will equal
the Number of Shares to be Delivered that Counterparty would
otherwise be required to deliver on such Nominal Settlement Date.
Notwithstanding anything herein to the contrary, to the extent
Counterparty receives or is entitled to receive any distribution or
payment in respect of Shares by reason of Counterparty's being a
holder of record of such Shares on any date after the Nominal
Settlement Date but for the provisions of the foregoing,
Counterparty shall deliver such distribution or payment to CSFB at
the time Counterparty delivers to CSFB the related portion of the
Number of Shares to be Delivered in accordance with the foregoing,
if such distribution or payment has already been received by
Counterparty at such time, or within a reasonable period of time
following Counterparty's receipt of the distribution or payment, if
such distribution or payment has not been already received by
Counterparty at the time Counterparty delivers the related portion
of the Number of Shares to be Delivered in accordance with the
foregoing.
4. Collateral Provisions:
Counterparty has granted to CSFB a security interest in the Initial
Pledged Items to secure Counterparty's obligations under the Term Sheet
and the Transaction. Counterparty and CSFB now wish to (i) set forth
additional understandings and agreements relating to such security
interest and (ii) confirm, on the terms set forth herein, the continuation
of such security interest.
A. DELIVERY OF COLLATERAL:
As soon as practicable after the Trade Date, Counterparty shall deliver to
CSFB in pledge hereunder, Eligible Collateral consisting of the Number of
Securities (the "INITIAL PLEDGED ITEMS"). "ELIGIBLE COLLATERAL" means
Securities; provided that Counterparty has good and marketable title
thereto, free of all of any and all lien, mortgage, interest, pledge,
charge or encumbrance of any kind (other than the security interests in
the Collateral created hereby, a "LIEN") and Transfer Restrictions (other
than the Existing Transfer Restrictions) and that CSFB has a valid, first
priority perfected security interest therein, a first lien thereon and
Control with respect thereto. "TRANSFER RESTRICTION" means, with respect
to any item of collateral pledged hereunder, any condition to or
restriction on the ability of the owner thereof to sell, assign or
otherwise transfer such item of collateral or 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 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 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 item of collateral, prior to the
sale, pledge, assignment or other transfer or enforcement of such item of
collateral and (iv) any registration or qualification requirement or
prospectus delivery requirement for such item of collateral pursuant to
any federal, state or foreign securities law (including, without
limitation, any such requirement arising under Section 5 of the Securities
Act as a result of such security being a "restricted security" or
Counterparty being an "affiliate" of the issuer of such security, as such
terms are defined in Rule 144 under the Securities Act, or as a result of
the sale of such security being subject to paragraph (c) of Rule 145 under
the Securities Act); provided that the required delivery of any
assignment, instruction or entitlement order from the seller,
Counterparty, assignor or transferor of such item of collateral, together
with any evidence of the corporate or other authority of such Person,
shall not constitute a "Transfer Restriction". "EXISTING TRANSFER
RESTRICTIONS" means Transfer Restrictions existing with respect to any
securities by virtue of the fact that Counterparty is an "affiliate",
within the meaning of Rule 144 under the Securities Act, of the Issuer.
"PERSON" means an individual, a corporation, a limited liability company,
a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency
or instrumentality thereof.
Any delivery of any securities or security entitlements (each as defined
in Section 8-102 of the UCC) as Collateral to CSFB by Counterparty shall
be effected (A) in the case of Collateral consisting of certificated
securities registered in the name of Counterparty, by delivery of
certificates representing such securities to the Custodian, accompanied by
any required transfer tax stamps, and in suitable form for transfer by
delivery or accompanied by duly executed instruments of transfer or
assignment in blank, with signatures appropriately guaranteed, all in form
and substance satisfactory to CSFB, and the crediting by the Custodian of
such securities to a securities account (as defined in Section 8-501 of
the UCC) (the "COLLATERAL ACCOUNT") of CSFB maintained by the Custodian,
(B) in the case of Collateral consisting of uncertificated securities
registered in the name of Counterparty, by transmission by Counterparty of
an instruction to the issuer of such securities instructing such issuer to
register such securities in the name of the Custodian or its nominee,
accompanied by any required transfer tax stamps, the issuer's compliance
with such instructions and the crediting by the Custodian of such
securities to the Collateral Account, (C) in the case of securities in
respect of which security entitlements are held by Counterparty through a
securities intermediary, by the crediting of such securities, accompanied
by any required transfer tax stamps, to a securities account of the
Custodian at such securities intermediary or, at the option of CSFB, at
another securities intermediary satisfactory to CSFB and the crediting by
the Custodian of such securities to the Collateral Account or (D) in any
case, by complying with such alternative delivery instructions as CSFB
shall provide to Counterparty in writing. "CUSTODIAN" means Credit Suisse
First Boston LLC, or any other custodian appointed by CSFB and identified
to Counterparty.
B. GRANT OF SECURITY INTERESTS IN THE COLLATERAL:
In order to secure the full and punctual observance and performance of the
covenants and agreements contained in this Confirmation and in the
Agreement, Counterparty hereby assigns and pledges to CSFB, and grants to
CSFB, as secured party, security interests in and to, and a lien upon and
right of set-off against, and transfers to CSFB, as and by way of a
security interest having priority over all other security interests, with
power of sale, all of Counterparty's right, title and interest in and to
(i) the Initial Pledged Items; (ii) all additions to and substitutions for
the Initial Pledged Items (including, without limitation, any securities,
instruments or other property delivered or pledged hereunder) (such
additions and substitutions, the "ADDITIONS AND SUBSTITUTIONS"); (iii) the
Collateral Account of CSFB maintained by the Custodian and all securities
and other financial assets (each as defined in Section 8-102 of the UCC)
and other funds, property or assets from time to time held therein or
credited thereto; and (iv) other than the payments made to CSFB pursuant
to the provision entitled "Payment Obligation by Counterparty" of
paragraph 2 of this Confirmation, all income, proceeds and collections
received or to be received, or derived or to be derived, at the time that
the Initial Pledged Items were delivered to the Custodian or any time
thereafter (whether before or after the commencement of any proceeding
under applicable bankruptcy, insolvency or similar law, by or against
Counterparty, with respect to Counterparty) from or in connection with the
Initial Pledged Items or the Additions and Substitutions (collectively,
the "COLLATERAL"). The parties hereto expressly agree that all rights,
assets and property at any time held in or credited to the Collateral
Account shall be treated as financial assets (as defined in Section 8-102
of the UCC).
C. CERTAIN COVENANTS OF COUNTERPARTY RELATING TO THE COLLATERAL:
Counterparty agrees that, so long as any of Counterparty's obligations
under the Agreement remain outstanding:
1. Counterparty shall ensure at all times that a Collateral Event of
Default shall not occur, and shall pledge additional Collateral in
the manner described hereunder as necessary to cause such requirement
to be met. "COLLATERAL EVENT OF DEFAULT" means, at any time, the
occurrence of either of the following: (A) failure of the Collateral
to include, as Eligible Collateral, the Number of Securities or (B)
failure at any time of the security interests in the Collateral
created hereby to constitute valid and perfected security interests
in all of the Collateral, subject to no prior, equal or junior Lien,
and, with respect to any Collateral consisting of securities or
security entitlements (each as defined in Section 8-102 of the UCC),
as to which CSFB has Control, or, in each case, assertion of such by
Counterparty in writing.
2. Counterparty shall, at its own expense and in such manner and form as
CSFB may require, give, execute, deliver, file and record any
financing statement, notice, instrument, document, agreement or other
papers that may be necessary or desirable in order to (i) create,
preserve, perfect, substantiate or validate any security interest
granted pursuant hereto, (ii) create or maintain Control with respect
to any such security interests in any investment property (as defined
in Section 9-102(a) of the UCC) or (iii) enable CSFB to exercise and
enforce its rights hereunder with respect to such security interest.
3. Counterparty shall warrant and defend Counterparty's title to the
Collateral, subject to the rights of CSFB, against the claims and
demands of all persons. CSFB may elect, but without an obligation to
do so, to discharge any Lien of any third party on any of the
Collateral.
4. Counterparty agrees that Counterparty shall not change (i)
Counterparty's name in any manner or (ii) Counterparty's "location"
(as defined in Section 9-307 of UCC), unless Counterparty shall have
given CSFB not less than 10 days' prior notice thereof.
5. Counterparty agrees that Counterparty has not and shall not (i)
create or permit to exist any Lien (other than the security interests
in the Collateral created hereby) or any Transfer Restriction upon or
with respect to the Collateral, (ii) sell or otherwise dispose of, or
grant any option with respect to, any of the Collateral or (iii)
enter into or consent to any agreement (x) that restricts in any
manner the rights of any present or future owner of any Collateral
with respect thereto (other than this Confirmation) or (y) pursuant
to which any person other than Counterparty, CSFB and any securities
intermediary through whom any of the Collateral is held (but in the
case of any such securities intermediary only in respect of
Collateral held through it) has or will have Control in respect of
any Collateral and represents that it has not previously created any
such Lien, effected any such sale, disposition or grant or entered in
or consented to any such agreement.
D. ADMINISTRATION OF THE COLLATERAL AND VALUATION OF SECURITIES:
1. CSFB shall determine on each Business Day whether a Collateral Event
of Default shall have occurred. If on any Business Day CSFB
determines that a Collateral Event of Default shall have occurred,
CSFB shall promptly notify Counterparty of such determination by
telephone call to Counterparty followed by a written confirmation of
such call. If on any Business Day CSFB determines that no Default
Event or failure by Counterparty to meet any of Counterparty's
obligations under "Certain Covenants of Counterparty relating to the
Collateral" or under this section has occurred and is continuing,
Counterparty may obtain the release from the security interests in
the Collateral created hereby of any Collateral upon delivery to CSFB
of a written notice from Counterparty indicating the items of
Collateral to be released so long as, after such release, no
Collateral Event of Default shall have occurred. "DEFAULT EVENT"
means any Collateral Event of Default, any Event of Default with
respect to Counterparty or any Termination Event with respect to
which Counterparty is the Affected Party or an Affected Party or an
Extraordinary Event that results in an obligation of Counterparty to
pay an amount pursuant to Section 12.7 or Section 12.9 of the 2002
Definitions.
2. Counterparty may pledge additional Eligible Collateral hereunder at
any time by delivering the same pursuant to the provisions of
"Delivery of Collateral" above. Concurrently with the delivery of any
additional Eligible Collateral, Counterparty shall deliver to CSFB a
certificate, dated the date of such delivery, (i) identifying the
additional items of Eligible Collateral being pledged and (ii)
certifying that with respect to such items of additional Eligible
Collateral the representations and warranties contained in paragraph
4.c.5. above are true and correct with respect to such Eligible
Collateral on and as of the date thereof.
3. [RESERVED]
4. CSFB may at any time or from time to time, in its sole discretion,
cause any or all of the Collateral that is registered in the name of
Counterparty or Counterparty's nominee to be transferred of record
into the name of the Custodian, CSFB or its nominee. Counterparty
shall promptly give to CSFB copies of any notices or other
communications received by Counterparty with respect to Collateral
that is registered, or held through a securities intermediary, in the
name of Counterparty or Counterparty's nominee and CSFB shall
promptly give to Counterparty copies of any notices and
communications received by CSFB with respect to Collateral that is
registered, or held through a securities intermediary, in the name of
Custodian, CSFB or its nominee.
5. Counterparty agrees that Counterparty shall forthwith upon demand pay
to CSFB:
(i) the amount of any taxes that CSFB or the Custodian may have
been required to pay by reason of the security interests in
the Collateral created hereby or to free any of the Collateral
from any Lien thereon; and
(ii) the amount of any and all costs and expenses, including the
fees and disbursements of counsel and of any other experts,
that CSFB or the Custodian may incur in connection with (A)
the enforcement of this pledge upon a Default Event, including
such expenses as are incurred to preserve the value of the
Collateral and the validity, perfection, rank and value of the
security interests in the Collateral created hereby, (B) the
collection, sale or other disposition of any of the Collateral
pursuant to the terms and conditions of the Agreement, (C) the
exercise by CSFB of any of the rights conferred upon it
hereunder or (D) any Default Event.
Any such amount not paid on demand shall bear interest (computed on
the basis of a year of 360 days and payable for the actual number
of days elapsed) at a rate per annum equal to 5% plus the prime
rate as published from time to time in The Wall Street Journal,
Eastern Edition.
E. REHYPOTHECATION OF COLLATERAL:
The parties hereto agree that CSFB may sell, lend, pledge, rehypothecate,
assign, invest, use, commingle or otherwise dispose of, or otherwise use
in its business any Collateral.
F. INCOME RIGHTS IN COLLATERAL:
Other than the payments made to CSFB pursuant to the provision entitled
"Payment Obligation by Counterparty" of paragraph 2 of this Confirmation,
CSFB shall have the right to receive and retain as Collateral hereunder
all proceeds and interest of the Collateral (such proceeds as CSFB shall
have the right to receive and retain at any time, "RETAINED PROCEEDS"),
and Counterparty shall take all such action as CSFB shall deem necessary
or appropriate to give effect to such right. All such Retained Proceeds
that are received by Counterparty shall be received in trust for the
benefit of CSFB and, if CSFB so directs, shall be segregated from other
funds of Counterparty and shall, forthwith upon demand by CSFB, be
delivered over to the Custodian on behalf of CSFB as Collateral in the
same form as received (with any necessary endorsement).
G. REMEDIES UPON DEFAULT EVENTS:
If any Default Event shall have occurred and be continuing, CSFB may
exercise all the rights of a secured party under the UCC (whether or not
in effect in the jurisdiction where such rights are exercised) and, in
addition, without being required to give any notice, except as herein
provided or as may be required by mandatory provisions of law, may sell
all of the Collateral, or such lesser portion thereof as may be necessary
to generate proceeds sufficient to satisfy in full all of the obligations
of Counterparty under the Agreement or hereunder.
Counterparty hereby irrevocably appoints CSFB as Counterparty's true and
lawful attorney (which power of attorney is coupled with an interest),
with full power of substitution, in the name of Counterparty, CSFB or
otherwise, for the sole use and benefit of CSFB, but at the expense of
Counterparty, to the extent permitted by law, to exercise, at any time and
from time to time while a Default Event has occurred and is continuing,
all or any of the following powers with respect to all or any of the
Collateral:
(i) to demand, sue for, collect, receive and give acquittance for any
and all monies due or to become due upon or by virtue thereof;
(ii) to settle, compromise, compound, prosecute or defend any action or
proceeding with respect thereto;
(iii) to sell, transfer, assign or otherwise deal in or with the same or
the proceeds or avails thereof, as fully and effectually as if CSFB
were the absolute owner thereof and in connection therewith, to
make all necessary deeds, bills of sale, instruments of assignment,
transfer or conveyance of the property, and all instructions and
entitlement orders in respect of the property thus to be (or that
is being or has been) sold, transferred, assigned or otherwise
dealt in; and
(iv) to extend the time of payment of any or all thereof and to make any
allowance and other adjustments with reference thereto;
provided that CSFB shall give Counterparty not less than one day's
prior written notice of the time and place of any sale or other
intended disposition of any of the Collateral, except any
Collateral that threatens to decline speedily in value, including,
without limitation, equity securities, or is of a type customarily
sold on a recognized market. CSFB and Counterparty agree that such
notice constitutes "reasonable authenticated notification" within
the meaning of Section 9-611(b) of the UCC.
H. TERMINATION:
The rights hereby granted by Counterparty in the Collateral shall cease,
terminate and be void upon fulfillment of all of the obligations of
Counterparty under this Confirmation. Any Collateral remaining at the time
of such termination shall be fully released and discharged from the
security interests in the Collateral created hereby and delivered to
Counterparty by CSFB, all at the request and expense of Counterparty.
5. The Agreement is further supplemented by the following provisions:
TERMINATION PROVISIONS.
1. "SPECIFIED ENTITY" means in relation to CSFB and Counterparty,
none.
2. The "DEFAULT UNDER SPECIFIED TRANSACTION" provision of Section
5(a)(v) of the Agreement will not apply to CSFB and
Counterparty.
3. The "CROSS DEFAULT" provision of Section 5(a)(vi) will not
apply to CSFB and will apply to Counterparty.
4. The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv)
will not apply to CSFB and Counterparty.
5. The "AUTOMATIC EARLY TERMINATION" provisions of Section 6(a)
will not apply to CSFB and Counterparty.
6. PAYMENTS ON EARLY TERMINATION. For the purpose of Section
6(e), Second Method and Loss will apply.
7. "TERMINATION CURRENCY" means United States Dollars.
8. NETTING. The provisions of Section 2(c) of the Agreement shall
apply, provided that Section 2(c) shall be amended by deleting
"and" at the end of clause (i) thereof and deleting clause
(ii) thereof.
9. 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 an
Early Termination Event, such Party ("PARTY X") shall have the
right to terminate, liquidate and otherwise close out the
transactions contemplated by this Confirmation pursuant to the
terms hereof, and to set off any obligation that Party X or
any affiliate of Party X may have to the other party ("PARTY
Y") hereunder, thereunder or otherwise, including without
limitation any obligation to make any release, delivery or
payment to Party Y pursuant to this Confirmation or any other
agreement between Party X or any of its affiliates and Party
Y, against any right Party X or any of its affiliates may have
against Party Y, including without limitation any right to
receive a payment or delivery pursuant to this Confirmation or
any other agreement between Party X or any of its affiliates
and Party Y. 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 Shares or right to
receive Shares, the value at any time of such obligation or
right shall be determined by reference to the market value of
the Shares 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.
TAX REPRESENTATIONS. None.
AGREEMENTS TO DELIVER DOCUMENTS. For the purpose of Sections 4(a)(i)
and (ii), each of CSFB and Counterparty agrees to deliver the
following documents, as applicable:
1. The Issuer shall have executed and delivered to CSFB, upon
execution of this Confirmation, an Issuer Acknowledgement in
the form attached as Annex A hereto.
2. Each of CSFB and Counterparty will deliver to the other party,
upon execution of this Confirmation and upon request of such
other party, evidence reasonably satisfactory to the other
party as to the names, true signatures and authority of the
officers or officials signing this Confirmation on its behalf.
Such documents shall be covered by the representation set forth in
Section 3(d).
MISCELLANEOUS:
1. ADDRESSES FOR NOTICES. For the purpose of Section 12(a):
Address for notices or communications to CSFB (other than by
facsimile) (for all purposes):
Address: Credit Suisse First Boston Capital LLC
c/o Credit Suisse First Boston LLC
11 Madison Avenue
New York, NY 10010
Attn: Senior Legal
Officer Tel: (212) 538 4488
Fax: (212) 325 4585
With a copy to: Credit Suisse First Boston LLC
1 Madison Avenue, 3rd Floor
New York, New York 10010
For payments and deliveries:
Attn: Ricardo Harewood
Tel: (212) 538-9810
Fax: (212) 325- 8175
For all other communications:
Attn: Carlos Moscoso / John Ryan
Tel.: (212) 538-4437 / (212) 538-8297/
(212) 325-5119
Fax: (212) 325-8173
Designated responsible employee for the purposes of Section
12(a)(iii): Senior Legal Officer
Address for notices or communications to Counterparty:
Address: FFL Executive Partners, L.P.
One Maritime Plaza, Suite 1000
San Francisco, CA 94111
Attention: Rajat Duggal
Facsimile No.: (415) 402-2111 Telephone No.: (415) 402-2100
With a copy to:
Address: Bingham McCutchen LLP
399 Park Avenue
New York, NY 10022
Attention: Neil Townsend
Facsimile No.: (212) 702-3644
Telephone No.: (212) 318-7722
2. The date and time of the Transaction will be furnished by CSFB
to Counterparty upon written request by Counterparty.
3. [RESERVED]
4. WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING RELATING TO THIS CONFIRMATION OR ANY CREDIT SUPPORT
DOCUMENT. Each party (i) certifies that no representative,
agent or attorney of the other party has represented,
expressly or otherwise, that such other party would not, in
the event of such a suit action or proceeding, seek to enforce
the foregoing waiver and (ii) acknowledges that it and the
other party have been induced to enter into this Confirmation
by, among other things, the mutual waivers and certifications
in this Section.
5. SERVICE OF PROCESS. The parties irrevocably consent to service
of process given in the manner provided for notices in Section
in paragraph 1 immediately above. Nothing in this Confirmation
will affect the right of either party to serve process in any
other manner permitted by law.
6. THE AGREEMENT AND EACH CONFIRMATION THEREUNDER WILL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REFERENCE TO CHOICE OF LAW DOCTRINE
(PROVIDED THAT AS TO PLEDGED ITEMS LOCATED IN ANY JURISDICTION
OTHER THAN THE STATE OF NEW YORK, CSFB SHALL, IN ADDITION TO
ANY RIGHTS UNDER THE LAWS OF THE STATE OF NEW YORK, HAVE ALL
OF THE RIGHTS TO WHICH A SECURED PARTY IS ENTITLED UNDER THE
LAWS OF SUCH OTHER JURISDICTION). EACH PARTY HEREBY SUBMITS TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK. THE
PARTIES HERETO HEREBY AGREE THAT THE CUSTODIAN'S JURISDICTION,
WITHIN THE MEANING OF SECTION 8-110(E) OF THE UCC, INSOFAR AS
IT ACTS AS A SECURITIES INTERMEDIARY HEREUNDER OR IN RESPECT
HEREOF, IS THE STATE OF NEW YORK.
7. This Confirmation is not intended and shall not be construed
to create any rights in any person other than Counterparty,
CSFB 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 Counterparty and CSFB shall bind,
and inure to the benefit of, their respective successors and
assigns whether so expressed or not.
8. Any provision of this Confirmation may be amended or waived
if, and only if, such amendment or waiver is in writing and
signed, and in the case of an amendment, by Counterparty and
CSFB or, in the case of a waiver, by the party against whom
the waiver is to be effective.
Please confirm that the foregoing correctly sets forth the terms of our
agreement by signing and returning this Confirmation.
Yours faithfully,
CREDIT SUISSE FIRST BOSTON CAPITAL LLC
By:_____________________________
Name:
Title:
Confirmed as of the date first written above:
FFL EXECUTIVE PARTNERS, L.P.
BY: FRIEDMAN FLEISCHER & LOWE GP, LLC, ITS GENERAL PARTNER
By:________________________________
Name: Spencer C. Fleischer
Title: Senior Managing Member
CREDIT SUISSE FIRST BOSTON LLC,
as Agent
By:________________________________
Name:
Title:
Our Reference Number: External ID: / Risk ID:
ANNEX A
[FORM OF ISSUER ACKNOWLEDGEMENT]
[DATE]
Credit Suisse First Boston Capital LLC
c/o Credit Suisse First Boston LLC
Eleven Madison Avenue
New York, New York 10010
Re: PROPOSED TRANSACTION BY FFL EXECUTIVE PARTNERS, L.P.
Ladies and Gentlemen:
Korn/Ferry International (the "COMPANY") understands that FFL Executive
Partners, L.P. ("COUNTERPARTY") proposes to enter into a hedging transaction
(the "TRANSACTION") with Credit Suisse First Boston Capital LLC ("CSFB") with
respect to shares of the 7.5% Convertible Series A Preferred Stock of the
Company (the "CONVERTIBLE SHARES") convertible into shares of common stock of
the Company (the "COMMON STOCK"). Specifically, the Company understands that
Counterparty proposes to enter into a forward sale and purchase transaction
with CSFB, pursuant to which CSFB will pay cash to Counterparty on or shortly
after the date of execution of the Transaction and Counterparty will deliver to
CSFB on or about October 1, 2006 or such other date specified by CSFB upon 1
Business Day's notice (the "SETTLEMENT DATE"), 59.045 Convertible Shares
(subject to applicable adjustments). In addition, the Company understands that
Counterparty initially will pledge 59.045 Convertible Shares owned by
Counterparty to CSFB to secure Counterparty's obligations under the Transaction
(the "PLEDGE").
The Company has no objection to the proposed Transaction or to the Pledge.
The Company confirms that the Transaction and the Pledge will not violate any
insider trading or other policy or rule of the Company.
The Company agrees that if CSFB forecloses on the Convertible Shares, or
the Convertible Shares are transferred to CSFB pursuant to the terms of the
Transaction, that promptly, upon delivery to the Company or its transfer agent
of:
(i) any required tax stamps; and
(ii) a duly executed notice of conversion (attached hereto as Exhibit 1)
the Company (x) will effect the conversion of such Convertible Shares without
any further action or delivery of any documents or instruments on the part of
CSFB or Counterparty and notwithstanding any policy or objection the Company
may have at the time that would prevent or delay any sale or transfer of any
shares of Common Stock or Convertible Shares by Counterparty at the time of
such foreclosure or transfer and (y) will instruct its transfer agent to
convert any such Convertible Shares held by CSFB in Pledge, in accordance with
the provisions of the Convertible Shares, into the such number of shares of
fully paid and non-assessable shares of Common Stock as provided for by the
terms of the Convertible Shares and issue shares of Common Stock without any
legends thereon that relate to restrictions on the disposition thereof under
the Securities Act of 1933 or otherwise register in such name or names as CSFB
shall request and deliver such shares directly to CSFB or its designee without
the return thereof to Counterparty.
KORN/FERRY INTERNATIONAL
By:
Name:
Title:
EXHIBIT 1 TO ANNEX A
[FORM OF NOTICE OF CONVERSION]
[DATE]
Korn/Ferry International
1800 Century Park East, Suite 900
Los Angeles, CA 90067
Attn: Secretary
Ladies and Gentlemen:
Please be advised that FFL Executive Partners, L.P., a Delaware limited
partnership ("SELLER"), has entered into a Prepaid Forward Confirmation (the
"AGREEMENT") dated as of October 1, 2004 with Credit Suisse First Boston
Capital LLC ("BUYER"), by Credit Suisse First Boston LLC as its agent (the
"AGENT").
Seller is the record holder of shares of 7.5% Convertible Series A
Preferred Stock (evidenced by the certificates attached hereto, the
"CONVERTIBLE SHARES") of Korn/Ferry International, a Delaware corporation (the
"COMPANY"). The Convertible Shares are convertible into shares of common stock
("COMMON STOCK") of the Company. Seller and Buyer are willing to sell and
purchase 59.045 Convertible Shares at the times and on the terms set forth in
the Agreement. Seller has agreed, pursuant to the Agreement, to grant Buyer a
security interest (the "PLEDGE") in Convertible Shares (the "PLEDGED SHARES")
to secure the obligations of Seller under the Agreement.
This letter constitutes written notice of conversion (the "NOTICE OF
CONVERSION") required by the Convertible Shares and instruments governing the
Convertible Shares. In the event that Seller delivers Convertible Shares
pursuant to its obligations under the Agreement, or in the event of the
exercise by Buyer of any of its rights under the Pledge with respect to the
Pledged Shares, the Seller and Buyer hereby elect that such Convertible Shares
be converted into such number of shares of Common Stock as provided for by the
terms of the Convertible Shares and its governing instruments.
Pursuant to this Notice of Conversion and upon delivery of certificates
evidencing the Convertible Shares subject to conversion duly endorsed by Seller
or in blank or accompanied by a duly executed proper instrument of transfer in
a form satisfactory to the Company, please convert the Convertible Shares into
the applicable number of shares of Common Stock and, at Buyer's direction,
either (i) issue them in the name of Credit Suisse First Boston Capital LLC and
deliver the certificate evidencing such shares of Common Stock directly to the
following address:
Credit Suisse First Boston Capital LLC
1 Madison Avenue, 3rd Floor
New York, New York 10010
Attn: Ricardo Harewood
OTC Derivative Operations
or (ii) deliver them in electronic equivalent form to an account specified by
Buyer at such time.
PLEASE DO NOT DELIVER THE CERTIFICATES REPRESENTING SUCH SHARES OF COMMON
STOCK TO SELLER UNDER ANY CIRCUMSTANCES PURSUANT TO THE TERMS OF THIS NOTICE OF
CONVERSION.
This Notice of Conversion will be irrevocable by the Seller. This Notice
of Conversion will automatically terminate upon the satisfaction of Seller's
delivery obligations under the Agreement, as determined in good faith by the
Buyer.
Very truly yours,
FFL EXECUTIVE PARTNERS, L.P.
BY: FRIEDMAN FLEISCHER & LOWE GP,
LLC, ITS GENERAL PARTNER
By:
Name:
Title:
CREDIT SUISSE FIRST BOSTON CAPITAL LLC
By:
Name:
Title:
PREPAID FORWARD TRANSACTION
October 4, 2004
FFL Executive Partners, L.P.
One Maritime Plaza, Suite 1000
San Francisco, CA 94111
Credit Suisse First Boston Capital LLC
Eleven Madison Avenue
New York, NY 10010
External ID: - Risk ID:
Dear Sir or Madam,
The purpose of this letter agreement (this "CONFIRMATION") is to confirm the
terms and conditions of the Transaction entered into between us on the Trade
Date specified below (the "TRANSACTION"). This Confirmation constitutes a
"Confirmation" as referred to in the Agreement specified below.
In this Confirmation, "CSFB" means Credit Suisse First Boston Capital LLC,
"COUNTERPARTY" means FFL Executive Partners, L.P. and "AGENT" means Credit
Suisse First Boston LLC, solely in its capacity as agent for CSFB and
Counterparty.
1. The definitions and provisions contained in the 2000 ISDA Definitions (the
"2000 DEFINITIONS") and the 2002 ISDA Equity Derivatives Definitions (the
"2002 DEFINITIONS" and, together with the 2000 Definitions, the
"DEFINITIONS"), each as published by the International Swaps and
Derivatives Association, Inc. ("ISDA"), are incorporated into this
Confirmation. In the event of any inconsistency between the 2000
Definitions and the 2002 Definitions, the 2002 Definitions will govern. In
the event of any inconsistency between the Definitions and this
Confirmation, this Confirmation will govern. The Transaction shall be
deemed to be a Share Forward Transaction within the meaning set forth in
the Equity Definitions.
This Confirmation shall supplement, form a part of and be subject to an
agreement (the "AGREEMENT") in the form of the 1992 ISDA Master Agreement
(Multicurrency - Cross Border) (the "ISDA FORM"), as published by the
International Swaps and Derivatives Association, Inc., as if CSFB and
Counterparty had executed the ISDA Form (without any Schedule thereto) on
the date hereof. All provisions contained in the Agreement are
incorporated into and shall govern this Confirmation except as expressly
modified below. This Confirmation evidences a complete and binding
agreement between you and us as to the terms of the Transaction and
relates and replaces any previous agreement between us with respect to the
subject matter hereof, including the agreement entitled "Physically
Settled Forward Contract on Korn Ferry 7.5% Convertible Subordinated Note
Executable Terms as of October 1, 2004" (the "TERM SHEET"). This
Confirmation, together with all other confirmations or agreements between
us referencing the ISDA Form, shall be deemed to supplement, form part of
and be subject to the same, single Agreement.
If there exists any ISDA Master Agreement between CSFB and Counterparty or
any confirmation or other agreement between CSFB and Counterparty pursuant
to which an ISDA Master Agreement is deemed to exist between CSFB and
Counterparty, then notwithstanding anything to the contrary in such ISDA
Master Agreement, such confirmation or agreement or any other agreement to
which CSFB and Counterparty are parties, this Transaction shall not be
considered a Transaction under, or otherwise governed by, such existing or
deemed ISDA Master Agreement.
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
General Terms:
Trade Date: October 1, 2004
Seller: Counterparty
Buyer: CSFB
Securities: 7.5% Convertible Subordinated Notes due
2010 of Korn/Ferry International (the
"ISSUER").
Number of Securities: $236,215.21 aggregate principal
amount as of the Trade Date; the Number
of Securities shall be increased to
reflect any payments of interest
thereon in additional Securities;
further, in the event of any exchange,
substitution, redemption, repurchase or
similar transaction (whether in whole
or in part) with respect to the Number
of Securities pursuant to the terms
thereof and the instruments governing
them or applicable law, the Number of
Securities shall consist of any and all
property received upon such transaction
and any remaining Securities, as
determined by the Calculation Agent.
Shares: Common stock of the Issuer (Exchange
Symbol: "KFY")
Number of Shares: the number of Shares into which the
Number of Securities is convertible
(23,181.08 as of the Trade Date);
provided, however, that any references
to Number of Shares to be Delivered
shall be to the Number of Securities
Prepayment: Applicable
Prepayment Date: The later of (i) October 6, 2004 and
(ii) the earliest date on which all
conditions to CSFB's obligation to pay
the Prepayment Amount have been
satisfied, provided, however, that in
the case of (ii) above, if such
conditions were not satisfied by 12:00
p.m. New York City time on such date,
then the Prepayment Date would be the
following Business Day
Conditions to CSFB's Obligation
to Pay Prepayment Amount: It shall be a condition to CSFB's
obligation to pay any Prepayment Amount
hereunder on any Prepayment Date that
Counterparty shall have performed its
obligations under paragraphs
4(a)-"Delivery of Collateral" and
5-"Agreements to Deliver Documents",
below.
Prepayment Amount: USD 428,484.55
Variable Obligation: Not applicable
Exchange: The New York Stock Exchange
Related Exchange(s): All Exchanges
Settlement Terms:
Physical Settlement: Applicable
Settlement Method Election: Not applicable
Settlement Date 2 years from the Trade Date, provided
that CSFB may elect to accelerate the
Settlement Date at anytime upon 1
Business Day's notice and take
immediate delivery of the Number of
Securities.
Automatic Physical
Settlement: If (x) by 10:00 A.M., New York City
time, on the Settlement Date,
Counterparty has not otherwise effected
delivery of the Number of Shares to be
Delivered and (y) the Representation
and Agreement set forth in Section 9.11
of the 2002 Definitions are true and
satisfied (or, at the absolute
discretion of CSFB, such Representation
and Agreement are not true or
satisfied) with respect to the
collateral then held hereunder by or on
behalf of CSFB, then the delivery
required by Section 9.2 of the Equity
Definitions shall be effected, in whole
or in part, as the case may be, by
delivery from the Collateral Account
(as defined below under "Collateral")
to CSFB of the Number of Securities.
Settlement Currency: USD
Interest and Other Payments:
Payment Obligation by
Counterparty: Counterparty shall immediately upon
receipt thereof pay to CSFB any and all
interest, distributions, coupons and
other payments (other than interest
payments in kind which shall be added
to the Number of Securities and the
Collateral) received in respect of the
Securities.
Sections 11 and 12 of the
2002 Definitions: Not Applicable
Non-Reliance: Applicable
Agreements and Acknowledgments
Regarding Hedging Activities: Applicable
Additional Acknowledgments: Applicable
Credit Support Documents: Section 4 shall be a Credit Support
Document under the Agreement with
respect to Counterparty.
Guarantee dated May 16, 2001 made by
Credit Suisse First Boston (USA), Inc.,
a Delaware corporation, in favor of
each and every counterparty to one or
more Financial Transactions (as defined
therein) with CSFB shall be a Credit
Support Document under the Agreement
with respect to CSFB.
Account Details:
Payments to CSFB: To be advised under separate cover
prior to the Trade Date
Payments to Counterparty: Bank: Bank of America
Address: 345 Montgomery Street
Concourse Level
San Francisco, CA 94104
ABA #: 121-000-358
Account #: 14991-06117
Account Name: FFL Executive Partners,
L.P.
Delivery of Securities/Shares
to CSFB: Credit Suisse First Boston Corp.
DTC# 355
Account # 2HRY60
Account Name: CSFB
Capital LLC Collateral Management
Account
Office: CSFB is acting through its New York
Office for the purposes of the
Transaction; Counterparty is not a
Multibranch Party.
Calculation Agent: CSFB. The Calculation Agent will have
no responsibility for good faith errors
or omissions in any determination under
the Transaction.
3. Other Provisions:
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF COUNTERPARTY:
Counterparty hereby represents and warrants to CSFB as of the date
hereof that:
1. From the date three months prior to the date of the Term
Sheet, neither Counterparty nor any person who would be
considered to be the same "person" as Counterparty or "acting
in concert" with Counterparty (as such terms are used in
clauses (a)(2) and (e)(3)(vi) of Rule 144 under the Securities
Act of 1933, as amended (the "SECURITIES ACT")) has, without
the written consent of CSFB, sold any Shares or hedged
(through swaps, options, short sales or otherwise) any long
position in the Shares. Counterparty 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. Shares of common stock of the Issuer issuable
upon conversion of the Securities would, upon sale of such
shares, be considered securities "acquired from the issuer for
a consideration consisting solely of other securities of the
same issuer surrendered for conversion" for the purposes of
Rule 144.
2. Counterparty is an "eligible contract participant" as such
term is defined in Section 1(a)(12) of the Commodity Exchange
Act, as amended.
3. Counterparty was not on the Trade Date, and is not on the date
hereof, in possession of any material non-public information
regarding the Issuer. None of the transactions contemplated
herein will violate any corporate policy of the Issuer or
other rules or regulations of the Issuer applicable to
Counterparty or its affiliates, including, but not limited to,
the Issuer's window period policy.
4. On the Trade Date, Counterparty filed, in the manner
contemplated by Rule 144(h) under the Securities Act, a notice
on Form 144 relating to the Transaction contemplated hereby in
form and substance that CSFB has informed Counterparty is
acceptable to CSFB.
5. All representations and warranties of Counterparty contained
in the Term Sheet were true and correct as of the times such
representations and warranties were made or repeated or deemed
to be made or repeated under the Term Sheet and Counterparty
has performed all of the covenants and obligations to be
performed by Counterparty on or prior to the date hereof under
the Term Sheet.
6. Counterparty is not and, after giving effect to the
transactions contemplated hereby, will not be an "investment
company" as such term is defined in the Investment Company Act
of 1940, as amended.
7. Counterparty is, and shall be as of the date of any payment or
delivery by Counterparty hereunder, solvent and able to pay
its debts as they come due, with assets having a fair value
greater than liabilities and with capital sufficient to carry
on the businesses in which it engages.
8. Counterparty's holding period (calculated in accordance with
Rule 144(d) under the Securities Act) with respect to the
Initial Pledged Items commenced on June 13, 2002. Counterparty
agrees that Counterparty has not (i) created or permitted to
exist any Lien (other than the Security Interests) or any
Transfer Restriction (other than the Existing Transfer
Restrictions) upon or with respect to the Collateral, (ii)
sold or otherwise disposed of, or granted any option with
respect to, any of the Collateral or (iii) entered into or
consented to any agreement (other than, in the case of clause
(x), this Confirmation) (x) that restricts in any manner the
rights of any present or future owner of any Collateral with
respect thereto or (y) pursuant to which any person other than
Counterparty, CSFB and any securities intermediary through
whom any of the Collateral is held (but in the case of any
such securities intermediary only in respect of Collateral
held through it) has or will have Control in respect of any
Collateral. "CONTROL" means "control" as defined in Section
8-106 and 9-106 of the Uniform Commercial Code as in effect in
the State of New York ("UCC").
9. Other than financing statements or other similar or equivalent
documents or instruments with respect to the Security
Interests, no financing statement, security agreement or
similar or equivalent document or instrument covering all or
any part of the Collateral is on file or of record in any
jurisdiction in which such filing or recording would be
effective to perfect a lien, security interest or other
encumbrance of any kind on such Collateral.
10. All Collateral consisting of securities and all financial
assets underlying Collateral consisting of security
entitlements (each as defined in Section 8-102 of the UCC) at
any time pledged hereunder is and will be issued by an issuer
organized under the laws of the United States, any State
thereof or the District of Columbia and is and will be (i)
certificated (and the certificate or certificates in respect
of such securities or financial assets are and will be located
in the United States) and registered in the name of
Counterparty or held through a securities intermediary whose
securities intermediary's jurisdiction (within the meaning of
Section 8-110(e) of the UCC) is located in the United States
or (ii) uncertificated and either registered in the name of
Counterparty or held through a securities intermediary whose
securities intermediary's jurisdiction (within the meaning of
Section 8-110(e) of the UCC) is located in the United States;
provided that this representation shall not be deemed to be
breached if, at any time, any such Collateral is issued by an
issuer that is not organized under the laws of the United
States, any State thereof or the District of Columbia, and the
parties hereto agree to procedures or amendments hereto
necessary to enable CSFB to maintain a valid and continuously
perfected security interest in such Collateral, in respect of
which CSFB will have Control, subject to no prior Lien. The
parties hereto agree to negotiate in good faith any such
procedures or amendments.
11. Counterparty's "location" (as defined in Section 9-307 of UCC)
is the state of Delaware. The following is the mailing
address, county and state of each chief executive office not
at such "location" maintained by Counterparty at any time
during the past five years: One Maritime Plaza, Suite 1000,
San Francisco, CA 94111.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF CSFB:
1. CSFB represents to Counterparty that an affiliate of CSFB (the
"CSFB AFFILIATE") is registered as a broker and a dealer with
the Securities and Exchange Commission and is a "market maker"
or a "block positioner", as such terms are used in Rule 144
under the Securities Act, with respect to the Shares.
2. CSFB agrees that CSFB Affiliate shall, as promptly as
practicable consistent with market conditions, introduce into
the public market a quantity of securities of the same class
as the Shares equal to the Number of Shares.
U.S. PRIVATE PLACEMENT REPRESENTATIONS:
Each of CSFB and Counterparty hereby represents and warrants to the
other party as of the date hereof that:
1. It is an "accredited investor" (as defined in Regulation D
under the Securities Act) and has such knowledge and
experience in financial and business matters as to be capable
of evaluating the merits and risks of the Transaction, and it
is able to bear the economic risk of the Transaction.
2. It is entering into the Transaction for its own account and
not with a view to the distribution or resale of the
Transaction or its rights thereunder except pursuant to a
registration statement declared effective under, or an
exemption from the registration requirements of, the
Securities Act.
COVENANTS OF COUNTERPARTY:
Counterparty agrees that each of Counterparty and its affiliates
will comply with all applicable disclosure or reporting
requirements in respect of the Transaction, including, without
limitation, any requirement imposed by Section 13 or Section 16 of
the Securities and Exchange Act of 1934, as amended, if any, and
Counterparty will provide CSFB with a copy of any report filed in
respect of the Transaction promptly upon filing thereof.
BINDING COMMITMENT/FINAL AGREEMENT:
The parties intend that this Confirmation constitutes a "Final
Agreement" as described in the letter dated December 14, 1999
submitted by Robert W. Reeder and Alan L. Beller to Michael Hyatte
of the staff of the Securities and Exchange Commission (the
"STAFF") to which the Staff responded in an interpretative letter
dated December 20, 1999.
PAYMENTS ON EARLY TERMINATION:
Upon the occurrence or effective designation of an Early
Termination Date in respect of the Transaction (an "EARLY
TERMINATION EVENT"), if Counterparty would owe any amount to CSFB
pursuant to Section 6(d)(ii) of the Agreement (determined as if the
Transaction were the only Transaction under the Agreement) (any
such amount, a "COUNTERPARTY PAYMENT AMOUNT" and any Early
Termination Event that would so result in Counterparty owing any
such amount, a "COUNTERPARTY PAYMENT EVENT"), then, except to the
extent that CSFB proceeds to realize upon the Collateral and to
apply the proceeds of such realization to any obligation of
Counterparty hereunder and under the Agreement:
(i) on the date on which any Counterparty Payment Amount is due,
in lieu of any payment or delivery of such Counterparty
Payment Amount, Counterparty shall deliver to CSFB the Number
of Securities; and
(ii) for purposes of determining any Loss under Section 6(e) of the
Agreement in respect of any other Transactions under the
Agreement, the Transaction shall be deemed not to be a
Transaction under the Agreement; provided that, for the
avoidance of doubt, if Counterparty fails to deliver
Securities pursuant to clause (i) above at the time required,
then the Transaction (including such delivery obligation)
shall be included for the purpose of determining CSFB's Loss
for all Transactions (including the Transaction) under the
Agreement.
SECURITIES CONTRACT:
The parties hereto acknowledge and agree that each of CSFB and the
Custodian is a "stockbroker" within the meaning of Section 101
(53A) of Title 11 of the United States Code (the "BANKRUPTCY CODE")
and that the Custodian is acting as agent and custodian for CSFB in
connection with the Transaction and that CSFB is a "customer" of
the Custodian within the meaning of Section 741(2) of the
Bankruptcy Code. The parties hereto further recognize that the
Transaction is a "securities contract", as such term is defined in
Section 741(7) of the Bankruptcy Code, entitled to the protection
of, among other provisions, Sections 555 and 362(b)(6) of the
Bankruptcy Code, and that each payment or delivery of cash, Shares
or other property or assets hereunder is a "settlement payment"
within the meaning of Section 741(8) of the Bankruptcy Code.
ASSIGNMENT:
The rights and duties under this Confirmation may not be assigned
or transferred by any party hereto without the prior written
consent of the other parties hereto, such consent not to be
unreasonably withheld; provided that (i) CSFB may assign or
transfer any of its rights or duties hereunder to any of its
affiliates without the prior written consent of Counterparty 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.
NON-CONFIDENTIALITY:
The parties hereby agree that (i) effective from the date of
commencement of discussions concerning the Transaction,
Counterparty and each of its employees, representatives, or other
agents may disclose to any and all persons, without limitation of
any kind, the tax treatment and tax structure of the Transaction
and all materials of any kind, including opinions or other tax
analyses, provided by CSFB and its affiliates to Counterparty
relating to such tax treatment and tax structure; provided that the
foregoing does not constitute an authorization to disclose the
identity of CSFB or its affiliates, agents or advisers, or, except
to the extent relating to such tax structure or tax treatment, any
specific pricing terms or commercial or financial information, and
(ii) CSFB 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
Counterparty.
MATTERS RELATING TO CREDIT SUISSE FIRST BOSTON CAPITAL LLC AND CREDIT
SUISSE FIRST BOSTON LLC:
1. Agent shall act as "agent" for CSFB and Counterparty in
connection with the Transaction.
2. Agent will furnish to Counterparty upon written request a
statement as to the source and amount of any remuneration
received or to be received by Agent in connection herewith.
3. Agent has no obligation hereunder, by guaranty, endorsement or
otherwise, with respect to performance of CSFB's obligations
hereunder or under the Agreement.
4. Credit Suisse First Boston Capital LLC is an "OTC derivatives
dealer" as such term is defined in the Exchange Act and is an
affiliate of Agent.
5. Credit Suisse First Boston Capital LLC is not a member of the
Securities Investor Protection Corporation.
STAGGERED SETTLEMENT:
If CSFB determines reasonably and in good faith that the Number of
Shares to be Delivered to CSFB hereunder or, in receiving such
Number of Shares to be Delivered, its "beneficial ownership"
(within the meaning of Section 16 of the Exchange Act and rules
promulgated thereunder) on the Settlement Date would exceed 9.9% of
all outstanding Shares, then CSFB may, by notice to Counterparty on
or prior to the Settlement Date (a "NOMINAL SETTLEMENT DATE"),
elect to receive the Number of Shares to be Delivered on two or
more dates (each, a "STAGGERED SETTLEMENT DATE") as follows:
(e) in such notice, CSFB will specify to Counterparty the related
Staggered Settlement Dates (the first of which will be such Nominal
Settlement Date and the last of which will be no later than the
twentieth (20th) Exchange Business Day following such Nominal
Settlement Date) and the related portion of the Number of Shares to
be Delivered on each Staggered Settlement Date; and
(f) the aggregate number of Shares that Counterparty will deliver
to CSFB hereunder on all such Staggered Settlement Dates will equal
the Number of Shares to be Delivered that Counterparty would
otherwise be required to deliver on such Nominal Settlement Date.
Notwithstanding anything herein to the contrary, to the extent
Counterparty receives or is entitled to receive any distribution or
payment in respect of Shares by reason of Counterparty's being a
holder of record of such Shares on any date after the Nominal
Settlement Date but for the provisions of the foregoing,
Counterparty shall deliver such distribution or payment to CSFB at
the time Counterparty delivers to CSFB the related portion of the
Number of Shares to be Delivered in accordance with the foregoing,
if such distribution or payment has already been received by
Counterparty at such time, or within a reasonable period of time
following Counterparty's receipt of the distribution or payment, if
such distribution or payment has not been already received by
Counterparty at the time Counterparty delivers the related portion
of the Number of Shares to be Delivered in accordance with the
foregoing.
4. Collateral Provisions:
Counterparty has granted to CSFB a security interest in the Initial
Pledged Items to secure Counterparty's obligations under the Term Sheet
and the Transaction. Counterparty and CSFB now wish to (i) set forth
additional understandings and agreements relating to such security
interest and (ii) confirm, on the terms set forth herein, the continuation
of such security interest.
A. DELIVERY OF COLLATERAL:
As soon as practicable after the Trade Date, Counterparty shall deliver to
CSFB in pledge hereunder, Eligible Collateral consisting of the Number of
Securities (the "INITIAL PLEDGED ITEMS"). "ELIGIBLE COLLATERAL" means
Securities; provided that Counterparty has good and marketable title
thereto, free of all of any and all lien, mortgage, interest, pledge,
charge or encumbrance of any kind (other than the security interests in
the Collateral created hereby, a "LIEN") and Transfer Restrictions (other
than the Existing Transfer Restrictions) and that CSFB has a valid, first
priority perfected security interest therein, a first lien thereon and
Control with respect thereto. "TRANSFER RESTRICTION" means, with respect
to any item of collateral pledged hereunder, any condition to or
restriction on the ability of the owner thereof to sell, assign or
otherwise transfer such item of collateral or 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 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 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 item of collateral, prior to the
sale, pledge, assignment or other transfer or enforcement of such item of
collateral and (iv) any registration or qualification requirement or
prospectus delivery requirement for such item of collateral pursuant to
any federal, state or foreign securities law (including, without
limitation, any such requirement arising under Section 5 of the Securities
Act as a result of such security being a "restricted security" or
Counterparty being an "affiliate" of the issuer of such security, as such
terms are defined in Rule 144 under the Securities Act, or as a result of
the sale of such security being subject to paragraph (c) of Rule 145 under
the Securities Act); provided that the required delivery of any
assignment, instruction or entitlement order from the seller,
Counterparty, assignor or transferor of such item of collateral, together
with any evidence of the corporate or other authority of such Person,
shall not constitute a "Transfer Restriction". "EXISTING TRANSFER
RESTRICTIONS" means Transfer Restrictions existing with respect to any
securities by virtue of the fact that Counterparty is an "affiliate",
within the meaning of Rule 144 under the Securities Act, of the Issuer.
"PERSON" means an individual, a corporation, a limited liability company,
a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency
or instrumentality thereof.
Any delivery of any securities or security entitlements (each as defined
in Section 8-102 of the UCC) as Collateral to CSFB by Counterparty shall
be effected (A) in the case of Collateral consisting of certificated
securities registered in the name of Counterparty, by delivery of
certificates representing such securities to the Custodian, accompanied by
any required transfer tax stamps, and in suitable form for transfer by
delivery or accompanied by duly executed instruments of transfer or
assignment in blank, with signatures appropriately guaranteed, all in form
and substance satisfactory to CSFB, and the crediting by the Custodian of
such securities to a securities account (as defined in Section 8-501 of
the UCC) (the "COLLATERAL ACCOUNT") of CSFB maintained by the Custodian,
(B) in the case of Collateral consisting of uncertificated securities
registered in the name of Counterparty, by transmission by Counterparty of
an instruction to the issuer of such securities instructing such issuer to
register such securities in the name of the Custodian or its nominee,
accompanied by any required transfer tax stamps, the issuer's compliance
with such instructions and the crediting by the Custodian of such
securities to the Collateral Account, (C) in the case of securities in
respect of which security entitlements are held by Counterparty through a
securities intermediary, by the crediting of such securities, accompanied
by any required transfer tax stamps, to a securities account of the
Custodian at such securities intermediary or, at the option of CSFB, at
another securities intermediary satisfactory to CSFB and the crediting by
the Custodian of such securities to the Collateral Account or (D) in any
case, by complying with such alternative delivery instructions as CSFB
shall provide to Counterparty in writing. "CUSTODIAN" means Credit Suisse
First Boston LLC, or any other custodian appointed by CSFB and identified
to Counterparty.
B. GRANT OF SECURITY INTERESTS IN THE COLLATERAL:
In order to secure the full and punctual observance and performance of the
covenants and agreements contained in this Confirmation and in the
Agreement, Counterparty hereby assigns and pledges to CSFB, and grants to
CSFB, as secured party, security interests in and to, and a lien upon and
right of set-off against, and transfers to CSFB, as and by way of a
security interest having priority over all other security interests, with
power of sale, all of Counterparty's right, title and interest in and to
(i) the Initial Pledged Items; (ii) all additions to and substitutions for
the Initial Pledged Items (including, without limitation, any securities,
instruments or other property delivered or pledged hereunder) (such
additions and substitutions, the "ADDITIONS AND SUBSTITUTIONS"); (iii) the
Collateral Account of CSFB maintained by the Custodian and all securities
and other financial assets (each as defined in Section 8-102 of the UCC)
and other funds, property or assets from time to time held therein or
credited thereto; and (iv) other than the payments made to CSFB pursuant
to the provision entitled "Payment Obligation by Counterparty" of
paragraph 2 of this Confirmation, all income, proceeds and collections
received or to be received, or derived or to be derived, at the time that
the Initial Pledged Items were delivered to the Custodian or any time
thereafter (whether before or after the commencement of any proceeding
under applicable bankruptcy, insolvency or similar law, by or against
Counterparty, with respect to Counterparty) from or in connection with the
Initial Pledged Items or the Additions and Substitutions (collectively,
the "COLLATERAL"). The parties hereto expressly agree that all rights,
assets and property at any time held in or credited to the Collateral
Account shall be treated as financial assets (as defined in Section 8-102
of the UCC).
C. CERTAIN COVENANTS OF COUNTERPARTY RELATING TO THE COLLATERAL:
Counterparty agrees that, so long as any of Counterparty's obligations
under the Agreement remain outstanding:
1. Counterparty shall ensure at all times that a Collateral Event
of Default shall not occur, and shall pledge additional
Collateral in the manner described hereunder as necessary to
cause such requirement to be met. "COLLATERAL EVENT OF
DEFAULT" means, at any time, the occurrence of either of the
following: (A) failure of the Collateral to include, as
Eligible Collateral, the Number of Securities or (B) failure
at any time of the security interests in the Collateral
created hereby to constitute valid and perfected security
interests in all of the Collateral, subject to no prior, equal
or junior Lien, and, with respect to any Collateral consisting
of securities or security entitlements (each as defined in
Section 8-102 of the UCC), as to which CSFB has Control, or,
in each case, assertion of such by Counterparty in writing.
2. Counterparty shall, at its own expense and in such manner and
form as CSFB may require, give, execute, deliver, file and
record any financing statement, notice, instrument, document,
agreement or other papers that may be necessary or desirable
in order to (i) create, preserve, perfect, substantiate or
validate any security interest granted pursuant hereto, (ii)
create or maintain Control with respect to any such security
interests in any investment property (as defined in Section
9-102(a) of the UCC) or (iii) enable CSFB to exercise and
enforce its rights hereunder with respect to such security
interest.
3. Counterparty shall warrant and defend Counterparty's title to
the Collateral, subject to the rights of CSFB, against the
claims and demands of all persons. CSFB may elect, but without
an obligation to do so, to discharge any Lien of any third
party on any of the Collateral.
4. Counterparty agrees that Counterparty shall not change (i)
Counterparty's name in any manner or (ii) Counterparty's
"location" (as defined in Section 9-307 of UCC), unless
Counterparty shall have given CSFB not less than 10 days'
prior notice thereof.
5. Counterparty agrees that Counterparty has not and shall not
(i) create or permit to exist any Lien (other than the
security interests in the Collateral created hereby) or any
Transfer Restriction upon or with respect to the Collateral,
(ii) sell or otherwise dispose of, or grant any option with
respect to, any of the Collateral or (iii) enter into or
consent to any agreement (x) that restricts in any manner the
rights of any present or future owner of any Collateral with
respect thereto (other than this Confirmation) or (y) pursuant
to which any person other than Counterparty, CSFB and any
securities intermediary through whom any of the Collateral is
held (but in the case of any such securities intermediary only
in respect of Collateral held through it) has or will have
Control in respect of any Collateral and represents that it
has not previously created any such Lien, effected any such
sale, disposition or grant or entered in or consented to any
such agreement.
D. ADMINISTRATION OF THE COLLATERAL AND VALUATION OF SECURITIES:
1. CSFB shall determine on each Business Day whether a Collateral Event
of Default shall have occurred. If on any Business Day CSFB
determines that a Collateral Event of Default shall have occurred,
CSFB shall promptly notify Counterparty of such determination by
telephone call to Counterparty followed by a written confirmation of
such call. If on any Business Day CSFB determines that no Default
Event or failure by Counterparty to meet any of Counterparty's
obligations under "Certain Covenants of Counterparty relating to the
Collateral" or under this section has occurred and is continuing,
Counterparty may obtain the release from the security interests in
the Collateral created hereby of any Collateral upon delivery to CSFB
of a written notice from Counterparty indicating the items of
Collateral to be released so long as, after such release, no
Collateral Event of Default shall have occurred. "DEFAULT EVENT"
means any Collateral Event of Default, any Event of Default with
respect to Counterparty or any Termination Event with respect to
which Counterparty is the Affected Party or an Affected Party or an
Extraordinary Event that results in an obligation of Counterparty to
pay an amount pursuant to Section 12.7 or Section 12.9 of the 2002
Definitions.
2. Counterparty may pledge additional Eligible Collateral hereunder at
any time by delivering the same pursuant to the provisions of
"Delivery of Collateral" above. Concurrently with the delivery of any
additional Eligible Collateral, Counterparty shall deliver to CSFB a
certificate, dated the date of such delivery, (i) identifying the
additional items of Eligible Collateral being pledged and (ii)
certifying that with respect to such items of additional Eligible
Collateral the representations and warranties contained in paragraph
4.c.5. above are true and correct with respect to such Eligible
Collateral on and as of the date thereof.
3. [RESERVED]
4. CSFB may at any time or from time to time, in its sole discretion,
cause any or all of the Collateral that is registered in the name of
Counterparty or Counterparty's nominee to be transferred of record
into the name of the Custodian, CSFB or its nominee. Counterparty
shall promptly give to CSFB copies of any notices or other
communications received by Counterparty with respect to Collateral
that is registered, or held through a securities intermediary, in the
name of Counterparty or Counterparty's nominee and CSFB shall
promptly give to Counterparty copies of any notices and
communications received by CSFB with respect to Collateral that is
registered, or held through a securities intermediary, in the name of
Custodian, CSFB or its nominee.
5. Counterparty agrees that Counterparty shall forthwith upon demand pay
to CSFB:
(i) the amount of any taxes that CSFB or the Custodian may have
been required to pay by reason of the security interests in
the Collateral created hereby or to free any of the Collateral
from any Lien thereon; and
(ii) the amount of any and all costs and expenses, including the
fees and disbursements of counsel and of any other experts,
that CSFB or the Custodian may incur in connection with (A)
the enforcement of this pledge upon a Default Event, including
such expenses as are incurred to preserve the value of the
Collateral and the validity, perfection, rank and value of the
security interests in the Collateral created hereby, (B) the
collection, sale or other disposition of any of the Collateral
pursuant to the terms and conditions of the Agreement, (C) the
exercise by CSFB of any of the rights conferred upon it
hereunder or (D) any Default Event.
Any such amount not paid on demand shall bear interest (computed on
the basis of a year of 360 days and payable for the actual number
of days elapsed) at a rate per annum equal to 5% plus the prime
rate as published from time to time in The Wall Street Journal,
Eastern Edition.
E. REHYPOTHECATION OF COLLATERAL:
The parties hereto agree that CSFB may sell, lend, pledge, rehypothecate,
assign, invest, use, commingle or otherwise dispose of, or otherwise use
in its business any Collateral.
F. INCOME RIGHTS IN COLLATERAL:
Other than the payments made to CSFB pursuant to the provision entitled
"Payment Obligation by Counterparty" of paragraph 2 of this Confirmation,
CSFB shall have the right to receive and retain as Collateral hereunder
all proceeds and interest of the Collateral (such proceeds as CSFB shall
have the right to receive and retain at any time, "RETAINED PROCEEDS"),
and Counterparty shall take all such action as CSFB shall deem necessary
or appropriate to give effect to such right. All such Retained Proceeds
that are received by Counterparty shall be received in trust for the
benefit of CSFB and, if CSFB so directs, shall be segregated from other
funds of Counterparty and shall, forthwith upon demand by CSFB, be
delivered over to the Custodian on behalf of CSFB as Collateral in the
same form as received (with any necessary endorsement).
G. REMEDIES UPON DEFAULT EVENTS:
If any Default Event shall have occurred and be continuing, CSFB may
exercise all the rights of a secured party under the UCC (whether or not
in effect in the jurisdiction where such rights are exercised) and, in
addition, without being required to give any notice, except as herein
provided or as may be required by mandatory provisions of law, may sell
all of the Collateral, or such lesser portion thereof as may be necessary
to generate proceeds sufficient to satisfy in full all of the obligations
of Counterparty under the Agreement or hereunder.
Counterparty hereby irrevocably appoints CSFB as Counterparty's true and
lawful attorney (which power of attorney is coupled with an interest),
with full power of substitution, in the name of Counterparty, CSFB or
otherwise, for the sole use and benefit of CSFB, but at the expense of
Counterparty, to the extent permitted by law, to exercise, at any time and
from time to time while a Default Event has occurred and is continuing,
all or any of the following powers with respect to all or any of the
Collateral:
(i) to demand, sue for, collect, receive and give acquittance for any and
all monies due or to become due upon or by virtue thereof;
(ii) to settle, compromise, compound, prosecute or defend any action or
proceeding with respect thereto;
(iii) to sell, transfer, assign or otherwise deal in or with the same or
the proceeds or avails thereof, as fully and effectually as if CSFB
were the absolute owner thereof and in connection therewith, to make
all necessary deeds, bills of sale, instruments of assignment,
transfer or conveyance of the property, and all instructions and
entitlement orders in respect of the property thus to be (or that is
being or has been) sold, transferred, assigned or otherwise dealt in;
and
(iv) to extend the time of payment of any or all thereof and to make any
allowance and other adjustments with reference thereto;
provided that CSFB shall give Counterparty not less than one day's prior
written notice of the time and place of any sale or other intended
disposition of any of the Collateral, except any Collateral that threatens
to decline speedily in value, including, without limitation, equity
securities, or is of a type customarily sold on a recognized market. CSFB
and Counterparty agree that such notice constitutes "reasonable
authenticated notification" within the meaning of Section 9-611(b) of the
UCC.
H. TERMINATION:
The rights hereby granted by Counterparty in the Collateral shall cease,
terminate and be void upon fulfillment of all of the obligations of
Counterparty under this Confirmation. Any Collateral remaining at the time
of such termination shall be fully released and discharged from the
security interests in the Collateral created hereby and delivered to
Counterparty by CSFB, all at the request and expense of Counterparty.
5. The Agreement is further supplemented by the following provisions:
TERMINATION PROVISIONS.
1. "SPECIFIED ENTITY" means in relation to CSFB and Counterparty,
none.
2. The "DEFAULT UNDER SPECIFIED TRANSACTION" provision of Section
5(a)(v) of the Agreement will not apply to CSFB and
Counterparty.
3. The "CROSS DEFAULT" provision of Section 5(a)(vi) will not
apply to CSFB and will apply to Counterparty.
4. The "CREDIT EVENT UPON MERGER" provisions of Section 5(b)(iv)
will not apply to CSFB and Counterparty.
5. The "AUTOMATIC EARLY TERMINATION" provisions of Section 6(a)
will not apply to CSFB and Counterparty.
6. PAYMENTS ON EARLY TERMINATION. For the purpose of Section
6(e), Second Method and Loss will apply.
7. "TERMINATION CURRENCY" means United States Dollars.
8. NETTING. The provisions of Section 2(c) of the Agreement shall
apply, provided that Section 2(c) shall be amended by deleting
"and" at the end of clause (i) thereof and deleting clause
(ii) thereof.
9. 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 an
Early Termination Event, such Party ("PARTY X") shall have the
right to terminate, liquidate and otherwise close out the
transactions contemplated by this Confirmation pursuant to the
terms hereof, and to set off any obligation that Party X or
any affiliate of Party X may have to the other party ("PARTY
Y") hereunder, thereunder or otherwise, including without
limitation any obligation to make any release, delivery or
payment to Party Y pursuant to this Confirmation or any other
agreement between Party X or any of its affiliates and Party
Y, against any right Party X or any of its affiliates may have
against Party Y, including without limitation any right to
receive a payment or delivery pursuant to this Confirmation or
any other agreement between Party X or any of its affiliates
and Party Y. 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 Shares or right to
receive Shares, the value at any time of such obligation or
right shall be determined by reference to the market value of
the Shares 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.
TAX REPRESENTATIONS. None.
AGREEMENTS TO DELIVER DOCUMENTS. For the purpose of Sections 4(a)(i)
and (ii), each of CSFB and Counterparty agrees to deliver the
following documents, as applicable:
1. The Issuer shall have executed and delivered to CSFB, upon
execution of this Confirmation, an Issuer Acknowledgement in
the form attached as Annex A hereto.
2. Each of CSFB and Counterparty will deliver to the other party,
upon execution of this Confirmation and upon request of such
other party, evidence reasonably satisfactory to the other
party as to the names, true signatures and authority of the
officers or officials signing this Confirmation on its behalf.
Such documents shall be covered by the representation set forth in
Section 3(d).
MISCELLANEOUS:
1. ADDRESSES FOR NOTICES. For the purpose of Section 12(a):
Address for notices or communications to CSFB (other than by
facsimile) (for all purposes):
Address: Credit Suisse First Boston Capital LLC
c/o Credit Suisse First Boston LLC
11 Madison Avenue
New York, NY 10010
Attn: Senior Legal Officer
Tel: (212) 538 4488
Fax: (212) 325 4585
With a copy to: Credit Suisse First Boston LLC
1 Madison Avenue, 3rd Floor
New York, New York 10010
For payments and deliveries:
Attn: Ricardo Harewood
Tel: (212) 538-9810
Fax: (212) 325- 8175
For all other communications:
Attn: Carlos Moscoso / John Ryan
Tel.: (212) 538-4437 / (212) 538-8297/
(212) 325-5119
Fax: (212) 325-8173
Designated responsible employee for the purposes of Section
12(a)(iii): Senior Legal Officer
Address for notices or communications to Counterparty:
Address: FFL Executive Partners, L.P.
One Maritime Plaza, Suite 1000
San Francisco, CA 94111
Attention: Rajat Duggal
Facsimile No.: (415) 402-2111 Telephone No.: (415) 402-2100
With a copy to:
Address: Bingham McCutchen LLP
399 Park Avenue
New York, NY 10022
Attention: Neil Townsend
Facsimile No.: (212) 702-3644 Telephone No.: (212) 318-7722
2. The date and time of the Transaction will be furnished by CSFB
to Counterparty upon written request by Counterparty.
3. [RESERVED]
4. WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING RELATING TO THIS CONFIRMATION OR ANY CREDIT SUPPORT
DOCUMENT. Each party (i) certifies that no representative,
agent or attorney of the other party has represented,
expressly or otherwise, that such other party would not, in
the event of such a suit action or proceeding, seek to enforce
the foregoing waiver and (ii) acknowledges that it and the
other party have been induced to enter into this Confirmation
by, among other things, the mutual waivers and certifications
in this Section.
5. SERVICE OF PROCESS. The parties irrevocably consent to service
of process given in the manner provided for notices in Section
in paragraph 1 immediately above. Nothing in this Confirmation
will affect the right of either party to serve process in any
other manner permitted by law.
6. THE AGREEMENT AND EACH CONFIRMATION THEREUNDER WILL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REFERENCE TO CHOICE OF LAW DOCTRINE
(PROVIDED THAT AS TO PLEDGED ITEMS LOCATED IN ANY JURISDICTION
OTHER THAN THE STATE OF NEW YORK, CSFB SHALL, IN ADDITION TO
ANY RIGHTS UNDER THE LAWS OF THE STATE OF NEW YORK, HAVE ALL
OF THE RIGHTS TO WHICH A SECURED PARTY IS ENTITLED UNDER THE
LAWS OF SUCH OTHER JURISDICTION). EACH PARTY HEREBY SUBMITS TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK. THE
PARTIES HERETO HEREBY AGREE THAT THE CUSTODIAN'S JURISDICTION,
WITHIN THE MEANING OF SECTION 8-110(E) OF THE UCC, INSOFAR AS
IT ACTS AS A SECURITIES INTERMEDIARY HEREUNDER OR IN RESPECT
HEREOF, IS THE STATE OF NEW YORK.
7. This Confirmation is not intended and shall not be construed
to create any rights in any person other than Counterparty,
CSFB 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 Counterparty and CSFB shall bind,
and inure to the benefit of, their respective successors and
assigns whether so expressed or not.
8. Any provision of this Confirmation may be amended or waived
if, and only if, such amendment or waiver is in writing and
signed, and in the case of an amendment, by Counterparty and
CSFB or, in the case of a waiver, by the party against whom
the waiver is to be effective.
Please confirm that the foregoing correctly sets forth the terms of our
agreement by signing and returning this Confirmation.
Yours faithfully,
CREDIT SUISSE FIRST BOSTON CAPITAL LLC
By:_____________________________
Name:
Title:
Confirmed as of the date first written above:
FFL EXECUTIVE PARTNERS, L.P.
BY: FRIEDMAN FLEISCHER & LOWE GP, LLC, ITS GENERAL PARTNER
By:________________________________
Name: Spencer C. Fleischer
Title: Senior Managing Member
CREDIT SUISSE FIRST BOSTON LLC,
as Agent
By:________________________________
Name:
Title:
Our Reference Number: External ID: / Risk ID:
ANNEX A
[FORM OF ISSUER ACKNOWLEDGEMENT]
[DATE]
Credit Suisse First Boston Capital LLC
c/o Credit Suisse First Boston LLC
Eleven Madison Avenue
New York, New York 10010
Re: PROPOSED TRANSACTION BY FFL EXECUTIVE PARTNERS, L.P.
Ladies and Gentlemen:
Korn/Ferry International (the "COMPANY") understands that FFL Executive
Partners, L.P. ("COUNTERPARTY") proposes to enter into a hedging transaction
(the "TRANSACTION") with Credit Suisse First Boston Capital LLC ("CSFB") with
respect to the 7.5% Convertible Subordinated Notes due 2010 of the Company (the
"CONVERTIBLE NOTES") convertible into shares of common stock of the Company
(the "COMMON STOCK"). Specifically, the Company understands that Counterparty
proposes to enter into a forward sale and purchase transaction with CSFB,
pursuant to which CSFB will pay cash to Counterparty on or shortly after the
date of execution of the Transaction and Counterparty will deliver to CSFB on
or about October 1, 2006 or such other date specified by CSFB upon 1 Business
Day's notice (the "SETTLEMENT DATE"), $236,215.21 aggregate principal amount of
Convertible Notes (subject to applicable adjustments). In addition, the Company
understands that Counterparty initially will pledge $236,215.21 aggregate
principal amount of Convertible Notes owned by Counterparty to CSFB to secure
Counterparty's obligations under the Transaction (the "PLEDGE").
The Company has no objection to the proposed Transaction or to the Pledge.
The Company confirms that the Transaction and the Pledge will not violate any
insider trading or other policy or rule of the Company.
The Company agrees that if CSFB forecloses on the Convertible Notes, or
the Convertible Notes are transferred to CSFB pursuant to the terms of the
Transaction, that promptly, upon delivery to the Company or its transfer agent
of:
(i) any required tax stamps; and
(ii) a duly executed notice of conversion (attached hereto as
Exhibit 1)
the Company (x) will effect the conversion of such Convertible Notes without
any further action or delivery of any documents or instruments on the part of
CSFB or Counterparty and notwithstanding any policy or objection the Company
may have at the time that would otherwise prevent or delay any sale or transfer
of any shares of Common Stock or Convertible Notes by Counterparty at the time
of such foreclosure or transfer and (y) will instruct its transfer agent to
convert any such Convertible Notes held by CSFB in Pledge, in accordance with
the provisions of the Convertible Notes, into the such number of shares of
fully paid and non-assessable shares of Common Stock as provided for by the
terms of the Convertible Notes and issue shares of Common Stock without any
legends thereon that relate to restrictions on the disposition thereof under
the Securities Act of 1933 or otherwise register in such name or names as CSFB
shall request and deliver such shares directly to CSFB or its designee without
the return thereof to Counterparty.
KORN/FERRY INTERNATIONAL
By:
Name:
Title:
EXHIBIT 1 TO ANNEX A
[FORM OF NOTICE OF CONVERSION]
[DATE]
Korn/Ferry International
1800 Century Park East, Suite 900
Los Angeles, CA 90067
Attn: Secretary
Ladies and Gentlemen:
Please be advised that FFL Executive Partners, L.P., a Delaware limited
partnership ("SELLER"), has entered into a Prepaid Forward Confirmation (the
"AGREEMENT") dated as of July 7, 2004 with Credit Suisse First Boston Capital
LLC ("BUYER"), by Credit Suisse First Boston LLC as its agent (the "AGENT").
Seller is the record holder of 7.5% Convertible Subordinated Notes due
2010 (evidenced by the certificates attached hereto, the "SECURITIES") of
Korn/Ferry International, a Delaware corporation (the "COMPANY"). The
Securities are convertible into shares of common stock ("COMMON STOCK") of the
Company. Seller and Buyer are willing to sell and purchase $236,215.21
aggregate principal amount of the Securities at the times and on the terms set
forth in the Agreement. Seller has agreed, pursuant to the Agreement, to grant
Buyer a security interest (the "PLEDGE") in Securities (the "PLEDGED
SECURITIES") to secure the obligations of Seller under the Agreement.
This letter constitutes written notice of conversion (the "NOTICE OF
CONVERSION") required by the Securities and instruments governing the
Securities. In the event that Seller delivers Securities pursuant to its
obligations under the Agreement, or in the event of the exercise by Buyer of
any of its rights under the Pledge with respect to the Pledged Securities, the
Seller and Buyer hereby elect that such Securities be converted into such
number of shares of Common Stock as provided for by the terms of the Securities
and its governing instruments.
Pursuant to this Notice of Conversion and upon delivery of certificates
evidencing the Securities subject to conversion duly endorsed by Seller or in
blank or accompanied by a duly executed proper instrument of transfer in a form
satisfactory to the Company, please convert the Securities into the applicable
number of shares of Common Stock and, at Buyer's direction, either (i) issue
them in the name of Credit Suisse First Boston Capital LLC and deliver the
certificate evidencing such shares of Common Stock directly to the following
address:
Credit Suisse First Boston Capital LLC
1 Madison Avenue, 3rd Floor
New York, New York 10010
Attn: Ricardo Harewood
OTC Derivative Operations
or (ii) deliver them in electronic equivalent form to an account specified by
Buyer at such time.
PLEASE DO NOT DELIVER THE CERTIFICATES REPRESENTING SUCH SHARES OF COMMON
STOCK TO SELLER UNDER ANY CIRCUMSTANCES PURSUANT TO THE TERMS OF THIS NOTICE OF
CONVERSION.
This Notice of Conversion will be irrevocable by the Seller. This Notice
of Conversion will automatically terminate upon the satisfaction of Seller's
delivery obligations under the Agreement, as determined in good faith by the
Buyer.
Very truly yours,
FFL EXECUTIVE PARTNERS, L.P.
BY: FRIEDMAN FLEISCHER & LOWE GP,
LLC, ITS GENERAL PARTNER
By:
Name:
Title:
CREDIT SUISSE FIRST BOSTON CAPITAL LLC
By:
Name:
Title: