<PAGE>
UNITED STATES
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 1996
-----------------------------------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from:_____________________ to _______________________
Commission file number: 0-23494
-------------------------------------------------------
BRIGHTPOINT, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 35-1778566
- -------------------------------------------------------------------------------
State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization
6402 Corporate Drive,
Indianapolis, Indiana 46278
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(317) 297-6100
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
Number of shares of common stock outstanding at July 22, 1996: 10,728,459 shares
<PAGE>
BRIGHTPOINT, INC.
INDEX
Page No.
--------
PART I. FINANCIAL INFORMATION
ITEM 1
Consolidated Balance Sheets
December 31, 1995 and June 30, 1996...................... 3
Consolidated Statements of Income
Three Months Ended June 30, 1995 and 1996................ 4
Six Months Ended June 30, 1995 and 1996.................. 4
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1995 and 1996.................. 5
Notes to Consolidated financial statements.................... 6
ITEM 2
Management's Discussion and Analysis of
Financial Condition and Results of Operations............ 9
PART II. OTHER INFORMATION............................................. 14
Signatures ............................................................ 16
2
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BRIGHTPOINT, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
December 31, 1995 June 30, 1996
----------------- -------------
(Note) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 726 $ 5,979
Accounts receivable (less allowance for
doubtful accounts of $691 in 1995 55,153 60,969
and $1,000 in 1996)
Accounts receivable, related parties (Note 5) 2,135 12,620
Inventories 56,313 53,859
Other current assets 2,220 1,705
-------- --------
Total current assets 116,547 135,132
Property and equipment, net 2,934 6,050
Other assets 306 1,572
-------- --------
Total assets $119,787 $142,754
======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 48,665 $ 35,588
Notes payable 5,663 37,892
-------- --------
Total current liabilities 54,328 73,480
Deferred taxes 48 48
Stockholder loans 554 --
Stockholders' equity:
Common stock 106 107
Additional paid-in capital 50,823 59,301
Retained earnings 13,928 9,818
-------- --------
Total stockholders' equity 64,857 69,226
-------- --------
Total liabilities and stockholders' equity $119,787 $142,754
======== ========
Note: The consolidated balance sheet at December 31, 1995 has been derived from
the audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
See accompanying notes.
3
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BRIGHTPOINT, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1995 1996 1995 1996
------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $91,921 $119,896 $189,102 $232,856
Cost of sales 85,885 111,414 176,861 216,446
------- -------- -------- --------
Gross profit 6,036 8,482 12,241 16,410
Selling, general and administrative expenses 2,871 4,090 5,954 7,767
------- -------- -------- --------
Income from operations 3,165 4,392 6,287 8,643
Merger expenses (Note 4) -- 2,750 -- 2,750
Interest expense 496 439 778 623
------- -------- -------- --------
Income before income taxes 2,669 1,203 5,509 5,270
Income taxes 675 806 1,575 1,971
------- -------- -------- --------
Net income $ 1,994 $ 397 $ 3,934 $ 3,299
======= ======== ======== ========
Pro forma financial information:
Historical income before taxes $ 2,669 $ 1,203 $ 5,509 $ 5,270
Pro forma income taxes 945 857 2,154 2,447
------- -------- -------- --------
Pro forma net income $ 1,724 $ 346 $ 3,355 $ 2,823
======= ======== ======== ========
Pro forma net income per share $ 0.19 $ 0.03 $ 0.38 $ 0.25
======= ======== ======== ========
Weighted average common shares outstanding 8,853 11,144 8,746 11,098
======= ======== ======== ========
Pro forma financial information excluding
the effect of the one-time merger
expenses:
Pro forma net income $ 1,724 $ 2,407 $ 3,355 $ 4,884
======= ======== ======== ========
Pro forma net income per share $ 0.19 $ 0.22 $ 0.38 $ 0.44
======= ======== ======== ========
</TABLE>
See accompanying notes.
4
<PAGE>
BRIGHTPOINT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Six Months Ended June 30
1995 1996
----------- ----------
Operating activities
Net income $ 3,934 $ 3,299
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation 66 333
Merger expenses -- 2,750
Changes in current assets and liabilities:
Accounts receivable (11,933) (6,015)
Accounts receivable, related parties (943) (10,485)
Inventories (9,040) 2,454
Other current assets (157) 205
Accounts payable and accrued expenses (4,891) (13,352)
-------- --------
Net cash used in operating activities (22,964) (20,811)
Investing activities
Capital expenditures (413) (3,449)
Other assets (1,043) (1,144)
-------- --------
Net cash used in investing activities (1,456) (4,593)
Financing activities
Net borrowings on note payable 21,929 32,229
Net borrowings (repayments) on stockholder loans 546 (554)
Merger expenses -- (2,088)
Proceeds from exercise of stock options and warrants 1,834 819
Tax effect of incentive stock option exercise 544 537
Dividend distributions to Allied Companies'
stockholders for subchapter S income taxes (871) (286)
-------- --------
Net cash provided by financing activities 23,982 30,657
-------- --------
Net (decrease) increase in cash (438) 5,253
Cash and cash equivalents at beginning of period 441 726
-------- --------
Cash and cash equivalents at end of period $ 3 $ 5,979
======== ========
See accompanying notes.
5
<PAGE>
BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of the Company,
all adjustments (consisting of only normal recurring accruals) considered
necessary to present fairly the consolidated financial statements have been
included.
The consolidated statements of income for the three and six months ended
June 30, 1996 are not necessarily indicative of the results that may be
expected for the entire year. For further information reference is made to
the unaudited pro forma condensed combined financial statements and notes
thereto contained in the Company's proxy statement dated April 30, 1996 and
the audited consolidated financial statements and the footnotes thereto
included in the Company's Form 10-K for the year ended December 31, 1995.
On June 7, 1996, the Company completed a merger with Allied Communications,
Inc., Allied Communications of Florida, Inc., Allied Communications of
Georgia, Inc., Allied Communications of Illinois, Inc. and Allied
Communications of Puerto Rico, Inc. ("the Allied Companies"), which are
engaged in substantially the same business as the Company. The transaction
was accounted for using the pooling-of-interests method and accordingly, the
Company's financial statements have been restated to reflect the
consolidated balance sheets and consolidated results of operations of both
companies as if the merger had been in effect for all periods presented.
Further information pertaining to the merger is presented in Note 4 - Merger
with the Allied Companies.
2. Reclassifications
Certain amounts in the 1995 consolidated financial statements have been
reclassified to conform to the June 30, 1996 presentation.
3. Pro Forma Financial Information
Prior to the Company's merger with the Allied Companies, the Allied
Companies' stockholders had elected under Subchapter S of the Internal
Revenue Code to include the income of the Allied Companies in their own
income for income tax purposes. Therefore the pro forma financial
information is presented to include a provision for income taxes as if the
Allied Companies had been subject to income taxes.
6
<PAGE>
BRIGHTPOINT, INC. NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
4. Merger with the Allied Companies
On June 7, 1996, the Company completed a merger with the Allied Companies
through the exchange of 2,025,000 shares of newly-issued Company common
stock for all of the outstanding shares of the Allied Companies common
stock. The merger was structured as a tax-free reorganization and was
accounted for using the pooling-of-interests method of accounting. Net sales
and net income for the Company and the Allied Companies for the three months
and the six months ended June 30, 1995, prior to the combination, are as
follows (in thousands):
Three Months Ended Six Months Ended
June 30, 1995 June 30, 1995
------------------ ----------------
Net sales
Brightpoint, Inc. $60,970 $124,514
Allied Companies 30,951 64,588
------- --------
Combined $91,921 $189,102
======= ========
Net income
Brightpoint, Inc. $ 1,303 $ 2,453
Allied Companies (pro forma) 421 902
------- --------
Combined $ 1,724 $ 3,355
======= ========
In connection with the merger, the Company recorded a nonrecurring charge of
$2,750,000 ($2,061,000 net of tax) in the quarter ended June 30, 1996 for
transaction costs, including investment banking, legal, and accounting fees,
and for estimated costs associated with the merger ("Merger expenses").
5. Accounts receivable, related parties
The Company had accounts receivable due from Technology Resources
International Ltd. of $1,293,000 and $11,654,000 at December 31, 1995 and
June 30, 1996, respectively, and from Simply Wireless of $842,000 and
$966,000 at December 31, 1995 and June 30, 1996, respectively.
7
<PAGE>
BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
6. Credit Arrangements
On June 7, 1996, the Company amended its credit agreement to increase
available borrowings on the line of credit to $75 million. The amendment
also eliminated all borrowing base limitations previously included in the
agreement. Borrowings on the amended line of credit bear interest at the
bank's prime rate less up to 100 basis points or at LIBOR plus 75 to 175
basis points dependent upon the ratio of the Company's funded debt to
capital.
7. Subsequent event - Formation of joint venture with Technology Resources
International Ltd.
On August 1, 1996, the Company completed the formation of a joint venture
with Technology Resources International Ltd. (TRI). The newly formed
Brightpoint International Ltd. is owned 50 percent by the Company and 50
percent by TRI. The operations of Brightpoint International Ltd. will be
consolidated for financial reporting purposes.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Comparison of Three and Six Months Ended June 30, 1995 to Three and Six Months
Ended June 30, 1996
On June 7, 1996, the Company completed a merger with Allied Communications,
Inc., Allied Communications of Florida, Inc., Allied Communications of Georgia,
Inc., Allied Communications of Illinois, Inc. and Allied Communications of
Puerto Rico, Inc. ("the Allied Companies"), which are engaged in substantially
the same business as the Company. The transaction was accounted for using the
pooling-of-interests method and accordingly, the Company's financial statements
have been restated to reflect the consolidated balance sheets and consolidated
results of operations of both companies as if the merger had been in effect for
all periods presented. In connection with the merger, the company recorded a
nonrecurring charge of $2,750,000 ($2,061,000 net of tax) in the quarter ended
June 30, 1996 for transaction costs, including investment banking, legal, and
accounting fees, and for estimated costs associated with the merger ("Merger
expenses").
Results of Operations
The following table sets forth, for the periods indicated, the percentage of net
sales represented by certain items reflected in the Company's consolidated
statements of income and the percentage change in such items from the prior
period.
Percentage of Net Sales
Three Months Ended June 30 Percentage
-------------------------- Change
1995 1996 1995 to 1996
--------- -------- ------------
Net sales 100.0% 100.0% 30.4%
Cost of sales 93.4 92.9 29.7
----- -----
Gross profit 6.6 7.1 40.5
Selling, general and
administrative expenses 3.1 3.4 42.5
----- -----
Income from operations 3.5 3.7 38.8
Merger expenses -- 2.3 --
Interest expense, net .6 .4 (11.5)
----- -----
Income before income taxes 2.9 1.0 (54.9)
Pro forma income taxes 1.0 .7 (9.3)
----- -----
Pro forma net income 1.9% .3% (79.9)%
===== ====
9
<PAGE>
Percentage of Net Sales
Six Months Ended June 30 Percentage
-------------------------- Change
1995 1996 1995 to 1996
-------- -------- ------------
Net sales 100.0% 100.0% 23.1%
Cost of sales 93.5 93.0 22.4
----- -----
Gross profit 6.5 7.0 34.1
Selling, general and
administrative expenses 3.2 3.3 30.5
----- -----
Income from operations 3.3 3.7 37.5
Merger expenses -- 1.2 --
Interest expense, net .4 .2 (19.9)
----- -----
Income before income taxes 2.9 2.3 (4.3)
Pro forma income taxes 1.1 1.1 13.6
----- -----
Pro forma net income 1.8% 1.2% (15.9)%
===== =====
Net sales increased by approximately $27,975,000, or 30.4%, from the three
months ended June 30, 1995 to the three months ended June 30, 1996. Net sales
increased by approximately $43,754,000, or 23.1%, from the six months ended June
30, 1995 to the six months ended June 30, 1996. The increase in net sales is
primarily attributable to increased domestic and foreign unit volume, offsetting
a decrease in per unit prices. Foreign sales were approximately 28% and 37% of
the Company's net sales for the six months ended June 30, 1995 and 1996,
respectively. The Company anticipates that sales of its products in foreign
markets will continue to account for a significant portion of net sales in the
future.
Gross profit increased by approximately $2,446,000, or 40.5%, from the three
months ended June 30, 1995 to the three months ended June 30, 1996. Gross profit
increased by approximately $4,169,000, or 34.1%, from the six months ended June
30, 1995 to the six months ended June 30, 1996. Gross profit as a percentage of
net sales increased from 6.6% to 7.1% from the three months ended June 30, 1995
to the three months ended June 30, 1996 and from 6.5% to 7.0% for the six months
ended June 30, 1995 to the six months ended June 30, 1996. The increase in
absolute dollars is primarily attributable to the increased number of units
sold. The increase in gross profit as a percentage of net sales is due to the
Company's ability to maintain its per unit dollar profit as per unit phone
prices have declined. In future periods, gross profit may be affected by
product, freight and other costs, price competition and by changes in the mix of
products offered by the Company.
Selling, general and administrative expenses increased by approximately
$1,219,000, or 42.5%, from the three months ended June 30, 1995 to the three
months ended June 30, 1996. Selling, general and administrative expenses
increased by approximately $1,813,000, or 30.5%, from the six months ended June
30, 1995 to the six months ended June 30, 1996. In addition, selling, general
and administrative expenses as a percentage of net sales increased from 3.1% to
3.4% from the three months ended June 30, 1995 to the three months ended June
30, 1996 and from 3.2% to 3.3% from the six months ended June 30, 1995 to the
six months ended June 30, 1996. The increase is attributable to the Company's
10
<PAGE>
Results of Operations (continued)
expanded level of operations and reflects increases in depreciation expense
relating to investments in management information systems, compensation expense,
rent expense and travel costs associated with increased international sales and
marketing efforts. In addition, during the transition period leading up to the
merger with the Allied Companies, the Company and the Allied Companies incurred
duplicate expenses which will be eliminated in future periods. The Company
expects that selling, general and administrative expenses will continue to
increase in absolute dollars in connection with higher levels of sales but
remain relatively constant as a percentage of net sales.
Income from operations increased by approximately $1,227,000, or 38.8%, from the
three months ended June 30, 1995 to the three months ended June 30, 1996. Income
from operations increased by approximately $2,356,000, or 37.5%, from the six
months ended June 30, 1995 to the six months ended June 30, 1996. Income from
operations as a percentage of net sales increased from 3.5% to 3.7% from the
three months ended June 30, 1995 to the three months ended June 30, 1996 and
from 3.3% to 3.7% from the six months ended June 30, 1995 to the six months
ended June 30, 1996. These increases are primarily attributable to the increase
in gross profit offset in part by the increase in selling, general and
administrative expenses as discussed above.
Pro forma net income decreased by approximately $1,378,000, or 79.9%, from the
three months ended June 30, 1995 to the three months ended June 30, 1996. Pro
forma net income decreased by approximately $532,000, or 15.9%, from the six
months ended June 30, 1995 to the six months ended June 30, 1996. The decreases
in pro forma net income are directly attributable to the merger expenses
recorded during the three months ended June 30, 1996. Excluding the merger
expenses, pro forma net income would have increased by approximately $683,000,
or 39.6%, from the three months ended June 30, 1995 to the three months ended
June 30, 1996 and by $1,529,000, or 45.6%, from the six months ended June 30,
1995 to the six months ended June 30, 1996. The increase in pro forma net income
(excluding the effect of the merger expenses) resulted from an increase in
income from operations as discussed above. Interest expense and income taxes
have remained consistent as a percent of sales.
Liquidity and Capital Resources
The Company's primary cash requirements have been to fund increased levels of
accounts receivable and inventories. The Company has historically satisfied its
working capital requirements principally through cash flow from operations, bank
borrowings and the issuance of equity securities.
At June 30, 1996, the Company had working capital of approximately $62,219,000
compared to working capital of approximately $61,652,000 at December 31, 1995.
Net cash used by operating activities was approximately $20,811,000 in the six
months ended June 30, 1996, as compared to approximately $22,964,000 in the six
months ended June 30, 1995. The decrease in cash used by operating activities
was primarily attributable to a slower growth rate in accounts receivable
11
<PAGE>
Liquidity and Capital Resources (continued)
and a decrease in inventories partially offset by an increase in accounts
receivable, related parties, and a decrease in accounts payable and accrued
expenses. Net cash used by investing activities was approximately $4,593,000 in
the six months ended June 30, 1996, as compared to approximately $1,456,000 in
the six months ended June 30, 1995. The increase in cash used by investing
activities was primarily attributable to capital expenditures relating to the
purchases of information systems equipment and software, furniture and fixtures
and leasehold improvements, and capitalization of expenditures related to the
formation of Brightpoint International Ltd.. Net cash provided by financing
activities was approximately $30,657,000 in the six months ended June 30, 1996,
as compared to approximately $23,982,000 in the six months ended June 30, 1995.
The increase in net cash provided by financing activities was primarily
attributable to advances under the Company's line of credit. At June 30, 1996,
the Company had cash and cash equivalents of approximately $5,979,000 as
compared to $3,000 at June 30, 1995.
In January 1996, the Company amended its credit agreement (line of credit) with
Bank One, Indianapolis, NA, as agent for a group of banks (the "Bank"), to
increase available borrowings on the line of credit to $50,000,000. In June,
1996, the Company further amended it credit agreement to increase available
borrowings on the line of credit to $75,000,000. The amendment also eliminated
all borrowing base limitations previously included in the agreement. Borrowings
on the amended line of credit bear interest at the bank's prime rate less up to
100 basis points or at LIBOR plus 75 to 175 basis points dependent upon the
ratio of the Company's funded debt to capital, and is payable monthly. At June
30, 1996, there was $37,892,000 outstanding, $11,746,000 in letters of credit
and $25,362,000 available on the line of credit. The line of credit expires on
May 28, 1999.
Substantially all of the Company's assets, including its inventories and
receivables, are pledged to the Bank as collateral and the Company is prohibited
from incurring additional indebtedness, except for trade indebtedness, certain
of which is subordinated to the Company's indebtedness to the Bank. The
Company's inability to incur additional indebtedness could, under certain
circumstances, limit the Company's ability to expand its operations. In addition
to covenants requiring the maintenance of certain financial ratios, the
Company's agreement with the Bank limits or prohibits the Company, subject to
certain exceptions, from declaring or paying cash dividends, making capital
distributions or other payments to stockholders, merging or consolidating with
another corporation, forming subsidiaries, selling all or substantially all of
its assets, creating liens or security interests on the Company's assets,
entering into transactions with affiliates and making payments on subordinated
indebtedness without the Bank's prior consent.
12
<PAGE>
Liquidity and Capital Resources (continued)
The Company believes that projected cash flow from operations together with
existing capital resources, including cash and borrowings available under its
line of credit, will be sufficient to satisfy the Company's current working
capital requirements. In July 1996, the Company committed to expand its
distribution facility in Indianapolis by adding 77,000 square feet to the
existing warehouse. The commitment will result in an annual increase in
operating lease payments of approximately $350,000 and an investment in
leasehold improvements not to exceed $500,000. Other than in connection with
implementing the Company's management information system and expansion of the
Indianapolis distribution facility, the Company has no material commitments for
capital expenditures as of June 30, 1996.
13
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders
An annual meeting of stockholders was held on May 29, 1996 to:
(i) elect three Class 2 directors, one Class 1 director and two Class 3
directors. The results of the vote were as follows:
Messrs. Robert J. Laikin, Rollin M. Dick and Robert F. Wagner were elected
to serve as Class 2 directors until the annual meeting of stockholders to be
held in 1999. Mr. J. Mark Howell was elected to serve as a Class 1 director
until the annual meeting of stockholders in 1998. Messrs. John W. Adams and
Steven B. Sands were elected to serve as Class 3 directors until the annual
meeting of stockholders to be held in 1997. The terms of office of Messrs.
Stephen H. Simon (Class 1 director) and T. Scott Housefield (Class 3
director) continue until 1998 and 1997, respectively.
Robert J. Laikin received 7,105,765 votes for and 75,942 votes abstained,
Rollin M. Dick received 7,102,890 votes for and 78,817 votes abstained,
Robert F. Wagner received 7,102,595 votes for and 79,112 votes abstained, J.
Mark Howell received 7,106,015 votes for and 75,692 votes abstained, John W.
Adams received 7,105,595 votes for and 76,112 votes abstained and Steven B.
Sands received 7,105,765 votes for and 75,942 votes abstained.
(ii) consider and vote on a proposal to approve an amendment to the Company's
Certificate of Incorporation to increase the number of authorized shares of
common stock from 10,000,000 to 25,000,000. The proposal received 5,711,176
votes for and 79,995 votes against.
(iii) consider and vote on a proposal to approve and adopt the Agreement and
Plan of Merger, as amended, by and among the Allied Communications, Inc., Allied
Communications of Florida, Inc., Allied Communications of Georgia, Inc., Allied
Communications of Illinois, Inc., Allied Communications of Puerto Rico, Inc.
Robert Picow, Joseph Forer, the Company and Brightpoint Acquisition, Inc.. The
proposal received 5,532,663 votes for and 6,098 votes against.
Item 5. Other Information
On June 7, 1996, the Company and the Allied Companies consummated a merger
between the companies pursuant to Agreement and Plan of Merger, as amended, by
and among the Allied Communications, Inc., Allied Communications of Florida,
Inc., Allied Communications of Georgia, Inc., Allied Communications of Illinois,
Inc., Allied Communications of Puerto Rico, Inc. Robert Picow, Joseph Forer, the
Company and Brightpoint Acquisition, Inc.
14
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(2) Agreement and Plan of Merger, as amended, by and among the Allied
Communications, Inc., Allied Communications of Florida, Inc.,
Allied Communications of Georgia, Inc., Allied Communications of
Illinois, Inc., Allied Communications of Puerto Rico, Inc.
Robert Picow, Joseph Forer, the Company and Brightpoint
Acquisition, Inc. (incorporated by reference to the Company's
Proxy Statement dated April 30, 1996).
(3) Amendment to Certificate of Incorporation of Brightpoint, Inc.
(4.1) Third Amendment to the Credit Agreement dated June 7, 1996
(4.2) Fourth Amendment to the Credit Agreement dated June 28, 1996
(11) Statement Re: Computation of Earnings Per Share
(27) Financial Data Schedule
(b) Reports on Form 8-K
On June 12, 1996, the Company filed a Form 8-K with the Securities and
Exchange Commission reporting a merger under Items 2 and 5.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Brightpoint, Inc.
(Registrant)
Date August 12, 1996 /s/ Robert J. Laikin
------------------ --------------------------------------
Robert J. Laikin
President and Chief Executive Officer
Date August 12, 1996 /s/ J. Mark Howell
------------------ --------------------------------------
J. Mark Howell
Chief Financial Officer
16
<PAGE>
Exhibit Index
Exhibit No. Description
- ----------- -----------
(3) Amendment to Certificate of
Incorporation of Brightpoint, Inc.
(4.1, 4.2) Third and Fourth Amendments to
the Credit Agreement dated
June 7, 1996 and June 28, 1996,
respectively
(11) Statement Re: Computation of
Earnings Per Share
(27) Financial Data Schedule
17
<PAGE>
EXHIBIT 3
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
BRIGHTPOINT, INC.
-----------------------------------------
Adopted in accordance with the provisions
of Section 242 of the General Corporation
Law of the State of Delaware
-----------------------------------------
The undersigned, being the Executive Vice President of BRIGHTPOINT, INC.
(the "Corporation"), a corporation existing under the laws of the State of
Delaware, does hereby certify as follows:
FIRST: That the Certificate of Incorporation of the Corporation has been
amended as follows by striking out the first paragraph of Article FOURTH thereof
as it now exists and inserting in lieu and instead thereof a new first paragraph
of Article FOURTH, reading as follows:
"FOURTH: The total number of shares of capital stock which the Corporation
shall have authority to issue is Twenty-Six Million (26,000,000) shares, of
which Twenty-Five Million (25,000,000) shares shall be Common Stock, par value
$.01 per share, and One Million (1,000,000) shares of Preferred Stock, par value
$.01 per share."
SECOND: That such amendment has been duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, I have signed this Certificate this 29th day of May,
1996.
BRIGHTPOINT, INC.
By: /s/ J. Mark Howell
-----------------------------
Name: J. Mark Howell
Title: Executive Vice President
<PAGE>
EXHIBIT 4.1
THIRD AMENDMENT TO CREDIT AGREEMENT
BRIGHTPOINT, INC., a Delaware corporation, (the "Company"), the banks
listed on the signature pages hereof (each individually a "Bank" and
collectively the "Banks") and BANK ONE, INDIANAPOLIS, NATIONAL ASSOCIATION, a
national banking association with its principal office in Indianapolis, Indiana,
as agent for the Banks (in such capacity the "Agent" and in its individual
capacity "Bank One") agree as follows:
1. CONTEXT. This agreement is made in the context of the following
agreed state of facts:
a. The Company, the Banks and the Agent are parties to a Credit
Agreement dated June 13, 1995, as amended by First Amendment to
Credit Agreement dated as of September 15, 1995, and Second
Amendment to Credit Agreement dated as of January 19, 1996
(collectively, the Agreement").
b. The Company has requested that the Banks increase to
$75,000,000.00 the maximum amount available to the Company under
the terms of the Agreement and extend the Revolving Loan
Maturity Date from May 29, 1998, to May 28, 1999.
c. The Company has further requested that the Banks waive the
Company's noncompliance with the terms of the Agreement related
to the creation of a wholly-owned Subsidiary, Brightpoint
Acquisition, Inc., a Delaware corporation ("Acquisition"), as an
incident of the acquisition to which the Banks consented in that
certain letter dated February 1, 1996 (the "Allied transaction."
d. The Company has further requested that the Banks waive the
Company's noncompliance with the provisions of the Agreement
including, but not limited to Section 6.e, related to the
creation of a wholly-owned Subsidiary, Brightpoint International
Ltd., a Delaware corporation ("International"), and that the
Banks consent to the acquisition of certain assets and
properties of Marriott Investment & Trade Inc., a British Virgin
Island company, Safkong Holdings Limited, a private company
limited by shares organized in Hong Kong under The Companies
Ordinance, Technology Resources International Limited, a private
company limited by shares organized in Hong Kong under The
Companies Ordinance, and each of Dana Marlin and John Michael
Maclean-Arnott, individuals residing in Hong Kong, pursuant to
the terms of the Shareholder and Asset Purchase Agreement, a
copy of which agreement is attached as Exhibit "A" to this Third
Amendment.
e. The Banks have agreed to such requests, subject to certain terms
and conditions, and the parties have executed this document
(this "Third Amendment") to give effect to their agreement.
2. DEFINITIONS. Terms used in this Third Amendment with their initial
letters capitalized are used as defined in the Agreement, unless otherwise
defined herein. Section 1 of the Agreement is amended, as follows:
<PAGE>
a. Amended Definitions. The definitions of the following terms set
out in Section 1 are hereby amended and restated in their
entireties as follows:
o "Applicable Rate" means any of the Applicable Unused Fee
Rate, the Applicable Commission Rate, the Applicable
Prime Spread or the Applicable LIBOR Spread, as the
context requires, and when used in the plural form
refers collectively to all of the Applicable Unused Fee
Rate, the Applicable Commission Rate, the Applicable
Prime Spread and the Applicable LIBOR Spread. The
Applicable Rate shall be determined by reference to the
ratio of the Company's Funded Debt to Capital in
accordance with the following tables:
<TABLE>
<CAPTION>
Ratio of Funded Applicable Applicable
Debt to Capital Prime Spread LIBOR Spread
--------------- ------------ ------------
<S> <C> <C>
.55 to 1.0 or greater 0.00% 1.75%
.45 to 1.0 or
greater but less
than .55 to 1.0 (.25%) 1.50%
.40 to 1.0 or
greater but less
than .45 to 1.0 (.50%) 1.25%
.35 to 1.0 or
greater but less
than .40 to 1.0 (.75%) 1.00%
less than .35 to 1.0 (1.00%) .75%
Ratio of Funded Applicable Applicable
Debt to Capital Unused Fee Rate Commission Rate
--------------- --------------- ---------------
.55 to 1.0 or greater .25% 1.00%
.45 to 1.0 or
greater but less
than .55 to 1.0 .20% .875%
.40 to 1.0 or
greater but less
than .45 to 1.0 .15% .75%
.35 to 1.0 or
greater but less
than .40 to 1.0 .15% .75%
less than .35 to 1.0 .125% .75%
</TABLE>
-2-
<PAGE>
The initial Applicable Rates shall be as shown in the
bottom spread of the foregoing tables. Hereafter, the
Applicable Rates shall be determined on the basis of
the financial statements of the Company dated as of the
month ending each fiscal quarter furnished to the Banks
pursuant to the requirements of Section 5.b(ii), with
prospective effect for the following fiscal quarter.
Interest will accrue and be payable, and fees and
commissions will be calculated and be payable, in any
fiscal quarter on the basis of the Applicable Rates in
effect during the preceding fiscal quarter until an
adjustment is made under the provisions of this
subsection. The Applicable Rates shall be adjusted on
the first interest payment date which follows receipt
by the Banks of the financial statements upon which
such adjustment is based, but such adjustment shall not
be effective as to any LIBOR-based Rate elected prior
to the date of such adjustment until the expiration of
the period of time for which such LIBOR-based Rate
shall have been elected by the Company. In the event
that the Company fails to deliver the financial
statements required under Section 5.b(ii) for any month
which ends a fiscal quarter, interest shall accrue on
the Loan at the Prime Rate and the Applicable
Commission Rate and the Applicable Unused Fee shall be
at the highest level shown in the foregoing tables from
the date such financial statements were required to be
delivered until the first interest payment date which
follows receipt by the Banks of such financial
statements. For the avoidance of doubt, it is noted
that it is the intent of the parties that the Banks
shall be free to exercise all remedies otherwise
provided in this Agreement in the event of the
violation by the Company of the covenants stated in
Section 5.b(ii) or 5.g(ii) notwithstanding the accrual
of interest upon any Loan or the calculation of fees
and commissions at a rate determined in accordance with
this definition.
o "Funded Debt" means (a) all consolidated obligations of
the Company and its Subsidiaries (including without
limitation, all fees, costs or unpaid accrued interest)
for or with respect to borrowed money or for the
deferred purchase price of property or services except
current accounts payable arising in the ordinary course
of business, (b) all consolidated obligations of the
Company and its Subsidiaries created or arising under
any conditional sale or other title retention agreement
with respect to any property acquired by the Company
and its Subsidiaries and all consolidated obligations
created or arising under such agreement even though the
rights and remedies of the seller or lender thereunder
are limited to repossession or sale of such property in
the event of default, (c) all consolidated obligations
of the Company and its Subsidiaries under leases which
shall have been or should be recorded as capitalized
leases in accordance with generally accepted accounting
principles, (d) all guarantees and other obligations
(contingent or otherwise) of the Company and its
Subsidiaries, calculated on a consolidated basis, to
assure a creditor against loss (including, without
limitation, letters of responsibility or comfort
letters, arrangements to purchase or repurchase
property
-3-
<PAGE>
or obligations, to pay for property, goods or services
whether or not delivered or rendered, to maintain
working capital, equity capital or other financial
statement condition of, or to lend or contribute to or
invest in a third party) in respect of obligations of
such third party, (e) all consolidated obligations of
the Company and its Subsidiaries for extensions of
credit including the face amount of letters of credit
issued for the account of the Company or any
Subsidiary, whether or not representing obligations for
borrowed money, (f) consolidated Rate Hedging
Obligations of the Company and its Subsidiaries, and
(g) all consolidated obligations or indebtedness
described in clauses (a) through (f) secured by a lien
on any property owned by the Company or any Subsidiary,
whether or not the Company or such Subsidiary has
assumed or become liable for the payment thereof
except, with respect to this clause (g), obligations or
indebtedness secured by a lien which has been
subordinated to the lien of the Agent under the terms
of a Subordination Agreement satisfactory to the Agent
and substantially in the form of Exhibit "G" attached
to the Credit Agreement.
o "Loan Document" means any of this Agreement, any of the
Revolving Notes, the Security Agreement, the Pledge
Agreement, the Guaranty Agreements, the Guarantor
Security Agreement, any and all Subordination
Agreements, any and all Reimbursement Agreements and
any other instrument or document which evidences or
secures the Loan or which expresses an agreement as to
terms applicable to the Loan, and when used in the
plural form means any two or more of the Loan
Documents, as the context requires.
o "Note" means any of the Revolving Notes and when used
in the plural form means all of the Revolving Notes.
o "Revolving Loan Maturity Date" means initially May 28,
1999, and hereafter any other date to which the
Aggregate Commitment may be extended by the Banks
pursuant to the terms of Section 2.a(iv).
o "Subsidiary" means any corporation, partnership, joint
venture or other business entity over which the Company
exercises control; provided that it shall be
conclusively presumed that the Company exercises
control over any such entity 51% or more of the equity
interest in which is owned by the Company, directly or
indirectly, and provided further that International
shall be deemed a Subsidiary of the Company for all
purposes under this Agreement, but any and all
subsidiaries of International shall not be deemed
Subsidiaries of the Company for purposes of this
Agreement.
o "Tangible Net Worth" means the consolidated
shareholders' equity of the Company and its
Subsidiaries less any allowance for goodwill, patents,
trademarks, trade secrets, officer or employee loans or
advances and any other assets which would be classified
as intangible assets under generally accepted
accounting principles.
-4-
<PAGE>
b. New Definition. A new definition is added to Section 1 of the
Agreement to read as follows:
o Acquisition. "Acquisition" means Brightpoint
Acquisition, Inc., a Delaware corporation.
o International. "International means Brightpoint
International, Ltd., a Delaware corporation.
o Third Amendment. "Third Amendment" means the written
amendment to this Agreement entitled "Third Amendment
to Credit Agreement" and dated with effect as of May
31, 1996.
c. Deleted Definitions. The definitions of the following terms are
deleted from Section 1 of the Agreement: Borrowing Base and
Borrowing Base Certificate.
3. THE REVOLVING LOAN. Section 2.a(i) and the first sentence of Section
2.a(ii) of the Agreement are amended and restated in their respective
entireties as follows:
(i) The Aggregate Commitment -- Use of Proceeds. From the
date of the Third Amendment and until the Revolving
Loan Maturity Date, each Bank agrees to make its
Percentage of Advances (all such Advances by all such
Banks are collectively referred to as the "Revolving
Loan") under a revolving line of credit from time to
time to the Company of an aggregate amount not in
excess at any time outstanding of Seventy-Five Million
and 00/100 Dollars ($75,000,000.00), provided that all
of the conditions of lending stated in Section 7 of
this Agreement as being applicable to Advances have
been fulfilled at the time of each Advance. Proceeds of
the Revolving Loan may be used by the Company only to
fund working capital requirements and for general
corporate purposes of the Company, Acquisition and
International, provided, however, that portion of the
proceeds used for International shall not exceed the
aggregate principal amount of Twenty Million Dollars
($20,000,000.00).
(ii) The Revolving Notes. The obligation of the Company to
repay the Revolving Loan shall be evidenced by the
promissory notes (the "Revolving Notes") of the Company
payable to the order of each Bank and in an amount
equal to each Bank's Percentage of the Aggregate
Commitment, which Revolving Notes shall be in the form
of Exhibit "B" attached to the Third Amendment.
4. SUBLIMIT FOR LETTERS OF CREDIT. To evidence an increase in the
amount available for the issuance of standby letters of credit under the
Agreement, the first sentence of Section 2.a(v) is hereby amended in its
entirety to read as follows:
(v) Standby Letters of Credit. At any time that the Company
is entitled to an Advance under the Revolving Loan,
Bank One shall, upon the application of the Company and
after notice to the Banks, issue for the account of the
Company, a standby letter of credit (each a "Letter of
Credit") in an amount not in excess of
-5-
<PAGE>
the maximum Advance that the Company would then be
entitled to obtain under the Revolving Loan, provided
that (A) the total amount of Letters of Credit which
are outstanding at any time shall not exceed Thirty
Million and 00/100 Dollars ($30,000,000.00), (B) the
issuance of any Letter of Credit with a maturity date
beyond the Revolving Loan Maturity Date shall be
entirely at the discretion of the Banks, (C) the form
of the requested Letter of Credit shall be satisfactory
to Bank One in the reasonable exercise of Bank One's
discretion, and (D) the Company shall have executed an
application and reimbursement agreement for the Letter
of Credit (a "Reimbursement Agreement") in Bank One's
standard form.
5. COLLATERAL. New Sections 4.c, 4.d and 4.e are added to the Agreement
to read as follows:
c. Pledge Agreement. The Obligations will be further secured by a
pledge of fifty percent (50%) of the stock owned by the Company
of International, which pledge shall be evidenced by a Pledge
Agreement (the "Pledge Agreement") in the form of Exhibit "C" to
the Third Amendment.
d. Guaranty. The Obligations will be further supported by the
unconditional guaranty of prompt payment of all of the Company's
U. S. Subsidiaries (collectively, the "Guarantors"), each of
which guaranty shall be evidenced by a Guaranty Agreement (each
a "Guaranty Agreement" and collectively, the "Guaranty
Agreements") substantially in the form of Exhibit "D" to the
Third Amendment.
e. Guarantor Security Agreements. The obligations of Acquisition
under its Guaranty Agreement will be secured by a security
interest in all equipment, inventory, accounts receivable,
chattel paper and general intangibles of Acquisition now owned
and hereafter acquired and in the proceeds thereof, which
security interest will be created by a Security Agreement ( a
"Guarantor Security Agreement" ) in the form attached as Exhibit
"E" to the Third Amendment. Each Guarantor Security Agreement
will provide a first-priority security interest in the
collateral described therein, subject only to liens and security
interests of the type described in the exceptions enumerated in
Section 6.b.
6. AMENDMENTS TO FINANCIAL COVENANTS. The Company acknowledges that
compliance with the financial covenants set forth in Section 5.g shall be
computed on the basis of the consolidated financial statements of the Company
and its Subsidiaries. Section 5.b(i), Section 5.b(ii), Section 5.b(vii), Section
5.g, 5.g(i) and Section 5.g(iii) of the Agreement are amended and restated in
their respective entireties to read as follows:
b. (i) Annual Statements. As soon as available and in any event
within ninety (90) days after the close of each fiscal year,
consolidated financial statements of the Company and its
Subsidiaries, including a statement of income, a balance sheet
as of the end of such fiscal year, a statement of cash flows and
a reconciliation of shareholders' equity, for such fiscal year
-6-
<PAGE>
prepared and presented in accordance with generally accepted
accounting principles, applied in a manner consistent with that
used in preparing the financial statements referred to in
Section 3.d (except for changes in which the independent
accountants of the Company concur), in each case setting forth
in comparative form corresponding figures for the preceding
fiscal year, together with the audit report, unqualified as to
scope, of independent certified public accountants approved by
the Agent, which approval shall not be unreasonably withheld,
and similarly presented consolidating financial statements for
the same period prepared by the Company all in reasonable detail
and accompanied by the written representation of the chief
financial officer of the Company that such financial statements
have been prepared in accordance with generally accepted
accounting principles (except that they need not include
footnotes and need not reflect adjustments normally made at year
end, if such adjustments are not material in amount),
consistently applied, (except for changes in which the
independent accountants of the Company concur) and present
fairly the financial position of the Company and the results of
its operation as of the dates of such statements and for the
fiscal periods then ended.
(ii) Interim Statements. As soon as available and in any event
within thirty (30) days after the end of each month, a copy of
the interim consolidated and consolidating financial statements
of the Company and its Subsidiaries, consisting at a minimum of:
A. the balance sheet as of the end of the month,
B. a statement of income for the month and for the partial
or full fiscal year ended as of the end of the month,
and
C. a statement of cash flows,
all in reasonable detail and accompanied by the written
representation of the chief financial officer of the
Company that such financial statements have been
prepared in accordance with generally accepted
accounting principles (except that they need not
include footnotes and need not reflect adjustments
normally made at year end, if such adjustments are not
material in amount), consistently applied, (except for
changes in which the independent accountants of the
Company concur) and present fairly the financial
position of the Company and the results of its
operation as of the dates of such statements and for
the fiscal periods then ended.
(vii) Compliance Certificates. Within thirty (30) days following each
month end and within ninety (90) days following each fiscal year
end, a certificate of the Chief Financial Officer or other
appropriate officer of the Company demonstrating compliance with
the financial covenants stated in Section 5.g and with the
purchase-money lien covenant stated in Section 6.b(viii). Such
certificate shall relate the covenants to the month-end figures
and shall otherwise be in such form and provide such detail as
may be reasonably satisfactory to the Agent.
-7-
<PAGE>
g. Financial Covenants. The Company shall observe, on a
consolidated basis, each of the following financial covenants:
(i) Tangible Net Worth. The Company shall maintain its
Tangible Net Worth as of the date of execution of the
Third Amendment and at all times until June 30, 1996,
at a level not less than $60,000,000.00; at June 30,
1996, and at all times until December 30, 1996, at a
level not less than $70,000,000.00; at December 31,
1996, and at all times until December 30, 1997, at a
level not less than the sum of $70,000,000.00 plus 50%
of the net income reported during the fiscal period
July 1, 1996, through December 31, 1996; and at each
fiscal year end thereafter, and at all times during the
fiscal year immediately following, at a level equal to
the sum of 50% of the net income reported during the
fiscal year for which the Tangible Net Worth is being
determined (exclusive of any loss) plus the Tangible
Net Worth reported at the immediately preceding fiscal
year end.
(ii) Ratio of Liabilities to Tangible Net Worth. At the end
of each month, the Company shall maintain the ratio of
its consolidated total liabilities to the Tangible Net
Worth at a level not greater than 2.0 to 1.0. For
purposes of testing compliance with this covenant, the
term "liabilities" shall include the present value of
all consolidated capital lease obligations of the
Company and its Subsidiaries, determined as of any date
the ratio is to be tested.
(iii) Fixed Charge Coverage. At the end of each fiscal
quarter, for the four consecutive fiscal quarters
ending as of such fiscal quarter end, from the date of
the Third Amendment and until December 30, 1996, the
Company shall maintain a fixed charge coverage ratio of
not less than 1.25 to 1.0. At December 31, 1996, and at
each fiscal quarter thereafter, the Company shall
maintain a fixed charge coverage ratio of not less than
1.50 to 1.0. For purposes of this covenant, the phrase
"fixed charge coverage ratio" means, for any relevant
period, the ratio of the sum of net income plus
depreciation, amortization and interest expense plus
cash taxes paid over the sum of payments made on term
debt during the period for which the ratio is being
calculated, including current capital lease payments
but excluding any payments made on account of the Loan,
plus interest expense, plus expenditures for fixed
assets not funded with borrowed funds, plus dividends
paid, plus cash taxes paid.
7. AMENDMENTS TO NEGATIVE COVENANTS. Section 6 of the Agreement is
amended as follows:
a. Restricted Payments. The last sentence of Section 6.a of the
Agreement is amended and restated in its entirety to read as
follows:
The Company shall not permit any Subsidiary to purchase
or redeem any shares of the capital stock of such
Subsidiary, declare or pay any dividends thereon except
for dividends payable entirely in capital stock and
dividends and
-8-
<PAGE>
distributions payable to the Company or make any
distribution to shareholders or redeem any subordinated
indebtedness of such Subsidiary; provided, however that
International may pay dividends or distributions to its
shareholders so long as International has retained
earnings in excess of $2,000.000.00 and so long as such
dividends or distributions do not exceed 25% of net
income computed on a cumulative basis for any period
for which such dividend or distribution is being
determined and provided that such cumulative amount is
first reduced by any net losses incurred during such
period.
b. Liens. Subsection (viii) of Section 6.b is amended and restated
in its entirety and a new subsection (ix) is added to Section
6.b as follows:
(viii) purchase-money liens on any inventory hereafter
acquired; provided that (A) any such inventory is
acquired by the Company or any Subsidiary in the
ordinary course of its business, (B) the lien attaches
only to the inventory so acquired, and (C) the total
amount of outstanding indebtedness secured by all such
liens shall not exceed the aggregate sum of
$5,000,000.00; and
(ix) those specific liens now existing described on the
"Schedule of Exceptions" attached as Exhibit "D."
c. Guaranties. Subsection (iii) of Section 6.c is amended and
restated in its entirety and a new subsection (iv) is added to
Section 6.c as follows:
(iii) guaranties by International in favor of its
subsidiaries; and
(iv) those specific existing guaranties listed in the
"Schedule of Exceptions" attached as Exhibit "D."
d. Loans or Advances. Subsection (iv) of Section 6.d is amended and
restated in its entirety and new subsections (v), (vi) and (vii)
are added to the Agreement as follows:
(iv) loans and advances from the Company to International
not in excess of the aggregate principal amount of
$20,000,000.00, provided that any Letters of Credit
issued for the account of the Company but on behalf of
International shall be included in the amount of loans
or advances for purposes of this subsection;
(v) loans and advances from any Subsidiary to the Company;
(vi) loans and advances from International to any of the
subsidiaries of International; and
(vii) the specific items listed in the "Schedule of
Exceptions" attached as Exhibit "D."
-9-
<PAGE>
e. Merger, Consolidations, Sales, Acquisition or Formation of
Subsidiaries. Section 6.e of the Agreement is amended and
restated in its entirety to read as follows:
e. Merger, Consolidations, Sales, Acquisition or Formation
of Subsidiaries. The Company shall not be, and shall
not permit any Subsidiary to be, a party to any
consolidation or to any merger and shall not purchase
the capital stock of or otherwise acquire any equity
interest in any other business entity; provided,
however that, upon prior written notice to the Banks, a
Subsidiary of the Company may merge into the Company so
long as the Company is the surviving entity. The
Company shall not acquire, and shall not permit any
Subsidiary to acquire, any material part of the assets
of any other business entity which exceed the aggregate
amount of Two Million Dollars ($2,000,000.00). Except
as provided in the Security Agreement, the Company
shall not, and shall not permit any Subsidiary to,
sell, transfer, convey or lease all or a Substantial
Portion of the consolidated assets of the Company and
its Subsidiaries, except in the ordinary course of
business, or sell or assign with or without recourse
any receivables. The Company shall not cause to be
created or otherwise acquire any Subsidiaries nor
permit any Subsidiary to cause to be created or
otherwise acquire any Subsidiaries; provided, however,
that International may create subsidiaries of
International so long as the Company provides written
notice to the Banks.
8. MODIFICATIONS TO EVENTS OF DEFAULT. Section 8.c of the Agreement is
amended to include "or any Subsidiary" in the last line and new Sections 8.h
and 8.i are added to the Agreement, as follows:
c. Bankruptcy, Insolvency, etc. The Company or any
Subsidiary admitting in writing its inability to pay
its debts as they mature or an administrative or
judicial order of dissolution or determination of
insolvency being entered against the Company or any
Subsidiary; or the Company or any Subsidiary applying
for, consenting to, or acquiescing in the appointment
of a trustee or receiver for the Company or any
Subsidiary or any property thereof, or the Company or
any Subsidiary making a general assignment for the
benefit of creditors; or, in the absence of such
application, consent or acquiescence, a trustee or
receiver being appointed for the Company or any
Subsidiary or for a substantial part of its property
and not being discharged within sixty (60) days; or any
bankruptcy, reorganization, debt arrangement, or other
proceeding under any bankruptcy or insolvency law, or
any dissolution or liquidation proceeding being
instituted by or against the Company or any Subsidiary,
and, if involuntary, being consented to or acquiesced
in by the Company or any Subsidiary or remaining for
sixty (60) days undismissed.
h. Guaranty Agreement. Any Guaranty Agreement shall fail
to remain in full force and effect or any action shall
be taken to discontinue or to assert the invalidity or
unenforceability of any Guaranty Agreement, or any
Guarantor shall fail to comply
-10-
<PAGE>
with any of the terms or provisions of any Guaranty
Agreement to which it is a party, or any Guarantor
denies that it has any further liability, except as
otherwise provided in such Guaranty Agreement, under
any Guaranty Agreement to which it is a party, or gives
notice to such effect.
i. Collateral Document. Any Security Agreement or Pledge
Agreement or other document purporting to grant a
security interest to the Agent or the Banks (each a
"Collateral Document") shall for any reason (other than
action or inaction by the Banks) fail to create a valid
and perfected first priority security interest in any
collateral purported to be covered thereby, except as
otherwise permitted under the Agreement or any Loan
Document, or any Collateral Document shall fail to
remain in full force or effect or any action shall be
taken to discontinue or to assert the invalidity or
unenforceability of any Collateral Document, or the
Company or any Subsidiary shall fail to comply with any
of the terms or provisions of any Collateral Document.
9. BORROWING BASE. The Banks agree that the Aggregate Commitment will
not be limited by a Borrowing Base after the date of this Third Amendment.
Section 2.c(iii), Section 5.b(iv), Section 8.f and Section 10.s(xi) are hereby
deleted from the Ageement. All other references in the Agreement to the term
"Borrowing Base" and "Borrowing Base Certificate" shall be deemed void and of
no effect.
10. FORBEARANCE FOR LIENS ACQUIRED IN THE ALLIED TRANSACTION. The Banks
agree to forbear from exercising any remedies available under the Agreement with
respect to liens of creditors on the assets acquired in the Allied transaction
which liens have priority over the liens granted to the Agent on behalf of the
Banks under the Loan Documents so long as such liens are terminated or released
on or before July 8, 1996. The Company acknowledges that if such liens are not
terminated or released by July 8, 1996, the Company will not be in compliance
with the terms of the Agreement and the Agent on behalf of the Banks may
exercise any rights or remedies available under the Agreement for such
noncompliance.
11. CONSENT TO CREATION OF INTERNATIONAL AND THE ACQUISITION OF CERTAIN
ASSETS. The Banks waive the remedies available under the Agreement for the
failure of the Company to comply with the provisions of Section 6.e in the
creation of Brightpoint International, Ltd. The Banks consent to the acquisition
by International of certain assets and properties as more particularly set forth
in the copy of the Shareholder and Asset Purchase Agreement attached to this
Third Amendment as Exhibit "A," (the "Purchase Agreement"). The consent provided
in this Third Amendment does not constitute a waiver of or a consent to any
violation of or noncompliance by the Company or any of its Subsidiaries with any
financial or other covenants, representations or warranties contained in the
Agreement or in any other Loan Document to which the Company or any Subsidiary
is a party, except the provisions of Section 6.e of the Agreement as applied to
International. This consent is subject to the condition that immediately after
giving effect to the acquisition, no event shall occur or shall have occurred
and be continuing which constitutes an Event of Default or Unmatured Event of
Default under the Agreement, except the provisions of Section 6.e of the
Agreement as applied to International and except as otherwise provided herein.
The Company agrees to
-11-
<PAGE>
advise the Agent prior to finalizing the acquisition if the terms thereof differ
materially from those set forth in the Purchase Agreement. In such event, the
Banks reserve the right to revoke this consent in their discretion.
12. NONCOMPLIANCE WITH SECTION 5. The Banks waive the remedies available
under the Agreement for the failure of the Company to comply with the provisions
of Section 5.g(iii) of the Agreement with respect to the required fixed charge
coverage ratio at April 30, 1996. This waiver shall not be construed as a
commitment on the part of the Banks to grant any similar or other waiver in the
future.
13. CONDITIONS PRECEDENT. As conditions precedent to the effectiveness
of this Third Amendment, the Agent shall have received, each duly executed and
in form and substance satisfactory to the Banks the following:
a. This Third Amendment.
b. The Revolving Notes.
c. The Guaranty Agreements.
d. The Guarantor Security Agreements.
e. A certified copy of resolutions of the Board of Directors of the
Company authorizing the execution and delivery of this Third
Amendment and any other document required under this Third
Amendment.
f. A certificate signed by the Secretary of the Company certifying
the name of the officer or officers authorized to sign this
Third Amendment and any other document required under this Third
Amendment, together with a sample of the true signature of each
such officer.
g. A certified copy of resolutions of the Board of Directors of
each of the Guarantors authorizing the execution and delivery of
its respective Guaranty Agreement, its respective Guarantor
Security Agreement and any other document required under this
Third Amendment to which such Guarantor may be a party.
h. A certificate signed by the Secretary of each Guarantor
certifying the name of the officer or officers authorized to
sign the documents to which such Guarantor is to be a party as
required under this Third Amendment, together with a sample of
the true signature of each such officer.
i. The opinion or opinions of counsel for the Company and each
Guarantor addressed to the Banks to the effect that the
representations stated in Sections 3.a, 3.b and 3.c and 3.l of
the Agreement with respect to the Company, and in Sections 11.a,
11.b, 11,c and 11.k of each Guaranty Agreement with respect to
the Guarantors, are correct. Such opinion or opinions shall be
in such form as may be reasonably acceptable to the Banks.
-12-
<PAGE>
j. A copy of the file-marked Articles of Incorporation of each of
the Subsidiaries, certified as complete and correct by the
Secretary of State of the state of each such Subsidiary's
incorporation, and a copy of the By-Laws of each such
Subsidiary, certified as complete and correct by the Secretary
of such Subsidiary.
k. A currently dated certificate of existence or certificate of
good standing, as applicable, of each of the Subsidiaries issued
by the Secretary of State each such Subsidiary's incorporation.
l. Such other documents as may be reasonably required by the Agent
or the Banks.
14. REPRESENTATIONS AND WARRANTIES. To induce the Banks and the Agent to
enter into this Third Amendment, the Company represents and warrants, as of the
date of this Third Amendment and except as otherwise provided in this Third
Amendment, that no Event of Default or Unmatured Event of Default has occurred
and is continuing and that the representations and warranties contained in
Section 3 of the Agreement are true and correct, except that the representations
contained in Section 3.d refer to the latest financial statements furnished to
the Banks by the Company pursuant to the requirements of the Agreement and the
representation contained in Section 3.l is amended and restated in its entirety
to read as follows:
l. Subsidiaries. The only Subsidiaries of the Company as
of the date of the Third Amendment are Brightpoint
Acquisition, Inc., a Delaware corporation which is
wholly owned by the Company, Brightpoint FSC, Inc., a
foreign sales corporation organized under the laws of
Barbados which is wholly owned by the Company, and
Brightpoint International, Ltd., a Delaware
corporation, which is wholly owned by the Company as of
the date of the Third Amendment, but will be fifty
percent (50%) owned after execution of the Purchase
Agreement, but which shall be deemed a Subsidiary for
all purposes under the terms of this Agreement and the
other Loan Documents.
15. REAFFIRMATION OF THE AGREEMENT. Except as amended by this Third
Amendment, all terms and conditions of the Agreement shall continue unchanged
and in full force and effect and the Obligations of the Company shall continue
to be secured and guaranteed as therein provided until payment and performance
in full of all Obligations.
16. COUNTERPARTS. This Third Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company, the Agent and the Banks, by their
respective duly authorized officers, have executed this Third Amendment to
Credit Agreement with effect as of June 7, 1996.
BRIGHTPOINT, INC.
By:_______________________________________
J. Mark Howell, Executive Vice
President and Chief Financial Officer
-13-
<PAGE>
Address: 6402 Corporate Drive
Indianapolis, Indiana 46278
Attention: Executive Vice President and
Chief Financial Officer
Fax: (317) 297-6191
BANK ONE, INDIANAPOLIS,
NATIONAL ASSOCIATION
Individually and as Agent
By:_______________________________________
_______________________________________
(printed name and title)
PERCENTAGE: 41.5%
Address: Bank One Center/Tower
111 Monument Circle, Suite 1921
P. O. Box 7700
Indianapolis, Indiana 46277-0119
Attention: Manager, Metropolitan Department B
Fax: (317) 321-8079
THE FIRST NATIONAL BANK OF CHICAGO
By:_______________________________________
_______________________________________
PERCENTAGE: 26.0%
Address: One First National Plaza
Mail Suite 0088
Chicago, Illinois 60670-0088
Attention: Cory M. Olson
Fax: (312) 732-5161
SUNTRUST BANK, CENTRAL FLORIDA, N.A.
By:_______________________________________
_______________________________________
(printed name and title)
PERCENTAGE: 19.0%
-14-
<PAGE>
Address: SunTrust Bank, Central Florida, N.A.
200 South Orange Avenue
Orlando, Florida 32801
Attention:_____________________________
Fax: (407) 237-6894
CORESTATES BANK, N.A.
By:_______________________________________
_______________________________________
(printed name and title)
PERCENTAGE: 13.5%
Address: CoreStates Bank, N.A.
2240 Butler Pike
Plymouth Meeting, Pennsylvania 19462
Attention:________________________________
Fax: (610) 834-2069
-15-
<PAGE>
TABLE OF CONTENTS
Page
----
SHAREHOLDER AND ASSET PURCHASE AGREEMENT .............................. 3
RECITALS .............................................................. 3
1. FORMATION OF INTERNATIONAL ............................... 4
1.1. Purpose ........................................... 4
1.2. Certificate of Incorporation and Bylaws ........... 5
1.3. Capitalization .................................... 5
1.4. Board of Directors ................................ 5
1.5. Officers .......................................... 6
1.6. Administration and Management ..................... 7
1.7. Auditors .......................................... 9
1.8. Fiscal Year ....................................... 9
1.9. Principal Offices ................................. 9
1.10. Business Plan ..................................... 9
1.11. Corporate Borrowings .............................. 10
1.12. Supply of Product ................................. 11
1.13. Employment Agreements ............................. 12
1.14. Dividend Policy ................................... 12
1.15. International Subsidiaries ........................ 13
2. PURCHASE AND SALE OF TRI ACQUIRED ASSETS ................. 13
2.1. Purchase and Sale ................................. 13
2.2. No Assumption of Liabilities ...................... 15
2.3. Valuation of the Inventory ........................ 16
2.4. Consideration ..................................... 18
3. REPRESENTATIONS AND WARRANTIES ........................... 18
3.1. Representations and Warranties of TRI ............. 18
3.2. Representations and Warranties of BPUS ............ 33
3.3. Representations and Warranties of
INTERNATIONAL ................................... 35
4. ADDITIONAL COVENANTS ..................................... 36
4.1. Conduct of TRI Business Pending the Closing ....... 36
4.2. Access to Information ............................. 41
4.3. Best Efforts ...................................... 42
4.4. Notice of Material Change ......................... 42
4.5. Future Sales\Competing Investments ................ 43
4.6. Broker ............................................ 44
4.7. Transfer Costs .................................... 44
4.8. Governmental Filings .............................. 44
4.9. Investment Intent ................................. 44
5. CONDITIONS PRECEDENT TO CLOSING .......................... 45
5.1. Conditions to each Party's Obligations
Antitrust and Competition Laws .................. 45
5.2. Accuracy of Representations and Warranties ........ 47
5.3. Conditions to Obligations of TRI .................. 49
EXHIBIT "A"
Page i of 76 Pages
<PAGE>
6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES ................ 50
7. CLOSING .................................................. 50
7.1. The Closing ....................................... 50
7.2. Deliveries at the Closing ......................... 50
7.3. Other Documents ................................... 51
8. PUBLIC OFFERING/CONVERSION AND CALL RIGHTS ............... 51
8.1. Public Offering ................................... 51
8.2. Conversion Option ................................. 52
8.3. Call Option ....................................... 53
9. RESTRICTIONS ON TRANSFERS OF INTERNATIONAL STOCK ......... 55
9.1. General Prohibition ............................... 55
9.2. Right of First Refusal ............................ 56
9.3. The Closing ....................................... 58
9.4. Authorized Transfer ............................... 60
9.5. Legend ............................................ 61
10. NON-COMPETITION COVENANT ................................. 62
10.1. Non-competition and Noninterference ............... 62
10.2. Consideration ..................................... 64
10.3. Enforcement ....................................... 65
10.4. Litigation Expense ................................ 65
11. INDEMNIFICATION .......................................... 66
11.1. Agreement to Indemnify by TRI, SAFKONG,
ARNOTT, MARRIOTT and MARLIN ..................... 66
11.2. Agreement to Indemnify by INTERNATIONAL ........... 66
11.3. No Knowledge or Investigation ..................... 67
11.4. Notice; Control of Defense; Settlement ............ 67
12. TERMINATION, AMENDMENT AND WAIVER ........................ 68
12.1. Pre-Closing Termination ........................... 68
12.2. Post-Closing Termination .......................... 69
12.3. Effect of Termination ............................. 69
13. MISCELLANEOUS ............................................ 69
13.1. Amendment ......................................... 69
13.2. Extension; Waiver ................................. 70
13.3. Notices ........................................... 70
13.4. Expenses .......................................... 71
13.5. Cooperation ....................................... 71
13.6. Governing Law ..................................... 71
13.7. Waiver of Jury Trial .............................. 72
13.8. Assignability and Parties in Interest ............. 72
13.9. Complete Agreement ................................ 72
13.10. Counterparts ...................................... 72
EXHIBIT "A"
Page ii of 76 Pages
<PAGE>
SHAREHOLDER AND ASSET PURCHASE AGREEMENT
THIS SHAREHOLDER AND STOCK PURCHASE AGREEMENT is made as of __________,
1996 by and among BRIGHTPOINT INTERNATIONAL, LTD., a Delaware corporation
("INTERNATIONAL"), BRIGHTPOINT, INC., a Delaware corporation ("BPUS"), MARRIOTT
INVESTMENT & TRADE INC., a British Virgin Island company ("MARRIOTT"), SAFKONG
HOLDINGS LIMITED, a private company limited by shares organized in Hong Kong
under The Companies Ordinance ("SAFKONG", and together with MARRIOTT, sometimes
referred to herein as the "TRI Shareholders"), TECHNOLOGY RESOURCES
INTERNATIONAL LIMITED, a private company limited by shares organized in Hong
Kong under The Companies Ordinance ("TRI") and each of Dana Marlin ("MARLIN")
and John Michael Maclean-Arnott ("ARNOTT"), individuals residing in Hong Kong.
RECITALS
WHEREAS, TRI is in the business of the wholesale purchase of wireless
communications devices and accessories (the "Products") for the marketing,
distribution and sale to customers (the "Business") located throughout the world
(other than North America, South America and Latin America) (the "Territory");
and
WHEREAS, INTERNATIONAL desires to purchase from TRI, and TRI desires to
sell to INTERNATIONAL, on the terms and subject to the conditions hereinafter
set forth, certain assets and properties of TRI and the Business hereinafter
described, in exchange for ___ shares of INTERNATIONAL, representing 50% of the
EXHIBIT "A"
Page 1 of 76 Pages
<PAGE>
issued and outstanding shares of INTERNATIONAL, free and clear from any all
liabilities, liens, claims and encumbrances of any nature whatsoever, excepting
only those liabilities hereinafter expressly provided to be assumed by
INTERNATIONAL; and
WHEREAS, BPUS proposes to provide to INTERNATIONAL certain credit
facilities in connection with the acquired Business, as set forth more
particularly in this Agreement; and
WHEREAS, BPUS and TRI desire to assure a continuity of the management
and policies of INTERNATIONAL and to arrange for the disposition of the common
stock of INTERNATIONAL owned or hereinafter acquired by each of them; and
WHEREAS, BPUS and TRI intend that the business of INTERNATIONAL be
conducted in accordance with and subject to the provisions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
1. FORMATION OF INTERNATIONAL
1.1. Purpose. INTERNATIONAL shall engage in the purchase and
marketing for distribution and sale of the Products to customers throughout the
Territory. TRI shall make available to International its contacts and customers
including those developed by the subsidiaries of TRI listed on Schedule 3.1(c)
hereof (collectively hereinafter referred to as the "TRI Subsidiaries" and
individually, "TRI Subsidiary").
EXHIBIT "A"
Page 2 of 76 Pages
<PAGE>
1.2. Certificate of Incorporation and Bylaws. The Certificate of
Incorporation and the Bylaws of INTERNATIONAL shall be substantially in the form
of Exhibits 1.2A and 1.2B, respectively, attached hereto and made a part hereof.
1.3. Capitalization. As set forth in the Certificate of Incorporation,
the authorized capitalization of INTERNATIONAL shall consist of ___ shares of
Common Stock par value $____ per share (the "International Stock"). After the
Closing, the ownership of the issued and outstanding shares of the International
Stock shall be as follows:
Stockholder Shares Percentage
----------- ------ ----------
BPUS 50%
TRI 50%
1.4. Board of Directors. The business and affairs of INTERNATIONAL
shall be managed by the Board of Directors of INTERNATIONAL (the "Board"),
subject to certain limitations contained herein:
(a) The Bylaws of INTERNATIONAL shall provide that the Board
shall consist of six (6) members, three of whom shall be designated by BPUS
(the "BPUS Designees") and three of whom shall be designated by TRI (the "TRI
Designees"). The initial Board to be appointed shall consist of:
Name Designor
---- --------
Robert J. Laikin BPUS
T. Scott Housefield BPUS
J. Mark Howell BPUS
Albert Myburg TRI
John Michael Maclean-Arnott TRI
Dana Marlin TRI
EXHIBIT "A"
Page 3 of 76 Pages
<PAGE>
(b) Each of the stockholders of INTERNATIONAL (the "International
Stockholders") shall vote their respective International Stock to elect and
re-elect the initial members of the Board as directors of INTERNATIONAL.
(c) In the event of the removal, resignation, death or disability
of T. Scott Housefield, J. Mark Howell or Robert J. Laikin, the remaining
international Stockholders shall vote their respective International Stock to
elect and re-elect the designee of the remaining BPUS Designees.
(d) In the event of the removal, resignation, death or disability
of Albert Myburg, ARNOTT or MARLIN, the remaining International Stockholders
shall vote their respective International Stock to elect and re-elect the
designee of the remaining TRI Designees.
1.5. Officers.
(a) The officers of INTERNATIONAL shall be appointed by the
Board. The initial officers to be so appointed are:
Position Name
-------- ----
Chairman Robert J. Laikin
President T. Scott Housefield
Vice-President,
Managing Director
and Secretary John Maclean-Arnott
Vice-President,
Managing Director and
Assistant Secretary Dana Marlin
Vice President and
Assistant Secretary J. Mark Howell
(b) A Chief Financial Officer (CFO) shall be appointed by a
majority of the BPUS Designees.
EXHIBIT "A"
Page 4 of 76 Pages
<PAGE>
(c) The International Stockholders shall use their best efforts to
cause the members of the Board to elect and to continue in office and to
re-elect the persons as officers of INTERNATIONAL in the capacity set forth in
Paragraphs (a) and (b) hereof.
(d) In the event of the removal, resignation, death or disability
of Robert J. Laikin, T. Scott Housefield or J. Mark Howell or their respective
designees, the International Stockholders shall vote their respective
International Stock to elect and re-elect the designee of the BPUS Designees as
Chairman, President or Vice-President, as the case may be.
(e) In the event of the removal, resignation, death or disability
of ARNOTT or MARLIN or their respective designee, the International
Stockholders shall vote their respective International Stock to elect and
re-elect the designee of the TRI Designees as Vice-President and Managing
Director(s).
1.6. Administration and Management.
(a) Except as set forth in Paragraph (b) hereof, all actions of
the Board shall require a majority vote of the directors, which majority vote
shall include at least one BPUS Designee and one TRI Designee, to constitute the
authorized action of the Board.
(b) The Bylaws of INTERNATIONAL shall provide that the following
actions of the Board and/or INTERNATIONAL (the "Material Decisions") shall
require a five director vote of the Board to constitute the authorized action
of the Board:
EXHIBIT "A"
Page 5 of 76 Pages
<PAGE>
(i) any merger, reorganization, consolidation or
recapitalization of INTERNATIONAL;
(ii) the issuance of additional securities of INTERNATIONAL;
(iii) the addition or reduction of the number of directors
comprising the Board;
(iv) the amendment to the Bylaws or Certificate of
Incorporation of INTERNATIONAL;
(v) the sale, assignment, mortgage, hypothecation, pledge,
encumbrance or other disposition of any of the International Stock except as
provided in Article 9 hereof;
(vi) the terms of the Public Offering (as defined in Section
8.1 hereof);
(vii) the acquisition of a company or assets by
INTERNATIONAL, with consideration being paid by INTERNATIONAL in excess of
$50,000;
(viii) the sale, assignment or other transfer or disposition
of all or substantially all of the assets of INTERNATIONAL other than in the
ordinary course of its business operations;
(ix) the payment of dividends to the International
Stockholders other than as provided in Section 1.14 hereof;
(x) the dissolution or winding up of INTERNATIONAL, except
upon termination pursuant to Article 12 hereof;
EXHIBIT "A"
Page 6 of 76 Pages
<PAGE>
(xi) the amendment to the Bylaws or Certificate of
Incorporation, or the corresponding incorporation or governing documents of any
International Subsidiary;
(xii) any change to the effective control or ownership
interest exercised by INTERNATIONAL in any International Subsidiary;
(xiii) except as provided in Section 1.15 hereof, the creation
of additional subsidiaries of INTERNATIONAL; and
(xiv) unless specifically contemplated by the Business Plan
(as defined in Section 1.10) in effect when such action is taken:
(A) the incurrence of indebtedness, or making a loan
to any party in excess of $100,000;
(B) the making of investments in excess of $100,000
other than in the ordinary course of business (i.e., investments in money
market, treasury bills, bank accounts);
(C) the hiring of employees with annual compensation
in excess of $50,000;
(D) the payment of commissions, brokers or finders
fees or other compensation in excess of $50,000 to any agent or broker; and
(E) any amendment to the Business Plan, as approved,
resulting in a deviation, individually or in the aggregate, of more than 2% of
any particular line item of the budget.
EXHIBIT "A"
Page 7 of 76 Pages
<PAGE>
1.7. Auditors. The auditors of INTERNATIONAL shall be the accounting
firm of Ernst & Young LLP and the members of the Board shall re-confirm the
engagement of Ernst & Young LLP.
1.8. Fiscal Year. The fiscal year of INTERNATIONAL shall be the
calendar year.
1.9. Principal Offices. The corporate headquarters of INTERNATIONAL
shall be located and maintained in Manchester, England. INTERNATIONAL shall also
maintain an office in London, England as well as such other locations as the
Board may determine from time to time.
1.10. Business Plan. At least once a year, the President (in
consultation with the other officers and such others as the President determines
in his reasonable discretion) shall prepare a budget and plan of operation
(the "Business Plan") which sets forth in reasonable detail the anticipated
revenues and expenditures for INTERNATIONAL and the anticipated business
activities for the succeeding fiscal year. The proposed Business Plan for the
year, ending December 31, 1996, shall be promptly prepared. Each Business Plan
shall be submitted to the Board for approval in accordance with Sections 1.6(b).
Notwithstanding anything to the contrary contained in this Agreement or the
Bylaws of INTERNATIONAL, if a Business Plan is not adopted with respect to a
particular period, all transactions taken prior to such adoption must be
approved by the Board pursuant to Section 1.6(b). It is hereby acknowledged that
the Business Plan cannot anticipate every contingency; accordingly, it is
further acknowledged that necessary deviation from the Business Plan may be
EXHIBIT "A"
Page 8 of 76 Pages
<PAGE>
acceptable, provided that such deviations, individually or in the aggregate
shall not be more than 2% of any particular line item of the budget without the
approval of the Board pursuant to Section 1.6(b).
1.11. Corporate Borrowings. The parties intend that INTERNATIONAL
shall finance its own working capital and investments in property, plant and
equipment. Prior to the date of the Public Offering (as defined in Section 8.1
hereof), BPUS will make available to INTERNATIONAL from time to time (i) up to
$10,000,000 in letter of credit facilities (the "Letter of Credit Facility") to
be used in connection with the purchase of the Products and (ii) up to
$7,500,000 in account receivable financing, working capital advances,
guarantees, and trade receivables (the "Advance Facility"); provided that the
aggregate amounts outstanding under the Letter of Credit Facility and the
Advance Facility shall not exceed $15,000,000. The parties agree that any funds
provided by BPUS (including the Letter of Credit Facility and the Advance
Facility) shall bear a rate of interest equal to BPUS's best commercial
borrowing rate plus 1% (the "Borrowing Rate"), together with all fees
(including Letter of Credit fees) paid by BPUS in connection with such
Facilities. All requests for advances on the Letter of Credit Facility and
Advance Facility must be approved by a BPUS Designee which approval shall not be
unreasonably withheld or delayed.
1.12. Supply of Product.
(a) It is the understanding and agreement of the parties that
following the Closing Date, and from time to time, each of INTERNATIONAL and
EXHIBIT "A"
Page 9 of 76 Pages
<PAGE>
BPUS may enter into contracts and commercial transactions with the other party
for the purchase of the Products. The purchase price for the Products purchased
from BPUS shall be equal to BPUS's cost plus 3% and payment terms of net
forty-five (45) days from the date of the purchase order, with interest accruing
thereafter at the Borrowing Rate, as of the last business day immediately prior
to the expiration of the aforesaid net 45-day period. BPUS will use its best
efforts to allow INTERNATIONAL to purchase the Products directly from vendors,
subject to the availability of funds under the Facilities.
(b) INTERNATIONAL shall, as herein provided, have a right of
first refusal to supply (the "Supply Right of First Refusal") to BPUS all
proprietary after-market accessories (the "Accessories"). BPUS shall promptly
provide INTERNATIONAL with the specifications and delivery time for Accessories
required by BPUS, whereupon International shall provide BPUS, within three (3)
business days (or such shorter time as may be required by BPUS), with a price
and written confirmation of International's ability to meet the specifications.
All accessories supplied by INTERNATIONAL to BPUS pursuant hereto shall be on a
"most-favored-nation" basis.
1.13. Employment Agreements. INTERNATIONAL shall, at the Closing,
enter into employment agreements with each of ARNOTT and MARLIN, providing, in
part, for an annual salary of $120,000.00 plus an allowance, in the amount of
$80,000.00, for housing, transportation, medical and education and in
substantially the form of the employment agreements attached as Exhibits 1.13A
and 1.13B hereto (collectively, the "Employment Agreements").
EXHIBIT "A"
Page 10 of 76 Pages
<PAGE>
1.14. Dividend Policy. If after December 31, 1997, and if at the end
of each applicable period, retained earnings of INTERNATIONAL are in excess
of $2,000,000, the Board shall cause INTERNATIONAL to declare a dividend, to the
International Stockholders, in an amount not to exceed twenty-five percent (25%)
of the cash profits of INTERNATIONAL for such period; provided, however, that in
the event there is a loss for any quarter during any fiscal year in which a
dividend was declared in accordance with this Section 1.14, International
Stockholders shall repay to INTERNATIONAL within ten (10) days of demand
therefor the amount by which dividends paid pursuant to this Section 1.14 for
such years exceed 25% of such International Stockholder's allocable portion of
the profits of INTERNATIONAL for such year. Notwithstanding anything
contained in this Agreement or in the Bylaws of INTERNATIONAL to the
contrary, the International Stockholders covenant and agree that no dividends
shall be declared or paid by INTERNATIONAL until after December 31, 1997
(unless approved by BPUS Designees).
1.15. International Subsidiaries. The Board. shall cause the
formation of two wholly-owned subsidiary corporations (the "International
Subsidiaries") to assist in the operation of the Business by INTERNATIONAL after
the Closing. The By-laws for the International Subsidiaries shall provide for
the formation of such further subsidiaries as determined by the respective
boards for each of the International Subsidiaries from time to time.
EXHIBIT "A"
Page 11 of 76 Pages
<PAGE>
2. PURCHASE AND SALE OF TRI ASSETS
2.1. Purchase and Sale. Subject to and in reliance upon the
representations, warranties and agreements, and subject to the terms and
conditions set forth in this Agreement, TRI hereby agrees to sell, convey,
transfer, assign, and deliver to INTERNATIONAL, free and clear of all
liabilities, liens, claims, security interests, pledges, charges, and
encumbrances, except as specifically set forth herein, and INTERNATIONAL agrees
to purchase from TRI at the Closing Date (as defined in Section 7.1 hereof), the
following assets and properties of the Business (the "Acquired Assets"):
(a) All of TRI's (and TRI subsidiaries') customers and its
goodwill, consisting of the customer lists (active, inactive and prospective
since TRI's incorporation in 1993) of the Business, the records (both written
and machine-readable) of TRI and the TRI Subsidiaries relating to customer
histories, addresses, credit information, quantities and frequency of sales,
contact persons, special customer needs, customer specifications, product data
sheets and all other records, documents and other information (both written and
machine-readable) in possession of TRI or any TRI Subsidiary as may be necessary
to enable INTERNATIONAL to transfer TRI's customers to INTERNATIONAL;
(b) All books and records of TRI and TRI Subsidiaries either in
original or photostatic form, relating exclusively to the Business and
consisting of books and records relating to purchases and sales of the Products,
supplier information and prices at which TRI purchases any of the Products;
EXHIBIT "A"
Page 12 of 76 Pages
<PAGE>
(c) All contracts, commitments and offers of TRI and TRI
Subsidiaries for the sale of the Products and for the purchase and supply of the
Products, which have been entered into by TRI and which are by their terms
assignable to INTERNATIONAL (or, where consent to assignment is required, such
consent has been obtained by TRI), including any and all rights necessary or
desirable for the purpose of preserving and continuing existing arrangements
(whether exclusive or otherwise) with the TRI Suppliers (defined in Section
3.1(u) hereof) and commitments for the purchase of the Products not yet
delivered. A list of such contracts is attached hereto as Exhibit 2.1(c);
(d) The accounts receivable, instruments, documents, contract
rights and all rights of TRI to any payment or other consideration for
Products sold or for services rendered, as mutually agreed to by TRI and
INTERNATIONAL at the Closing;
(e) All good and usable inventory of the Products located at, or
in transit to, TRI facilities or warehouses as of the Closing, together with all
warehouse receipts, documents of title and books and records relating thereto
(the "Inventory"); and
(f) All furniture, fixtures and equipment used in the Business as
more particularly set forth in Schedule 2.1(f) hereto.
EXHIBIT "A"
Page 13 of 76 Pages
<PAGE>
2.2. No Assumption of Liabilities. Except for any obligations of TRI
which arise (i) under any of the contracts set forth in Exhibit 2.1.(c) hereof
and assumed by INTERNATIONAL at the Closing or (ii) under the aforesaid supply
commitment with SAGEM, it is expressly understood and agreed that INTERNATIONAL
shall not assume, purchase the Acquired Assets subject to, or be in any manner
liable or responsible for, any and all debts, liens, adverse claims, penalties,
liabilities, encumbrances and other obligations of TRI of any nature whatsoever,
whether secured, unsecured, recourse, nonrecourse, liquidated, unliquidated,
accrued, absolute, fixed, contingent, ascertained, known, unknown or otherwise
of TRI (the "TRI's Obligations") including, without limitation, TRI's
Obligations:
(a) For any Tax (as defined in Section 3.1(n)(iii) hereof),
whether or not reflected in TRI's books and records, with respect to all
periods before or after the Closing, including, without limitation, any Tax
arising from TRI's transfer of the Acquired Assets or its consummation of the
transactions contemplated hereunder;
(b) Resulting from personal injury, property damage or any other
injury or damage or out of any claims, including causes of action sounding in
products liability or damage to the environment or natural resources, for any
breach or non-performance by TRI of any contract, commitment or obligation or in
respect of any other claim, action, suit, arbitration, government inspection or
other legal or administrative proceeding, whether initiated before or after
the date hereof, concerning Products sold by TRI, the use, ownership or transfer
EXHIBIT "A"
Page 14 of 76 Pages
<PAGE>
of the Acquired Assets, the Business as conducted by TRI, or otherwise arising
out of the actions of involving TRI, its affiliates, or any shareholder,
partner, director, officer, employee or agent of TRI or its affiliates;
(c) For any expenses, liabilities, damages, or obligations for
personal injury, property damage, losses or any other claims with respect to
Products manufactured or acquired by TRI prior to the Closing other than
Products which are altered by INTERNATIONAL, or shipped, sold or otherwise
disposed of by INTERNATIONAL more than six (6) months after the Closing;
(d) Arising from any accrued salary, vacation, sick pay, workers'
compensation, unemployment and other benefits, or any benefit plans covering any
employees of TRI; and
(e) Resulting from the requirements or obligations applicable to
TRI related to, or the violation by TRI of, any order, writ, injunction,
decree, law, statute, rule or regulation of any court or governmental authority,
including, without limitation, any and all environmental, health or safety laws.
2.3. Valuation of the Inventory.
(a) Representatives of TRI and INTERNATIONAL shall take a physical
inventory of all of the Inventory of TRI located at facilities and/or warehouses
owned or leased by TRI and any TRI Subsidiary. Such physical inventory shall be
commenced on a date (the "Physical Inventory Date") that will permit completion
on or before the Closing Date (as defined in Section 7.1 hereof). On or before
EXHIBIT "A"
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<PAGE>
the Physical Inventory Date, TRI shall furnish INTERNATIONAL with true and
complete copies of all warehouse receipts, if any, with respect to items of
Inventory located at, or in transit to, warehouses, together with a complete and
accurate description of all such items. Such physical inventory shall be
recorded in duplicate books (signed by representatives of TRI and INTERNATIONAL)
and valued at "market price," which shall be defined as the net realizable value
of the items of Inventory (F.O.B. TRI's facility or warehouse) to be determined
jointly by the parties.
(b) Any dispute between TRI and INTERNATIONAL as to the value of
Inventory items, or as to whether Inventory items are salable (which shall be
defined to mean salable in the ordinary course of business as conducted by TRI
without discount from the prices generally charged by TRI for like items of
first quality), shall be determined by an expert selected by mutual agreement
of TRI and INTERNATIONAL. If TRI and INTERNATIONAL cannot agree upon the
selection of such expert within ten (10) days of the occurrence of the
dispute, each party shall designate an independent representative, and the two
representatives so designated shall select an expert to determine the dispute.
Each party shall bear the costs associated with its designation of such
independent representative and shall equally bear the cost of retaining an
expert to determine the dispute. The decision of the expert shall be final and
binding on the parties. Payment for any disputed items of Inventory found to be
salable or usable shall be made by INTERNATIONAL either on the Closing Date or
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within ten (10) days after receipt of such expert's decision, whichever is
later.
2.4. Consideration. On the Closing Date, in full consideration for the
transfer of the Acquired Assets, INTERNATIONAL will deliver or cause to be
delivered at the Closing to TRI (i) stock certificate(s) registered in the name
of TRI, which certificate(s) shall evidence the issuance to TRI of _______
shares of International Stock, constituting fifty percent (50%) of the
International Stock, together with any rights or options to acquire additional
shares of capital stock, if any, thereof and (ii) cash, in an amount equal to
the purchased Inventory and accounts receivable included in the Acquired Assets.
3. REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of TRI. Each of TRI, SAFKONG,
MARRIOTT, ARNOTT and MARLIN, jointly and severally, represents and warrants to
each of INTERNATIONAL and BPUS as follows:
(a) Organization, Standing and Power. TRI and each TRI Subsidiary
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, with full corporate power and
authority to own, lease and operate its properties and to carry on its business
as presently conducted by it. TRI and each TRI Subsidiary is duly qualified to
do business and is in good standing in each jurisdiction in which any of the
properties owned or leased by TRI or such TRI Subsidiary, or the conduct of its
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businesses requires such qualification. Copies of the Memorandum of Association
of TRI and all amendments thereof, and of the Articles of Association of TRI, as
amended to date, and the corresponding incorporation documents for each TRI
Subsidiary have been furnished to BPUS and are complete and correct. The minute
books and corporate records of TRI and each TRI Subsidiary heretofore exhibited
to BPUS contain complete and accurate records of all meetings and other
corporate actions of each companies' stockholders and boards of directors.
(b) Capitalization.
(i) The authorized capital stock of TRI consists of
ten-thousand (10,000) shares of common stock, par value of HKD 1.00 per share,
of which 10,000 shares are issued and outstanding. All issued shares of TRI's
common stock have been duly and validly issued and are fully paid and
nonassessable. There are no outstanding options, warrants, rights, puts, calls,
commitments, conversion rights, plans or other agreements of any character to
which TRI or any of the TRI Shareholders are a party or otherwise bound which
provide for the acquisition, disposition or issuance of any issued but not
outstanding, outstanding, or authorized and unissued shares of capital stock of
TRI.
(ii) There is no personal liability, and there are no
preemptive or similar rights, attached to the TRI Shares or the shares of any
TRI Subsidiary. Schedule 3.1(b) is a complete and correct list of the names,
addresses and record and beneficial stock ownership of all of the shareholders
of TRI and each TRI Subsidiary. Each such shareholder has good and marketable
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title to all of the TRI Shares which are indicated on said Schedule 3.1(b) as
being owned by it on the date hereof, free and clear of any and all liens,
claims, security interest, pledges, charges and encumbrances of any nature
whatsoever, and on the Closing Date will own all of the TRI Shares or shares of
the TRI Subsidiaries, as the case may be, which are indicated on said
Schedule 3.1(b) as being owned by him on said date, free and clear of any and
all liens, claims, security interests, pledges, charges and encumbrances of any
nature whatsoever, including, but not limited to, any claims by any present or
former shareholders of TRI or any TRI Subsidiary.
(c) Interests in Other Entities. Except for the TRI Subsidiaries
set forth on Schedule 3.1(c), TRI does not (A) own, directly or indirectly, of
record or beneficially, any shares of voting stock or other equity securities of
any other corporation, partnership, limited liability company or other person or
entity (B) have any ownership interest, direct or indirect, of record or
beneficially, in any unincorporated entity, or (C) have any obligation, direct
or indirect, present or contingent, (1) to purchase or subscribe for any
interest in, advance or loan monies to, or in any way make investments in, any
person or entity, or (2) to share any profits or capital investments or both.
Neither SAFKONG, MARRIOTT, MARLIN or ARNOTT nor any of their affiliates, have
any other interest (except for interests in publicly held companies in any other
person or entity engaged in the purchasing, manufacturing, marketing, selling or
distribution of wireless communications devices or accessories.
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(d) Authority. The execution and delivery by TRI, SAFKONG and
MARRIOTT of this Agreement and of all of the agreements to be executed and
delivered by any of them pursuant hereto, the performance by any of them of
their respective obligations hereunder and thereunder, and the consummation of
the transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary corporate action on the part of TRI (including, but
not limited to, the unanimous consents of TRI Shareholders) and TRI, SAFKONG and
MARRIOTT have all necessary power with respect thereto. This Agreement is, and
when executed and delivered by TRI, SAFKONG and MARRIOTT, each of the other
agreements to be delivered by any of them pursuant hereto will be, the valid and
binding obligation of TRI, SAFKONG and MARRIOTT, respectively, to the extent
each of them is a party thereto, in accordance with its terms.
(e) Noncontravention. Except as set forth on Schedule 3.1(e),
neither the execution and delivery by TRI, SAFKONG or MARRIOTT of this
Agreement or of any agreement to be executed and delivered by any of them
pursuant hereto, nor the consummation of any of the transactions contemplated
hereby or thereby, nor the performance by any of them of their respective
obligations hereunder or thereunder, will (nor with the giving of notice or the
lapse of time or both would) (A) conflict with or result in a breach of any
provision of either the Memorandum or Articles of Association of TRI or the
corresponding incorporation documents for any TRI Subsidiary, or (B) give rise
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to a default, or any right of termination, cancellation or acceleration, or
otherwise be in conflict with or result in a loss of contractual benefits to any
of them under the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, agreement or other instrument or obligation to which TRI,
SAFKONG, MARRIOTT or any TRI Subsidiary is a party or by which any of them or
any of their assets may be bound, or require any consent, approval or notice
under the terms of any such document or instrument, or (C) violate any order,
writ, injunction, decree, law, statute, rule or regulation of any court or
governmental authority which is applicable to any of them, or (D) result in the
creation or imposition of any lien, claim, restriction, charge or encumbrance
upon any of the assets of TRI or any TRI Subsidiary including without limitation
any contractual relations with suppliers and/or customers with respect to the
Products, or (E) interfere with or otherwise adversely affect the ability of TRI
or any TRI Subsidiary to carry on the business after the Closing Date on
substantially the same basis as is now conducted by TRI and the TRI
Subsidiaries.
(f) Financial Statements. TRI has or will heretofore delivered to
BPUS its audited balance sheets for the years ended, 1994 and 1995 (the "Audited
Balance Sheet"), together with the related statements of income, stockholders,
equity and cash flows for the year ended on such date, certified without
qualification by (Ernst & Young, LLP) independent certified public accountants,
and TRI's unaudited balance sheet as of ____________________________1996 ,
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(the "Unaudited Balance Sheet"), and the related statements of income,
stockholders' equity and cash flows for the period then ended. Said financial
statements were prepared in accordance with generally accepted accounting
principles consistently applied, and fairly present the financial position of
TRI as at the date thereof and its results of operations for the period
indicated, except that the aforementioned unaudited financial statements are
subject to normal recurring adjustments which might be required as a result of
year-end audit. The books and records of TRI and each TRI Subsidiary are
complete and correct, have been maintained in accordance with good business
practices, and accurately reflect the basis for the financial condition of TRI
and each TRI Subsidiary as set forth in the aforementioned financial statements.
(g) Absence of Undisclosed Liabilities. Neither TRI nor any TRI
Subsidiary has any liabilities or obligations of any nature whatsoever, whether
accrued, absolute, contingent or otherwise, which have not been (i) in the case
of liabilities and obligations of a type customarily reflected on a corporate
balance sheet, prepared in accordance with generally accepted accounting
principles, set forth on the Audited Balance Sheet or the Unaudited Balance
Sheet or (ii) in the case of other types of liabilities and obligations,
described in any of the Schedules delivered pursuant hereto or omitted from said
Schedules in accordance with the terms of this Agreement, or (iii) incurred,
consistent with past practice, in the ordinary course of business (in the case
of liabilities and obligations of the type referred to in clause (i) above).
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(h) Properties.
(i) TRI and each TRI Subsidiary have good and marketable fee
title to all of the real property and fixtures, and good and marketable title to
all of the other properties and assets, reflected on the Unaudited Balance Sheet
or thereafter acquired, except properties or assets sold or otherwise disposed
of in the ordinary course of business, free and clear of any and all mortgages,
liens, pledges, charges and encumbrances of any nature whatsoever, liens for
current taxes not yet due and payable or being contested in good faith by
appropriate proceedings.
(ii) All plants, structures and equipment which are utilized in
the businesses of TRI, or are material to operations or condition (financial or
otherwise) of TRI are owned or leased by TRI and are in good operating
condition and repair (ordinary wear and tear excepted), and are adequate and
suitable for purposes for which they are used. Schedule 3.1(h) sets forth all
(A) real property which is owned, leased (whether as lessor or lessee) or
subject to contract or commitment of purchase or sale or lease (whether as
lessor or lessee) by TRI or which is subject to a title retention or conditional
sales agreement or other security device, and (B) personal property which was
owned, leased (whether as lessor or lessee) or subject to contract or commitment
of purchase or sale or lease (whether as lessor or lessee) by TRI.
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(i) Accounts Receivable; Inventories. The accounts and notes
receivable which are reflected on the Unaudited Balance Sheet are good and
collectible in the ordinary course of business at the aggregate recorded amounts
thereof, less the amount of the allowance for accounts reflected thereon (which
allowances were established an a basis consistent with prior practice), and are
not subject to offsets. The accounts and notes receivable of TRI which were
thereafter added are good and collectible in the ordinary course of business at
the aggregate amounts recorded in their books of account, less the amount of the
allowance for doubtful accounts reflected thereon (which allowances were
established on a basis consistent with prior practice), and are not subject to
offsets. The inventories reflected on the Unaudited Balance Sheet and thereafter
added consist of items of a quality and quantity usable or saleable in the
ordinary course of business, except for obsolete materials, slow-moving items,
materials of below standard quality and not readily marketable items, all of
which have been written down to net realizable value or adequately reserved
against on the books and records of TRI. All inventories are stated at the lower
of cost or market in accordance with generally accepted accounting principles.
(j) Absence of Changes. Since _______________________, there have
not been (i) any material adverse changes in the condition (financial or
otherwise), assets, liabilities, business, prospects, or results of operations
of TRI (including, without limitation, any such adverse change resulting from
damage, destruction or other casualty loss, whether or not covered by
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insurance), any waivers by TRI of any right, or cancellation of any debt or
claim, of substantial value, (iii) any declarations, setting asides or payments
of any dividend or other distribution or payments in respect of the capital
stock of TRI, or (iv) any changes in the accounting principles or methods which
are utilized by TRI.
(k) Litigation. Except as set forth in Schedule 3.1(k), there are
no foreign or domestic suits or actions, or administrative, arbitration or
other proceedings or governmental investigations, pending or, to the best of
the knowledge of TRI or the TRI Shareholders, threatened, against or relating to
TRI, any TRI Subsidiary, their respective business operations or any of their
assets. There are no judgments, orders, stipulations, injunctions, decrees or
awards in effect which relate to TRI, any TRI Subsidiary, the TRI Shareholders,
the business operations of TRI or any TRI Subsidiary or any of the assets of TRI
or any TRI Subsidiary, the effect of which is (A) to limit, restrict, regulate,
enjoin or prohibit any business practice in any area, or the acquisition, of any
properties, assets or businesses, or (B) otherwise materially adverse to
business operations, or any of the assets, of TRI or any TRI Subsidiary or the
business operations of INTERNATIONAL.
(1) No Violation of Laws. Neither TRI, any TRI Subsidiary nor
the TRI Shareholders are engaging in any activity or omitting to take any
action as a result of which (A) they are in violation of any law, rule,
regulation, zoning or other ordinance, statute, order, injunction or
decree, or any other
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requirement of any foreign, domestic, federal, state or local court or
governmental or administrative body or agency (the "Laws"), applicable to TRI
or any TRI Subsidiary, their business operations or any of the assets of TRI or
any TRI Subsidiary, including without limitation the laws relating to
antiboycotting and the transfer of technology and encrypted material under the
Export Administrative Act (50 U.S.C. Sections 1201 and 2401), bribery and other
prohibited methods of obtaining and retaining business under the Foreign
Corrupt Practices Act ("FCPA") (15 U.S.C. Sections 78dd and 78m), occupational
safety and health, environmental protection, business and labor practices,
employee benefits, zoning and other land use, and (B) TRI or any TRI Subsidiary,
their business operations and any of their assets have been or may be
materially and adversely affected.
(m) Intangibles. TRI owns or possesses adequate and enforceable
rights to use all patents, patent applications, trademarks, service marks,
copyrights, rights, trade secrets, confidential information, processes,
software, manuals and operating systems (collectively, the "Intangibles") used
or proposed to be used in the conduct of its or any TRI Subsidiary's business;
to the best knowledge of TRI or the TRI Shareholders, TRI has not infringed and
is not infringing upon the rights of others with respect to the Intangibles,
and TRI has not received notice that it has or may have infringed or is
infringing upon the rights of others with respect to the Intangibles; and TRI
has not received any notice of conflict with the asserted rights of others with
respect to the Intangibles which could, singly or in the aggregate, materially
EXHIBIT "A"
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adversely affect its business, assets, prospects, properties or condition
(financial or otherwise) or results of operations of TRI and TRI knows of no
basis therefor and, to the best knowledge of TRI and the TRI Shareholders,
no others have infringed upon the Intangibles. Schedule 3.1(m) sets forth all
of the trade names, trademarks, service marks and copyrights or registrations,
patents and patent applications, used or proposed to be used, in the conduct of
the TRI's business operations and the manner of ownership or TRI's rights
therein.
(n) Tax Matters.
(i) TRI and each TRI Subsidiary has filed with the appropriate
governmental agencies all returns and reports of all Taxes (as herein defined)
required to be filed by it, and has paid in full or made adequate provision for
the payment of, all Taxes shown to be due or claimed to be due on such returns
and reports. The provisions for Taxes which are set forth on the Audited
Balance Sheet and the Unaudited Balance Sheet are adequate for all accrued and
unpaid Taxes of TRI and each TRI Subsidiary as of the respective dates thereof,
whether (A) incurred in respect of or measured by income of TRI or any TRI
Subsidiary for any periods prior to the close of business on that date, or
(B) arising out of transactions entered into, or any state of facts existing,
on or prior to that date. The provisions for Taxes which are set forth on the
books of account of TRI and each TRI Subsidiary are adequate for all Taxes
which accrued after _____________________. TRI has not executed or filed with
any taxing authority any agreement extending the periods for the assessment or
EXHIBIT "A"
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the assessment or collection of any Taxes, and is not party to any pending or,
to the best of the knowledge of TRI or the TRI Shareholders threatened, action
or proceeding by any governmental authority for the assessment or collection of
Taxes.
(ii) As used herein, "Taxes" means all federal, state, county,
local, foreign and other taxes and governmental assessments (including United
States and foreign jurisdictions), including but not limited to income taxes,
value added taxes, estimated taxes, withholding taxes, use taxes, gross receipts
taxes, sales taxes, transfer taxes, excise taxes, real and personal property
taxes, ad valorem taxes, payroll related taxes (including, but not limited to,
premiums for worker's compensation insurance and statutory disability
insurance), employment taxes, franchise taxes and import duties, together
with any related liabilities, penalties, fines, additions to tax or interest.
[Add as per accountants and local counsel's advice]
(o) Insurance. Schedule 3.1(o) is a complete and correct list
and summary description of all policies of insurance relating to the business
operations, or any of the assets, of TRI in which TRI is an insured party,
beneficiary or loss payable payee. Such policies are in full force and effect,
all premiums due and payable with respect thereto have been paid, and no
notice of cancellation or termination has been received by TRI with respect to
any such policy. Such policies cover risks normally insured against, and are in
amounts normally carried, by companies engaged in similar businesses.
EXHIBIT "A"
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(p) Banks; Powers of Attorney. Schedule 3.1(p) is a complete and
correct list showing (A) the names of each bank in which TRI and each TRI
Subsidiary has an account or safe deposit box and the names of all persons
authorized to draw thereon or who have access thereto, and (B) the names of all
persons, if any, holding powers of attorney from TRI and each TRI Subsidiary.
(q) Employee and Independent Contractor Arrangements. (i)
Schedule 3.1(q) is a complete and correct list and summary description of all
(A) union, collective bargaining, employment, management, termination,
independent contractor and consulting agreements to which TRI or any TRI
Subsidiary is a party or otherwise bound, and (B) compensation plans and
arrangements; bonus and incentive plans and arrangements; deferred compensation
plans and arrangements; pension and retirement plans and arrangements;
profit-sharing and thrift plans and arrangements; stock purchase and stock
option plans and arrangements; hospitalization and other life, health or
disability insurance or reimbursement programs; holiday, sick leave, severance,
vacation, tuition reimbursement, personal loan and product purchase discount
policies and arrangements; and other plans or arrangements providing for
benefits for employees of TRI or any TRI Subsidiary (the "Employee Benefit
Plans"). Said Schedule also lists the names and compensation of all employees
and independent contractors of TRI or any TRI Subsidiary whose compensation
during the last fiscal year were $_____ or more (including bonuses and other
incentive compensation, and all employees and independent contractors who
EXHIBIT "A"
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are expected to receive at least said amount in respect of the current fiscal
year.
(ii) Except as set forth in Schedule 3.1(q) hereof, neither
TRI nor any TRI Subsidiary will be liable to any employee, by reason of anything
done prior to the date hereof, under any Employee Benefit Plan upon termination
of the employment of such employee. TRI and each TRI Subsidiary are in
conformity and full compliance with all laws respecting employment and
employment practices, terms and conditions of employment, and wages and hours,
and is not engaged in any unfair labor practice.
(r) Certain Business Matters. Except as is set forth in Schedule
3.1(r), (A) neither TRI nor any TRI Subsidiary is a party to or bound by any
distributorship, dealership, sales agency, franchise or similar agreement which
relates to the sale or distribution of any Products and any related services
performed by TRI or any TRI Subsidiary, (B) there are no pending, or to the
best of the knowledge of TRI or the TRI Shareholders, threatened labor
negotiations, work stoppages or work slowdowns involving or affecting TRI's or
any TRI Subsidiary's business operations, and, to the best of the knowledge of
TRI or the TRI Shareholders, no union representation questions exist, and there
are no organizing activities, in respect of any of the employees of any of TRI,
(C) except for that certain non-competition covenant expressly provided for in
Article 10 hereof, neither TRI, any TRI Subsidiaries nor the TRI Shareholders
are parties to or bound by any agreement which limits their freedom to compete
EXHIBIT "A"
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in any line of business or with any person, or which is otherwise materially
burdensome to them, and (D) except as set forth in Schedule 3.1(r), neither TRI
nor any TRI Subsidiary is a party to or bound by any agreement in which any
officer, director or stockholder of TRI (or any affiliate of any such person)
has, or had when made, a direct or indirect material interest.
(s) Certain Contracts. Schedule 3.1(s) is a complete and correct
list of all contracts, commitments, obligations and understandings which are not
set forth in any other Schedule delivered hereunder and to which TRI or any TRI
Subsidiary is a party or otherwise bound, including, without limitation, the
contracts, commitments, obligations and understandings with Siemens, JRC and
SAGEM (including the "Affinity" private label product line and each agreement
with any shareholder of a TRI Subsidiary or any member of such other
shareholder's affiliates); provided, however, that Schedule 3.1(s) shall not
include those contracts, commitments, obligations or understandings which (A)
were made in the ordinary course of business, and (B) may be anticipated to
involve aggregate payments to or by TRI of $______ (or the equivalent) or less
calculated over the full term thereof, and (C) are not otherwise material to the
business operations of TRI or any TRI Subsidiary. Complete and correct copies
of all contracts, commitments, obligations and undertakings set forth on any of
the Schedules delivered pursuant to this Agreement have been furnished by TRI to
BPUS, and except as expressly stated on the Schedule on which they are set
EXHIBIT "A"
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forth, (1) each of them is in full force and effect, no person or entity
which is a party thereto or otherwise bound thereby is in default thereunder,
and, to the best of the knowledge of TRI or the TRI Shareholders, no event,
occurrence, condition or act exists which does (or which with the giving of
notice or the lapse of time or both would) give rise to a default or right of
cancellation, acceleration or loss of contractual benefits thereunder; (2) there
has been no threatened cancellations thereof, and there are no outstanding
disputes thereunder; and (3) none of them is unduly burdensome or restrictive of
the business operations of TRI or any TRI Subsidiary. Each such contract was
entered into in the ordinary course of the business operations of TRI or the TRI
Subsidiary consistent with past practices.
(t) Consents/Approvals. Except as set forth on Schedule 3.1(t),
TRI and any TRI Subsidiary currently holds all governmental and administrative
consents, permits, appointments, approvals, licenses, certificates and
franchises (the "Consents") necessary for the conduct of such entity's business,
all of which Consents are in full force and effect. Schedule 3.1(t) is a
complete list of the Consents held by TRI and no violations of the terms
thereof have occurred.
(u) Customers and Suppliers. Schedule 3.1(u) is a complete and
correct list setting forth, with respect to the twelve-month period ended
February 29, 1996; (A) all customers of TRI and the TRI Subsidiaries and their
business (the "TRI Customers"), together with the quantities and dollar volume
of any purchases of the Products, and (B) the _____ largest suppliers of the
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of the Products and related component parts and services to TRI and each TRI
Subsidiary (the "TRI Suppliers") and the amount of goods and services purchased
from each. There has been no material adverse change in the business
relationship between the business operations of TRI and TRI Customers or TRI
Suppliers, and (ii) to the best of the knowledge of TRI or the TRI Shareholders,
the TRI Customers and TRI Suppliers will continue their respective relationships
with TRI after the Closing Date on substantially the same basis as now exists.
(v) Disclosure. None of the representations or warranties made by
TRI or the TRI Shareholders in this Agreement or in any agreement executed and
delivered by or on behalf of any of them pursuant hereto are false or misleading
with respect to any material fact, or omit to state any material fact necessary
in order to make the statements therein contained not misleading.
3.2. Representations and Warranties of BPUS. BPUS represents and
warrants to each of TRI, SAFKONG, MARRIOTT, and INTERNATIONAL as follows:
(a) Organization, Standing and Power. BPUS is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with full corporate power and authority to own, lease and operate its
properties and to carry on its business as presently conducted by it. Except as
set forth on Schedule 3.2(a), there are no states or jurisdictions in which the
character and location of any of the properties owned or leased by BPUS, or the
conduct of its
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businesses makes it necessary for BPUS to qualify to do business as a foreign
corporation.
(b) Authority. The execution and delivery by BPUS of this Agreement and
of each agreement to be executed and delivered by either of them pursuant
hereto, the compliance by them with the provisions hereof and thereof, and the
consummation of the transactions contemplated hereby and thereby, have been duly
and validly authorized by all necessary corporate action on the part of BPUS,
and BPUS has all necessary corporate power with respect thereto. This Agreement
is, and, when executed and delivered by BPUS, each other agreement to be
executed and delivered by BPUS pursuant hereto will be, the valid and binding
obligation of BPUS, to the extent BPUS is a party thereto, in accordance with
their respective terms.
(c) Noncontravention. Except as set forth on Schedule 3.2(c), neither
the execution and delivery by BPUS of this Agreement or of any agreement to be
executed and delivered pursuant hereto, nor the consummation of any of the
transactions contemplated hereby or thereby, nor the performance by BPUS of any
of its respective obligations hereunder or thereunder, will (nor with the giving
of notice or the lapse of time or both would) (A) conflict with or result in a
breach of any provision of the Certificates of Incorporation or Bylaws of BPUS,
or (B) give rise to a default, or any right of termination, cancellation or
acceleration, or otherwise be in conflict with or result in a loss of
contractual benefits to it under the terms, conditions or provisions of any
note, bond, mortgage, indenture, license,
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agreement or other instrument or obligation to which BPUS is a party or by which
it may be bound, or require any consent, approval or notice under the terms of
any such document or instrument, or (C) violate any order, writ, injunction,
decree, law, statute, rule or regulation of any court or governmental authority
which is applicable to any or them, or (D) result in the creation or imposition
of any lien, claim, restriction, charge or encumbrance upon any of the assets of
BPUS, or (E) interfere with or otherwise adversely affect the ability of BPUS to
carry on its business after the Closing Date on substantially the same basis as
is now conducted by BPUS.
(d) Disclosure. None of the representations or warranties made by BPUS
in this Agreement or in any agreement executed and delivered by or on behalf of
it pursuant hereto are false or misleading with respect to any material fact, or
omit to state any material fact necessary in order to make the statements
therein contained not misleading.
3.3. Representations and Warranties of INTERNATIONAL. INTERNATIONAL
represents and warrants to each of TRI and BPUS as follows:
(a) Organization, Standing and Power. INTERNATIONAL is a corporation
duly organized, validly existing and in good standing under the laws of State of
Delaware, with full corporate power and authority to own, lease and operate its
properties and to carry on its business as presently conducted by it.
INTERNATIONAL is duly qualified to do business and is in good standing in
each jurisdiction in which any of the properties
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owned or leased by INTERNATIONAL, or the conduct of its businesses requires such
qualification. Copies of the Certificate of Incorporation of INTERNATIONAL and
all amendments thereof, and of the Bylaws of INTERNATIONAL, as amended to date,
have been furnished to each of BPUS and TRI and are complete and correct. The
minute books and corporate records of INTERNATIONAL heretofore exhibited to BPUS
and TRI contain complete and accurate records of all meetings and other
corporate actions of the International Stockholders and board of directors.
(b) Authority. The execution and delivery by INTERNATIONAL of this
Agreement and of all of the agreements to be executed and delivered by it
pursuant hereto, the performance by it of its obligations hereunder and
thereunder, and the consummation of the transactions contemplated hereby and
thereby, have been duly and validly authorized by all necessary corporate action
on the part of INTERNATIONAL (including, but not limited to, the unanimous
consents of the International stockholders) and INTERNATIONAL has all necessary
power with respect thereto. This Agreement is, and when executed and delivered
by INTERNATIONAL, each of the other agreements to be delivered by it pursuant
hereto will be, the valid and binding obligation of INTERNATIONAL to the extent
it is a party thereto, in accordance with its terms.
(c) Shares. The International Stock, when issued, will be duly
authorized and validly issued, fully paid and non-assessable, will be delivered
hereunder free and clear of any lien, claim, security interest, pledge or other
encumbrance of
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any nature whatsoever, except that the International Stock will be "restricted
securities" as such term is defined in the rules and regulations of the
Securities and Exchange Commission and will be subject to restrictions on
transfers pursuant to such rules and regulations and State laws.
4. ADDITIONAL COVENANTS
4.1. Conduct of TRI Business Pending the Closing. TRI covenants and agrees,
and each of TRI, SAFKONG, MARRIOTT, ARNOTT and MARLIN covenants and agrees to
use its best efforts to cause TRI, to conduct its business operations (and to
cause the TRI Subsidiaries to conduct their respective business operations)
during the period from the date hereof to the Closing Date, except pursuant to
the terms hereof or unless BPUS shall otherwise agree in writing, only in the
ordinary course of business and in a manner consistent with past practice and in
compliance with applicable laws; and TRI and each of TRI Subsidiary shall use
their best efforts to preserve intact their respective business organizations,
to keep available the services of their respective current officers, employees
and consultants of TRI and the TRI Subsidiaries and to preserve the present
goodwill of TRI and the TRI Subsidies and their respective relationships with
customers, suppliers and other persons with whom they have business relations.
By way of illustration and not limitation, neither TRI, any TRI Subsidiary,
SAFKONG nor MARRIOTT shall, between the date of this Agreement and the Closing
Date, directly or indirectly do, or propose or commit to
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do, any of the following without the prior written consent of BPUS:
(a) (i) except as set forth on Schedule 4.1(a), declare, set aside or
pay any dividends on, or make any other distributions in respect of, any of the
common stock of TRI or any TRI subsidiary (ii) split, combine or reclassify any
of their respective common stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of their
respective common stock or (iii) purchase, redeem or otherwise acquire any
shares of common stock of TRI or any TRI Subsidiary or any other securities
thereof or any rights, warrants or options to acquire any such shares or other
securities;
(b) authorize for issuance, issue, deliver, sell or agree to commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise), pledge
or otherwise encumber any shares of common stock of TRI or any TRI Subsidiary,
any other voting securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities convertible
securities or any other securities or equity equivalents;
(c) except to the extent required under existing written agreements as
in effect on the date of this Agreement, (i) increase the compensation or fringe
benefits of any of its directors, officers or employees, except for increases in
salary or wages of employees of TRI or any TRI Subsidiary who are not
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officers of TRI or such TRI Subsidiary in the ordinary course of business, in
accordance with past practice, (ii) enter into employment arrangement, other
than in the ordinary course of business consistent with past practice, any other
employee of TRI or the TRI Subsidiary, (iii) establish, adopt, enter into or
amend or terminate any written agreement or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any directors, officers or employees or
(iv) notwithstanding any agreement to the contrary, pay any bonus, salary or
compensation to any of the TRI Shareholders, holders of shares of any TRI
Subsidiary or their affiliates in excess of a base salary of $100,000;
(d) amend their Memorandum of Association, Articles of Association or
other comparable charters or organizational documents or alter through merger,
liquidation, reorganization, restructuring or in any other fashion the corporate
structure or ownership of TRI or any TRI Subsidiary;
(e) except as set forth on Schedule 4.1(e), acquire or agree to acquire
(i) by merging or consolidating with, or by purchasing a substantial portion of
the stock or assets of, or by any other manner, any business or corporation,
partnership, joint venture, association or other business organization or
division thereof, or (ii) any assets that are material, individually or in the
aggregate, to TRI or any TRI Subsidiary taken as a whole, except purchases
consistent with past practice;
(f) sell, lease, license, mortgage or otherwise encumber or subject to
any lien or otherwise dispose of any of
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their properties or assets, except sales in the ordinary course of business
consistent with past practice;
(g) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person (other than guarantees by TRI in favor of any TRI
Subsidiary), issue or sell any debt securities or warrants or other rights to
acquire any debt securities of TRI or any TRI Subsidiary, guarantee any debt
securities of another person, or enter into any arrangement having the economic
effect of any of the foregoing, except for short-term borrowings incurred in the
ordinary course of business consistent with past practice;
(h) enter into any agreement, contract, commitment, whether or not in
the ordinary course of business, involving a commitment on the part of TRI or
any TRI Subsidiary to purchase, sell, lease or otherwise dispose of assets or
require payment by TRI or any TRI Subsidiary in excess of $100,000;
(i) expend funds for capital expenditures other than in accordance with
TPI's or any TRI Subsidiary's current capital expenditure plans (which plans
shall have been disclosed in writing to BPUS on or prior to the date hereof);
(j) adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing such a liquidation or dissolution, merger,
consolidation, restructuring, recapitalization or reorganization;
(k) recognize any labor union (unless legally required to do so) or
enter into or amend any collective bargaining agreement;
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(l) change any accounting principles used by TRI or any TRI Subsidiary,
unless required by the SEC or the Financial Accounting Standards Board;
(m) make any tax election or settle or compromise any income tax
liability or file any federal income tax return prior to the last day (including
extensions) prescribed by law, in the case of any of the foregoing, material to
the business, financial condition or results of operations of TRI or any TRI
Subsidiary taken as a whole;
(n) settle or compromise any litigation in which TRI or any TRI
Subsidiary is a defendant (whether or not commenced prior to the date of this
Agreement) or settle, pay or compromise any claims not required to be paid,
which payments are individually in an amount in excess of $100,000 and in the
aggregate in an amount in excess of $100,000;
(o) authorize any of, or commit or agree to take any of the foregoing
actions; and
(p) authorize or permit any of TRI's or TRI Subsidiary's officers,
directors or employees or any investment banker, financial advisor, attorney,
accountant or other representative, to solicit, initiate or encourage
(including by way of furnishing information) or take any other action to
facilitate, any inquiries or the making of any proposal which constitutes, or
may reasonably be expected to lead to an agreement or a mutual understanding as
to terms or the execution of a letter of intent or definitive agreement or
publicly announced agreement in principle with regard to a transaction or
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series of transactions with a party other than BPUS or INTERNATIONAL, which
transactions relate to the sale or other disposition of the respective capital
stock, assets or business of each of TRI, SAFKONG, MARRIOTT and any TRI
Subsidiary or any other financing, stock repurchase, restructuring (including
any merger or consolidation involving TRI or any TRI Subsidiary), stock issuance
or similar transaction (other than in the ordinary course of business) which
causes TRI, SAFKONG or MARRIOTT not to consummate any of the transactions
contemplated by this Agreement.
4.2. Access to Information.
(a) From after the date hereof, TRI shall afford, and each of SAFKONG
and MARRIOTT shall cause TRI to afford and to cause the TRI Subsidiaries to
afford, the officers, attorneys, accountants and other authorized
representatives of BPUS and INTERNATIONAL, reasonable access, during normal
business hours prior to the Closing, to all of the properties, books, contracts,
commitments and records of TRI and the TRI Subsidiaries relating to the
transactions contemplated by this Agreement. TRI and the TRI Subsidiaries and
their respective employees, accountants, independent accountants and attorneys
shall cooperate fully with the aforesaid individuals in connection with such
review and examination and shall make full disclosure to INTERNATIONAL, BPUS
and/or their respective representatives, as the case may be, of all material
facts; provided, however, that INTERNATIONAL and BPUS shall keep confidential
and refrain from using any information (unless readily ascertainable from public
or
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published information or sources) obtained from any access hereunder, and shall
not disclose such information to any person other than their respective
employees, advisors, accountants or agents. In the event of termination of this
Agreement, all documents or other written material obtained in connection with
the transactions herein contemplated and not theretofore made public shall be
returned to TRI and the TRI Subsidiaries, as applicable.
(b) In the event that between the date hereof and the Closing Date any
federal, state, local or foreign governmental authority shall commence any
examination, investigation or proceeding against any of BPUS, MARRIOTT, SAFKONG,
TRI, the TRI Subsidiaries or INTERNATIONAL with respect to the transactions
contemplated by this Agreement, the party as to which such examination, review
or proceeding is commenced shall give prompt notice thereof to the other
parties, shall keep the other parties informed as to the status thereof.
4.3 Best Efforts. The parties each agree to use its best efforts to bring
about the transactions contemplated by this Agreement as soon as practicable,
unless terminated as provided in Article 12 hereof.
4.4. Notice of Material Change. TRI agrees, and each of SAFKONG and MARRIOTT
agree to cause TRI, to give and to cause the TRI Subsidiaries to give BPUS
prompt notice of (i) any material change in any of the information contained in
the representations and warranties of TRI or the TRI Subsidiaries contained in
Section 3.1 or in the exhibits thereto, which occurs prior to the
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Closing and (ii) any governmental or other complaints, investigations or
hearings relating to their respective business operations or assets (or
communications indicating that the same may be contemplated), or the receipt of
any notice with respect to any requirement or obligation arising out of any
applicable Laws relating to their respective business operations, or the
institution of any litigation, action, claim, proceeding or threats relating to
such business operations, as well as keep BPUS fully informed of material
developments concerning such events.
4.5. Future Sales\Competing Investments.
(a) Each of BPUS and TRI covenants and agrees, after the Closing, to
direct to INTERNATIONAL all sales opportunities of the Products in the Territory
and to make all sales of Products in the Territory through INTERNATIONAL; and
(b) Except as a passive investor or holding less than five percent (5%)
of the publicly-traded shares of a Competing Entity (as defined herein), or as
otherwise provided in this Agreement, each of BPUS and TRI covenants and agrees
not to invest, directly or indirectly, whether alone or together with or on
behalf of or through any other entity or individual, in an entity or individual
engaged in business activities and/or operations similar to the Business (the
"Competing Entity"); provided, however, that BPUS or TRI shall not make any
passive investment pursuant hereto without first offering such investment
opportunity to INTERNATIONAL. INTERNATIONAL shall have ten (10) business days
after having been given notice from BPUS or TRI of
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such investment opportunity to exercise its right of first refusal, granted
hereunder, as to such investment.
4.6. Broker. Each of BPUS, MARRIOTT, SAFKONG and TRI represents and warrants
to the other parties that it has not engaged or dealt with any broker or finder
in connection with any of the transactions contemplated by this Agreement, and
each of the parties shall indemnify and hold the other harmless from and against
any and all claims or liabilities asserted by or on behalf of any alleged broker
or finder for finder's fees, commissions, brokerage fees or like payment.
4.7. Transfer Costs. TRI shall be responsible for, and pay, any and all
applicable sales taxes, transfer taxes and similar charges arising out of the
closing and carrying out of the purchase and sale of TRI Shares contemplated by
this Agreement.
4.8. Governmental Filings. If required in the opinion of counsel for any of
BPUS, SAFKONG, MARRIOTT or TRI, the appropriate party(ies) shall, as promptly as
reasonably practical after the date of this Agreement, file with the relevant
governmental agencies or departments, foreign or domestic, any and all notices,
reports and other documents required by Law with respect to the transactions
contemplated by this Agreement, including without limitation the purchase and
sale of the TRI Shares and the operations of the Venture Business, and shall
promptly submit any additional information or documentary material requested by
any such governmental agency or department.
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4.9. Investment Intent. Each of TRI and INTERNATIONAL hereby represents and
agrees that the International Stock acquired by it pursuant to this Agreement
are being acquired for its own account, for investment, and not with a view
towards distribution thereof. All transfers, dispositions or assignments of such
shares of capital stock shall be made in compliance with applicable state and
United States security laws. Each certificate evidencing such shares of capital
stock shall bear the following legend, in addition to any legend required under
state security laws:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL FOR THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933."
5. CONDITIONS PRECEDENT TO CLOSING.
5.1. Conditions to each Party's Obligations. The respective obligations of
BPUS, SAFKONG, MARRIOTT, ARNOTT, MARLIN and TRI to effect the transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing Date of the following conditions:
(a) Antitrust and Competition Laws. BPUS, TRI, SAFKONG, MARRIOTT and
any other person (as defined in the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 [the "HSR Act"] or other applicable foreign antitrust or competition law
[the "Foreign Acts"], together with the rules and regulations promulgated
thereunder) which is required in connection with the
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transactions contemplated hereby to file a Notification and Report Form for
Certain Mergers and Acquisitions with the United States Department of Justice
and the United States Federal Trade Commission pursuant to Title II of the HSR
Act, or similar filing requirements under the Foreign Acts, if applicable, shall
have made such filing(s), and the applicable waiting period with respect to each
such filing (including any extension thereof by reason of a request for
additional information) shall have expired or been terminated.
(b) Litigation. No order of any court or administrative agency shall be
in effect which restrains or prohibits the transactions contemplated hereby, and
no suit, action, inquiry, investigation or proceeding in which it will be, or it
is, sought to restrain, prohibit or change the terms of or obtain damages or
other relief in connection with this Agreement or any of the transactions
contemplated hereby, and which in the reasonable judgment of any of the parties
hereto makes it inadvisable to proceed with the consummation of such
transactions, shall have been instituted or threatened by any person or entity.
(c) Consents and Approvals. All consents, waivers, approvals, licenses
and authorizations by third parties and governmental and administrative
authorities, whether domestic or foreign (and all amendments or modifications to
existing agreements with third parties) required as a precondition to the
performance by any of the parties hereto of their respective
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obligations hereunder and under any agreement delivered pursuant hereto, shall
be in full force and effect.
(d) Chief Financial Officer. The Board shall have appointed a CFO in accordance
with Section 1.5(b) hereof.
5.2. Conditions to Obligations of BPUS. The obligations of BPUS to effect the
transactions contemplated by this Agreement shall be subject to the satisfaction
at or prior to the Closing Date of the following additional conditions:
(a) Accuracy of Representations and Warranties. The representations and
warranties of each of TRI, SAFKONG, MARRIOTT, MARLIN and ARNOTT contained in
this Agreement or in any document, agreement or instrument delivered by any or
all of them pursuant hereto shall have been true when made, and, in addition,
shall be true, on and as of the Closing Date with the same force and effect as
though made on and as of the Closing Date.
(b) Performance of Agreements. Each of TRI, SAFKONG, MARRIOTT, MARLIN
and ARNOTT shall have performed all obligations and agreements and complied with
all covenants and conditions, contained in this Agreement or in any document,
agreement or instrument delivered by any or all of them pursuant hereto and
required to be performed or complied with by any or all of them at or prior to
the Closing Date.
(c) Results of Investigation. Each of BPUS and INTERNATIONAL shall be
satisfied with the results of any investigation of the business and affairs of
each of TRI and the TRI Subsidiaries undertaken by BPUS and/or INTERNATIONAL
pursuant to Section 4.2 hereof.
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(d) Opinion of Counsel for each of TRI. BPUS shall have received an
option of ___________________________, counsel for TRI, dated the Closing Date,
in substantially the form of Exhibit 5.2(d) attached and made a part hereof.
(e) Validity of Transactions. The validity of all transactions
contemplated hereby, as well as the form and substance of all agreements,
instruments, opinions, certificates and other documents delivered by each of
TRI, the TRI Subsidiaries, SAFKONG and MARRIOTT pursuant hereto, shall be
satisfactory in all material respects to BPUS and INTERNATIONAL and their
respective counsel.
(f) No Material Adverse Change. There shall not have occurred after the
date hereof, in the reasonable judgment of BPUS, a material adverse change with
respect to (i) the senior management of TRI or any TRI Subsidiary; (ii) the
control of TRI and the TRI Subsidiaries; (iii) the assets, properties or
liabilities of TRI or any TRI Subsidiary or (iv) the business operations of TRI
or any TRI Subsidiary. For purposes herein, "control" shall mean possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of TRI and the TRI Subsidiaries, whether through the
ownership of voting securities or by contract or otherwise.
(g) Employment Agreements. INTERNATIONAL and each of ARNOTT and MARLIN
shall have executed and delivered their respective Employment Agreements in
accordance with Section 1.13 hereof.
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(i) Board Approval. This Agreement and the transactions contemplated
hereunder shall have been duly and properly authorized and approved by the board
of directors for each of BPUS and INTERNATIONAL in accordance with their
By-Laws.
5.3. Conditions to obligations of TRI. The obligations of TRI, SAFKONG,
MARRIOTT, ARNOTT and MARLIN to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction at or prior to the Closing Date
of the following additional conditions:
(a) Accuracy of Representations and Warranties. The representations
and warranties of BPUS and INTERNATIONAL contained in this Agreement or in any
document, agreement or instrument delivered by it pursuant hereto shall have
been true when made, and, in addition, shall be true, in all material respects,
on and as of the Closing Date with the same force and effect as though made on
and as of the Closing Date.
(b) Performance of Agreements. BPUS and INTERNATIONAL shall have
performed, in all material respects, all obligations and agreements, and
complied, in all material respects, with all covenants and conditions, contained
in this Agreement or in any document, agreement or instrument delivered
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by them pursuant hereto and required to be performed or complied with by them at
or prior to the Closing Date.
(c) Opinion of Counsel for BPUS and INTERNATIONAL. TRI shall have
received an opinion of Tenzer Greenblatt LLP, counsel for BPUS [and
INTERNATIONAL], dated the Closing Date, in substantially the form of Exhibit
5.3(c) attached hereto and made a part hereof.
(d) Validity of Transactions. The validity of all transactions
contemplated hereby, as well as the form and substance of all agreements,
instruments, opinions, certificates and other documents delivered by BPUS and
INTERNATIONAL pursuant hereto, shall be satisfactory in all material respects to
TRI and their respective counsel.
(e) Employment Agreement. The Employment Agreements shall have been
executed and delivered by INTERNATIONAL, MARLIN and ARNOTT.
6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
Excent as otherwise specifically provided in this Agreement, all
representations, warranties, agreements, obligations, covenants and indemnities
made in this Agreement or pursuant hereto shall survive the Closing.
7. CLOSING.
7.1. The Closing. The Closing of the purchase and sale of the Acquired
Assets (the "Closing") contemplated by this Agreement shal1 take place at the
offices of _________________________
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_________________________at 10:00 A.M., or at such other time and date as
the parties shall mutually agree, ____ business days after each of TRI and BPUS
gives notice to INTERNATIONAL that all the conditions set forth in Article 5 are
satisfied or waived, whichever shall last occur (the "Closing Date").
7.2. Deliveries at the Closing.
(a) At the Closing, TRI shall deliver to INTERNATIONAL the following:
(i) possession and control of the Acquired Assets.
(ii) a General Assignment and Bill of Sale, in the form of
Exhibit 7.2(a) attached hereto.
(iii) an Assignment and Assumption of Contracts, in the form
of Exhibit 7.2(b) attached hereto.
(iv) a copy of its corporate resolutions authorizing entry
into this agreement and such other steps as contemplated by this Agreement.
(b) At the Closing, BPUS shall deliver to the parties a copy of its
corporate resolutions authorizing entry into this agreement and such other steps
as contemplated by this Agreement.
(c) At the Closing, INTERNATIONAL shall deliver to TRI stock
certificate(s), evidencing International Stock issued to TRI, as more
particularly set forth in Article 2 hereof, registered in the name of TRI, and
duly executed on behalf of INTERNATIONAL.
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7.3 Other Documents. In addition to the documents required to be delivered
pursuant to Articles 3, 5 and 7, the parties shall execute and deliver such
other documents as may be required by this Agreement and as either of them or
their respective counsel may reasonably require in order to document and carry
out the transactions contemplated by this Agreement.
8. PUBLIC OFFERING/CONVERSION AND CALL RIGHTS
8.1. Public Offering. It is the intentions of each of BPUS and TRI that
INTERNATIONAL effects a public offering of stock of INTERNATIONAL pursuant to
the Securities Act of 1933, as amended (the "Public Offering") on or before the
third anniversary of the Closing Date (the "Outside Offering Date") and each of
BPUS and TRI agrees to use its reasonable best efforts to cause the Public
Offering to occur on or before the Outside Offering Date.
8.2. Conversion Option.
(a) If INTERNATIONAL has not obtained a firm commitment from an
underwriter reasonably satisfactory to INTERNATIONAL on or before the
Outside Offering Date, TRI may, upon written notice to INTERNATIONAL and BPUS
within ten (10) business days of the Outside Offering Date, exchange all, but
not less than all, of its International Shares for the number of shares of the
common capital stock of BPUS (the "Conversion Option"), equal to one-half of
the product of (x) the fraction, the numerator of which is the product of
(a) the net income of INTERNATIONAL for the year ended December 31, 1998 as
reflected
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on INTERNATIONAL's audited balance sheet for such period multiplied by (b) BPUS'
average price/earnings ratio for the ten (10) trading days preceding the Outside
Offering Date and the denominator of which (c) is the average closing price of
the BPUS Common Stock for the ten (10) trading days preceding the Outside
Offering Date (the "Calculation Price"), multiplied by (y) the percentage
ownership in INTERNATIONAL represented by the International Shares which are the
subject of the Conversion Option; provided, however, the maximum number of
shares of BPUS Common Stock required to be issued upon exercise of the
Conversion Option shall not exceed 5% of the then issued and outstanding Common
Stock of BPUS. The closing of the sale of shares to TRI under the Conversion
Option shall take place at 10:00 am at the principal place of business of BPUS
____ days following notice of the Conversion Option and shall be effected in
the manner, and upon the terms and conditions, provided in Section 9.3 hereof
(substituting therein TRI for the "Offeror" and the International Stock which is
the subject of the Conversion Option, for the "Target Shares").
(b) In the event that TRI exercises its Conversion Option, TRI or its
permitted assigns (the "Holders") shall be entitled to "Piggyback Registration"
rights with respect to the Conversion Stock as provided in the Registration
Rights Agreement annexed hereto as Exhibit 8.2(b).
8.3. Put Option.
(a) Upon the (i) death of ARNOTT or MARLIN or (ii) the termination of
employment of ARNOTT or MARLIN by
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INTERNATIONAL pursuant to the Employment Agreement (each a "Put Event"), TRI
may, upon written notice to INTERNATIONAL and BPUS within ten (10) business
days of the Put Event, exchange half, but not less than half, of its
International Stock for the number of shares of common stock of BPUS (the "Put
Option") equal to one half of the product of (x) the fraction, the numerator of
which is the product of (a) the net income of INTERNATIONAL for the year ending
immediately prior to the Put Event as reflected on INTERNATIONAL's audited
balance sheet for such period multiplied by (b) BPUS' average price/earnings
ratio for the ten (10) trading days preceding the Put Event and the denominator
of which (c) is the average closing price of BPUS Common Stock for the ten
trading days preceding the Put Event (the "Put Calculation Price"), multiplied
by (y) the percentage ownership in INTERNATIONAL represented by the
International Shares which are the subject of the Put Option; provided however
the maximum number of shares of BPUS Common Stock required to be issued upon
exercise of the Put Option shall not exceed 2 1/2% of the then issued and
outstanding Common Stock of BPUS. The closing of the exchanae of shares under
the Put Option shall take place at 10:00 am at the principal place of business
of BPUS, thirty (30) days following notice of the Put Option and shall be
effected in the manner, and upon the terms and conditions, provided in Section
9.3 hereof (substituting therein TRI for the "Offeror" and the International
Stock which is the subject of the Put Option, for the "Target Shares").
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8.4. Call Option.
(a) At any time prior to the Public Offering, BPUS may require TRI
to sell to BPUS (the "Call Option") all, but not less than all of the
International Stock owned by TRI and its Permitted Assigns (as defined in
Section 9.1 hereof) in the event that INTERNATIONAL does not maintain a minimum
return on the investment (the "Target ROI"), based on the average outstanding
amount of the Facilities plus any other advances or contributions made by BPUS
to INTERNATIONAL during such period (the "Investment") as determined in the
manner set forth below, during the three month and six month periods immediately
following notice from BPUS to TRI of INTERNATIONAL failure to meet the Target
ROI for a specified period (a "Call Event"). The Target ROI shall be
calculated, commencing after December 31, 1996, on a quarterly or semi-annual
basis, as the case may be, and shall be equal to:
(i) if BPUS' Investment is in the form of the Facilities,
the Target ROI shall be ten percent (10%), which percentage shall be determined
each quarter by dividing INTERNATIONAL's net income for such quarter by the
average balance of the BPUS Investment for such quarter and multiplying the
result by 100; or
(1) if BPUS' Investment in INTERNATIONAL is $250,000 or
less, the Target ROI shall be five percent (5%), which percentage shall be
determined each quarter by multiplying by 100 the quotient obtained by dividing
INTERNATIONAL's net income for such quarter by the sum of (x) the equity
holdings of
EXHIBIT "A"
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<PAGE>
BPUS in INTERNATIONAL and (y) the average long-term funded debt of INTERNATIONAL
during such quarter;
(b) Upon the occurrence of a Call Event, BPUS may require TRI and its
Permitted Transferees, upon written notice to INTERNATIONAL and TRI within ten
(10) business days of the Call Event, to exchange all, but not less than all, of
its International Stock for the number of shares of common stock of BPUS equal
to one half of the product of (x) the fraction, the numerator of which is the
product of (a) the net income of INTERNATIONAL for the year ending immediately
prior to the Call Event as reflected on INTERNATIONAL's audited balance sheet
for such period multiplied by (b) BPUS' average price/earnings ratio for the
ten (10) trading days preceding the Call Event and the denominator of which (c)
is the average closing price of BPUS Common Stock for the ten trading days
preceding the Call Event (the "Call Calculation Price"), multiplied by (y) the
percentage ownership in INTERNATIONAL represented by the International Shares
which are the subject of the Call Option; provided however the maximum number of
shares of BPUS Common Stock required to be issued upon exercise of the Call
Option shall not exceed 5% of the then issued and outstanding Common Stock of
BPUS. The closing of the exchange of shares under the Call Option shall take
place at 10:00 am at the principal place of business of BPUS, thirty (30) days
following notice of the Call Option and shall be effected in the manner, and
upon the terms and conditions, provided in Section 9.3 hereof (substituting
therein TRI and its Permitted Transferees for the "Offeror" and the
EXHIBIT "A"
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<PAGE>
International Stock which is the subject of the Call Option for the "Target
Shares").
9. RESTRICTIONS ON TRANSFERS OF INTERNATIONAL STOCK.
9.1. General Prohibition. Except for Transfers of International Stock
to Family Members or Family Trust (each as defined in 9.6 hereof), provided that
any such transferee agrees in writing to be bound by all of the terms and
provisions of this Agreement ("Permitted Transferees"), no International
Stockholder shall sell, assign, transfer, pledge, encumber, bequeath or
otherwise voluntarily or involuntarily dispose, whether pursuant to the
operation of law, court order, levy, attachment or otherwise ("Transfer") any of
its International Stock unless it shall have obtained the prior written consent
of all of the other International Stockholders or it shall have complied in full
with the requirements of this Article 9. Any Transfer of International Stock in
violation of the terms of this Agreement shall be null and void and of no
effect, and INTERNATIONAL shall not recognize any such transferee as an owner of
International Stock. Furthermore, in the event of any Transfer of International
Stock by a International Stockholder in violation of the terms of this
Agreement, said attempted Transfer shall be deemed to be an Offer Notice (as
defined in Section 9.6 hereof) by such International Stockholder to sell its
International Stock pursuant to Section 9.2 hereof, which Offer Notice shall be
deemed to be given on the date that any of the "Remaining
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<PAGE>
International Stockholders" (as defined herein) first acquire actual knowledge
of the attempted Transfer.
9.2. Right of First Refusal. If a International Stockholder receives an
Offer (as defined in Section 9.6 hereof) and intends to accept such Offer,
then such International Stockholder (the "Offeror") shall give to the Remaining
International Stockholder(s) and INTERNATIONAL notice of its intention to accept
the Offer, whereupon:
(a) The Remaining International Stockholder(s) shall, for a
period of sixty (60) days following the giving of the Offer Notice (the "Offer
Period"), have the right to purchase (the "Right of First Refusal") all but not
less than all of the International Stock held by the Offeror (the "Target
Shares") for the price and on the terms specified in the Offer or 80% of the
product of (x) the fraction, the numerator of which is (a) the product of the
net income of INTERNATIONAL for the immediately preceding year ended (from the
date of the Offering Notice) as reflected on INTERNATIONAL's audited balance
sheet for such period multiplied by (b) BPUS' average price/earnings ratio for
the ten (10) trading days preceding the date of the Offer Notice and the
denominator of which (c) is the average closing price of the BPUS Common Stock
for the ten (10) trading days preceding the date of the Offer Notice,
multiplied by (y) the percentage ownership in INTERNATIONAL represented by the
International Shares which are the subject of the Offer, whichever amount is
lesser; provided, however, if more than one Remaining International Stockholder
shall exercise its Right of First
EXHIBIT "A"
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<PAGE>
Refusal to purchase the Target Shares, then such Remaining International
Stockholder shall be entitled to purchase that number of shares of International
Stock equal to its Proportionate Share" (as defined in Section 9.6 hereof)
immediately prior to any purchase under this Section 9.2, and the aggregate
purchase price of the Target Shares which shall be allocated among each such
Remaining International Stockholder in the proportion equal to its Remaining
Proportionate Share at such time and the payment at the closing, and any
installments on any balance and any interest due on such installments, shall be
paid in such proportions.
(b) In the event that the Remaining International Stockholder(s) does
not timely exercise its Right of First Refusal, then INTERNATIONAL shall have
the Right of Last Refusal to purchase all but not less than all of the Target
Shares. INTERNATIONAL may exercise the Right of Last Refusal by giving Notice
of its acceptance within ten (10) days after the expiration of the Remaining
International Stockholders' Right of First Refusal. Within ten (10) days after
the Remaining International Stockholders Right of First Refusal has expired, a
special meeting of the International Stockholders shall be called for the
purpose of determining whether INTERNATIONAL shall exercise its option to
purchase or retire all of the Target Shares. The exercise or non-exercise of
this option by INTERNATIONAL, shall be determined by vote of the Remaining
International Stockholders, and if the Remaining International Stockholders
approve, by a majority of the Remaining
EXHIBIT "A"
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<PAGE>
International Stockiholders, the purchase or redemption of the Offer
Stock, the Offeror is then directed to so vote at the special meeting of
International Stockholders and INTERNATIONAL shall be authorized to give its
Notice of acceptance.
9.3. The Closing. The closing of the transaction of purchase and sale
pursuant to Article 8 hereof or a Right of First or Last Refusal, as the case
may be, under Section 9.2 hereof shall take place at 10:00 a.m. at the principal
place of business of INTERNATIONAL on the date which is thirty (30) days after
the last day of the Offer Period. Such purchase shall be effected in the
following manner, and upon the following terms and conditions:
(a) At the closing, the purchaser shall pay to the Offeror, if a cash
payment is due, by cash or certified check, an amount equal to at least
twenty-five percent (25%) of the purchase price in cash or certified check; and
the balance of such amount by execution and delivery to the Offeror one or more
non-negotiable promissory notes for the amount of such balance, bearing interest
at the fluctuating prime rate at the Borrowing Rate, payable in equal monthly
installments, inclusive of principal and accrued interest, the first such
installment to be due and payable thirty (30) days from and after the date of
Closing and each subsequent installment to be due and payable monthly
thereafter, such note(s) to provide that in the event of the sale of all or
substantially all of the assets of INTERNATIONAL or the sale of a majority of
the outstanding International Stock (other than the Target Shares of the Offeror
EXHIBIT "A"
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<PAGE>
or any sale to a Remaining International Stockholder) by the then
Remaining International Stockholder(s) or the dissolution and liquidation of
INTERNATIONAL, the unpaid balance thereof shall become due and payable
forthwith. Any note(s) delivered at Closing shall also provide that it may be
prepaid in whole or in part at any time, and from time to time, without
penalty or premium but with interest to the date of prepayment.
(b) At the closing of a sale of Target Shares made pursuant to Article
8 hereof or Section 9.2 hereof, the Offeror shall deliver: (i) Stock assignment
of the Target Shares, free and clear of all liens, security interests,
restrictions and encumbrances whatsoever other than those restrictions contained
herein or in any other agreement in effect on the date of said closing by which
all of the International Stockholders and INTERNATIONAL are bound and (ii) all
additional documents which counsel for the purchaser or purchasers shall
reasonably deem necessary or advisable in order to accomplish a complete
transfer of shares of the Target Shares to the purchaser or purchasers
thereof.
(c) At the closing, all loans or other indebtedness due from the
Offeror to the Remaining International Stockholder(s) and/or INTERNATIONAL shall
be due and payable, irrespective of any other due date contained in the
documents executed in connection with such loan or indebtedness. If
INTERNATIONAL is the purchaser, it shall have the right to apply the first
payments of the purchase price to discharge any such indebtedness of the
Offeror to INTERNATIONAL and to offset
EXHIBIT "A"
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<PAGE>
against the first payment or payments of the purchase price due to the Offeror
the amount of all loans or other indebtedness due from the Offeror.
(d) At the closing, as a condition precedent to the obligations
hereunder of the Offeror, INTERNATIONAL shall pay to the Offeror any loans
or other indebtedness owed by it to the Offeror, regardless of the due date
thereof.
9.4. Authorized Transfer. If neither INTERNATIONAL nor any of the
Remaining International Stockholders, as the case may be, has given Notice to
the Offeror of their acceptance of the Target Shares within the time periods
provided herein, then:
(a) The Remaining International Stockholder(s) and INTERNATIONAL
shall be deemed to have rejected the Offer and shall no longer have the right to
purchase the Target Shares; and
(b) The Offeror may Transfer the Target Shares on the identical terms
and conditions, including price, specified in the Offer to the individual or
individuals making the Offer for a period of ninety (90) days, beginning on the
last day of the Offer Period; provided, however, that such individual or
individuals making the Offer shall agree in writing to be bound by all of the
terms of this Agreement and any subsequent sale of stock by such individual or
individuals shall be again subject in all respects to the provisions of this
Article 9; and
(c) If, at the conclusion of such ninety (90) day period, the sale
identified in the Offer has not been consummated, all restrictions imposed by
this Agreement on the
EXHIBIT "A"
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<PAGE>
Transfer of International Stock, shall be fully effective and applicable with
respect to such Target Shares.
9.5. Legend. All certificates representing International Stock subject
to this Agreement shall bear the following legend:
"The Shares represented by this certificate are subject to and
restricted by the terms and provisions of a certain Shareholder
and Asset Purchase Agreement dated as of _____________ ___ 1996,
a copy of which agreement is on file at the office of the
Brightpoint International Ltd.
9.6. For purposes of this Articles 9, the following terms shall have
the respective meanings set forth below:
(a) "Family Member" shall mean the spouse, direct lineal
descendants and ancestors of ARNOTT or MARLIN, provided such person agrees in
writing to be bound by this Agreement.
(b) "Family Trust" shall mean any trust or custodianship
created solely for the benefit of one or more of the respective Family Members,
provided such Family Member agrees in writing to be bound by this Agreement.
(c) "Offer" shall mean a bona fide offer received by an
International Stockholder to purchase all of the Target Shares. An Offer shall
not be bona fide unless, at a minimum, the following conditions are met: (A) the
total purchase price for such Target Shares is in cash, payable either at
closing or on an installment basis; (B) it is accompanied by bank or certified
check for the deposit payable to the Offeror, or an escrow agent for the benefit
of the Offeror, in an amount equal to not less than __ percent (__%) of the
offered purchase
EXHIBIT "A"
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<PAGE>
price; and (C) it is in writing, made and signed by an individual or
individuals, who represent therein that they are financially capable of
carrying out the terms of such offer;
(d) "Offer Notice" shall mean the notice given by the Offeror to the
Remaining International Stockholder(s) and INTERNATIONAL of the Offeror's
intention to accept the Offer. Such Notice shall include a copy of the Offer, a
photocopy of the deposit check and a statement of the Offeror of its intention
to accept the same;
(e) "Remaining Proportionate Shares" as applied to a Remaining
International Stockholder shall mean a fraction determined as of the date to
which the calculation refers, the numerator of which is the total number of
shares of International Stock held by such Remaining International Stockholder
and the denominator of which is the total number of shares of International
Stock held by all of the Remaining International Stockholders; and
(f) "Remaining International Stockholders" shall mean all other
International Stockholders other than the Offeror.
EXHIBIT "A"
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<PAGE>
10. NON-COMPETITION COVENANT.
10.1. Non-competition and Noninterference.
(a) For the Restricted Period (as defined herein), each of TRI,
SAFKONG, ARNOTT, MARRIOTT and MARLIN hereby, jointly and severally, covenants
and agrees with BPUS for the benefit of each of INTERNATIONAL and BPUS, its
successors and assigns, that neither they nor any of their respective
subsidiaries and controlled affiliates (collectively referred to herein as the
"Restricted Parties") shall, directly or indirectly, whether alone or together
with or on behalf of or through any other Person (as defined herein), whether as
sole proprietor, partner, investor, stockholder, or any type of principal, or as
agent, officer, director, employee, technical advisor (except as employee of or
consultant to each of INTERNATIONAL or any subsidiary or affiliate of
INTERNATIONAL, lender, trustee, beneficiary, or otherwise, engage or be engaged
in any phase of the Restricted Business (as defined herein) anywhere in the
Restricted Area (as defined herein).
(b) For purposes hereof, the term "engage or be interested, directly or
indirectly" shall include, without limitation, giving advice or technical or
financial assistance, with respect to the Restricted Business, by loan,
guarantees, stock transactions or in any other manner to any Person doing or
about to do such Restricted Business in the Restricted Area. Nothing to the
contrary contained in this Section 10 shall preclude TRI from engaging in
passive investment activity in accordance with Section 4.5 hereof.
EXHIBIT "A"
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<PAGE>
(c) In the event that the foregoing covenant not to compete is
considered by a court of competent jurisdiction to be excessive in its
duration or in the Restricted Area or Restricted Business to which it
applies, it shall be considered modified and valid for such duration and for
such business and area as said court may determine reasonable under the
circumstances.
(d) Each of TRI, SAFKONG, ARNOTT, MARRIOTT and MARLIN hereby, jointly
and severally, also covenants and agrees that, during the Restricted Period,
neither they nor any other Restricted Party shall request, induce or advise any
customer, supplier, employee, independent contractor, sales representative,
joint venture partner or any other Person having business dealings with
INTERNATIONAL (or its successors or assigns) to the extent such business
dealings are in connection with the Restricted Business, including, without
limitation, the TRI Subsidiaries, to withdraw, amend, curtail or cancel such
business dealings.
(e) For purposes hereof, the following terms shall have the respective
meanings set forth below for all purposes of this Agreement:
(A) "Person" shall mean any individual, firm, partnership,
association, limited liability company, trust, venture, corporation or other
business organization, entity or enterprise except INTERNATIONAL;
(B) "Restricted Area" shall mean ___________________;
EXHIBIT "A"
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<PAGE>
(C) "Restricted Business" shall mean the purchase of Products and
related component parts for the sale, marketing and/or distribution to any
Person in the Restricted Area; and
(D) "Restricted Period" shall mean the period commencing on the Closing
Date and ending one (1) year from the date thereof, provided that, if any of the
Restricted Parties violates the covenant not to compete set forth in this
Article 10, the foregoing time period shall be extended for an added period
equal to the duration of the period of such violation for the Restricted Party
who violated the covenant not to compete.
10.2. Consideration. Each of TRI, SAFKONG, ARNOTT, MARRIOTT and MARLIN,
jointly and severally, acknowledge that, without their agreement to be bound and
to bind the other Restricted Parties, by the covenants of this Article 10, each
of INTERNATIONAL and TRI would not have agreed to enter into this Agreement and
consummate the transactions contemplated hereby.
10.3. Enforcement. Each of TRI, SAFKONG, ARNOTT, MARRIOTT and MARLIN,
jointly and severally, acknowledges and confirms that any activity of any of the
Restricted Parties in the Restricted Area, if prohibited by this Article 10 as
well as any breach by the Restricted Parties of any of the covenants of this
Article 10, would result in irreparable injury to each of INTERNATIONAL and BPUS
and their subsidiaries and affiliates for which money damages could not
adequately compensate. In the event that any proceeding is brought by any of
them seeking equitable relief, each of TRI, SAFKONG, ARNOTT, MARRIOTT and
MARLIN, jointly and severally, agrees that the breaching party's ability to
answer in
EXHIBIT "A"
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<PAGE>
damages shall not be a bar to, or be interposed as a defense against, the
granting of any injunctive or other equitable relief against any of the
Restricted Parties.
10.4. Litigation Expense. If any party hereto is made or shall
become a party to any litigation (including arbitration) commenced by or against
the other party involving the enforcement of any of the rights or remedies of
such party under this Article 10, or arising on account of a default of the
other party in its performance of any of the other party's obligations under
this Article 10, then the prevailing party in such litigation shall receive from
the other party all costs incurred by the prevailing party in such litigation,
plus reasonable attorney's fees to be fixed by the court or arbitrator, with
interest thereon from the date of judgment at the maximum rate permitted by
law; provided, however, that in the event that the prevailing party prevails
with respect to less than all of the claims made by it in such litigation, the
parties shall each be entitled to recover from the other a portion of its costs
proportionate to the extent to which it prevailed in such litigation.
11. INDEMNIFICATION.
11.1. Agreement to Indemnify by TRI, SAFKONG, ARNOTT, MARRIOTT and
MARLIN. Each of TRI, SAFKONG, ARNOTT, MARRIOTT and MARLIN agrees, jointly and
severally, to indemnify, defend and save each of INTERNATIONAL and BPUS, and
their successors and assigns, harmless from, against, for and in respect of:
EXHIBIT "A"
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<PAGE>
(a) any and all damages, losses, obligations, liabilities, claims,
actions or causes of action, encumbrances, costs, and expenses suffered,
sustained, incurred or required to be paid by INTERNATIONAL, its successors or
assigns, as a result of the untruth or inaccuracy of any representation or
warranty, or the breach of any representation, covenant or agreement of TRI,
SAFKONG, ARNOTT, MARRIOTT or MARLIN contained in or made pursuant to this
Agreement; and
(b) all costs and expenses (including, without limitation, reasonable
attorneys' fees, interest and penalties) incurred by each of INTERNATIONAL and
BPUS, its successors or assigns, in connection with any action, suit,
proceeding, demand, assessment or judgment incident to any of the matters
indemnified against by TRI, SAFKONG, ARNOTT, MARRIOTT or MARLIN under this
Acreement.
11.2. Agreement to Indemnify by INTERNATIONAL. INTERNATIONAL agrees
to indemnify, defend and save each of TRI, SAFKONG, ARNOTT, MARRIOTT, MARLIN
and their successors and assigns, harmless from, against, for and in respect of:
(a) any and all damages, losses, obligations, liabilities, claims,
actions or causes of action, encumbrances, costs, and expenses suffered,
sustained, incurred or required to be paid by TRI, SAFKONG, ARNOTT, MARRIOTT,
MARLIN and their successors or assigns, as a result of the untruth or inaccuracy
of any representation or warranty of INTERNATIONAL contained in this Agreement,
or the breach of any representation, covenant or
EXHIBIT "A"
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<PAGE>
agreement of INTERNATIONAL contained in or made pursuant to this Agreement;
and
(b) all costs and expenses (including, without limitation, reasonable
attorneys, fees, interest and penalties) incurred by TRI, SAFKONG, ARNOTT,
MARRIOTT, MARLIN and its successors or assigns, in connection with any action,
suit, proceeding, demand, or judgment incident to any of the matters
indemnified against by INTERNATIONAL under this Agreement.
11.3. No Knowledge or Investigation. Except as disclosed in the exhibits to
this Agreement, the indemnity provided under this Article 11 shall be effective
irrespective of any investigation by, or knowledge of, each of INTERNATIONAL,
TRI, SAFKONG, ARNOTT, MARRIOTT or MARLIN, as the case may be.
11.4. Notice; Control of Defense; Settlement.
(a) The indemnified party agrees to give prompt written notice to the
indemnifying party of any claim or circumstances which might give rise to a
claim by the indemnified party against the indemnifying party stating the nature
and basis of said claims, and the amount thereof, to the extent known.
(b) In the event any action, suit or proceeding is brought against the
indemnified party, with respect to which the indemnifying party may have
liability, the indemnified party shall permit the indemnifying party to assume
the defense of any such action, suit or proceeding at the expense of the
indemnifying party. The indemnified party shall have the right to be represented
by advisory counsel and accountants, at its own expense, and the indemnified
party shall be kept fully informed
EXHIBIT "A"
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<PAGE>
of such action, suit or proceeding at all stages thereof whether or not
it is so represented. The indemnifying party shall make available to the
indemnified party and its attorneys and accountants all books and records of the
indemnifying party relating to such proceedings or litigation.
(c) The indemnifying party shall not make any settlement of any claims
which does not include as an unconditional term thereof the giving by the
claimant to the indemnified party a release of all liability in respect of such
claims, without the written consent of the indemnified party, which consent
shall not be unreasonably withheld or delayed.
12. TERMINATION, AMENDMENT AND WAIVER
12.1. Pre-Closing Termination. This Agreement may be terminated at any
time prior to the Closing:
(a) by mutual agreement of each of INTERNATIONAL, BPUS, SAFKONG,
ARNOTT, MARRIOTT, MARLIN and TRI;
(b) [outside date re: consummation of deal]; and
(c) by BPUS or TRI, if (i) any representation or warranty made herein
for the benefit of BPUS or TRI, respectively, or (ii) any certificate,
schedule or document furnished to BPUS or TRI, respectively, pursuant to this
Agreement.
12.2. Post-Closing Termination. This Agreement may be terminated at any
time subsequent to the Closing Date:
(a) by a super-majority vote of the Board pursuant to Section 1.6(b)
hereof; and
EXHIBIT "A"
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<PAGE>
(b) by BPUS or TRI, if the other party shall have defaulted in the
performance of any material obligation under this Agreement and said default
shall not have been cured within sixty (60) days of notice hereof.
12.3. Effect of Termination.
(a) In the event of termination of this Agreement on or before the
Closing, as provided in Section 12.1, the parties each hereby covenant and
agree that this Agreement shall (except for the provisions of Articles 6 and 11
as well as any and all provisions of this Agreement pertaining to
confidentiality matters) forthwith become void, and there shall be no
liability on the part of either BPUS or SAFKONG, ARNOTT, MARIOTT and MARLIN
or their respective officers or directors, except such liability as may have
theretofore accrued because of a prior default under or breach of this
Agreement, for which the equitable and legal remedies to claim damages for such
default or breach are reserved to the aggrieved party.
13. MISCELLANEOUS
13.l. Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
13.2. Extension: Waiver. At any time prior to the Closing Date, the parties
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations
EXHIBIT "A"
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<PAGE>
and warranties contained herein or in any document delivered pursuant hereto and
(c) waive compliance with any of the agreements or conditions contained herein.
Any agreements on the part of a party hereto to any such extensions or waiver
shall be valid if set forth in an instrument in writing signed on behalf of such
party.
13.3. Notices. All notices, demands, requests and other communications
(each a "Notice") required or permitted to be given to or made upon the parties
hereunder shall be in writing and delivered personally, by facsimile (receipt
confirmed) or sent by commercial overnight carrier to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
MARRIOTT INVESTMENT & TRADE INC.
___________________________________
___________________________________
___________________________________
SAFKONG HOLDINGS LIMITED
___________________________________
___________________________________
___________________________________
BRIGHTPOINT INTERNATIONAL, LTD.
___________________________________
___________________________________
___________________________________
TECHNOLOGY RESOURCES INTERNATIONAL LIMITED
___________________________________
___________________________________
___________________________________
BRIGHTPOINT, INC.
6402 Corporate Drive
Indianapolis, Indiana
Attention: J. Mark Howell
EXHIBIT "A"
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<PAGE>
Each such Notice shall be deemed given (a) if delivered personally or sent by
commercial overnight carrier, when received and (b) if by facsimile, the next
business day after confirmed receipt.
13.4. Expenses. Except as otherwise expressly provided herein, each of the
parties shall bear and pay all its own costs and expenses incurred or to be
incurred by such party in negotiating and preparing this Agreement and in
closing and carrying out the transactions contemplated by this Agreement.
13.5. Cooperation. The parties, hereto each agrees to execute and deliver
such other documents, certificates, agreements and other writings and to take
such other actions as may be necessary or desirable in order to expeditiously
consummate or implement the transactions contemplated by this Agreement.
13.6. Governing Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the internal laws of the State
of Delaware without giving effect to the conflict of laws provisions thereof.
Each of the parties hereto hereby irrevocably and unconditionally consents to
submit to the exclusive jurisdiction of the federal courts of the United States
located in the States of Indiana or Delaware (the "Courts") for any litigation
arising out of or relating to this Agreement and the transactions contemplated
hereby (and agrees not to commence any litigation relating thereto except in
such courts) waives any objection to the laying of venue of any such
litigation in the Courts and agrees not to plead or claim that
EXHIBIT "A"
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<PAGE>
such litigation brought in the Courts has been brought in an inconvenient forum.
13.7. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES
ANY RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY SUIT, ACTION, OR SIMILAR
PROCEEDING BROUGHT RELATING TO OR ARISING OUT OF THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY.
13.8. Assignability and Parties in Interest. This Agreement shall not be
assignable by any of the parties hereto. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors; nothing in this Agreement is intended to confer, expressly or by
implication, upon any third person any rights or remedies under or by reason of
this Agreement.
13.9. Complete Agreement. This Agreement, the exhibits hereto, and the
schedules and documents delivered pursuant hereto or referred to herein contain
the entire agreement between the parties hereto with respect to the
transactions contemplated herein and therein and, except as provided herein,
supersede all previous negotiations, commitments and writings.
13.10. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
EXHIBIT "A"
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<PAGE>
PROMISSORY NOTE
(Revolving Loan)
Indianapolis, Indiana
$31,125,000.00 Dated as of June 7, 1996
Final Maturity: May 28, 1999
On or before May 28, 1999 ("Final Maturity"), BRIGHTPOINT, INC., a
Delaware corporation formerly known as Wholesale Cellular USA, Inc., (the
"Maker") promises to pay to the order of BANK ONE, INDIANAPOLIS, NATIONAL
ASSOCIATION (the "Payee Bank") at the principal office of BANK ONE,
INDIANAPOLIS, NATIONAL ASSOCIATION (the "Agent") at Bank One Center/Tower, 111
Monument Circle, Indianapolis, Indiana 46277, the principal sum of Thirty-One
Million One Hundred Twenty-Five Thousand and 00/100 Dollars ($31,125,000.00) or
so much of the principal amount of the Loan represented by this Note as may be
disbursed by the Payee Bank under the terms of the Credit Agreement described
below, and to pay interest on the unpaid principal balance outstanding from time
to time as provided in this Note.
This Note evidences indebtedness (the "Loan") incurred or to be incurred
by the Maker under a revolving line of credit extended to the Maker by the Bank
under a Credit Agreement dated June 13, 1995, as amended (collectively, the
"Credit Agreement"). All references in this Note to the Credit Agreement shall
be construed as references to that Agreement as it may be amended from time to
time. The Loan is referred to in the Credit Agreement as the "Revolving Loan."
Subject to the terms and conditions of the Credit Agreement, the proceeds of the
Loan may be advanced and repaid and re-advanced until Final Maturity. The
principal amount of the Loan outstanding from time to time shall be determined
by reference to the books and records of the Payee Bank on which all Advances
under the Loan and all payments by the Maker on account of the Loan shall be
recorded. Such books and records shall be deemed prima facie to be correct as to
such matters.
The terms "Advance" and "Banking Day" are used in this Note as defined
in the Credit Agreement.
Interest on the unpaid principal balance of the Loan outstanding from
time to time prior to and after maturity will accrue at the rate or rates
provided in the Credit Agreement. Prior to maturity, accrued interest shall be
due and payable on the last Banking Day of each month commencing on the last
Banking Day of the month in which this Note is executed. After maturity,
interest shall be due and payable as accrued and without demand. Interest will
be calculated on the basis that an entire year's interest is earned in 360 days.
The entire outstanding principal balance of this Note shall be due and
payable, together with accrued interest, at Final Maturity. Reference is made to
the Credit Agreement for provisions requiring prepayment of principal under
certain circumstances. Principal may be prepaid, but only as provided in the
Credit Agreement.
If any installment of interest due under the terms of this Note is not
paid when due, then the Required Banks may, subject to the terms of the Credit
Agreement, without notice, declare the entire principal amount of the Note and
all accrued interest immediately due and payable. Reference is made to the
Credit Agreement which provides for acceleration of the maturity of this Note
upon the happening of other "Events of Default" as defined therein.
Exhibit "B-1"
Page 1 of 2 pages
<PAGE>
All payments on account of this Note shall be applied first to expenses
of collection, next to any late payment fees which are due and payable, next to
interest which is due and payable, and only after satisfaction of all such
expenses, fees and interest, to principal.
The Maker and any endorsers severally waive demand, presentment for
payment and notice of nonpayment of this Note, and each of them consents to any
renewals or extensions of the time of payment of this Note without notice.
All amounts payable under the terms of this Note shall be payable with
expenses of collection, including attorneys' fees, and without relief from
valuation and appraisement laws.
This Note is given to replace that certain Promissory Note of the Maker
in favor of the Payee Bank, dated January 19, 1996, in the principal amount of
$26,650,000.00 and bearing a final maturity date of May 29, 1998, and to
represent an increase of the indebtedness evidenced thereby.
This Note is made under and will be governed in all cases by the
substantive laws of the State of Indiana, notwithstanding the fact that Indiana
conflicts of law rules might otherwise require the substantive rules of law of
another jurisdiction to apply.
BRIGHTPOINT, INC.
By: /s/ J. Mark Howell
-------------------------------------
J. Mark Howell, Executive Vice
President and Chief Financial Officer
Exhibit "B-1"
Page 2 of 2 pages
<PAGE>
PROMISSORY NOTE
(Revolving Loan)
Indianapolis, Indiana
$19,500,000.00 Dated as of June 7, 1996
Final Maturity: May 28, 1999
On or before May 28, 1999 ("Final Maturity"), BRIGHTPOINT, INC., a
Delaware corporation formerly known as Wholesale Cellular USA, Inc., (the
"Maker") promises to pay to the order of THE FIRST NATIONAL BANK OF CHICAGO (the
"Payee Bank") at the principal office of BANK ONE, INDIANAPOLIS, NATIONAL
ASSOCIATION (the "Agent") at Bank One Center/Tower, 111 Monument Circle,
Indianapolis, Indiana 46277, the principal sum of Nineteen Million Five Hundred
Thousand and 00/100 Dollars ($19,500,000.00) or so much of the principal amount
of the Loan represented by this Note as may be disbursed by the Payee Bank under
the terms of the Credit Agreement described below, and to pay interest on the
unpaid principal balance outstanding from time to time as provided in this Note.
This Note evidences indebtedness (the "Loan") incurred or to be incurred
by the Maker under a revolving line of credit extended to the Maker by the Bank
under a Credit Agreement dated June 13, 1995, as amended (collectively, the
"Credit Agreement"). All references in this Note to the Credit Agreement shall
be construed as references to that Agreement as it may be amended from time to
time. The Loan is referred to in the Credit Agreement as the "Revolving Loan."
Subject to the terms and conditions of the Credit Agreement, the proceeds of the
Loan may be advanced and repaid and re-advanced until Final Maturity. The
principal amount of the Loan outstanding from time to time shall be determined
by reference to the books and records of the Payee Bank on which all Advances
under the Loan and all payments by the Maker on account of the Loan shall be
recorded. Such books and records shall be deemed prima facie to be correct as to
such matters.
The terms "Advance" and "Banking Day" are used in this Note as defined
in the Credit Agreement.
Interest on the unpaid principal balance of the Loan outstanding from
time to time prior to and after maturity will accrue at the rate or rates
provided in the Credit Agreement. Prior to maturity, accrued interest shall be
due and payable on the last Banking Day of each month commencing on the last
Banking Day of the month in which this Note is executed. After maturity,
interest shall be due and payable as accrued and without demand. Interest will
be calculated on the basis that an entire year's interest is earned in 360 days.
The entire outstanding principal balance of this Note shall be due and
payable, together with accrued interest, at Final Maturity. Reference is made to
the Credit Agreement for provisions requiring prepayment of principal under
certain circumstances. Principal may be prepaid, but only as provided in the
Credit Agreement.
If any installment of interest due under the terms of this Note is not
paid when due, then the Required Banks may, subject to the terms of the Credit
Agreement, without notice, declare the entire principal amount of the Note and
all accrued interest immediately due and payable. Reference is made to the
Credit Agreement which provides for acceleration of the maturity of this Note
upon the happening of other "Events of Default" as defined therein.
Exhibit "B-2"
Page 1 of 2 pages
<PAGE>
All payments on account of this Note shall be applied first to expenses
of collection, next to any late payment fees which are due and payable, next to
interest which is due and payable, and only after satisfaction of all such
expenses, fees and interest, to principal.
The Maker and any endorsers severally waive demand, presentment for
payment and notice of nonpayment of this Note, and each of them consents to any
renewals or extensions of the time of payment of this Note without notice.
All amounts payable under the terms of this Note shall be payable with
expenses of collection, including attorneys' fees, and without relief from
valuation and appraisement laws.
This Note is given to replace that certain Promissory Note of the Maker
in favor of the Payee Bank, dated January 19, 1996, in the principal amount of
$13,350,000.00 and bearing a final maturity date of May 29, 1998, and to
represent an increase of the indebtedness evidenced thereby.
This Note is made under and will be governed in all cases by the
substantive laws of the State of Indiana, notwithstanding the fact that Indiana
conflicts of law rules might otherwise require the substantive rules of law of
another jurisdiction to apply.
BRIGHTPOINT, INC.
By: /s/ J. Mark Howell
------------------------------------
J. Mark Howell, Executive Vice
President and Chief Financial Officer
Exhibit "B-2"
Page 2 of 2 pages
<PAGE>
PROMISSORY NOTE
(Revolving Loan)
Indianapolis, Indiana
$14,250,000.00 Dated as of June 7, 1996
Final Maturity: May 28, 1999
On or before May 28, 1999 ("Final Maturity"), BRIGHTPOINT, INC., a
Delaware corporation formerly known as Wholesale Cellular USA, Inc., (the
"Maker") promises to pay to the order of SUNTRUST BANK, CENTRAL FLORIDA, N.A.
(the "Payee Bank") at the principal office of BANK ONE, INDIANAPOLIS, NATIONAL
ASSOCIATION (the "Agent") at Bank One Center/Tower, 111 Monument Circle,
Indianapolis, Indiana 46277, the principal sum of Fourteen Million Two Hundred
Fifty Thousand and 00/100 Dollars ($14,250,000.00) or so much of the principal
amount of the Loan represented by this Note as may be disbursed by the Payee
Bank under the terms of the Credit Agreement described below, and to pay
interest on the unpaid principal balance outstanding from time to time as
provided in this Note.
This Note evidences indebtedness (the "Loan") incurred or to be incurred
by the Maker under a revolving line of credit extended to the Maker by the Bank
under a Credit Agreement dated June 13, 1995, as amended (collectively, the
"Credit Agreement"). All references in this Note to the Credit Agreement shall
be construed as references to that Agreement as it may be amended from time to
time. The Loan is referred to in the Credit Agreement as the "Revolving Loan."
Subject to the terms and conditions of the Credit Agreement, the proceeds of the
Loan may be advanced and repaid and re-advanced until Final Maturity. The
principal amount of the Loan outstanding from time to time shall be determined
by reference to the books and records of the Payee Bank on which all Advances
under the Loan and all payments by the Maker on account of the Loan shall be
recorded. Such books and records shall be deemed prima facie to be correct as to
such matters.
The terms "Advance" and "Banking Day" are used in this Note as defined
in the Credit Agreement.
Interest on the unpaid principal balance of the Loan outstanding from
time to time prior to and after maturity will accrue at the rate or rates
provided in the Credit Agreement. Prior to maturity, accrued interest shall be
due and payable on the last Banking Day of each month commencing on the last
Banking Day of the month in which this Note is executed. After maturity,
interest shall be due and payable as accrued and without demand. Interest will
be calculated on the basis that an entire year's interest is earned in 360 days.
The entire outstanding principal balance of this Note shall be due and
payable, together with accrued interest, at Final Maturity. Reference is made to
the Credit Agreement for provisions requiring prepayment of principal under
certain circumstances. Principal may be prepaid, but only as provided in the
Credit Agreement.
If any installment of interest due under the terms of this Note is not
paid when due, then the Required Banks may, subject to the terms of the Credit
Agreement, without notice, declare the entire principal amount of the Note and
all accrued interest immediately due and payable. Reference is made to the
Credit Agreement which provides for acceleration of the maturity of this Note
upon the happening of other "Events of Default" as defined therein.
Exhibit "B-3"
Page 1 of 2 pages
<PAGE>
All payments on account of this Note shall be applied first to expenses
of collection, next to any late payment fees which are due and payable, next to
interest which is due and payable, and only after satisfaction of all such
expenses, fees and interest, to principal.
The Maker and any endorsers severally waive demand, presentment for
payment and notice of nonpayment of this Note, and each of them consents to any
renewals or extensions of the time of payment of this Note without notice.
All amounts payable under the terms of this Note shall be payable with
expenses of collection, including attorneys' fees, and without relief from
valuation and appraisement laws.
This Note is given to replace that certain Promissory Note of the Maker
in favor of the Payee Bank, dated January 19, 1996, in the principal amount of
$10,000,000.00, and bearing a final maturity date of May 29, 1998, and to
represent an increase of the indebtedness evidenced thereby.
This Note is made under and will be governed in all cases by the
substantive laws of the State of Indiana, notwithstanding the fact that Indiana
conflicts of law rules might otherwise require the substantive rules of law of
another jurisdiction to apply.
BRIGHTPOINT, INC.
By: /s/ J. Mark Howell
---------------------------------------
J. Mark Howell, Executive Vice
President and Chief Financial Officer
Exhibit "B-3"
Page 2 of 2 pages
<PAGE>
PROMISSORY NOTE
(Revolving Loan)
Indianapolis, Indiana
$10,125,000.00 Dated as of June 7, 1996
Final Maturity: May 28, 1999
On or before May 28, 1999 ("Final Maturity"), BRIGHTPOINT, INC., a
Delaware corporation formerly known as Wholesale Cellular USA, Inc., (the
"Maker") promises to pay to the order of CORESTATES BANK, N.A. (the "Payee
Bank") at the principal office of BANK ONE, INDIANAPOLIS, NATIONAL ASSOCIATION
(the "Agent") at Bank One Center/Tower, 111 Monument Circle, Indianapolis,
Indiana 46277, the principal sum of Ten Million One Hundred Twenty-Five Thousand
and 00/100 Dollars ($10,125,000.00) or so much of the principal amount of the
Loan represented by this Note as may be disbursed by the Payee Bank under the
terms of the Credit Agreement described below, and to pay interest on the unpaid
principal balance outstanding from time to time as provided in this Note.
This Note evidences indebtedness (the "Loan") incurred or to be incurred
by the Maker under a revolving line of credit extended to the Maker by the Bank
under a Credit Agreement dated June 13, 1995, as amended (collectively, the
"Credit Agreement"). All references in this Note to the Credit Agreement shall
be construed as references to that Agreement as it may be amended from time to
time. The Loan is referred to in the Credit Agreement as the "Revolving Loan."
Subject to the terms and conditions of the Credit Agreement, the proceeds of the
Loan may be advanced and repaid and re-advanced until Final Maturity. The
principal amount of the Loan outstanding from time to time shall be determined
by reference to the books and records of the Payee Bank on which all Advances
under the Loan and all payments by the Maker on account of the Loan shall be
recorded. Such books and records shall be deemed prima facie to be correct as to
such matters.
The terms "Advance" and "Banking Day" are used in this Note as defined
in the Credit Agreement.
Interest on the unpaid principal balance of the Loan outstanding from
time to time prior to and after maturity will accrue at the rate or rates
provided in the Credit Agreement. Prior to maturity, accrued interest shall be
due and payable on the last Banking Day of each month commencing on the last
Banking Day of the month in which this Note is executed. After maturity,
interest shall be due and payable as accrued and without demand. Interest will
be calculated on the basis that an entire year's interest is earned in 360 days.
The entire outstanding principal balance of this Note shall be due and
payable, together with accrued interest, at Final Maturity. Reference is made to
the Credit Agreement for provisions requiring prepayment of principal under
certain circumstances. Principal may be prepaid, but only as provided in the
Credit Agreement.
If any installment of interest due under the terms of this Note is not
paid when due, then the Required Banks may, subject to the terms of the Credit
Agreement, without notice, declare the entire principal amount of the Note and
all accrued interest immediately due and payable. Reference is made to the
Credit Agreement which provides for acceleration of the maturity of this Note
upon the happening of other "Events of Default" as defined therein.
Exhibit "B-4"
Page 1 of 2 pages
<PAGE>
All payments on account of this Note shall be applied first to expenses
of collection, next to any late payment fees which are due and payable, next to
interest which is due and payable, and only after satisfaction of all such
expenses, fees and interest, to principal.
The Maker and any endorsers severally waive demand, presentment for
payment and notice of nonpayment of this Note, and each of them consents to any
renewals or extensions of the time of payment of this Note without notice.
All amounts payable under the terms of this Note shall be payable with
expenses of collection, including attorneys' fees, and without relief from
valuation and appraisement laws.
This Note is made under and will be governed in all cases by the
substantive laws of the State of Indiana, notwithstanding the fact that Indiana
conflicts of law rules might otherwise require the substantive rules of law of
another jurisdiction to apply.
BRIGHTPOINT, INC.
By: /s/ J. Mark Howell
-------------------------------------
J. Mark Howell, Executive Vice
President and Chief Financial Officer
Exhibit "B-4"
Page 2 of 2 pages
<PAGE>
PLEDGE AGREEMENT
BRIGHTPOINT, INC., a Delaware corporation (the "Pledgor"), grants to
BANK ONE, INDIANAPOLIS, NATIONAL ASSOCIATION, as Agent (the "Agent") for the
banks (the "Banks") which are parties to the Credit Agreement (as defined
hereafter) a pledge of and a security interest in those securities (the "Pledged
Securities") described in the "Schedule" attached hereto or which may be
described in any supplemental Schedule which may hereafter be delivered by the
Pledgor to the Agent, which supplemental Schedule contains a reference to this
Pledge Agreement (each a "Supplemental Schedule"). The Schedule and any
Supplemental Schedule shall constitute a part of this Agreement.
1. Obligations Secured -- Certain Definitions. This Pledge Agreement has
been executed by the Pledgor and delivered to the Agent pursuant to the
requirements of a Credit Agreement between the Pledgor, the Agent and the Banks
dated as of June 13, 1995, as amended by First Amendment to Credit Agreement
dated as of September 15, 1995, and Second Amendment to Credit Agreement dated
as of January 19, 1996, and as further amended by Third Amendment to Credit
Agreement dated the date of this Pledge Agreement (collectively, the Credit
Agreement). The security interest of the Banks in the Pledged Securities will
secure the prompt payment and performance of all of the Pledgor's "Obligations"
(which term is used in this Pledge Agreement as defined in the Credit Agreement)
to the Banks. The terms "Event of Default," "Unmatured Event of Default" and
"Loan Documents" are used in this Pledge Agreement as defined in the Credit
Agreement. The terms "Certificated Security," "Uncertificated Security,"
"Clearing Corporation," "Financial Intermediary," "Issuer" and "Instruction" are
used in this Pledge Agreement as defined in the Uniform Commercial Code as
enacted in Indiana.
2. Perfection of Pledge. If any Pledged Security is an Uncertificated
Security, this Pledge Agreement in and of itself will constitute an Instruction
to the Issuer of the Security to register the security interest of the Agent and
the Pledgor will execute and deliver any other Instruction to the Issuer to
register the security interest of the Agent which the Agent may reasonably
request. If any Pledged Security is in the custody of or is registered to a
Clearing Corporation, Financial Intermediary or other third party, this Pledge
Agreement in and of itself will constitute notice to any such third party of the
security interest of the Agent. The Pledgor will execute and deliver to the
Agent any "stock power," "bond power," or other instrument of assignment and any
financing statement, Instruction or other instrument deemed necessary by the
Agent to further evidence or perfect the Agent's security interest. The Agent
may file any financing statement to perfect its security interest signed by the
Agent or by the Pledgor alone. The Pledgor appoints and constitutes the Agent as
its agent and any officer of the Agent as the Pledgor's attorney-in-fact for the
purposes of: (i) executing instruments of assignment of any Pledged Security
which is a Certificated Security, including "stock powers" and "bond powers";
(ii) issuing any Instruction or taking any other action necessary to cause the
Exhibit "C"
Page 1 of 4 pages
<PAGE>
Agent's security interest to be registered on the books of the Issuer of any
Uncertificated Security and (iii) giving notice of the Agent's security interest
to any Clearing Corporation, Financial Intermediary or other third party which
is the registered owner of or is in possession of any Pledged Security. Such
appointment and such power are irrevocable so long as any Obligations are
secured by the pledge and security interest evidenced by this Pledge Agreement
and so long as the Banks have any obligation to make any advance which would be
so secured when made.
3. Proceeds -- Special Distributions. The Agent's security interest will
extend to the proceeds of any Pledged Securities and any Securities which may be
acquired by the Pledgor by reason of any reinvestment of such proceeds. The
Agent's security interest will also extend to any cash, securities or any other
property which may be or become payable or distributable to the Pledgor on
account of any Pledged Securities, including any cash, securities or other
property payable or distributable on account of any cash dividend, stock
redemption, stock split, stock dividend or any other dividend payable in
property other than cash and any cash payable upon the maturity of any Pledged
Security which is a debt security; provided, however, that so long as no Event
of Default or Unmatured Event of Default has occurred and is continuing, the
Pledgor may retain free of the Agent's security interest any regular cash
dividends and any interest payments made on account of any Pledged Securities.
The Pledgor will deliver to the Agent any certificates which the Pledgor may
receive representing any securities which are subject to the Agent's security
interest together with appropriate "stock powers" or "bond powers" or other
appropriate instruments of assignment.
4. Warranty of Ownership. The Pledgor represents, warrants and covenants
that the Pledgor is the owner of all of the initial Pledged Securities and will
be the owner of any Pledged Securities hereafter delivered to the Agent or which
may otherwise be subjected to the Agent's security interest under this Pledge
Agreement, free of any other security interests or any interest whatever of any
other party, and that the Pledgor has and will continue to have full power,
right and authority to grant to the Agent a pledge of and a security interest in
all Pledged Securities.
5. Voting Rights. Unless an Event of Default shall have occurred and be
continuing, the Pledgor shall be entitled to exercise all voting rights with
respect to the Pledged Securities and to execute consents in respect thereof,
and to consent to, ratify or waive notice of any or all meetings of the holders
of Securities of a class of which any of the Pledged Securities are a part, with
the same force and effect as if this Pledge Agreement had not been executed and
delivered; provided, that the Pledgor shall not exercise voting and similar
rights reserved to the Pledgor in a manner materially adverse to the interests
of the Banks under any of the Loan Documents. If necessary and upon the receipt
of the written request from the Pledgor, the Agent with the consent of the Banks
shall from time to time execute and deliver appropriate proxies to enable the
Pledgor to exercise the voting and similar rights reserved to the Pledgor.
6. Remedies. Upon the occurrence of an Event of Default, the
Banks or the Agent on behalf of the Banks shall have all the rights, remedies
and options in respect to the Pledged Securities of a secured party under the
Exhibit "C"
Page 2 of 4 pages
<PAGE>
Uniform Commercial Code as enacted in Indiana, regardless of whether the Code in
such form has been enacted in any jurisdiction in which the Agent asserts such
remedies, and all other rights and remedies provided by law. In exercising any
such remedies, the Agent may sell all or any portion of the Pledged Securities
as a unit, even though the price obtained may be in excess of the amount
remaining unpaid on the Obligations. The Agent is authorized at any sale or
other disposition of the Pledged Securities, if it deems it advisable so to do,
to restrict the prospective bidders or purchasers to persons who will represent
and agree that they are purchasing for their own account, for investment and not
with a view to the distribution or resale of any of the Pledged Securities. The
Agent or any holder of any Obligations may purchase the Pledged Securities or
any part thereof at any sale or sales. Any requirements of the Uniform
Commercial Code as to reasonable notice shall be met by giving notice to the
Pledgor ten (l0) days prior to such sale or other event giving rise to the
requirement for notice.
7. Application of Proceeds. The proceeds of any sale of all or any part
of the Pledged Securities, and any other cash at the time held by the Agent
under this Pledge Agreement, may be applied by the Agent in the following order
of application, unless a court of competent jurisdiction shall otherwise direct:
a. to the payment of all costs and expenses of the Agent or the
Banks incurred in connection with any such sale, including reasonable
compensation to its agents and counsel, and all other expenses,
liabilities and advances made or incurred by the Agent in connection
herewith;
b. to payment of that portion of the Obligations constituting
accrued and unpaid interest and fees;
c. to payment of the principal of the Obligations in such
order as the Bank may determine, and
d. after any and all Obligations to the Agent and the Banks have
been satisfied and the Banks no longer have any obligation to make any
advance which would result in the creation of an Obligation, to the
Pledgor or the Pledgor's successors or assigns.
8. Pledge Absolute. This Pledge Agreement and the pledge and security
interest provided for hereunder shall be absolute and unconditional,
irrespective of the irregularity, invalidity or unenforceability of any other
Loan Document and shall not be affected or impaired by any failure, negligence
or omission on the part of the Agent or the Banks to realize upon or protect any
other collateral for any of the Obligations.
9. Miscellaneous. This Pledge Agreement shall be binding upon the
Pledgor and upon the Pledgor's legal representatives, successors and assigns. If
any provision of this Pledge Agreement is determined to be illegal or
unenforceable, such provision shall be deemed to be severable from the balance
of the provisions of this Pledge Agreement and the remaining provisions shall be
enforceable in accordance with their terms. This Pledge Agreement is made under
and will be governed in all cases by the substantive laws of the State
Exhibit "C"
Page 3 of 4 pages
<PAGE>
of Indiana, notwithstanding the fact that Indiana conflicts of law rules might
otherwise require the substantive rules of law of another jurisdiction to apply.
Dated as of June 7, 1996.
BRIGHTPOINT, INC.
By: /s/ J. Mark Howell
-------------------------------------
J. Mark Howell, Executive Vice
President and Chief Financial Officer
Exhibit "C"
Page 4 of 4 pages
<PAGE>
S C H E D U L E
Attached to and forming a part of a
Pledge Agreement
Executed by Brightpoint, Inc. in favor of
Bank One, Indianapolis National Association,
as Agent for the Banks
dated as of June 7, 1996
DESCRIPTION OF SECURITIES PLEDGED
Dated as of June 7, 1996.
BRIGHTPOINT, INC.
By: /s/ J. Mark Howell
------------------------------------------
J. Mark Howell, Executive
Vice President and Chief Financial Officer
Exhibit "C"
<PAGE>
GUARANTY AGREEMENT
This undertaking and agreement (this "Guaranty") is made by BRIGHTPOINT
ACQUISITION, INC., a Delaware corporation (the "Guarantor"), in favor of BANK
ONE, INDIANAPOLIS, NATIONAL ASSOCIATION, as Agent (the "Agent") for the banks
(the "Banks") which are parties to the Credit Agreement (as defined hereafter),
in consideration of the loans described in this Guaranty made or to be made by
the Banks to BRIGHTPOINT, INC., a Delaware corporation (the "Borrower"). This
Guaranty is on the following terms:
1. Background of this Guaranty -- Certain Definitions. The Agent, the
Banks and the Borrower are parties to a Credit Agreement dated as of June 13,
1995, as amended by First Amendment to Credit Agreement dated as of September
15, 1995, and Second Amendment to Credit Agreement dated as of January 19, 1996,
and as further amended by Third Amendment to Credit Agreement dated as of the
date of this Guaranty (collectively, the "Credit Agreement") under the terms of
which the Banks have agreed to extend a revolving line of credit (referred to in
the Credit Agreement as the "Revolving Loan") to the Borrower subject to the
fulfillment of certain conditions, one of which is the execution and delivery by
the Guarantor of this Guaranty. This Guaranty is made by the Guarantor in
consideration of the agreement of the Banks to increase the maximum amount
available for advances under the Revolving Loan and to extend the Revolving Loan
Maturity Date (as hereafter defined). In addition to the terms "Revolving Loan,"
the terms "Advances," "Commitment," "Guarantor Security Agreement," "Third
Amendment," "Revolving Loan Maturity Date" and "Loan Document" are used in this
Guaranty as defined in the Credit Agreement. The term "Obligations" as used in
this Guaranty means all of the obligations of the Borrower in favor of the Bank
of every type and description, direct or indirect, absolute or contingent, due
or to become due, now existing or hereafter arising, including but not limited
to the Borrower's obligation to repay the principal of, interest on and expenses
of collection of the Loans as provided in the Credit Agreement and the other
Loan Documents, including any Advances under the Revolving Loan made after this
date and after the initial Revolving Loan Maturity Date pursuant to any
extension or extensions of the Revolving Loan Maturity Date, and all other
obligations incurred pursuant to the terms of the Credit Agreement and any other
Loan Document including any obligations arising on account of any amendment to
or extension of the Credit Agreement or any other Loan Document. The term
"Default" means an "Event of Default" as defined in the Credit Agreement.
2. The Guaranty. The Guarantor guarantees the full and prompt payment of
all of the Obligations when due, whether at scheduled maturity or at maturity by
virtue of acceleration on account of a Default. The Guarantor further agrees to
pay to the Bank an amount equal to all expenses, including reasonable attorneys'
fees, paid or incurred by the Bank after Default in endeavoring to enforce this
Guaranty. Notwithstanding any other provision of this Guaranty, the Guarantor's
liability hereunder shall be limited to the lesser of the following amounts
minus, in either case, One Dollar ($1.00):
a. the lowest amount which would render this Guaranty a fraudulent
transfer under Section 548 of the Bankruptcy Code of 1978, as
amended, or
Exhibit "D-1"
Page 1 of 8 pages
<PAGE>
b. if this Guaranty is subject to the Uniform Fraudulent Transfer
Act (the "UFTA") or the Uniform Fraudulent Conveyance Act (the
"UFCA") or any similar or analogous statute or rule of law, then
the lowest amount which would render this Guaranty a fraudulent
conveyance or a fraudulent transfer under the UFTA, the UFCA, or
any such similar or analogous statute or rule of law.
The amount of the limitation imposed upon the Guarantor's liability under the
terms of the preceding sentence shall be subject to redetermination as of each
date a "transfer" is deemed to have been made on account of this Guaranty under
applicable law. The Guarantor acknowledges that information concerning the
Guarantor's financial condition is under the control of the Guarantor and is
more readily available to the Guarantor than to the Bank, and for that reason
the Guarantor agrees that should the Guarantor claim that the amount of its
liability under this Guaranty is less than the full amount of the Obligations
because of the provisions of this paragraph, then the burden of proving the
facts which would result in such limitation shall be upon the Guarantor.
3. Financial Information. As long as this Guaranty is in effect, and in
the event that the Borrower fails to furnish such information as required
under the provisions of the Credit Agreement, the Guarantor shall furnish to
the Bank the following:
a. Annual Statements. As soon as available and in any event within 90
days after the close of each fiscal year, financial statements of
the Guarantor for such fiscal year prepared and presented in
accordance with generally accepted accounting principles, in each
case setting forth in comparative form corresponding figures for
the preceding fiscal year, prepared by independent certified public
accountants approved by the Bank, which approval shall not be
unreasonably withheld.
b. Interim Statements. As soon as available and in any event within 30
days after the end of each month, a copy of the interim financial
statements of the Guarantor, consisting at a minimum of
(i) the balance sheet of the Guarantor as of the end of the
month, and
(ii) a statement of income for the month and for the partial or
full fiscal year ended as of the end of the month,
all in reasonable detail.
c. Certificates Regarding Solvency. At such times as the Bank may
reasonably require, a "Certificate Regarding Solvency" in the form
of the attached "Annex."
d. Other Information. Such other information relating to the financial
condition of the Guarantor as the Bank may reasonably require.
Each set of annual and interim financial statements required to be delivered by
the Guarantor to the Bank shall be accompanied by the written representation of
the chief financial officer of the Guarantor that such
Exhibit "D-1"
Page 2 of 8 pages
<PAGE>
financial statements have been prepared in accordance with generally accepted
accounting principles (except that the interim statements need not include a
statement of cash flows and footnotes and need not reflect adjustments normally
made at year end, if such adjustments are not material in amount), consistently
applied, (except for changes in which the independent accountants of the
Guarantor concur) and present fairly the financial position of the Guarantor and
the results of its operation as of the dates of such statements and for the
fiscal periods then ended.
4. Guaranty Absolute. This Guaranty shall be absolute, continuing and
unconditional, irrespective of the irregularity, invalidity or unenforceability
of any other Loan Document and shall not be affected or impaired by any failure,
negligence or omission on the part of the Bank to realize upon and protect any
collateral for any of the Obligations. This Guaranty shall remain in full force
and effect until all of the Obligations have been satisfied in full and the
commitment of the Banks to make Advances under the Revolving Loan has expired.
The Bank may from time to time, without notice to the Guarantor and without
affecting the Guarantor's liability under this Guaranty:
a. obtain a security interest in any property to secure any of the
Obligations;
b. obtain the primary or secondary liability of any party or parties
in addition to the Borrower and the Guarantor with respect to any
of the Obligations;
c. extend or renew any of the Obligations for any period beyond their
original due dates;
d. release or compromise the liability of any other party or parties
which are now or may hereafter become primarily or secondarily
liable with respect to any of the Obligations;
e. release any security interest which the Bank now has or may
hereafter obtain in any property securing any of the Obligations
and permit any substitution or exchange of any such property;
f. proceed against the Guarantor for payment of the Obligations,
whether or not the Bank shall have resorted to any property
securing any of the Obligations or shall have proceeded against the
Borrower or any other party primarily or secondarily liable with
respect to any of the Obligations;
g. amend the terms of the Credit Agreement from time to time in any
particulars, or
h. extend loans and other credit accommodations to the Borrower in
addition to the Revolving Loan and increase the maximum amount
which may be loaned to the Borrower under the Revolving Loan.
5. Assignments and Participations. Except as may otherwise be provided
in the Credit Agreement, the Banks may, without notice to the Borrower or the
Guarantor, sell or otherwise assign all or any portion of the Obligations and
any participations therein, and upon any such sale or assignment, the
Exhibit "D-1"
Page 3 of 8 pages
<PAGE>
transferee shall have the right to enforce this Guaranty to the extent of the
transferee's interest directly against the Guarantor as fully as if the
transferee were specifically named in the Guaranty as the holder of such
interest, but the Banks or the Agent on behalf of the Banks shall have the
unimpaired right to enforce this Guaranty for the benefit of the Banks and for
the benefit of any participant in respect of whose participation the Banks or
any Bank has retained such right.
6. Subrogation Waiver. In order to induce the Banks to make the Loans in
reliance, in part, upon this Guaranty, notwithstanding the fact that the
Guarantor is an "insider" with respect to the Borrower, as the term "insider" is
defined in the Bankruptcy Code, the Guarantor waives for itself, its legal
representatives and assigns any right of indemnity, reimbursement or
contribution from the Borrower or any other person obligated with respect to any
of the Obligations (any such other person being referred to hereafter in this
paragraph as a "Co-Obligor") or from the property of the Borrower or from the
property of any Co-Obligor, and the Guarantor further waives any right of
subrogation to the rights of the Agent on behalf of the Banks against the
Borrower or any Co-Obligor or the property of the Borrower or any Co-Obligor
which would otherwise arise by virtue of any payment made by the Guarantor to
the Agent on behalf of the Banks on account of this Guaranty, whether any such
right of indemnity, reimbursement, contribution or subrogation would otherwise
arise by virtue of contract, whether express or implied, with any person or as a
matter of law or equity, and the Guarantor undertakes on behalf of itself, its
legal representatives and assigns that neither the Guarantor nor the Guarantor's
legal representatives or assigns will attempt to exercise or accept the benefits
of any such right and should the Guarantor or the Guarantor's legal
representative or assigns receive any payment or distribution of money or other
property on account of such right notwithstanding the provisions of this
paragraph, such money or other property shall be held in trust by the recipient
for the Banks and shall immediately be delivered to the Agent on behalf of the
Banks for application to the Obligations in the same form as received, with the
addition only of such endorsements or assignments as may be necessary to perfect
the title of the Agent on behalf of the Banks thereto.
7. Other Waivers. The Guarantor waives: (i) notice of the acceptance
of this Guaranty, (ii) notice of the existence and creation of all or any of
the Obligations, (iii) notice of nonpayment of any of the Obligations and (iv)
diligence by the Agent on behalf of the Banks in collection of the Obligations
and the protection of or realization upon any collateral for the Obligations.
8. Reinstatement. If any amount which is paid to the Agent on behalf of
the Banks by the Borrower or any other party and which is applied by the Banks
to the satisfaction of any of the Obligations, is returned by the Banks to the
Borrower or such other party or a trustee in Bankruptcy or other legal
representative of the Borrower or such other party by virtue of a claim that
such payment constituted a voidable preference under the Bankruptcy Code or
under any state insolvency law, whether such amount is returned under court
order or pursuant to settlement of the claim of preference, then this Guaranty
shall be reinstated as to such amount as though such payment to the Banks had
never been made and notwithstanding any intervening return or cancellation of
any note or other instrument or agreement evidencing the reinstated Obligations.
Exhibit "D-1"
Page 4 of 8 pages
<PAGE>
9. Miscellaneous. This Guaranty shall be binding upon the Guarantor,
upon the Guarantor's legal representatives, successors and assigns. If any
provision of this Guaranty is determined to be illegal or unenforceable, such
provision shall be deemed to be severable from the balance of the provisions of
this Guaranty and the remaining provisions shall be enforceable in accordance
with their terms.
10. Choice of Law. This Guaranty is made under and will be governed in
all cases by the substantive laws of the State of Indiana, notwithstanding the
fact that Indiana conflicts of law rules might otherwise require the substantive
rules of law of another jurisdiction to apply.
11. Representations and Warranties. In order to induce the Banks and the
Agent to accept this Guaranty and to induce the Banks to make the Loans to the
Borrower, the Guarantor represents and warrants to the Agent and the Banks that:
a. Organization of the Guarantor. The Guarantor is a corporation
organized, existing and in good standing under the laws of the
State of Delaware. The Guarantor is qualified to do business in
every jurisdiction in which: (i) the nature of the business
conducted or the character or location of properties owned or
leased, or the residences or activities of employees make such
qualification necessary, and (ii) failure so to qualify might
impair the title of the Guarantor to material properties or the
Guarantor's right to enforce material contracts or result in
exposure of the Guarantor to liability for material penalties in
such jurisdiction. No jurisdiction in which the Guarantor is not
qualified to do business has asserted that the Guarantor is
required to be qualified therein. The principal office of the
Guarantor is located at 6402 Corporate Drive, Indianapolis, Indiana
46278. The Guarantor does not conduct any material operations or
keep any material amounts of property at any other location, except
the addresses listed in the Guarantor Security Agreement. The
Guarantor has not done business under any name other than its
present corporate name at any time during the six years preceding
the date of this agreement.
b. Authorization; No Conflict. The execution and delivery of this
Guaranty, the execution and delivery of the Guarantor Security
Agreement and the performance by the Guarantor of its obligations
under this Guaranty and the Guarantor Security Agreement are within
the Guarantor's corporate powers, have been duly authorized by all
necessary corporate action, have received any required governmental
or regulatory agency approvals and do not and will not contravene
or conflict with any provision of law or of the articles of
incorporation or bylaws of the Guarantor or of any agreement
binding upon the Guarantor or its properties.
c. Validity and Binding Nature. This Guaranty and the Guarantor
Security Agreement executed by the Guarantor are the legal, valid
and binding obligations of the Guarantor, enforceable against the
Guarantor in accordance with their respective terms, except to the
extent that enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium and other laws enacted for
the relief of debtors generally and other similar laws affecting
the
Exhibit "D-1"
Page 5 of 8 pages
<PAGE>
enforcement of creditors' rights generally or by equitable
principles which may affect the availability of specific
performance and other equitable remedies.
d. Litigation and Contingent Liabilities. No litigation, arbitration
proceedings or governmental proceedings are pending or threatened
against the Guarantor which would, if adversely determined,
materially and adversely affect its financial position or continued
operations. The Guarantor has no material contingent liabilities
not provided for or disclosed to the Banks or the Agent on behalf
of the Banks.
e. Liens. None of the assets of the Guarantor are subject to any
mortgage, pledge, title retention lien, or other lien, encumbrance
or security interest except for liens and security interests
described in the exceptions enumerated in Section 6.b of the Credit
Agreement and Section 9 of the Third Amendment.
f. Employee Benefit Plans. Each Plan maintained by the Guarantor is in
material compliance with ERISA, the Code, and all applicable rules
and regulations adopted by regulatory authorities pursuant thereto,
and the Guarantor has filed all reports and returns required to be
filed by ERISA, the Code and such rules and regulations. No Plan
maintained by the Guarantor and no trust created under any such
Plan has incurred any "accumulated funding deficiency" within the
meaning of Section 412(c)(1) of the Code, and the present value of
all benefits vested under each Plan did not exceed, as of the last
annual valuation date, the value of the assets of the respective
Plans allocable to such vested benefits. The Guarantor has no
knowledge that any "reportable event" as defined in ERISA has
occurred with respect to any Plan.
g. Payment of Taxes. The Guarantor has filed all federal, state and
local tax returns and tax related reports which the Guarantor is
required to file by any statute or regulation and all taxes and any
tax related interest payments and penalties that are due and
payable have been paid, except for such as are being contested in
good faith and by appropriate proceedings and as to which
appropriate reserves have been established. Adequate provision has
been made for the payment when due of all tax liabilities which
have been incurred, but are not as yet due and payable.
h. Investment Guarantor Act. The Guarantor is not an "investment
company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended.
i. Regulation U. The Guarantor is not engaged principally, or as one
of its important activities, in the business of extending credit
for the purpose of purchasing or carrying margin stock within the
meaning of Regulation U of the Board of Governors of the Federal
Reserve System. Not more than twenty-five percent (25%) of the
assets of the Guarantor consists of margin stock, within the
contemplation of Regulation U, as amended.
Exhibit "D-1"
Page 6 of 8 pages
<PAGE>
j. Hazardous Substances. Except as disclosed in writing to the Agent,
to the best knowledge of the Guarantor after due inquiry and
investigation; (i) there are no underground storage tanks of any
kind on any premises owned or occupied by or under lease to the
Guarantor or any Subsidiary in violation of any applicable law;
(ii) there are no tanks, drums or other containers of any kind on
premises owned or occupied by or under lease to the Guarantor or
any Subsidiary, the contents of which are unknown to the Guarantor;
(iii) no premises owned or occupied by or under lease to the
Guarantor or any Subsidiary have ever been used, and as of the date
of this Guaranty, no such premises are being used for any
activities involving the use, treatment, transportation,
generation, storage or disposal of any Hazardous Substances in
reportable quantities in violation of any applicable law; and (iv)
no Hazardous Substances in reportable quantities have been released
on any such premises nor is there any threat of release of any
Hazardous Substances in reportable quantities on any such premises
in violation of any applicable law.
k. Subsidiaries. The Guarantor has no Subsidiaries as of the date of
this Guaranty.
Dated as of June 7, 1996
BRIGHTPOINT ACQUISITION, INC.
By: /s/ J. Mark Howell
-----------------------------------
J. Mark Howell, Vice President
Witness:______________________________
______________________________
(printed name of Witness)
Witness:______________________________
______________________________
(printed name of Witness)
Exhibit "D-1"
Page 7 of 8 pages
<PAGE>
ANNEX
CERTIFICATE REGARDING SOLVENCY
BRIGHTPOINT ACQUISITION, INC., a Delaware corporation (the "Guarantor"),
by its duly authorized officer, makes the following representations to BANK ONE,
INDIANAPOLIS, NATIONAL ASSOCIATION (the "Bank") and acknowledges that the Bank
is entitled to rely and will rely upon these representations, in providing
certain financial accommodations to BRIGHTPOINT, INC., a Delaware corporation,
pursuant to a certain Credit Agreement dated June 13, 1995, as amended
(collectively, the "Credit Agreement").
1. The assets of the Guarantor at a "fair valuation" within the
meaning of the Bankruptcy Code of 1978, as amended, (the "Code")
are worth approximately $___________________ as of this date.
2. The liabilities of the Guarantor, including without limitation
contingent liabilities to the extent appropriate for consideration
in determining whether the Guarantor is "insolvent", within the
meaning of the Code, but excluding the Guarantor's contingent
liability under the Guaranty Agreement (the "Guaranty") required to
be given by the Guarantor under the terms of the Credit Agreement,
total approximately $ _______________ as of ______________, 19__,
the end of the last fiscal quarter of the Guarantor.
3. The Guarantor is not insolvent within the meaning of the Code,
after taking into account its contingent liability under the
Guaranty.
4. After taking into account its contingent liability under the
Guaranty, the Guarantor has sufficient capital for the operation of
its business as presently conducted and at the level of operations
contemplated for the foreseeable future. The minimum amount of
capital required to support the Guarantor's operations at the level
planned for the foreseeable future is $___________ .
5. The Guarantor is currently paying its debts as they become due in
the ordinary course of its business. After taking into account its
contingent liability under the Guaranty, the Guarantor believes
that it will be able to continue to pay its debts as they become
due in the ordinary course of its business.
Dated: __________________, 19__.
BRIGHTPOINT ACQUISITION, INC.
By: /s/ J. Mark Howell
---------------------------
(printed name and title)
Exhibit "D-1"
Page 8 of 8 pages
<PAGE>
GUARANTY AGREEMENT
This undertaking and agreement (this "Guaranty") is made by BRIGHTPOINT
INTERNATIONAL, LTD., a Delaware corporation (the "Guarantor"), in favor of
BANK ONE, INDIANAPOLIS, NATIONAL ASSOCIATION, as Agent (the "Agent") for the
banks (the "Banks") which are parties to the Credit Agreement (as defined
hereafter), in consideration of the loans described in this Guaranty made or
to be made by the Banks to BRIGHTPOINT, INC., a Delaware corporation (the
"Borrower"). This Guaranty is on the following terms:
1. Background of this Guaranty -- Certain Definitions. The Agent, the
Banks and the Borrower are parties to a Credit Agreement dated as of June 13,
1995, as amended by First Amendment to Credit Agreement dated as of September
15, 1995, and Second Amendment to Credit Agreement dated as of January 19, 1996,
and as further amended by Third Amendment to Credit Agreement dated as of the
date of this Guaranty (collectively, the "Credit Agreement") under the terms of
which the Banks have agreed to extend a revolving line of credit (referred to in
the Credit Agreement as the "Revolving Loan") to the Borrower subject to the
fulfillment of certain conditions, one of which is the execution and delivery by
the Guarantor of this Guaranty. This Guaranty is made by the Guarantor in
consideration of the agreement of the Banks to increase the maximum amount
available for advances under the Revolving Loan and to extend the Revolving Loan
Maturity Date (as hereafter defined). In addition to the terms "Revolving Loan,"
the terms "Advances," "Commitment," "Guarantor Security Agreement," "Revolving
Loan Maturity Date" and "Loan Document" are used in this Guaranty as defined in
the Credit Agreement. The term "Obligations" as used in this Guaranty means all
of the obligations of the Borrower in favor of the Bank of every type and
description, direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, including but not limited to the Borrower's
obligation to repay the principal of, interest on and expenses of collection of
the Loans as provided in the Credit Agreement and the other Loan Documents,
including any Advances under the Revolving Loan made after this date and after
the initial Revolving Loan Maturity Date pursuant to any extension or extensions
of the Revolving Loan Maturity Date, and all other obligations incurred pursuant
to the terms of the Credit Agreement and any other Loan Document including any
obligations arising on account of any amendment to or extension of the Credit
Agreement or any other Loan Document. The term "Default" means an "Event of
Default" as defined in the Credit Agreement.
2. The Guaranty. The Guarantor guarantees the full and prompt payment of
all of the Obligations when due, whether at scheduled maturity or at maturity by
virtue of acceleration on account of a Default. The Guarantor further agrees to
pay to the Bank an amount equal to all expenses, including reasonable attorneys'
fees, paid or incurred by the Bank after Default in endeavoring to enforce this
Guaranty. Notwithstanding any other provision of this Guaranty, the maximum
amount which the Guarantor may be required to pay under the terms of this
Guaranty shall not exceed Twenty Million Dollars ($20,000,000.00), together with
interest at a variable rate equal at all times to the Prime Rate plus two
percent (2%) per annum on any portion of any amount
Exhibit "D-2"
Page 1 of 9 pages
<PAGE>
payable under the terms of this Guaranty which remains unpaid after the date
of the Bank's demand for payment, plus expenses of enforcement of this
Guaranty, including reasonable attorney fees. As used in this paragraph, the
term "Prime Rate" means a variable per annum interest rate equal at all times
to the rate of interest established and quoted by the Bank as its Prime Rate,
such rate to change contemporaneously with each change in such established and
quoted rate, provided that it is understood that the Prime Rate shall not
necessarily be representative of the rate of interest actually charged by the
Bank on any loan or class of loans.
Notwithstanding any other provision of this Guaranty, the Guarantor's
liability hereunder shall be further limited to the lesser of the following
amounts minus, in either case, One Dollar ($1.00):
a. the lowest amount which would render this Guaranty a fraudulent
transfer under Section 548 of the Bankruptcy Code of 1978, as
amended, or
b. if this Guaranty is subject to the Uniform Fraudulent Transfer
Act (the "UFTA") or the Uniform Fraudulent Conveyance Act (the
"UFCA") or any similar or analogous statute or rule of law, then
the lowest amount which would render this Guaranty a fraudulent
conveyance or a fraudulent transfer under the UFTA, the UFCA, or
any such similar or analogous statute or rule of law.
The amount of the limitation imposed upon the Guarantor's liability under the
terms of the preceding sentence shall be subject to redetermination as of each
date a "transfer" is deemed to have been made on account of this Guaranty
under applicable law. The Guarantor acknowledges that information concerning
the Guarantor's financial condition is under the control of the Guarantor and
is more readily available to the Guarantor than to the Bank, and for that
reason the Guarantor agrees that should the Guarantor claim that the amount of
its liability under this Guaranty is less than an amount equal to the lesser
of the full amount of the Obligations or $20,000,000.00 because of the
provisions of this paragraph, then the burden of proving the facts which would
result in such limitation shall be upon the Guarantor.
3. Financial Information. As long as this Guaranty is in effect, and in
the event that the Borrower fails to furnish such information as required
under the provisions of the Credit Agreement, the Guarantor shall furnish to
the Bank the following:
a. Annual Statements. As soon as available and in any event within
90 days after the close of each fiscal year, financial
statements of the Guarantor for such fiscal year prepared and
presented in accordance with generally accepted accounting
principles, in each case setting forth in comparative form
corresponding figures for the preceding fiscal yearprepared by
independent certified public accountants approved by the Bank,
which approval shall not be unreasonably withheld.
b. Interim Statements. As soon as available and in any event within
30 days after the end of each month, a copy of the interim
financial statements of the Guarantor, consisting at a minimum
of
Exhibit "D-2"
Page 2 of 9 pages
<PAGE>
(i) the balance sheet of the Guarantor as of the end of the
month, and
(ii) a statement of income for the month and for the partial
or full fiscal year ended as of the end of the month,
all in reasonable detail.
c. Certificates Regarding Solvency. At such times as the Bank may
reasonably require, a "Certificate Regarding Solvency" in the
form of the attached "Annex."
d. Other Information. Such other information relating to the
financial condition of the Guarantor as the Bank may reasonably
require.
Each set of annual and interim financial statements required to be delivered
by the Guarantor to the Bank shall be accompanied by the written
representation of the chief financial officer of the Guarantor that such
financial statements have been prepared in accordance with generally accepted
accounting principles (except that the interim statements need not include a
statement of cash flows and footnotes and need not reflect adjustments
normally made at year end, if such adjustments are not material in amount),
consistently applied, (except for changes in which the independent accountants
of the Guarantor concur) and present fairly the financial position of the
Guarantor and the results of its operation as of the dates of such statements
and for the fiscal periods then ended.
4. Guaranty Absolute. This Guaranty shall be absolute, continuing and
unconditional, irrespective of the irregularity, invalidity or
unenforceability of any other Loan Document and shall not be affected or
impaired by any failure, negligence or omission on the part of the Bank to
realize upon and protect any collateral for any of the Obligations. This
Guaranty shall remain in full force and effect until all of the Obligations
have been satisfied in full and the commitment of the Banks to make Advances
under the Revolving Loan has expired. The Bank may from time to time, without
notice to the Guarantor and without affecting the Guarantor's liability under
this Guaranty:
a. obtain a security interest in any property to secure any of the
Obligations;
b. obtain the primary or secondary liability of any party or
parties in addition to the Borrower and the Guarantor with
respect to any of the Obligations;
c. extend or renew any of the Obligations for any period beyond
their original due dates;
d. release or compromise the liability of any other party or
parties which are now or may hereafter become primarily or
secondarily liable with respect to any of the Obligations;
Exhibit "D-2"
Page 3 of 9 pages
<PAGE>
e. release any security interest which the Bank now has or may
hereafter obtain in any property securing any of the Obligations
and permit any substitution or exchange of any such property;
f. proceed against the Guarantor for payment of the Obligations,
whether or not the Bank shall have resorted to any property
securing any of the Obligations or shall have proceeded against
the Borrower or any other party primarily or secondarily liable
with respect to any of the Obligations;
g. amend the terms of the Credit Agreement from time to time in any
particulars, or
h. extend loans and other credit accommodations to the Borrower in
addition to the Revolving Loan and increase the maximum amount
which may be loaned to the Borrower under the Revolving Loan.
5. Assignments and Participations. The Banks may, without notice to the
Borrower or the Guarantor, sell or otherwise assign all or any portion of the
Obligations and any participations therein, and upon any such sale or
assignment, the transferee shall have the right to enforce this Guaranty to
the extent of the transferee's interest directly against the Guarantor as
fully as if the transferee were specifically named in the Guaranty as the
holder of such interest, but the Banks or the Agent on behalf of the Banks
shall have the unimpaired right to enforce this Guaranty for the benefit of
the Banks and for the benefit of any participant in respect of whose
participation the Banks or any Bank has retained such right.
6. Subrogation Waiver. In order to induce the Banks to make the Loans
in reliance, in part, upon this Guaranty, notwithstanding the fact that the
Guarantor is an "insider" with respect to the Borrower, as the term "insider"
is defined in the Bankruptcy Code, the Guarantor waives for itself, its legal
representatives and assigns any right of indemnity, reimbursement or
contribution from the Borrower or any other person obligated with respect to
any of the Obligations (any such other person being referred to hereafter in
this paragraph as a "Co-Obligor") or from the property of the Borrower or from
the property of any Co-Obligor, and the Guarantor further waives any right of
subrogation to the rights of the Agent on behalf of the Banks against the
Borrower or any Co-Obligor or the property of the Borrower or any Co-Obligor
which would otherwise arise by virtue of any payment made by the Guarantor to
the Agent on behalf of the Banks on account of this Guaranty, whether any such
right of indemnity, reimbursement, contribution or subrogation would otherwise
arise by virtue of contract, whether express or implied, with any person or as
a matter of law or equity, and the Guarantor undertakes on behalf of itself,
its legal representatives and assigns that neither the Guarantor nor the
Guarantor's legal representatives or assigns will attempt to exercise or
accept the benefits of any such right and should the Guarantor or the
Guarantor's legal representative or assigns receive any payment or
distribution of money or other property on account of such right
notwithstanding the provisions of this paragraph, such money or other property
shall be held in trust by the recipient for the Banks and shall immediately be
delivered to the Agent on behalf of the Banks for application to the
Obligations in the same form as received, with the addition only of such
endorsements or assignments as may be necessary to perfect the title of the
Agent on behalf of the Banks thereto.
Exhibit "D-2"
Page 4 of 9 pages
<PAGE>
7. Other Waivers. The Guarantor waives: (i) notice of the acceptance
of this Guaranty, (ii) notice of the existence and creation of all or any of
the Obligations, (iii) notice of nonpayment of any of the Obligations and (iv)
diligence by the Agent on behalf of the Banks in collection of the Obligations
and the protection of or realization upon any collateral for the Obligations.
8. Reinstatement. If any amount which is paid to the Agent on behalf of
the Banks by the Borrower or any other party and which is applied by the Banks
to the satisfaction of any of the Obligations, is returned by the Banks to the
Borrower or such other party or a trustee in Bankruptcy or other legal
representative of the Borrower or such other party by virtue of a claim that
such payment constituted a voidable preference under the Bankruptcy Code or
under any state insolvency law, whether such amount is returned under court
order or pursuant to settlement of the claim of preference, then this Guaranty
shall be reinstated as to such amount as though such payment to the Banks had
never been made and notwithstanding any intervening return or cancellation of
any note or other instrument or agreement evidencing the reinstated
Obligations.
9. Miscellaneous. This Guaranty shall be binding upon the Guarantor,
upon the Guarantor's legal representatives, successors and assigns. If any
provision of this Guaranty is determined to be illegal or unenforceable, such
provision shall be deemed to be severable from the balance of the provisions
of this Guaranty and the remaining provisions shall be enforceable in
accordance with their terms.
10. Choice of Law. This Guaranty is made under and will be governed in
all cases by the substantive laws of the State of Indiana, notwithstanding the
fact that Indiana conflicts of law rules might otherwise require the
substantive rules of law of another jurisdiction to apply.
11. Representations and Warranties. In order to induce the Banks and the
Agent to accept this Guaranty and to induce the Banks to make the Loans to the
Borrower, the Guarantor represents and warrants to the Agent and the Banks
that:
a. Organization of the Guarantor. The Guarantor is a corporation
organized, existing and in good standing under the laws of the
State of Delaware. The Guarantor is qualified to do business in
every jurisdiction in which: (i) the nature of the business
conducted or the character or location of properties owned or
leased, or the residences or activities of employees make such
qualification necessary, and (ii) failure so to qualify might
impair the title of the Guarantor to material properties or the
Guarantor's right to enforce material contracts or result in
exposure of the Guarantor to liability for material penalties in
such jurisdiction. No jurisdiction in which the Guarantor is not
qualified to do business has asserted that the Guarantor is
required to be qualified therein. The principal office of the
Guarantor is located at 6402 Corporate Drive, Indianapolis,
Indiana 46278. The Guarantor does not conduct any material
operations or keep any material amounts of property at any other
location, except the addresses listed in the Guarantor
Exhibit "D-2"
Page 5 of 9 pages
<PAGE>
Security Agreement. The Guarantor has not done business under
any name other than its present corporate name at any time
during the six years preceding the date of this agreement.
b. Authorization; No Conflict. The execution and delivery of this
Guaranty, the execution and delivery of the Guarantor Security
Agreement and the performance by the Guarantor of its
obligations under this Guaranty and the Guarantor Security
Agreement are within the Guarantor's corporate powers, have been
duly authorized by all necessary corporate action, have received
any required governmental or regulatory agency approvals and do
not and will not contravene or conflict with any provision of
law or of the articles of incorporation or bylaws of the
Guarantor or of any agreement binding upon the Guarantor or its
properties.
c. Validity and Binding Nature. This Guaranty and the Guarantor
Security Agreement executed by the Guarantor are the legal,
valid and binding obligations of the Guarantor, enforceable
against the Guarantor in accordance with their respective terms,
except to the extent that enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium and other
laws enacted for the relief of debtors generally and other
similar laws affecting the enforcement of creditors' rights
generally or by equitable principles which may affect the
availability of specific performance and other equitable
remedies.
d. Litigation and Contingent Liabilities. No litigation,
arbitration proceedings or governmental proceedings are pending
or threatened against the Guarantor which would, if adversely
determined, materially and adversely affect its financial
position or continued operations. The Guarantor has no material
contingent liabilities not provided for or disclosed to the
Banks or the Agent on behalf of the Banks.
e. Liens. None of the assets of the Guarantor are subject to any
mortgage, pledge, title retention lien, or other lien,
encumbrance or security interest except for liens and security
interests described in the exceptions enumerated in Section 6.b
of the Credit Agreement.
f. Employee Benefit Plans. Each Plan maintained by the Guarantor is
in material compliance with ERISA, the Code, and all applicable
rules and regulations adopted by regulatory authorities pursuant
thereto, and the Guarantor has filed all reports and returns
required to be filed by ERISA, the Code and such rules and
regulations. No Plan maintained by the Guarantor and no trust
created under any such Plan has incurred any "accumulated
funding deficiency" within the meaning of Section 412(c)(1) of
the Code, and the present value of all benefits vested under
each Plan did not exceed, as of the last annual valuation date,
the value of the assets of the respective Plans allocable to
such vested benefits. The Guarantor has no knowledge that any
"reportable event" as defined in ERISA has occurred with respect
to any Plan.
Exhibit "D-2"
Page 6 of 9 pages
<PAGE>
g. Payment of Taxes. The Guarantor has filed all federal, state and
local tax returns and tax related reports which the Guarantor is
required to file by any statute or regulation and all taxes and
any tax related interest payments and penalties that are due and
payable have been paid, except for such as are being contested
in good faith and by appropriate proceedings and as to which
appropriate reserves have been established. Adequate provision
has been made for the payment when due of all tax liabilities
which have been incurred, but are not as yet due and payable.
h. Investment Guarantor Act. The Guarantor is not an "investment
company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended.
i. Regulation U. The Guarantor is not engaged principally, or as
one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock
within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System. Not more than twenty-five percent
(25%) of the assets of the Guarantor consists of margin stock,
within the contemplation of Regulation U, as amended.
j. Hazardous Substances. Except as disclosed in writing to the
Agent, to the best knowledge of the Guarantor after due inquiry
and investigation; (i) there are no underground storage tanks of
any kind on any premises owned or occupied by or under lease to
the Guarantor or any Subsidiary in violation of any applicable
law; (ii) there are no tanks, drums or other containers of any
kind on premises owned or occupied by or under lease to the
Guarantor or any Subsidiary, the contents of which are unknown
to the Guarantor; (iii) no premises owned or occupied by or
under lease to the Guarantor or any Subsidiary have ever been
used, and as of the date of this Guaranty, no such premises are
being used for any activities involving the use, treatment,
transportation, generation, storage or disposal of any Hazardous
Substances in reportable quantities in violation of any
applicable law; and (iv) no Hazardous Substances in reportable
quantities have been released on any such premises nor is there
any threat of release of any Hazardous Substances in reportable
quantities on any such premises in violation of any applicable
law.
k. Subsidiaries. The Guarantor has no Subsidiaries as of the date
of this Guaranty.
Dated as of June 7, 1996
BRIGHTPOINT INTERNATIONAL, LTD.
By: /s/ J. Mark Howell
-------------------------------
J. Mark Howell, Vice President
Exhibit "D-2"
Page 7 of 9 pages
<PAGE>
Witness: ____________________________________
____________________________________
(printed name of Witness)
Witness: ____________________________________
____________________________________
(printed name of Witness)
Exhibit "D-2"
Page 8 of 9 pages
<PAGE>
ANNEX
CERTIFICATE REGARDING SOLVENCY
BRIGHTPOINT INTERNATIONAL, LTD., a Delaware corporation (the
"Guarantor"), by its duly authorized officer, makes the following
representations to BANK ONE, INDIANAPOLIS, NATIONAL ASSOCIATION (the "Bank") and
acknowledges that the Bank is entitled to rely and will rely upon these
representations, in providing certain financial accommodations to BRIGHTPOINT,
INC., a Delaware corporation, pursuant to a certain Credit Agreement dated June
13, 1995, as amended (collectively, the "Credit Agreement").
1. The assets of the Guarantor at a "fair valuation" within the
meaning of the Bankruptcy Code of 1978, as amended, (the "Code")
are worth approximately $________ as of this date.
2. The liabilities of the Guarantor, including without limitation
contingent liabilities to the extent appropriate for
consideration in determining whether the Guarantor is
"insolvent", within the meaning of the Code, but excluding the
Guarantor's contingent liability under the Guaranty Agreement
(the "Guaranty") required to be given by the Guarantor under the
terms of the Credit Agreement, total approximately
$____________________________ as of ________________, 19__, the
end of the last fiscal quarter of the Guarantor.
3. The Guarantor is not insolvent within the meaning of the Code,
after taking into account its contingent liability under the
Guaranty.
4. After taking into account its contingent liability under the
Guaranty, the Guarantor has sufficient capital for the operation
of its business as presently conducted and at the level of
operations contemplated for the foreseeable future. The minimum
amount of capital required to support the Guarantor's operations
at the level planned for the foreseeable future is
$_______________________.
5. The Guarantor is currently paying its debts as they become due
in the ordinary course of its business. After taking into
account its contingent liability under the Guaranty, the
Guarantor believes that it will be able to continue to pay its
debts as they become due in the ordinary course of its business.
Dated: ______________________, 19__.
BRIGHTPOINT INTERNATIONAL, LTD.
By: /s/ J. Mark Howell
------------------------------
(printed name and title)
Exhibit "D-2"
Page 9 of 9 pages
<PAGE>
SECURITY AGREEMENT
(Equipment, Inventory, Accounts Receivable and General Intangibles)
BRIGHTPOINT ACQUISITION, INC., a Delaware corporation (the "Company"),
grants to BANK ONE, INDIANAPOLIS, NATIONAL ASSOCIATION, as Agent (the "Agent")
for the banks (the "Banks") which are parties to the Credit Agreement (as
defined hereafter),/ a security interest in the Company's Equipment,
Inventory, Accounts Receivable and General Intangibles, whether now owned and
hereafter acquired, and in the proceeds thereof to secure the payment and
performance of all of the Obligations. Such security interest is granted on
the terms stated in this Security Agreement.
l. DEFINITIONS. As used in this Security Agreement, the following terms
have the meanings indicated when used with the initial letter capitalized:
(a) "Account Debtor" means a party who is obligated to the
Company with respect to any Account Receivable, or General Intangible.
(b) "Accounts Receivable" or "Account" means any right of the
Company to payment for goods sold or leased or for services rendered,
whether or not earned by performance.
(c) "Collateral" means all property or rights in which a
security interest is granted under this Security Agreement.
(d) "Collateral Account" is used as defined in Paragraph 10(a).
(e) "Credit Agreement" means the Credit Agreement between
Brightpoint, Inc., a Delaware corporation, the Agent and the Banks dated
as of June 13, 1995, as amended by First Amendment to Credit Agreement
dated as of September 15, 1995, and Second Amendment to Credit Agreement
dated as of January 19, 1996, and as further amended by Third Amendment
to Credit Agreement dated the date of this Security Agreement, and as it
further may be amended from time to time.
(f) "Default" means an "Event of Default" as defined in the
Credit Agreement.
(g) "Equipment" means all of the furniture, fixtures, machinery
and equipment of the Company together with all tools, accessories, parts
and accessions now in, attached to or hereafter placed in or added to
such property, and any replacements of any such property.
(h) "General Intangibles" means any personal property (including
things in action) other than goods, Accounts, chattel paper, documents,
instruments and money.
(i) "Guaranty Agreement" means the Guaranty Agreement executed
by the Company in favor of the Ageent dated the date of this Security
Agreement, as it may be amended from time to time.
(j) "Inventory" means all goods which are held for sale or lease
to customers or which are furnished, have been furnished or are to be
furnished under contracts of service, or which are raw materials, work
in process or materials used or consumed in the Company's business.
(k) "Obligations" is used as defined in the CreditGuaranty
Agreement.
Exhibit "E"
Page 1 of 5 pages
<PAGE>
2. FINANCING STATEMENTS. The Company authorizes the Bank at the expense
of the Company to execute on its behalf and file a financing statement or
statements in those public offices deemed necessary by the Bank to perfect its
security interest. Such financing statements may be signed by the Bank alone. In
addition, the Company shall execute and deliver any financing statement or other
document that the Bank may request to perfect or to further evidence the
security interest created by this Security Agreement including, without
limitation, any certificate or certificates of title to the Collateral with the
security interest of the Bank noted thereon or executed applications for such
certificates of title.
3. LOCATION, INSPECTION AND PROTECTION OF COLLATERAL. Unless the Company
gives the Bank not less than ten (10) days prior written notice of additional
locations at which Inventory and Equipment shall be kept, all Inventory and
Equipment is kept and shall be kept at the addresses listed on the attached
Schedule I./ /Unless the Company gives the Bank written notice of the location
of additional offices where records of the Company relative to Accounts
Receivable and General Intangibles are kept, all such records of the Company
shall be kept at /6402 Corporate Drive, Indianapolis, Indiana 46278 which, the
Company represents, is also the address of its principal office. The Company
shall not keep duplicate Accounts Receivable records at any other address or
change the location of its principal office unless the Company gives the Bank
not less than 10 days prior written notice of such event. The Company shall, at
all reasonable times and in a reasonable manner, allow the officers, attorneys
and accountants of the Bank to examine, inspect, photocopy and make abstracts
from the Company's books and records and to verify Equipment and Inventory, the
latter both as to quantity and quality, and to arrange for verification of
Accounts Receivable, under reasonable procedures, directly with the Account
Debtors or by other methods. The Company shall also deliver to the Bank upon
request any promissory notes or other papers evidencing any Account and any
guaranty or collateral together with appropriate endorsements and assignments
and any information relating thereto and shall do anything else the Bank may
reasonably require to further protect the Bank's interest in the Collateral. If
any of the Collateral consists of Equipment normally used in more than one state
and the Company intends to use any of such Collateral in any jurisdiction other
than a state in which the Company shall have previously advised the Bank such
Collateral is to be used, the Company shall not commence use in such other
jurisdiction except upon ten (10) days prior written notice to the Bank.
4. FIXTURES. None of the Collateral is attached to real estate/ /so as
to constitute a fixture. If any Collateral is hereafter so attached to any real
estate, /notice of the common address, legal description, and name of the owner
of record of such real estate shall be furnished to the Bank at least ten (10)
days prior to such attachment. If any Collateral is hereafter attached to real
estate prior to the perfection of the security interest created by this Security
Agreement in such Collateral, the Company shall, on demand, furnish the Bank
with a disclaimer of interest in the Collateral executed by each person having
an interest in such real estate.
5. THE COMPANY'S TITLE. The Company has full and clear title to all of
the Collateral presently owned and shall have such title to all Collateral
hereafter acquired except for the security interest granted by this Security
Agreement and any other lien or security interest permitted under the terms of
Exhibit "E"
Page 2 of 5 pages
<PAGE>
the Credit Agreement, and the Company shall keep the Collateral free at all
times from any lien or encumbrance except those permitted by the Credit
Agreement. No financing statements covering all or any portion of the
Collateral is on file at any public office except as may be required or
permitted by this Security Agreement and the Credit Agreement.
6. THE COMPANY'S DUTY TO MAINTAIN THE COLLATERAL. The Company shall keep
all tangible Collateral in good order and repair and shall not waste or destroy
any of the Collateral. The Company shall not use the Collateral in violation of
any statute or ordinance or contrary to the provisions of any policy of
insurance thereon.
7. INSURANCE. In addition to maintaining such insurance on the
Collateral as is required by the Credit Agreement, the Company shall, upon the
reasonable request of the Bank, keep the Collateral insured against such
additional risks, in such amounts and under such policies as the Bank may
reasonably require and with such companies as shall be reasonably acceptable to
the Bank. All policies providing insurance on the Collateral shall, provide that
any loss thereunder shall be payable to the Bank under a standard form of
secured lender's loss payable endorsement. The Company authorizes the Bank to
endorse on the Company's behalf and to negotiate drafts reflecting proceeds of
insurance on the Collateral, provided that the Bank shall remit to the Company
such surplus, if any, as remains after the proceeds have been applied at the
Bank's option, (a) to the satisfaction of all of the Obligations or to the
establishment of a cash collateral account for the Obligations, or (b) to the
replacement or repair of the Collateral; provided, however, that so long as no
Default exists, and provided further that the Company can demonstrate to the
Bank's satisfaction that any proposed replacement or repair of collateral is
economically and physically feasible, such proceeds shall be applied, at the
Company's option and to the extent necessary, as provided in the foregoing
clause (b). Certificates evidencing the existence of all of the insurance
required under the Credit Agreement or this Security Agreement shall be
furnished to the Bank by the Company and the original policies providing such
insurance shall be delivered to the Bank at its request.
8. ADVANCES TO PROTECT COLLATERAL. Upon failure of the Company to
procure any required insurance or to remove any prohibited encumbrance upon the
Collateral or if any policy providing any required insurance is cancelled, the
Bank may procure such insurance or remove any encumbrance on the Collateral and
any amounts expended by the Bank for such purposes shall be immediately due and
payable by the Company to the Bank and shall be added to and become a part of
the Obligations secured hereby and shall bear interest at the Prime Rate, as
defined in the Credit Agreement, plus three percent (3%) per annum.
9. DEALING WITH COLLATERAL PRIOR TO DEFAULT. Prior to Default and
thereafter until the Bank shall notify the Company of the revocation of such
authority:
(a) the Company may, in the ordinary course of business, at its
own expense, sell, lease or furnish under contracts of service, any of
the Inventory normally held by the Company for such purposes, provided
that a sale in the ordinary course of business shall not include a
transfer in
Exhibit "E"
Page 3 of 5 pages
<PAGE>
total or partial satisfaction of a debt, and the Company may use and
consume, in the ordinary course of its business, any raw materials, work
in process or materials normally held by it for such purposes;
(b) the Company shall, at its own expense, endeavor to collect,
when due, all amounts due with respect to any Accounts or General
Intangibles, and shall take such action with respect to collection as
the Bank may reasonably request or, in the absence of such request, as
the Company may deem advisable in accordance with sound business
practice, and
(c) the Company may grant, in the ordinary course of business,
to any Account Debtor, any rebate, refund or adjustment to which such
Account Debtor may be entitled, and may accept, in connection therewith,
the return of the goods, the sale or lease of which shall have given
rise to the obligation of the Account Debtor.
10. DEALING WITH COLLATERAL AFTER DEFAULT. After Default and upon the
request of the Bank:
(a) the Company shall upon receipt of any checks, drafts, cash
or other remittances in payment of Inventory sold or in payment of
Accounts Receivable of the Company, deposit the same in a special
collateral account (the "Collateral Account") maintained with the Bank;
such proceeds shall be deposited in the form received except for the
indorsement of the Company when required, which indorsement the Bank is
authorized to make on the Company's behalf, and shall be held by the
Bank as security for all Obligations;
(b) the Company shall deliver to the Bank all other instruments
and chattel paper which constitute proceeds from the sale of Collateral,
whether then held or thereafter acquired, and
(c) the Company shall keep segregated any such checks, drafts,
cash, other instruments, chattel paper or other remittances from any of
the Company's other funds or property and shall hold such items in trust
for the benefit of the Bank until delivery to the Bank or deposit in the
Collateral Account and the Bank may apply all or any portion of the
funds on deposit in the Collateral Account against any Obligations in
the order of application provided for in the Credit Agreement or, absent
such provision, at the discretion of the Bank.
After Default, the Bank may notify any Account Debtor to make payment directly
to the Bank of any amounts due or to become due under any Account Receivable,
General Intangible instrument or chattel paper and the Bank may enforce the
collection of any Account Receivable, General Intangible, instrument or
chattel paper in its name or in the name of the Company, by suit or otherwise,
and may surrender, release or exchange all or any part thereof or compromise
or extend or renew for any period, whether or not longer than the original
period, any indebtedness thereunder or evidenced thereby, and any Account
Debtor will be fully protected in relying upon the representation of the Bank
that it has authority under the terms of this Security Agreement to deal with
any Account Receivable, General Intangible, instrument or chattel paper and
need not look beyond this Security Agreement and such representation of the
Bank to establish the Bank's authority in that regard.
Exhibit "E"
Page 4 of 5 pages
<PAGE>
11. SUBSTITUTION AND SALE OF EQUIPMENT. The Company may from time to
time so long as no Default has occurred and is continuing, substitute items of
Equipment so long as any new Equipment becomes subject to the security
interest created by this Security Agreement and is subject to no prior liens
or security interest other than those permitted by the Credit Agreement. So
long as no Default has occurred and is continuing, the Company may, in the
ordinary course of its business, sell or otherwise dispose of any items of
Equipment for which substitutes have been obtained or which are no longer
useful to the Company in its operations, provided that at least 10 days prior
written notice of any proposed disposition of any material amount of Equipment
in a single or a planned series of transactions is given to the Bank. Upon
the request of the Company, the Bank will deliver an appropriate release of
its security interest in any item of Equipment disposed of by the Company
pursuant to the provisions of this paragraph.
12. REMEDIES UPON DEFAULT. Upon the occurrence of any Default the Bank
shall have with respect to the Collateral, in addition to all rights and
remedies specified in the Credit Agreement, this Security Agreement or any other
agreement between the Company and the Bank, the remedies of a secured party
under the Uniform Commercial Code as in force from time to time in Indiana,
regardless of whether the Code in such form has been enacted in the jurisdiction
in which any such right or remedy is asserted. Any notice required by law,
including but not limited to notice of the intended disposition of all or any
portion of the Collateral, shall be deemed reasonably and properly given if
given at least l0 days prior to such disposition in the manner prescribed for
the giving of notices in the Credit Agreement. Any proceeds of the disposition
of any of the Collateral shall be applied first to the payment of the expenses
of the retaking, holding, repairing, preparing for sale and sale of the
Collateral, including reasonable attorneys' fees and legal expenses in
connection therewith and any balance of such proceeds shall be applied by the
Bank to the Obligations in such order as the Bank shall determine.
13. RELATION TO CREDIT AGREEMENT. This Security Agreement is given
pursuant to the terms of the Credit Agreement and shall be deemed a part thereof
and subject to the terms and conditions of the Credit Agreement.
14. NOTICES. Any notice required or otherwise given concerning this
Security Agreement by either party to the other shall be given as notices are
required to be given under the terms of the Credit Agreement.
Dated as of June 7, 1996
BRIGHTPOINT ACQUISITION, INC.
By: /s/ J. Mark Howell
-----------------------------------
J. Mark Howell, Vice President
Exhibit "E"
Page 5 of 5 pages
<PAGE>
SCHEDULE I
Operational Locations
5732 West 71st Street 6402 Corporate Drive
Indianapolis, Indiana 46278 Indianapolis, Indiana 46278
1573 Northwest 82nd Avenue 2876 Northwest 72nd Avenue
Miami, Florida 33126 Miami, Florida 33122
5201 Brookhollow Parkway 1705 Winchester Road
Norcross, Georgia 30071 Bensalem, Pennsylvania 19020
14 Jewel Drive Unit 2, Building No. 502
Wilmington, Massachusetts 01887 Humberline Drive
Etobicoke, Ontario
Carolina Commerce Park Canada
Building D
P.O. Box 9179
Carolina, Puerto Rico 00988-9176
<PAGE>
EXHIBIT 4.2
FOURTH AMENDMENT TO CREDIT AGREEMENT
BRIGHTPOINT, INC., a Delaware corporation, (the "Company"), the banks listed
on the signature pages hereof (each individually a "Bank" and collectively the
"Banks") and BANK ONE, INDIANAPOLIS, NATIONAL ASSOCIATION, a national banking
association with its principal office in Indianapolis, Indiana, as agent for the
Banks (in such capacity the "Agent" and in its individual capacity "Bank One")
agree as follows:
1. CONTEXT. This agreement is made in the context of the following agreed
state of facts:
a. The Company, the Banks and the Agent are parties to a Credit Agreement
dated June 13, 1995, as amended by First Amendment to Credit Agreement
dated as of September 15, 1995, Second Amendment to Credit Agreement dated
as of January 19, 1996, and the Third Amendment to Credit Agreement dated
as of June 7, 1996 (collectively, the "Agreement").
b. The Company has requested that the Banks (i) modify certain financial
covenants on account of adjustments related to the Allied transaction and
(ii) waive the requirement for the consolidating financial statements of
Brightpoint Acquisition. Inc.
c. The Banks have agreed to such requests, subject to certain terms and
conditions, and the parties have executed this document (this "Fourth
Amendment") to give effect to their agreement.
2. DEFINITIONS. Terms used in this Fourth Amendment with their initial
letters capitalized are used as defined in the Agreement, unless otherwise
defined herein. A new definition is added to Section 1 of the Agreement to read
as follows:
o Fourth Amendment. "Fourth Amendment" means the written amendment to
this Agreement entitled "Fourth Amendment to Credit Agreement" and
dated with effect as of June 28, 1996.
3. AMENDMENTS TO FINANCIAL COVENANTS. Section 5.g(i) and Section 5.g(iii) of
the Agreement are amended and restated in their entireties to read as follows:
(i) Tangible Net Worth. The Company shall maintain its Tangible Net
Worth as of the date of execution of the Fourth Amendment and at
all times until December 30, 1996, at a level not less than
$67,500,000.00; at December 31, 1996, and at all times until
December 30, 1997, at a level not less than the sum of
$67,500,000.00 plus 50% of the net income reported during the
fiscal period July 1, 1996, through December 31, 1996; and at each
fiscal year end thereafter, and at all times during the fiscal year
immediately following, at a level equal to the sum of 50%" of the
net income reported during the fiscal year for which
<PAGE>
the Tangible Net Worth is being determined (exclusive of any
loss) plus the Tangible Net Worth reported at the immediately
preceding fiscal year end.
(iii) Fixed Charge Coverage. At the end of each fiscal quarter, for the
four consecutive fiscal quarters ending as of such fiscal quarter
end, from the date of the Fourth Amendment and until December 30,
1996, the Company shall maintain a fixed charge coverage ratio of
not less than 1.25 to 1.0. At December 31, 1996, and at each
fiscal quarter thereafter, the Company shall maintain a fixed
charge coverage ratio of not less than 1.50 to 1.0. For purposes
of this covenant, the phrase "fixed charge coverage ratio" means,
for any relevant period, the ratio of the sum of net income plus
depreciation, amortization and interest expense plus cash taxes
paid over the sum of payments made on term debt during the period
for which the ratio is being calculated, including current
capital lease payments but excluding any payments made on account
of the Loan, plus interest expense, plus expenditures for fixed
assets not funded with borrowed funds, plus dividends paid, plus
cash taxes paid; provided that for purposes of this covenant, net
income shall not be reduced by the expenses of the Company
related to the Allied transaction in a maximum sum of
$2,500,000.00.
4. WAIVER OF CONSOLIDATING FINANCIAL STATEMENTS OF ACQUISITION. The Company
has informed the Banks that the assets and liabilities of Acquisition have been
or will be transferred to the books and records of the Company and that, as of
June 30, 1996, there will be no separate books and records of Acquisition. The
Banks waive the remedies available under the Agreement for the failure of the
Company to comply with the provisions of Section 5.b(ii) with respect to
furnishing the consolidating financial statements of Acquisition for the months
ending June 30, 1996, July 31, 1996, and August 31, 1996; provided that the
Company agrees to take all action necessary to effect the merger of Acquisition
into the Company on or before September 30, 1996, and provided further that the
Company will provide (A) a written certification to the Banks that Acquisition
has no assets or business operations which are not reflected in the financial
statements of the Company, which certification will accompany each of the
financial statements furnished to the Banks pursuant to the Agreement prior to
the merger of Acquisition into the Company, and (B) written notice to the Banks
when the merger has been completed accompanied by copies of the Articles of
Merger, or comparable appropriate documents, certified by the Secretary of State
of Delaware. The Company acknowledges that if the merger of Acquisition into the
Company is not completed by September 30, 1996, the Company shall comply with
the provisions of Section 5.b(ii) which provisions require the consolidating
financial statements of Acquisition.
5. CONDITIONS PRECEDENT. As conditions precedent to the effectiveness of this
Fourth Amendment, the Agent shall have received, each duly executed and in form
and substance satisfactory to the Banks the following:
-2-
<PAGE>
a. This Fourth Amendment.
b. Such other documents as may be reasonably required by the Agent or the
Banks.
6. REPRESENTATIONS AND WARRANTIES. To induce the Banks and the Agent to
enter into this Fourth Amendment, the Company represents and warrants, as of the
date of this Fourth Amendment and except as otherwise provided in this Fourth
Amendment, that no Event of Default or Unmatured Event of Default has occurred
and is continuing and that the representations and warranties contained in
Section 3 of the Agreement are true and correct, except that the representations
contained in Section 3.d refer to the latest financial statements furnished to
the Banks by the Company pursuant to the requirements of the Agreement.
7. REAFFIRMATION OF THE AGREEMENT. Except as amended by this Fourth
Amendment, all terms and conditions of the Agreement shall continue unchanged
and in full force and effect and the Obligations of the Company shall continue
to be secured and guaranteed as therein provided until payment and performance
in full of all Obligations.
8. COUNTERPARTS. This Fourth Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company, the Agent and the Banks, by their respective
duly authorized officers, have executed this Fourth Amendment to Credit
Agreement with effect as of June 28, 1996.
BRIGHTPOINT, INC.
By: /s/ J. Mark Howell
-----------------------------------
J. Mark Howell, Executive Vice
President and Chief Financial
Officer
Address: 6402 Corporate Drive
Indianapolis, Indiana 46278
Attention: Executive Vice President and
Chief Financial Officer
Fax: (317) 387-5493
BALANCE OF PAGE LEFT INTENTIONALLY BLANK
-3-
<PAGE>
BANK ONE, INDIANAPOLIS,
NATIONAL ASSOCIATION
Individually and as Agent
By: /s/ Brian D. Smith
------------------------------------
Brian D. Smith, Vice President and
Senior Relationship Manager
PERCENTAGE: 41.5%
Address: Bank One Center/Tower
111 Monument Circle, Suite 1921
P. O. Box 7700
Indianapolis, Indiana 46277-0119
Attention: Manager, Metropolitan Department B
Fax: (317) 321-8079
THE FIRST NATIONAL BANK OF CHICAGO
By:
-------------------------------------------
-------------------------------------------
(printed name and title)
PERCENTAGE: 26.0%
Address: One First National Plaza
Mail Suite 0088
Chicago, Illinois 60670-0088
Attention: Cory M. Olson
Fax: (312) 732-5161
SUNTRUST BANK, CENTRAL FLORIDA, N.A.
By:
-------------------------------------------
-------------------------------------------
(printed name and title)
PERCENTAGE: 19.0%
Address: SunTrust Bank, Central Florida, N.A.
200 South Orange Avenue
Orlando, Florida 32801
Attention: Chris Black, Vice President
Fax: (407) 237-6894
-4-
<PAGE>
BANK ONE, INDIANAPOLIS,
NATIONAL ASSOCIATION
Individually and as Agent
By:
------------------------------------
Brian D. Smith, Vice President and
Senior Relationship Manager
PERCENTAGE: 41.5%
Address: Bank One Center/Tower
111 Monument Circle, Suite 1921
P. O. Box 7700
Indianapolis, Indiana 46277-0119
Attention: Manager, Metropolitan Department B
Fax: (317) 321-8079
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Cory M. Olson
-------------------------------------------
Cory M. Olson, Vice President
-------------------------------------------
(printed name and title)
PERCENTAGE: 26.0%
Address: One First National Plaza
Mail Suite 0088
Chicago, Illinois 60670-0088
Attention: Cory M. Olson
Fax: (312) 732-5161
SUNTRUST BANK, CENTRAL FLORIDA, N.A.
By:
-------------------------------------------
-------------------------------------------
(printed name and title)
PERCENTAGE: 19.0%
Address: SunTrust Bank, Central Florida, N.A.
200 South Orange Avenue
Orlando, Florida 32801
Attention: Chris Black, Vice President
Fax: (407) 237-6894
-4-
<PAGE>
BANK ONE, INDIANAPOLIS,
NATIONAL ASSOCIATION
Individually and as Agent
By:
------------------------------------
Brian D. Smith, Vice President and
Senior Relationship Manager
PERCENTAGE: 41.5%
Address: Bank One Center/Tower
111 Monument Circle, Suite 1921
P. O. Box 7700
Indianapolis, Indiana 46277-0119
Attention: Manager, Metropolitan Department B
Fax: (317) 321-8079
THE FIRST NATIONAL BANK OF CHICAGO
By:
-------------------------------------------
-------------------------------------------
(printed name and title)
PERCENTAGE: 26.0%
Address: One First National Plaza
Mail Suite 0088
Chicago, Illinois 60670-0088
Attention: Cory M. Olson
Fax: (312) 732-5161
SUNTRUST BANK, CENTRAL FLORIDA, N.A.
By: /s/ Chris Black
-------------------------------------------
Chris Black, V.P.
-------------------------------------------
(printed name and title)
PERCENTAGE: 19.0%
Address: SunTrust Bank, Central Florida, N.A.
200 South Orange Avenue
Orlando, Florida 32801
Attention: Chris Black, Vice President
Fax: (407) 237-6894
-4-
<PAGE>
CORESTATES BANK, N.A.
By: /s/ Karl F. Schultz
------------------------------------------
Karl F. Schultz, Vice President
------------------------------------------
(print name and title)
PERCENTAGE: 13.5%
Address: CoreStates Bank, N.A.
2240 Butler Pike
Plymouth Meeting, Pennsylvania 19462
Attention: William Johnston
Fax: (610) 834-2069
-5-
<PAGE>
Exhibit (11) Statement Re: Computation of Earnings Per Share
(000's omitted, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------ -----------------
1995 1996 1995 1996
------- -------- --------- -------
<S> <C> <C> <C> <C>
Primary:
Average shares outstanding 8,340 10,669 8,246 10,641
Net effect of stock options and
warrants - based on the
treasury stock method
using average market price 460 473 454 402
------- ------- ------- -------
Totals 8,800 11,142 8,700 11,043
======= ======= ======= =======
Pro forma net income(A) $ 1,724 $ 346 $ 3,355 2,823
======= ======= ======= =======
Per share amount $ 0.20 $ 0.03 0.39 0.25
======= ======= ======= =======
Fully diluted:
Average shares outstanding 8,340 10,669 8,246 10,641
Net effect of stock
options and warrants - based
on the treasury stock
method using quarter end
market price which is greater
than average market
price 513 475 500 457
------- ------- ------- -------
Totals 8,853 11,144 8,746 11,098
======= ======= ======= =======
Pro forma net income(A) $ 1,724 $ 346 $ 3,355 $ 2,823
======= ======= ======= =======
Per share amount $ 0.19 $ 0.03 $ 0.38 $ 0.25
======= ======= ======= =======
</TABLE>
(A) Includes a provision for income taxes as if the Company had been subject to
income taxes for the entire period presented.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q AT
JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 5,979,000
<SECURITIES> 0
<RECEIVABLES> 74,589,000
<ALLOWANCES> 1,000,000
<INVENTORY> 53,859,000
<CURRENT-ASSETS> 135,132,000
<PP&E> 6,893,000
<DEPRECIATION> 843,000
<TOTAL-ASSETS> 142,754,000
<CURRENT-LIABILITIES> 73,480,000
<BONDS> 0
0
0
<COMMON> 107,000
<OTHER-SE> 69,119,000
<TOTAL-LIABILITY-AND-EQUITY> 142,754,000
<SALES> 232,856,000
<TOTAL-REVENUES> 232,856,000
<CGS> 216,446,000
<TOTAL-COSTS> 216,446,000
<OTHER-EXPENSES> 7,767,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 623,000
<INCOME-PRETAX> 5,270,000
<INCOME-TAX> 1,971,000
<INCOME-CONTINUING> 3,299,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,299,000
<EPS-PRIMARY> .25
<EPS-DILUTED> .25
</TABLE>
