<PAGE> 1
As filed with the Securities and Exchange Commission on July 15, 1997.
Registration No. 333-29533
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT
NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
BRIGHTPOINT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<C> <C> <C>
DELAWARE 6402 CORPORATE DRIVE 35-1778566
(State or other jurisdiction of INDIANAPOLIS, IN 46278 (IRS employer identification number)
incorporation or organization) (317) 297-6100
</TABLE>
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
J. MARK HOWELL, PRESIDENT
AND CHIEF OPERATING OFFICER
BRIGHTPOINT, INC.
6402 CORPORATE DRIVE
INDIANAPOLIS, INDIANA 46278
(317) 297-6100
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
ROBERT J. MITTMAN, ESQ. MICHAEL A. CAMPBELL, ESQ.
TENZER GREENBLATT LLP MAYER, BROWN & PLATT
405 LEXINGTON AVENUE 190 SOUTH LASALLE STREET
NEW YORK, NEW YORK 10174 CHICAGO, ILLINOIS 60603
TELEPHONE NO.: (212) 885-5000 TELEPHONE NO.: (312) 782-0600
FACSIMILE NO.: (212) 885-5001 FACSIMILE NO.: (312) 701-7711
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
- ------------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ------------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
EXPLANATORY NOTE
This registration statement contains two forms of prospectus: one to be
used in connection with an offering in the United States and Canada (the "U.S.
Prospectus") and one to be used in a concurrent international offering outside
the United States and Canada (the "International Prospectus"). The complete U.S.
Prospectus follows immediately. Following the U.S. Prospectus are certain pages
of the International Prospectus, which include an alternate front cover page, an
alternate underwriting section and an alternate back cover page. All other pages
of the U.S. Prospectus and the International Prospectus are identical.
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES
MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH
SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JULY 15, 1997
PROSPECTUS
4,000,000 SHARES
[BRIGHTPOINT LOGO]
COMMON STOCK
------------------------
Of the 4,000,000 shares of Common Stock of Brightpoint, Inc., a Delaware
corporation (the "Company" or "Brightpoint"), being offered hereby, 1,800,000
shares are being offered by the Company and 2,200,000 shares are being offered
by certain stockholders of the Company (the "Selling Stockholders"). The Company
will not receive any of the proceeds from the sale of shares of Common Stock by
the Selling Stockholders. See "Principal and Selling Stockholders."
Of the 4,000,000 shares of Common Stock offered hereby, 3,200,000 are being
offered initially in the United States and Canada by the U.S. Underwriters (the
"U.S. Offering") and 800,000 shares are being offered initially in a concurrent
international offering outside the United States and Canada by the International
Managers (the "International Offering," and together with the U.S. Offering, the
"Offerings"). The public offering price and the underwriting discount per share
are identical for each of the Offerings. See "Underwriting."
The Common Stock is quoted on the Nasdaq National Market under the symbol
"CELL." On July 14, 1997, the last reported sale price of the Common Stock on
the Nasdaq National Market was $30 1/4 per share. See "Price Range of Common
Stock."
SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
PROCEEDS TO
PRICE UNDERWRITING PROCEEDS TO SELLING
TO PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDERS
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
Per Share.................... $ $ $ $
- -------------------------------------------------------------------------------------------------------------------------
Total(3)..................... $ $ $ $
=========================================================================================================================
</TABLE>
(1) The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities, including certain
liabilities under the Securities Act of 1933, as amended. See
"Underwriting."
(2) Before deducting expenses of the Offerings payable by the Company estimated
to be $1,250,000. The Selling Stockholders will not be paying any of the
expenses of the Offerings.
(3) The Company has granted an option to the U.S. Underwriters, exercisable
within 30 days of the date hereof, to purchase up to 480,000 additional
shares of Common Stock and an option to the International Managers,
exercisable within 30 days of the date hereof, to purchase up to 120,000
additional shares of Common Stock, solely to cover over-allotments, if any.
If such options are exercised in full, the total Price to Public,
Underwriting Discount and Proceeds to Company will be $ , $ and
$ , respectively. See "Underwriting."
------------------------
The shares of Common Stock are being offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to the approval of certain legal matters by counsel for the Underwriters and to
certain other conditions. The Underwriters reserve the right to withdraw, cancel
or modify such offer and to reject orders in whole or in part. It is expected
that delivery of the shares of Common Stock will be made in New York, New York
on or about , 1997.
------------------------
MERRILL LYNCH & CO.
COWEN & COMPANY
UBS SECURITIES
SANDS BROTHERS & CO., LTD.
------------------------
The date of this Prospectus is , 1997.
<PAGE> 4
<TABLE>
<S><C>
[Ericsson LOGO] [Nokia LOGO] [Picture of Brightpoint, Inc.'s
Indianapolis, Indiana Operations
Center]
[Picture of value-added logistics
services line at Brightpoint,
Inc.'s Indianapolis, Indiana
Operations Center] [NEC LOGO] [Panasonic LOGO]
[Uniden LOGO] [Picture of value-added [Audiovox Cellular
logistics services line Communications
[Philips LOGO] at Brightpoint, Inc.'s LOGO]
[Mitsubishi Logo] Indianapolis, Indiana
[Siemens LOGO] Operations Center] [OKI Phones LOGO]
[Picture of repair and [Brightpoint, Inc. LOGO] [Picture of
refurbishment line A leading provider of Brightpoint,
in Indianapolis, distribution and value Inc.'s Indianapolis,
Indiana] -added logistics services Indiana Operations
to the global wireless Center.]
communications industry.
</TABLE>
CERTAIN PERSONS PARTICIPATING IN THE OFFERINGS MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK. SUCH
TRANSACTIONS MAY INCLUDE STABILIZING, THE PURCHASE OF COMMON STOCK TO COVER
SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITING."
------------------------
IN CONNECTION WITH THE OFFERINGS, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON
THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 103 OF REGULATION M. SEE
"UNDERWRITING."
<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and the Consolidated
Financial Statements, including the notes thereto, appearing elsewhere in this
Prospectus or incorporated by reference herein. Unless the context suggests
otherwise, references in this Prospectus to the "Company" or "Brightpoint" mean
Brightpoint, Inc., its predecessors, and its subsidiaries. Except as otherwise
indicated, all information in this Prospectus assumes no exercise of the
Underwriters' over-allotment options. All dollar amounts set forth in this
Prospectus are expressed in United States dollars. See "Underwriting."
THE COMPANY
Brightpoint is a leading provider of distribution and value-added logistics
services to the wireless communications industry. The Company facilitates the
effective and efficient distribution of wireless handsets and related
accessories from leading manufacturers, under brand names such as Nokia,
Ericsson, Philips, Siemens and Motorola, to network operators, agents,
resellers, dealers and retailers in the wireless communications market. The
Company's distribution services include purchasing, marketing, selling,
warehousing, picking, packing, shipping and "just-in-time" delivery of wireless
handsets and accessories. Its value-added logistics services include, among
others, inventory management, product fulfillment, kitting and customized
packaging, light assembly and end-user support services. The Company is one of
the largest dedicated distributors of wireless handsets and accessories in the
world, with operations centers and/or sales offices in Australia, China, Hong
Kong, the Philippines, South Africa, Sweden, the United Arab Emirates, the
United Kingdom and the United States, and provides its services to a customer
base of more than 10,000 network operators, manufacturers, agents, resellers,
dealers and retailers in over 75 countries and on six continents. The Company's
four regional divisions, Asia-Pacific; North America; Europe, Middle East and
Africa; and Latin America, accounted for 44%, 31%, 20% and 5%, respectively, of
the Company's net sales for the six months ended June 30, 1997.
The Company's net sales and pro forma net income have each grown at a
compounded annual growth rate of over 50% from 1992 to 1996. For the six months
ended June 30, 1997, the Company's net sales and net income were $419.2 million
and $10.3 million, respectively, representing increases of 80% and 111%,
respectively, when compared to net sales and pro forma net income for the same
period in 1996. The Company's growth in net sales has been driven primarily by
increases in worldwide demand for wireless handsets and accessories, the
Company's expansion into new geographic markets, and its increased market share
resulting from strengthening relationships with wireless manufacturers and
network operators. The Company's operating margin has also increased, due
primarily to its introduction of higher-margin value-added logistics services.
In recent years, the markets for wireless communications equipment and
services have expanded significantly. On a worldwide basis, the number of
wireless communications subscribers during the past five years increased by 52
million, or 60%, to approximately 140 million by the end of 1996. Nonetheless,
at the end of 1996, wireless penetration was estimated at a mere 16% of the
population within the United States and was still, on average, less than 2% of
the population outside of the United States, providing both the wireless
communications industry and the Company with significant opportunities for
growth. According to a leading independent industry research group, the global
wireless communications subscriber base is expected to grow by more than 250
million subscribers, to approximately 400 million subscribers, by the end of
2000.
In addition to the dramatic increase in subscribers, there are several
major trends affecting the wireless communications industry. The number of
wireless network operators has increased and is expected to continue to increase
as a result of further deregulation within the wireless communications industry,
the allocation of additional spectrum frequencies and the introduction of new
technological applications such as personal communications services ("PCS").
These new wireless networks are increasingly incorporating digital technologies,
which provide greater network capacity, more functionality, improved voice
quality and better security/privacy than analog technologies. In addition,
incumbent analog cellular network operators are gradually transitioning their
networks toward digital systems. With the opportunities presented by a rapidly
3
<PAGE> 6
expanding market for wireless communications equipment, the transition from
analog to digital technology, and the further penetration of the mass consumer
market, many additional manufacturers are beginning to produce wireless handsets
and related accessories. The increased complexity of, and competition in, the
wireless communications industry have caused manufacturers, network operators
and resellers to focus available internal resources on their core competencies
and to outsource more of their product management functions, from distribution
to sophisticated wireless logistics services, to specialists such as the Company
in an effort to reduce costs, increase productivity and improve quality.
The Company's primary strategies for building on its position as a global
leader in providing services to the growing wireless communications industry
include: (i) capitalizing on the rapidly growing outsourcing demands of wireless
equipment manufacturers and network operators by offering them a wide variety of
distribution and value-added logistics services; (ii) expanding the Company's
worldwide presence through internal growth at existing locations, mergers and
acquisitions, joint ventures, other strategic alliances, and start-ups in new
locations; (iii) leveraging the Company's experience and expertise with new
wireless communications technologies and applications to assist its customers in
introducing new products to the market in a timely and effective manner; and
(iv) continuously improving and streamlining its systems and processes in terms
of quality, time and cost in order to establish itself as the most effective and
efficient market channel for wireless communications equipment.
THE OFFERINGS
Common Stock offered by:
The Company(1)................. 1,800,000 shares
The Selling Stockholders(2).... 2,200,000 shares
Common Stock to be outstanding
after the Offerings(3)............ 24,118,490 shares
Use of Proceeds..................... To repay indebtedness. See "Use of
Proceeds."
Nasdaq National Market symbol....... CELL
- ------------
(1) Of the 1,800,000 shares of Common Stock to be sold in the Offerings by the
Company, 1,440,000 shares are being offered initially in the United States
and Canada by the U.S. Underwriters and 360,000 shares are being offered
initially in a concurrent international offering outside the United States
and Canada by the International Managers. See "Underwriting."
(2) Of the 2,200,000 shares of Common Stock to be sold in the Offerings by the
Selling Stockholders, 1,760,000 shares are being offered initially in the
United States and Canada by the U.S. Underwriters and 440,000 shares are
being offering initially in a concurrent international offering outside the
United States and Canada by the International Managers. See "Underwriting."
(3) Does not include (i) an aggregate of 2,797,270 shares of Common Stock
reserved, as of July 10, 1997, for issuance upon exercise of outstanding
stock options (of which stock options to purchase 352,885 shares were
immediately exercisable) and an aggregate of 2,248,277 shares of Common
Stock reserved, as of July 10, 1997, for issuance upon exercise of stock
options available for future grant, in each case under the Company's 1994
Stock Option Plan, 1996 Stock Option Plan and Non-employee Director Stock
Option Plan (collectively, the "Stock Option Plans"), and (ii) 24,140
shares of Common Stock reserved, as of July 10, 1997, for issuance upon
exercise of outstanding and immediately exercisable warrants. See
"Management -- Stock Option Plans."
The Company was incorporated under the laws of the State of Indiana in
August 1989 under the name Wholesale Cellular USA, Inc. and reincorporated under
the laws of the State of Delaware in March 1994. In September 1995, the Company
changed its name to Brightpoint, Inc. The Company's principal executive offices
are located at 6402 Corporate Drive, Indianapolis, Indiana 46278, and its
telephone number is (317) 297-6100.
4
<PAGE> 7
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
CONSOLIDATED STATEMENT OF INCOME DATA(1):
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
--------------------------------------------------- -------------------
1992 1993 1994 1995 1996 1996 1997
------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales........................ $96,403 $151,315 $309,227 $419,149 $589,718 $232,856 $419,196
Cost of sales.................... 89,580 140,617 290,463 390,950 543,878 216,446 385,180
------- -------- -------- -------- -------- -------- --------
Gross profit..................... 6,823 10,698 18,764 28,199 45,840 16,410 34,016
Selling, general and
administrative expenses........ 4,944 7,418 11,095 14,813 20,849 7,767 17,136
------- -------- -------- -------- -------- -------- --------
Income from operations........... 1,879 3,280 7,669 13,386 24,991 8,643 16,880
Merger expenses.................. -- -- -- -- 2,750 2,750 --
Net investment gain(2)........... -- -- -- -- -- -- 1,432
Interest expense, net............ 38 103 164 1,383 2,118 623 3,106
------- -------- -------- -------- -------- -------- --------
Income before income taxes and
minority interest.............. 1,841 3,177 7,505 12,003 20,123 5,270 15,206
Income taxes(3).................. -- -- 1,623 3,838 7,328 1,971 4,540
------- -------- -------- -------- -------- -------- --------
Income before minority
interest....................... 1,841 3,177 5,882 8,165 12,795 3,299 10,666
Minority interest in
subsidiaries' earnings......... -- -- -- -- 1,758 -- 383
------- -------- -------- -------- -------- -------- --------
Net income(2).................... $ 1,841 $ 3,177 $ 5,882 $ 8,165 $ 11,037 $ 3,299 $ 10,283
======= ======== ======== ======== ======== ======== ========
Pro forma net income(2)(3)(4).... $ 1,114 $ 1,928 $ 4,555 $ 7,307 $ 12,622 $ 4,884 $ 10,283
======= ======== ======== ======== ======== ======== ========
Pro forma net income per
share(2)....................... $ 0.11 $ 0.19 $ 0.32 $ 0.42 $ 0.58 $ 0.23 $ 0.44
======= ======== ======== ======== ======== ======== ========
Weighted average common shares
outstanding.................... 9,891 9,891 14,276 17,226 21,594 20,809 23,159
</TABLE>
CONSOLIDATED BALANCE SHEET DATA(1):
<TABLE>
<CAPTION>
JUNE 30, 1997
-------------------------
ACTUAL AS ADJUSTED(5)
-------- --------------
<S> <C> <C>
Working capital........................................... $167,564 $167,564
Total assets.............................................. 286,157 286,157
Long-term obligations..................................... 97,831 47,353
Stockholders' equity...................................... 110,235 160,713
</TABLE>
- ------------
(1) On June 7, 1996, the Company completed a merger (the "Allied 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. (collectively, "Allied
Communications"), which were 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 Consolidated
Financial Statements have been restated to reflect the consolidated balance
sheets and consolidated results of operations of both the Company and Allied
Communications as if the Allied Merger had been in effect for all periods
presented. See Note 2 of Notes to Consolidated Financial Statements.
(2) During the first quarter of 1997, the Company realized a gain, net of
transaction costs, including related bonuses to certain key employees, of
approximately $8.3 million on the sale of an equity investment. In addition,
the Company recorded $6.9 million of losses relating to other debt and
equity investments. Excluding the impact of the resulting net investment
gain of $1.4 million and related income taxes, net income and net income per
share for the six months ended June 30, 1997 would have been $9.4 million
and $0.41, respectively. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Note 3 of Notes to
Consolidated Financial Statements.
5
<PAGE> 8
(3) Prior to consummation of the Company's initial public offering in April
1994, the stockholders of the Company had elected for the Company to be
treated as an S corporation. Accordingly, the income of the Company was
included in the stockholders' own income for tax purposes, and the Company
was subject to neither federal nor state income taxes, until the Company's
election under Subchapter S was terminated on April 14, 1994. Prior to the
Allied Merger, the stockholders of Allied Communications had also elected
treatment under Subchapter S. Concurrent with the Allied Merger, on June 7,
1996, Allied Communications' election under Subchapter S was also
terminated. Pro forma net income amounts assume that each of the Company and
Allied Communications was subject to federal and state income taxes, and
taxed at the rates then in effect, for all periods presented. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Note 1 of Notes to Consolidated Financial Statements.
(4) Excluding the after-tax effect ($2.1 million) of one-time merger expenses
incurred in connection with the Allied Merger. See Note 2 of Notes to
Consolidated Financial Statements.
(5) As adjusted to give effect to the receipt by the Company of the estimated
net proceeds from the sale of the 1,800,000 shares of Common Stock offered
by the Company in the Offerings at an assumed public offering price of
$30.25 per share and the anticipated application of the estimated net
proceeds therefrom. See "Use of Proceeds."
6
<PAGE> 9
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
CERTAIN STATEMENTS IN THIS PROSPECTUS AND IN THE DOCUMENTS INCORPORATED BY
REFERENCE HEREIN CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH FORWARD-LOOKING
STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS
WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY
TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FACTORS INCLUDE,
AMONG OTHERS, THE FOLLOWING: THE ABILITY TO HIRE AND RETAIN KEY PERSONNEL;
SUCCESSFUL COMPLETION AND INTEGRATION OF FUTURE ACQUISITIONS; RELATIONSHIPS WITH
AND DEPENDENCE ON THIRD-PARTY WIRELESS COMMUNICATIONS EQUIPMENT SUPPLIERS;
UNCERTAINTIES RELATING TO ECONOMIC CONDITIONS IN MARKETS IN WHICH THE COMPANY
OPERATES; UNCERTAINTIES RELATING TO GOVERNMENT AND REGULATORY POLICIES;
UNCERTAINTIES RELATING TO CUSTOMER PLANS AND COMMITMENTS; DEPENDENCE ON THE
WIRELESS COMMUNICATIONS INDUSTRY; PRICING AND AVAILABILITY OF WIRELESS
COMMUNICATIONS EQUIPMENT MATERIALS AND INVENTORIES; RAPID TECHNOLOGICAL
DEVELOPMENTS AND OBSOLESCENCE IN THE WIRELESS COMMUNICATIONS INDUSTRY; POTENTIAL
PERFORMANCE ISSUES WITH SUPPLIERS AND CUSTOMERS; GOVERNMENTAL EXPORT AND IMPORT
POLICIES; GLOBAL TRADE POLICIES; WORLDWIDE POLITICAL STABILITY AND ECONOMIC
GROWTH; THE HIGHLY COMPETITIVE ENVIRONMENT IN WHICH THE COMPANY OPERATES;
POTENTIAL ENTRY OF NEW, WELL-CAPITALIZED COMPETITORS INTO THE COMPANY'S MARKETS;
CHANGES IN THE COMPANY'S CAPITAL STRUCTURE AND COST OF CAPITAL; AND
UNCERTAINTIES INHERENT IN INTERNATIONAL OPERATIONS AND FOREIGN CURRENCY
FLUCTUATIONS. THE WORDS "BELIEVE," "EXPECT," "ANTICIPATE," "INTEND" AND "PLAN"
AND SIMILAR EXPRESSIONS IDENTIFY FORWARD-LOOKING STATEMENTS. READERS ARE
CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH
SPEAK ONLY AS OF THE DATE THE STATEMENT WAS MADE. SEE "RISK FACTORS."
RISK FACTORS
Prospective purchasers of the shares of Common Stock offered hereby should
consider carefully the specific factors set forth below as well as the other
information contained in, or incorporated by reference into, this Prospectus in
evaluating an investment in the Common Stock.
FUTURE OPERATING RESULTS
For the year ended December 31, 1996 and the six months ended June 30,
1997, 88% and 89%, respectively, of the Company's net sales consisted of
wireless handset sales, a segment of its business which operates on a
high-volume, low-margin basis. In addition, the Company's operating expenses
have increased significantly and can be expected to continue to increase
significantly in connection with the Company's expansion activities, including
the increasing provision of value-added logistics services. Accordingly, the
Company's future profitability will depend upon corresponding increases in
sales. The Company also believes that, as the number of wireless networks
increases as a result of deregulation, increased competition and the emergence
of new technologies, a growing industry emphasis on containing costs could
further reduce the gross margins realized by the Company on sales of wireless
handsets. Future events, including unanticipated expenses, increased price
competition, unfavorable general economic conditions, product returns and
recalls and uncollectible accounts receivable, could have an adverse effect on
the Company's operating results. There can be no assurance that the Company's
rate of sales growth will continue in the future or that the Company's future
operations will continue to be profitable. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and Consolidated
Financial Statements.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
Sales in markets outside of North America have accounted for an increasing
portion of the Company's net sales. For the years ended December 31, 1995 and
1996 and the six months ended June 30, 1997, net sales in markets outside of
North America represented approximately 36%, 51% and 69%, respectively, of the
Company's total net sales. The global aspect of the Company's business subjects
it to a number of additional risks, including increased credit risk, customs
duties, import quotas and other trade restrictions, potentially greater
inflationary pressures, fluctuations in foreign currency exchange rates,
shipping delays, failure or material interruption of wireless systems and
services, and international political, regulatory and economic
7
<PAGE> 10
developments, all of which could have a material adverse effect on the Company.
In addition to its facilities in the United States, the Company maintains
operations centers and/or sales offices in numerous territories and countries,
including Australia, China, Hong Kong, the Philippines, South Africa, Sweden,
the United Arab Emirates and the United Kingdom. The Company is therefore
subject to the risks associated with changes in the social, political,
regulatory and economic conditions inherent in foreign operations, including
changes in the laws and policies that govern foreign investment and
international trade in territories and countries where the Company currently has
operations, as well as, to a lesser extent, changes in United States laws and
regulations relating to foreign investment and trade. Any such social,
political, regulatory or economic changes could expose the Company to, among
other things, the risk of wireless product supply interruption or significant
increases in wireless product prices. Accordingly, there can be no assurance
that any such changes in social, political, regulatory or economic conditions
will not have a material adverse effect on the Company.
In addition, a significant portion of the Company's sales outside the
United States are denominated in foreign currencies. Accordingly, a decrease in
the value of foreign currencies relative to the United States dollar could
result in a significant decrease in United States dollar revenues received by
the Company. Due to the number of currencies involved in the Company's
international sales and the volatility of currency exchange rates, the Company
cannot predict the effect of exchange rate fluctuations on future operating
results. On occasion, the Company enters into forward exchange, futures or
options contracts as a means of hedging its currency translation exposure;
however, the Company's management has had limited prior experience in engaging
in such transactions. Moreover, there can be no assurance that any hedging will
effectively limit the Company's exposure to a decline in operating results due
to foreign currency translation adjustments. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and Note 1 of Notes
to Consolidated Financial Statements.
RISKS RELATING TO OPERATIONS IN HONG KONG
The Company maintains an operations center and sales office in Hong Kong,
and, for the six months ended June 30, 1997, sales through the Company's Hong
Kong operations represented approximately 33% of the Company's net sales. On
July 1, 1997, sovereignty over Hong Kong was transferred from the United Kingdom
to the People's Republic of China ("China") and Hong Kong became a Special
Administrative Region ("SAR") of China. As provided in the Sino-British Joint
Declaration on the Question of Hong Kong and the Basic Law of the Hong Kong SAR
of China (the "Basic Law"), the Hong Kong SAR will have a high degree of
autonomy except in foreign affairs and defense. Under the Basic Law, the Hong
Kong SAR is to have its own legislature, legal and judicial systems and economic
autonomy for 50 years. There can be no assurance that there will not be an
adverse change in existing political, economic or commercial conditions in Hong
Kong or that any such change would not have a material adverse effect on the
Company's results of operations or financial condition. Furthermore, the Company
cannot predict the effect that changes in the social, economic, regulatory and
political conditions in China could have on its operations in Hong Kong. For
instance, the Company's operations in Hong Kong could be affected if the
"most-favored nation" status granted to China by the United States government
for trade and tariff purposes was terminated. Such status is currently reviewed
annually by the United States government, and the Company cannot predict whether
China will continue to receive such status in the future. The loss by China of
its "most-favored nation" status or other changes in social, economic,
regulatory or political conditions in China could have a material adverse effect
on the Company.
DEPENDENCE ON TREND TOWARD OUTSOURCING
The Company's growth depends in large part on the growing trend among
wireless equipment manufacturers, network operators and resellers to outsource
some or all of their product management functions, such as marketing,
programming, packaging, end-user fulfillment and returns management, to
specialists such as the Company. Although the Company believes that increasing
competition, deregulation and technological developments within the wireless
communications industry will continue to support this trend, there can be no
assurance that wireless equipment manufacturers and network operators will not
elect to maintain such services internally. A significant change in this trend,
or the onset of a trend in the wireless
8
<PAGE> 11
communications industry not to use, or to reduce the use of, outsourced
value-added logistics services such as those provided by the Company, could have
a material adverse effect on the Company. See "Business -- Wireless
Communications Industry," "-- Growth Strategy" and "-- Services."
DEPENDENCE ON THIRD-PARTY SUPPLIERS
The Company purchases all of the wireless handsets and accessories it sells
from third-party wireless communications equipment manufacturers, dealers and
network operators. For the years ended December 31, 1995 and 1996 and the six
months ended June 30, 1997, the Company's three largest sources of wireless
handsets and accessories, in the aggregate, accounted for approximately 38%, 51%
and 65%, respectively, of the Company's product purchases. For the year ended
December 31, 1995, the Company's three largest suppliers (Nokia, BellSouth
Cellular Corp. and Ericsson) accounted for approximately 20%, 10% and 8%,
respectively, of the Company's product purchases. For the year ended December
31, 1996, the Company's three largest suppliers (Nokia, Ericsson and Lucent
Technologies Inc.) accounted for approximately 33%, 12% and 6%, respectively, of
the Company's product purchases. For the six months ended June 30, 1997, the
Company's three largest suppliers (Nokia, Ericsson and Siemens) accounted for
approximately 37%, 18% and 10%, respectively, of the Company's product
purchases. The Company is dependent on the ability of its suppliers to provide
adequate inventories of currently popular brand name products on a timely basis
and on favorable pricing terms. Other than with some of its primary suppliers,
the Company does not typically maintain agreements with its suppliers. Moreover,
as is typical in the industry, the agreements which the Company does maintain
are generally non-exclusive, require the Company to satisfy minimum purchase
requirements, can be terminated on short notice and provide for certain
territorial restrictions. The Company generally purchases products pursuant to
purchase orders placed from time to time in the ordinary course of business.
Although the Company believes that its relationships with its suppliers are
satisfactory, the loss of certain of the Company's principal suppliers or
substantial price increases imposed by any such supplier, in the absence of
readily available alternative sources of supply, would have a material adverse
effect on the Company. There can be no assurance that suppliers will continue to
offer competitive products to the Company, that the Company will be able to
obtain products on favorable terms or that the Company will not be subject to
the risk of price fluctuations and periodic delays. Failure or delay by
principal suppliers in supplying competitive products to the Company on
favorable terms would materially adversely affect the Company's operating
margins and the Company's ability to obtain and deliver products on a timely and
competitive basis or at all. See "Business -- Purchasing and Supply."
INTENSE INDUSTRY COMPETITION
The markets for wireless handsets and accessories are characterized by
intense price competition and significant price erosion over the life of a
product. In addition, the wireless communications equipment distribution
industry has, in the past, been characterized by low barriers to entry. Although
entry barriers are expected to rise as the market requirement shifts from pure
distribution services to a mix of distribution services and value-added
logistics services (due to the increased infrastructure costs, expanded human
resource requirements and advanced management and information systems
capabilities that the value-added logistics services segment of the business
mandates), the Company competes and expects that it will continue to compete
with numerous well-established distributors and manufacturers of wireless
communications equipment, including the Company's suppliers, and wireless
network operators, certain of which possess greater financial and other
resources than the Company. Certain of these competitors may also market the
same or similar products directly to the Company's customers and have the
financial resources to withstand substantial price competition and to implement
extensive advertising and promotional programs, both generally and in response
to efforts by additional competitors to enter into new markets or introduce new
products. As a provider of value-added logistics services, the Company also
competes with other distributors and with logistics services companies. The
Company's ability to continue to compete successfully will be largely dependent
on its ability to maintain its current industry relationships and anticipate and
respond to various competitive factors affecting the industry, including new or
changing outsourcing requirements, new well-capitalized competitors, new
products which may be introduced, changes in consumer preferences, demographic
trends, international, national, regional and local economic conditions and
discount pricing and
9
<PAGE> 12
promotion strategies by competitors. There can be no assurance that the Company
will be able to continue to compete successfully, particularly as cellular
markets mature and the Company seeks to enter into new markets and market new
products. See "Business -- Competition."
ABILITY TO MANAGE AND SUSTAIN GROWTH; RISKS ASSOCIATED WITH FUTURE ACQUISITIONS
The Company has experienced rapid international growth recently through,
among other things, a series of strategic acquisitions and anticipates that
continued growth will be driven in large part by the Company's continuing
ability to successfully acquire additional businesses or establish strategic
alliances with companies which the Company believes are compatible with its
business; secure adequate supplies of competitive products on a timely basis and
on commercially reasonable terms; continually turn its inventories and collect
its accounts receivable; and successfully develop additional, and maintain its
existing, key relationships with leading network operators and manufacturers and
dealers of wireless handsets and accessories. The Company's success in
sustaining growth will also be dependent upon its ability to hire and retain the
additional qualified management, marketing and other personnel that will be
needed to successfully manage continuing growth (including monitoring
operations, controlling costs and maintaining effective management, inventory
and credit controls). The Company's growth prospects could be adversely affected
by a decline in the wireless communications industry generally or in one of its
regional divisions in particular, either of which could result in reduction or
deferral of expenditures by prospective customers. There can be no assurance
that the Company will continue to be able to manage its expanding operations
effectively or that it will be able to maintain or accelerate its growth. In
addition, there can be no assurance that the Company will be able to make
additional acquisitions or that the Company will be able to successfully
integrate into its operations any new businesses which it may acquire. Any
inability to do so, particularly in instances in which the Company has made
significant capital investments, could have a material adverse effect on the
Company. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business."
INVENTORY OBSOLESCENCE AND TECHNOLOGICAL CHANGE
The markets for wireless communications equipment are characterized by
rapidly changing technology and evolving industry standards, often resulting in
product obsolescence or short product life cycles. Accordingly, the Company's
success is dependent upon its ability to anticipate technological changes in the
industry and to continually identify, obtain and successfully market new
products that satisfy evolving industry and customer requirements. The Company
has made increased commitments of capital to purchase product inventories.
Additional concentrations of capital in inventory increase the risk of loss from
possible inventory obsolescence. There can be no assurance that competitors or
manufacturers of wireless equipment will not market products which have
perceived or actual advantages over the Company's products or which render them
obsolete or less marketable. In addition, the use of emerging wireless
communications technologies, including wireless local loop and satellite-based
communications systems, may reduce demand for existing cellular and PCS
products. The Company also expects that companies which have developed or are
developing new technologies or products in related market segments will
commercialize technologies which compete with existing cellular and PCS
technology. Certain of such technologies, upon widespread commercial
introduction, will materially change the types of products sold by the Company
and its suppliers and result in significant price competition. There can be no
assurance that the Company's existing customers or consumers will be willing,
for financial or other reasons, to purchase new equipment necessary to utilize
these new technologies or that product obsolescence will not result in
significantly increased inventories of unsold products. Moreover, complex
hardware and software contained in new wireless handsets could contain defects
which become apparent subsequent to widespread commercial use, resulting in
product recalls and returns.
RISKS RELATING TO STRATEGIC RELATIONSHIPS AND STRATEGIC FINANCING
As part of its expansion strategy, the Company has entered into, and
intends to continue to enter into, strategic relationships and joint ventures
with wireless equipment manufacturers, network operators and other providers of
wireless communications logistics services. In connection with such strategic
relationships, the Company may enter into distribution and/or value-added
logistics services agreements with, and provide equity or debt financing to, its
strategic partners. The Company's ability to achieve profitability through such
strategic relationships will be dependent in part upon its strategic partners'
economic viability, success and
10
<PAGE> 13
motivation, and the amount of time and resources they devote to such alliances.
There can be no assurance that the Company will receive any business from future
alliances, that any business received will be significant or at the level
anticipated, or that profits, if any, received as a result of future alliances
will offset any possible losses on investments made or financing extended by the
Company to enter into its strategic relationships. A loan to, or an investment
in, a strategic partner will be subject to many of the same risks to which the
strategic partner is subject in seeking to operate and grow its businesses, and
there can be no assurance that the Company will be repaid or achieve an
acceptable return on its investment within an acceptable period, if at all. In
December 1996, the Company entered into a distribution agreement with Pocket
Communications, Inc. ("Pocket"), a PCS network operator, pursuant to which the
Company was to distribute custom wireless handsets provided by Pocket.
Simultaneous with its execution of such agreement, the Company purchased $5
million in convertible debentures of Pocket. In March 1997, Pocket filed for
protection under Chapter 11 of the United States Bankruptcy Code. Accordingly,
the Company recorded $5 million of unrealized losses in connection with its
investment in Pocket during the quarter ended March 31, 1997. A decline in the
financial prospects of strategic partners could have a material adverse effect
on the Company. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and Note 3 of Notes to Consolidated Financial
Statements.
SIGNIFICANT OUTSTANDING INDEBTEDNESS; LOAN COVENANTS AND SECURITY INTERESTS
As of June 30, 1997, the Company had approximately $97.5 million in
outstanding borrowings and an aggregate of $15.6 million in letters of credit
outstanding under its senior secured revolving line of credit facility with The
First National Bank of Chicago and Bank One, Indiana, N.A., as co-agents for a
group of banks (collectively, the "Banks"), which facility provides availability
to the Company and its subsidiaries of up to $200 million of credit in the
aggregate. All of the Company's assets located in the United States and 65% of
the capital stock of the Company's foreign subsidiaries are pledged to the Banks
as collateral, and the Company is substantially prohibited from incurring
additional indebtedness, either of which terms could, under certain
circumstances, limit the Company's ability to implement its expansion plans. In
addition to certain net worth and other financial covenants, the Company's loan
agreement with the Banks 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 or selling all or substantially all of its assets. In the
event of a violation by the Company of any of its loan covenants or other
default by the Company on its obligations, the Company's indebtedness could
become immediately due and payable and the Banks could foreclose on the
Company's assets. Although the Company intends to use the proceeds of the
Offerings received by it to repay a portion of its outstanding borrowings, the
Company expects to utilize the resulting increased borrowing availability under
its line of credit to fund its operations. There can be no assurance that the
Company will be able to comply with the terms of its loan agreement with the
Banks. See "Use of Proceeds" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
ACCOUNTS RECEIVABLE, COLLECTION AND CREDIT RISKS; SALES CONCENTRATION
The Company's accounts receivable, less allowance for doubtful accounts, at
December 31, 1996 and June 30, 1997 was approximately $113 million and $119
million, respectively. At June 30, 1997, accounts receivable from Success World
Limited, an exporter in Hong Kong, was approximately $12.5 million and, during
the six months ended June 30, 1997, product sales to Success World Limited
accounted for approximately 12% of the Company's net sales. No other customer
accounted for more than 5% of the Company's net sales during the six months
ended June 30, 1997. At June 30, 1997, the Company's allowance for doubtful
accounts was approximately $2 million, which the Company believes is currently
adequate for the size and nature of its receivables. Nevertheless, delays in
collection or uncollectibility of accounts receivable could have a material
adverse effect on the Company's liquidity and working capital position. For the
year ended December 31, 1996 and the six months ended June 30, 1997,
approximately 55% and 52%, respectively, of the Company's net sales were made on
open account terms. In connection with the Company's continued expansion, the
Company intends to offer open account terms to additional customers, which will
subject the Company to increased credit risk, particularly in the event that any
such receivables represent sales to a limited number of customers or are
concentrated in particular geographic markets, and could require the
11
<PAGE> 14
Company to continually increase its allowance for doubtful accounts. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
POSSIBLE FLUCTUATIONS IN OPERATING RESULTS; SEASONALITY
The Company's operating results are influenced by a number of seasonal
factors in the different countries and markets in which it operates. Such
results may vary from period to period as a result of purchasing patterns of
customers in different markets, the timing of introduction of new products by
the Company's suppliers and competitors, variations in sales by distribution
channels, product availability and pricing and other seasonal factors such as
those associated with consumer electronics and retail sales which tend to result
in increased volume in the latter part of the calendar year. While the overall
growth of the Company's business has reduced the impact of such factors on the
Company's operating results, seasonality contributes to the increase in the
Company's sales in the fourth quarter of its fiscal years. Unanticipated events,
including delays in securing adequate inventories of competitive products at the
time of peak sales, or significant decreases in sales during such periods, could
have a material adverse effect on the Company. There can be no assurance that
the foregoing factors will not result in significant fluctuations in operating
results in the future. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Results of Operations."
DEPENDENCE ON KEY PERSONNEL
The success of the Company depends in large part on the abilities and
continued services of its executive officers and other key employees. Although
the Company has entered into employment agreements with several of such officers
and employees, there can be no assurance that the Company will be able to retain
their services. The loss of executive officers or other key personnel could have
a material adverse effect on the Company. The Company also has non-compete
agreements with its executive officers and certain of its existing key
personnel; however, courts are at times reluctant to enforce such agreements. In
addition, in order to support its continued growth, the Company will be required
to effectively recruit, develop and retain additional qualified management. The
inability of the Company to attract and retain such necessary personnel could
also have a material adverse effect on the Company. See "Management."
UNCERTAINTY OF PROTECTION OF PROPRIETARY SOFTWARE
The Company's success is substantially dependent upon its proprietary
software applications relating to its information systems. The Company does not
currently hold any patents relating to its software and relies on trade secret
and copyright laws to protect its proprietary software. In addition, the Company
regularly enters into non-disclosure agreements with its key employees and
limits access to and distribution of its trade secrets and other proprietary
information. There can be no assurance that these measures will be adequate to
prevent misappropriation of its technology or that the Company's competitors
will not independently develop technologies that are substantially equivalent or
superior to the Company's technology, thereby eliminating one of the Company's
perceived competitive advantages. In addition, the laws of some countries do not
protect the Company's proprietary rights to the same extent as do the laws of
the United States. Finally, although the Company believes that its proprietary
software has been developed independently and does not infringe upon the
proprietary rights of others, there can be no assurance that the software does
not and will not so infringe or that third parties will not assert infringement
claims against the Company in the future. See "Business -- Information Systems."
RELIANCE ON TECHNOLOGY; RISK OF BUSINESS INTERRUPTION
The Company has invested significantly in sophisticated and specialized
information systems technology and has focused on the application of this
technology to provide customized distribution and value-added logistics services
to wireless communications equipment manufacturers and network operators. The
Company anticipates that it will be necessary to continue to develop new
logistics services and enhance its information systems in order to maintain its
competitiveness. In addition, the Company's sales and marketing efforts (a large
part of which are telemarketing based) are highly dependent on its computer and
telephone equipment, and the temporary or permanent loss of such equipment or
systems through casualty or operating malfunction, or a significant increase in
the cost of telephone services that is not recoverable through an
12
<PAGE> 15
increase in the price of the Company's services, could have a material adverse
effect on the Company. The Company's property and business interruption
insurance may not adequately compensate the Company for all losses that it may
incur in any such event. See "Business -- Services," "-- Sales and Marketing"
and "-- Information Systems."
DEPENDENCE ON LABOR FORCE
The Company's distribution and value-added logistics services are labor
intensive and the Company experiences high personnel turnover. A significant
number of the Company's employees are employed on a part-time basis. A higher
turnover rate among the Company's employees would increase the Company's
recruiting and training costs and decrease operating efficiencies and
productivity. Growth in the Company's business, together with seasonal increases
in net sales, require the Company to recruit and train personnel at an
accelerated rate from time to time. There can be no assurance that the Company
will be able to continue to hire, train and retain a significant labor force of
qualified employees when needed, or at all. In addition, a significant portion
of the Company's costs consist of wages to hourly workers. An increase in hourly
wages, costs of employee benefits, employment taxes or commission rates could
have a material adverse effect on the Company. See "Business -- Employees."
POTENTIAL VOLATILITY OF PRICE OF THE COMMON STOCK
The market price of the Common Stock has risen substantially and, from time
to time, experienced significant fluctuations since the Company's initial public
offering in April 1994. The Common Stock is quoted on the Nasdaq National
Market, which market has experienced, and is likely to experience in the future,
significant price and volume fluctuations which could adversely affect the
market price of the Common Stock without regard to the operating performance of
the Company. In addition, the trading price of the Common Stock could be subject
to significant fluctuations in response to actual or anticipated variations in
the Company's quarterly operating results and other factors, such as the
introduction of new services or technologies by the Company, its competitors or
its suppliers, changes in other conditions or trends in the wireless
communications industry, changes in governmental regulation, changes in
securities analysts' estimates for the Company's, or its competitors' or
industry's, future performance or general market conditions. General market
price declines or market volatility in the future, or future declines or
volatility in the prices of stocks for companies in the wireless communications
industry or the distribution or value-added logistics services sectors of the
wireless communications industry, could also affect the market price of the
Common Stock.
ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER, BY-LAW AND STOCKHOLDERS RIGHTS PLAN
PROVISIONS
The Company's Certificate of Incorporation, as amended, authorizes the
issuance of "blank check" preferred stock with such designations, rights and
preferences as may be determined from time to time by the Board of Directors.
Accordingly, the Board of Directors is empowered, without stockholder approval,
to issue preferred stock with dividend, liquidation, conversion, voting or other
rights which could adversely affect the voting power or other rights of the
holders of the Company's Common Stock. In addition, the Company's Amended and
Restated By-laws divide the Board of Directors into three classes serving
staggered three-year terms. The Company also has a Stockholders Rights Plan that
may make certain proposed acquisitions of the Company prohibitively expensive.
These charter and by-law provisions and the Stockholders Rights Plan could make
it more difficult for a stockholder to effect certain transactions and make it
more difficult for a third party to acquire, or discourage a third party from
attempting to acquire, control of the Company. As a result, such provisions
could limit the price that certain investors might be willing to pay in the
future for shares of the Company's Common Stock. See "Description of Capital
Stock -- Preferred Stock" and "-- Anti-Takeover Effects of Certain Provisions of
the Company's By-laws, Stockholders Rights Plan and Delaware Corporate Law." See
also "Management -- Employment Agreements."
POSSIBLE MEDICAL RISKS ASSOCIATED WITH WIRELESS HANDSETS
Recent lawsuits have been filed against manufacturers of wireless handsets
alleging possible medical risks, including brain cancer, associated with
electromagnetic fields emitted by wireless hand-held cellular telephones. To
date, there has been only limited research in this area, and such research has
not been
13
<PAGE> 16
conclusive as to what effects, if any, exposure to electromagnetic fields
emitted by wireless handsets has on human cells. The Company recognizes,
however, that the perception that health risks may exist could adversely affect
the Company's ability to market wireless handsets. Inasmuch as substantially all
of the Company's revenues are derived, either directly or indirectly, from sales
of wireless handsets, future studies finding possible health risks associated
with the use of such products could have a material adverse effect on the
wireless communications industry and the Company. As a distributor of wireless
handsets, the Company may be subject to lawsuits filed by plaintiffs alleging
health risks. A successful claim against the Company could have a material
adverse effect on the Company.
SHARES ELIGIBLE FOR FUTURE SALE
As of July 10, 1997, the Company had stock options and warrants outstanding
for the purchase of an aggregate of 2,821,410 shares of Common Stock, of which
options and warrants outstanding for the purchase of an aggregate of 377,025
shares of Common Stock were immediately exercisable, and had registered an
aggregate of 1,209,922 shares of Common Stock underlying outstanding options and
warrants, and options available for future grant under the Company's Stock
Option Plans, under the Securities Act of 1933, as amended (the "Securities
Act"). In addition, commencing 30 days following the date of this Prospectus, a
stockholder, who is also an employee, of the Company may require the Company to
file a registration statement relating to 375,000 shares of Common Stock owned
by such stockholder and to take such reasonable steps necessary to cause the
registration statement to be declared effective. Such stockholder has agreed
that he will not sell, offer to sell, grant any option for the sale of, or
otherwise dispose of 187,500 of such shares for a period of 120 days following
the consummation of the Offerings; provided, however, that if, subsequent to
exercise of the demand registration right by the stockholder, the registration
statement relating to the stockholder's 375,000 shares of Common Stock is not
declared effective by five days prior to the public announcement of the
Company's financial results for the three months ended September 30, 1997, he
may, subject to applicable securities laws, sell up to 187,500 shares of Common
Stock commencing the day following the public announcement of the Company's
financial results for the three months ended September 30, 1997. No prediction
can be made as to the effect, if any, that future sales of shares or the
registration and/or availability of shares for sale will have on the market
price of the Common Stock prevailing from time to time. Nonetheless, sales of
substantial amounts of Common Stock upon the exercise of stock options or
warrants or otherwise, or the perception that such sales might occur, could
adversely affect prevailing market prices of the Common Stock. See "Management
- -- Stock Option Plans" and "Shares Eligible for Future Sale; Registration
Rights."
14
<PAGE> 17
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the
1,800,000 shares of Common Stock offered by the Company in the Offerings at an
assumed public offering price of $30.25 per share are estimated to be
approximately $50.5 million ($67.7 million if the Underwriters' over-allotment
options are exercised in full), after deduction of the underwriting discount and
estimated offering expenses payable by the Company. The Company will not receive
any proceeds from the sale of shares of Common Stock by the Selling
Stockholders.
The Company intends to use the net proceeds received by it to repay a
portion of the amounts outstanding under its $200 million revolving line of
credit facility with the Banks. As of June 30, 1997, approximately $97.5 million
was outstanding under such facility. The line of credit matures in June 2002 and
generally bears interest, at the Company's option, at (i) the greater of The
First National Bank of Chicago's corporate base rate and 0.50% plus the Federal
funds effective rate (the "Base Rate") or (ii) the rate at which deposits in
United States dollars or Eurocurrencies are offered by banks in the London
interbank market (the "Eurodollar Rate") plus a spread ranging from 40 to 112.5
basis points (based on a leverage ratio defined in the credit agreement) plus a
reserve spread, if any. Borrowings by the Company's non-United States
subsidiaries will bear interest at rates negotiated with the applicable lenders.
Following the consummation of the Offerings, the Company intends to utilize the
resulting increased borrowing availability under the line of credit as necessary
in the ordinary course of business, including for increased inventories and
receivables and continued enhancement of the Company's information systems. The
Company may use a portion of such increased borrowing availability to acquire
businesses which the Company believes are compatible with its business. While
the Company regularly evaluates possible acquisition opportunities, as of the
date of this Prospectus, the Company has no material agreements, commitments,
understandings or arrangements with respect to any acquisition. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
Pending use of the net proceeds as set forth above, the Company intends to
invest the net proceeds received by it principally in United States government
securities, short-term certificates of deposit, money market funds or other
interest bearing investments.
PRICE RANGE OF COMMON STOCK
The Common Stock has been quoted on the Nasdaq National Market under the
symbol "CELL" since the Company's initial public offering in 1994. The following
table sets forth, on a per share basis, the high and low sales prices of the
Common Stock for the periods indicated, as reported by the Nasdaq National
Market.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
Year Ended December 31, 1995:
First Quarter.......................................... $ 7.63 $ 5.76
Second Quarter......................................... 9.92 7.09
Third Quarter.......................................... 9.73 8.05
Fourth Quarter......................................... 11.00 6.74
Year Ended December 31, 1996:
First Quarter.......................................... 10.67 7.20
Second Quarter......................................... 16.27 9.07
Third Quarter.......................................... 13.93 10.00
Fourth Quarter......................................... 24.20 12.27
Year Ending December 31, 1997:
First Quarter.......................................... 25.00 16.25
Second Quarter......................................... 34.88 16.00
Third Quarter (through July 14, 1997).................. 32.63 27.75
</TABLE>
On July 14, 1997, the last reported sale price of the Common Stock on the
Nasdaq National Market was $30.25 per share. At July 14, 1997, there were
approximately 125 stockholders of record.
15
<PAGE> 18
DIVIDEND POLICY
The Company has not paid cash dividends on its Common Stock other than S
corporation distributions made to its stockholders prior to the Company's
initial public offering in April 1994 and S corporation distributions made to
the stockholders of Allied Communications prior to the Allied Merger. The Board
of Directors intends to continue a policy of retaining earnings to finance the
Company's anticipated growth and development of its business and does not expect
to declare or pay any cash dividends in the foreseeable future. In addition, the
declaration or payment of cash dividends is prohibited under the terms of the
agreements relating to the Company's line of credit facility with the Banks.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at June 30, 1997 and as adjusted to give effect to the sale of the
1,800,000 shares of Common Stock offered by the Company in the Offerings at an
assumed public offering price of $30.25 per share and the application of the
estimated net proceeds therefrom. This table should be read in conjunction with
the Company's Consolidated Financial Statements and the notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1997
----------------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS, EXCEPT SHARE
DATA)
<S> <C> <C>
Short-term debt............................................. $ -- $ --
======== ========
Notes payable............................................... $ 97,501 $ 47,023
Stockholders' equity:
Preferred Stock, $.01 par value; 1,000,000 shares
authorized; no shares issued or outstanding............ -- --
Common Stock, $.01 par value; 100,000,000 shares
authorized; 22,318,490 shares issued and outstanding;
24,118,490 shares issued and outstanding, as
adjusted(1)............................................ 223 241
Additional paid-in capital................................ 81,840 132,300
Retained earnings......................................... 27,817 27,817
Foreign currency translation adjustment................... 355 355
-------- --------
Total stockholders' equity............................. 110,235 160,713
-------- --------
Total capitalization................................... $207,736 $207,736
======== ========
</TABLE>
- ------------
(1) Does not include (i) an aggregate of 2,797,270 shares of Common Stock
reserved, as of July 10, 1997, for issuance upon exercise of outstanding
stock options (of which stock options to purchase 352,885 shares were
immediately exercisable) and an aggregate of 2,248,277 shares of Common
Stock reserved, as of July 10, 1997, for issuance upon exercise of stock
options available for future grant, in each case under the Company's Stock
Option Plans; and (ii) 24,140 shares of Common Stock reserved, as of July
10, 1997, for issuance upon exercise of outstanding and immediately
exercisable warrants. See "Management -- Stock Option Plans."
16
<PAGE> 19
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following tables set forth selected consolidated financial data for
each of the years in the five-year period ended December 31, 1996 and for the
six-month periods ended June 30, 1996 and 1997. The consolidated statement of
income data and balance sheet data for and as of the end of each of the years in
the five-year period ended December 31, 1996 are derived from the audited
Consolidated Financial Statements of the Company. The consolidated statement of
income data and balance sheet data for and as of the end of each of the
six-month periods ended June 30, 1996 and 1997 have been derived from the
unaudited Consolidated Financial Statements of the Company and, in the opinion
of management, include all adjustments (consisting of normal recurring accruals)
which are necessary to present fairly the results of operations and financial
position of the Company for the periods and at the dates indicated. The selected
consolidated financial data for the six months ended June 30, 1997 are not
necessarily indicative of the results to be expected for the full year. The
following selected consolidated financial data should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements, including the notes
thereto, appearing elsewhere in this Prospectus.
CONSOLIDATED STATEMENT OF INCOME DATA(1):
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------------------------------- -------------------
1992 1993 1994 1995 1996 1996 1997
------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales............................ $96,403 $151,315 $309,227 $419,149 $589,718 $232,856 $419,196
Cost of sales........................ 89,580 140,617 290,463 390,950 543,878 216,446 385,180
------- -------- -------- -------- -------- -------- --------
Gross profit......................... 6,823 10,698 18,764 28,199 45,840 16,410 34,016
Selling, general and administrative
expenses........................... 4,944 7,418 11,095 14,813 20,849 7,767 17,136
------- -------- -------- -------- -------- -------- --------
Income from operations............... 1,879 3,280 7,669 13,386 24,991 8,643 16,880
Merger expenses...................... -- -- -- -- 2,750 2,750 --
Net investment gain(2)............... -- -- -- -- -- -- 1,432
Interest expense, net................ 38 103 164 1,383 2,118 623 3,106
------- -------- -------- -------- -------- -------- --------
Income before income taxes and
minority interest.................. 1,841 3,177 7,505 12,003 20,123 5,270 15,206
Income taxes(3)...................... -- -- 1,623 3,838 7,328 1,971 4,540
------- -------- -------- -------- -------- -------- --------
Income before minority interest...... 1,841 3,177 5,882 8,165 12,795 3,299 10,666
Minority interest in subsidiaries'
earnings........................... -- -- -- -- 1,758 -- 383
------- -------- -------- -------- -------- -------- --------
Net income(2)........................ $ 1,841 $ 3,177 $ 5,882 $ 8,165 $ 11,037 $ 3,299 $ 10,283
======= ======== ======== ======== ======== ======== ========
Pro forma net income(2)(3)(4)........ $ 1,114 $ 1,928 $ 4,555 $ 7,307 $ 12,622 $ 4,884 $ 10,283
======= ======== ======== ======== ======== ======== ========
Pro forma net income per share(2).... $ 0.11 $ 0.19 $ 0.32 $ 0.42 $ 0.58 $ 0.23 $ 0.44
======= ======== ======== ======== ======== ======== ========
Weighted average common shares
outstanding........................ 9,891 9,891 14,276 17,226 21,594 20,809 23,159
</TABLE>
CONSOLIDATED BALANCE SHEET DATA(1):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------- JUNE 30,
1992 1993 1994 1995 1996 1997
------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Working capital................................. $ 3,072 $ 7,039 $20,960 $ 62,219 $143,481 $167,564
Total assets.................................... 18,365 31,283 82,845 119,787 299,045 286,157
Long-term obligations........................... 1,060 5,577 1,346 602 79,894 97,831
Stockholders' equity............................ 2,336 3,485 20,283 64,857 94,982 110,235
</TABLE>
- ------------
(1) On June 7, 1996, the Company completed the Allied Merger. The transaction
was accounted for using the pooling-of-interests method and, accordingly,
the Company's Consolidated Financial Statements have been restated to
reflect the consolidated balance sheets and consolidated results of
operations of
17
<PAGE> 20
both the Company and Allied Communications as if the Allied Merger had been
in effect for all periods presented. See Note 2 of Notes to Consolidated
Financial Statements.
(2) During the first quarter of 1997, the Company realized a gain, net of
transaction costs, including related bonuses to certain key employees, of
approximately $8.3 million on the sale of an equity investment. In addition,
the Company recorded $6.9 million of losses relating to other debt and
equity investments. Excluding the impact of the resulting net investment
gain of $1.4 million and related income taxes, net income and net income per
share for the six months ended June 30, 1997 would have been $9.4 million
and $0.41, respectively. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Note 3 of Notes to
Consolidated Financial Statements.
(3) Prior to consummation of the Company's initial public offering in April
1994, the stockholders of the Company had elected for the Company to be
treated as an S corporation. Accordingly, the income of the Company was
included in the stockholders' own income for tax purposes, and the Company
was subject to neither federal nor state income taxes, until the Company's
election under Subchapter S was terminated on April 14, 1994. Prior to the
Allied Merger, the stockholders of Allied Communications had also elected
treatment under Subchapter S. Concurrent with the Allied Merger, on June 7,
1996, Allied Communications's election under Subchapter S was also
terminated. Pro forma net income amounts assume that each of the Company and
Allied Communications was subject to federal and state income taxes, and
taxed at the rates then in effect, for all periods presented. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Note 1 of Notes to Consolidated Financial Statements.
(4) Excluding the after-tax effect ($2.1 million) of one-time merger expenses
incurred in connection with the Allied Merger. See Note 2 of Notes to
Consolidated Financial Statements.
18
<PAGE> 21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
This discussion and analysis should be read in conjunction with the
Consolidated Financial Statements of the Company, and the notes thereto,
included elsewhere in this Prospectus.
Effective June 7, 1996, the Company completed a merger with the Allied
Communications companies (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.), which were
engaged in substantially the same business as the Company. In connection with
the Allied Merger, the Company exchanged 3,796,875 newly issued shares of Common
Stock of the Company for all of the outstanding shares of common stock of Allied
Communications. The Allied Merger was accounted for using the
pooling-of-interests method and, consistent with such accounting treatment,
financial information presented herein for all periods reflects the combined
financial condition and results of operations of the Company and Allied
Communications.
Effective August 1, 1996, the Company completed the formation of
Brightpoint International Ltd. ("BIL"), a joint venture with Technology
Resources International Limited ("TRI"), owned 50% by the Company and 50% by
TRI. Pursuant to the terms of the purchase and shareholders' agreement, TRI
contributed to BIL substantially all of its assets relating to its wireless
communications business, including its interest in TRI (Europe) Limited and its
80% interest in the predecessor to Brightpoint China Limited. The Company agreed
to provide certain funding, sales opportunities and management to BIL. In
connection with the formation of BIL, the assets of TRI (Europe) Limited were
contributed to Brightpoint (UK) Limited, a majority-owned (80%) subsidiary of
BIL. In November 1996, the Company acquired TRI's 50% ownership interest in BIL
in consideration of 750,000 unregistered shares of Common Stock and $5.0 million
in cash.
In October 1996, BIL acquired the business and certain assets of Hatadicorp
Pty Ltd. ("Hatadi") based in Sydney, Australia in consideration of $2.8 million
in cash and a note payable, plus a 20% ownership interest in Brightpoint
Australia Pty Ltd. (an indirect subsidiary of BIL). In March and April of 1997,
the Company acquired the remaining 20% ownership interests in Brightpoint China
Ltd., Brightpoint (UK) Ltd. and Brightpoint Australia Pty Ltd. for an aggregate
consideration of 232,245 unregistered shares of Common Stock and $1.5 million in
cash. In June 1997, the Company, through Brightpoint Sweden AB, a wholly-owned
subsidiary of BIL, acquired the business and net assets of Telnic AB located in
Gothenburg, Sweden in consideration of approximately $2.5 million with an
additional $300,000 payable upon execution of a key contract and up to an
additional $3.6 million depending upon the future financial performance of
Brightpoint Sweden AB.
The Company completed 5-for-4, 3-for-2 and 5-for-4 stock splits in
September 1995, December 1996 and March 1997, respectively, each in the form of
a stock dividend.
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 statements of
income.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------- -----------------
1994 1995 1996 1996 1997
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net sales...................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales.................................. 93.9 93.3 92.2 93.0 91.9
----- ----- ----- ----- -----
Gross profit................................... 6.1 6.7 7.8 7.0 8.1
Selling, general and administrative expenses... 3.6 3.5 3.6 3.3 4.1
----- ----- ----- ----- -----
Income from operations......................... 2.5 3.2 4.2 3.7 4.0
Merger expenses................................ -- -- 0.5 1.2 --
Net investment gain............................ -- -- -- -- 0.3
Interest expense, net.......................... 0.1 0.3 0.3 0.2 0.7
----- ----- ----- ----- -----
Income before income taxes and minority
interest..................................... 2.4 2.9 3.4 2.3 3.6
Income taxes................................... 0.5 1.0 1.2 0.9 1.1
----- ----- ----- ----- -----
Income before minority interest................ 1.9 1.9 2.2 1.4 2.5
Minority interest in subsidiaries' earnings.... -- -- 0.3 -- 0.1
----- ----- ----- ----- -----
Net income..................................... 1.9% 1.9% 1.9% 1.4% 2.4%
===== ===== ===== ===== =====
Pro forma net income........................... 1.5% 1.7% 2.1% 2.1% 2.4%
===== ===== ===== ===== =====
</TABLE>
19
<PAGE> 22
The Company's net sales are comprised of sales of wireless handsets, sales
of related accessories and fees generated from value-added logistics services.
The Company's value-added logistics services include, among others, inventory
management, procurement, product fulfillment, programming, light assembly,
telemarketing, private labeling, kitting and customized packaging, off-balance
sheet financing, product warranty, repair and refurbishment and end-user support
services. Although fees for these value-added logistics services represent a
relatively small percentage of net sales, their impact on the Company's gross
profit is much greater. Compensation for the Company's distribution services,
which services include purchasing, marketing, selling, warehousing, picking,
packing, shipping and "just-in-time" delivery, is built into the equipment
prices paid or offered by the Company and thus is reflected in sales of wireless
handsets and accessories.
COMPARISON OF SIX MONTHS ENDED JUNE 30, 1997 TO SIX MONTHS ENDED JUNE 30,
1996
NET SALES. Net sales increased by 80% to $419.2 million for the six months
ended June 30, 1997 from $232.9 million for the six months ended June 30, 1996,
reflecting continued strong worldwide demand for wireless handsets and related
accessories. The increase in net sales is primarily attributable to a 53%
increase in handset volume and a 25% increase in the average selling price per
wireless handset. This increase in average selling price was the result of
significant sales growth in markets where sales are concentrated in higher
priced digital handsets.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------
1996 1997
---- ----
<S> <C> <C>
Net sales by division:
Asia-Pacific.............................................. 13% 44%
North America............................................. 67 31
Europe, Middle East and Africa............................ 2 20
Latin America............................................. 18 5
</TABLE>
Sales in the Asia-Pacific and Europe, Middle East and Africa divisions
remained strong as the Company continued to penetrate these markets. In its
North America division, units handled by the Company (phones sold by the Company
or phones, consigned to the Company by its customers, on which the Company has
performed its value-added logistics services) in the six months ended June 30,
1997 increased 31% from the comparable period in 1996 due primarily to an
increase in its value-added logistics services. In the many cases in which the
Company performs value-added logistics services on products consigned to it by
its customers, only service fees are recorded as sales. As a result, sales in
North America were lower in the six months ended June 30, 1997 than the six
months ended June 30, 1996. Sales in the Latin America division also decreased
due to a planned reduction in sales to other distributors, as the Company
continues to implement its strategy of selling directly to network operators.
Sales of wireless handsets, sales of related accessories and fees generated
from value-added logistics services were 89%, 7% and 4%, respectively, of net
sales for the six months ended June 30, 1997. Sales of wireless handsets and
related accessories were 84% and 16%, respectively, of net sales for the six
months ended June 30, 1996.
GROSS PROFIT. Gross profit increased by 107% to $34.0 million for the six
months ended June 30, 1997 from $16.4 million for the six months ended June 30,
1996, due to increased sales and increased gross margin (8.1% for the six months
ended June 30, 1997 as compared to 7.0% for the same period in 1996). The
increase in gross margin is primarily due to an increase in the amount of higher
margin value-added logistics services provided by the Company, as well as
increased sales in certain markets, and to certain customers, from which the
Company generated higher margins. In addition, the Company continued its
disciplined effort to reduce sales to other distributors in the North and Latin
America markets as such sales have traditionally been lower margin sales for the
Company.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by 121% to $17.1 million for the six months
ended June 30, 1997 from $7.8 million for the six months ended June 30, 1996. As
a percentage of net sales, selling, general and administrative expenses
increased to 4.1% for the six months ended June 30, 1997 as compared to 3.3% for
the same period in the prior year. This increase is
20
<PAGE> 23
attributable to the Company's expanded level of operations and reflects
increases in depreciation expense relating to investments in information
systems, rent expense for expanded facilities, and compensation expense and
travel costs associated with increased international sales and marketing
efforts.
INCOME FROM OPERATIONS. Income from operations increased by 95% to $16.9
million for the six months ended June 30, 1997 from $8.6 million for the six
months ended June 30, 1996. This increase is primarily attributable to increased
gross profit offset partially by an increase in selling, general and
administrative expenses.
NET INCOME AND PRO FORMA NET INCOME. Net income increased by 111% to $10.3
million in the six months ended June 30, 1997 from pro forma net income of $4.9
million in the six months ended June 30, 1996. This increase is the result of
increased income from operations, a $1.4 million net investment gain (as
described below) and a decrease in the effective income tax rate from 39% in the
six months ended June 30, 1996 to 29.9% in the first six months of 1997,
partially offset by an increase in interest expense relating to bank debt
obtained for working capital purposes and by income attributable to minority
interests. The decrease in the effective income tax rate is due primarily to
increased earnings in tax jurisdictions with lower statutory rates. Pro forma
amounts for 1996 reflect a provision for income taxes for Allied Communications,
which, at the time, was not subject to income taxes.
Net income per share increased by 91% to $0.44 for the six months ended
June 30, 1997 from pro forma net income per share of $0.23 for the six months
ended June 30, 1996. For the six months ended June 30, 1997, weighted average
common shares outstanding were approximately 23.2 million as compared to
approximately 20.8 million shares for the six months ended June 30, 1996. This
increase is due primarily to shares issued in connection with the Company's
acquisition of BIL and of the minority interests in Brightpoint China Limited,
Brightpoint (UK) Limited and Brightpoint Australia Pty Ltd. and the impact of
the exercise of stock options and warrants.
During the first quarter of 1997, the Company realized a gain on the sale
of its equity investment in CellStar Corporation. The gain, net of transaction
costs, including related bonuses to certain key employees, was approximately
$8.3 million. In addition, on March 31, 1997, Pocket filed for protection under
Chapter 11 of the U.S. Bankruptcy Code. Accordingly, the Company recorded $6.9
million of losses on its investments in Pocket and two smaller equity
investments. Excluding the impact of the resulting net investment gain of $1.4
million and related income taxes, net income per share for the six months ended
June 30, 1997 would have been $0.41.
COMPARISON OF YEAR ENDED DECEMBER 31, 1996 TO YEAR ENDED DECEMBER 31, 1995
NET SALES. Net sales increased by 41% to $589.7 million in 1996 from $419.1
million in the prior year, as worldwide demand for wireless handsets and related
accessories continued to accelerate. The increased demand for wireless products
was fueled by increasing penetration of wireless handsets in many world markets
and by increased demand for replacement or upgraded equipment. The Company
completed its merger with Allied Communications in June 1996 and formed its
joint venture relating to BIL in August 1996. This commitment to the Europe,
Middle East and Africa, Asia-Pacific and Latin America markets, resulted in
significant sales growth in markets outside of North America. Wireless handset
volume increased by 52% in 1996 from the prior year.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------
1995 1996
----- -----
<S> <C> <C>
Net sales by division:
North America............................................. 64% 49%
Asia-Pacific.............................................. 2 21
Latin America............................................. 23 17
Europe, Middle East and Africa............................ 11 13
</TABLE>
21
<PAGE> 24
Historically, period-to-period average selling prices for wireless handsets
have declined significantly; however, in 1996, the average selling price of
wireless handsets sold by the Company increased by approximately 3% due
primarily to an increase in sales of higher-priced digital wireless handsets.
Sales of wireless handsets, sales of related accessories and fees generated
from value-added logistics services were 88%, 11% and 1%, respectively, of net
sales for 1996. Sales of wireless handsets and related accessories were 86% and
14%, respectively, of net sales for 1995.
GROSS PROFIT. Gross profit increased by 63% to $45.8 million in 1996 from
$28.2 million in 1995, due to the increase in wireless handset sales and the
increase in the gross margin (7.8% for 1996 as compared to 6.7% for 1995). The
increase in gross margin is due to the execution of the Company's strategy to
provide higher-margin value-added logistics services, as well as increased sales
of units on which the Company earned higher margins. In addition, the Company
made a concerted effort to reduce sales to other distributors in the North and
Latin America markets. Although this disciplined change in the North and Latin
America sales mix accounted for slower growth in those markets, the result was
an enhancement in the Company's gross margin.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by 41% to $20.8 million in 1996 from $14.8
million in 1995, due primarily to the increased business activities of the
Company and acquisitions which opened new markets to the Company. The Company
increased its staff in several areas during the year, including management,
operations, sales and marketing, and information systems. These staff
enhancements were necessary to support the expanded level of business generated
by the Company. This increase is also due to increases in depreciation expense
related to investments in information systems and leasehold improvements, rent
expense due to expanded facilities and various marketing costs including travel,
promotions and commissions. Selling, general and administrative expenses, as a
percentage of net sales, remained constant at 3.5%.
INCOME FROM OPERATIONS. Income from operations increased by 87% to $25.0
million in 1996 from $13.4 million in 1995. This increase is due primarily to
increases in unit sales and the Company's ability to enhance its gross profit
and hold selling, general and administrative expenses relatively constant as a
percent of net sales.
PRO FORMA NET INCOME. Pro forma net income increased by 73% to $12.6
million in 1996 from $7.3 million in 1995. This increase is a result of
increased income from operations partially offset by interest expense relating
primarily to bank debt obtained for working capital purposes and by the income
attributable to minority interests.
Generally accepted accounting principles require that certain charges
related to pooling-of-interests transactions be expensed in the period in which
the transaction is consummated. Such charges related to the Allied Merger, in
the amount of $2.1 million net of applicable taxes, were recognized as expense
in the quarter ended June 30, 1996. Pro forma amounts exclude the effect of this
one-time charge.
Prior to the Allied Merger, Allied Communications had elected to be treated
as a Subchapter S corporation and was, therefore, not subject to federal and
state income taxes. Pro forma amounts provide for income taxes on the income not
previously taxed at the corporate level.
Pro forma net income per share increased by 38% to $0.58 in 1996 from $0.42
in 1995. For 1996, weighted average common shares outstanding were approximately
21.6 million shares as compared to approximately 17.2 million shares for 1995.
This increase is due primarily to shares issued by the Company in connection
with its acquisition of TRI's 50% ownership interest in BIL in the fourth
quarter of 1996 and the impact of the exercise of stock options and warrants.
22
<PAGE> 25
COMPARISON OF YEAR ENDED DECEMBER 31, 1995 TO YEAR ENDED DECEMBER 31, 1994
NET SALES. Net sales increased by 36% to $419.1 million in 1995 from $309.2
million in 1994 as a result of increased demand in markets outside North
America. In addition, the Company increased domestic unit volume, offsetting a
decrease in per unit prices.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------
1994 1995
---- ----
<S> <C> <C>
Net sales by division:
North America............................................. 81% 64%
Latin America............................................. 13 23
Europe, Middle East and Africa............................ 6 11
Asia-Pacific.............................................. -- 2
</TABLE>
GROSS PROFIT. Gross profit increased by 50% to $28.2 million in 1995 from
$18.8 million in 1994, due primarily to an increase in wireless handset sales
(6.7% for 1995 as compared to 6.1% for 1994). In addition, an increase in the
volume of higher margin accessory sales helped to enhance the gross margin.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by 34% to $14.8 million in 1995 from $11.1
million in 1994, due primarily to the increased level of business activity
generated by the Company. Expanded operations were supported by increases in
compensation expense, rent expense, travel costs and an increase in the
allowance for doubtful accounts.
INCOME FROM OPERATIONS. Income from operations increased by 75% to $13.4
million in 1995 from $7.7 million in 1994. This increase is due primarily to
increases in unit sales and the Company's ability to enhance its gross profit
and hold selling, general and administrative expenses relatively constant as a
percent of net sales.
PRO FORMA NET INCOME. Pro forma net income increased by 60% to $7.3 million
in 1995 from $4.6 million in 1994. This increase is a result of an increase in
income from operations partially offset by an increase in interest expense and
income taxes.
Pro forma net income per share increased by 31% to $0.42 in 1995 from $0.32
in 1994. For 1995, weighted average common shares outstanding were approximately
17.2 million shares as compared to approximately 14.3 million shares for 1994.
This increase is due primarily to the Company's October 1995 public offering and
the impact of the exercise of stock options and warrants outstanding.
QUARTERLY RESULTS OF OPERATIONS
The following table presents certain unaudited quarterly financial
information for each of the eight quarters in the two-year period ended June 30,
1997. In the opinion of the Company's management, this information has been
prepared on the same basis as the Consolidated Financial Statements appearing
elsewhere in this Prospectus and includes all adjustments (consisting only of
normal recurring accruals) necessary to present fairly the financial results set
forth herein. Results of operations for any previous quarter are not necessarily
indicative of results for any future period.
23
<PAGE> 26
<TABLE>
<CAPTION>
QUARTER ENDED
----------------------------------------------------------------------------------
SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1995 1995 1996 1996 1996 1996
------------- ------------ --------- -------- ------------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Net sales................... $100,915 $129,132 $112,960 $119,896 $145,290 $211,572
Cost of sales............... 94,093 119,996 105,032 111,414 133,036 194,396
-------- -------- -------- -------- -------- --------
Gross profit................ 6,822 9,136 7,928 8,482 12,254 17,176
Selling, general and
administrative expenses... 3,712 5,147 3,677 4,090 5,105 7,977
-------- -------- -------- -------- -------- --------
Income from operations...... 3,110 3,989 4,251 4,392 7,149 9,199
Merger expenses............. -- -- -- 2,750 -- --
Net investment gain......... -- -- -- -- -- --
Interest expense, net....... 508 97 184 439 549 946
-------- -------- -------- -------- -------- --------
Income before income taxes
and minority interest..... 2,602 3,892 4,067 1,203 6,600 8,253
Income taxes................ 894 1,369 1,165 806 2,349 3,008
-------- -------- -------- -------- -------- --------
Income before minority
interest.................. 1,708 2,523 2,902 397 4,251 5,245
Minority interest in
subsidiaries' earnings.... -- -- -- -- 1,042 716
-------- -------- -------- -------- -------- --------
Net income.................. $ 1,708 $ 2,523 $ 2,902 $ 397 $ 3,209 $ 4,529
======== ======== ======== ======== ======== ========
Pro forma net income........ $ 1,583 $ 2,369 $ 2,477 $ 2,407 $ 3,209 $ 4,529
======== ======== ======== ======== ======== ========
As a percentage of net
sales:
Net sales................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Gross profit.............. 6.8 7.1 7.0 7.1 8.4 8.1
Selling, general and
administrative
expenses................ 3.7 4.0 3.2 3.4 3.5 3.8
Income from operations.... 3.1 3.1 3.8 3.7 4.9 4.3
Pro forma net income...... 1.6 1.8 2.2 2.0 2.2 2.1
<CAPTION>
QUARTER ENDED
--------------------
MARCH 31, JUNE 30,
1997 1997
--------- --------
<S> <C> <C>
Net sales................... $199,169 $220,027
Cost of sales............... 183,167 202,013
-------- --------
Gross profit................ 16,002 18,014
Selling, general and
administrative expenses... 8,096 9,040
-------- --------
Income from operations...... 7,906 8,974
Merger expenses............. -- --
Net investment gain......... 1,432 --
Interest expense, net....... 1,123 1,983
-------- --------
Income before income taxes
and minority interest..... 8,215 6,991
Income taxes................ 2,443 2,097
-------- --------
Income before minority
interest.................. 5,772 4,894
Minority interest in
subsidiaries' earnings.... 356 27
-------- --------
Net income.................. $ 5,416 $ 4,867
======== ========
Pro forma net income........ $ 5,416 $ 4,867
======== ========
As a percentage of net
sales:
Net sales................. 100.0% 100.0%
Gross profit.............. 8.0 8.2
Selling, general and
administrative
expenses................ 4.0 4.1
Income from operations.... 4.0 4.1
Pro forma net income...... 2.7 2.2
</TABLE>
The Company's sales are influenced by a number of seasonal factors
associated with consumer electronics and retail sales which tend to result in
increased volume in the latter part of the calendar year. The overall growth of
the Company's business has reduced the impact of such factors on the Company's
operating results. However, seasonality contributes to the increase in the
Company's sales in the fourth quarter of its fiscal years.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary cash requirements have been to fund increased levels
of accounts receivable and inventories and to fund capital expenditures. The
Company has historically satisfied its working capital requirements principally
through cash flow from operations, vendor financing, bank borrowings and the
issuance of equity securities.
In April 1994, the Company consummated an initial public offering of its
Common Stock, pursuant to which the Company received net proceeds of
approximately $12.1 million. The offering provided additional working capital to
fund the Company's growth and to facilitate additional opportunities.
In October 1995, the Company consummated a public offering of Common Stock
pursuant to which the Company received net proceeds of approximately $33.5
million. The net proceeds were utilized to repay amounts outstanding on the
Company's line of credit, fund capital expenditures associated with its
information systems and new corporate headquarters, and provide working capital
for acquisitions and general corporate purposes.
At June 30, 1997, the Company had working capital of approximately $167.6
million compared to working capital of approximately $143.5 million at December
31, 1996. The increase in working capital is primarily attributable to a
decrease in accounts payable. This increase was funded by an increase in bank
borrowings and the sale of the Company's investment in CellStar Corporation. The
Company also generated working capital through the exercise of stock options.
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Net cash used by operating activities was approximately $23.0 million for
the six months ended June 30, 1997, as compared to approximately $20.8 million
for the six months ended June 30, 1996. The increase in cash used by operating
activities for the six months ended June 30, 1997 was primarily attributable to
a decrease in accounts payable and an increase in accounts receivable, partially
offset by a decrease in inventories. Net cash provided by investing activities
was approximately $1.8 million for the six months ended June 30, 1997, as
compared to net cash used by investing activities of approximately $4.6 million
for the six months ended June 30, 1996. The cash provided by investing
activities for the six months ended June 30, 1997 was primarily attributable to
the sale of the Company's investment in CellStar Corporation, partially offset
by capital expenditures relating to the purchase of information systems
equipment and software, the expansion of the Company's operations center in
Indianapolis, Indiana, the opening of its west coast operations center in
Sparks, Nevada, the purchase of minority interests in Brightpoint China Limited,
Brightpoint (UK) Limited and Brightpoint Australia Pty Ltd. and the continued
expansion of its international operations. The cash used by investing activities
for the six months ended June 30, 1996 was primarily attributable to capital
expenditures relating to the purchase of information systems equipment and
software. Net cash provided by financing activities was approximately $23.5
million for the six months ended June 30, 1997, as compared to approximately
$30.7 million for the six months ended June 30, 1996. The net cash provided by
financing activities is primarily due to advances against the Company's line of
credit and proceeds from the exercise of stock options. At June 30, 1997, the
Company had cash and cash equivalents of approximately $16.9 million.
On June 24, 1997, the Company entered into a $200 million five-year senior
secured revolving line of credit facility with The First National Bank of
Chicago and Bank One, Indiana, N.A., as co-agents for a group of banks
(collectively, the "Banks"). The new facility replaced the Company's two prior
credit facilities of up to $125 million in the aggregate. The new line of credit
matures in June 2002 and generally bears interest, at the Company's option, at
(i) the greater of The First National Bank of Chicago's corporate base rate and
0.50% plus the Federal funds effective rate (the "Base Rate") or (ii) the rate
at which deposits in United States dollars or Eurocurrencies are offered by The
First National Bank of Chicago to first-class banks in the London interbank
market plus a spread ranging from 40 to 112.5 basis points (based on a leverage
ratio defined in the credit agreement) plus a spread reserve, if any, and
provides it with the ability to borrow in multiple currencies and thus to use
the facility for its global working capital needs. Borrowings by the Company's
non-United States subsidiaries will bear interest at rates negotiated with the
applicable lenders. Under its line of credit, at June 30, 1997, there was $97.5
million outstanding, an aggregate of $15.6 million in letters of credit
outstanding and $86.9 million of credit remaining available.
All of the Company's assets located in the United States and 65% of the
capital stock of the Company's foreign subsidiaries are pledged to the Banks as
collateral, and the Company is substantially prohibited from incurring
additional indebtedness, either of which terms could, under certain
circumstances, limit the Company's ability to implement its expansion plans. In
addition to certain net worth and other financial covenants, the Company's loan
agreement with the Banks 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 or selling all or substantially all of its assets.
The Company has increasingly emphasized the sale of products on open
account terms and has purchased increased levels of inventories to support an
expanding customer base, which has resulted in increased accounts receivable
days outstanding and a decrease in inventory turns. The Company believes that
the ability to offer these credit terms provides it with a competitive
advantage.
The Company seeks to maintain an average of approximately 30 days of
inventory on hand in addition to making opportunistic spot buys. These spot buys
occur frequently at year end and can cause inventories at the end of the year to
be higher on a relative basis than at other times during the year.
At June 30, 1997, the Company's allowance for doubtful accounts was $2.2
million, which the Company believes is currently adequate for the size and
nature of its receivables. Bad debt expense accounted for less than 1.0% of the
Company's net sales for 1995, 1996 and the six months ended June 30, 1997.
Nevertheless, delays in collection or the uncollectibility of accounts
receivable could have an adverse effect on the Company's liquidity and working
capital position. In connection with the Company's expanded operations, the
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Company has offered open account terms to additional customers, which subjects
the Company to increased credit risk, particularly in foreign markets. The
Company seeks to minimize losses on credit sales by closely monitoring its
customers' credit worthiness and by seeking to obtain letters of credit or
similar security in connection with certain open account sales to customers
located in foreign markets.
The Company believes that the net proceeds to be received by it from the
Offerings, together with projected cash flow from operations and existing
capital resources, including cash and borrowings available under its line of
credit, will be sufficient to satisfy the Company's anticipated working capital
requirements and expansion plans for at least 12 months following the
consummation of the Offerings. The Company had no material commitments for
capital expenditures as of June 30, 1997.
INFLATION AND FOREIGN CURRENCY
Inflation has historically not had a material effect on the Company's
operations. The Company frequently transacts business in currencies other than
its functional currency and, therefore, experiences some risk to exchange rate
fluctuations. Historically, the Company has not experienced significant exchange
rate gains or losses. Increasing trade activity in foreign markets could subject
the Company to greater inflationary pressures and more significant exchange rate
gains or losses from these arrangements.
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BUSINESS
GENERAL
Brightpoint is a leading provider of distribution and value-added logistics
services to the wireless communications industry. The Company facilitates the
effective and efficient distribution of wireless handsets and related
accessories from leading manufacturers, under brand names such as Nokia,
Ericsson, Philips, Siemens and Motorola, to network operators, agents,
resellers, dealers and retailers in the wireless communications market. The
Company's distribution services include purchasing, marketing, selling,
warehousing, picking, packing, shipping and "just-in-time" delivery of wireless
handsets and accessories. Its value-added logistics services include, among
others, inventory management, product fulfillment, kitting and customized
packaging, light assembly and end-user support services. The Company is one of
the largest dedicated distributors of wireless handsets and accessories in the
world, with operations centers and/or sales offices in Australia, China, Hong
Kong, the Philippines, South Africa, Sweden, the United Arab Emirates, the
United Kingdom and the United States, and provides its services to a customer
base of more than 10,000 network operators, manufacturers, agents, resellers,
dealers and retailers, in over 75 countries and on six continents. The Company's
four regional divisions, Asia-Pacific; North America; Europe, Middle East and
Africa; and Latin America, accounted for 44%, 31%, 20% and 5%, respectively, of
the Company's net sales for the six months ended June 30, 1997.
WIRELESS COMMUNICATIONS INDUSTRY
The wireless communications industry provides voice and data communications
primarily through cellular telephone, personal communications services ("PCS"),
personal communications networks ("PCN"), satellite, enhanced specialized mobile
radio ("ESMR") and paging services. Among other factors, economic development,
advances in systems technology and equipment, the proliferation of manufacturers
and the increased number of network operators have increased consumer acceptance
and driven dramatic increases in worldwide demand for wireless communications
equipment and services.
In recent years, the markets for wireless communications equipment and
services have expanded significantly. On a worldwide basis, the number of
wireless subscribers during the past five years increased by 52 million, or 60%,
to approximately 140 million by the end of 1996. Nonetheless, at the end of
1996, wireless penetration was estimated at a mere 16% of the population within
the United States and was still, on average, less than 2% of the population
outside of the United States (with Sweden, Hong Kong and Japan having the
highest penetration rates at about 28%, 22% and 18%, respectively, while
countries such as China and India had penetration rates of only .57% and .03%,
respectively), reflecting significant worldwide opportunities for growth within
the wireless communications industry. According to a leading independent
industry research group, the number of worldwide subscribers is expected to grow
by more than 250 million subscribers, to approximately 400 million subscribers,
by the end of 2000. The Company believes it is well positioned to take advantage
of the following major trends taking place within the industry.
NEW NETWORK OPERATORS. The number of network operators in each market has
increased and is expected to continue to increase as a result of increasing
deregulation within the wireless communications industry and the introduction of
new technological applications such as PCS and satellite-based communications
systems. For example, in the United States, prior to 1995, the United States
Federal Communications Commission (the "FCC") allowed only two network operators
to provide cellular service in any one service area. In connection with the
auctioning of PCS licenses in 1995 and 1996, the FCC permitted the addition of
up to six PCS network operators in every service area. In addition, the FCC has
awarded three mobile satellite licenses to entities that are investing in
satellites, which will enable them to provide wireless phone, data, fax and
paging on a global basis. The emergence of these, and other, new wireless
communications technologies and services is expected to increase both the number
of wireless network operators in each market and the services provided,
including seamless roaming, increased service coverage, improved signal quality
and greater data transmission capacity. This increase in the number of network
operators, together with the increased number of resellers of wireless
communication services in certain markets, is expected to intensify competition
for new and existing subscribers, driving growth in subscribers and the market
for wireless communications equipment.
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INCREASING PENETRATION OF WORLDWIDE MARKETS. The Company expects that
continuing demand for wireless services will drive increased penetration of
markets worldwide. In certain markets, such as certain Asia-Pacific and Latin
American countries, which are currently characterized by relatively low
penetration, such growth is expected to be driven by economic growth, increased
service availability and the lower cost of service compared to conventional
wireline telephony systems. In addition, certain markets such as Sweden,
Australia, Hong Kong, Japan and the United States, which are currently
characterized by higher market penetrations, are also expected to grow,
primarily as a result of increasing deregulation, the availability of additional
spectrum frequencies, the allocation of new network operator licenses, increased
competition and the emergence of new wireless technologies.
TRANSITION FROM ANALOG TO DIGITAL. The wireless communications industry has
historically provided telecommunications services primarily through analog
technology. However, new wireless networks have increasingly been built around
digital technologies, which provide increased network capacity, more
functionality, better voice quality and greater security/privacy than analog
technologies. By the time digital technologies became commercially available in
the United States during the latter part of 1996, cellular systems in the United
States had, for the most part, already been built to full capacity (using analog
technologies). Consequently, the first proponents of the new digital
technologies in the United States were the PCS network operators, as they had
not yet built costly network infrastructures. These PCS providers now compete
with incumbent cellular network operators in the United States for wireless
subscribers. In addition, incumbent analog cellular network operators in the
United States are gradually beginning to shift their subscribers toward digital
coverage, a shift that, to a great degree, has already occurred in many markets
within the Company's Asia-Pacific and Europe, Middle East and Africa divisions.
PROLIFERATION OF MANUFACTURERS. With the opportunities presented by a
rapidly expanding market for wireless communications equipment, the transition
from analog to digital technology, and the penetration of the mass consumer
market, many new manufacturers are expected to produce wireless handsets and
accessories, including certain manufacturers who have historically been
successful in providing consumer electronics to the mass consumer market. The
greater number of manufacturers is expected to heighten competition and most
likely will provide consumers with lower handset prices, broader selection and
more end-market channels, resulting in higher product turnover by end users.
OUTSOURCING. As the variety of handset models expands, digital technology
evolves and distribution migrates from the agent/dealer network to mass
retailers, incumbent cellular network operators are switching from in-house
distribution to independent distribution services in order to lower overall
costs. In order to maintain their resources for marketing, sales and customer
retention, new cellular and PCS network operators are also increasingly
outsourcing their handset distribution, fulfillment and inventory management
functions (as opposed to building distribution infrastructure and committing
limited working capital to inventory maintenance). At the same time, at the
other end of the industry, large incumbent handset manufacturers are starting to
outsource some of their channel management functions and utilize value-added
logistics services as a means of simplifying and reducing the cost of their
worldwide distribution systems. Finally, as competition increases and prices
decrease, vendors and network operators are targeting the growing consumer
segment through mass retail channels, requiring greater levels of fulfillment
services in order to address the logistical challenges of supporting mass
retailers and consumer electronics outlets.
GROWTH STRATEGY
The Company's primary strategies for building on its position as a global
leader in providing services to the growing wireless communications industry
include the following:
CAPTURE GROWING OUTSOURCING MARKET. The Company believes that increasing
government deregulation, competition and technological developments within the
wireless communications industry have caused manufacturers, network operators
and resellers to focus available internal resources on their core competencies,
and to outsource an increasing number of their product management functions to
specialists such as the Company, in an effort to reduce costs, increase
productivity and improve quality. The Company has strategically positioned
itself to capitalize on the growing trend toward outsourcing by offering a wide
variety
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of distribution and value-added logistics services that effectively and
efficiently move wireless handsets and accessories through market channels. See
"-- Services."
EXPAND WORLDWIDE PRESENCE. In the six months ended June 30, 1997, the
Company's sales in markets outside of North America represented approximately
69% of its total net sales, compared to 51%, 36% and 18% for the years ended
December 31, 1996, 1995 and 1994, respectively. These increases are the direct
result of the Company's strategy of focusing on growing markets worldwide. In
connection with its global expansion, the Company has created an in-country
presence in certain key markets throughout the world and intends to continue to
expand its international presence through internal growth at existing locations,
mergers and acquisitions, joint ventures, other strategic alliances, and
start-ups in new locations. In the last 18 months, the Company has been able to
significantly expand its global presence through the acquisition of Allied
Communications (United States and Latin America), the acquisition of the
business and net assets of each of Technology Resources International Limited
(China, Hong Kong and United Kingdom), Hatadicorp Pty Ltd. (Australia) and
Telnic AB (Sweden) and the formation of each of Brightpoint South Africa (Pty)
Limited and Brightpoint Philippines, Inc. In addition, the Company is in the
process of forming Brightpoint Middle East FZE to be located in the Jebel Ali
Free Zone of Dubai, United Arab Emirates.
LEVERAGE THE COMPANY'S EXPERIENCE AND EXPERTISE WITH NEW WIRELESS
COMMUNICATIONS TECHNOLOGIES. There are continuously new, often incompatible,
wireless communications technologies and applications being introduced into the
wireless communications market, such as wireless local loop and satellite-based
communications, which are expected to contribute to future subscriber growth.
The Company's value-added logistics capabilities are, as a result of their
versatility, flexibility and broad-based application, virtually indifferent to
changes in telecommunications technologies and should integrate well with the
needs of the manufacturers, network operators and resellers of new wireless
products and services. In addition, the Company already provides distribution
services for, and has established strong relationships with, many of the
wireless communications equipment manufacturers which the Company expects to
produce products utilizing these emerging technologies and applications,
including Nokia Mobile Phones Ltd. ("Nokia"), Ericsson Inc. ("Ericsson"),
Philips Consumer Communications ("Philips") and Siemens Ltd. ("Siemens"). As a
result, the Company believes that it is well-positioned as a provider of
distribution and value-added logistics services to participate in the
proliferation of the new wireless communications technologies and products
currently entering the market or being developed.
MAINTAIN OPERATIONAL EXCELLENCE. The Company continuously seeks to improve
and streamline its distribution and process handling systems in terms of
quality, time and cost in order to establish itself as the most effective and
efficient market channel for wireless communications equipment. The Company's
operational excellence, achieved through its business systems and procedures,
proprietary information systems, state-of-the-art facilities and strong regional
division management teams, allows the Company to develop strong relationships
with both the leading manufacturers of wireless communications equipment and its
other suppliers and customers. The Company has recently designed and implemented
a detailed business system and work flow procedures plan which the Company
believes enhances its ability to perform, and monitor the performance of, its
distribution and value-added logistics services. The Company's comprehensive
information systems, which the Company intends to integrate throughout its
global network, have given the Company the platform to develop many proprietary
solutions for its customers. These systems provide full electronic data
interchange capabilities and include proprietary modules for order fulfillment,
returns administration and a flexible service delivery system in support of the
Company's value-added logistics services. In the first quarter of 1997, the
Company completed an expansion of its state-of-the-art operations center in
Indianapolis, Indiana, increasing the total size of such facility to 182,400
square feet and giving it the capacity necessary to assemble, package and
fulfill approximately 12,000 units per day. In the first quarter of 1997, the
Company also opened an operations center in Sparks, Nevada, which together with
the Company's three other United States operations centers, gives the Company
the ability to serve every customer in the continental United States with
two-day ground rates. The Company has also entered into leases for additional
operations centers in South Africa and the Philippines, bringing to 11 the total
number of operations centers currently operated by the Company.
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SERVICES
The Company has strategically positioned itself to capitalize on the
growing trend toward outsourcing by offering distribution and value-added
logistics services that effectively and efficiently move wireless handsets and
accessories through market channels. The Company has become one of the leading
suppliers of such services due primarily to its thorough understanding of the
needs within each distribution channel and its development of the knowledge and
resources necessary to create successful solutions. The Company currently
provides services for some of the leading manufacturers, network operators (both
cellular and PCS) and resellers in the wireless communications market.
DISTRIBUTION SERVICES. The Company's distribution services include the
purchasing, marketing, selling, warehousing, picking, packing, shipping, and
"just-in-time" delivery of a broad selection of wireless communications products
from leading manufacturers. The Company continually reviews and evaluates
wireless communications products in determining the mix of products purchased
for resale and seeks to acquire distribution rights for products which the
Company believes have the potential for significant market penetration.
The products distributed by the Company include a variety of handsets
designed to work on substantially all operating platforms (including analog
platforms, such as AMPS, TACS and NMT, and digital platforms, such as GSM and
TDMA) and feature prominent brand names such as Nokia, Ericsson, Philips,
Siemens and Motorola. For the years ended December 31, 1995 and 1996 and the six
months ended June 30, 1997, approximately 86%, 88% and 89%, respectively, of the
Company's net sales were derived from handset sales.
In addition, the Company distributes handset accessories, such as
batteries, battery eliminators, plug-in chargers, cases, antennas and
"hands-free" kits. Among other things, the Company purchases original equipment
manufacturer ("OEM") accessories, either prepackaged or in bulk, and resells
them "as-is"; it purchases OEM accessories in bulk and packages them according
to its customers' specifications; it purchases after-market accessories and
packages them according to its customers' specifications; and it packages and
sells OEM and after-market accessories under its own BrightLinkTM name.
Accessories typically carry higher margins than handsets. For the years ended
December 31, 1995 and 1996 and the six months ended June 30, 1997, sales of
accessories accounted for approximately 14%, 11% and 7%, respectively, of the
Company's net sales.
VALUE-ADDED LOGISTICS SERVICES. The Company's value-added logistics
services include, among others, inventory management, product fulfillment,
programming, private labeling, light assembly, telemarketing, product warranty,
repair and refurbishment and end-user support services. The Company also
procures wireless handsets and accessories for its customers using the Company's
own sources or the customers' specified vendors. In addition, the Company
performs packaging and kitting functions for its customers, whereby it receives
orders, either directly from customers or from customers' end-users, via
electronic data interchange, and then, on a "just-in-time" basis, makes shelf
ready kits in customized packaging prescribed by its customers, in satisfaction
of the orders. For certain of its customers, the Company also finances purchases
of wireless handsets and accessories up to an agreed upon credit limit. When the
Company provides such off-balance sheet financing, it assumes the financial risk
but typically not the risk of obsolescence. When the customer consigns products
to the Company for order fulfillment, the financial risk and the risk of
obsolescence both typically lie completely with the customer. Recently, the
Company has also entered into a contract to provide a network operator with a
wide range of value-added logistics services relating to its new wireless
prepaid program in South Africa, including various inventory management, product
fulfillment and switch management services, and expects to enter into similar
arrangements in the Philippines and other markets in the future.
During the six months ended June 30, 1997, the Company's fees for
value-added logistics services were approximately $15 million (4% of net sales)
as compared to approximately $353,000 (less than 1% of net sales) in the six
months ended June 30, 1996. Because the fees for such services have much higher
margins than those associated with handset and accessory sales, they represent a
higher than proportionate percentage of the Company's operating profits. In
addition, the Company believes that its value-added logistics services will both
expand the Company's customer base and create new revenue streams from its
existing customers.
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CUSTOMERS
The Company provides distribution and value-added logistics services to a
customer base of more than 10,000 network operators, manufacturers, agents,
resellers, dealers and retailers. For the years ended December 31, 1995 and 1996
and the six months ended June 30, 1997, aggregate sales of handsets and
accessories to the Company's five largest customers accounted for approximately
17%, 15% and 25%, respectively, of the Company's net sales. During the year
ended December 31, 1996, no single customer accounted for more than 6% of the
Company's net sales. During the six months ended June 30, 1997, product sales to
Success World Limited, an exporter in Hong Kong, accounted for approximately 12%
of the Company's net sales and no other customer accounted for more than 5% of
the Company's net sales.
The Company generally sells its products pursuant to customer purchase
orders and ships product orders received by 4:00 P.M. local time the same day.
Unless otherwise requested, substantially all of the Company's products are
delivered by common carriers within two days of receipt of customer orders.
Because orders are filled shortly after receipt, backlog is not material to the
Company's business. The Company's value-added logistics services are typically
provided pursuant to two-year, renewable agreements.
PURCHASING AND SUPPLY
The Company has established key relationships with leading manufacturers of
wireless communications equipment. The Company generally negotiates directly
with manufacturers and suppliers in order to ensure adequate inventories of
popular brand name products on favorable pricing terms. In 1996, the Company
purchased its products from more than 45 suppliers. Inventory purchases are
based on quality, price, service, customer demand, product availability and
brand name recognition. Certain of the Company's suppliers provide favorable
purchasing terms to the Company, including price protection and cooperative
advertising and marketing allowances. Product manufacturers typically provide
warranties which the Company extends to its customers.
For the years ended December 31, 1995 and 1996 and the six months ended
June 30, 1997, the Company's three largest sources of wireless handsets and
accessories in the aggregate accounted for approximately 38%, 51% and 65%,
respectively, of the Company's product purchases. For the year ended December
31, 1995, the Company's three largest suppliers (Nokia, BellSouth Cellular Corp.
and Ericsson) accounted for approximately 20%, 10% and 8%, respectively, of the
Company's product purchases. For the year ended December 31, 1996, the Company's
three largest suppliers (Nokia, Ericsson and Lucent Technologies Inc.) accounted
for approximately 33%, 12% and 6%, respectively, of the Company's product
purchases. For the six months ended June 30, 1997, the Company's three largest
suppliers (Nokia, Ericsson and Siemens) accounted for approximately 37%, 18% and
10%, respectively, of the Company's product purchases. For these periods, none
of the Company's other suppliers accounted for more than 10% of product
purchases. Failure or delay by these or other suppliers in supplying competitive
products on favorable terms, or at all, would materially adversely affect the
Company's operating margins and the Company's ability to obtain and deliver
products on a timely and competitive basis. See "-- Competition."
The Company maintains agreements with certain of its significant suppliers,
including Nokia, Ericsson and Philips. The most recent agreement, with Nokia,
provides for distribution services in Hong Kong and China. These agreements are
generally non-exclusive, require the Company to satisfy minimum purchase
requirements and can be terminated on short notice by either party. The Company
purchases products from other manufacturers and dealers pursuant to purchase
orders placed from time to time in the ordinary course of business. The Company
generally places orders to its suppliers by facsimile on a daily basis. Purchase
orders are typically filled within one to 21 days and products are shipped to
the Company's warehouses by common carrier. The Company believes that its
relationships with its suppliers are good.
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SALES AND MARKETING
The Company's sales and marketing efforts are coordinated in each of its
four regional divisions by a Managing Director for that particular division.
Because of the service-oriented nature of the Company's business, these
executives devote a substantial amount of their time to developing and
maintaining relationships with the Company's customers in addition to managing
the overall operations of the division. Each division's sales offices are
managed by a Managing Director who reports to the Managing Director of the
division and is responsible for the daily sales and operations of each sales
office. Each division has telemarketers who specialize in or focus on telephone
sales to a particular type of customer (e.g. network operator, dealer, reseller,
other distributor, retailer, etc.). In addition, the Company markets its
value-added logistics services through the Managing Director in each of its four
regional divisions and through dedicated sales personnel. Including support
personnel, the Company had approximately 141 employees involved in sales and
marketing at June 30, 1997, including 26 in its Asia-Pacific division, 76 in its
North America division, 33 in its Europe, Middle East and Africa division and 6
in its Latin America division.
The Company believes that product recognition by customers and consumers is
an important factor in the marketing of the products sold by the Company.
Accordingly, the Company promotes itself and certain of its product lines
through advertising in trade publications and attendance at international,
national and regional trade shows, as well as through direct mail solicitation,
broadcast faxing and its telemarketing activities. The Company's manufacturers
and dealers use a variety of methods to promote their products directly to
consumers, including print and media advertising based on product features.
COMPETITION
The Company operates in a highly competitive market and believes that such
competition will intensify in the future. The markets for wireless
communications products are characterized by intense price competition and
significant price erosion over the life of a product. The Company competes
principally on the basis of value (in terms of price, time and reliability),
service and product availability. The Company competes with numerous
well-established manufacturers and wholesale distributors of wireless equipment,
including the Company's customers and suppliers, as well as with wireless
network operators, including the Company's customers, and logistics service
providers, some of which possess substantially greater financial, marketing,
personnel and other resources than the Company. Certain of these competitors
have the financial resources necessary to withstand substantial price
competition and implement extensive advertising and promotional campaigns, both
generally and in response to efforts by additional competitors to enter into new
markets or introduce new products.
The wireless communications equipment distribution industry has, in the
past, been characterized by low barriers to entry. However, as the market
requirement shifts from pure distribution services to a mix of distribution
services and value-added logistics services, entry barriers are expected to rise
due to the increased cost of infrastructure, the expanded human resource
requirement and the advanced management and information systems capabilities
that the value-added logistics services segment of the business mandates. The
Company's ability to continue to compete successfully will be largely dependent
on its ability to anticipate and respond to various competitive factors
affecting the industry, including new or changing outsourcing requirements, new
products which may be introduced, changes in consumer preferences, demographic
trends, international, national, regional and local economic conditions
(particularly recessionary conditions adversely affecting consumer spending) and
discount pricing strategies and promotional activities by competitors.
In the Asia-Pacific wireless product distributor market, the Company's
primary competitors are national carriers that have retail outlets with direct
end-user access and United States and foreign-based exporters and distributors,
including CellStar Corporation ("CellStar"), Techglory International Ltd. (in
Hong Kong) and Telepacific Pty Limited (in Australia). In addition, the Company
competes for logistics fees with agents and subagents of the network operators.
Competitors of the Company in its North America division include network
operators and other dedicated wireless distributors such as CellStar and Pana
Pacific, Inc. The Company also competes with logistics service providers in its
North America operations, such as United Parcel Service of America, Inc. and
TESSCO Technologies Incorporated. In the Company's Europe, Middle
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East and Africa division its competitors include wireless equipment
manufacturers who sell directly to the region's network operators and retailers,
as well as the network operators themselves and other distributors, such as
20/20 Logistics Ltd. (formerly Caudwell Communications), European Telecom plc
and Banner Twin Choice plc. In the Latin America division the Company competes
primarily with CellStar and various other distributors.
The markets for wireless communications products are characterized by
rapidly changing technology and evolving industry standards, often resulting in
product obsolescence or short product life cycles. Accordingly, the Company's
success is dependent upon its ability to anticipate technological changes in the
industry and to continually identify, obtain and successfully market new
products that satisfy evolving industry and customer requirements. The use of
alternative wireless technologies, including wireless local loop and
satellite-based communications systems, may reduce demand for existing cellular
and PCS products. Upon widespread commercial introduction, new wireless
technologies could materially change the types of products sold by the Company
and its suppliers and result in significant price competition. In addition,
products that reach the market outside of normal distribution channels, such as
"gray market" resales (e.g., unauthorized or illegal resales, which may avoid
applicable duties and taxes), may also have an adverse impact on the Company's
operations.
Although the Company believes that the scope and efficiency of its
value-added logistics services will provide it with a competitive advantage in
the distribution sector of the industry as well, there can be no assurance that
the Company will be able to continue to compete successfully in the future.
INFORMATION SYSTEMS
The Company's continued operational excellence will be partially dependent
on the functionality, performance and utilization of its information systems. In
the first quarter of 1996, the Company successfully implemented a comprehensive
Informix-based information system which currently maintains financial and
management controls for its operations through the use of a centralized
accounting system and a computerized management information system for its North
and Latin America divisions. Since the implementation of the system, the Company
has invested approximately $12.3 million in continued development and
enhancement of the system to provide electronic data interchange capabilities,
create proprietary solutions for its customers and provide a flexible service
delivery system in support of its value-added logistics services and intends to
use additional funds to integrate this information system throughout its four
divisions. The Company's information systems department has grown substantially
in resources, both through increased software and hardware and additional
employees. At June 30, 1997, there were 29 employees in the Company's
information systems department.
EMPLOYEES
As of June 30, 1997, the Company had 543 employees, 88 in its Asia-Pacific
division, 350 in its North America division, 87 in its Europe, Middle East and
Africa division and 18 in its Latin America division. Of these employees,
approximately 25 were in executive positions, 141 were engaged in sales and
marketing, 255 were in service operations and 122 were in administration. None
of the Company's employees are covered by a collective bargaining agreement. The
Company believes that its relations with its employees are good.
FACILITIES
The Company provides its distribution and value-added logistics services
from its operations centers. The Company's headquarters and largest operations
center are located in a 182,400 square foot facility in Indianapolis, Indiana.
This facility includes approximately 142,400 square feet of operations center
space.
33
<PAGE> 36
Including this Indianapolis facility, the Company leases the following
operations centers and/or sales office facilities (for an aggregate monthly rent
of approximately $178,000):
<TABLE>
<CAPTION>
INITIAL LEASE
REGIONAL DIVISION FACILITY TYPE SQUARE FOOTAGE EXPIRATION DATE
----------------- ----------------- -------------- ----------------
<S> <C> <C> <C>
ASIA-PACIFIC:
Sydney, Australia........................ Operations/Sales 16,038 May 2001
Manila, Philippines...................... Operations/Sales 11,410 May 2000
Hong Kong................................ Operations Center 1,800 August 1997
Hong Kong................................ Sales Office 1,625 April 1998
Beijing, China........................... Sales Office 1,472 December 1997
NORTH AMERICA:
Indianapolis, Indiana(1)................. Operations/Sales 182,400 December 2006
Indianapolis, Indiana.................... Operations Center 18,000 December 1998
Sparks, Nevada........................... Operations Center 65,000 February 2002
Philadelphia, Pennsylvania............... Operations Center 22,000 December 1999
EUROPE, MIDDLE EAST AND AFRICA:
Manchester, England...................... Operations/Sales 16,589 December 2001
Johannesburg, South Africa............... Operations/Sales 16,214 April 2000
Gothenburg, Sweden....................... Operations/Sales 8,123 September 1999
LATIN AMERICA:
Miami, Florida(2)........................ Operations/Sales 14,415 August 1998
</TABLE>
- ------------
(1) The lease term for approximately 92,400 square feet of this facility expires
on December 31, 2006 and for approximately 90,000 square feet expires on
January 31, 2006, each of which terms may be renewed for two five-year
periods. At the end of the initial lease term, the Company has an option to
purchase the leased premises for approximately $11.5 million.
(2) The Company's Miami, Florida office also services its North America
operations.
The Company believes that its existing facilities are adequate for its
current requirements and that suitable additional space will be available as
needed to accommodate future expansion of its operations.
34
<PAGE> 37
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors is divided into three classes serving staggered
three-year terms. Executive officers are elected by, and serve at the discretion
of, the Board of Directors. The directors and executive officers of the Company
are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Robert J. Laikin(1).................... 34 Chairman of the Board and Chief Executive Officer
J. Mark Howell(2)...................... 32 President, Chief Operating Officer and Director
T. Scott Housefield(3)................. 39 Executive Vice President and Director
Phillip A. Bounsall.................... 36 Executive Vice President, Chief Financial Officer
and Treasurer
Steven E. Fivel........................ 36 Executive Vice President, General Counsel and
Secretary
Robert Picow(1)(4)..................... 42 Vice Chairman of the Board
Joseph Forer(2)(4)..................... 47 Director
Stephen H. Simon(2).................... 31 Director
John W. Adams(3)....................... 48 Director
Robert F. Wagner(1).................... 62 Director
Rollin M. Dick(1)...................... 65 Director
Steven B. Sands(3)..................... 38 Director
</TABLE>
- ---------------
(1) Class II director, term expires in 1999
(2) Class I director, term expires in 1998
(3) Class III director, term expires in 2000
(4) Messrs. Picow and Forer, the Selling Stockholders, will be resigning as
directors effective as of the consummation of the Offerings. The Company has
not yet identified replacement directors to fill these pending vacancies.
Mr. Forer will continue as the Company's Director of International Business
Development following the Offerings.
Robert J. Laikin, a founder of the Company, has been a director of the
Company since its inception in August 1989. Mr. Laikin has been Chairman of the
Board and Chief Executive Officer of the Company since January 1994. Mr. Laikin
was President of the Company from June 1992 until September 1996 and Vice
President and Treasurer of the Company from August 1989 until May 1992. From
July 1986 to December 1987, Mr. Laikin was Vice President and, from January 1988
to February 1993, President of Century Cellular Network, Inc., a company engaged
in the retail sale of cellular telephones and accessories.
J. Mark Howell has been a director of the Company since October 1994. Mr.
Howell has been President of the Company since September 1996, Chief Operating
Officer of the Company from September 1995 and was Executive Vice President,
Finance, Chief Financial Officer, Treasurer and Secretary of the Company from
July 1994 until September 1996. From July 1992 until joining the Company, Mr.
Howell was Corporate Controller for ADESA Corporation, a company which owns and
operates automobile auctions in the United States and Canada. Prior thereto, Mr.
Howell was a Manager with Ernst & Young LLP.
T. Scott Housefield has been a director of the Company since January 1993
and Executive Vice President since July 1994. From January 1993 to June 1994,
Mr. Housefield was Chief Financial Officer of the Company and, from January 1994
to July 1994, was Chief Operating Officer of the Company. Prior thereto, Mr.
Housefield owned and operated Housefield Marketing Corp., a company engaged in
the wholesale distribution of textiles.
Phillip A. Bounsall has been Executive Vice President, Chief Financial
Officer and Treasurer of the Company since October 1996. From March 1994 until
September 1996, Mr. Bounsall was Chief Financial Officer of Walker Information,
Inc., a provider of customer satisfaction measurement and other information
services. Previously, Mr. Bounsall was a senior manager with Ernst & Young LLP,
where he worked for 12 years.
35
<PAGE> 38
Steven E. Fivel has been Executive Vice President, General Counsel and
Secretary of the Company since January 1997. From December 1993 until January
1997, Mr. Fivel was an attorney with SDG Administrative Services Partnership,
L.P., an affiliate of Simon DeBartolo Group and a publicly-held real estate
investment trust. From February 1988 to December 1993, Mr. Fivel was an attorney
with Melvin Simon & Associates, Inc., a privately-held shopping center
development company.
Robert Picow has been a director of the Company and Vice Chairman of the
Board of Directors of the Company since June 1996. Mr. Picow was President of
the Company's North America division from June 1996 until October 1996. He is
currently a private investor. Prior to their merger with the Company, Mr. Picow
was a founder of Allied Communications, Inc., Allied Communications of Georgia,
Inc. and Allied Communications of Illinois, Inc. and co-founder of Allied
Communications of Florida, Inc. and Allied Communications of Puerto Rico, Inc.
Mr. Picow served as Chairman and Chief Executive Officer of Allied
Communications, Inc., Allied Communications of Illinois, Inc. and Allied
Communications of Georgia, Inc. from their inception in 1984, 1993 and 1992,
respectively.
Joseph Forer has been a director of the Company since June 1996 and the
Company's Director of International Business Development since June 1997. From
June 1996 to June 1997, Mr. Forer was the Managing Director of the Company's
Latin America division. Prior to their merger with the Company, Mr. Forer was a
co-founder of Allied Communications of Florida, Inc. and Allied Communications
of Puerto Rico, Inc., as well as President and a director of such companies from
1992 and 1994, respectively. From 1989 until joining Allied Communications, Mr.
Forer served as Executive Vice President of Cellular World, Inc., a distributor
of cellular telephone and paging equipment.
John W. Adams has been a director of the Company since April 1994. Since
October 1983, Mr. Adams has been Vice President of Browning Investments, Inc., a
commercial real estate development company. Mr. Adams is a trustee of Century
Realty Trust, a publicly-held real estate investment trust.
Robert F. Wagner has been a director of the Company since April 1994. Mr.
Wagner has been engaged in the practice of law with the firm of Lewis & Wagner
since 1973.
Stephen H. Simon has been a director of the Company since April 1994. Mr.
Simon has been President and Chief Executive Officer of Melvin Simon &
Associates, Inc., a privately-held shopping center development company, since
February 1997. From December 1993 until February 1997, Mr. Simon was Director of
Development for SDG Administrative Services Partnership, L.P., an affiliate of
Simon DeBartolo Group and a publicly held real estate investment trust. From
November 1991 to December 1993, Mr. Simon was Development Manager of Melvin
Simon & Associates, Inc.
Rollin M. Dick has been a director of the Company since April 1994. Since
February 1986, Mr. Dick has been Executive Vice President and Chief Financial
Officer of Conseco, Inc., a publicly-held life insurance holding company. Mr.
Dick is also a director of Conseco, Inc., American Life Holdings, Inc., a
publicly traded life insurance holding company, and General Acceptance
Corporation, a publicly-held automotive finance company.
Steven B. Sands has been a director of the Company since May 1994. Since
1990, Mr. Sands has been Co-Chairman and Chief Executive Officer of Sands
Brothers & Co., Ltd., an investment banking firm and one of the Representatives
for the Offerings. Mr. Sands is a director of Semiconductor Packaging Materials
Co., Inc., a semiconductor components manufacturer; Command Security Corp., a
provider of security guards; and The Village Green Bookstore, Inc., a bookstore
owner and operator, each a publicly-held company. See "Underwriting."
BOARD COMMITTEES
During the fiscal year ended December 31, 1996, the Board of Directors held
nine meetings. Six of the meetings were attended by all of the directors, either
in person or by telephone and three meetings were attended by all directors with
the exception of one meeting missed by each of Messrs. Simon, Wagner and Adams.
In addition, the Board took other action by unanimous written consent in lieu of
a meeting. The Company has a Compensation Committee of the Board of Directors
comprised of Messrs. Wagner and Adams. The Compensation Committee held three
meetings during the fiscal year ended December 31, 1996. The Company has an
Audit Committee which supervises the audit and financial procedures of the
Company.
36
<PAGE> 39
The Audit Committee is comprised of Messrs. Dick and Simon. The Audit Committee
of the Board of Directors held two meetings during the fiscal year ended
December 31, 1996. The Company does not have a nominating committee. The Board
of Directors has also designated an Executive Committee which meets
periodically, as needed, and is comprised of Messrs. Dick, Howell, Laikin and
Wagner.
DIRECTOR COMPENSATION
For the fiscal year ended December 31, 1996, each non-employee director
received cash compensation of $5,000 per annum and $1,500 for each meeting of
the Board of Directors attended. For the fiscal year ending December 31, 1997,
each non-employee director will receive $10,000 per annum, $2,500 for each
meeting of the Board of Directors attended, and $1,000 for each meeting of a
committee of the Board of Directors attended. The Company has adopted a
Non-employee Director Stock Option Plan (the "Director Plan") pursuant to which
non-employee directors are eligible to receive options to purchase an aggregate
of 468,750 shares. The Director Plan provides that eligible directors
automatically receive a grant of options to purchase 10,000 shares of Common
Stock upon first becoming a director and, thereafter, an annual grant, in
January of each year, of options to purchase 4,000 shares. All of such options
are granted at fair market value on the date of grant and are exercisable as to
all of the shares covered thereby commencing one year from the date of grant. To
date, the Company has granted to each of Messrs. Adams, Wagner, Simon, Dick and
Sands options to purchase 45,312 shares of Common Stock, and has granted to Mr.
Picow options to purchase 5,000 shares of Common Stock, pursuant to the Director
Plan. During the year ended December 31, 1996, the Company granted options to
purchase 7,500 shares at an exercise price of $7.94 per share (after all stock
splits) to each of Messrs. Adams, Wagner, Simon, Dick and Sands. See "-- Stock
Option Plans."
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table discloses for the periods presented the compensation
for the person who served as the Company's Chief Executive Officer and for each
of the other executive officers of the Company whose total compensation exceeded
$100,000 for the Company's fiscal year ended December 31, 1996 (the "Named
Executives"):
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION SECURITIES
---------------------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#)
--------------------------- ---- --------------- --------------- -------------
<S> <C> <C> <C> <C>
Robert J. Laikin............................... 1996 $ 180,000 $ 200,000 375,000
Chief Executive Officer 1995 120,000 105,000 292,968
1994 67,500 100,000 117,188
J. Mark Howell................................. 1996 150,000 175,000 375,000
President and Chief Operating Officer 1995 90,000 85,000 175,780
1994 31,250 75,000 117,187
T. Scott Housefield............................ 1996 150,000 175,000 375,000
Executive Vice President 1995 90,000 60,000 58,593
1994 50,000 45,000 58,593
Phillip A. Bounsall............................ 1996 26,042(1) 125,000(2) 93,750
Executive Vice President and Chief Financial 1995 -- -- --
Officer 1994 -- -- --
</TABLE>
- ---------------
(1) Mr. Bounsall's employment with the Company commenced on October 14, 1996.
(2) Includes a signing bonus of $100,000.
37
<PAGE> 40
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information with respect to individual stock
options granted during fiscal 1996 to each of the Named Executives:
<TABLE>
<CAPTION>
% OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATES OF
SHARES GRANTED TO STOCK PRICE APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERM(2)
OPTIONS IN FISCAL PRICE EXPIRATION -------------------------
NAME GRANTED(1) YEAR ($/SH) DATE 5% 10%
---- ---------- ---------- ------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Laikin.......... 375,000 23.2% $ 12.46 10/04/01 $1,290,926 $2,852,608
J. Mark Howell............ 375,000 23.2% 12.46 10/04/01 1,290,926 2,852,608
T. Scott Housefield....... 375,000 23.2% 12.46 10/04/01 1,290,926 2,852,608
Phillip A. Bounsall....... 93,750 5.8% 12.46 10/04/01 322,731 713,152
</TABLE>
- ---------------
(1) Options were granted under the Company's 1996 Stock Option Plan and are
exercisable as to one-third of the shares covered thereby on the first,
second and third anniversaries of the date of grant. See "-- Stock Option
Plans."
(2) The potential realizable value columns of the table illustrate values that
might be realized upon exercise of the options immediately prior to their
expiration, assuming the Company's Common Stock appreciates at the
compounded rates specified over the term of the options. These numbers do
not take into account provisions of options providing for termination of
the option following termination of employment or nontransferability of the
options and do not make any provision for taxes associated with exercise.
Because actual gains will depend upon, among other things, future
performance of the Common Stock, there can be no assurance that the amounts
reflected in this table will be achieved.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning each exercise of
stock options by each of the Named Executives during the fiscal year ended
December 31, 1996 and the value of unexercised stock options held by the Named
Executives as of December 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES DECEMBER 31, 1996 AT DECEMBER 31, 1996(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Laikin.............. -- -- 332,032 453,125 $6,067,000 $5,512,000
J. Mark Howell................ 117,188 $968,750 39,063 453,125 630,000 5,512,000
T. Scott Housefield........... -- -- 58,594 375,000 1,016,000 4,253,000
Phillip A. Bounsall........... -- -- -- 93,750 -- 1,063,000
</TABLE>
- ------------
(1) Year-end values for unexercised in-the-money options represent the positive
spread between the exercise price of such options and the year-end market
value of the Common Stock.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
Section 145 of the Delaware General Corporation Law ("DGCL") contains
provisions entitling the Company's directors and officers to indemnification
from judgments, fines, amounts paid in settlement and expenses (including
attorneys' fees) actually and reasonably incurred as the result of an action,
suit or proceeding in which they may be involved by reason of having been a
director or officer of the Company. In its Certificate of Incorporation, the
Company has included a provision that limits the personal liability of its
directors to the Company or its stockholders for monetary damages arising from a
breach of their fiduciary
38
<PAGE> 41
duties as directors. This provision limits a director's liability except where
such director (i) breaches his duty of loyalty to the Company or its
stockholders, (ii) fails to act in good faith or engages in intentional
misconduct or a knowing violation of laws, (iii) authorizes payment of an
unlawful dividend or stock purchase or redemption as provided in Section 174 of
the DGCL or (iv) obtains an improper personal benefit. This provision does not
prevent the Company or its stockholders from seeking equitable remedies, such as
injunctive relief or rescission. If equitable remedies are found not to be
available to stockholders in any particular case, stockholders may not have any
effective remedy against actions taken by directors that constitute negligence
or gross negligence.
The Company's Certificate of Incorporation, as amended, also includes
provisions to the effect that (subject to certain exceptions) the Company shall,
to the maximum extent permitted from time to time under the law of the State of
Delaware, indemnify, and upon request shall reimburse expenses to, any director
or officer to the extent that such indemnification and reimbursement of expenses
is permitted under such law, as it may from time to time be in effect. In
addition, the Amended and Restated Bylaws of the Company require the Company to
indemnify, to the fullest extent permitted by law, any director, officer,
employee or agent of the Company. At present, the DGCL provides that, in order
to be entitled to indemnification, an individual must have acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
Company's best interests and, with respect to a criminal action or proceeding,
had no reasonable cause to believe that his or her conduct was unlawful.
EMPLOYMENT AGREEMENTS
The Company has entered into five-year evergreen employment agreements with
each of Messrs. Laikin, Howell and Housefield which are automatically renewable
for successive one-year periods and provide for an annual base compensation of
$200,000 and such bonuses as the Compensation Committee of the Board of
Directors may from time to time determine. If the Company provides the employee
with notice that it desires to terminate the agreement, there is a final
five-year term commencing on the date of such notice. The employment agreements
provide for employment on a full-time basis and contain a provision that the
employee will not compete or engage in a business competitive with the current
or anticipated business of the Company during the term of the employment
agreement and for a period of two years thereafter. The employment agreements
also provide that if the employee's employment is terminated under certain
circumstances, including as a result of a change of control, the employee will
be entitled to receive severance pay equal to ten times the total compensation
(including salary, bonus, the value of all perquisites and the value of all
stock options received or earned by the employee) received from the Company
during the twelve months prior to the date of termination. For purposes of such
agreements, a "change of control" shall be deemed to occur, unless previously
consented to in writing by the respective employee, upon (i) the actual
acquisition, or the execution of an agreement to acquire, 20% or more of the
voting securities of the Company by any person or entity not affiliated with the
respective employee (other than pursuant to a bona fide underwriting agreement
relating to a public distribution of securities of the Company), (ii) the
commencement of a tender or exchange offer for more than 20% of the voting
securities of the Company by any person or entity not affiliated with the
respective employee, (iii) the commencement of a proxy contest against
management for the election of a majority of the Board of Directors of the
Company if the group conducting the proxy contest owns, has or gains the power
to vote at least 20% of the voting securities of the Company, (iv) a vote by the
Board of Directors to merge, consolidate or sell all or substantially all of the
assets of the Company to any person or entity not affiliated with the respective
employee, or (v) the election of directors constituting a majority of the Board
of Directors who have not been nominated or approved by the respective employee.
In addition, the Company has entered into three-year evergreen employment
agreements with each of Messrs. Bounsall and Fivel which provide for an annual
base compensation of $125,000 and provide otherwise for substantially the same
terms as the employment agreements described above, except that if the
employee's employment is terminated under certain circumstances, including as a
result of a change of control, the employee will be entitled to receive
severance pay equal to three times the compensation received from the Company
during the twelve months prior to the date of termination.
39
<PAGE> 42
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company has a Compensation Committee of the Board of Directors
currently consisting of Messrs. Wagner and Adams. Decisions as to executive
compensation are made by the Board of Directors, primarily upon the
recommendation of such committee. The Board of Directors has not modified or
rejected any recommendations of the Compensation Committee as to the
compensation of the Company's executive officers. During the fiscal year ended
December 31, 1996, none of the executive officers of the Company has served on
the board of directors or the compensation committee of any other entity, any of
whose officers serves on the Company's Board of Directors or Compensation
Committee.
STOCK OPTION PLANS
In March 1994, the Company adopted the 1994 Stock Option Plan, effective
April 7, 1994, as amended in May 1995 and April 1997 (the "1994 Plan"), pursuant
to which 4,100,000 shares of Common Stock were reserved for issuance upon the
exercise of options designated as either (i) options intended to constitute
incentive stock options ("ISOs") under the Internal Revenue Code of 1986, as
amended (the "Code"), or (ii) nonqualified options. ISOs may be granted under
the 1994 Plan to employees and officers of the Company. Non-qualified options
may be granted to consultants, directors (whether or not they are employees),
employees or officers of the Company.
The 1994 Plan is intended to qualify under Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and is administered by a
committee (the "Committee") of the Board of Directors (the "Stock Option
Committee"), which currently consists of Messrs. Wagner and Adams. The Stock
Option Committee, within the limitations of the 1994 Plan, determines the
persons to whom options will be granted, the number of shares to be covered by
each option, whether the options granted are intended to be ISOs, the duration
and rate of exercise of each option, the exercise price per share and the manner
of exercise and the time, manner and form of payment upon exercise of an option.
Unless sooner terminated, the 1994 Plan will expire on April 7, 2004.
ISOs granted under the 1994 Plan may not be granted at a price less than
the fair market value of the Common Stock on the date of grant (or 110% of fair
market value in the case of persons holding 10% or more of the voting stock of
the Company). The aggregate fair market value of shares for which ISOs granted
to any employee are exercisable for the first time by such employee during any
calendar year (under all stock option plans of the Company) may not exceed
$100,000. Non-qualified options granted under the 1994 Plan may not be granted
at a price less than the fair market value of the Common Stock on the date of
grant. However, the Stock Option Committee may, in the future, adjust the
original exercise price of up to 10% of the total options available for grant
without stockholder approval. Options granted under the 1994 Plan will expire
not more than ten years from the date of grant (five years in the case of ISOs
granted to persons holding 10% or more of the voting stock of the Company). All
options granted under the 1994 Plan are not transferable during an optionee's
lifetime but are transferable at death by will or by the laws of descent and
distribution. In general, upon termination of employment of an optionee, all
options granted to such person which are not exercisable on the date of such
termination immediately terminate, and any options that are exercisable
terminate 90 days following termination of employment.
Under the 1994 Plan, the maximum number of shares that may be covered by
stock options granted to any employee of the Company shall be a maximum of 50%
of the aggregate number of shares reserved for issuance under the 1994 Plan.
Such requirement is intended to meet the exception from Section 162(m) of the
Code for performance-based compensation.
The 1994 Plan contains anti-dilution provisions authorizing appropriate
adjustments in certain circumstances. Shares of Common Stock subject to options
which expire without being exercised or which are cancelled as a result of the
cessation of employment are available for further grants. No shares of Common
Stock may be issued to any optionee until the full exercise price has been paid.
The Committee may grant individual options under the 1994 Plan with more
stringent provisions than those specified in the 1994 Plan.
40
<PAGE> 43
As of July 10, 1997, the Company has granted options to purchase an
aggregate of 2,143,285 shares under the 1994 Plan (net of forfeitures), of which
options to purchase 1,309,140 shares have been exercised. During the fiscal year
ended December 31, 1996, the Company granted five-year options to purchase an
aggregate of 217,500 (net of forfeitures) shares under the 1994 Plan, none of
which were granted to executive officers or directors of the Company.
As of July 1996, the Company adopted the 1996 Stock Option Plan (the "1996
Plan") pursuant to which employees of the Company and others are eligible to be
granted non-qualified stock options to purchase up to an aggregate of 1,875,000
shares of Common Stock. The 1996 Plan is administered by the Stock Option
Committee in the same manner in which the Committee administers the 1994 Plan.
The terms of the 1996 Plan are identical to those contained in the 1994 Plan
except that no ISOs may be granted under the 1996 Plan. As of July 10, 1997, the
Company has granted options (net of cancellations) to purchase an aggregate of
1,820,625 shares under the 1996 Plan, none of which has been exercised. During
the fiscal year ended December 31, 1996, the Company granted five and ten-year
options to purchase an aggregate of 1,403,125 shares under the 1996 Plan. Of
such options, options to purchase 375,000, 375,000, 375,000 and 93,750 shares,
respectively, were granted to Messrs. Laikin, Howell, Housefield and Bounsall at
an exercise price of $12.46 per share. During the six months ended June 30,
1997, the Company granted options to purchase 46,875 shares to Mr. Fivel under
the 1996 Plan, which options are exercisable at a price of $19.40 per share. All
of such options are exercisable as to one-third of the shares covered thereby on
the first, second and third anniversaries of the date of grant.
The Company has also adopted the Non-employee Directors Stock Option Plan
(the "Directors Plan" and, together with the 1994 Plan and the 1996 Plan, the
"Stock Option Plans"), as amended, pursuant to which non-employee directors are
eligible to receive options to purchase an aggregate of 468,750 shares. The
Director Plan provides that eligible directors automatically receive a grant of
options to purchase 10,000 shares of Common Stock at fair market value upon
first becoming a director and, thereafter, an annual grant, in January of each
year, of 4,000 options at fair market value. Each option expires five years from
the date of grant and is exercisable in full commencing one year from the date
of grant. As of July 10, 1997, the Company has granted options to purchase an
aggregate of 231,562 shares of Common Stock under the Directors Plan, of which
options to purchase 89,062 shares have been exercised.
41
<PAGE> 44
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of July 10, 1997 and as adjusted to give effect
to the sale of Common Stock offered by the Company and the Selling Stockholders
in the Offerings: (i) by each person who is known by the Company to own
beneficially more than 5% of the Company's Common Stock; (ii) by each director;
(iii) by each of the Named Executives; (iv) by all executive officers and
directors of the Company as a group; and (v) by each Selling Stockholder.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR OWNED AFTER
TO OFFERINGS(2) SHARES TO OFFERINGS(2)
-------------------- BE SOLD IN --------------------
NAME(1) NUMBER PERCENT OFFERINGS NUMBER PERCENT
------- --------- ------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C>
Robert J. Laikin............................. 500,469(3) 2.2% -- 500,469 2.1%
J. Mark Howell............................... 78,125(4) * -- 78,125 *
T. Scott Housefield.......................... 58,594(5) * -- 58,594 *
Phillip A. Bounsall.......................... --(6) * -- -- *
Robert Picow(7).............................. 2,418,999(8) 10.8% 2,000,000 418,999 1.7%
Joseph Forer(9).............................. 342,188 1.5% 200,000 142,188 *
Rollin M. Dick............................... 532,500(10) 2.4% -- 532,500 2.2%
John W. Adams................................ 16,875(11) * -- 16,875 *
Robert F. Wagner............................. 7,500(12) * -- 7,500 *
Stephen H. Simon............................. 7,500(13) * -- 7,500 *
Steven B. Sands.............................. 45,233(14) * -- 45,233 *
American Century Companies, Inc. ............ 1,500,000(15) 6.7% -- 1,500,000 6.2%
The Capital Group Companies, Inc. ........... 1,331,250(16) 6.0% -- 1,331,250 5.5%
All executive officers and directors as a
group (twelve persons)(17)................. 4,007,983 17.7% 2,200,000 1,807,983 7.4%
</TABLE>
- ------------
* Less than 1%.
(1) The address for each of such individuals, unless specified otherwise in a
subsequent footnote, is in care of the Company, 6402 Corporate Drive,
Indianapolis, Indiana 46278.
(2) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date hereof upon the
exercise of options. Each beneficial owner's percentage ownership is
determined by assuming that options or warrants that are held by such
person (but not those held by any other person) and which are exercisable
within 60 days of the date hereof have been exercised. Unless otherwise
indicated, the Company believes that all persons named in the table have
sole voting and investment power with respect to all shares of Common Stock
beneficially owned by them, subject to community property laws where
applicable.
(3) Includes: (i) 461,406 shares held by Robert J. Laikin and (ii) 39,063
shares underlying options which are exercisable within 60 days of the date
hereof. Does not include options to purchase 414,063 shares.
(4) Represents shares underlying options which are exercisable within 60 days
of the date hereof. Does not include options to purchase 414,063 shares.
(5) Does not include options to purchase 375,000 shares.
(6) Does not include options to purchase 93,750 shares.
(7) The address for Robert Picow is 2 Cartagena Drive, Boca Raton, Florida
33428.
(8) Does not include options to purchase 5,000 shares.
(9) The address for Joseph Forer is 12370 SW 64th Avenue, Miami, Florida 33156.
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<PAGE> 45
(10) Includes: (i) 492,188 shares held in the name of Rollin M. Dick and Helen
E. Dick Grantor Retained Annuity Trust II, and (ii) 40,312 shares
underlying options which are exercisable within 60 days of the date hereof.
Does not include options to purchase 5,000 shares.
(11) Represents shares underlying options which are exercisable within 60 days
of the date hereof. Does not include options to purchase 5,000 shares.
(12) Represents shares underlying options which are exercisable within 60 days
of the date hereof. Does not include options to purchase 5,000 shares.
(13) Represents shares underlying options which are exercisable within 60 days
of the date hereof. Does not include options to purchase 5,000 shares.
(14) Consists of (i) 3,750 shares held by Ponderosa Partners, L.P., of which Mr.
Sands is a controlling stockholder, officer and director of the corporate
general partner and (ii) 41,483 shares underlying options and warrants
which are exercisable within 60 days of the date hereof. Does not include
options to purchase 5,000 shares.
(15) Based on Form 13-G filed with the Commission, American Century Companies,
Inc. has sole voting and dispositive power over the shares. The address for
American Century Companies, Inc. is Twentieth Century Tower, 4500 Main
Street, Kansas City, Missouri 64111.
(16) Based on Form 13-G filed with the Commission, Capital Research and
Management Company, a wholly-owned subsidiary of the Capital Group
Companies, Inc. ("CGC"), and the SMALLCAP World Fund, Inc. have sole voting
and dispositive power over the shares. The address for CGC is 333 South
Hope Street, 52nd Floor, Los Angeles, California 90071.
(17) Includes an aggregate of 272,266 shares underlying options and warrants
which are exercisable within 60 days of the date hereof, including those
listed in notes (3) through (6), (8) and (12) through (16) above.
CERTAIN TRANSACTIONS
Century Cellular Network, Inc. ("Century"), a company 50% owned by Robert
J. Laikin, Chairman of the Board of the Company, was a customer and supplier to
the Company until December 1996. For the year ended December 31, 1996, the
Company sold approximately $2.6 million of cellular telephone products to
Century and made purchases of inventory from Century of approximately $751,000.
The Company believes that sales to Century and purchases made from Century
during 1996 were made on terms no less favorable than could have been made to or
from unaffiliated third parties. At June 30, 1997, accounts receivable from
Century were approximately $370,000. Mr. Laikin has personally guaranteed the
payment of receivables due from Century.
In May 1997, in connection with the assignment from Century to the Company
of certain leasehold premises located in Indianapolis which were previously
guaranteed by Mr. Laikin, the third-party landlord under such lease released Mr.
Laikin from his personal guaranty.
In connection with the Allied Merger, the Company issued an aggregate of
3,796,875 shares of Common Stock to Messrs. Robert Picow and Joseph Forer in
exchange for all of the outstanding shares of Allied Communications' common
stock and appointed each of them as a director of the Company. Each of Messrs.
Picow and Forer is a Selling Stockholder in connection with the Offerings,
offering 2,000,000 shares and 200,000 shares, respectively, and each will resign
as a director upon the consummation of the Offerings. Mr. Forer will continue as
the Company's Director of International Business Development. The Company has
agreed to indemnify the Selling Stockholders against certain liabilities,
including certain liabilities under the Securities Act, or to contribute to
payments the Selling Stockholders may be required to make in respect thereof.
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<PAGE> 46
In October 1996, the Company terminated an employment agreement with Robert
Picow and entered into an agreement with Mr. Picow, pursuant to which Mr. Picow
serves as Vice Chairman of the Board of Directors of the Company and receives
$10,000 per month. The term of the agreement is from October 9, 1996 until June
7, 1999. Under the agreement, Mr. Picow may not have an interest in, or render
any services to, any business competitive with the business activities of the
Company, either in any state of the United States or any country where the
Company has a subsidiary, joint venture or other entity controlled by the
Company, prior to June 7, 2001. Mr. Picow and the Company have agreed that,
effective upon the consummation of the Offerings, the foregoing agreement (other
than such non-compete and certain other provisions thereof) will be terminated,
in consideration for which Mr. Picow will receive approximately $106,000.
The Company's Philadelphia, Pennsylvania operations center is leased from
Robert Picow and his wife at a monthly rental of $7,500. The Company believes
that the terms of such leases are no less favorable to the Company than the
terms of similar transactions available from an unrelated party.
The Company utilizes the services of a third party for the purchase of
corporate gifts, promotional items and standard and personalized corporate
stationery. Mrs. Judy Laikin, the mother of Robert J. Laikin, owns this
advertising specialty company. For the year ended December 31, 1996 and the six
months ended June 30, 1997, the Company purchased approximately $245,000 and
$228,000, respectively, of services and products from this party. The Company
believes these purchases by the Company were made on terms no less favorable
than could be made from an unrelated party.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 100 million shares
of Common Stock, par value $.01 per share, and one million shares of preferred
stock, par value $.01 per share (the "Preferred Stock"). At July 14, 1997, the
Company had 22,318,490 shares of Common Stock issued and outstanding, held of
record by approximately 125 stockholders, and no shares of Preferred Stock
issued and outstanding.
The following description of the capital stock of the Company and certain
provisions of the Company's Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), and its Amended and Restated By-laws (the
"By-laws") is a summary and is qualified in it entirety by the Certificate of
Incorporation and By-laws, copies of which are exhibits to the Registration
Statement of which this Prospectus is a part.
COMMON STOCK
Except as required by law, holders of Common Stock are entitled to one vote
for each share held of record on all matters submitted to a vote of the holders
of Common Stock. The holders of Common Stock are not entitled to cumulative
voting rights with respect to the election of directors. Subject to preferences
that may be applicable to any then outstanding Preferred Stock, holders of
Common Stock are entitled to receive ratably such dividends as may be declared
by the Board of Directors out of funds legally available therefor. In the event
of a liquidation, dissolution, or winding up of the Company, holders of the
Common Stock are entitled to share ratably in all assets remaining after payment
of liabilities and the liquidation preference of any then outstanding Preferred
Stock. Holders of Common Stock have no preemptive rights and have no right to
convert their Common Stock into any other securities. There are no redemption or
sinking fund provisions applicable to the Common Stock. All outstanding shares
of Common Stock are, and the Common Stock to be outstanding upon consummation of
the Offerings will be, fully paid and nonassessable. The Board of Directors may
issue additional authorized shares of Common Stock without further action by the
stockholders.
PREFERRED STOCK
The Board of Directors has the authority, without further action by the
stockholders, to issue up to one million shares of Preferred Stock in one or
more series and to fix the rights, preferences, privileges and restrictions
thereof, including dividend rights, conversion rights, voting rights, terms of
redemption, liquidation preferences, and the number of shares constituting any
series or the designation of such series. The issuance of
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<PAGE> 47
Preferred Stock could adversely affect the voting power of holders of Common
Stock and could have the effect of delaying, deferring, or preventing a change
in control of the Company. The Company has no present plan to issue any shares
of Preferred Stock other than as it may be issued in connection with the
Stockholders Rights Plan described below. See "-- Anti-takeover Effects of
Certain Provisions of the Company's By-laws, Stockholders Rights Plan and
Delaware Corporate Law."
ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF THE COMPANY'S
BY-LAWS, STOCKHOLDERS RIGHTS PLAN AND DELAWARE CORPORATE LAW
CERTAIN BY-LAW PROVISIONS. The Company's By-laws contain provisions that
could make more difficult the acquisition of control of the Company by various
means, such as a tender offer, open market purchases, a proxy contest or
otherwise. For instance, the Company's Board of Directors is divided into three
classes, as nearly equal in number as is reasonably possible, serving staggered
terms. One class of directors is elected at each annual meeting to serve a term
of three years. At least two annual meetings of stockholders, instead of one,
will be required to effect a change in a majority of the Company's Board of
Directors. In addition, special meetings of the stockholders may only be called
by a majority of the Board of Directors or the President of the Company, and the
Company's By-laws establish advance notice procedures with regard to stockholder
proposals for annual or special meetings. Amendments to the staggered board
provision require a two-thirds vote of stockholders. The purposes of these
provisions are to discourage certain types of transactions which may involve an
actual or threatened change of control of the Company and encourage persons
seeking to acquire control of the Company to consult first with the Board of
Directors to negotiate the terms of any proposed business combination or offer.
The provisions are designed to reduce the vulnerability of the Company to an
unsolicited proposal for a takeover that does not contemplate the acquisition of
all outstanding shares or is otherwise unfair to stockholders of the Company, or
an unsolicited proposal for the restructuring or sale of all or part of the
Company.
STOCKHOLDERS RIGHTS PLAN. In February 1997, the Company adopted a
Stockholders Rights Plan and declared a dividend of one preferred share purchase
right (a "Right") for each outstanding share of Common Stock. The dividend was
paid to holders of record of Common Stock as of the close of business on
February 20, 1997 (the "Record Date"). Each Right entitles the registered holder
to purchase from the Company one one-thousandth of a share of Series A Junior
Participating Preferred Stock, par value $.01 per share (the "Preferred
Shares"), of the Company at a price of $115 per one one-thousandth of a
Preferred Share (the "Purchase Price"), subject to adjustment in certain
circumstances. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and Continental Stock
Transfer & Trust Company, as Rights Agent (the "Rights Agent"). A copy of the
Rights Agreement, which includes as Exhibit B the form of Rights Certificate and
as Exhibit C the Summary of Rights to Purchase Preferred Shares, is an exhibit
to the Registration Statement of which this Prospectus is a part.
Rights are evidenced by and are transferable only in connection with the
Common Stock certificates outstanding prior to the Distribution Date (as defined
below). As soon as practical following the earlier to occur of (i) ten days
after a public announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") have acquired beneficial ownership of 15% or
more of the outstanding Common Stock or (ii) ten business days (or such later
date as may be determined by action of the Board of Directors prior to such time
as any person or group becomes an Acquiring Person) after the commencement of,
or announcement of an intention to commence, a tender or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 15% or more of the outstanding Common Stock (the "Distribution Date"),
separate certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of the Common Stock as of the close of business on
the Distribution Date and such separate Right Certificates alone will evidence
the Rights.
The Rights are not exercisable until the Distribution Date and will expire
on February 20, 2007, unless extended or unless the Rights are earlier redeemed
or exchanged by the Company, as described below. The Rights, the Purchase Price,
and the number of Preferred Shares or other securities or property issuable upon
exercise of the Rights are subject to adjustment from time to time to prevent
dilution.
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<PAGE> 48
Preferred Shares will not be redeemable. Each Preferred Share will be
entitled to a minimum preferential quarterly dividend payment of $1.00 per share
but will be entitled to an aggregate dividend of 1,000 times the dividend
declared per share of Common Stock. In the event of liquidation, the holders of
the Preferred Shares will be entitled to a minimum preferential liquidation
payment of $1.00 per share but will be entitled to an aggregate payment of 1,000
times the payment made per share of Common Stock. Each Preferred Share will have
1,000 votes, voting together with the Common Stock. Finally, in the event of any
merger, consolidation or other transaction in which shares of Common Stock are
exchanged, each Preferred Share will be entitled to receive 1,000 times the
amount received per share of Common Stock.
In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person or its affiliate, associate or
transferee (which will thereafter be void), will thereafter have the right to
receive that number of shares of Common Stock having a market value of two times
the exercise price of the Right. In the event that the Company is acquired in a
merger or other business combination transaction or 50% or more of its
consolidated assets or earning power are sold after a person or group has become
an Acquiring Person in a transaction with such Acquiring Person or group, each
holder of a Right will thereafter have the right to receive that number of
shares of common stock of the acquiring company having a market value of two
times the exercise price of the Right. In each case, there are exceptions for
transactions that have received the prior approval of the Board of Directors.
At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of 50% or more of the outstanding
shares of Common Stock, the Board of Directors of the Company may exchange the
Rights (other than Rights owned by such person or group which will have become
void), in whole or in part, at an exchange ratio of one share of Common Stock
per Right (subject to adjustment). At any time prior to any person or group
becoming an Acquiring Person, the Board of Directors of the Company may redeem
all of the outstanding Rights at a price of $.01 per Right, payable in cash or
Common Stock (the "Redemption Price").
All of the provisions of the Rights Agreement may be amended by the Company
prior to the Distribution Date. After the Distribution Date, the provisions of
the Rights Agreement may not be amended in any manner which would adversely
affect the interests of the holders of the Rights (excluding the interests of an
Acquiring Person).
DELAWARE ANTI-TAKEOVER LAW. The Company is subject to certain
anti-takeover provisions under Section 203 of the Delaware General Corporation
Law. In general, under Section 203, a Delaware corporation may not engage in any
business combination with any interested stockholder (a person that owns,
directly or indirectly, 15% or more of the outstanding voting stock of a
corporation or is an affiliate or associate of a corporation and was the owner
of 15% or more of the outstanding voting stock of the corporation at any time
within the prior three years), for a period of three years following the date
such stockholder became an interested stockholder, unless (i) prior to such date
the board of directors of the corporation approved either the business
combination or the transaction which resulted in the stockholder becoming an
interested stockholder, or (ii) upon consummation of the transaction which
resulted in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, or (iii) on or subsequent to
such date, the business combination is approved by the board of directors and
authorized at an annual or special meeting of stockholders, and not by written
consent, by at least 66 2/3% of the outstanding voting stock which is not owned
by the interested stockholder. The restrictions imposed by Section 203 will not
apply to a corporation if the corporation's original certificate of
incorporation contains a provision expressly electing not to be governed by this
section or the corporation by action of its stockholders adopts an amendment to
its certificate of incorporation or by-laws expressly electing not to be
governed by Section 203. The Company has not elected out of Section 203, and
thus the restrictions imposed by Section 203 apply to the Company. Such
provision could have the effect of discouraging, delaying or preventing a
takeover of the Company, which could otherwise be in the best interest of the
Company's stockholders, and have an adverse effect on the market price for the
Company's Common Stock.
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<PAGE> 49
TRANSFER AGENT
The transfer agent and registrar for the Common Stock is Continental Stock
Transfer & Trust Company, New York, New York.
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
Sales of substantial amounts of Common Stock in the public market, or the
perception that such sales could occur, could depress the prevailing market
price of the Common Stock.
Upon completion of the Offerings, 22,113,652 shares of Common Stock will be
freely tradeable. All other outstanding shares of Common Stock were issued by
the Company in private transactions not involving a public offering, are treated
as "restricted securities" for purposes of Rule 144, and may not be resold
unless they are registered under the Securities Act or are resold pursuant to an
exemption from registration, including the exemption provided under Rule 144 of
the Securities Act.
In general, Rule 144, as currently in effect, provides that a person (or
persons whose sales are aggregated) who is an affiliate of the Company or who
has beneficially owned shares which are issued and sold in reliance upon
exemptions from registration under the Securities Act ("Restricted Shares") for
at least one year is entitled to sell within any three-month period a number of
shares that does not exceed the greater of 1% of the then outstanding shares of
Common Stock or the average weekly trading volume in the shares of Common Stock
during the four calendar weeks preceding the filing of a notice of the sale is
filed with the Securities and Exchange Commission (the "Commission"). Sales
under Rule 144 are also subject to certain manner of sale provisions, notice
requirements and the availability of current public information about the
Company. However, a person who is not deemed to have been an "affiliate" of the
Company at any time during the three months preceding a sale, and who has
beneficially owned Restricted Shares for at least two years, would be entitled
to sell such shares under Rule 144 without regard to volume limitations, manner
of sale provisions, notice requirements or the availability of current public
information about the Company.
The Company, the executive officers and directors of the Company, and the
Selling Stockholders have, subject to certain exceptions, agreed that they will
not, directly or indirectly, sell, offer to sell, grant any option for the sale
of, or otherwise dispose of, any capital stock of the Company or any security
convertible or exchangeable into or exercisable for, such capital stock, or, in
the case of the Company, file any registration statement with respect to the
foregoing, for a period of 120 days after the date of this Prospectus, without
the prior written consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated
and Merrill Lynch International. The Company has filed registration statements
under the Securities Act registering an aggregate of 1,179,923 shares of Common
Stock reserved for issuance in connection with outstanding options and options
available for future grant under the 1994 Plan and the Directors Plan (of which,
as of July 10, 1997, options to purchase 352,885 shares were immediately
exercisable) and 24,140 shares of Common Stock reserved for issuance in
connection with outstanding warrants, thus permitting the resale of such shares
by non-affiliates in the public market without restriction under the Securities
Act. In addition, the Company intends to file registration statements under the
Securities Act registering shares of Common Stock reserved for issuance in
connection with the balance of the options outstanding and available for future
grant under the Company's Stock Option Plans. Options to acquire an aggregate of
976,644 shares of Common Stock under the 1994 Plan and the Directors Plan and
warrants to acquire 24,140 shares of Common Stock remained outstanding as of
July 10, 1997.
In addition, commencing 30 days following the date of this Prospectus, a
stockholder, who is also an employee, of the Company may require the Company to
file a registration statement relating to 375,000 shares of Common Stock owned
by such stockholder and to take such reasonable steps necessary to cause the
registration statement to be declared effective. Such stockholder has agreed
that he will not sell, offer to sell, grant any option for the sale of, or
otherwise dispose of 187,500 of such shares for a period of 120 days following
the consummation of the Offerings; provided, however, that if, subsequent to
exercise of the demand registration right by the stockholder, the registration
statement relating to the stockholder's 375,000 shares of Common Stock is not
declared effective by five days prior to the public announcement of the
Company's
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<PAGE> 50
financial results for the three months ended September 30, 1997, he may, subject
to applicable securities laws, sell up to 187,500 shares of Common Stock
commencing the day following the public announcement of the Company's financial
results for the three months ended September 30, 1997.
CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
TO NON-UNITED STATES HOLDERS
The following is a general discussion of certain United States Federal tax
consequences of the acquisition, ownership, and disposition of Common Stock by a
holder that, for United States Federal income tax purposes, is not a "United
States person" (a "Non-United States Holder"). This discussion is based upon the
United States Federal tax law now in effect, which is subject to change,
possibly retroactively. For purposes of this discussion, a "United States
person" means a citizen or resident of the United States; a corporation,
partnership, or other entity created or organized in the United States or under
the laws of the United States or of any political subdivision thereof; an estate
whose income is includible in gross income for United States Federal income tax
purposes regardless of its source; or a "United States Trust". A United States
Trust is (a) for taxable years beginning after December 31, 1996, or if the
trustee of a trust elects to apply the following definition to an earlier
taxable year, any trust if, and only if, (i) a court within the United States is
able to exercise primary supervision over the administration of the trust and
(ii) one or more United States trustees have the authority to control all
substantial decisions of the trust, and (b) for all other taxable years, any
trust whose income is includible in gross income for United States Federal
income tax purposes regardless of its source. This discussion does not consider
any specific facts or circumstances that may apply to a particular Non-United
States Holder. Prospective investors are urged to consult their tax advisors
regarding the United States Federal tax consequences of acquiring, holding, and
disposing of Common Stock, as well as any tax consequences that may arise under
the laws of any foreign, state, local, or other taxing jurisdiction.
DIVIDENDS
Dividends paid to a Non-United States Holder will generally be subject to
withholding of United States Federal income tax at the rate of 30% unless the
dividend is effectively connected with the conduct of a trade or business within
the United States by the Non-United States Holder (or if certain tax treaties
apply, is attributable to a United States permanent establishment maintained by
such Non-United States Holder), in which case the dividend will be subject to
the United States Federal income tax on net income on the same basis that
applies to United States persons generally. In the case of a Non-United States
Holder which is a corporation, such effectively connected income also may be
subject to the branch profits tax (which is generally imposed on a foreign
corporation on the repatriation from the United States of effectively connected
earnings and profits). Non-United States Holders should consult any applicable
income tax treaties that may provide for a lower rate of withholding or other
rules different from those described above. A Non-United States Holder may be
required to satisfy certain certification requirements in order to claim treaty
benefits or otherwise claim a reduction of or exemption from withholding under
the foregoing rules.
GAIN ON DISPOSITION
A Non-United States Holder will generally not be subject to United States
Federal income tax on gain recognized on a sale or other disposition of Common
Stock unless (i) the gain is effectively connected with the conduct of a trade
or business within the United States by the Non-United States Holder or, if tax
treaties apply, is attributable to a United States permanent establishment
maintained by the Non-United States Holder, (ii) in the case of a Non-United
States Holder who is a nonresident alien individual and holds the Common Stock
as a capital asset, such holder is present in the United States for 183 or more
days in the taxable year of disposition or either such individual has a "tax
home" in the United States or the gain is attributable to an office or other
fixed place of business maintained by such individual in the United States,
(iii) the Company is or has been a "United States real property holding
corporation" for United States Federal income tax purposes (which the Company
does not believe that it is or likely to become) and the Non-United States
Holder holds or has held, directly or indirectly, at any time during the
five-year period ending on the date of disposition, more than 5% of the Common
Stock or (iv) the Non-United States Holder
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<PAGE> 51
is subject to tax pursuant to the Internal Revenue Code of 1986, as amended,
provisions applicable to certain United States expatriates. Gain that is
effectively connected with the conduct of a trade or business within the United
States by the Non-United States Holder will be subject to the United States
Federal income tax on net income on the same basis that applies to United States
persons generally (and, with respect to corporate holders, under certain
circumstances, the branch profits tax) but will not be subject to withholding.
Non-United States Holders should consult any applicable treaties that may
provide for different rules.
FEDERAL ESTATE TAXES
Common Stock owned or treated as owned by an individual who is not a
citizen or resident of the United States at the date of death will be included
in such individual's estate for United States Federal estate tax purposes,
unless an applicable estate tax treaty provides otherwise.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Company must report annually to the Internal Revenue Service and to
each Non-United States Holder the amount of dividends paid to, and the tax
withheld with respect to, such holder, regardless of whether any tax was
actually withheld. This information may also be made available to the tax
authorities of a country in which the Non-United States Holder resides.
Under the temporary United States Treasury regulations, United States
information reporting requirements and backup withholding tax will generally not
apply to dividends paid on the Common Stock to a Non-United States Holder.
Payments by a United States office of a broker of the proceeds of a sale of
Common Stock are subject to both backup withholding at a rate of 31% and
information reporting unless the holder certifies its Non-United States Holder
status under penalties of perjury or otherwise establishes an exemption.
Information reporting requirements (but not backup withholding) will also apply
to payments of the proceeds of sales of Common Stock by foreign offices of
United States brokers, or foreign brokers with certain types of relationships to
the United States, unless the broker has documentary evidence in its records
that the holder is a Non-United States Holder and certain other conditions are
met, or the holder otherwise establishes an exemption.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules will be refunded or credited against the Non-United
States Holder's United States Federal income tax liability, provided that the
required information is furnished to the Internal Revenue Service.
These information reporting and backup withholding rules are under review
by the United States Treasury and their application to the Common Stock could be
changed by future regulations. On April 22, 1996, proposed Treasury Regulations
were published in the Federal Register concerning the withholding of tax and
reporting for certain amounts paid to non-resident individuals and foreign
corporations. The proposed Treasury Regulations, if adopted in their present
form, would be effective for payments made after December 31, 1997. Prospective
investors should consult their tax advisors concerning the potential adoption of
such proposed Treasury Regulations and the potential effect on their ownership
of Common Stock.
49
<PAGE> 52
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"U.S. Purchase Agreement") among the Company, each of the Selling Stockholders
and each of the underwriters named below (the "U.S. Underwriters"), and
concurrently with the sale of 800,000 shares of Common Stock to the
International Managers (as defined below), the Company and the Selling
Stockholders have agreed to sell to the U.S. Underwriters, and each of the U.S.
Underwriters severally has agreed to purchase from the Company and the Selling
Stockholders, the number of shares of Common Stock set forth opposite its name
below.
<TABLE>
<CAPTION>
NUMBER
U.S. UNDERWRITERS OF SHARES
----------------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................
Cowen & Company.............................................
UBS Securities LLC..........................................
Sands Brothers & Co., Ltd...................................
---------
Total.......................................... 3,200,000
=========
</TABLE>
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Cowen
& Company, UBS Securities LLC and Sands Brothers & Co., Ltd. are acting as
representatives (the "U.S. Representatives") of the U.S. Underwriters.
The Company and the Selling Stockholders have also entered into a purchase
agreement (the "International Purchase Agreement" and, together with the U.S.
Purchase Agreement, (the "Purchase Agreements") with certain underwriters
outside the United States and Canada (collectively, the "International
Managers," and together with the U.S. Underwriters, the "Underwriters"), for
whom Merrill Lynch International, Cowen International L.P., UBS Limited and
Sands Brothers & Co., Ltd. are acting as representatives (the "International
Representatives" and, together with the U.S. Representatives, the
"Representatives"). Subject to the terms and conditions set forth in the
International Purchase Agreement, and concurrently with the sale of 3,200,000
shares of Common Stock to the U.S. Underwriters pursuant to the U.S. Purchase
Agreement, the Company and the Selling Stockholders have agreed to sell to the
International Managers, and the International Managers have severally agreed to
purchase from the Company and the Selling Stockholders, an aggregate of 800,000
shares of Common Stock. The public offering price per share of Common Stock and
the underwriting discount per share of Common Stock are identical under the U.S.
Purchase Agreement and the International Purchase Agreement. The respective
percentages of the Common Stock to be sold by each of the Company and the
Selling Stockholders will be identical in the U.S. Offering and the
International Offering.
In the U.S. Purchase Agreement and the International Purchase Agreement,
the several U.S. Underwriters and the several International Managers,
respectively, have agreed, subject to the terms and conditions set forth
therein, to purchase all of the shares of Common Stock being sold pursuant to
each such agreement if any of the shares of Common Stock being sold pursuant to
such agreement are purchased. Under certain circumstances involving a default by
an Underwriter, the commitments of non-defaulting U.S. Underwriters or
International Managers (as the case may be) may be increased or the U.S.
Purchase Agreement or the International Purchase Agreement (as the case may be)
may be terminated. The sale of Common Stock to the U.S. Underwriters is
conditioned upon the sale of Common Stock to the International Managers and vice
versa.
The U.S. Underwriters and the International Managers have entered into an
intersyndicate agreement (the "Intersyndicate Agreement") providing for the
coordination of their activities. The Underwriters are
50
<PAGE> 53
permitted to sell shares of Common Stock to each other for purposes of resale at
the initial public offering price, less an amount not greater than the selling
concession. Under the terms of the Intersyndicate Agreement, the U.S.
Underwriters and any dealer to whom they sell shares of Common Stock will not
offer to sell or sell shares of Common Stock to persons who are non-United
States or non-Canadian persons or to persons they believe intend to resell to
persons who are non-United States or non-Canadian persons, and the International
Managers and any dealer to whom they sell shares of Common Stock will not offer
to sell or sell shares of Common Stock to U.S. persons or to Canadian persons or
to persons they believe intend to resell to United States persons or Canadian
persons, except in the case of transactions pursuant to the Intersyndicate
Agreement.
The U.S. Representatives have advised the Company and the Selling
Stockholders that the U.S. Underwriters propose initially to offer the shares of
Common Stock to the public at the public offering price set forth on the cover
page of this Prospectus, and to certain selected dealers at such price less a
concession not in excess of $ per share. The U.S. Underwriters may
allow, and such dealers may reallow, a discount not in excess of $ per
share on sales to certain other dealers. After the initial public offering, the
public offering price, concession and discount may be changed.
The Company has granted an option to the U.S. Underwriters, exercisable
within 30 days after the date of this Prospectus, to purchase up to an aggregate
of 480,000 additional shares of Common Stock at the public offering price set
forth on the cover page of this Prospectus, less the underwriting discount. The
U.S. Underwriters may exercise this option only to cover over-allotments, if
any, made on the sale of the shares of Common Stock offered hereby. To the
extent that the U.S. Underwriters exercise this option, each U.S. Underwriter
will be obligated, subject to certain conditions, to purchase a number of
additional shares of Common Stock proportionate to such U.S. Underwriter's
initial amount reflected in the foregoing table. The Company has also granted an
option to the International Managers, exercisable within 30 days after the date
of this Prospectus, to purchase up to an aggregate of 120,000 additional shares
of Common Stock to cover over-allotments, if any, on terms similar to those
granted to the U.S. Underwriters. If purchased, the Underwriters will offer such
additional shares on the same terms as those on which the 4,000,000 shares are
being offered.
The Company, its executive officers and directors, and the Selling
Stockholders have, subject to certain exceptions, agreed that they will not for
a period of 120 days from the date of this Prospectus, without the prior written
consent of Merrill Lynch and Merrill Lynch International, directly or
indirectly, sell, offer to sell, grant any option for the sale of, or otherwise
dispose of, any capital stock of the Company or any security convertible or
exchangeable into, or exercisable for, such capital stock, or, in the case of
the Company, file any registration statement (other than registration statements
on Form S-8 relating to employee stock option plans and the registration
statement relating to 375,000 shares of Common Stock owned by a stockholder and
an employee of the Company pursuant to the terms of his outstanding registration
rights) with respect to any of the foregoing, except that the Company may,
without such consent, issue options pursuant to the Stock Option Plans and
shares of Common Stock upon exercise of options issued pursuant to the Stock
Option Plans. See "Shares Eligible for Future Sale; Registration Rights."
In connection with the Offerings, certain Underwriters or their respective
affiliates and selling group members (if any) who are qualified market makers on
the Nasdaq National Market may engage in "passive market making" in the Common
Stock on the Nasdaq National Market in accordance with Rule 103 under Regulation
M. Rule 103 permits, upon the satisfaction of certain conditions, underwriters
and selling group members participating in a distribution that are also Nasdaq
National Market market makers in the security being distributed to engage in
limited market making transactions during the period when Rule 103 under
Regulation M would otherwise prohibit such activity. Rule 103 prohibits
underwriters and selling group members engaged in passive market making
generally from entering a bid or effecting a purchase at a price that exceeds
the highest bid for those securities displayed on the Nasdaq National Market by
a market maker that is not participating in the distribution. Under Rule 103,
each underwriter or selling group member engaged in passive market making is
subject to a daily net purchase limitation equal to 30% of such entity's average
daily trading volume during the two full consecutive calendar months immediately
preceding the date of the filing of the registration statement under the
Securities Act pertaining to the security to be distributed.
51
<PAGE> 54
The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including certain liabilities under
the Securities Act, or to contribute to payments the Underwriters may be
required to make in respect thereof.
In connection with the Offerings, the Underwriters may engage in certain
transactions which stabilize, maintain or otherwise affect the price of the
Common Stock. Such transactions may include the purchase of shares of Common
Stock in the open market to cover short positions created by over-allotments or
to stabilize the price of the Common Stock. In general, purchases of a security
for the purpose of stabilization or to reduce a short position could cause the
price of the security to be higher than it might be in the absence of such
purchases. Neither the Company nor any of the Underwriters make any
representation or prediction as to the direction or magnitude of any effect that
the transactions described above may have on the price of the Common Stock. In
addition, neither the Company nor any of the Underwriters make any
representation that the Underwriters will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.
Steven B. Sands, the Co-Chairman and Chief Executive Officer of Sands
Brothers & Co., Ltd., one of the Representatives, has been a member of the
Company's Board of Directors since the Company's initial public offering in
April 1994. In addition, in connection with the Company's initial public
offering, Sands Brothers & Co., Ltd. received warrants to purchase an aggregate
of 468,750 shares of Common Stock at an exercise price of $3.30 per share, of
which warrants to purchase 467,579 shares have been exercised.
LEGAL MATTERS
Certain legal matters with respect to the validity of the shares of Common
Stock offered hereby are being passed upon for the Company by Tenzer Greenblatt
LLP, New York, New York. A partner of Tenzer Greenblatt LLP holds options to
purchase 9,375 shares of Common Stock at an exercise price of $19.40 per share.
Mayer, Brown & Platt, Chicago, Illinois, is acting as counsel for the
Underwriters in connection with certain legal matters relating to the sale of
the shares of Common Stock offered hereby.
EXPERTS
The Consolidated Financial Statements and schedule of the Company as of
December 31, 1996 and 1995 and for each of the three years in the period ended
December 31, 1996 appearing in this Prospectus and elsewhere in the Registration
Statement (as defined herein), have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon appearing elsewhere
herein, which, as to the years 1995 and 1994, is based in part on the reports of
Coopers & Lybrand L.L.P., independent auditors. The financial statements and
schedule referred to above are included in reliance upon such reports given upon
the authority of said firms as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act with respect to the
Common Stock registered hereunder. As used herein, the term "Registration
Statement" means the initial Registration Statement and any and all amendments
thereto. This Prospectus omits certain information contained in said
Registration Statement as permitted by the rules and regulations of the
Commission. For further information with respect to the Company and the Common
Stock registered hereunder, reference is made to the Registration Statement,
including the exhibits thereto. Statements herein concerning the contents of any
contract or other document are not necessarily complete and in each instance
reference is made to such contract or other documents filed with the Commission
as an exhibit to the Registration Statement, or otherwise, each such statement
being qualified by and subject to such reference in all respects.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the
52
<PAGE> 55
Commission. Reports, registration statements, proxy statements, and other
information filed by the Company with the Commission can be inspected and copied
at the public reference facilities maintained by the Commission at Judiciary
Plaza, 450 Fifth Street, N.W. Room 1024, Washington, D.C. 20549, and at the
Commission's Regional Offices: 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and 7 World Trade Center, New York, New York 10048. Copies of
such materials can be obtained at prescribed rates from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549. Such reports and other information, including the Registration Statement
and the exhibits and schedules thereto, are also available on the Commission's
Web Site at http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(a) Annual Report on Form 10-K for the fiscal year ended December 31, 1996;
and
(b) Amendment No. 1 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996;
(c) Quarterly Report on Form 10-Q for the three-month period ended March
31, 1997; and
(d) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8A declared effective April 7, 1994 and
any amendments thereto.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the Offerings shall be deemed to be incorporated by reference
herein and to be a part hereof on the date of filing of such documents.
The Company will furnish without charge to each person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the documents incorporated herein by reference, except for the
exhibits to such documents. Requests should be directed to Mr. Phillip A.
Bounsall, Brightpoint, Inc., 6402 Corporate Drive, Indianapolis, Indiana 46278,
telephone: (317) 297-6100.
53
<PAGE> 56
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors.............................. F-2
Consolidated Statements of Income for the years ended
December 31, 1994, 1995 and 1996, and for the six-month
periods ended June 30, 1996 and 1997 (unaudited).......... F-3
Consolidated Balance Sheets as of December 31, 1995 and
1996, and as of June 30, 1997 (unaudited)................. F-4
Consolidated Statements of Stockholders' Equity for the
years ended December 31, 1994, 1995 and 1996, and for the
six-month period ended June 30, 1997 (unaudited).......... F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1995 and 1996, and for the six-month
periods ended June 30, 1996 and 1997 (unaudited).......... F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>
F-1
<PAGE> 57
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Brightpoint, Inc.
We have audited the accompanying consolidated balance sheets of
Brightpoint, Inc. as of December 31, 1996 and 1995, and the related consolidated
statements of income, stockholders' equity and cash flows for each of the three
years in the period ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We did not audit the
1995 and 1994 financial statements of Allied Communications, which are included
in the consolidated financial statements, which statements reflect total assets
constituting 33% in 1995, and net sales constituting 36% in 1995 and 45% in 1994
of the related consolidated totals. Those statements were audited by other
auditors whose report has been furnished to us, and our opinion, insofar as it
relates to data included for Allied Communications, is based solely on the
report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material respects,
the consolidated financial position of Brightpoint, Inc. at December 31, 1996
and 1995, and the consolidated results of its operations and its cash flows for
each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
Indianapolis, Indiana
January 28, 1997
F-2
<PAGE> 58
BRIGHTPOINT, INC.
CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------ -------------------------
1994 1995 1996 1996 1997
---- ---- ---- ---- ----
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales............................... $309,227 $419,149 $589,718 $232,856 $419,196
Cost of sales........................... 290,463 390,950 543,878 216,446 385,180
-------- -------- -------- -------- --------
Gross profit............................ 18,764 28,199 45,840 16,410 34,016
Selling, general and administrative
expenses.............................. 11,095 14,813 20,849 7,767 17,136
-------- -------- -------- -------- --------
Income from operations.................. 7,669 13,386 24,991 8,643 16,880
Merger expenses......................... -- -- 2,750 2,750 --
Net investment gain..................... -- -- -- -- 1,432
Interest expense, net................... 164 1,383 2,118 623 3,106
-------- -------- -------- -------- --------
Income before income taxes and minority
interest.............................. 7,505 12,003 20,123 5,270 15,206
Income taxes............................ 1,623 3,838 7,328 1,971 4,540
-------- -------- -------- -------- --------
Income before minority interest......... 5,882 8,165 12,795 3,299 10,666
Minority interest in subsidiaries'
earnings.............................. -- -- 1,758 -- 383
-------- -------- -------- -------- --------
Net income.............................. $ 5,882 $ 8,165 $ 11,037 $ 3,299 $ 10,283
======== ======== ======== ======== ========
Pro forma data (unaudited):
Historical income before income
taxes.............................. $ 7,505 $ 12,003 $ 20,123 $ 5,270
Pro forma income taxes................ 2,950 4,696 7,804 2,447
Minority interest in subsidiaries'
earnings........................... -- -- 1,758 --
-------- -------- -------- --------
Pro forma net income.................. $ 4,555 $ 7,307 $ 10,561 $ 2,823 $ 10,283
======== ======== ======== ======== ========
Pro forma net income excluding the
after-tax effect of one-time merger
expenses........................... $ 4,555 $ 7,307 $ 12,622 $ 4,884 $ 10,283
======== ======== ======== ======== ========
Net income per share:
Historical............................ $ 0.44
========
Pro forma............................. $ 0.32 $ 0.42 $ 0.49 $ 0.14 $ 0.44
======== ======== ======== ======== ========
Pro forma excluding the after-tax
effect of one-time merger
expenses........................... $ 0.32 $ 0.42 $ 0.58 $ 0.23 $ 0.44
======== ======== ======== ======== ========
Weighted average common shares
outstanding........................ 14,276 17,226 21,594 20,809 23,159
</TABLE>
See accompanying notes.
F-3
<PAGE> 59
BRIGHTPOINT, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30,
1995 1996 1997
---- ---- --------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 726 $ 14,255 $ 16,939
Marketable securities..................................... -- 18,000 --
Accounts receivable (less allowance for doubtful accounts
of $691 in 1995, $1,115 in 1996 and $2,161 in 1997).... 57,288 113,119 119,343
Inventories............................................... 56,313 112,916 98,729
Other current assets...................................... 2,220 8,422 10,355
-------- -------- --------
Total current assets........................................ 116,547 266,712 245,366
Property and equipment, net................................. 2,934 8,207 16,806
Goodwill, net............................................... -- 15,232 19,312
Other assets................................................ 306 8,894 4,673
-------- -------- --------
Total assets................................................ $119,787 $299,045 $286,157
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses..................... $ 48,665 $123,231 $ 77,802
Notes payable............................................. 5,663 -- --
-------- -------- --------
Total current liabilities................................... 54,328 123,231 77,802
Notes payable............................................... -- 79,564 97,501
Deferred taxes.............................................. 48 330 330
Stockholder loans........................................... 554 -- --
Minority interest........................................... -- 938 289
Stockholders' equity:
Preferred stock, $.01 par value:
Authorized shares -- 1,000
No shares issued or outstanding........................ -- -- --
Common stock, $.01 par value:
Authorized shares -- 100,000
Issued and outstanding shares -- 19,894 in 1995, 21,636
in 1996 and 22,318 in 1997........................... 199 216 223
Additional paid-in capital................................ 50,757 73,206 81,840
Foreign currency translation adjustment................... -- 97 355
Unrealized gain on marketable securities, net of tax...... -- 3,929 --
Retained earnings......................................... 13,901 17,534 27,817
-------- -------- --------
Total stockholders' equity.................................. 64,857 94,982 110,235
-------- -------- --------
Total liabilities and stockholders' equity.................. $119,787 $299,045 $286,157
======== ======== ========
</TABLE>
See accompanying notes.
F-4
<PAGE> 60
BRIGHTPOINT, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
--------------- PAID-IN RETAINED
SHARES AMOUNT CAPITAL OTHER EARNINGS TOTAL
------ ------ ---------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1994.............. 9,891 $ 99 $ -- $ -- $ 3,386 $ 3,485
S corporation dividends............... -- -- -- -- (1,161) (1,161)
Transfer of Brightpoint, Inc.
undistributed S corporation
earnings........................... -- -- 1,006 -- (1,006) --
Issuance of common stock.............. 5,390 54 12,023 -- -- 12,077
Net income............................ -- -- -- -- 5,882 5,882
------ ---- ------- ------- ------- --------
Balance at December 31, 1994............ 15,281 153 13,029 -- 7,101 20,283
S corporation dividends............... -- -- -- -- (1,365) (1,365)
Issuance of common stock.............. 3,615 36 33,510 -- -- 33,546
Exercise of stock options and
warrants........................... 998 10 2,942 -- -- 2,952
Tax benefit of exercise of stock
options............................ -- -- 1,276 -- -- 1,276
Net income............................ -- -- -- -- 8,165 8,165
------ ---- ------- ------- ------- --------
Balance at December 31, 1995............ 19,894 199 50,757 -- 13,901 64,857
S corporation dividends............... -- -- -- -- (289) (289)
Transfer of Allied Communications
undistributed S corporation
earnings........................... -- -- 7,115 -- (7,115) --
Exercise of stock options and
warrants........................... 992 10 5,939 -- -- 5,949
Tax benefit of exercise of stock
options............................ -- -- 1,302 -- -- 1,302
Common stock issued in connection with
the purchase of Brightpoint
International Ltd. ................ 750 7 8,093 -- -- 8,100
Foreign currency translation
adjustment......................... -- -- -- 97 -- 97
Unrealized gain on marketable
securities, net of tax............. -- -- -- 3,929 -- 3,929
Net income............................ -- -- -- -- 11,037 11,037
------ ---- ------- ------- ------- --------
Balance at December 31, 1996............ 21,636 216 73,206 4,026 17,534 94,982
Exercise of stock options............. 450 5 2,840 -- -- 2,845
Tax benefit of exercise of stock
options............................ -- -- 2,704 -- -- 2,704
Common stock issued in connection with
the purchase of minority interests
in Brightpoint China Limited,
Brightpoint (UK) Limited and
Brightpoint Australia Pty Ltd...... 232 2 3,090 -- -- 3,092
Foreign currency translation
adjustment......................... -- -- -- 258 -- 258
Change in unrealized gain on
marketable securities, net of
tax................................ -- -- -- (3,929) -- (3,929)
Net income............................ -- -- -- -- 10,283 10,283
------ ---- ------- ------- ------- --------
Balance at June 30, 1997 (unaudited).... 22,318 $223 $81,840 $ 355 $27,817 $110,235
====== ==== ======= ======= ======= ========
</TABLE>
See accompanying notes.
F-5
<PAGE> 61
BRIGHTPOINT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
-------------------------------- -------------------------
1994 1995 1996 1996 1997
---- ---- ---- ---- ----
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income................................ $ 5,882 $ 8,165 $ 11,037 $ 3,299 $ 10,283
Adjustments to reconcile net income to net
cash used by operating activities:
Minority interest.................... -- -- 1,758 -- 383
Depreciation and amortization........ 151 217 1,069 333 1,416
Merger expenses...................... -- -- 2,750 2,750 --
Net investment gain.................. -- -- -- -- (1,432)
Deferred taxes....................... -- -- 282 -- --
Changes in operating assets and
liabilities, net of effects from
acquisitions:
Accounts receivable............. (21,648) (15,776) (43,989) (16,500) (4,063)
Inventories..................... (28,993) (17,094) (45,771) 2,454 15,717
Other current assets............ (867) (1,176) (5,180) 205 (1,021)
Accounts payable and accrued
expenses...................... 34,497 (7,536) 46,519 (13,352) (44,247)
-------- -------- -------- -------- --------
Net cash used by operating activities..... (10,978) (33,200) (31,525) (20,811) (22,964)
INVESTING ACTIVITIES
Capital expenditures...................... (468) (2,521) (5,965) (3,449) (9,650)
Sales (purchases) of marketable
securities.............................. -- -- (11,431) -- 18,528
Acquisition of Brightpoint International
Ltd. ................................... -- -- (5,000) -- --
Acquisition of Hatadicorp Pty Ltd. ....... -- -- (912) -- --
Acquisition of minority interests in
Brightpoint China Limited, Brightpoint
(UK) Limited and Brightpoint Australia
Pty Ltd................................. -- -- -- -- (1,522)
Acquisition of Telnic AB.................. -- -- -- -- (2,512)
Cash acquired in formation of Brightpoint
International Ltd. ..................... -- -- 352 -- --
Increase in other assets.................. -- (259) (7,678) (1,144) (3,089)
-------- -------- -------- -------- --------
Net cash provided (used) by investing
activities.............................. (468) (2,780) (30,634) (4,593) 1,755
FINANCING ACTIVITIES
Net proceeds from notes payable........... 3,448 648 71,740 32,229 17,938
Proceeds from stock offering.............. 12,189 33,546 -- -- --
Proceeds and tax benefit from exercise of
stock options and warrants.............. -- 4,228 7,255 1,356 5,549
Payments on long-term debt................ (4,015) -- -- -- --
Proceeds from (payments on) stockholder
loans................................... 842 (792) (554) (554) --
Merger expenses........................... -- -- (2,168) (2,088) --
S corporation distributions............... (1,169) (1,365) (289) (286) --
-------- -------- -------- -------- --------
Net cash provided by financing
activities.............................. 11,295 36,265 75,984 30,657 23,487
Effect of exchange rate changes on cash
and cash equivalents.................... -- -- (296) -- 406
-------- -------- -------- -------- --------
Net increase (decrease) in cash and cash
equivalents............................. (151) 285 13,529 5,253 2,684
Cash and cash equivalents at beginning of
period.................................. 592 441 726 726 14,255
-------- -------- -------- -------- --------
Cash and cash equivalents at end of
period.................................. $ 441 $ 726 $ 14,255 $ 5,979 $ 16,939
======== ======== ======== ======== ========
</TABLE>
See accompanying notes.
F-6
<PAGE> 62
BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED WITH RESPECT TO INFORMATION AS OF JUNE 30, 1997
AND FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 1996 AND 1997)
1. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
Brightpoint, Inc. (the Company) is a leading provider of distribution and
value-added logistics services to the wireless communications industry. The
Company provides its services to its customers, which include network operators,
manufacturers, agents, resellers, dealers and retailers, throughout the world.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company,
its wholly owned subsidiary, Brightpoint International Ltd. (see Note 2 --
Merger and Acquisitions), and Brightpoint International Ltd.'s subsidiaries.
Significant intercompany accounts and transactions have been eliminated in
consolidation.
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. (Allied Communications), which were 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 entities as if the merger had been in effect for
all periods presented.
Pro forma net income per share for all periods presented is computed after
taking into consideration the 3,796,875 shares of the Company's common stock
that was exchanged for all of the outstanding common stock of Allied
Communications. Further information pertaining to the merger is presented in
Note 2 -- Merger and Acquisitions.
There were no material differences between the accounting policies of the
Company and Allied Communications. Certain amounts in Allied Communications'
historical combined financial statements were reclassified to conform with the
presentation used by the Company.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
REVENUE RECOGNITION
Revenue is recognized when wireless communications equipment is shipped and
sold or when services have been rendered to customers.
CASH AND CASH EQUIVALENTS
All highly liquid investments with maturities of three months or less when
purchased are considered to be cash equivalents. The carrying amount of cash and
cash equivalents approximates fair value because of the short maturity of those
investments.
CONCENTRATIONS OF RISK
Financial instruments which potentially expose the Company to
concentrations of credit risk consist primarily of trade accounts receivable.
The accounts receivable balance, reflecting the Company's sources of
F-7
<PAGE> 63
BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CONCENTRATIONS OF RISK (CONTINUED)
revenue from wireless network operators, mass retailers and agent dealers, is
dispersed throughout the world, including Asia and the Pacific Rim, North
America, Europe, the Middle East, Africa and Latin America. The Company has no
customer which exceeded 10% of the Company's accounts receivable balance at
December 31, 1996. At June 30, 1997, accounts receivable from Success World
Limited, an exporter in Hong Kong, was $12.5 million and no other customer
balance exceeded 10%. For the six months ended June 30, 1997, product sales to
Success World Limited accounted for approximately 12% of the Company's net
sales. No other customer accounted for more than 5% of the Company's net sales
during the six months ended June 30, 1997. The Company performs ongoing credit
evaluations of its customers and provides credit in the normal course of
business to a large number of its customers. However, consistent with industry
practice, the Company generally requires no collateral from its customers. The
Company maintains allowances for potential credit losses; such losses have not
been significant and have been within management's expectations.
The Company is dependent on third-party equipment manufacturers,
distributors and dealers for all of its supply of wireless communications
equipment. For the year ended December 31, 1996 and the six months ended June
30, 1997, the Company's three largest suppliers accounted for 51% and 65% of
product sales, respectively. The Company is dependent on the ability of its
suppliers to provide adequate products on a timely basis and on favorable
pricing terms. Although the Company believes that its relationships with its
suppliers are good, the loss of certain principal suppliers could have a
material adverse effect on the Company.
INVENTORIES
Inventories consist of wireless telephones and accessories and are stated
at the lower of cost (first-in, first-out method) or market.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost and depreciation is computed by
the straight-line method using the estimated useful lives of the assets,
generally five to fifteen years. Leasehold improvements are stated at cost and
amortized over the lease term of the associated property. Maintenance and
repairs are charged to expense as incurred.
GOODWILL
Goodwill represents the unamortized cost in excess of the fair value of the
net assets acquired in business combinations, and is amortized on a
straight-line basis over 30 years. The Company continually reviews the valuation
and amortization of goodwill.
IMPAIRMENT OF LONG-LIVED ASSETS
The FASB issued Statement of Financial Accounting Standards No. 121,
Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of, which the Company adopted effective January 1, 1996. SFAS No. 121
requires that long-lived assets and certain identifiable intangibles held and
used by the Company be reviewed for possible impairment whenever events or
changes in circumstances indicate the carrying amount of an asset may not be
recoverable. SFAS No. 121 also requires that long-lived assets and certain
identifiable intangibles held for sale, other than those related to discontinued
operations, be reported at the lower of carrying amount or fair value less cost
of disposal. Adoption of the Statement and its application during 1996 did not
have an impact on the Company's financial position or results of operations.
F-8
<PAGE> 64
BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
Prior to April 14, 1994, the stockholders of the Company had elected under
Subchapter S of the Internal Revenue Code to include the income of the Company
in their own income for tax purposes. Accordingly, the Company was not subject
to federal and state income taxes until that date.
Effective April 14, 1994, the Company's election under Subchapter S was
terminated. Concurrent with the termination, the Company adopted Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes, which
requires recognition of deferred tax assets and liabilities based on the
difference between the financial statement and tax bases of assets and
liabilities. These deferred taxes are measured by applying current tax laws. The
effect on 1994 net income of adopting the Statement was not material.
Prior to June 7, 1996, the stockholders of Allied Communications had also
elected treatment under Subchapter S of the Internal Revenue Code. Concurrent
with the merger with Allied Communications on June 7, 1996, Allied
Communications' election under Subchapter S was terminated. At that time, the
Company adopted Statement of Financial Accounting Standards No. 109, Accounting
for Income Taxes, for the Allied Communications' accounts. The effect on 1996
net income of adopting the Statement was not material.
FOREIGN CURRENCY TRANSLATION
Financial statements of Brightpoint International Ltd.'s subsidiaries are
translated into U.S. dollars using the exchange rate at each balance sheet date
for assets and liabilities and an average exchange rate for each period for
revenues, expenses, gains and losses. Translation adjustments are recorded as a
separate component of stockholders' equity since the local currency for each
subsidiary is, in all cases, its functional currency. Translation adjustments
have not been significant.
PRO FORMA INCOME TAXES
The pro forma income tax amounts presented in the statements of income
represent an estimate of the income taxes that the Company and Allied
Communications would have incurred had they been tax paying entities for all
periods presented.
NET INCOME PER SHARE AMOUNTS
Pro forma net income per share amounts are based on the weighted average
number of common shares and dilutive common share equivalents outstanding during
each period. Common share equivalents consist of shares of common stock issuable
upon exercise of outstanding stock options and stock warrants (see Note 7 --
Stockholders' Equity). Historical net income per share amounts are not presented
because such information is not meaningful.
RECENTLY ISSUED ACCOUNTING STANDARD
In February 1997, the FASB issued Statement of Financial Accounting
Standards No. 128, Earnings per Share, which replaces the presentation of
primary earnings per share (EPS) with basic EPS and replaces fully diluted EPS
with diluted EPS. It also requires dual presentation of basic and diluted EPS on
the face of the income statement for all entities with complex capital
structures and requires a reconciliation of the components of the basic EPS
computation to the components of the diluted EPS computation. SFAS No. 128 is
effective for both interim and annual periods ending after December 15, 1997.
Earlier adoption is not permitted. Upon adoption, all prior-period EPS data
presented will be restated. The Company does not anticipate the adoption of SFAS
No. 128 to have a significant effect on EPS.
F-9
<PAGE> 65
BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
STOCK OPTIONS
In 1996, the Company adopted Statement of Financial Accounting Standards
No. 123, Accounting for Stock-Based Compensation. In accordance with SFAS No.
123, the Company uses the intrinsic value method to account for stock options,
consistent with the existing rules established by Accounting Principles Board
No. 25, Accounting for Stock Issued to Employees. Accordingly, no compensation
expense has been recognized for stock options granted to employees.
UNAUDITED INTERIM FINANCIAL STATEMENTS
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 Article 10 of Regulation S-X
of the Securities Exchange Act of 1934. 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 position as of June 30, 1997 and the consolidated statements of
income, stockholders' equity and cash flows for the six-month periods ended June
30, 1996 and 1997 have been included.
2. MERGER AND ACQUISITIONS
On June 7, 1996, the Company completed a merger with Allied Communications
through the exchange of 3,796,875 shares of newly-issued Company common stock in
exchange for all of the outstanding shares of Allied Communications' common
stock. The merger was structured as a tax-free reorganization and was accounted
for using the pooling-of-interests method of accounting. In connection with the
merger, the Company recorded a nonrecurring charge of $2.75 million ($2.1
million 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. Net sales and net income for the Company and
Allied Communications prior to the combination are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED THREE
DECEMBER 31, MONTHS ENDED
-------------------- MARCH 31,
1994 1995 1996
---- ---- ------------
<S> <C> <C> <C>
Net sales
Brightpoint, Inc.......................................... $169,268 $269,359 $ 87,662
Allied Communications..................................... 139,959 149,790 25,298
-------- -------- --------
Combined............................................... $309,227 $419,149 $112,960
======== ======== ========
Net income, giving effect to pro forma income taxes
Brightpoint, Inc. ........................................ $ 2,843 $ 5,706 $ 2,023
Allied Communications..................................... 1,712 1,601 454
-------- -------- --------
Combined............................................... $ 4,555 $ 7,307 $ 2,477
======== ======== ========
</TABLE>
On August 1, 1996, the Company completed the formation of Brightpoint
International Ltd., a joint venture with Technology Resources International
Limited. The Company maintained effective controlling interest in Brightpoint
International Ltd., and therefore the operations were consolidated for financial
reporting purposes.
F-10
<PAGE> 66
BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. MERGER AND ACQUISITIONS (CONTINUED)
The Company owned 50% of Brightpoint International Ltd. until November
1996, when the Company acquired the remaining 50% of the subsidiary. The
combination was accounted for using the purchase method. The purchase price for
the remaining equity interest consisted of 750,000 unregistered shares of the
Company's common stock, valued at $8.1 million, and $5.0 million of cash. The
resulting goodwill of $12.6 million is being amortized over 30 years.
On October 18, 1996, Brightpoint International Ltd. acquired the business
and operations of Hatadicorp Pty Ltd. (Hatadi) based in Sydney, Australia. The
newly-formed Brightpoint Australia Pty Ltd. is owned 80 percent by Brightpoint
International Ltd. and 20 percent by the former shareholders of Hatadi. The
combination was accounted for using the purchase method and the operations of
Brightpoint Australia Pty Ltd. are consolidated for financial reporting
purposes. The purchase price of $2.8 million was allocated principally to
goodwill which is being amortized over 30 years.
In February 1997, the Company acquired the balance of ownership of its
majority-owned subsidiary, Brightpoint China Limited. The 20 percent minority
interest was owned by members of management of that subsidiary. The purchase
price for the remaining equity interest consisted of 96,775 of unregistered
shares of the Company's common stock, valued at $1.3 million, and $750,000 in
cash. The acquisition was accounted for using the purchase method. The resulting
goodwill of $1.6 million is being amortized over 30 years.
Effective April 1, 1997, the Company announced that it had acquired the
balance of ownership of two of its majority-owned subsidiaries, Brightpoint (UK)
Limited and Brightpoint Australia Pty Ltd. The 20 percent minority interests
were owned by members of management of each of the respective subsidiaries. The
purchase price of the minority ownership interests consisted of approximately
135,470 of unregistered shares of the Company's common stock, valued at $1.8
million, and approximately $772,000 in cash. The acquisitions were accounted for
using the purchase method. The purchase price of approximately $2.6 million was
allocated principally to goodwill which is being amortized over 30 years.
Effective April 1, 1997, the Company's wholly-owned subsidiary, Brightpoint
Sweden AB, acquired the business and certain net assets of Telnic AB, a
distributor of wireless communications equipment located in Sweden. The purchase
price consisted of approximately $2.5 million in cash with an additional
$300,000 payable upon execution of a key contract and up to an additional $3.6
million depending upon the future financial performance of Brightpoint Sweden
AB. This acquisition was accounted for using the purchase method and the
resulting goodwill was approximately $600,000 which is being amortized over 30
years.
The impact of these acquisitions was not material in relation to the
Company's results of operations. Consequently, pro forma information is not
presented.
3. INVESTMENTS
During the fourth quarter of 1996, the Company acquired 1,000,000 shares of
common stock of CellStar Corporation for investment purposes. CellStar
Corporation is engaged in substantially the same business as the Company. The
cost basis of this investment was $11.4 million and the fair value at December
31, 1996 (based on quoted market price) was $18.0 million. In accordance with
Statement of Financial Accounting Standards No. 115, Accounting for Certain Debt
and Equity Securities, the Company classified the available-for-sale investment
as a current asset and reported it at fair value with the unrealized gain, net
of tax, classified as a separate component of stockholders' equity at December
31, 1996.
In December 1996, the Company acquired 25 Series E convertible debentures
of Pocket Communications, Inc. (Pocket). Pocket is a privately-held company
offering wireless telecommunications services, specifically in the area of
Personal Communications Services (PCS). The price of each debenture was $200,000
resulting in a total investment of $5.0 million. Each debenture is convertible
into 25,000 shares of
F-11
<PAGE> 67
BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. INVESTMENTS (CONTINUED)
common stock of Pocket, resulting in 625,000 total convertible shares. The
debentures earn interest at a rate of 2.5% above Prime Rate (10.75% at December
31, 1996) and have a maturity date of December 12, 1998, at which time the
Company can demand repayment or exercise its conversion rights. Assuming
conversion, the Company's ownership interest in Pocket would approximate 1%.
This investment was carried at cost and classified in other assets at December
31, 1996. There is no quoted market price for this investment. However, because
the instrument was acquired in late 1996 and no events had occurred that would
significantly impact the value of the instrument, the cost of the investment at
December 31, 1996 was assumed to approximate fair value.
During the first quarter of 1997, the Company realized a gain on the sale
of its investment in CellStar Corporation. The gain, net of transaction costs,
including related bonuses to certain key employees, was approximately $8.3
million. In addition, on March 31, 1997, Pocket filed for protection under
Chapter 11 of the U.S. Bankruptcy Code. Accordingly, the Company recorded $6.9
million of losses on its investments in Pocket and two smaller equity
investments. Excluding the impact of the resulting net investment gain of $1.4
million and related income taxes, net income per share for the six months ended
June 30, 1997 would have been $0.41.
4. PROPERTY AND EQUIPMENT
The components of property and equipment are as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------- JUNE 30,
1995 1996 1997
---- ---- --------
(UNAUDITED)
<S> <C> <C> <C>
Furniture and equipment..................................... $ 964 $2,065 $ 4,042
Information systems equipment and software.................. 1,985 5,917 12,307
Leasehold improvements...................................... 495 1,450 2,826
------ ------ -------
3,444 9,432 19,175
Less accumulated depreciation............................... 510 1,225 2,369
------ ------ -------
Net property and equipment.................................. $2,934 $8,207 $16,806
====== ====== =======
</TABLE>
5. NOTES PAYABLE
On June 24, 1997, the Company entered into a new $200 million five-year
senior secured revolving line of credit facility with The First National Bank of
Chicago and Bank One, Indiana, N.A., as co-agents for a group of banks
(collectively, the "Banks"). The new credit facility has replaced the Company's
two previous bank credit facilities of up to $125 million in the aggregate. The
new credit facility matures in June 2002 and generally bears interest, at the
Company's option, at (i) the greater of The First National Bank of Chicago's
corporate base rate and 0.50% plus the Federal funds effective rate (the "Base
Rate") or (ii) the rate at which deposits in United States dollars or
Eurocurrencies are offered by The First National Bank of Chicago to first-class
banks in the London interbank market plus a spread ranging from 40 to 112.5
basis points (based on the Company's leverage ratio) plus a spread reserve, if
any. Borrowings by the Company's non-United States subsidiaries will bear
interest at rates negotiated with the applicable lenders. Under the new line of
credit, at June 30, 1997, there was $97.5 million outstanding, an aggregate of
$15.6 million in letters of credit outstanding and $86.9 million of credit
remaining available.
All of the Company's assets located in the United States and 65% of the
capital stock of the Company's foreign subsidiaries are pledged to the Banks as
collateral, and the Company is substantially prohibited from incurring
additional indebtedness. In addition to certain net worth and other financial
covenants, the
F-12
<PAGE> 68
BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. NOTES PAYABLE (CONTINUED)
Company's loan agreement with the Banks 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 or selling all or substantially all of its assets.
At December 31, 1996, the Company had a $75 million credit agreement with
Bank One, Indiana, N.A., as agent for a group of banks. On January 28, 1997, the
Company amended its credit agreement with Bank One to increase available
borrowings to $100 million. In addition, at December 31, 1996, Brightpoint
International Ltd. had a $25 million line of credit with The First National Bank
of Chicago to provide capital for the Company's international operating
divisions. Borrowings on the Bank One credit agreement and The First National
Bank of Chicago line of credit were $56.0 million and $21.6 million at December
31, 1996, respectively.
At December 31, 1996, the Company was in compliance with the covenants in
its credit agreements. Interest payments for 1994, 1995, and 1996 were
approximately $277,000, $1,525,000 and $1,556,000, respectively. The carrying
amount of the Company's borrowings under its variable-rate lines of credit
approximates fair value.
At December 31, 1995, outstanding debt of $5.7 million was classified as a
current liability and consisted primarily of a note payable with Bank One that
had a current maturity schedule.
6. INCOME TAXES
For financial reporting purposes, income before income taxes and minority
interest, by tax jurisdiction, is comprised of the following (in thousands):
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------- -------------------------
1994 1995 1996 1996 1997
---- ---- ---- ---- ----
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
United States................ $7,505 $12,003 $13,706 $5,270 $ 6,404
Foreign...................... -- -- 6,417 -- 8,802
------ ------- ------- ------ -------
$7,505 $12,003 $20,123 $5,270 $15,206
====== ======= ======= ====== =======
</TABLE>
The pro forma provision for income taxes represents the estimated income
taxes that would have been reported had the Company been subject to income taxes
for each of the periods presented. In 1994 and 1995, the pro forma income tax
expense is comprised of a provision for federal income taxes at the statutory
rate plus a state income tax provision, net of federal income tax benefit. No
other items materially impact the pro forma income tax expense during those two
years. Due to the significance of the Subchapter S earnings (of both the Company
and Allied Communications) during 1994 and 1995, a reconciliation of historical
income tax expense is not presented as it would not be meaningful.
F-13
<PAGE> 69
BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. INCOME TAXES (CONTINUED)
The reconciliation of income tax expense for 1996 computed at the U.S.
federal statutory tax rate to the Company's effective income tax rate is as
follows:
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
---------- ---------
<S> <C> <C>
Tax at U.S. federal statutory rate...................... 35.0% 35.0%
State and local income taxes, net of U.S. federal
benefit............................................... 3.7 3.7
Allied Communications' Subchapter S earnings............ (2.5) --
Non-deductible merger expenses.......................... 1.7 1.7
Foreign sales corporation and foreign rates............. (1.5) (1.6)
---- ----
36.4% 38.8%
==== ====
</TABLE>
For the six months ended June 30, 1997, the difference between the U.S.
Federal statutory rate and the Company's effective income tax rate is primarily
attributable to lower foreign sales corporation and foreign tax rates.
Significant components of the historical and pro forma provision for income
taxes are as follows (in thousands):
<TABLE>
<CAPTION>
PRO FORMA (UNAUDITED) HISTORICAL
-------------------------------- --------------------------------
1994 1995 1996 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Current:
Federal....................... $2,590 $3,763 $4,758 $1,357 $3,028 $4,340
State......................... 642 1,017 1,131 410 978 1,035
Foreign....................... -- -- 2,184 -- -- 2,184
------ ------ ------ ------ ------ ------
3,232 4,780 8,073 1,767 4,006 7,559
Deferred:
Federal....................... (227) (73) (237) (116) (146) (203)
State......................... (55) (11) (32) (28) (22) (28)
------ ------ ------ ------ ------ ------
(282) (84) (269) (144) (168) (231)
------ ------ ------ ------ ------ ------
$2,950 $4,696 $7,804 $1,623 $3,838 $7,328
====== ====== ====== ====== ====== ======
</TABLE>
Components of the Company's deferred taxes are as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1995 1996
---- ----
<S> <C> <C>
Deferred tax assets:
Capitalization of inventory costs......................... $ 204 $ 612
Allowance for doubtful accounts........................... 156 372
------- -------
360 984
Deferred tax liabilities:
Depreciation.............................................. (48) (330)
Unrealized gain on marketable securities.................. -- (2,640)
------- -------
(48) (2,970)
------- -------
$ 312 $(1,986)
======= =======
</TABLE>
F-14
<PAGE> 70
BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. INCOME TAXES (CONTINUED)
Income tax payments were approximately $1,976,000, $1,931,000 and
$6,199,000 for 1994, 1995 and 1996, respectively.
Undistributed earnings of the Company's foreign operations were
approximately $6.0 million at December 31, 1996. Those earnings are considered
to be indefinitely reinvested and accordingly, no provision for U.S. federal and
state income taxes or foreign withholding taxes has been made. Upon distribution
of those earnings, the Company would be subject to U.S. income taxes (subject to
a reduction for foreign tax credits) and withholding taxes payable to the
various foreign countries. Determination of the amount of unrecognized deferred
U.S. income tax liability is not practicable; however, unrecognized foreign tax
credit carryovers would be available to reduce some portion of the U.S.
liability.
7. STOCKHOLDERS' EQUITY
The Company has declared the following stock splits which were effected in
the form of stock dividends:
<TABLE>
<CAPTION>
DECLARATION DATE DIVIDEND PAYMENT DATE SPLIT RATIO
- ---------------- --------------------- -----------
<S> <C> <C>
August 31, 1995 September 20, 1995 5 for 4
November 12, 1996 December 17, 1996 3 for 2
January 28, 1997 March 3, 1997 5 for 4
</TABLE>
Accordingly, all references in the financial statements related to share
amounts, per share amounts, average shares outstanding and information
concerning stock option plans have been adjusted retroactively to reflect these
stock splits.
In April 1994, the Company consummated the sale of 5.4 million shares
(including the underwriters' over-allotment option) of common stock for $2.67
per share in an initial public offering. In connection with the initial public
offering and the conversion of the Company from an S corporation to a C
corporation, the undistributed retained earnings generated while an S
corporation were transferred to additional paid-in capital.
In October 1995, the Company consummated the sale of 3.6 million shares of
common stock (including the sale of 520,000 shares pursuant to the underwriters'
over-allotment option) at a price of $10.14 per share in a public offering. The
net proceeds were used to repay $10.3 million outstanding under its line of
credit and for working capital and general corporate purposes.
On April 24, 1997, the stockholders of the Company approved an amendment to
the Company's Certificate of Incorporation to increase the authorized number of
shares of common stock from 25,000,000 to 100,000,000.
In connection with the Allied merger completed in June 1996, Allied
Communications' Subchapter S election was terminated. Accordingly, the
undistributed retained earnings generated while Allied Communications were
Subchapter S corporations were transferred to additional paid-in capital.
The Company has authorized 1,000,000 shares of preferred stock which remain
unissued. The Board of Directors has not yet determined the preferences,
qualifications, relative voting or other rights of the authorized shares of
preferred stock.
STOCK OPTION PLANS
The Company has three fixed stock option plans which reserve shares of
common stock for issuance to executives, key employees and directors.
In March 1994, the Company adopted the 1994 Stock Option Plan whereby
employees of the Company and others are eligible to be granted incentive stock
options or non-qualified stock options. A total of 937,500
F-15
<PAGE> 71
BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. STOCKHOLDERS' EQUITY (CONTINUED)
STOCK OPTION PLANS (CONTINUED)
common shares were originally reserved for grant under the Plan. During 1995, an
amendment was approved which authorized an increase in shares reserved for
issuance to a total of 2,109,375 shares and, in April 1997, an amendment was
approved which authorized an increase in shares reserved for issuance to a total
of 4,100,000 shares. In October 1996, the Company adopted the 1996 Stock Option
Plan whereby employees of the Company and others are eligible to be granted
non-qualified stock options. A total of 1,875,000 common shares were reserved
for grant under the Plan. For both Plans, a committee of the Board of Directors
determines the time or times at which the options will be granted, selects the
employees or others to whom options will be granted and determines the number of
shares covered by each option, purchase price, time of exercise (not to exceed
ten years from the date of the grant) and other terms.
In March 1994, the Company adopted the Non-employee Directors Stock Option
Plan whereby non-employee directors are eligible to be granted non-qualified
stock options. A total of 234,375 shares were reserved for grant under the plan.
During 1995, an amendment was approved which authorized an increase in shares
reserved for issuance under the plan to 468,750 shares. Options to purchase
10,000 shares of common stock are granted to each newly elected non-employee
director and, on the first day of each year, each individual elected and
continuing as a non-employee director receives an option to purchase 4,000
shares of common stock.
The exercise price of stock options granted may not be less than the fair
market value of a share of common stock on the date of the grant. Options become
exercisable in periods ranging from one to three years. Information regarding
these option plans for 1995 and 1996 is as follows:
<TABLE>
<CAPTION>
1995 1996
----------- -------------------------------
WEIGHTED AVERAGE
SHARES SHARES EXERCISE PRICE
------ ------ ----------------
<S> <C> <C> <C>
Options outstanding, beginning of year.............. 1,034,767 1,247,179 $ 5.71
Options granted..................................... 814,454 1,705,366 12.31
Options exercised................................... 594,228 344,183 4.76
Options canceled.................................... 7,814 32,422 11.30
----------- ------------
Options outstanding, end of year.................... 1,247,179 2,575,940 10.13
=========== ============
Option price range at end of year................... $2.67-$8.90 $2.67-$19.20
Option price range for exercised shares............. $2.67-$5.28 $2.67-$ 8.90
Options available for grant at year end............. 927,028
Weighted average fair value of options granted
during the year................................... $ 4.23
</TABLE>
The following table summarizes information about the fixed price stock
options outstanding at December 31, 1996.
<TABLE>
<CAPTION>
WEIGHTED
NUMBER AVERAGE NUMBER
RANGE OF OUTSTANDING AT REMAINING WEIGHTED AVERAGE EXERCISABLE AT WEIGHTED AVERAGE
EXERCISE PRICES DECEMBER 31, 1996 CONTRACTUAL LIFE EXERCISE PRICE DECEMBER 31, 1996 EXERCISE PRICE
--------------- ----------------- ---------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
$ 2.67-$ 6.02........ 270,937 3 years $ 3.15 194,565 $2.67
$ 6.46-$ 8.90........ 656,253 3 years $ 7.37 375,002 $7.10
$10.00-$12.46........ 1,565,625 5 years $12.23 -- --
$14.66-$19.20........ 83,125 5 years $15.27 -- --
</TABLE>
F-16
<PAGE> 72
BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. STOCKHOLDERS' EQUITY (CONTINUED)
STOCK OPTION PLANS (CONTINUED)
Pro forma information regarding net income and earnings per share is
required by SFAS No. 123, which also requires that the information be determined
as if the Company has accounted for its employee stock options granted
subsequent to December 31, 1994, under the fair value method as defined by that
Statement. The fair value for these options was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted-average
assumptions for 1995 and 1996: risk-free interest rate of 5.5%; a dividend yield
of 0.0%; volatility factor of the expected market price of the Company's common
stock of .51; and an expected life of the options of 1.99 years.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.
For purposes of pro forma disclosures, the estimated fair value of the
options and stock warrants, discussed below, are amortized to expense over the
related vesting period. Because compensation expense is recognized over the
vesting period, the initial impact on pro forma net income may not be
representative of compensation expense in future years, when the effect of
amortization of multiple awards would be reflected in the consolidated
statements of income. The Company's pro forma information giving effect to the
estimated compensation expense related to stock options and warrants is as
follows (in thousands, except per share data):
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Pro forma net income(1)..................................... $6,336 $11,638
Pro forma earnings per share................................ $ 0.37 $ 0.55
</TABLE>
- ------------
(1) Excluding the after-tax effect of one-time merger expenses.
STOCK WARRANTS
In connection with the initial public offering, the Company issued warrants
to purchase up to 468,750 shares of common stock initially exercisable at $3.30
per share. During 1995 and 1996, substantially all of the warrants were
exercised.
In January 1995, the Company issued warrants to purchase up to 596,430
shares of common stock at $6.96 per share in connection with an agreement with
HSN Direct, Inc. During 1996, 573,461 of the warrants were exercised. The
remaining outstanding warrants are exercisable by the holders at any time until
January 16, 2000.
8. LEASE ARRANGEMENTS
The Company leases certain furniture and equipment as well as its office
and warehouse/distribution space under operating leases.
Total rent expense under all operating leases was $446,000, $540,000 and
$1,469,000 for 1994, 1995 and 1996, respectively.
F-17
<PAGE> 73
BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. LEASE ARRANGEMENTS (CONTINUED)
The aggregate future minimum payments on the above leases are as follows
(in thousands):
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------
<S> <C>
1997................................................. $ 1,828
1998................................................. 1,693
1999................................................. 1,628
2000................................................. 1,506
2001................................................. 1,448
Thereafter........................................... 7,075
-------
$15,178
=======
</TABLE>
9. GEOGRAPHIC OPERATIONS
The Company operates in worldwide markets. Its business activities are
conducted in four divisions: Asia-Pacific; North America; Europe, Middle East
and Africa; and Latin America. A summary of the Company's operations by division
is presented below (in thousands):
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------- --------------------------
1994 1995 1996 1996 1997
---- ---- ---- ---- ----
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET SALES:
Asia-Pacific............................ $ -- $ 7,533 $127,629 $ 29,824 $183,611
North America........................... 252,262 269,730 287,377 155,884 129,526
Europe, Middle East and Africa.......... 16,927 46,284 76,292 5,235 86,237
Latin America........................... 40,038 95,602 98,420 41,913 19,822
-------- -------- -------- -------- --------
$309,227 $419,149 $589,718 $232,856 $419,196
======== ======== ======== ======== ========
INCOME BEFORE INCOME TAXES AND MINORITY
INTERESTS:
Asia-Pacific............................ $ -- $ -- $ 5,135 $ 1,827 $ 8,225
North America........................... 6,533 9,265 7,113 1,758 4,938
Europe, Middle East and Africa.......... -- -- 3,607 490 577
Latin America........................... 972 2,738 4,268 1,195 1,466
-------- -------- -------- -------- --------
$ 7,505 $ 12,003 $ 20,123 $ 5,270 $ 15,206
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------- JUNE 30,
1994 1995 1996 1997
---- ---- ---- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
IDENTIFIABLE ASSETS:
Asia-Pacific....................................... $ -- $ -- $ 54,958 $ 85,479
North America...................................... 72,118 92,465 126,003 118,580
Europe, Middle East and Africa..................... -- -- 44,451 46,329
Latin America...................................... 10,727 27,322 73,633 35,769
-------- -------- -------- --------
$ 82,845 $119,787 $299,045 $286,157
======== ======== ======== ========
</TABLE>
F-18
<PAGE> 74
BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. GEOGRAPHIC OPERATIONS (CONTINUED)
For geographic reporting purposes only, net sales are recorded in the
region in which the customer is located. In 1994 and 1995, sales in the
Asia-Pacific and Europe, Middle East and Africa divisions were export sales from
North America operations. As a result, the Company has not allocated income
before income taxes and minority interest and identifiable assets to those
divisions in 1994 and 1995.
10. EMPLOYEE BENEFIT PLAN
On January 1, 1996, the Company adopted an employee savings plan which
permits employees with at least one year of service to make contributions by
salary reduction pursuant to section 401(k) of the Internal Revenue Code. The
Company matches 25% of employee contributions, up to 6%, in Company common
stock. In connection with the required match, the Company's contribution to the
Plan was $56,400 in 1996.
F-19
<PAGE> 75
[Map of world depicting locations of Brightpoint, Inc's
World Headquarters, Operations Centers and Sales Centers]
Serving the global wireless communications industry in
over 75 countries and on six continents.
[Picture of information systems [Picture of wireless handsets]
center in Brightpoint, Inc's
World Headquarters in
Indianapolis, Indiana]
[Picture of salesperson in
Brightpoint, Inc's World
Headquarters in Indianapolis,
Indiana]
Brightpoint and design SM and
Brightlink TM are the property
of the Company. All other [Picture of Brightpoint,
trademarks, tradenames Inc's Indianapolis, Indiana
and service marks used Operation's Center]
herein are the property
of their respective owners.
[Brightpoint, Inc. Logo]
<PAGE> 76
======================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING STOCKHOLDERS OR THE UNDERWRITERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON WHOM, IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary..................... 3
Special Note Regarding Forward-Looking
Statements........................... 7
Risk Factors........................... 7
Use of Proceeds........................ 15
Price Range of Common Stock............ 15
Dividend Policy........................ 16
Capitalization......................... 16
Selected Consolidated Financial Data... 17
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 19
Business............................... 27
Management............................. 35
Principal and Selling Stockholders..... 42
Certain Transactions................... 43
Description of Capital Stock........... 44
Shares Eligible for Future Sale;
Registration Rights.................. 47
Certain United States Federal Tax
Consequences to Non-United States
Holders.............................. 48
Underwriting........................... 50
Legal Matters.......................... 52
Experts................................ 52
Available Information.................. 52
Incorporation of Certain Documents by
Reference............................ 53
Index to Consolidated Financial
Statements........................... F-1
</TABLE>
======================================================
======================================================
4,000,000 SHARES
BRIGHTPOINT LOGO
COMMON STOCK
---------------------------
PROSPECTUS
---------------------------
MERRILL LYNCH & CO.
COWEN & COMPANY
UBS SECURITIES
SANDS BROTHERS & CO., LTD.
, 1997
======================================================
<PAGE> 77
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
[ALTERNATE INTERNATIONAL PROSPECTUS PAGE]
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JULY 15, 1997
PROSPECTUS
4,000,000 SHARES
[BRIGHTPOINT LOGO]
COMMON STOCK
------------------------
Of the 4,000,000 shares of Common Stock of Brightpoint, Inc., a Delaware
corporation (the "Company" or "Brightpoint"), being offered hereby, 1,800,000
shares are being offered by the Company and 2,200,000 shares are being offered
by certain stockholders of the Company (the "Selling Stockholders"). The Company
will not receive any of the proceeds from the sale of shares of Common Stock by
the Selling Stockholders. See "Principal and Selling Stockholders."
Of the 4,000,000 shares of Common Stock offered hereby, 800,000 are being
offered initially outside the United States and Canada by the International
Managers (the "International Offering") and 3,200,000 shares are being offered
initially in a concurrent offering inside the United States and Canada by the
U.S. Underwriters (the "U.S. Offering," and together with the International
Offering, the "Offerings"). The public offering price and the underwriting
discount per share are identical for each of the Offerings. See "Underwriting."
The Common Stock is quoted on the Nasdaq National Market under the symbol
"CELL." On July 14, 1997, the last reported sale price of the Common Stock on
the Nasdaq National Market was $30 1/4 per share. See "Price Range of Common
Stock."
SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
======================================================================================================================
PROCEEDS TO
PRICE UNDERWRITING PROCEEDS TO SELLING
TO PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDERS
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
Per Share................. $ $ $ $
- ----------------------------------------------------------------------------------------------------------------------
Total(3).................. $ $ $ $
======================================================================================================================
</TABLE>
(1) The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities, including certain
liabilities under the Securities Act of 1933, as amended. See
"Underwriting."
(2) Before deducting expenses of the Offerings payable by the Company estimated
to be $1,250,000. The Selling Stockholders will not be paying any expenses
of the Offerings.
(3) The Company has granted an option to the International Managers, exercisable
within 30 days of the date hereof, to purchase up to 120,000 additional
shares of Common Stock and an option to the U.S. Underwriters, exercisable
within 30 days of the date hereof, to purchase up to 480,000 additional
shares of Common Stock solely to cover over-allotments, if any. If such
options are exercised in full, the total Price to Public, Underwriting
Discount and Proceeds to Company will be $ , $ and $ ,
respectively. See "Underwriting."
------------------------
The shares of Common Stock are being offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to the approval of certain legal matters by counsel for the Underwriters and
certain other conditions. The Underwriters reserve the right to withdraw, cancel
or modify such offer and to reject orders in whole or in part. It is expected
that delivery of the shares of Common Stock will be made in New York, New York
on or about , 1997.
------------------------
MERRILL LYNCH INTERNATIONAL
COWEN INTERNATIONAL L.P.
UBS LIMITED
SANDS BROTHERS & CO., LTD.
------------------------
The date of this Prospectus is , 1997.
<PAGE> 78
[ALTERNATE INTERNATIONAL PROSPECTUS PAGE]
UNDERWRITING
Subject to the terms and conditions set forth in an international purchase
agreement (the "International Purchase Agreement") among the Company, each of
the Selling Stockholders and each of the underwriters named below (the
"International Managers"), and concurrently with the sale of 3,200,000 shares of
Common Stock to the U.S. Underwriters (as defined below), the Company and the
Selling Stockholders have agreed to sell to the International Managers, and each
of the International Managers severally has agreed to purchase from the Company
and the Selling Stockholders, the number of shares of Common Stock set forth
opposite its name below.
<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL MANAGERS SHARES
---------------------- ---------
<S> <C>
Merrill Lynch International.................................
Cowen International L.P.....................................
UBS Limited.................................................
Sands Brothers & Co., Ltd...................................
---------
Total........................................... 800,000
=========
</TABLE>
Merrill Lynch International, Cowen International L.P., UBS Limited and
Sands Brothers & Co., Ltd. are acting as representatives (the "International
Representatives") of the International Managers.
The Company and the Selling Stockholders have also entered into a purchase
agreement (the "U.S. Purchase Agreement") and, together with the International
Purchase Agreement, the "Purchase Agreements") with certain underwriters in the
United States and Canada (collectively, the "U.S. Underwriters," and together
with the International Managers, the "Underwriters"), for whom Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Cowen & Company, UBS
Securities LLC and Sands Brothers & Co., Ltd. are acting as representatives (the
"U.S. Representatives" and, together with the International Representatives, the
"Representatives"). Subject to the terms and conditions set forth in the U.S.
Purchase Agreement, and concurrently with the sale of 800,000 shares of Common
Stock to the International Managers pursuant to the International Purchase
Agreement, the Company and the Selling Stockholders have agreed to sell to the
U.S. Underwriters, and the U.S. Underwriters have severally agreed to purchase
from the Company and the Selling Stockholders, an aggregate of 3,200,000 shares
of Common Stock. The public offering price per share of Common Stock and the
underwriting discount per share of Common Stock are identical under the
International Purchase Agreement and the U.S. Purchase Agreement. The respective
percentages of the Common Stock to be sold by each of the Company and the
Selling Stockholders will be identical in the U.S. Offering and the
International Offering.
In the International Purchase Agreement and the U.S. Purchase Agreement,
the several International Managers and the several U.S. Underwriters,
respectively, have agreed, subject to the terms and conditions set forth
therein, to purchase all of the shares of Common Stock being sold pursuant to
each such agreement if any of the shares of Common Stock being sold pursuant to
such agreement are purchased. Under certain circumstances involving a default by
an Underwriter, the commitments of non-defaulting International Managers or U.S.
Underwriters (as the case may be) may be increased or the International Purchase
Agreement or the U.S. Purchase Agreement (as the case may be) may be terminated.
The sale of Common Stock to the International Managers is conditioned upon the
sale of Common Stock to the U.S. Underwriters and vice versa.
The International Managers and the U.S. Underwriters have entered into an
intersyndicate agreement (the "Intersyndicate Agreement") providing for the
coordination of their activities. The Underwriters are
50
<PAGE> 79
[ALTERNATE INTERNATIONAL PROSPECTUS PAGE]
Agreement, the International Managers and any dealer to whom they sell shares of
Common Stock will not offer to sell or sell shares of Common Stock to persons
who are United States or Canadian persons or to persons they believe intend to
resell to persons who are United States or Canadian persons, and the U.S.
Underwriters and any dealer to whom they sell shares of Common Stock will not
offer to sell or sell shares of Common Stock to non-United States persons or to
non-Canadian persons or to persons they believe intend to resell to non-United
States persons or non-Canadian persons, except in the case of transactions
pursuant to the Intersyndicate Agreement.
The International Representatives have advised the Company and the Selling
Stockholders that the International Managers propose initially to offer the
shares of Common Stock to the public at the public offering price set forth on
the cover page of this Prospectus, and to certain selected dealers at such price
less a concession not in excess of $ per share. The International Managers
may allow, and such dealers may reallow, a discount not in excess of $ per
share on sales to certain other dealers. After the initial public offering, the
public offering price, concession and discount may be changed.
Each International Manager has agreed that (i) it has not offered or sold,
and will not for a period of six months following consummation of the Offerings
offer or sell, in the United Kingdom by means of any document, any shares of
Common Stock offered hereby, other than to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances that do not constitute an offer to the public within the meaning
of the Public Offers of Securities Regulations of 1995; (ii) it has complied
with and will comply with all applicable provisions of the Financial Services
Act of 1986 with respect to anything done by it in relation to the Common Stock
in, from or otherwise involving the United Kingdom and (iii) it has only issued
or passed on and will only issue or pass on to any person in the United Kingdom
any document received by it in connection with the issue of the Common Stock if
that person is of a kind described in Article 11(3) of the Financial Services
Act of 1986 (Investment Advertisements)(Exemptions) Order 1996, as amended, or
is a person to whom the document may otherwise lawfully be issued or passed on.
Purchasers of the shares of Common Stock offered hereby may be required to
pay stamp taxes and other charges in accordance with the laws and practices of
the country of purchase, in addition to the offering price set forth on the
cover page hereof.
The Company has granted to the International Managers an option,
exercisable within 30 days after the date of this Prospectus, to purchase up to
an aggregate of 120,000 additional shares of Common Stock at the public offering
price set forth on the cover page of this Prospectus, less the underwriting
discount. The International Managers may exercise this option only to cover
over-allotments, if any, made on the sale of the shares of Common Stock offered
hereby. To the extent that the International Managers exercise this option, each
International Manager will be obligated, subject to certain conditions, to
purchase a number of additional shares of Common Stock proportionate to such
International Manager's initial amount reflected in the foregoing table. The
Company has also granted an option to the U.S. Underwriters, exercisable within
30 days after the date of this Prospectus, to purchase up to an aggregate of
480,000 additional shares of Common Stock to cover over-allotments, if any, on
terms similar to those granted to the International Managers. If purchased, the
Underwriters will offer such additional shares on the same terms as those on
which the 4,000,000 shares are being offered.
The Company, its executive officers and directors, and the Selling
Stockholders have, subject to certain exceptions, agreed that they will not for
a period of 120 days from the date of this Prospectus, without the prior written
consent of Merrill Lynch and Merrill Lynch International, directly or
indirectly, sell, offer to sell, grant any option for the sale of, or otherwise
dispose of, any capital stock of the Company or any security convertible or
exchangeable into, or exercisable for, such capital stock, or, in the case of
the Company, file any registration statement (other than registration statements
on Form S-8 relating to employee stock option plans and the registration
statement relating to 375,000 shares of Common Stock owned by a stockholder and
an employee of the Company pursuant to the terms of his outstanding registration
rights) with respect to any of the
51
<PAGE> 80
[ALTERNATE INTERNATIONAL PROSPECTUS PAGE]
foregoing, except that the Company may, without such consent, issue options
pursuant to the Stock Option Plans and shares of Common Stock upon exercise of
options issued pursuant to the Stock Option Plans. See "Shares Eligible for
Future Sale; Registration Rights."
In connection with the Offerings, certain Underwriters or their respective
affiliates and selling group members (if any) who are qualified market makers on
the Nasdaq National Market may engage in "passive market making" in the Common
Stock on the Nasdaq National Market in accordance with Rule 103 under Regulation
M. Rule 103 permits, upon the satisfaction of certain conditions, underwriters
and selling group members participating in a distribution that are also Nasdaq
National Market makers in the security being distributed to engage in limited
market making transactions during the period when Rule 103 under Regulation M
would otherwise prohibit such activity. Rule 103 prohibits underwriters and
selling group members engaged in passive market making generally from entering a
bid or effecting a purchase at a price that exceeds the highest bid for those
securities displayed on the Nasdaq National Market by a market maker that is not
participating in the distribution. Under Rule 103, each underwriter or selling
group member engaged in passive market making is subject to a daily net purchase
limitation equal to 30% of such entity's average daily trading volume during the
two full consecutive calendar months immediately preceding the date of the
filing of the registration statement under the Securities Act pertaining to the
security to be distributed.
The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including certain liabilities under
the Securities Act, or to contribute to payments the Underwriters may be
required to make in respect thereof.
In connection with the Offerings, the Underwriters may engage in certain
transactions which stabilize, maintain or otherwise affect the price of the
Common Stock. Such transactions may include the purchase of shares of Common
Stock in the open market to cover short positions created by over-allotments or
to stabilize the price of the Common Stock. In general, purchases of a security
for the purpose of stabilization or to reduce a short position could cause the
price of the security to be higher than it might be in the absence of such
purchases. Neither the Company nor any of the Underwriters make any
representation or prediction as to the direction or magnitude of any effect that
the transactions described above may have on the price of the Common Stock. In
addition, neither the Company nor any of the Underwriters make any
representation that the Underwriters will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.
Steven B. Sands, the Co-Chairman and Chief Executive Officer of Sands
Brothers & Co., Ltd., one of the Representatives, has been a member of the
Company's Board of Directors since the Company's initial public offering in
April 1994. In addition, in connection with the Company's initial public
offering, Sands Brothers & Co., Ltd. received warrants to purchase an aggregate
of 468,750 shares of Common Stock at an exercise price of $3.30 per share, of
which warrants to purchase 467,579 shares have been exercised.
52
<PAGE> 81
[ALTERNATE INTERNATIONAL PROSPECTUS PAGE]
======================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING STOCKHOLDERS OR THE UNDERWRITERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON WHOM, IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary..................... 3
Special Note Regarding Forward-Looking
Statements........................... 7
Risk Factors........................... 7
Use of Proceeds........................ 15
Price Range of Common Stock............ 15
Dividend Policy........................ 16
Capitalization......................... 16
Selected Consolidated Financial Data... 17
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 19
Business............................... 27
Management............................. 35
Principal and Selling Stockholders..... 42
Certain Transactions................... 43
Description of Capital Stock........... 44
Shares Eligible for Future Sale;
Registration Rights.................. 47
Certain United States Federal Tax
Consequences to Non-United States
Holders.............................. 48
Underwriting........................... 50
Legal Matters.......................... 52
Experts................................ 52
Available Information.................. 53
Incorporation of Certain Documents by
Reference............................ 53
Index to Consolidated Financial
Statements........................... F-1
</TABLE>
======================================================
======================================================
4,000,000 SHARES
[BRIGHTPOINT LOGO]
COMMON STOCK
---------------------------
PROSPECTUS
---------------------------
MERRILL LYNCH INTERNATIONAL
COWEN INTERNATIONAL L.P.
UBS LIMITED
SANDS BROTHERS & CO., LTD.
, 1997
======================================================
<PAGE> 82
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses of the Offerings payable by the registrant to be
incurred in connection with the distribution of the shares of Common Stock
registered hereby (less the underwriting discount) are as follows:
<TABLE>
<S> <C>
SEC registration............................................ $ 40,947.00
NASD fee.................................................... 14,012.50
Nasdaq listing fee.......................................... 17,500.00
Printing and engraving costs................................ *
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Blue Sky fees and expenses.................................. *
Transfer agent and registrar fees and expenses.............. *
Miscellaneous............................................... *
-------------
Total.................................................. $1,250,000.00
=============
</TABLE>
- ---------------
* To be completed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
provides for the indemnification of officers and directors under certain
circumstances against expenses incurred in successfully defending against a
claim and authorizes Delaware corporations to indemnify their officers and
directors under certain circumstances against expenses and liabilities incurred
in legal proceedings involving such persons because of their being or having
been an officer or director.
Section 102(b) of the Delaware General Corporation Law permits a
corporation, by so providing in its certificate of incorporation, to eliminate
or limit director's liability to the corporation and its stockholders for
monetary damages arising out of certain alleged breaches of their fiduciary
duty. Section 102(b)(7) provides that no such limitation of liability may affect
a director's liability with respect to any of the following: (i) breaches of the
director's duty of loyalty to the corporation or its stockholders; (ii) acts or
omissions not in good faith or which involve intentional misconduct of knowing
violations of law;(iii) liability for dividends paid or stock repurchased or
redeemed in violation of the Delaware General Corporation law; or (iv) any
transaction from which the director derived an improper personal benefit.
Section 102(b)(7) does not authorize any limitation on the ability of the
corporation or its stockholders to obtain injunction relief, specific
performance or other equitable relief against directors.
Article Ninth of the Company's Certificate of Incorporation and the
Company's By-laws provide that all persons who the Company is empowered to
indemnify pursuant to the provisions of Section 145 of the General Corporation
law of the State of Delaware (or any similar provision or provisions of
applicable law at the time in effect), shall be indemnified by the Company to
the full extent permitted thereby. The foregoing right of indemnification shall
not be deemed to be exclusive of any other rights to which those seeking
indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors, or otherwise.
Article Tenth of the Company's Certificate of Incorporation provides that
no director of the Company shall be personally liable to the Company or its
stockholders for any monetary damages for breaches of fiduciary duty as a
director, provided that such provision does not eliminate or limit the liability
of a director (i) for breaches of fiduciary duty of loyalty to the Company or
its stockholders' (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing-violation of law; (iii) under Section 174 of
II-1
<PAGE> 83
the General Corporation of Law of the State of Delaware; or (iv) for any
transaction from which the director derived an improper personal benefit.
Insofar as indemnification for liabilities under the Act may be permitted
to directors, officers or persons controlling the Company pursuant to the
foregoing provisions, the Company has been informed that in the opinion of the
Commission, such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
Reference is made to the Purchase Agreements, the proposed form of which
are filed as Exhibits 1.1 and 1.2, pursuant to which the Underwriters agree to
indemnify the directors and certain officers of the Registrant and certain other
persons against certain civil liabilities.
ITEM 16. EXHIBITS
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
<C> <S>
1.1 Form of U.S. Purchase Agreement. (10)
1.2 Form of International Purchase Agreement.*
3.1 Certificate of Incorporation of the Company, as Amended (10)
3.2 Amended and Restated By-Laws of the Company (11)
3.3 Certificate of Merger of Brightpoint, Inc. into Wholesale
Cellular USA, Inc., effective September 15, 1995. (2)
4.1 Form of Common Stock Certificate (1)
5.1 Opinion of Tenzer Greenblatt LLP as to the legality of the
shares to be issued.*
10.1 1994 Stock Option Plan (1)
10.2 1996 Stock Option Plan (8)
10.3 Non-Employee Directors Stock Option Plan (1)
10.4 Form of Employment Agreement between the Company and Robert
J. Laikin, J. Mark Howell and T. Scott Housefield (8)
10.5 Form of Employment Agreement between the Company and its
Executive Vice Presidents (8)
10.6 Lease Agreement between the Company and WRC Properties,
Inc., as amended and Unconditional Guaranty of Lease by
Century Cellular Network, Inc. (1)
10.7 Lease Agreement between the Company and Park 100 Properties,
Inc. (2)
10.8 Lease Agreement between the Company and Industrial
Affiliates, Ltd. (2)
10.9 Second Amendment to Lease Agreement between the Company and
Corporate Drive Associates, LLC, dated as of July 17, 1996.
(11)
10.10 Lease Agreement (Building Expansion) between the Company and
Corporate Drive Associates, LLC, dated as of July 17, 1996.
(11)
10.11 Lease Agreement between the Company and Airport Key
Corporation, dated November 30, 1995 (3)
10.12 Lease Agreement between the Company and Corporate Drive
Associates, LLC, dated June 6, 1995 (3)
10.13 Amendment to Lease Agreement between the Company and
Corporate Drive Associates, LLC, dated October 3, 1995 (3)
</TABLE>
II-2
<PAGE> 84
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
<C> <S>
10.14 Agreement and Plan of Merger, as amended on April 29, 1996,
by and among the Company, Brightpoint Acquisition, Inc., a
wholly-owned subsidiary of the Company, 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 and Joseph Forer. (5)
10.15 Stock Purchase Agreement, dated as of October 1, 1996, among
the Company, Brightpoint International Ltd., Technology
Resources International Ltd., Safkong Holdings Limited,
Marriott Invest & Trade Inc., John MacLean-Arnott and Dana
Marlin. (6)
10.16 Rights Agreement, dated as of February 20, 1997, between the
Company and Continental Stock Transfer Trust Company, as
Rights Agent. (7)
10.17 Lease agreement between the Company and DP Operating
Partnership, L.P., dated as of March 1, 1997. (9)
10.18 Multicurrency Credit Agreement dated as of June 24, 1997
among the Company, Brightpoint International Ltd., the
Subsidiary Borrowers from time to time party thereto, the
Guarantors from time to time party thereto, the Financial
Institutions from time to time party thereto as lenders, The
First National Bank of Chicago as administrative agent and
Bank One, Indiana, N.A. as syndication agent. (11)
11.1 Statement re: computation of per share earnings (11)
13.1 1996 Annual Report to Stockholders. With the exception of
the information incorporated by reference in Items 5, 6, 7
and 8, the 1996 Annual Report to Stockholders is not deemed
filed as part of this report. (8)
21.1 Subsidiaries (10)
23.1 Consent of Ernst & Young LLP (11)
23.2 Report of Coopers & Lybrand LLP (8)
23.3 Consent of Coopers & Lybrand LLP (11)
23.4 Consent of Tenzer Greenblatt LLP, included in opinion filed
as Exhibit 5.1.*
24.1 Power of Attorney, included in the signature page of this
Registration Statement
27.1 Financial Data Schedule (11)
</TABLE>
- ---------------
* To be filed by amendment.
(1) Incorporated by reference to Registration Statement (33-75148) effective
April 7, 1994.
(2) Incorporated by reference to Annual Report on Form 10-K for the fiscal year
ended December 31, 1994.
(3) Incorporated by reference to Annual Report on Form 10-K for the fiscal year
ended December 31, 1995.
(4) Incorporated by reference to Registration Statement on Form S-3 (33-97084)
effective October 24, 1995.
(5) Incorporated by reference to Current Report on Form 8-K, dated June 12,
1996.
(6) Incorporated by reference to Current Report on Form 8-K, dated December 3,
1996.
(7) Incorporated by reference to Current Report on Form 8-K, dated March 28,
1997.
(8) Incorporated by reference to Annual Report on Form 10-K for the fiscal year
ended December 31, 1996.
(9) Incorporated by reference to Quarterly Report on Form 10-Q for the three
months ended March 31, 1997
(10) Previously filed.
(11) Filed herewith.
II-3
<PAGE> 85
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof;
(2) (i) for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective; and
(ii) for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof; and
(3) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
II-4
<PAGE> 86
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing on Form S-3 and has duly caused this Amendment No. 1 to
its registration statement to be signed on its behalf by the undersigned, in the
City of Indianapolis, State of Indiana, on the 14th day of July 1997.
BRIGHTPOINT, INC.
By: /s/ ROBERT J. LAIKIN
------------------------------------
Robert J. Laikin
Chief Executive Officer
Each person whose signature appears below hereby authorizes each of Robert
J. Laikin and J. Mark Howell or either of them as his true and lawful
attorney-in-fact with full power of substitution to execute in the name and on
behalf of each person, individually and in each capacity stated below, and to
file, any and all amendments to this Registration Statement, including any and
all post-effective amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 was signed by the following persons in the
capacities and on the dates stated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ ROBERT J. LAIKIN Chairman of the Board and Chief July 14, 1997
- --------------------------------------------- Executive Officer (Principal Executive
Robert J. Laikin Officer)
* President, Chief Operating Officer and July 14, 1997
- --------------------------------------------- Director
J. Mark Howell
* Executive Vice President and Director July 14, 1997
- ---------------------------------------------
T. Scott Housefield
* Executive Vice President; Chief July 14, 1997
- --------------------------------------------- Financial Officer (Principal Financial
Phillip A. Bounsall Officer); and Treasurer
* Executive Vice President; General July 14, 1997
- --------------------------------------------- Counsel; and Secretary
Steven E. Fivel
* Vice President; Corporate Controller; July 14, 1997
- --------------------------------------------- and Assistant Secretary (Principal
John P. Delaney Accounting Officer)
* Vice Chairman of the Board July 14, 1997
- ---------------------------------------------
Robert Picow
* Director July 14, 1997
- ---------------------------------------------
Joseph Forer
</TABLE>
<PAGE> 87
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Director July 14, 1997
- ---------------------------------------------
John W. Adams
* Director July 14, 1997
- ---------------------------------------------
Robert F. Wagner
* Director July 14, 1997
- ---------------------------------------------
Stephen H. Simon
* Director July 14, 1997
- ---------------------------------------------
Rollin M. Dick
* Director July 14, 1997
- ---------------------------------------------
Steven B. Sands
* /s/ ROBERT J. LAIKIN
- ---------------------------------------------
Robert J. Laikin as
attorney-in-fact
</TABLE>
<PAGE> 88
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
<C> <S>
</TABLE>
1.1 Form of U.S. Purchase Agreement. (10)
1.2 Form of International Purchase Agreement.*
3.1 Certificate of Incorporation of the Company, as Amended (10)
3.2 Amended and Restated By-Laws of the Company (11)
3.3 Certificate of Merger of Brightpoint, Inc. into Wholesale
Cellular USA, Inc., effective September 15, 1995. (2)
4.1 Form of Common Stock Certificate (1)
5.1 Opinion of Tenzer Greenblatt LLP as to the legality of the
shares to be issued.*
10.1 1994 Stock Option Plan (1)
10.2 1996 Stock Option Plan (8)
10.3 Non-Employee Directors Stock Option Plan (1)
10.4 Form of Employment Agreement between the Company and Robert
J. Laikin, J. Mark Howell and T. Scott Housefield (8)
10.5 Form of Employment Agreement between the Company and its
Executive Vice Presidents (8)
10.6 Lease Agreement between the Company and WRC Properties,
Inc., as amended and Unconditional Guaranty of Lease by
Century Cellular Network, Inc. (1)
10.7 Lease Agreement between the Company and Park 100 Properties,
Inc. (2)
10.8 Lease Agreement between the Company and Industrial
Affiliates, Ltd. (2)
10.9 Second Amendment to Lease Agreement between the Company and
Corporate Drive Associates, LLC, dated as of July 17, 1996.
(11)
10.10 Lease Agreement (Building Expansion) between the Company and
Corporate Drive Associates, LLC, dated as of July 17, 1996.
(11)
10.11 Lease Agreement between the Company and Airport Key
Corporation, dated November 30, 1995 (3)
10.12 Lease Agreement between the Company and Corporate Drive
Associates, LLC, dated June 6, 1995 (3)
10.13 Amendment to Lease Agreement between the Company and
Corporate Drive Associates, LLC, dated October 3, 1995 (3)
10.14 Agreement and Plan of Merger, as amended on April 29, 1996,
by and among the Company, Brightpoint Acquisition, Inc., a
wholly-owned subsidiary of the Company, 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 and Joseph Forer. (5)
10.15 Stock Purchase Agreement, dated as of October 1, 1996, among
the Company, Brightpoint International Ltd., Technology
Resources International Ltd., Safkong Holdings Limited,
Marriott Invest & Trade Inc., John MacLean-Arnott and Dana
Marlin. (6)
10.16 Rights Agreement, dated as of February 20, 1997, between the
Company and Continental Stock Transfer Trust Company, as
Rights Agent. (7)
10.17 Lease Agreement between the Company and DP Operating
Partnership, L.P., dated as of March 1, 1997. (9)
<PAGE> 89
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
<C> <S>
10.18 Multicurrency Credit Agreement dated as of June 24, 1997
among the Company, Brightpoint International Ltd., the
Subsidiary Borrowers from time to time party thereto, the
Guarantors from time to time party thereto, the Financial
Institutions from time to time party thereto as lenders, The
First National Bank of Chicago as administrative agent and
Bank One, Indiana, N.A. as syndication agent. (11)
11.1 Statement re: computation of per share earnings (11)
13.1 1996 Annual Report to Stockholders. With the exception of
the information incorporated by reference in Items 5, 6, 7
and 8, the 1996 Annual Report to Stockholders is not deemed
filed as part of this report. (8)
21.1 Subsidiaries (10)
23.1 Consent of Ernst & Young LLP (11)
23.2 Report of Coopers & Lybrand LLP (8)
23.3 Consent of Coopers & Lybrand LLP (11)
23.4 Consent of Tenzer Greenblatt LLP, included in opinion filed
as Exhibit 5.1.*
24.1 Power of Attorney, included in the signature page of this
Registration Statement
27.1 Financial Data Schedule (11)
</TABLE>
- ---------------
* To be filed by amendment.
(1) Incorporated by reference to Registration Statement (33-75148) effective
April 7, 1994.
(2) Incorporated by reference to Annual Report on Form 10-K for the fiscal year
ended December 31, 1994.
(3) Incorporated by reference to Annual Report on Form 10-K for the fiscal year
ended December 31, 1995.
(4) Incorporated by reference to Registration Statement on Form S-3 (33-97084)
effective October 24, 1995.
(5) Incorporated by reference to Current Report on Form 8-K, dated June 12,
1996.
(6) Incorporated by reference to Current Report on Form 8-K, dated December 3,
1996.
(7) Incorporated by reference to Current Report on Form 8-K, dated March 28,
1997.
(8) Incorporated by reference to Annual Report on Form 10-K for the fiscal year
ended December 31, 1996.
(9) Incorporated by reference to Quarterly Report on Form 10-Q for the three
months ended March 31, 1997
(10) Previously filed.
(11) Filed herewith.
<PAGE> 1
Exhibit 3.2
(Amended and Restated as of January 1, 1997)
BRIGHTPOINT, INC.
BY-LAWS
ARTICLE I
OFFICES
1. The location of the registered office of the Corporation in the State
of Delaware is 32 Loockerman Square, Suite L-100, in the City of Dover, County
of Kent, and the name of its registered agent at such address is The
Prentice-Hall Corporation System, Inc.
2. The Corporation shall in addition to its registered office in the State
of Delaware establish and maintain an office or offices at such place or places
as the Board of Directors may from time to time find necessary or desirable.
ARTICLE II
CORPORATE SEAL
The corporate seal of the Corporation shall have inscribed thereon the
name of the Corporation and may be in such form as the Board of Directors may
determine. Such seal may be used by causing it or a facsimile thereof to be
impressed, affixed or otherwise reproduced.
ARTICLE III
MEETINGS OF STOCKHOLDERS
1. All meetings of the stockholders shall be held at the registered office
of the Corporation in the State of Delaware or at such other place as shall be
determined from time to time by the Board of Directors.
2. The annual meeting of stockholders shall be held on such day and at
such time as may be determined from time to time by resolution of the Board of
Directors. The election of Directors and any other proper business, as
provided by Section 7 of Article III of these By-laws, may be transacted at the
annual meeting.
3. The holders of a majority of the stock issued and outstanding and
entitled to vote there at, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the
<PAGE> 2
transaction of business, except as otherwise expressly provided by statute, by
the Certificate of Incorporation or by these By-laws. If, however, such
majority shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote there at, present in person or
by proxy, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting (except as otherwise provided by
statute). At such adjourned meeting at which the requisite amount of voting
stock shall be represented any business may be transacted which might have been
transacted at the meeting as originally notified.
4. At all meetings of the stockholders each stockholder having the
right to vote shall be entitled to vote in person, or by proxy appointed by an
instrument in writing subscribed by such stockholder and bearing a date not
more than three years prior to said meeting, unless such instrument provides
for a longer period.
5. At each meeting of the stockholders each stockholder shall have one
vote for each share of capital stock having voting power, registered in his
name on the books of the Corporation at the record date fixed in accordance
with these By-laws, or otherwise determined, with respect to such meeting.
Except as otherwise expressly provided by statute, by the Certificate of
Incorporation or by these By-laws, all matters coming before any meeting of the
stockholders shall be decided by the vote of a majority of the number of shares
of stock present in person or represented by proxy at such meeting and entitled
to vote there at, a quorum being present.
6. Except as otherwise provided by law, written or printed notice of
each meeting of the stockholders, whether annual or special, shall be given not
less than 10 nor more than 60 days before the date of the meeting to each
stockholder entitled to vote at such meeting or, in the event that the
stockholders are to vote upon any proposal to merge or consolidate the
corporation or to sell, lease or exchange all or substantially all of its
property and assets, not less than 20 nor more than 60 days before the date of
such meeting. Such notice shall be delivered either personally or by mail or
at the direction of the Chairman of the Board, the President or the Secretary.
Each notice of meeting shall state the place, date and hour of the meeting.
7. At any meeting, only such business shall be conducted as shall have
been brought before the meeting (i) pursuant to the Corporation's notice of
meeting, (ii) by or at the direction of the Board of Directors, or (iii) by any
stockholder who complies with the procedures set forth in this Section 7.
-2-
<PAGE> 3
The only business which shall be conducted at any meeting of the
stockholders shall (i) have been specified in the written notice of the meeting
(or any supplement thereto) given as provided in the preceding Section, (ii) be
brought before the meeting at the direction of the Board of Directors or the
chairman of the meeting or (iii) have specified in a written notice (a
"Stockholder Meeting Notice") given to the corporation, in accordance with all
of the following requirements, by or on behalf of any stockholder who shall
have been a stockholder of record on the record date for such meeting and who
shall continue to be entitled to vote there at. Each Stockholder Meeting
notice must be delivered personally to, or be mailed to and received by, the
Secretary of the Corporation, at the principal executive offices of the
Corporation, not less than 50 days nor more than 75 days prior to the meeting;
provided, however, that in the event that less than 65 days' notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be received not later than the
close of business on the tenth day following the day on which such notice of
the date of the meeting was mailed or such public nondisclosure was made. Each
Stockholder Meeting Notice to the Secretary shall set forth as to each matter
the Stockholder proposes to bring before the meeting: (i) a description of each
item of business proposed to be brought before the meeting and the reasons for
conducting such business at the meeting; (ii) the name and address, as they
appear on the Corporation's books, of the stockholder proposing to bring such
item of business before the meeting; (iii) the class and number of shares of
stock held of record, owned beneficially and represented by proxy by such
stockholder as of the record date for the meeting (if such date then shall have
been made publicly available) and as of the date of such Stockholder Meeting
Notice; and (iv) all other information which would be required to be included
in a proxy statement filed with the Securities and Exchange Commission (the
"Commission") if, with respect to any such item of business, such stockholder
were a participant in a solicitation subject to Section 14 of the Securities
Exchange Act of 1934.
Notwithstanding anything in these By-laws to the contrary, no business
shall be conducted at any meeting of the stockholders except in accordance with
the procedures set forth in these By-laws. The Chairman of the meeting shall,
if the facts warrant, determine and declare to the meeting that business was
not properly brought before the meeting and in accordance with the procedures
prescribed by these By-laws, and if he should so determine, he shall so declare
to the meeting and any such business not properly brought before the meeting
shall not be transacted.
-3-
<PAGE> 4
When a meeting is adjourned to another time or place, notice of the
adjourned meeting need not be given if the time and place thereof are announced
at the meeting at which the adjournment is taken, unless the adjournment is for
more than 30 days, or unless after the adjournment a new record date is fixed
for the adjourned meeting, in which case notice of the adjourned meeting shall
be given to each stockholder of record entitled to vote at the meeting. At the
adjourned meeting, any business may be transacted that might have been
transacted at the original meeting.
8. Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute, may be called by the President or by
the Board of Directors.
9. The order of business at each meeting of stockholders shall be
determined by the presiding officer.
ARTICLE IV
DIRECTORS
1. The business and affairs of the Corporation shall be managed under the
direction of a Board of Directors, which may exercise all such powers and
authority for and on behalf of the Corporation as shall be permitted by law,
the Certificate of Incorporation or these By-laws.
2. The Board of Directors may hold their meetings within or outside of
the State of Delaware, at such place or places as it may from time to time
determine.
3. The number of directors comprising the Board of Directors shall be
such number as may be from time to time fixed by resolution of the Board of
Directors. The directors shall be classified in respect to the time for which
they shall severally hold office, by dividing them into three classes. The
number of directors in each class shall be as nearly equal as possible. At
each annual election, any vacancy in any class may be filled and the successors
to the directors of the class whose terms shall expire in that year shall be
elected to hold office for the term of three years, and the term of office of
one class of directors shall expire in each year. In the event the number of
directors is increased, election may be made to a class of directors with terms
expiring in three years or less in order to maintain proportionate equality
between the classes.
4. Subject to the rights of the holders of any class or series of stock
having a preference over the Common Stock as to dividends or upon liquidation,
nominations for the election of directors may be made by the Board of Directors
or a committee appointed by the Board of Directors or any stockholder entitled
to
-4-
<PAGE> 5
vote in the election of directors generally. However, any stockholder entitled
to vote in the election of directors generally may nominate one or more persons
for election as directors at a meeting only if written notice of such
stockholder's intent to make such nomination or nominations has been delivered
personally to, or been mailed to and received by the Secretary of the
Corporation at, the principal executive offices of the Corporation, not less
than 50 days nor more than 75 days prior to the meeting; provided, however,
that, in the event that less than 65 days' notice or prior public disclosure of
the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the tenth day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. Each such notice
shall set forth: (i) the name and address of the stockholder, as they appear on
the Corporation's books, who intends to make the nomination and of the person
or persons to be nominated; (ii) the class and number of shares of stock held
of record, owned beneficially and represented by proxy by such stockholder as
of the record date for the meeting (if such date shall then have been made
publicly available) and of the date of such notice; (iii) a representation that
the stockholder intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (iv) a description of
all arrangements or understandings between such stockholder and each nominee
and any other person or persons (naming such person or persons) pursuant to
which the nomination or nominations are to be made by such stockholder; (v)
such other information regarding each nominee proposed by such stockholder as
would be required to be included in a proxy statement filed pursuant to the
proxy rules of the Securities and Exchange Commission, had each nominee been
nominated, or intended to be nominated by the Board of Directors; and (vi) the
consent of each nominee to serve as a director of the corporation if so
elected.
No person shall be eligible to serve as a director of the corporation
unless nominated in accordance with the procedures set forth in this By-laws.
The Chairman of the meeting shall, if the facts warrant, determine and declare
to the meeting that a nomination was not made in accordance with the procedures
prescribed by these By-laws, and if he should so determine, he shall so declare
to the meeting and the defective nomination shall be disregarded.
5. The directors shall be elected by the holders of shares of stock of the
Corporation entitled to vote on the election of directors, and directors shall
be elected by a plurality vote. The initial directors shall be divided into
three classes, designated as Class I, Class II and Class III as set forth in
Section 3 of this
-5-
<PAGE> 6
Article IV. The Class I initial director or directors shall serve until the
annual meeting of stockholders held in 1995, the Class II initial director or
directors until the annual meeting of stockholders held in 1996, and the Class
III initial director or directors until the annual meeting of stockholders held
in 1997 and, in each case, until their successor(s) are duly elected and
qualified. At each annual meeting of stockholders commencing with the annual
meeting to be held during the calendar year 1995 each of the successors to the
Directors of the Class whose term shall have expired that year shall be elected
for a three-year term. If the number of directors is changed, any increase or
decrease shall be apportioned among the classes so as to maintain the number of
directors in each class as nearly equal as possible, and any additional
director of any class elected to fill a vacancy resulting from an increase in
such class shall hold office for a term that shall coincide with the remaining
term of that class, but in no case will a decrease in the number of directors
shorten the term of any incumbent director. A director shall hold office until
the annual meeting for the year in which his term expires and until the
successor shall be elected and shall qualify, subject, however to prior death,
resignation, retirement, disqualification or removal from office.
6. Any vacancy occurring in the Board of Directors, including any vacancy
created by reason of an increase in the number of directors, shall be filled
for the unexpired term by the concurring vote of a majority of the directors
then in office, whether or not a quorum, and any director so chosen shall hold
office for the remainder of the full term of the class of directors in which
the new directorship was created or the vacancy occurred and until such
director's successor shall have been elected and qualified.
7. Any director may resign at any time by giving written notice of his
resignation to the Board of Directors. Any such resignation shall take effect
upon receipt thereof by the Board, or at such later date as may be specified
therein. Any such notice to the Board shall be addressed to it in care of the
Secretary.
8. Any director or the entire Board of Directors may be removed, with or
without cause, by the holders of a majority of the shares entitled to vote at
an election of directors.
ARTICLE V
COMMITTEES OF DIRECTORS
1. By resolutions adopted by a majority of the whole Board of
Directors, the Board may designate an Executive Committee and one or more other
committees, each such committee to consist of one or more directors of the
Corporation. The Executive Committee shall have and may exercise all the
powers and authority of the Board in the management of the business and affairs
of the Corporation (except as otherwise
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<PAGE> 7
expressly limited by statute), including the power and authority to declare
dividends and to authorize the issuance of stock, and may authorize the seal of
the corporation to be affixed to all papers which may require it. Each such
committee shall have such of the powers and authority of the Board as may be
provided from time to time in resolutions adopted by a majority of the whole
Board.
2. The requirements with respect to the manner in which the Executive
Committee and each such other committee shall hold meetings and take actions
shall be set forth in the resolutions of the Board of Directors designating the
Executive Committee or such other committee.
ARTICLE VI
COMPENSATION OF DIRECTORS
The directors shall receive such compensation for their services as may be
authorized by resolution of the Board of Directors, which compensation may
include an annual fee and a fixed sum for expense of attendance at regular or
special meetings of the Board or any committee thereof. Nothing herein
contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
ARTICLE VII
MEETINGS OF DIRECTORS; ACTION WITHOUT A MEETING
1. Regular meetings of the Board of Directors may be held without notice
at such time and place, either within or without the State of Delaware, as may
be determined from time to time by resolution of the Board.
2. Special meetings of the Board of Directors shall be held whenever
called by the President of the Corporation or the Board of Directors on at
least 24 hours' notice to each director. Except as may be otherwise
specifically provided by statute, by the Certificate of Incorporation or by
these By-laws, the purpose or purposes of any such special meeting need not be
stated in such notice, although the time and place of the meeting shall be
stated.
3. At all meetings of the Board of Directors, the presence in person of a
majority of the members of the Board of Directors shall be necessary and
sufficient to constitute a quorum for the transaction of business, and, except
as otherwise provided by statute, by the Certificate of Incorporation or by
these By-laws, if a quorum shall be present the act of a majority of the
directors present shall be the act of the Board.
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<PAGE> 8
4. Any action required or permitted to be taken at any meeting of the
Board of Directors or of any committee thereof may be taken without a meeting
if all the members of the Board or such committee, as the case may be, consent
thereto in writing and the writing or writings are filed with the minutes of
proceedings of the Board of committee. Any director may participate in a
meeting of the Board, or any committee designated by the Board, by means of a
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in
a meeting pursuant to this sentence shall constitute presence in person at such
meeting.
ARTICLE VIII
OFFICERS
1. The officers of the Corporation shall be chosen by the Board of
Directors and shall be a Chairman of the Board, a Chief Executive Officer, a
Chief Operating Officer, a President, one or more Executive Vice Presidents,
one or more Vice Presidents, a Secretary and a Treasurer. The Board may also
choose one or more Assistant Secretaries and Assistant Treasurers, and such
other officers as it shall deem necessary. Any number of offices may be held by
the same person.
2. The salaries of all officers of the Corporation shall be fixed by the
Board of Directors, or in such manner as the Board may prescribe.
3. The officers of the Corporation shall hold office until their
successors are elected and qualified, or until their earlier resignation or
removal. Any officer may be at any time removed from office by the Board of
Directors, with or without cause. If the office of any officer becomes vacant
for any reason, the vacancy may be filled by the Board of Directors.
4. Any officer may resign at any time by giving written notice of his
resignation to the Board of Directors. Any such resignation shall take effect
upon receipt thereof by the Board or at such later date as may be specified
therein. Any such notice to the Board shall be addressed to it in care of the
Secretary.
ARTICLE IX
CHAIRMAN OF THE BOARD
The Chairman of the Board shall have general supervision and management of
the business of the Corporation and shall see that all orders and resolutions
of the Board are carried into effect. He shall preside at meetings of the
stockholders and of the Board of Directors.
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<PAGE> 9
ARTICLE X
CHIEF EXECUTIVE OFFICER; CHIEF OPERATING OFFICER
1. The Chief Executive Officer shall have general supervision and
direction of the business and affairs of the Corporation, subject, however, to
the direction and control of the Board. The Chief Executive Officer may sign
and execute in the name of the Corporation deeds, mortgages, bonds, contracts
or other instruments. He shall perform all duties incident to the office of
the Chief Executive Officer and shall, when requested, counsel with and advise
the other officers of the Corporation and shall perform such other duties as
the Board may from time to time determine.
2. The Chief Operating Officer shall have general supervision and
direction of the business and affairs of the Corporation and shall have general
and active supervision and direction over the business operations and affairs
of the Corporation and over its several officers, agents and employees,
subject, however, to the direction and control of the Board. The Chief
Operating Officer may sign and execute in the name of the Corporation deeds,
mortgages, bonds, contracts or other instruments. He shall perform all duties
incident to the office of the Chief Operating Officer and shall, when
requested, counsel with and advise the other officers of the Corporation and
shall perform such other duties as the Board may from time to time determine.
ARTICLE XI
PRESIDENT
Subject to the supervision and direction of the Board of Directors, he
shall be responsible for managing the affairs of the Corporation. He shall
have supervision and direction of all of the other officers of the Corporation
and shall have the powers and duties usually and customarily associated with
the office of the President. In the absence of the Chairman, he shall preside
at meetings of the stockholders.
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<PAGE> 10
ARTICLE XII
EXECUTIVE VICE PRESIDENTS
Each Executive Vice President shall have such powers and perform such
duties as may be delegated to him by the Board of Directors, the Chairman of
the Board, the President or the senior officer to whom he reports.
ARTICLE XIII
VICE PRESIDENTS
The Vice Presidents shall have such powers and duties as may be delegated
to them by the President.
ARTICLE XIV
SECRETARY AND ASSISTANT SECRETARY
1. The Secretary shall attend all meetings of the Board of Directors and
of the stockholders, and shall record the minutes of all proceedings in a book
to be kept for that purpose. He shall perform like duties for the committees
of the Board when required.
2. The Secretary shall give, or cause to be given, notice of meetings of
the stockholders, of the Board of Directors and of the committees of the Board.
He shall keep in safe custody the seal of the Corporation, and when authorized
by the President, an Executive Vice President or a Vice President, shall affix
the same to any instrument requiring it, and when so affixed it shall be
attested by his signature or by the signature of an Assistant Secretary. He
shall have such other powers and duties as may be delegated to him by the
President.
3. The Assistant Secretary shall, in case of the absence of the Secretary,
perform the duties and exercise the powers of the Secretary, and shall have
such other powers and duties as may be delegated to them by the President.
ARTICLE XV
TREASURER AND ASSISTANT TREASURER
1. The Treasurer shall have the custody of the corporate funds and
securities, and shall deposit or cause to be deposited under his direction all
moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of Directors
or pursuant to
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<PAGE> 11
authority granted by it. He shall render to the President and the Board
whenever they may require it an account of all his transactions as Treasurer
and of the financial condition of the Corporation. He shall have such other
powers and duties as may be delegated to him by the President.
2. The Assistant Treasurer shall, in case of the absence of the Treasurer,
perform the duties and exercise the powers of the Treasurer, and shall have
such other powers and duties as may be delegated to them by the President.
ARTICLE XVI
CERTIFICATES OF STOCK
The certificates of stock of the Corporation shall be numbered and shall
be entered in the books of the Corporation as they are issued. They shall
exhibit the holder's name and number of shares and shall be signed by the
President or an Executive Vice President or Vice President, and by the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant
Secretary.
ARTICLE XVII
CHECKS
All checks, drafts and other orders for the payment of money and all
promissory notes and other evidences of indebtedness of the Corporation shall
be signed by such officer or officers or such other person as may be designated
by the Board of Directors or pursuant to authority granted by it.
ARTICLE XVIII
FISCAL YEAR
The fiscal year of the Corporation shall be as determined from time to
time by resolution duly adopted by the Board of Directors.
ARTICLE XIX
NOTICES AND WAIVERS
1. Whenever by statute, by the Certificate of Incorporation or by these
By-laws it is provided that notice shall be given to any director or
stockholder, such provision shall not be construed to require personal notice,
but such notice may be given in writing, by mail, by depositing the same in the
United States mail, postage prepaid, directed to such stockholder or director
at his address as it appears on the records of the Corporation, and such notice
shall be deemed to be given at the time when the same shall be thus deposited.
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<PAGE> 12
Notice of regular or special meetings of the Board of Directors may also be
given to any director by telephone or by telex, telegraph or cable, and in the
latter event the notice shall be deemed to be given at the time such notice,
addressed to such director at the address hereinabove provided, is transmitted
by telex (with confirmed answerback), or delivered to and accepted by an
authorized telegraph or cable office.
2. Whenever by statute, by the Certificate of Incorporation or by these
By-laws a notice is required to be given, a written waiver thereof, signed by
the person entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent to notice. Attendance of any stockholder or
director at any meeting thereof shall constitute a waiver of notice of such
meeting by such stockholder or director, as the case may be, except as
otherwise provided by statute.
ARTICLE XX
INDEMNIFICATION
All persons who the Corporation is empowered to indemnify pursuant to the
provisions of Section 145 of the General Corporation Law of the State of
Delaware (or any similar provision or provisions of applicable law at the time
in effect) shall be indemnified by the Corporation to the full extent permitted
thereby. The foregoing right of indemnification shall not be deemed to be
exclusive of any other such rights to which those seeking indemnification from
the Corporation may be entitled, including, but not limited to, any rights of
indemnification to which they may be entitled pursuant to any agreement,
insurance policy, other by-law or charter provision, vote of stockholders or
directors, or otherwise. No repeal or amendment of this Article XX shall
adversely affect any rights of any person pursuant to this Article XX which
existed at the time of such repeal or amendment with respect to acts or
omissions occurring prior to such repeal or amendment.
ARTICLE XXI
ALTERATION OF BY-LAWS
The By-laws of the Corporation may be altered, amended or repealed, and
new By-laws may be adopted, by the majority vote of the stockholders or by the
Board of Directors; provided, however, that the provisions of Section 5 of
Article IV of the By-Laws may be altered, amended or repealed only by the
affirmative vote of the holders of 66 2/3% of the voting power of the
Corporation's stock outstanding and entitled to vote thereon.
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<PAGE> 1
EXHIBIT 10.9
SECOND AMENDMENT TO LEASE
(ORIGINAL BUILDING)
THIS SECOND AMENDMENT TO LEASE (the "Amendment"), made as of the 17th day
of July, 1996, by and between CORPORATE DRIVE ASSOCIATES, LLC, an Indiana
limited liability company ("Landlord"), and BRIGHTPOINT, INC., a Delaware
corporation f/k/a/ WHOLESALE CELLULAR USA, INC. ("Tenant"), WITNESSES that:
Recitals
WHEREAS, Landlord and Tenant entered into that certain Lease, dated June
6, 1995 ("Initial Lease"), as amended by that certain Amendment to Lease, dated
October 3, 1995 ("First Amendment"), pursuant to which Landlord leased to
Tenant and Tenant leased from Landlord a building constructed by Landlord
("Building") at the southwest corner of the intersection of Corporate Drive and
Corporate Way in Corporate Center North Corporate Park, Indianapolis, Indiana,
together with the parcel of real estate upon which the Building has been
constructed, as such parcel is more particularly described on Exhibit A-2 to
the Lease ("Parcel");
WHEREAS, Landlord has completed the construction of the Building on the
Parcel in accordance with the terms and provisions of the Initial Lease and the
plans and specifications attached to the Initial Lease, and Landlord has
completed the construction of a second floor of office space inside the
Building and certain other improvements to the Building and the Parcel
(collectively referred to as the "Additional Improvements") in accordance with
the terms and provisions of the First Amendment and the plans and
specifications attached to the First Amendment;
WHEREAS, Tenant desires Landlord to construct an expansion of the Building
and make certain other improvements to an adjoinder parcel of real estate
(collectively referred to as the "Expansion Improvements"), the construction of
which Expansion Improvements is not expressly provided for by the Initial
Lease, the plans and specifications attached to the Initial Lease, the First
Amendment or the plans and specifications attached to the First Amendment;
WHEREAS, Landlord and Tenant have entered into that certain Lease, dated
the date hereof ("Adjoinder Lease"), pursuant to which Landlord is leasing to
Tenant and Tenant is leasing from Landlord the Expansion Improvements, together
with the adjoinder parcel of real estate upon which the Expansion Improvements
are to be constructed, as such adjoinder parcel is more particularly described
on Exhibit A-2 to the Adjoinder Lease ("Adjoinder Parcel");
WHEREAS, as a condition of entering into the Adjoinder Lease, Landlord and
Tenant have agreed to certain amendments, modifications and supplements to the
Initial Lease, as amended by the First Amendment (collectively referred to as
the "Lease"), and Landlord and Tenant desire to amend, modify and supplement
the Lease to reflect the agreement between the parties;
NOW, THEREFORE, in consideration of the premises, Landlord and Tenant
entering into the Adjoinder Lease, the mutual covenants and agreements set
forth in the Lease and contained herein, and other valuable consideration, the
receipt and sufficiency of which are acknowledged hereby, Landlord and Tenant
hereby amend, modify and supplement the Lease as follows:
1. The definition of the "Parcel", as set forth in Section 1 of the
Lease, shall be amended by substituting Replacement Exhibit A-1 and Replacement
Exhibit A-2 attached hereto for Exhibits A-1 and A-2, respectively, attached to
the Lease.
2. The definition of the "Initial Lease Term", as set forth in Section 2
of the Lease and as amended by the First Amendment, shall be amended to mean
the period commencing on the date that is the
<PAGE> 2
"Commencement Date" (as defined in the Lease) and ending on the "Expiration
Date" (as defined in the Adjoinder Lease).
3. The fifth sentence in Section 9 of the Lease shall be amended by
substituting "the expiration of the Warranty Period" for "receipt of the
Acceptance Letter".
4. The first sentence in Section 10 of the Lease shall be amended by
deleting "so that such utility services are not commonly metered with any other
building".
5. The first sentence in Subsection 12(a) of the Lease shall be
supplemented by adding the following:
provided that Landlord, in its sole and absolute discretion, may
(i) withhold its consent to any proposed assignment of this Lease
if the proposed assignee is not the same party that then is, or,
after a concurrent assignment occurs, will be, the tenant under
that certain Lease by and between Landlord and Tenant, dated
July 17, 1996 ("Adjoinder Lease"), and (ii) in the case of
such a concurrent assignment to occur, condition its consent to
any proposed assignment of this Lease on the occurrence of the
concurrent assignment.
6. The first sentence in Subsection 12(b) of the Lease shall be amended
by substituting the following for the portion of such sentence after the date
"December 31, 1994":
such entity concurrently will become by virtue of the Merger or
Asset Sale the tenant under the Adjoinder Lease, specifically
assumes the obligations of Tenant under this Lease and the
Adjoinder Lease and agrees to cure any outstanding default
pursuant to such obligations, and Tenant otherwise complies with
the terms and conditions of this Section.
7. The first sentence in Subsection 14(e) of the Lease shall be amended
by substituting "thirty (30) days" for "fifteen (15) days".
8. Subsection 17(a) of the Lease shall be supplemented by adding the
following:
(xi) Any default by the tenant under the Adjoinder Lease, if
such default is not cured within the applicable cure period, if
any, provided in the Adjoinder Lease.
9. The first sentence of Section 19 of the Lease shall be supplemented by
adding the following:
and to any declaration of covenants, restrictions and easements
with respect to the Leased Premises and the premises leased to
Tenant under the Adjoinder Lease ("Adjoinder Premises").
10. Section 19 of the Lease shall be supplemented by adding the following:
Tenant acknowledges that the Leased Premises may be (i) subjected
to the same mortgage or other method of financing or refinancing
as that to which the Adjoinder Premises is subjected or (ii)
subjected to separate mortgages or other methods of financing or
refinancing. Accordingly, Tenant acknowledges that (i) this Lease
and the Adjoinder Lease may be subordinate to the same or
different mortgages or other methods of financing or refinancing,
and (ii) this Lease, the Adjoinder Lease and the rents payable
hereunder and thereunder may be assigned to the same or different
mortgage lenders or lien holders.
11. Section 25 of the Lease shall be supplemented by adding the following:
Notwithstanding anything set forth herein, (i) Tenant may not exercise its
option to purchase the Leased
<PAGE> 3
Premises, unless Tenant simultaneously exercises its option under
the Adjoinder Lease to purchase the Adjoinder Premises, and, (ii)
after Tenant exercises its options to purchase both the Lease
Premises and the Adjoinder Premises, the obligation of Landlord to
convey the Leased Premises to Tenant is conditioned upon a
simultaneous closing of the purchase by Tenant of both the Leased
Premises and the Adjoinder Premises, with a simultaneous payment
by Tenant of both the Purchase Price and the price specified in
the Adjoinder Lease to purchase the Adjoinder Premises.
12. Clause (i) of the second sentence in Exhibit B-1 to the Lease
(Prevailing Base Rent) shall be amended by substituting "minimum rent" for
"gross minimum rent".
13. Exhibit B-2 to the Lease (Base Rent Schedule) shall be deleted in its
entirety and replaced with Replacement Exhibit B-2, attached hereto.
14. Unless expressly amended, modified or supplemented herein, all terms
and provisions set forth in the Lease, as amended by the First Amendment,
shall remain in full force and effect.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Second
Amendment to Lease on the date first above referenced.
CORPORATE DRIVE ASSOCIATES, LLC an
Indiana limited liability company
By: /s/ Michael G. Browning
-----------------------------
Michael G. Browning, Member
BRIGHTPOINT, INC., a Delaware
corporation, f/k/a WHOLESALE
CELLULAR USA, INC.
By: /s/ J. Mark Howell
---------------------------
Printed: J. Mark Howell
----------------------
Title: CFO
------------------------
<PAGE> 4
EXHIBIT B-2
(ORIGINAL BUILDING)
BASE RENT SCHEDULE
<TABLE>
<S> <C>
Commencement Date through Year 10 - $5.73 per gross square foot
based on 84,928 square feet
Portion of Year 11 prior to Expiration Date - Greater of $7.00 per gross square foot
or the Prevailing Base Rent
(as defined on Exhibit B-1)
based on 84,928 square feet
First Extension Term - determined pursuant to Exhibit B-1
based on 84,928 square feet
(provided that Base Rent during the
last year of the First Extension
Term shall not be less than $7.70
per gross square foot)
Second Extension Term - determined pursuant to Exhibit B-1
based on 84,928 square feet
(provided that Base Rent during the
last year of the Second Extension
Term shall not be less than $8.50
per gross square foot)
</TABLE>
The Base Rent for the Warehouse Space prior to the substantial completion or
earlier occupancy of the Office Space shall be prorated based on the square
footage of the Warehouse Space. (57,420 sq. ft. x 5.73 per gross square
foot/12 = 27,418.05 per month). Upon the substantial completion or earlier
occupancy of the Office Space, Tenant shall pay Base Rent on the entire 84,928
square feet comprising the Leased Premises as set forth in the above schedule.
<PAGE> 1
EXHIBIT 10.10
LEASE
(BUILDING EXPANSION)
THIS LEASE, made as of the 17th day of July, 1996, by and
between CORPORATE DRIVE ASSOCIATES, LLC, an Indiana limited liability company
("Landlord"), and BRIGHTPOINT, INC., a Delaware corporation f/k/a WHOLESALE
CELLULAR USA, INC. ("Tenant");
WITNESSETH:
1. LEASED PREMISES. Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord a certain building to be constructed by Landlord
("Building"), which will be located generally at the southwest corner of the
intersection of Corporate Drive and Corporate Way in Corporate Center North
Corporate Park ("Park"), Indianapolis, Indiana, together with the parcel of
real estate upon which the Building will be constructed ("Parcel"), together
with the related improvements to be constructed on the Parcel and used in
connection with the Building ("Improvements"). For purposes of this Lease, the
Building shall be deemed to contain seventy-seven thousand six hundred eighty
(77,680) square feet of gross leasable area ("Gross Leasable Area"). Tenant
shall have the right, in common with Landlord, to the non-exclusive use of the
common easements and facilities in the Park which benefit the Parcel, subject
to the terms and conditions of the any recorded declaration of covenants and
restrictions applicable to the Park ("Declaration"). The Parcel and the Park
are depicted on Exhibit A-1 attached hereto, the Parcel is more particularly
described on Exhibit A-2 attached hereto, and the Building generally is
depicted on the site plan described on Exhibit A-3 attached hereto. The
Building, the Parcel and the Improvements are collectively referred to as the
"Leased Premises."
2. LEASE TERM AND HOLDING OVER. Subject to Subsection 6(d)
hereof, the initial term of this Lease ("Initial Lease Term") shall be for a
period commencing on January 1, 1997 ("Commencement Date"), and ending on
December 31, 2006 ("Expiration Date"). So long as Tenant is not in default
hereunder, Tenant shall have the option to extend the Initial Lease Term for
two (2) periods of five (5) years each ("First Extension Term" and "Second
Extension Term", respectively). Tenant shall exercise its option to extend the
Initial Lease Term and the First Extension Term by providing written notice
thereof to Landlord at least nine (9) months prior to the expiration of the
Initial Lease Term or the First Extension Term, as applicable ("Extension
Date"). If Tenant fails to exercise its option to extend the Initial Lease
Term and/or the First Extension Term, as applicable, on or before the Extension
Date or if Tenant rejects Landlord's determination of the Prevailing Base Rent
(as defined in Exhibit B-1 attached hereto) to be applicable during the First
Extension Term and/or the Second Extension Term, as applicable, then Tenant's
option to extend the Initial Lease Term and/or the First Extension Term, as
applicable, shall terminate and have no further force or effect, without
further notice from Landlord. If Tenant holds over and remains in possession
of the Leased Premises after the expiration of the Lease Term (as defined below
in this section), and, if Rent is paid by Tenant and accepted by Landlord, then
such holding over and continued possession shall create a tenancy from month to
month upon and subject to the same terms and conditions of this Lease in effect
when the Lease Term expires, except for the length of the term of this Lease.
At any time, either party may terminate such tenancy from month to month upon
thirty (30) days written notice delivered to the other party in accordance with
Section 22 hereof. If Tenant holds over and remains in possession of the
Leased Premises after the expiration of the Lease Term, without the consent of
Landlord, then (i) Tenant shall pay to Landlord for each day of such possession
one hundred twenty-five percent (125%) of all the Base Rent (as defined in
Section 3 hereof) in effect when expiration or termination occurs, computed on
a daily basis, and (ii) indemnify and hold Landlord harmless from and against
any and all claims, judgments, liabilities, losses, costs and expenses
(including without limitation, reasonable attorneys' fees and court costs)
arising from, or in connection with, such possession. The Initial Lease Term,
the First Extension Term and the Second Extension Term are collectively
referred to as the "Lease Term."
3. RENT. Tenant shall pay to Landlord minimum rent ("Base Rent")
for the Leased Premises during the Lease Term in accordance with the initial
rent schedule set forth on Exhibit B-2, attached
<PAGE> 2
hereto ("Rent Schedule"). Rent shall be payable in advance on or before the
first day of each full and partial calendar month during the Lease Term;
provided that, if the Lease Term commences or expires on a date other than on
the first day or last day of a calendar month, respectively, then the Base Rent
payable for each such partial calendar month shall be an amount equal to the
Base Rent otherwise then in effect, divided by the number of days in the full
calendar month during which the Lease Term commences or expires, respectively,
and multiplied by the number of days in the partial calendar month after and
including the Commencement Date or before and including the date of expiration,
respectively; and provided further that the Base Rent for any partial calendar
month at the commencement of the Lease Term shall be payable on or before the
first day of the first full calendar month during the Lease Term. In addition
to the payment of Base Rent, Tenant shall pay to Landlord as additional rent
("Additional Rent") all other sums of money and charges required to be paid by
Tenant to Landlord under this Lease, whether or not the same are designated as
Additional Rent. If any such sum or charge is not paid at the time provided in
this Lease, then it nevertheless shall be collectible as Additional Rent with
the next monthly installment of Base Rent; provided that nothing contained
herein shall be deemed to suspend or delay the payment of such sum or charge or
to limit any right or remedy of Landlord with respect to its nonpayment. All
Rent shall be paid without relief from valuation and appraisement laws and
shall be payable without offset for any amount due or claimed to be due from
Landlord to Tenant, except as expressly provided in this Lease.
4. PAST DUE PAYMENTS. If any Base Rent, Additional Rent
or any other sum, charge or payment owing from Tenant to Landlord pursuant to
this Lease ("Rent") shall become overdue for a period in excess of five (5)
days, then such unpaid Rent shall bear interest from the date due to the date
of payment at the rate of one and one-half percent (1-1/2%) per month. Such
interest shall be in addition to, and not in lieu of, any other right or remedy
Landlord may have hereunder, at law or in equity.
5. PLACE OF PAYMENTS. All payments of Rent required to
be made, and all statements required to be rendered, by Tenant to Landlord
shall be delivered to Landlord at its address set forth in Section 22 or to
such other address as Landlord specifies to Tenant in accordance with that
Section.
6. PREPARATION OF LEASED PREMISES.
(a) Landlord's Work. Landlord shall construct the Building and
the Improvements and landscape the Parcel pursuant to the construction
schedule attached hereto as Exhibit C ("Construction Schedule"), and in
accordance with the plans and specifications attached hereto as Exhibit D
("Landlord's Work"). A complete and permanent Exhibit D shall be finalized
and attached hereto by August 15, 1996, which permanent Exhibit D shall
replace the temporary Exhibit D now attached hereto. Landlord shall
obtain all permits and authorizations necessary for the completion of
Landlord's Work.
(b) Substantial Completion. The Building and the Improvements
shall be deemed to be substantially completed when Landlord delivers to
Tenant a copy of an architect's certificate of substantial completion
indicating that the Building and the Improvements have been completed in
accordance with Exhibit D attached hereto, subject to identified
"punch-list" items which do not materially affect Tenant's ability to use
the Building and the Improvements for the purpose of conducting its normal
business operations or for the purpose of completing the installation of
its fixtures and equipment and subject to Landlord subsequently completing
the "top-coat" of pavement on the parking lot which is part of the
Improvements. After the Commencement Date, Landlord shall complete the
"top coat" of pavement on the parking lot which is part of the Improvements
and landscape the Parcel in accordance with the Construction Schedule and
Exhibit D.
(c) Scheduled Completion Date. Landlord shall substantially
complete the Buildings and the Improvements on or before November 30, 1996
("Scheduled Completion Date"); provided that, if the permanent Exhibit D is
not finalized and attached hereto by August 15, 1996, then (i) the
Scheduled Completion Date shall be extended by a period equal to the number
of days after August 15, 1996, that it takes to finalize and attach the
final Exhibit D, and (ii) the obligation of Tenant to pay Rent shall
<PAGE> 3
commence on the Commencement Date, notwithstanding anything to the contrary
set forth therein.
(d) Non-Completion. Subject to Subsection 6(c) hereof, if the
permanent Exhibit D is finalized and attached hereto by August 15, 1996,
and the Buildings and Improvements are not substantially completed on or
before the date fifteen (15) days after the Scheduled Completion Date, then
(i) the Commencement Date shall be delayed until the date that is fifteen
(15) days after the date on which the Buildings and the Improvements are
substantially completed, and (ii) the Expiration Date shall be extended to
the last day of that calendar month during which the tenth (10th)
anniversary of the Commencement Date occurs.
(e) Tenant's Work. Tenant shall be responsible for all other work
necessary to prepare the Leased Premises for occupancy by Tenant which is
not expressly included as Landlord's Work on Exhibit D or in Section 10
hereof. Upon substantial completion of the Building and the Improvements,
Tenant may have occupancy of the Leased Premises, subject to continued
presence of Landlord on the Leased Premises to correct "punch-list" items
and defects in Landlord's Work. Such occupancy of the Leased Premises
shall be subject to all of the terms and provisions of this Lease, except
that payment of Base Rent shall commence on the Commencement Date. Tenant
shall coordinate any work it performs to prepare the Leased Premises with
the correction by Landlord of "punch-list" items and defects in Landlord's
Work.
(f) Construction Meetings. Commencing on the first full week
after the week in which Landlord commences Landlord's Work and continuing
each week thereafter until Landlord's Work is completed, a representative
of Landlord and Tenant shall attend construction meetings at a mutually
acceptable location during general business hours, for the purposes of
discussing the progress of Landlord's Work in accordance with the
Construction Schedule.
(g) Improvements Payment. On the later of substantial completion
of the Building and the Improvements or December 1, 1996, Tenant shall pay
to Landlord Thirty-Four Thousand Dollars ($34,000.00) to reimburse Landlord
for the cost that Landlord will incur to construct certain leasehold
improvements for the benefit of Tenant.
7. TAXES AND ASSESSMENTS.
(a) Real Estate Taxes and Assessments. Tenant shall pay and
discharge when due all real estate taxes and assessments ("Real Estate
Taxes") levied during the Lease Term on, against, or with respect to, the
Leased Premises. Within twenty (20) days after any installment or payment
of such Real Estate Taxes is due, Tenant shall deliver to Landlord
satisfactory evidence that the installment or payment has been paid and
discharged in full. All installments and payments of Real Estate Taxes
which are the obligation of Tenant hereunder shall be deemed to be Rent,
even though such installments and payments are made to the public or
quasi-public bodies which levy, charge or impose Real Estate Taxes.
Landlord shall attempt to (i) cause the Leased Premises to be established
as a separate parcel for the purpose of the assessment of Real Estate Taxes
and (ii) cause to be sent directly to Tenant the bills, statements and
invoices for, or with respect to, Real Estate Taxes levied during the Lease
Term on, against or with respect to, the Leased Premises. Real Estate
Taxes shall include any tax, levy or other charge on, against or with
respect to Landlord's interest hereunder or on, against or with respect to
ownership interests in the Leased Premises (other than a general gross
receipts tax or income tax). The obligations of Tenant hereunder with
respect to the payment of such Real Estate Taxes levied during the final
calendar year of the Lease Term shall survive the termination of this
Lease.
(b) Other Taxes and Assessments. Tenant shall pay and discharge,
as and when assessed, all taxes, levies and charges imposed on, against or
with respect to the conduct of its business operations in, on or from the
Leased Premises and all taxes, levies and charges imposed on, against or
with respect to its trade fixtures, equipment, inventory and other personal
property in, on or about the Leased
<PAGE> 4
Premises. Tenant also shall pay and discharge, as and when assessed, all
assessments levied or assessed during the Lease Term on, against or with
respect to, the Leased Premises pursuant to the Declaration ("Park
Assessments"), and Tenant shall pay all late charges, interest and costs of
collection under the Declaration if any installment or payment of Park
Assessments is not paid or discharged when required hereunder. Within
twenty (20) days after any installment or payment of such Park Assessments
is due, Tenant shall deliver to Landlord satisfactory evidence that the
installment or payment has been paid and discharged in full. All
installments and payments of Park Assessments which are the obligation of
Tenant hereunder shall be deemed to be Rent, even though such installments
and payments are made to a third party. The obligations of Tenant
hereunder with respect to the payment of such Park Assessments levied
during the final calendar year of the Lease Term shall survive the
termination of this Lease.
(c) Contesting Real Estate Taxes. Tenant shall have the right to
contest, in the manner prescribed by law and otherwise in a reasonable and
diligent manner, the calculation of Real Estate Taxes levied on, against or
with respect to the Leased Premises or the valuation of the Leased Premises
for purposes of calculating such Real Estate Taxes, at Tenant's cost and
expense, if (i) Tenant determines in good faith that such Real Estate Taxes
have been incorrectly calculated or the Leased Premises has been overvalued
for purposes of calculating such Real Estate Taxes ("Tax Dispute"), (ii)
Tenant delivers to Landlord a written notice describing the Tax Dispute and
the proposed contest with particularity, and (iii) if such contest is to be
made during the last two (2) years of the Initial Lease Term, the First
Extension Term or the Second Extension Term, as applicable, Landlord does
not object to the proposed contest within ten (10) days after receipt of
such notice, which objection shall be made only on a reasonable basis.
Pending resolution of the Tax Dispute, Tenant shall pay when required by
the applicable taxing authority the full amount of the Real Estate Taxes
levied on, against or with respect to the Leased Premises. Tenant shall
not agree to any settlement of a Tax Dispute without Landlord's prior
written consent, which consent may be withheld if the settlement will
result, or reasonably is anticipated by Landlord to result, in increased
Real Estate Taxes at any time, but which consent otherwise shall not be
withheld unreasonably. Tenant shall indemnify and hold Landlord harmless
from and against any and all increases in Real Estate Taxes which result
from a contest commenced or conducted by Tenant, together with all
reasonable attorneys' fees and court costs associated therewith.
8. USE OF LEASED PREMISES. The Leased Premises shall be
occupied and used solely as a facility for distribution/warehouse and general
office purposes and any other use permitted in the Park and by applicable
zoning, such other use being subject to Landlord's prior written approval,
which approval shall not be withheld unreasonably, and for no other uses.
Tenant shall have no right to change the zoning classification applicable to
the Leased Premises or obtain variances from such classification or the
requirements thereof. Tenant covenants and agrees that:
(a) Tenant shall not permit any waste, damage or nuisance in, on
or about the Leased Premises, or use or permit the use of the Leased
Premises for any unlawful purpose or in any manner which violates the terms
and conditions of the Declaration;
(b) Tenant shall conduct its business and keep the Leased Premises
in a safe, clean and sightly condition which complies with all written
rules and regulations delivered by Landlord to Tenant ("Rules"), and all
rules, regulations and guidelines of the health, fire, building,
environmental and other governmental agencies having jurisdiction over
Tenant's business operations and/or the Leased Premises, and Tenant shall
comply with all laws, statutes, ordinances and governmental rules,
regulations, guidelines, orders and decrees now or hereafter affecting or
relating to the Leased Premises or the use thereof ("Laws");
(c) Tenant shall not dump, or otherwise dispose of, any chemicals,
metals, garbage, trash or other industrial by-products or incidentals to
Tenant's business in, on or about the Leased Premises, and Tenant shall use
only waste removal facilities on the Leased Premises which are appropriate,
leakproof and fireproof;
<PAGE> 5
(d) Tenant shall comply with all Rules and the terms and
conditions of the Declaration, cause its agents and employees to comply
with all Rules and the terms and conditions of the Declaration, and use
reasonable efforts to cause its customers, invitees, licensees and
concessionaires to comply with all Rules and the terms and conditions of
the Declaration; and
(e) Tenant shall not (i) use the Leased Premises for the treatment
or disposal of any wastes, materials or substances that are hazardous,
toxic or radioactive and are, or become, regulated by any Law (including
without limitation, asbestos-containing materials and electrical
transformers or ballasts that contain PCB's) ("Hazardous Substances") or
(ii) store or use any Hazardous Substance on the Leased Premises, except
for such storage and usage of those types and amounts of Hazardous
Substances as may be necessary for the operations permitted under this
Lease; provided that Tenant shall not stockpile Hazardous Substances or
otherwise store more Hazardous Substances on the Leased Premises than may
be necessary to conduct the operations permitted under this Lease to be
conducted with reasonable dispatch. All storage, usage and transportation
of Hazardous Substances shall be conducted in compliance with all
applicable Laws and Rules, and Tenant shall take all necessary and
appropriate safety precautions in connection with such storage, usage and
transportation. Tenant shall not install or locate on the Leased Premises
any underground storage tanks ("UST's"). Tenant agrees to indemnify,
defend (by counsel reasonably acceptable to Landlord), protect and hold
harmless Landlord and any party affiliated with Landlord from and against
any and all claims, judgments, liabilities, losses, costs and expenses
(including without limitation, reasonable attorneys' fees and court costs)
arising from, or in connection with, (i) any storage or usage of any
Hazardous Substances by Tenant (or its employees, agents, contractors,
invitees or licensees) in, on or about the Leased Premises or (ii) any
transportation of any Hazardous Substances to or from the Leased Premises
by Tenant (or its employees, agents, contractors, invitees or licensees),
whether or not such storage, usage or transportation constitutes a failure
of Tenant to fully observe or perform its obligations under this Subsection
or to fully comply with or observe the limitations and restrictions under
this Subsection. The claims, judgments, liabilities, losses, costs and
expenses from and against which Tenant has agreed to indemnify, defend,
protect and hold harmless Landlord and any party affiliated with Landlord
under this Subsection shall include the following: (i) any obligation or
liability of Tenant or Landlord under any Law to remove any Hazardous
Substance or contaminated soil or groundwater from the Leased Premises,
"clean up" any contamination of the soil or the groundwater in, on or under
the Leased Premises, or perform any remediation of or for the Leased
Premises; (ii) all charges, fines or penalties imposed by governmental
authority or under any Law governing Hazardous Substances; (iii) any excess
of the fair market value of the Leased Premises without contamination by
Hazardous Substances over the fair market value of the Leased Premises as
so contaminated; and (iv) all claims by, and liabilities to, any third
party. The obligations of Tenant under this Subsection shall survive the
expiration or earlier termination of this Lease.
Tenant shall have the right to contest, in the manner prescribed by the
applicable Laws, and otherwise in a reasonable and diligent manner, any
allegation by a governmental entity that there exists a violation of any Law
affecting or relating to the Leased Premises or the use thereof ("Alleged
Violation"), if Tenant determines in good faith that no violation exists or the
Law is inapplicable, and Tenant delivers to Landlord a written notice
describing the Alleged Violation with particularity; provided that such contest
(i) postpones the enforcement of the Law which is the subject of the Alleged
Violation until the contest is completed, postpones any action against Landlord
with respect to the Alleged Violation until the contest is completed and
postpones the imposition of any charges, fines or penalties until the contest
is completed, (ii) will not result in the imposition of additional charges,
fines or penalties if the contest is unsuccessful, and (iii) the Leased
Premises will not deteriorate or decline in value as a result of, or in
connection with, the contest and the failure to correct the Alleged Violation.
Tenant shall not agree to any settlement of an Alleged Violation without
Landlord's prior written consent, which consent shall not be withheld
unreasonably. Tenant shall indemnify and hold Landlord harmless from any and
all actions against Landlord with respect to any contest hereunder or any
Alleged Violation which Tenant is contesting, any and all charges, fines and
penalties imposed upon Landlord as a consequence of any contest hereunder or
any Alleged Violation which Tenant is contesting and any other claims,
judgments, liabilities,
<PAGE> 6
losses, costs and expenses arising from, or incurred in connection with, any
contest hereunder or any Alleged Violation which Tenant is contesting
(including without limitation, reasonable attorneys' fees and court costs).
9. CONDITION, ALTERATIONS AND ADDITIONS. Tenant assumes
sole responsibility for inspecting the Leased Premises before accepting
occupancy to determine that Landlord's Work has been completed and the Leased
Premises complies with this Lease and all applicable Laws. On the Commencement
Date, Tenant shall execute and deliver to Landlord a certificate, in the form
attached hereto as Exhibit E ("Acceptance Letter"), stating that Tenant has
accepted the Leased Premises, subject to any "punch-list" items relating
thereto and subject to latent defects which (i) could not be discovered during
a reasonably diligent and thorough inspection of the Leased Premises and (ii)
subsequently are discovered and identified with particularity in a written
notice delivered to Landlord within one (1) year after the Commencement Date
("Latent Defects"); provided that the period for identifying Latent Defects in
the foundation, exterior walls and roof shall be two (2) years after the
Commencement Date ("Warranty Period"). Landlord promptly shall correct any
such "punch-list" items relating to the Leased Premises, within sixty (60) days
after receipt of the Acceptance Letter with respect thereto, and Landlord
promptly shall correct any Latent Defects within one hundred twenty (120) days
after receipt of the written notice thereof. If Landlord fails to correct a
"punch-list" item or Latent Defect within the period specified under this
Section, then Tenant shall have the right to correct such "punch-list" item or
Latent Defect, and Landlord shall reimburse Tenant on demand for the reasonable
costs and expenses of such correction. Upon the expiration of the Warranty
Period, Landlord shall assign to Tenant all warranties which (i) may be
extended to Landlord by manufacturers, suppliers or contractors in connection
with the completion of Landlord's Work and (ii) cover the foundation, exterior
walls and those other parts of the Leased Premises which Tenant is obligated to
maintain under Section 11 hereof. Tenant, at its cost and expense, may install
in the Building such trade fixtures, equipment and other personal property as
Tenant determines to be necessary or appropriate to conduct its business.
Tenant, at its cost and expense, also may make non-structural alterations or
improvements to the interior of the Building if (i) Tenant delivers to Landlord
written notice describing the proposed alteration or improvement with
particularity and provides to Landlord copies of any plans and specifications
for the alteration, and (ii) upon the expiration of the Lease Term or earlier
termination of this Lease, Tenant surrenders the portion of the Leased Premises
altered or improved in as good of a condition as on the date that Tenant
accepts the Leased Premises. Tenant shall make no structural alterations,
improvements or additions of or to any part of the Leased Premises or any
alterations, improvements or additions to the exterior of the Building without
the prior written consent of Landlord. All improvements, alterations and
additions to the Leased Premises, except only Tenant's trade fixtures and
personalty shall become the sole property of Landlord upon the expiration of
the Lease Term or earlier termination of this Lease. All exterior signs shall
be subject to the prior written approval of Landlord, and installation thereof
shall be the sole responsibility of Tenant. Prior to the time that Tenant
makes any structural improvements, alterations or additions to the Leased
Premises, Landlord and Tenant shall agree which portions of such improvements,
alterations and additions shall become the property of Landlord upon Tenant's
surrender of the Leased Premises and which portions of such improvements,
alterations and additions shall remain the property of Tenant.
10. UTILITIES. As part of Landlord's Work, Landlord
shall install (or cause installation of) facilities to furnish electricity,
water, sewer and other services specified in Exhibit D to the Building. During
the Lease Term, Tenant shall pay all usage and other charges for all utility
services furnished to the Leased Premises (including without limitation,
electricity, water, sewer and telephone). If any equipment installed by Tenant
requires additional utility facilities, then the costs of installing such
additional facilities shall be paid by Tenant.
11. MAINTENANCE AND REPAIRS. Tenant, at its cost and
expense, shall keep and maintain (and provide all repairs and replacements
necessary to keep and maintain) the Leased Premises and every part thereof at
all times in good order, condition and repair (including without limitation,
all interior and exterior electrical, mechanical and utility fixtures,
equipment and systems, all other fixtures, equipment and systems of any nature
located on the Leased Premises, all interior walls, floors, floor coverings and
ceilings, the foundation, exterior walls, roof and other structural parts of
the Building, all exterior signs and all landscaped areas, driveways and
parking lots). Without limiting the
<PAGE> 7
generality of the foregoing, Tenant shall implement (i) a janitorial program of
cleaning sufficient to keep the Leased Premises in a safe, clean and sightly
condition at all times, (ii) a program of grass cutting and landscape
maintenance sufficient to keep all landscaped areas in a safe, clean and
sanitary condition at all times, (iii) a regularly scheduled program of
preventive maintenance and repair of the roof, the heating, ventilation and air
conditioning system, and all electrical, mechanical and utility fixtures,
equipment and systems serving the Leased Premises, so that such items are in
good order, condition and repair at all times, and (iv) a regularly scheduled
program of sealing, re-topping and striping all driveways and parking lots
sufficient to keep all driveways and parking lots in a safe, clean and sanitary
condition at all times. Tenant shall not be responsible for making any repairs
occasioned by any negligence, intentional act or willful misconduct of Landlord
or its employees, contractors or agents, which repairs shall be promptly made
by Landlord at its cost and expense.
12. ASSIGNMENT AND SUBLETTING.
(a) Requirements of Landlord's Consent. Tenant shall not assign
this Lease or any interest therein, sublet the whole or any part of the
Leased Premises or permit any other party, (including without limitation,
concessionaires or licensees) to operate in, on or from, or occupy the
whole or any part of, the Leased Premises, without the prior written
consent of Landlord, which consent shall not be withheld or delayed
unreasonably; provided that Landlord, in its sole and absolute discretion,
may (i) withhold its consent to any proposed assignment of this Lease if
the proposed assignee is not the same party that then is, or, after a
concurrent assignment occurs, will be, the tenant under that certain Lease
by and between Landlord and Tenant, dated June 6, 1995, as amended by that
certain Amendment to Lease, dated October 3, 1995 ("Adjoinder Lease"), and
(ii) in the case of such a concurrent assignment to occur, condition its
consent to any proposed assignment of this Lease on the occurrence of the
concurrent assignment. The consent of Landlord to any assignment or
subletting shall not constitute a waiver of the requirement for such
consent to any subsequent assignment or subletting. In all events, Tenant
shall remain fully liable to perform all of the terms and provisions of
this Lease and no consent by Landlord to any Tenant assignment shall
release Tenant from such performance.
(b) Assignment by Operation of Law. Any transfer of this Lease by
operation of law (including without limitation, a transfer as a result of a
change of control, merger, consolidation or liquidation of Tenant) shall
constitute an assignment for purposes of this Lease; provided that the
terms and conditions of this Subsection and the foregoing Subsection 12(a)
shall not apply to (i) the merger or consolidation of Tenant with one or
more corporations ("Merger") or (ii) the sale by Tenant of all or
substantially all of its assets, including this Lease, to a single
corporation ("Asset Sale'"), if, in either case, the entity to which this
Lease is transferred or assigned as a result of a Merger or Asset Sale has
a net worth equal to or greater than the net worth of Tenant reflected on
the financial statements provided to Landlord, dated December 31, 1994,
such entity concurrently will become by virtue of the Merger or Asset Sale
the tenant under the Adjoinder Lease, specifically assumes the obligations
of Tenant under this Lease and the Adjoinder Lease and agrees to cure any
outstanding default pursuant to such obligations, and Tenant otherwise
complies with the terms and conditions of this Section.
13. ACCESS TO LEASED PREMISES. Tenant shall permit Landlord and
its agents to enter upon the Leased Premises at all reasonable times and upon
reasonable notice (except in the event of an emergency, with respect to which
such time and notice requirements shall not apply) to (i) inspect and examine
the Leased Premises, (ii) show the Leased Premises to prospective purchasers
and mortgagees and, during the last eighteen (18) months of the Lease Term or
during the continuation of a default by Tenant hereunder, to prospective
tenants, (iii) make such repairs and replacements as Landlord may deem
necessary, at its cost and expense or (iv) to exercise its rights hereunder in
connection with performing a covenant of Tenant which is in default, without
any such act constituting any eviction of Tenant in whole or in part, without
Rent in any manner abating by reason of loss or interruption of Tenant's
business in the Leased Premises, and without responsibility for any loss or
damage to Tenant's business or property, other than loss or damage resulting
from the intentional act or willful misconduct of Landlord, its agents,
employees or contractors; provided that any repairs and replacements for such
<PAGE> 8
intentional acts or willful misconduct shall be made at the cost and expense of
Landlord. Landlord's right of entry shall not be deemed or construed to impose
upon Landlord any obligation or liability whatsoever for the maintenance or
repair of the Leased Premises, except as expressly provided in this Lease.
14. INSURANCE AND INDEMNIFICATION.
(a) Real Property Insurance. Landlord, at its cost and expense,
shall maintain in full force and effect throughout the Lease Term fire and
extended coverage insurance on the Building for at least one hundred
percent (100%) of its insurable value on a replacement cost basis, less the
replacement cost of the foundation and other structural parts of the
Building which are not commonly covered by policies of fire and extended
coverage insurance. Upon receipt of a written invoice, Tenant shall
reimburse Landlord for the premiums paid and other costs and expenses
incurred by Landlord to obtain and maintain such insurance and related
coverages (including without limitation, such coverages as may be required
by Landlord's mortgage lender or lien holder).
(b) Public Liability Insurance. Tenant, at its cost and expense,
shall maintain in full force and effect throughout the Lease Term a policy
of general public liability insurance naming Landlord as an additional
insured and covering any and all claims for injuries to, or death of,
persons and damage to, or loss of, property occurring in, on or about the
Leased Premises, in an amount not less than Two Million Dollars
($2,000,000) for injury to, or death of, any one person, Five Million
Dollars ($5,000,000) for injury to, or death of, more than one person in
the same accident or occurrence, and One Million Dollars ($1,000,000) for
damaged or lost property arising out of any one accident or occurrence. If
it becomes customary for other similar businesses in the Indianapolis
metropolitan area to carry higher limits of liability coverage, then
Tenant, upon request by Landlord, shall increase the foregoing coverage to
such customary limits.
(c) Personal Property Insurance. All of Tenant's trade fixtures,
equipment, inventory and other personal property (including without
limitation, property which Tenant stores for third parties), shall be kept
in or upon the Leased Premises at Tenant's sole risk and expense, and
Tenant, at its cost and expense, shall maintain in full force and effect
throughout the Lease Term fire and extended coverage insurance on such
trade fixtures, equipment, inventory and other personal property for their
full insurable value on a replacement cost basis. Tenant shall indemnify
and hold Landlord harmless from any and all claims, judgments, liabilities,
losses, costs and expenses (including without limitation, reasonable
attorneys' fees and court costs) arising from, or in connection with,
damage to, or loss of, such trade fixtures, equipment, inventory and other
personal property, unless such damage is caused by the intentional act or
willful misconduct of Landlord or its employees, contractors or agents.
(d) Workmen's Compensation. Tenant shall comply with the
provisions of the applicable workmen's compensation Laws and insure its
liability thereunder.
(e) Certificates of Insurance. For each type of insurance which
Tenant is required to maintain under this Lease, Tenant shall furnish to
Landlord an endorsed copy of such insurance policy showing that each such
type of insurance is in full force and effect and may not be modified or
canceled without thirty (30) days prior written notice to Landlord. All
insurance policies which Tenant is required to maintain under this Lease
shall be issued by companies reasonably satisfactory to Landlord.
(f) Waiver of Subrogation. Landlord and Tenant, respectively,
hereby waive and release any and all rights of recovery which either may
have against the other for any loss or damage, whether or not caused by any
alleged negligence of the other party, its employees, contractors, agents,
invitees or licensees, to the extent that such loss or damage is or would
be covered by any insurance required to be maintained under this Lease.
Each policy of insurance required under this Lease shall contain an
endorsement to such effect, waiving the insurer's right of subrogation
against the other party.
<PAGE> 9
(g) Responsibility for Damages. Subject to the terms and
conditions of the foregoing Subsection 14(f), Tenant assumes all risks and
responsibilities for injuries, death, damages or losses to or of person or
property (including without limitation, the Building, the Improvements and
any fixtures, equipment or systems which constitute a part of the Building
or the Improvements), unless caused by the intentional act or willful
misconduct of Landlord or its employees, contractors or agents, and Tenant
agrees to indemnify and hold Landlord harmless from and against any and all
claims, judgments, liabilities, losses, costs and expenses (including
without limitation, reasonable attorneys' fees and court costs) arising
from, or in connection with, the condition, use or control of the Leased
Premises.
(h) Landlord Indemnity. Subject to the terms and conditions of
the foregoing Subsection 14(f), Landlord agrees to indemnify and hold
Tenant harmless from and against any and all claims, judgments,
liabilities, losses, costs and expenses (including without limitation,
reasonable attorneys' fees and court costs) arising from, or in connection
with, the intentional act or willful misconduct of Landlord or its
employees, contractors or agents.
15. FIRE AND OTHER CASUALTY. In the event of damage to, or total
or partial destruction of, the Building or any fixtures, equipment or systems
which constitute a part of the Building by fire or other casualty, the
insurance proceeds, if any, which, as a result of such damage or destruction,
are payable under any fire and extended coverage insurance maintained by
Landlord shall be payable to, and be the sole property of, Landlord, and,
subject to the terms and conditions of this Section, Landlord shall cause the
prompt and diligent repair and replacement of the Building as soon as
reasonably possible to substantially the same condition as existed prior to
such damage or destruction; provided that Landlord shall not be obligated to
repair or replace any alterations, improvements or additions of or to the
Leased Premises by Tenant; and provided further that, if substantial damage or
destruction occurs during the last two (2) years of the Lease Term, then either
Landlord or Tenant, at its respective option, may terminate this Lease upon
fifteen (15) days' written notice to the other party, and all obligations
hereunder, except those due or mature, shall cease and terminate. Rent shall
abate proportionately (based upon the proportion that the unusable gross
leasable area of the Building due to damage or destruction bears to the total
Gross Leasable Area) during the time that the Building or any part thereof is
unusable by reason of any such damage to, or destruction of, the Building.
16. EMINENT DOMAIN. In the event that all or a substantial part
of the Leased Premises is taken or condemned for public or quasi-public use
under any statute or by the right of eminent domain, or that, in lieu thereof,
all or a substantial part of the Leased Premises is conveyed to a public or
quasi-public body under threat of condemnation, and such taking, condemnation
or sale renders the Leased Premises unsuitable for Tenant's normal business
use, then, at the option of either Landlord or Tenant exercised within fifteen
(15) days after such taking, condemnation or sale occurs, this Lease shall
terminate as of the date possession of all or such part of the Leased Premises
is conveyed to the condemning authority, and all obligations hereunder, except
those due or mature, shall cease and terminate. All compensation awarded or
paid for the taking or conveyance in lieu thereof shall belong to and be the
sole property of Landlord; provided that Landlord shall not be entitled to any
award made solely to the Tenant for loss of business or cost and expense of
relocation and removing trade fixtures.
17. DEFAULT BY TENANT.
(a) Events of Default. Each of the following shall be deemed to
be a default by Tenant:
(i) Tenant's failure to pay any amount of Rent when due;
(ii) Tenant's failure to observe or perform any other term,
condition or covenant of this Lease to be observed or performed by
Tenant;
(iii) Tenant's vacation or abandonment of the Leased Premises;
<PAGE> 10
(iv) The sale of Tenant's leasehold interest hereunder pursuant to
execution;
(v) The adjudication of Tenant as a bankrupt or insolvent;
(vi) The making by Tenant of a general assignment for the benefit of
creditors;
(vii) The appointment of a receiver for Tenant's property, if such
appointment is not vacated or satisfied within sixty (60) days from the
date of such appointment;
(viii) The appointment of a trustee or receiver for Tenant's property
in a reorganization, arrangement, bankruptcy or other insolvency
proceeding, if such appointment is not vacated or set aside within
sixty (60) days from the date of such appointment;
(ix) Tenant's filing of a voluntary petition in bankruptcy or for
reorganization or arrangement or the filing of an involuntary petition
in bankruptcy or for reorganization or arrangement against Tenant if
such involuntary petition is not vacated within thirty (30) days after
the filing thereof;
(x) Tenant's filing of an answer admitting bankruptcy or
insolvency or agreeing to reorganization or arrangement; or
. (xi) Any default by the tenant under the Adjoinder Lease, if such default is
not cured within the applicable cure period, if any, provided in the Adjoinder
Lease.
(b) Landlord's Right Upon Lessee's Default. In the event of any
default described in Clause (i) of foregoing Subsection 17(a) hereof and
the continuance of such a default after five (5) days' written notice from
Landlord to Tenant, or in the event of any default described in Clause (ii)
of foregoing Subsection 17(a) hereof and the continuance of such default
after thirty (30) days' written notice from Landlord to Tenant or in the
event of any other default described in foregoing Subsection 17(a) without
any demand or notice, Landlord, in addition to any other rights or remedies
at law or in equity, may exercise the following rights and remedies:
(i) elect to terminate this Lease;
(ii) in the event that Tenant has failed to perform any of its
covenants under this Lease (other than a covenant to pay Base Rent),
perform the covenant or covenants of Tenant which are in default
(entering upon the Leased Premises for such purpose, if necessary), and
Landlord's performance of any such covenant shall not be construed as a
waiver of the default of Tenant or of any other right or remedy of
Landlord in respect of such default, nor as a waiver of any term or
condition of this Lease; or
(iii) immediately re-enter upon the Leased Premises, remove all persons
and property therefrom, and store such property in a public warehouse or
elsewhere at the sole cost and expense and for the account of Tenant,
all without service of notice or resort to legal process but in
compliance with the applicable Laws, and without being deemed guilty of
trespass or becoming liable for any loss or damage which may be
occasioned thereby;
provided that Landlord may exercise the foregoing rights and remedies in the
event of any default described in Clause (i) of foregoing Subsection 17(a) and
the continuation of such default after five (5) days, without any written
notice, if Landlord already has delivered to Tenant two (2) or more notices of
a default described in Clause (i) of foregoing Subsection 17(a) within the last
one (1) year; provided further, if any default described in Clause (ii) of
foregoing Subsection 17(a) cannot be cured by Tenant within thirty (30) days
after receipt by Tenant of the required notice from Landlord, despite
reasonably
<PAGE> 11
diligent effort, then Landlord shall not exercise any of its rights and
remedies under this Subsection 17(b) with respect to such default, if
Tenant commences to diligently pursue a cure of such default within fifteen
(15) days after receipt of notice thereof and diligently pursues such cure
to completion.
(c) Re-Letting. In the event Landlord re-enters upon the Leased
Premises as provided in Clause (iii) of foregoing Subsection 17(b) hereof,
or takes possession of the Leased Premises pursuant to legal proceedings or
pursuant to any notice provided by applicable Law, Landlord either may
terminate this Lease, or, from time to time without terminating this Lease,
make alterations and repairs for the purpose of re-letting the Leased
Premises and re-let the Leased Premises or any part thereof for such term
or terms (which may extend beyond the term of this Lease) at such rental
and upon such other terms and conditions as Landlord deems advisable. Upon
each re-letting, all rentals received from such re-letting shall be applied
in the following order: first, to payment of costs and expenses incurred
by Landlord in connection with such re-entry or taking of possession and
making such reasonable alterations and repairs; second, to the payment of
Rent and any other outstanding indebtedness of Tenant to Landlord hereunder
or in connection herewith; and the remainder, if any, shall be held by
Landlord and applied in payment of future Rent as it becomes due and
payable hereunder. If the rentals received from such re-letting during any
month are less than the full amount of Rent payable hereunder during that
month, then Tenant shall pay any such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly. No re-entry or taking of
possession by Landlord of the Leased Premises shall be construed as an
election to terminate this Lease, or acceptance of a surrender of the
Leased Premises, unless a written notice of termination or acceptance of
surrender is delivered by Landlord to Tenant. Notwithstanding any
re-letting without termination, Landlord at any time thereafter may elect
to terminate this Lease for Tenant's previous default.
(d) Damages Upon Termination. If Landlord at any time terminates
this Lease for any default by Tenant, then, in addition to any other rights
and remedies Landlord may have, Landlord may recover from Tenant all
damages Landlord may incur by reason of such default (including without
limitation, costs and expenses in connection with a re-entry or taking of
possession, making alterations and repairs for the purpose of reletting,
reasonable attorneys' fees, and the value at the time of such termination
of the excess, if any, of the amount of Rent for the remainder of the Lease
Term over the then reasonable rental value of the Leased Premises for the
remainder of the Lease Term). All such amounts shall be immediately due
and payable from Tenant to Landlord.
(e) Indemnification Upon Default. Upon any default by Tenant
hereunder, Tenant shall indemnify and hold Landlord harmless from any and
all claims, judgments, liabilities, losses, costs and expenses (including
without limitation, reasonable attorneys' fees and court costs) incurred by
Landlord and arising from, or in connection with, a default by Tenant under
this Lease or exercising Landlord's rights and remedies with respect to
such default.
18. SURRENDER. Upon the expiration of the Lease Term or the
earlier termination of this Lease, Tenant shall quit and surrender to Landlord
the Leased Premises and, except as expressly set forth below in this Section,
all property affixed to the Leased Premises, broom clean, and in good order,
condition and repair, except for ordinary wear and tear, the effects of damage
to, or the total or partial destruction of, the Building by fire or other
casualty which Landlord is obligated to repair or replace; provided that,
subject to Exhibit F, Tenant shall remove any or all of its property which
Landlord directs Tenant to remove, and, upon Tenant's failure to do so,
Landlord may cause all or any item of such property to be removed at Tenant's
cost and expense. Notwithstanding anything to the contrary set forth herein,
Tenant shall not be required to surrender any of Tenant's trade fixtures or
personalty, whether or not affixed to the Leased Premises. Tenant shall pay
all costs and expenses of any such removal and of the repair of any damage to
the Leased Premises caused by such removal. Landlord acknowledges that Tenant
shall have the right to grant to any third party a security interest in and to
its personalty and trade fixtures. Tenant's obligation to observe and perform
these covenants shall survive the expiration of the Lease Term or earlier
termination of this Lease.
<PAGE> 12
19. SUBORDINATION. This Lease is and shall be subordinate to the
lien of any mortgage or any other method of financing or refinancing now or
hereafter encumbering the Leased Premises, the Building or the Parcel
("Mortgage Lien"), to all advances made, or hereafter to be made, upon the
security thereof and to any declaration of covenants, restrictions and
easements with respect to the Leased Premises and the premises leased to Tenant
under the Adjoinder Lease ("Adjoinder Premises"). No act or agreement executed
by Tenant shall be necessary to effect such subordination. Nevertheless, upon
request by Landlord, Tenant shall execute and deliver a subordination agreement
in the form attached hereto as Exhibit G or otherwise in form and substance as
reasonably requested by Landlord or as reasonably requested by any mortgage
lender or lien holder if such subordination agreement provides that the rights
of Tenant under this Lease and the possession of the Leased Premises by Tenant
shall not be disturbed so long as Tenant is not in default hereunder. If any
proceedings are brought for the foreclosure of any Mortgage Lien, Tenant shall
(i) attorn to the purchaser upon any sale resulting directly or indirectly from
such proceedings and (ii) recognize the purchaser as Landlord hereunder. Upon
request by Landlord, Tenant shall execute and deliver an estoppel certificate
in the form attached hereto as Exhibit H or otherwise in form and substance as
reasonably requested by Landlord or as reasonably requested by any purchaser,
mortgage lender or lien holder. Upon request by Tenant, Landlord shall execute
and deliver an estoppel certificate in form and substance as reasonably
requested by Tenant or any lender. Tenant acknowledges that the Leased
Premises may be (i) subjected to the same mortgage or other method of financing
or refinancing as that to which the Adjoinder Premises is subjected or (ii)
subjected to separate mortgages or other methods of financing or refinancing.
Accordingly, Tenant acknowledges that (i) this Lease and the Adjoinder Lease
may be subordinate to the same or different mortgages or other methods of
financing or refinancing, and (ii) this Lease, the Adjoinder Lease and the
rents payable hereunder and thereunder may be assigned to the same or different
mortgage lenders or lien holders.
20. COVENANT OF QUIET ENJOYMENT. Landlord represents and
warrants that (i) it has all necessary right, title and interest in the Leased
Premises to enter into this Lease and grant Tenant the tenancy hereunder and
(ii) as of the date hereof, Landlord owns the Leased Premises in fee simple,
subject only to the matters identified on Exhibit I, which matters shall
constitute permitted encumbrances ("Permitted Encumbrances"). Landlord agrees
that if Tenant observes and performs all of its covenants hereunder, then, at
all times during the Lease Term, Tenant shall have the peaceable and quiet
enjoyment of possession of the Leased Premises, without any manner of
hindrance.
21. MECHANIC'S LIENS. Tenant shall not suffer or cause
the filing of any mechanic's lien against the Leased Premises. If any
mechanic's lien is filed against the Leased Premises or any part thereof for
work claimed to have been done for, or material claimed to have been furnished
to, Tenant, other than Landlord's Work, then Tenant shall (i) cause such
mechanic's lien to be discharged of record within thirty (30) days after notice
of the filing by bonding or as provided or required by law or (ii) provide
evidence that the lien is being contested by proceedings adequate to prevent
foreclosure of the lien, together with satisfactory indemnity (in an amount
equal to at least one hundred fifty percent (150%) of the claimed lien) to
Landlord within thirty (30) days after notice of the filing thereof. Tenant
shall indemnify and save Landlord harmless from all claims, judgments,
liabilities, losses, costs and expenses (including without limitation,
reasonable attorneys' fees and court costs) incurred by Landlord as a result
of, or in connection with, any such mechanic's lien. All liens suffered or
caused by Tenant shall attach to Tenant's interest only. Nothing in this Lease
shall be deemed or construed to constitute consent to, or request of, any party
for the performance of any work for, or the furnishing of any materials to,
Tenant, nor as giving Tenant the right or authority to contract for, authorize
or permit the performance of any work or the furnishing of any materials that
would permit the attaching of a mechanic's lien.
22. NOTICES. Any notice, statement, estimate, bill,
demand, request or consent required or permitted to be given or delivered by
either party to this Lease shall be in writing and shall be deemed to have been
duly given or delivered if delivery is made in person or if sent by United
States certified or registered mail, return receipt requested, or by a national
overnight courier service, addressed to the other party as follows:
Landlord: c/o Browning Investments, Inc. Tenant:
Capital Center North Tower -----------------
-------------
<PAGE> 13
251 N. Illinois Street, Suite 200 -----------------
Indianapolis, Indiana 46204 -----------------
Attention: F. Richard Rembusch -----------------
Copy to: Karl P. Haas Copy to:
Baker & Daniels -----------------
300 N. Meridian Street, Suite 2700 -----------------
Indianapolis, Indiana 46204 -----------------
-----------------
Any party may change its address for notice from time to time by delivering
notice to the other party as provided above. The date of delivery of any
notice sent by mail shall be the date upon which such notice is deposited in a
post office of the United States Postal Service.
23. MISCELLANEOUS PROVISIONS.
(a) Memorandum of Lease. The parties hereto shall not record this
Lease in the Marion County Recorder's Office, but each party shall execute
upon request of the other a "memorandum of lease" suitable for recording.
All costs and expenses associated with preparing, executing and recording a
"memorandum of lease" shall be borne by the party requesting execution of
such document.
(b) Relationship of Parties. Nothing contained herein shall be
deemed or construed by the parties hereto or by any third party as creating
between the parties hereto the relationship of principal and agent,
partnership, joint venture, or any relationship other than the relationship
of landlord and tenant.
(c) Waivers of Covenants. No waiver of any covenant, term or
condition or the breach of any covenant, term or condition of this Lease
shall be deemed to constitute a waiver of any subsequent breach of such
covenant, term or condition nor justify or authorize a non-observance upon
any occasion of such covenant, term or condition or any other covenant,
term or condition, and the acceptance of Rent by Landlord at any time when
Tenant is in default of any covenant, term or condition shall not be
construed as a waiver of such default or any right or remedy of Landlord on
account of such default.
(d) Accord and Satisfaction. No payment by Tenant or receipt by
Landlord of a lesser amount than the Rent due hereunder shall be deemed to
be other than on account of the Rent first due hereunder; provided that
Landlord shall not apply payments by Tenant to items of Rent with respect
to which there exists a good faith dispute of which Tenant has delivered to
Landlord a written notice describing with particularity the nature of such
dispute. No endorsement or statement on any check or letter accompanying
any check or payment of Rent shall be deemed to be an accord and
satisfaction, and Landlord may accept any such check or payment without
prejudice to the right of Landlord to recover the balance of such Rent or
to pursue any other right or remedy.
(e) Remedies Cumulative. The rights and remedies of Landlord and
Tenant hereunder shall be cumulative, and no one of them shall be deemed or
construed as exclusive of any other or of any right or remedy provided by
law or in equity. The exercise of any one such right or remedy by the
Landlord or Tenant shall not impair its standing to exercise any other such
right or remedy.
(f) Successors and Assigns. Subject to the terms and conditions
of Section 12 hereof, this Lease and all of the covenants, terms and
conditions hereof shall inure to the benefit of, and be binding upon, the
respective heirs, executors, administrators, successors and assigns of
Landlord and Tenant, except as otherwise expressly provided herein.
(g) Construction of Lease. Whenever in this Lease a singular word
is used, it shall also include the plural wherever required by the context
and vice versa. Exhibits A-1, A-2, A-3, B-1, B-2, C, D, E, F, G, H and I
are incorporated herein by reference. This Lease shall be construed in
<PAGE> 14
accordance with the laws of the State of Indiana. The captions of this
Lease are for convenience only and do not in any way limit or alter the
terms and conditions of this Lease. All references in this Lease to
periods of days shall be construed to refer to calendar, not business,
days. Notwithstanding anything set forth herein, if Landlord is delayed
in, or prevented from, completing Landlord's Work on or before the
applicable dates set forth in Section 6 hereof, correcting "punch-list"
items within the applicable periods specified under Section 9 hereof or
otherwise observing or performing any of its covenants hereunder as the
result of an act or omission of Tenant or any other cause which is not
within the control of Landlord (including without limitation, inclement
weather and the unavailability of materials, equipment, services or labor),
then such completion, correction, observation or performance shall be
excused for the period of days that such completion, correction,
observation or performance is delayed or prevented, and the dates set forth
in Section 6 hereof, the periods specified under Section 9 hereof and other
deadlines for observation and performance, as applicable, shall be extended
for the same period.
(h) Prior Agreements. All prior representations, promises and
undertakings by or between the parties hereto with respect to the subject
matter of this Lease are merged into, and expressed in, this Lease, and any
and all prior agreements between such parties with respect thereto are
hereby canceled. This Lease shall not be amended, modified, or
supplemented, except by a written agreement duly executed by both Landlord
and Tenant.
(i) Severability. The invalidity or unenforceability of any
particular provision of this Lease shall not affect the other provisions,
and this Lease shall be construed in all respects as if such invalid or
unenforceable provision had not been contained herein.
(j) Counterparts. This Lease may be executed in separate
counterparts, each of which when so executed shall be an original, but all
of such counterparts shall together constitute but one and the same
instrument.
(k) Authority. Each person executing this Lease other than on
behalf of themselves represents and warrants that he or she has been duly
authorized to execute and deliver this Lease by the entity for which he or
she is signing, and this Lease is the valid and binding agreement of such
entity, enforceable in accordance with its terms.
(l) Landlord's Consent. If Landlord breaches any obligation of
reasonableness, then the sole remedy of Tenant shall be an action for
specific performance or injunction to enforce the obligation, and Tenant
shall not be entitled to any monetary damages for, or in connection with, a
breach of such obligation, unless the breach is willful or in bad faith, in
which event Tenant shall be entitled to all remedies at law or in equity.
(m) Environmental Condition. Landlord represents and warrants to
Tenant that, to Landlord's actual knowledge and except as disclosed by the
environmental assessment reports prepared with respect to the Leased
Premises and provided to Tenant, (i) no Hazardous Substances are present or
were installed, exposed, released or discharged in, on or under the Leased
Premises at any time during or prior to Landlord's ownership thereof, and
no prior owner or occupant of the Leased Premises has used Hazardous
Substances therein, (ii) no UST's for gasoline or any other Hazardous
Substances are or were located on the Leased Premises at any time during or
prior to Landlord's ownership thereof, and (iii) the Leased Premises has
not been used or operated in violation of Laws governing Hazardous
Substances.
(n) Environmental Indemnity. Landlord agrees to indemnify, defend
(by counsel reasonably acceptable to Tenant), protect and hold harmless
Tenant and any party affiliated with Tenant from and against any and all
claims, judgments, liabilities, losses, costs and expenses (including
without limitation, reasonable attorneys' fees and court costs) arising
from, or in connection with, (i) any storage or usage of any Hazardous
Substances by Landlord (or its employees, agents, contractors, invitees or
licensees) in, on or about the Leased Premises or (ii) any transportation
of any Hazardous Substances to
<PAGE> 15
or from the Leased Premises by Landlord (or its employees, agents,
contractors, invitees or licensees). The claims, judgments, liabilities,
losses, costs and expenses from and against which Landlord has agreed to
indemnify, defend, protect and hold harmless Tenant and any party
affiliated with Tenant under this Subsection shall include the following:
(i) any obligation or liability of Landlord or Tenant under any Law to
remove any Hazardous Substance or contaminated soil or groundwater from the
Leased Premises, "clean up" any contamination of the soil or the
groundwater in, on or under the Leased Premises, or perform any remediation
of or for the Leased Premises; (ii) all charges, fines or penalties imposed
by governmental authority or under any Law governing Hazardous Substances;
and (iii) all claims by, and liabilities to, any third party. The
obligations of Landlord under this Subsection shall survive the expiration
or earlier termination of this Lease.
(o) Landlord Cooperation. Landlord shall provide reasonable
cooperation and appropriate assistance in connection with Tenant obtaining
real estate tax abatement (the "Governmental Incentives") (including
without limitation, executing and joining in all necessary applications,
petitions and proceedings, permitting Tenant to file and pursue such
applications, petitions and proceedings in the name of Landlord and
executing such other and incidental documents, instruments and agreements
as may be necessary in connection with obtaining the Governmental
Incentives); provided that Landlord shall not be obligated to incur any
unreimbursed out-of-pocket costs or expenses in connection with such
cooperation and assistance; provided further that, if Tenant is unable to
obtain any of the Governmental Incentives, then this Lease shall remain in
full force and effect, without any amendment or modification, and without
any change or reduction in the Rent payable by Tenant under this Lease or
the obligation of Tenant to observe and perform all of the terms,
conditions and covenants of this Lease.
24. LANDLORD CONVEYANCE. Landlord shall not cause or permit any
conveyance or transfer of fee title to the Leased Premises, without the prior
written consent of Tenant, which consent shall not be withheld or delayed
unreasonably; provided that the terms and conditions of this Section shall not
apply to (i) any changes in the ownership of Landlord, so long as Michael G.
Browning ("Browning") remains in control of Landlord or (ii) conveyances or
transfers to another entity controlled by Browning or which result from the
death of Browning; and provided further that, after the Warranty Period, the
terms and conditions of this Section shall not apply to conveyances or
transfers to an individual or entity which has the financial wherewithal at the
time of the conveyance or transfer to satisfy the obligations of Landlord under
this Lease. Notwithstanding anything set forth herein, the terms and
conditions of this Section shall not apply to, or limit or affect in any
manner, (i) any Mortgage Lien, (ii) the right or ability of Landlord to finance
or refinance the Leased Premises, the Building or the Parcel and encumber the
Leased Premises with a Mortgage Lien securing such financing or refinancing,
(iii) the rights and remedies of any mortgage lender or lien holder under, or
with respect to, a Mortgage Lien or the financing or refinancing which the
Mortgage Lien secures or the ability of the mortgage lender or lien holder to
exercise such remedies (including without limitation, foreclosure of any
Mortgage Lien or acceptance of a deed in lieu of foreclosure), or (iv) the
performance by Tenant of its obligations under Section 19. Notwithstanding
anything set forth herein, after fee title to the Leased Premises has been
conveyed or transferred as permitted by this Section to an individual or entity
who or which is not Browning or controlled by Browning, this Section shall have
no further force or effect.
25. PURCHASE OPTION. So long as Tenant is not in default
hereunder, Tenant shall have a one-time option to purchase the Leased Premises
for Five Million One Hundred Ninety-Two Thousand Two Hundred Ninety-Five
Dollars ($5,192,295.00) ("Purchase Price") upon the expiration of the Initial
Lease Term. Tenant shall exercise its option to purchase by providing written
notice thereof to Landlord at least nine (9) months prior to the expiration of
the Initial Lease Term ("Exercise Date"). If Tenant fails to exercise its
option to purchase on or before the Exercise Date, then Tenant's option to
purchase the Leased Premises shall terminate and have no further force or
effect, without notice from Landlord. If Tenant exercise its option to
purchase on or before the Exercise Date and otherwise in accordance with the
terms and conditions of this Section, then, on the day that the Initial Lease
Term expires, (i) Tenant shall pay the Purchase Price to Landlord in cash or by
wire transfer, (ii) Landlord shall convey the Leased Premises to Tenant by
warranty deed, subject only to Real Estate Taxes and Park Assessments, the
Permitted Encumbrances and any rights, interests or matters arising under, by
or
<PAGE> 16
through Tenant or to which Tenant has consented, and (iii) Landlord and Tenant
shall execute and deliver such other documents and instruments as are customary
to close a sale and purchase of commercial real estate in the Indianapolis
metropolitan area. Notwithstanding anything set forth herein, (i) Tenant may
not exercise its option to purchase the Leased Premises, unless Tenant
simultaneously exercises its option under the Adjoinder Lease to purchase the
Adjoinder Premises, and, (ii) after Tenant exercises its options to purchase
both the Lease Premises and the Adjoinder Premises, the obligation of Landlord
to convey the Leased Premises to Tenant is conditioned upon a simultaneous
closing of the purchase by Tenant of both the Leased Premises and the Adjoinder
Premises, with a simultaneous payment by Tenant of both the Purchase Price and
the price specified in the Adjoinder Lease to purchase the Adjoinder Premises.
<PAGE> 17
IN WITNESS WHEREOF, the parties have executed or caused the
execution of this Lease by their respective officers duly authorized as of the
day and year first above written.
LANDLORD:
CORPORATE DRIVE ASSOCIATES, LLC, an
Indiana limited liability company
By: /s/ Michael Browning
-------------------------------------
Printed:
--------------------------------
Title:
----------------------------------
TENANT:
BRIGHTPOINT, INC., a Delaware corporation
By: /s/ J. Mark Howell
-------------------------------------
Printed: J. Mark Howell
--------------------------------
Title: CFO
----------------------------------
<PAGE> 18
Exhibit A-1
Page 1 of 2
[BROWNING INVESTMENT, INC. LOGO]
[PLOT MAP]
CORPORATE CENTER NORTH
SOUTH EAST CORNER I-465 AND WEST 71st
DEVELOPMENT PLAN
<PAGE> 19
Exhibit A-1
Page 2 of 2
[Plot Map]
<PAGE> 20
Exhibit A-2
Page 1 of 3
[Plot Map]
<PAGE> 21
Exhibit A-2
Page 2 of 3
LAND DESCRIPTION
Corporate Center North
a portion of the Brightpoint, Inc, site
version 1
20 JUN 96
A part of the Southeast Quarter of Section 35, Township 17 North, Range 2 East
located in Pike Township, Marion County, Indiana being bounded as follows:
Commencing at the Northeast Corner of the Southwest Quarter of the
Northeast Quarter of Section 35, Township 17 North, Range 2 East; thence South
00 degrees 03 minutes 11 seconds West (assumed bearing) 977.41 feet along the
East Line of the Southwest Quarter of sold Northeast Quarter; thence South 88
degrees 55 minutes 30 seconds West 100.02 feet parallel with the North Line of
the Southwest Quarter of sold Northeast Quarter to the western right-of-way
line of Corporate Drive (ref: see the GRANT OF RIGHT-OF-WAY recorded as
instrument #1993-0048053 in the office of the Recorder of Marion County,
Indiana); thence South 00 degrees 03 minutes 11 seconds West 800.27 feet along
the western right-of-way line of Corporate Drive to the southeastern corner of
the non-exclusive easement for ingress and egress called "Parted II" on Exhibit
"B" of the WARRANTY DEED recorded as instrument #89 84962 in said Recorder's
office, the next four (4) courses are along the southern boundary of said
easement: 1) thence North 89 degrees 56 minutes 49 seconds West 111.42 feet 2)
thence South 66 degrees 33 minutes 11 seconds West 205.32 feet; 3) thence North
89 degrees 56 minutes 49 seconds West 127.89 feet; 4) thence South 82 degrees
45 minutes 11 seconds West 43.04 feet; thence South 02 degrees 04 minutes 45
seconds East 572.96 feet (parallel with the adjacent portion of the eastern
limited access right-of-way line of I-465; ref: see the WARRANTY DEED recorded
as instrument #67 37340 in said Recorder's office) to the southwestern corner
of the 5.440 acre tract of land described in the WARRANTY DEED recorded as
instrument #1995-00075758 in said Recorder's office; thence South 88 degrees 56
minutes 49 seconds East 113.73 feet along the southern boundary of said 6.440
acre tract of land to the POINT OF BEGINNING of this description; thence South
89 degrees 56 minutes 48 seconds East 243.82 feet along the southern boundary
of said 6.440 acre tract of land; thence North 02 degrees 02 minutes 57 seconds
West 160.71 feet perpendicular to the southern face of the building setting
upon said 5.440 acre tract of land to a point on the easterly extension of the
southern face of said building that is 1.00 feet east of the southeastern
corner of said building; thence South 87 degrees 57 minutes 03 seconds West
243.65 feet along the easterly extension of the southern face of said building,
along the southern face of said building, and along the westerly extension of
the southern face of said build to a point that is 1.00 feet west of the
southwestern corner of said building; thence South 02 degrees 02 minutes 57
seconds East 151.76 feet perpendicular to the southern face of said building to
the POINT OF BEGINNING containing 0.874 acres, more or less.
<TABLE>
<S><C>
AMERICAN CONSULTING ENGINEERS, INC. DATE: JUNE 20, 1996 SHEET NO.
4165 Millersville Road DRAWN BY: CWW 2 OF 2
INDIANAPOLIS INDIANA JOB NO. 95-302
(317)547-5580 (C) Copyright 1996 48205-2694
</TABLE>
<PAGE> 22
Exhibit A-2
Page 3 of 3
[Plot Map]
LAND DESCRIPTION
Corporate Center North
2.591 Acre Tract
version 2.1
June 24, 1995
A part of the Southeast Quarter of Section 35, Township 17 North, Range 2 East
located in Pike Township, Marion County, Indiana being bounded as follows:
Commencing at the Northeast Corner of the Southwest Quarter of the Northeast
Quarter of Section 35, Township 17 North, Range 2 East; hence South 00 degrees
03 minutes 11 seconds West (assumed bearing) 977.41 feet along the East Line of
the Southwest Quarter of said Northeast Quarter; thence South 88 degrees 55
minutes 30 seconds West 100.02 feet parallel with the North Line of the
Southwest Quarter of said Northeast Quarter to the western right-of-way line of
Corporate Drive (ref. see the GRANT OF RIGHT-OF-WAY recorded as instrument
1993-0048053 in the office of the Recorder of Horton County, Indiana): thence
South 00 degrees 03 minutes 11 seconds West 800.27 feet along the western
right-of-way line of Corporate Drive to the southeastern corner of the
non-exclusive easement for ingress and egress called "Parcel 11" on Exhibit
"B" of the WARRANTY DEED recorded as instrument #89 84962 in said Recorder's
office, the next four (4) courses are along the southern boundary of said
easement: 1) thence North 89 degrees 56 minutes 48 seconds West 111.42 feet; 2)
thence South 66 degrees 33 minutes 11 seconds West 205.52 feet; 3) thence North
89 degrees 56 minutes 49 seconds West 127.89 feet; 4) thence South 82 degrees
48 minutes 11 seconds West 43.04 feet; thence South 02 degrees 04 minutes 45
seconds East 572.96 feet (parallel with the adjacent portion of the eastern
limited access right-of-way line of 1-465; ref. see the WARRANTY DEED recorded
as instrument #67 37348 in said Recorder's office) to the POINT OF BEGINNING of
this description: thence South 02 degrees 04 minutes 45 seconds East 283.24
feet: thence North 89 degrees 57 minutes 02 seconds East 401.59 feet
perpendicular to the East Line of the West Half of the Southeast Quarter of
said Section 35 to the western right-of-way line of Corporate Drive, the next
three (3) courses are along the western right-of-way line of Corporate Drive:
1) thence North 11 degrees 32 minutes 58 seconds West 16.02 feet to the point
of curvature of curve to the right, said point of curvature being South 78
degrees 27 minutes 02 seconds West 533.22 feet from the radius point of said
curve; 2) thence northerly 220.87 feet along said curve to its point of
tangency, said point of tangency being North 77 degrees 48 minutes 59 seconds
West 533.22 feet from the radius point of said curve; 3) thence North 12
degrees 11 minutes 01 second East 48.42 feet to a point being South 89 degrees
56 minutes 49 seconds East (perpendicular to the East Line of the Southwest
Quarter of said Northeast Quarter) of the point of beginning: thence North 89
degrees 58 minutes 49 seconds West 420.09 feet perpendicular to the East Line
of the Southwest Quarter of said Northeast Quarter to the POINT OF BEGINNING
containing 2.591 acres, more or less.
AMERICAN CONSULTING ENGINEERS, INC.
4165 MILLERSVILLE ROAD
INDIANAPOLIS
(317)547-5580
(C) Copyright 1996
INDIANA
48205-2988
DATE: JUNE 21, 1996
DRAWN BY: CWW
JOB NO. 95-302
SHEET NO. 1 of 1
<PAGE> 23
EXHIBIT A-3
SITE PLAN OF BUILDING
SEE CONSTRUCTION PLANS PREPARED BY
AMERICAN CONSULTING ENGINEERS, INC.
<PAGE> 24
EXHIBIT B-1
PREVAILING BASE RENT
Estimation of Base Rent Extension Terms. If Tenant exercises its
option to extend the term of this Lease pursuant to Section 2 hereof, then, on
or before the date eight (8) months prior to the Extension Date, Landlord shall
give Tenant written notice of the "Prevailing Base Rent" (as defined below)
("Prevailing Rent Notice"). The Prevailing Base Rent shall equal the greater
of (i) the per annum rate of minimum rent on or about the Extension Date for
comparable distribution/warehouse space in buildings at comparable locations in
the Park or within a radius of ten (10) miles from the Lease Premises or (ii)
during the First Extension Term, Six and 35/100 Dollars ($6.35), and, during
the Second Extension Term, Seven and 01/100 Dollars ($7.01). Within thirty
(30) days after Landlord delivers the Prevailing Rent Notice to Tenant, Tenant
shall give Landlord written notice accepting or rejecting the Prevailing Base
Rent. If Tenant fails to so notify Landlord, then Tenant shall be deemed to
have accepted the Prevailing Base Rent and the term of this Lease shall be
extended pursuant to Section 2 of this Lease. If Tenant rejects the Prevailing
Base Rent in writing within such thirty (30) day period, as provided above,
then the term of this Lease shall not be extended, and Tenant shall surrender
the Leased Premises pursuant to Section 18 of this Lease. The Prevailing Base
Rent, so established above, shall be the Base Rent hereunder during the First
Extension Term and/or Second Extension Term, as applicable, and shall be
subject to adjustment for the Second Extension Term, as provided above. Base
Rent shall be payable during any extension or holdover period on the same terms
and conditions as during the Initial Lease Term.
<PAGE> 25
EXHIBIT B-2
(Building Expansion)
BASE RENT SCHEDULE
Commencement Date
through Year 5 $5.25 per gross square foot*
Years 6 through 10 $5.75 per gross square foot*
Years 11 through 15,
if applicable Determined pursuant to Exhibit B-1
Years 16 through 20,
if applicable Determined pursuant to Exhibit B-1
* based on seventy-seven thousand six hundred eighty (77,680) square feet of
Gross Leasable Area.
<PAGE> 26
EXHIBIT C
Construction Schedule
Substantial Completion November 30, 1996
EXHIBIT D
Landlord's Work
See Construction Plans Prepared by
American Consulting Engineers, Inc.
EXHIBIT E
Acceptance Letter
This Exhibit is the same as Exhibit E in the Adjoinder Lease.
EXHIBIT F
None except as mutually agreed by Landlord and Tenant
EXHIBIT G
Subordination, Non-Disturbance and Attornment Agreement
This Exhibit is the same as Exhibit F in the Adjoinder Lease.
EXHIBIT H
Tenant Estoppel Certificate
This Exhibit is the same as Exhibit G in the Adjoinder Lease.
EXHIBIT I
Permitted Encumbrances
The permitted encumbrances are the same as provided for in Exhibit H
to the Adjoinder Lease, subject to relocation of the utility easement to the
west boundary of the southern parcel and subject to the Declaration of
Easements and Covenants between the Lease Premises and the Adjoinder Premises.
<PAGE> 1
EXECUTION COPY
MULTICURRENCY CREDIT AGREEMENT
Dated as of June 24, 1997
among
BRIGHTPOINT, INC.,
BRIGHTPOINT INTERNATIONAL LTD.,
THE SUBSIDIARY BORROWERS FROM TIME TO TIME PARTY HERETO,
THE GUARANTORS FROM TIME TO TIME PARTY HERETO,
THE FINANCIAL INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS LENDERS,
THE FIRST NATIONAL BANK OF CHICAGO,
as Administrative Agent
and
BANK ONE, INDIANA, NATIONAL ASSOCIATION,
as Syndication Agent
<PAGE> 2
TABLE OF CONTENTS
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<TABLE>
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ARTICLE I: DEFINITIONS................................................. 1
1.1 Certain Defined Terms........................................ 1
1.2 Supplemental Disclosure...................................... 25
1.3 Currency Equivalents......................................... 25
ARTICLE II: THE CREDITS................................................. 25
2.1 Revolving Loans to Brightpoint and BPI....................... 25
2.2 Swing Line Loans............................................. 26
2.3 Alternate Currency Loans..................................... 27
2.4 Alternate Currency Swing Line Loans.......................... 29
2.5 Optional Payments; Mandatory Prepayments..................... 31
(A) Optional Payments..................................... 31
(B) Mandatory Prepayments................................. 31
2.6 Reduction of Commitments; Requests for New Alternate
Currency Facilities........................................ 32
2.7 Method of Borrowing.......................................... 32
2.8 Method of Selecting Types and Interest Periods
for Advances; Determination of Applicable Margins.......... 33
(a) Method of Selecting Types and Interest Periods
for Advances.......................................... 33
(b) Determination of Applicable Margins,
Applicable Letter of Credit Fee
and Applicable Facility Fee........................... 34
2.9 Minimum Amount of Each Advance............................... 35
2.10 Method of Selecting Types and Interest Periods
for Conversion and Continuation of Advances............... 36
(A) Right to Convert...................................... 36
(B) Automatic Conversion and Continuation................. 36
(C) No Conversion Post-Default or Post-Unmatured Default.. 36
(D) Conversion/Continuation Notice........................ 36
2.11 Default Rate................................................. 36
2.12. Terms of Alternate Currency Facilities....................... 36
2.13 Method of Payment............................................ 42
2.14 Notes, Telephonic Notices.................................... 43
2.15 Promise to Pay; Interest and Fees; Interest Payment Dates;
Interest and Fee Basis; Taxes; Loan and Control Accounts..... 44
(A) Promise to Pay........................................ 44
(B) Interest Payment Dates................................ 44
(C) Fees.................................................. 44
(D) Interest and Fee Basis................................ 44
(E) Taxes................................................. 45
(F) Loan Account.......................................... 48
(G) Control Account....................................... 48
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<TABLE>
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(H) Entries Binding....................................... 49
2.16 Notification of Advances, Interest Rates, Prepayments and
Aggregate Revolving Loan Commitment Reductions............ 49
2.17 Lending Installations....................................... 49
2.18 Non-Receipt of Funds by the Applicable Agent................ 49
2.19 Termination Date............................................ 50
2.20 Replacement of Certain Lenders.............................. 50
2.21 Letter of Credit Facility................................... 51
2.22 Letter of Credit Participation.............................. 51
2.23 Reimbursement Obligation.................................... 52
2.24 Cash Collateral............................................. 52
2.25 Letter of Credit Fees....................................... 53
2.26 Indemnification; Exoneration................................ 53
2.27 Judgment Currency........................................... 54
2.28 Market Disruption; Deposits Unavailable, Interest Rate
Unascertainable or Inadequate; Impracticability........... 55
2.29 Subsidiary Borrowers........................................ 56
ARTICLE III: CHANGE IN CIRCUMSTANCES.................................... 56
3.1 Yield Protection............................................ 56
3.2 Changes in Capital Adequacy Regulations..................... 57
3.3 Availability of Types of Advances........................... 57
3.4 Funding Indemnification..................................... 58
3.5 Lender Statements; Survival of Indemnity.................... 58
ARTICLE IV: CONDITIONS PRECEDENT....................................... 59
4.1 Initial Advances and Letters of Credit...................... 59
4.2 Each Advance and Letter of Credit........................... 59
4.3 Conditions Precedent to Initial Borrowing by each
Subsidiary Borrower....................................... 59
ARTICLE V: REPRESENTATIONS AND WARRANTIES.............................. 60
5.1 Organization; Powers........................................ 60
5.2 Authority................................................... 60
5.3 No Conflict; Governmental Consents.......................... 61
5.4 Financial Statements........................................ 61
5.5 No Material Adverse Change.................................. 62
5.6 Taxes....................................................... 62
(A) Tax Examinations..................................... 62
(B) Payment of Taxes..................................... 62
5.7 Litigation; Loss Contingencies and Violations............... 62
5.8 Subsidiaries................................................ 63
5.9 ERISA....................................................... 63
5.10 Accuracy of Information..................................... 63
</TABLE>
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5.11 Securities Activities......................................... 64
5.12 Material Agreements........................................... 64
5.13 Compliance with Laws.......................................... 64
5.14 Assets and Properties......................................... 64
5.15 Statutory Indebtedness Restrictions........................... 64
5.16 Post-Retirement Benefits...................................... 64
5.17 Insurance..................................................... 65
5.18 Contingent Obligations........................................ 65
5.19 Restricted Junior Payments.................................... 65
5.20 Labor Matters................................................. 65
5.21 Environmental Matters......................................... 65
5.22 Foreign Employee Benefit Matters.............................. 66
ARTICLE VI: COVENANTS................................................... 66
6.1 Reporting..................................................... 66
(A) Financial Reporting.................................... 66
(B) Notice of Default...................................... 68
(C) Lawsuits............................................... 68
(D) Insurance.............................................. 68
(E) ERISA Notices.......................................... 68
(F) Labor Matters.......................................... 70
(G) Other Indebtedness..................................... 70
(H) Other Reports.......................................... 70
(I) Environmental Notices.................................. 70
(J) Other Information...................................... 70
6.2 Affirmative Covenants......................................... 71
(A) Existence, Etc......................................... 71
(B) Powers................................................. 71
(C) Compliance with Laws, Etc.............................. 71
(D) Payment of Taxes and Claims; Tax Consolidation......... 71
(E) Insurance.............................................. 71
(F) Inspection of Property; Books and Records; Discussions. 72
(G) Insurance and Condemnation Proceeds.................... 72
(H) ERISA Compliance....................................... 72
(I) Maintenance of Property................................ 73
(J) Environmental Compliance............................... 73
(K) Use of Proceeds........................................ 73
(L) Foreign Employee Benefit Compliance.................... 73
(M) Additional Guarantors.................................. 73
(N) Post-Closing Requirements.............................. 73
6.3 Negative Covenants............................................ 73
(A) Indebtedness........................................... 74
(B) Sales of Assets........................................ 74
(C) Liens.................................................. 75
(D) Investments............................................ 75
</TABLE>
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(E) Contingent Obligations................................ 76
(F) Restricted Junior Payments............................ 76
(G) Conduct of Business; Subsidiaries; Acquisitions....... 77
(H) Transactions with Shareholders and Affiliates......... 78
(I) Restriction on Fundamental Changes.................... 78
(J) Sales and Leasebacks.................................. 78
(K) Margin Regulations.................................... 78
(L) ERISA................................................. 78
(M) Issuance of Equity Interests.......................... 79
(N) Organizational Documents.............................. 79
(O) Other Indebtedness.................................... 79
(P) Fiscal Year........................................... 79
(Q) Hedging Obligations................................... 79
6.4 Financial Covenants.......................................... 80
(A) Defined Terms for Financial Covenants................. 80
(B) Fixed Charge Coverage Ratio........................... 81
(C) Minimum Consolidated Book Equity...................... 81
(D) Maximum Leverage Ratio................................ 81
(E) Current Asset Coverage Ratio.......................... 82
(F) Capital Expenditures.................................. 82
ARTICLE VII: DEFAULTS................................................. 82
7.1 Defaults..................................................... 82
ARTICLE VIII: ACCELERATION, DEFAULTING LENDERS; WAIVERS,
AMENDMENTS AND REMEDIES........................................... 85
8.1 Remedies..................................................... 85
(a) Termination of Commitments; Acceleration.............. 85
(b) Rescission............................................ 85
(c) Enforcement........................................... 85
8.2 Defaulting Lender............................................ 85
8.3 Amendments................................................... 86
8.4 Preservation of Rights....................................... 87
ARTICLE IX: GUARANTEE
9.1 Guarantee; Modifications to Oblgations....................... 88
9.2 Waivers...................................................... 88
9.3 Guarantee Unconditional...................................... 88
9.4 Extensions and Other Modifications of Obligations............ 89
9.5 No Marshalling; Reinstatement of Guarantee................... 89
9.6 Agreement to Pay Obligations; Currency Issues................ 90
9.7 Subordination of Subrogation................................. 90
9.8 Election of Remedies......................................... 90
</TABLE>
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9.9 Limitation.................................................... 91
9.9 Contribution with Respect to Guaranty Obligations............. 91
9.10 Liability Cumulative.......................................... 92
9.11 No Revocation; Term of Guarantee.............................. 92
ARTICLE X: GENERAL PROVISIONS............................................ 93
10.1 Survival of Representations................................... 93
10.2 Governmental Regulation....................................... 93
10.3 Performance of Obligations.................................... 93
10.4 Headings...................................................... 93
10.5 Entire Agreement.............................................. 93
10.6 Several Obligations; Benefits of this Agreement............... 94
10.7 Expenses; Indemnification..................................... 94
(A) Expenses............................................... 94
(B) Indemnity.............................................. 94
(C) Waiver of Certain Claims; Settlement of Claims......... 95
(D) Survival of Agreements................................. 95
10.8 Numbers of Documents.......................................... 95
10.9 Accounting.................................................... 95
10.10 Severability of Provisions.................................... 96
10.11 Nonliability of Lenders....................................... 96
10.12 GOVERNING LAW................................................. 96
10.13 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL....... 96
(A) EXCLUSIVE JURISDICTION................................. 96
(B) OTHER JURISDICTIONS.................................... 96
(C) SERVICE OF PROCESS; VENUE.............................. 97
(D) WAIVER OF JURY TRIAL................................... 97
(E) WAIVER OF BOND......................................... 97
(F) ADVICE OF COUNSEL...................................... 98
10.14 Subordination of Intercompany Indebtedness.................... 98
10.15 No Strict Construction........................................ 99
10.16 Alternate Currency Addenda Binding on Each Lender;
Provisions Regarding Alternate Currency Agents.............. 99
ARTICLE XI: THE ADMINISTRATIVE AGENT..................................... 99
11.1 Appointment; Nature of Relationship........................... 99
11.2 Powers........................................................ 99
11.3 General Immunity.............................................. 99
11.4 No Responsibility for Loans, Creditworthiness,
Collateral, Recitals, Etc................................... 100
11.5 Action on Instructions of Lenders............................. 100
11.6 Employment of Agents and Counsel.............................. 100
11.7 Reliance on Documents; Counsel................................ 100
11.8 The Administrative Agent's Reimbursement and Indemnification.. 100
11.9 Rights as a Lender............................................ 101
</TABLE>
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11.10 Lender Credit Decision..................................... 101
11.11 Successor Administrative Agent............................. 101
11.12 Collateral Documents....................................... 102
ARTICLE XII: SETOFF; RATABLE PAYMENTS................................. 102
12.1 Setoff..................................................... 102
12.2 Ratable Payments........................................... 102
12.3 Application of Payments.................................... 102
12.4 Relations Among Lenders.................................... 103
ARTICLE XIII: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS....... 104
13.1 Successors and Assigns..................................... 104
13.2 Participations............................................. 104
(A) Permitted Participants; Effect...................... 104
(B) Voting Rights....................................... 104
(C) Benefit of Setoff................................... 104
13.3 Assignments................................................ 105
(A) Permitted Assignments............................... 105
(B) Effect; Effective Date.............................. 105
(C) The Register........................................ 106
13.4 Confidentiality............................................ 106
13.5 Dissemination of Information............................... 106
ARTICLE XIV: NOTICES.................................................. 107
14.1 Giving Notice.............................................. 107
14.2 Change of Address.......................................... 107
ARTICLE XV: COUNTERPARTS.............................................. 107
</TABLE>
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<PAGE> 8
EXHIBITS AND SCHEDULES
EXHIBITS
--------
<TABLE>
<CAPTION>
<S> <C> <C>
EXHIBIT A -- Form of Alternate Currency Addendum
(Definitions)
EXHIBIT B -- Form of Assumption Letter
(Definitions)
EXHIBIT C -- Form of Compliance Certificate
(Definitions, Sections 4.2, 6.1(A)(iii))
EXHIBIT D -- Form of Guarantor Assumption Letter
(Definitions)
EXHIBIT E -- Commitments
(Definitions)
EXHIBIT F -- Form of Master Revolving Note
(Definitions)
EXHIBIT G -- Form of Individual Revolving Note
(Definitions)
EXHIBIT H -- Form of Swing Line Loan Note
(Definitions)
EXHIBIT I -- Form of Assignment Agreement
(Sections 2.20, 13.3)
EXHIBIT J -- List of Closing Documents
(Section 4.1)
EXHIBIT K -- Form of Officer's Certificate
(Sections 4.2, 6.1(A)(iii))
EXHIBIT L -- Financial Statements
(Section 5.4(A))
</TABLE>
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<PAGE> 9
SCHEDULES
---------
<TABLE>
<CAPTION>
<S> <C> <C>
Schedule 1.1.1 -- Existing Letters of Credit (Definitions)
Schedule 1.1.2 -- Permitted Existing Contingent Obligations (Definitions)
Schedule 1.1.3 -- Permitted Existing Indebtedness (Definitions)
Schedule 1.1.4 -- Permitted Existing Investments (Definitions)
Schedule 1.1.5 -- Permitted Existing Liens (Definitions)
Schedule 5.3 -- Conflicts; Governmental Consents (Section 5.3)
Schedule 5.7 -- Litigation; Loss Contingencies (Section 5.7)
Schedule 5.8 -- Subsidiaries (Section 5.8)
Schedule 5.17 -- Insurance (Sections 5.17, 6.2(E))
Schedule 5.20 -- Labor Matters; Compensation Agreements (Section 5.20)
Schedule 5.21 -- Environmental Matters (Section 5.21)
Schedule 6.2(N) -- Post-Closing Requirements (Section 6.2(N))
Schedule 6.3(F) -- Permitted Restricted Junior Payments (Section 6.3(F))
</TABLE>
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<PAGE> 10
MULTICURRENCY CREDIT AGREEMENT
This Multicurrency Credit Agreement dated as of June 24, 1997 is entered
into among BRIGHTPOINT, INC., a Delaware corporation, BRIGHTPOINT INTERNATIONAL
LTD., a Delaware corporation, any SUBSIDIARY BORROWERS (as defined herein)
which are now or may hereafter become a party hereto from time to time, the
GUARANTORS (as defined herein) which are now or may hereafter become a party
hereto from time to time, the financial institutions from time to time a party
hereto as LENDERS, whether by execution of this Agreement or an assignment and
acceptance pursuant to Section 13.3, THE FIRST NATIONAL BANK OF CHICAGO, in its
capacity as Administrative Agent for itself and the other Lenders and BANK ONE,
INDIANA, NATIONAL ASSOCIATION, in its capacity as Syndication Agent. The
parties hereto agree as follows:
ARTICLE I: DEFINITIONS
1.1 Certain Defined Terms. In addition to the terms defined in other
sections of this Agreement, the following terms used in this Agreement shall
have the following meanings, applicable both to the singular and the plural
forms of the terms defined:
As used in this Agreement:
"ACCOUNT DEBTOR" means the account debtor or obligor with respect to any
of the Receivables and/or the prospective purchaser with respect to any
contract right, and/or any party who enters into or proposes to enter into any
contract or other arrangement with a Borrower.
"A/C INTEREST" is defined in Section 2.3(b)(i).
"ACQUISITION" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which a
Borrower or any Subsidiary of a Borrower (i) acquires any going business or all
or substantially all of the assets of any firm, corporation or division
thereof, whether through purchase of assets, merger or otherwise or (ii)
directly or indirectly acquires (in one transaction or as of the most recent
transaction in a series of transactions) at least a majority (in number of
vote) of the securities of a corporation which have ordinary voting power for
the election of directors (other than securities having such power only by
reason of the happening of a contingency) or a majority (by percentage of
voting power), of the membership, ownership or other equity interests in a
limited liability company or of the outstanding partnership interests of a
partnership.
"ADMINISTRATIVE AGENT" means First Chicago in its capacity as contractual
representative for itself and the Lenders pursuant to Article XI hereof and any
successor Administrative Agent appointed pursuant to Article XI hereof.
"ADVANCE" means a Ratable Advance or Alternate Currency Advance, as
applicable.
"AFFECTED LENDER" is defined in Section 2.20 hereof.
"AFFILIATE" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person is the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act)
of greater than ten percent (10%) or more of any class of voting Capital Stock
(or other voting interests) of
<PAGE> 11
the controlled Person or possesses, directly or indirectly, the power to
direct or cause the direction of the management or policies of the controlled
Person, whether through ownership of Equity Interests, by contract or
otherwise. In addition, each director of a Borrower or any Subsidiary of a
Borrower shall be deemed to be an Affiliate of each Borrower.
"AGENTS" means the Administrative Agent, the Syndication Agent and the
Alternate Currency Agents.
"AGREED CURRENCIES" means (i) Dollars, (ii) so long as such currencies
remain Eligible Currencies, Sterling, Hong Kong Dollars, Australian Dollars,
French Francs, Deutsche Marks, Canadian Dollars, Swiss Francs, Japanese Yen,
Dutch Guilders, Italian Lire, Swedish Kroner and Euro; and (iii) any other
Eligible Currency which Brightpoint requests the Administrative Agent to
include as an Agreed Currency hereunder and which is acceptable to one-hundred
percent (100%) of the Lenders; provided that the Administrative Agent shall
promptly notify each Lender of each such request and each Lender shall be
deemed not to have agreed to each such request unless its written consent
thereto has been received by the Administrative Agent within ten (10) Business
Days from the date of such notification by the Administrative Agent to such
Lender.
"AGGREGATE REVOLVING LOAN COMMITMENT" means the aggregate of the Revolving
Loan Commitments of all the Lenders, as adjusted from time to time pursuant to
the terms hereof. The initial Aggregate Revolving Loan Commitment is One
Hundred Fifty-Five Million and 00/100 Dollars ($155,000,000.00).
"AGREEMENT" means this Multicurrency Credit Agreement, as it may be
amended, restated or otherwise modified and in effect from time to time.
"AGREEMENT ACCOUNTING PRINCIPLES" means generally accepted accounting
principles as in effect as of the date of this Agreement in the United States,
applied in a manner consistent with that used by Brightpoint and its
consolidated Subsidiaries in the preparation of its audited consolidated
financial statements for the year ended December 31, 1996. If any changes in
generally accepted accounting principles are hereafter required or permitted and
are adopted by Brightpoint or any of its Subsidiaries with the agreement of its
independent certified public accountants and such changes result in a change in
the method of calculation of any of the financial covenants, restrictions or
standards herein or in the related definitions or terms used therein ("Covenant
Accounting Changes"), the parties hereto agree to enter into negotiations, in
good faith, in order to amend such provisions in a credit neutral manner so as
to reflect equitably such changes with the desired result that the criteria for
evaluating Brightpoint's consolidated financial condition shall be the same
after such changes as if such changes had not been made; provided, however, that
no Covenant Accounting Change shall be given effect in such calculations until
such provisions are amended in a manner reasonably satisfactory to the Required
Lenders. If such amendment is entered into, all references in this Agreement to
Agreement Accounting Principles shall mean generally accepted accounting
principles as of the date of such amendment applied in a manner consistent with
that used by Brightpoint and its consolidated Subsidiaries in the preparation of
its audited consolidated financial statements for the year ended December 31,
1996 except as agreed in connection with the Covenant Accounting Changes set
forth in such an amendment and together with any changes in generally accepted
accounting principles after the date of such amendment which are not Covenant
Accounting Changes.
- 2 -
<PAGE> 12
"ALTERNATE BASE RATE" means, for any day, a fluctuating interest rate per
annum (rounded upwards, if necessary, to the next 1/16 of 1%) as shall be in
effect from time to time, which rate per annum shall at all times be equal to
the greatest of (a) the Corporate Base Rate in effect on such day; and (b) the
sum of one-half of one percent (0.50%) and the Federal Funds Effective Rate in
effect on such day. For purposes hereof, "CORPORATE BASE RATE" shall mean the
rate of interest per annum publicly announced from time to time by First
Chicago as its corporate base rate (it being acknowledged that such announced
rate may not necessarily be the lowest rate charged by First Chicago to any of
its customers) in effect at its principal office in Chicago, Illinois; each
change in the Corporate Base Rate shall be effective on the date such change is
publicly announced as being effective. "FEDERAL FUNDS EFFECTIVE RATE" shall
mean, for any day, a fluctuating interest rate per annum equal to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers, as published on
the next succeeding Business Day by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day on such transactions received by First
Chicago from three Federal funds brokers of recognized standing selected by the
Administrative Agent. If for any reason the Administrative Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Federal Funds Effective Rate for any reason,
including the inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms hereof, the Alternate Base
Rate shall be determined without regard to clause (b) of the first sentence of
this definition until the circumstances giving rise to such inability no longer
exist. Any change in the Alternate Base Rate due to a change in the Corporate
Base Rate or the Federal Funds Effective Rate shall be effective on the
effective date of such change.
"ALTERNATE CURRENCY" means (i) so long as such currencies remain Eligible
Currencies, Sterling, Hong Kong Dollars and Australian Dollars and (ii) any
other Eligible Currency which Brightpoint requests the Administrative Agent to
include as an Alternate Currency hereunder and which is acceptable to
one-hundred percent (100%) of the Lenders; provided that the Administrative
Agent shall promptly notify each Lender of such request and each Lender of each
such request and each Lender shall be deemed not to have agreed to each such
request unless its written consent thereto has been received by the
Administrative Agent within ten (10) Business Days from the date of such
notification by the Administrative Agent to such Lender; provided, further,
however, no such Eligible Currency shall be an Alternate Currency hereunder
until an Alternate Currency Addendum has been executed among Brightpoint, BPI,
each Guarantor, a Subsidiary Borrower, one or more Alternate Currency Lenders
and an Alternate Currency Agent in connection therewith.
"ALTERNATE CURRENCY ADDENDUM" means an addendum substantially in the form
of Exhibit A entered into among Brightpoint, BPI, one or more of the Subsidiary
Borrowers, one or more Alternate Currency Lenders and an Alternate Currency
Agent.
"ALTERNATE CURRENCY ADVANCE" means a borrowing hereunder consisting of the
aggregate amount of the several Alternate Currency Loans (other than Alternate
Currency Swing Line Loans) made by the applicable Alternate Currency Lenders to
any Borrower eligible to borrow with respect to the applicable Alternate
Currency of the same Type, denominated in the same Alternate Currency and for
the same Interest Period.
"ALTERNATE CURRENCY AGENT" means one or more entities (which may be the
Administrative Agent or its local affiliates), satisfactory to the
Administrative Agent, as specified in the applicable Alternate Currency
Addendum.
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"ALTERNATE CURRENCY AVAILABILITY" means, at any particular time, and for
any particular Alternate Currency, the amount by which the aggregate of the
Alternate Currency Commitments of all Alternate Currency Lenders with respect
to such Alternate Currency exceeds the Alternate Currency Obligations with
respect to such Alternate Currency.
"ALTERNATE CURRENCY COMMITMENT" means, for each Alternate Currency Lender
for each Alternate Currency, the obligation of such Alternate Currency Lender
to make Alternate Currency Loans, to purchase Alternate Currency Loans under
Section 2.3(b) or 2.12(f) and to purchase Revolving Loans and participations
in Letters of Credit under Section 2.12(f) not exceeding the Dollar Amount set
forth in the applicable Alternate Currency Addendum, as such amount may be
modified from time to time pursuant to the terms of this Agreement and the
applicable Alternate Currency Addendum.
"ALTERNATE CURRENCY LENDER" means any Lender (or any Affiliate, branch or
agency thereof) party to an Alternate Currency Addendum and, after any
Conversion, any Lender who has purchased Alternate Currency Loans under Section
2.12(f). If any agency or Affiliate of a Lender shall be a party to an
Alternate Currency Addendum, such agency or Affiliate shall, to the extent of
any commitment extended and any Loans made by it, have all the rights of such
Lender hereunder; provided, however, that such Lender shall to the exclusion of
such agency or Affiliate, continue to have all the voting and consensual rights
vested in it by the terms hereof. Unless the context otherwise requires, all
references to Alternate Currency Lenders shall include the Alternate Currency
Agent.
"ALTERNATE CURRENCY LOAN" means any loan denominated in an Alternate
Currency made by the Alternate Currency Agent or one or more of the Alternate
Currency Lenders to a Subsidiary Borrower pursuant to Section 2.3 and an
Alternate Currency Addendum.
"ALTERNATE CURRENCY OBLIGATIONS" means, at any particular time, the sum of
(i) the outstanding principal amount of the Alternate Currency Loans at such
time plus (ii) the outstanding principal amount of the Alternate Currency Swing
Line Loans at such time.
"ALTERNATE CURRENCY SHARE" means, with respect to any Alternate Currency
Lender for any particular Alternate Currency, the percentage obtained by
dividing (A) such Alternate Currency Lender's Alternate Currency Commitment at
such time as set forth in the applicable Alternate Currency Addendum by (B) the
aggregate of the Alternate Currency Commitments at such time of all Alternate
Currency Lenders with respect to such Alternate Currency as set forth in the
applicable Alternate Currency Addendum.
"ALTERNATE CURRENCY SWING LINE LOAN" means a loan (including any loan
under any overdraft facility) in an Alternate Currency made available to any
applicable Subsidiary Borrower by the applicable Alternate Currency Agent
pursuant to Section 2.4.
"ALTERNATE CURRENCY SWING LINE LOAN NOTE" means, a Note in the form of
Annex I to the Alternate Currency Addendum for the applicable Alternate
Currency, if such a Note is required under the applicable Alternate Currency
Addendum, duly executed by the applicable Subsidiary Borrower and payable to
the order of the applicable Alternate Currency Agent in the maximum amount of
its Alternate Currency Swing Line Loans for such Alternate Currency.
"ALTERNATE CURRENCY SYNDICATION NOTICE" is defined in Section 2.3(b).
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"APPLICABLE FACILITY FEE" as at any date of determination, shall be the
rate per annum then applicable in the determination of the amount payable under
Section 2.15(C) with respect to the Aggregate Revolving Loan Commitment and the
Maximum Aggregate Alternate Currency Amount, determined in accordance with the
provisions of Section 2.8(b).
"APPLICABLE FIXED RATE MARGIN" as at any date of determination, shall be
the rate per annum then applicable to Eurocurrency Rate Loans and, unless
alternate pricing provisions are set forth in the applicable Alternate Currency
Addendum, for Alternate Currency Advances which are Fixed Rate Advances,
determined in accordance with the provisions of Section 2.8(b).
"APPLICABLE FLOATING RATE MARGIN" as at any date of determination, shall
be the rate per annum then applicable to Base Rate Loans and, unless alternate
pricing provisions are set forth in the applicable Alternate Currency Addendum,
for Alternate Currency Advances which are Floating Rate Advances, determined in
accordance with the provisions of Section 2.8(b).
"APPLICABLE LETTER OF CREDIT FEE" as at any date of determination, shall
be the rate per annum then applicable in the determination of the amount
payable under Section 2.25 with respect to Letters of Credit, determined in
accordance with the provisions of Section 2.8(b).
"APPLICABLE MARGIN(S)" is defined in Section 2.8(b).
"ARRANGER" means First Chicago Capital Markets, Inc.
"ASSUMPTION LETTER" means a letter of a Subsidiary of Brightpoint
addressed to the Lenders substantially in the form of Exhibit B hereto pursuant
to which such Subsidiary agrees to become a "Subsidiary Borrower" and agrees to
be bound by the terms hereof.
"AUSTRALIAN DOLLARS" means the lawful money of Australia.
"AUTHORIZED OFFICER" means any of the chief operating officer, chief
financial officer, controller and treasurer of a Borrower, acting singly.
"BASE RATE" means, for any day for any Loan, a rate per annum equal to (i)
the Alternate Base Rate for such day plus (ii) the Applicable Floating Rate
Margin applicable to such Loan, changing when and as the Alternate Base Rate
changes.
"BASE RATE ADVANCE" means an Advance which bears interest at the Base
Rate.
"BASE RATE LOAN" means a Loan, or portion thereof, which bears interest at
the Base Rate.
"BENEFIT PLAN" means a defined benefit plan as defined in Section 3(35) of
ERISA (other than a Multiemployer Plan) in respect of which Brightpoint or any
other member of the Controlled Group is, or within the immediately preceding
six (6) years was, an "employer" as defined in Section 3(5) of ERISA.
"BORROWER" means, as applicable, Brightpoint, BPI and any Subsidiary
Borrower and their respective successors and assigns.
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"BORROWING DATE" means a date on which an Advance, a Swing Line Loan, an
Alternate Currency Loan or an Alternate Currency Swing Line Loan is made
hereunder.
"BORROWING NOTICE" is defined in Section 2.8 hereof.
"BPI" means Brightpoint International Ltd., a Delaware corporation and a
wholly-owned Subsidiary of Brightpoint, and its successors and assigns,
including a debtor-in-possession on behalf of Brightpoint International Ltd.
"BRIGHTPOINT" means Brightpoint, Inc., a Delaware corporation, and its
successors and assigns, including a debtor-in-possession on behalf of
Brightpoint, Inc.
"BUSINESS DAY" means, except as otherwise provided in an Alternate
Currency Addendum with respect to Alternate Currency Loans made thereunder, (i)
with respect to any borrowing, payment or rate selection of Alternate Currency
Loans or Revolving Loans bearing interest at the Eurocurrency Rate, a day
(other than a Saturday or Sunday) on which banks are open for business in
Chicago, Illinois and Indianapolis, Indiana and on which dealings in United
States Dollars and the other Agreed Currencies or Alternate Currencies are
carried on in the relevant interbank market and (ii) for all other purposes a
day (other than a Saturday or Sunday) on which banks are open for business in
Chicago, Illinois and Indianapolis, Indiana.
"CALCULATION DATE" means (i) with respect to any Revolving Loan or Letter
of Credit in any currency other than Dollars, the Business Day of the making of
such Revolving Loan or the issuance of the Letter of Credit with respect to the
Agreed Currency in which such Revolving Loan is being made or Letter of Credit
is being issued; (ii) with respect to any Alternate Currency Loan, the Business
Day of the making of such Alternate Currency Loan with respect to the Alternate
Currency in which such Alternate Currency Loan is being made; (iii) with
respect to Revolving Loans and Letters of Credit, any other Business Day
selected at the option of the Administrative Agent or at the direction of the
Required Lenders; (iv) with respect to Alternate Currency Loans for any
Alternate Currency, any other Business Day selected at the option of the
Alternate Currency Agent or at the direction of the Alternate Currency
Lenders with respect to such Alternate Currencies having Alternate Currency
Commitments representing at least 66-2/3% of all such Alternate Currency
Commitments at such time; and (v) on the date any Conversion Notice is given
pursuant to Section 2.12(f); provided, with respect to any option exercised
pursuant to clause (iii) or (iv) above, without the consent of the
Administrative Agent or Alternate Currency Agent required to calculate the
applicable Exchange Rate, the Calculation Date selected shall not be earlier
than the second (2nd) Business Day following exercise of such option.
"CANADIAN DOLLARS" means the lawful money of Canada.
"CAPITAL EXPENDITURES" is defined in Section 6.4(A) hereof.
"CAPITAL STOCK" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (howsoever designated)
of corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing person, in each such case regardless
of class or designation.
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<PAGE> 16
"CAPITALIZED LEASE" of a Person means any lease of property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with Agreement Accounting Principles.
"CAPITALIZED LEASE OBLIGATIONS" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be capitalized
on a balance sheet of such Person prepared in accordance with Agreement
Accounting Principles.
"CASH EQUIVALENTS" means (i) marketable direct obligations issued or
unconditionally guaranteed by the government of the United States or the
government of any member of the European Economic Community; (ii) domestic and
Eurocurrency certificates of deposit and time deposits, bankers' acceptances
and Base rate certificates of deposit issued by any commercial bank organized
under the laws of the United States, any state thereof, the District of
Columbia, or its branches or agencies or the laws of any member of the European
Economic Community and having capital and surplus in an aggregate amount not
less than $500,000,000 (fully protected against currency fluctuations for any
such deposits with a term of more than ten (10) days); (iii) shares of money
market, mutual or similar funds having net assets in excess of $500,000,000
maturing or being due or payable in full not more than one hundred eighty (180)
days any Borrower's acquisition thereof and the investments of which are
limited to investment grade securities (i.e., securities rated at least Baa by
Moody's Investors Service, Inc. or at least BBB by Standard & Poor's Ratings
Group) or shares of similar funds of similar credit quality in Europe approved
for such purposes by the Administrative Agent in its sole discretion and (iv)
commercial paper of United States and foreign banks and bank holding companies
and their subsidiaries and United States and foreign finance, commercial,
industrial or utility companies which, at the time of acquisition, are rated
A-1 (or better) by Standard & Poor's Ratings Group or P-1 (or better) by
Moody's Investors Services, Inc. or commercial paper of British banks of
similar credit quality approved for such purposes by the Administrative Agent
in its sole discretion; provided that the maturities of such Cash Equivalents
shall not exceed 365 days.
"CHANGE" is defined in Section 3.2 hereof.
"CHANGE OF CONTROL" means any of the following:
(i) any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act)is or becomes the "beneficial owner"
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that
a person shall be deemed to have "beneficial ownership" of all securities
that such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of 20% or more of the combined voting power of Brightpoint's
Capital Stock ordinarily having the right to vote at an election of
directors;
(ii) during any period of 12 consecutive calendar months,
individuals:
(a) who were directors of Brightpoint on the first
day of such period, or
(b) whose election or nomination for election to the
board of directors of Brightpoint was recommended or approved
by at least a majority of the directors then still in office
who were directors of Brightpoint on the first day of such
period, or whose election or nomination for election was so
approved,
shall cease to constitute a majority of the board of directors of
Brightpoint;
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(iii) Brightpoint consolidates with or merges into another
corporation or conveys, transfers or leases all or substantially all of
its property to any Person, or any corporation consolidates with or
merges into Brightpoint, in either event pursuant to a transaction in
which the outstanding Capital Stock of Brightpoint is reclassified or
changed into or exchanged for cash, securities or other property;
(iv) Brightpoint shall cease to own, of record and beneficially,
with sole voting and dispositive power, 100% of the outstanding shares of
Capital Stock of BPI or shall cease to have the power, directly or
indirectly, to elect all of the members of the board of directors of BPI;
and
(v) BPI shall cease to own of record and beneficially, with sole
voting and dispositive power, at least 80% of the outstanding shares of
Capital Stock of each Subsidiary Borrower ordinarily having the right to
vote at an election of directors or shall cease to have the power,
directly or indirectly, to elect a majority of the board of directors of
each Subsidiary Borrower.
"CLOSING DATE" means the date on which the initial Revolving Loans are
made under this Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"COLLATERAL" means all property and interests in property now owned or
hereafter acquired by a Borrower or any of its Subsidiaries in or upon which a
security interest, lien or mortgage is granted to the Administrative Agent, for
the benefit of the Lenders, to secure all of the Secured Obligations, whether
under the Security Agreements, under the Trademark Security Agreement, under
the Pledge Agreements, under any of the other Collateral Documents or under any
of the other Loan Documents.
"COLLATERAL DOCUMENTS" means all agreements, instruments and documents
executed in connection with this Agreement, including, without limitation the
Security Agreements, the Trademark Security Agreement, the Pledge Agreements
and all other security agreements, loan agreements, notes, guarantees,
mortgages, subordination agreements, pledges, powers of attorney, consents,
assignments, contracts, leases, financing statements and all other written
matter whether heretofore, now, or hereafter executed by or on behalf of a
Borrower or any Subsidiary of a Borrower and delivered to the Administrative
Agent or any of the Lenders, together with all agreements and documents
referred to therein or contemplated thereby.
"COMMISSION" means the Securities and Exchange Commission and any Person
succeeding to the functions thereof.
"COMMITMENT" means, for each Lender, such Lender's Revolving Loan
Commitment, for each Alternate Currency Lender, its applicable Alternate
Currency Commitment or Commitments, for the Swing Line Lender, its Swing Line
Loan Commitment and for each Alternate Currency Agent, its Alternate Currency
Swing Line Commitment. The Commitments shall automatically and permanently
terminate on the Termination Date.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form of
Exhibit C delivered to the Administrative Agent and each Lender by Brightpoint
pursuant to the provisions of this Agreement and covering, among other things,
its calculation of the Applicable Margins, Applicable Facility Fee,
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Applicable Letter of Credit Fee, its compliance with the financial covenants
contained in Section 6.4 and certain other provisions of this Agreement.
"CONFIDENTIAL INFORMATION MEMORANDUM" means the set of materials entitled
"Brightpoint, Inc. $200,000,000 Senior Secured Revolving Credit Facilities
Confidential Information Memorandum May 1997" assembled by the Arranger and the
Syndication Agent based solely on information provided by Brightpoint.
"CONSOLIDATED BOOK EQUITY" is defined in Section 6.4(A) hereof.
"CONTAMINANT" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos, polychlorinated biphenyls ("PCBS"), or any
constituent of any such substance or waste, and includes but is not limited to
these terms as defined in Environmental, Health or Safety Requirements of Law.
"CONTINGENT OBLIGATION", as applied to any Person, means any Contractual
Obligation, contingent or otherwise, of that Person with respect to any
Indebtedness of another or other obligation or liability of another, including,
without limitation, any such Indebtedness, obligation or liability of another
directly or indirectly guaranteed, endorsed (otherwise than for collection or
deposit in the ordinary course of business), co-made or discounted or sold
with recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable, including Contractual Obligations (contingent
or otherwise) arising through any agreement to purchase, repurchase, or
otherwise acquire such Indebtedness, obligation or liability or any security
therefor, or to provide funds for the payment or discharge thereof (whether in
the form of loans, advances, stock purchases, capital contributions or
otherwise), or to maintain solvency, assets, level of income, or other
financial condition, or to make payment other than for value received.
"CONTINGENT PURCHASE PRICE OBLIGATION", as applied to any Person, means
any Contractual Obligation of such Person incurred in connection with an
Acquisition pursuant to which such Person is obligated to pay additional
consideration to the applicable seller in the form of an earnout, milestone
payment, contingent purchase price payment, or other similar performance based
compensation relating to post-Acquisition financial or operating performance of
the business acquired.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any provision of
any equity or debt securities issued by that Person or any indenture, mortgage,
deed of trust, security agreement, pledge agreement, guaranty, contract,
undertaking, agreement or instrument, in any case in writing, to which that
Person is a party or by which it or any of its properties is bound, or to which
it or any of its properties is subject.
"CONTROLLED GROUP" means the group consisting of (i) any corporation which
is a member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as Brightpoint; (ii) a partnership or other trade
or business (whether or not incorporated) which is under common control (within
the meaning of Section 414(c) of the Code) with Brightpoint; and (iii) a member
of the same affiliated service group (within the meaning of Section 414(m) of
the Code) as Brightpoint, any corporation described in clause (i) above or any
partnership or trade or business described in clause (ii) above.
"CONVERSION/CONTINUATION NOTICE" is defined in Section 2.10(D) hereof.
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<PAGE> 19
"CONVERSION DATE" is defined in Section 2.12(f).
"CONVERSION ELECTION" is defined in Section 2.12(f).
"CONVERSION EVENT is defined in Section 2.12(f)
"CONVERSION NOTICE" means any notice of a Conversion Election or other
Conversion Event given by any of the Agents to Brightpoint or any other
Borrower pursuant to the terms of Section 2.12(f).
"CONVERTED LOANS" means any one or more Loans converted from any currency
other than Dollars to Dollars pursuant to the terms of Section 2.12(f).
"CORPORATE BASE RATE" is defined in the definition of Alternate Base Rate
above.
"CURE LOAN" is defined in Section 8.2 hereof.
"CURRENT ASSET COVERAGE RATIO" is defined in Section 6.4(E).
"CUSTOMARY PERMITTED LIENS" means:
(i) Liens (other than Environmental Liens and Liens in favor of the
IRS or the PBGC) with respect to the payment of taxes, assessments or
governmental charges in all cases which are not yet due or which are
being contested in good faith by appropriate proceedings and with respect
to which adequate reserves or other appropriate provisions are being
maintained in accordance with Agreement Accounting Principles;
(ii) statutory Liens of landlords and Liens of suppliers, mechanics,
carriers, materialmen, warehousemen or workmen and other similar Liens
imposed by law created in the ordinary course of business for amounts not
yet due or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or other
appropriate provisions are being maintained in accordance with Agreement
Accounting Principles;
(iii) Liens (other than Environmental Liens and Liens in favor of
the IRS or the PBGC) incurred or deposits made in the ordinary course of
business in connection with worker's compensation, unemployment insurance
or other types of social security benefits or to secure the performance
of bids, tenders, sales, contracts (other than for the repayment of
borrowed money), surety, appeal and performance bonds; provided that (A)
all such Liens do not in the aggregate materially detract from the value
of assets or property of any Borrower taken as a whole or materially
impair the use thereof in the operation of the businesses taken as a
whole, and (B) all Liens securing bonds to stay judgments or in
connection with appeals that do not secure at any time an aggregate
amount exceeding $1,000,000;
(iv) Liens arising with respect to zoning restrictions, easements,
licenses, reservations, covenants, rights-of-way, utility easements,
building restrictions and other similar charges or encumbrances on the
use of real property which do not interfere with the ordinary conduct of
the business of any Borrower or any Subsidiary of any Borrower;
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<PAGE> 20
(v) Liens of attachment or judgment with respect to judgments, writs
or warrants of attachment, or similar process against any Borrower or any
Subsidiary of any Borrower which do not constitute a Default under
Section 7.1(h);
(vi) Liens arising from leases, subleases or licenses granted to
others which do not interfere in any material respect with the business
of any Borrower or any Subsidiary of any Borrower; and
(vii) any interest or title of the lessor in the property subject to
any operating lease entered into by any Borrower or any Subsidiary of any
Borrower in the ordinary course of business.
"DEFAULT" means an event described in Article VII hereof.
"DEUTSCHE MARKS" or "DM" means the lawful money of the Republic of
Germany.
"DOL" means the United States Department of Labor and any Person
succeeding to the functions thereof.
"DOLLAR" or "$" means the lawful money of the United States of America.
"DOLLAR AMOUNT" of any currency at any date shall mean (i) the amount of
such currency if such currency is Dollars or (ii) the Equivalent Amount of
Dollars if such currency is any currency other than Dollars, calculated on the
basis of the then applicable Exchange Rate.
"DUTCH GUILDERS" means the lawful money of The Netherlands.
"EBITDA" is defined in Section 6.4(A) hereof.
"ELIGIBLE CURRENCY" means any currency other than Dollars that is readily
available, freely traded, in which deposits are customarily offered to banks in
the London interbank market, convertible into Dollars in the international
interbank market and as to which an Equivalent Amount may be readily
calculated. If, after the designation by the Lenders of any currency as an
Agreed Currency or an Alternate Currency, currency control or other exchange
regulations are imposed in the country in which such currency is issued with
the result that different types of such currency are introduced, such country's
currency is, in the determination of the Administrative Agent, no longer
readily available or freely traded or as to which, in the determination of the
Administrative Agent, an Equivalent Amount is not readily calculable, then the
Administrative Agent shall promptly notify the Lenders and Brightpoint, such
country's currency shall no longer be an Alternate Currency or Agreed Currency
until such time as all of the Lenders agree to reinstate such country's
currency as an Alternate Currency or Agreed Currency and promptly, but in any
event within five (5) Business Days of receipt of such notice from the
Administrative Agent, the Borrowers with respect to such Alternate Currency or
Agreed Currency shall repay all Loans in such affected currency or convert such
Loans into Loans in Dollars, another Agreed Currency or Alternate Currency as
applicable, subject to the other terms contained in Article II.
"ENVIRONMENTAL, HEALTH OR SAFETY REQUIREMENTS OF LAW" means all
Requirements of Law derived from or relating to federal, state and local laws
or regulations relating to or addressing pollution or protection of the
environment, or protection of worker health or safety, including, but not
limited to, the
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<PAGE> 21
Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. Section 9601 et seq., the Occupational Safety and Health Act of
1970, 29 U.S.C. Section 651 et seq., and the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. Section 6901 et seq., in each case including
any amendments thereto, any successor statutes, and any regulations or
guidance promulgated thereunder, and any state or local equivalent thereof.
"ENVIRONMENTAL LIEN" means a lien in favor of any Governmental Authority
for (a) any liability under Environmental, Health or Safety Requirements of
Law, or (b) damages arising from, or costs incurred by such Governmental
Authority in response to, a Release or threatened Release of a Contaminant
into the environment.
"ENVIRONMENTAL PROPERTY TRANSFER ACT" means any applicable requirement of
law that conditions, restricts, prohibits or requires any notification or
disclosure triggered by the closure of any property or the transfer, sale or
lease of any property or deed or title for any property for environmental
reasons, including, but not limited to, any so-called "Industrial Site Recovery
Act" or "Responsible Property Transfer Act."
"EQUIPMENT" means all of the present and future (i) equipment, including,
without limitation, machinery, manufacturing, distribution, selling, data
processing and office equipment, assembly systems, tools, molds, dies,
fixtures, appliances, furniture, furnishings, vehicles, vessels, aircraft,
aircraft engines, and trade fixtures, (ii) other tangible personal property
(other than the Inventory), and (iii) any and all accessions, parts and
appurtenances attached to any of the foregoing or used in connection
therewith, and any substitutions therefor and replacements, products and
proceeds thereof owned by Brightpoint or any of the other Borrowers.
"EQUITY INTERESTS" means Capital Stock and all warrants, options purchase
rights, conversion or exchange rights, other rights to acquire Capital Stock
and all voting rights, calls or claims of any character with respect thereto
(but excluding any debt security that is convertible into, or exchangeable for,
Capital Stock).
"EQUIVALENT AMOUNT" of any currency with respect to any amount of Dollars
at any date means the equivalent in such currency of such amount of Dollars,
calculated on the basis of the then applicable Exchange Rate rounded up to the
nearest incremental amount of such currency as determined by the Administrative
Agent from time to time.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time including (unless the context otherwise requires) any
rules or regulations promulgated thereunder.
"EURO" means the lawful currency adopted by the European Economic
Community.
"EUROCURRENCY BASE RATE" means, with respect to any Eurocurrency Rate
Advance for any specified Interest Period, the rate at which deposits in the
applicable Agreed Currency are offered by the Administrative Agent to
first-class banks in the London interbank market (or the Paris interbank market
in the event the Agreed Currency is Sterling) at approximately 11 a.m. (London
time or Paris time, as applicable) two Business Days prior to the first day of
such Interest Period, in the approximate amount of the pro rata share of the
Administrative Agent of such Eurocurrency Advance and having a maturity
approximately equal to such Interest Period.
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<PAGE> 22
"EUROCURRENCY PAYMENT OFFICE" of the Administrative Agent means, for each
of the Agreed Currencies, the office, branch or affiliate of the Administrative
Agent, specified as the "EUROCURRENCY PAYMENT ADDRESS" for such currency on the
signature page for each Lender hereto or such other office, branch, affiliate
or correspondent bank of the Administrative Agent, as it may from time to time
specify to the Borrowers and each Lender as its Eurocurrency Payment Office.
"EUROCURRENCY RATE" means, with respect to a Eurocurrency Rate Advance for
the relevant Interest Period, the sum of (a) (i) the Eurocurrency Base Rate
divided by (ii) one minus the Reserve Requirement (expressed as a decimal)
applicable to such Interest Period plus (b) the percentage determined in
accordance with Section 2.8(b) to be the Applicable Fixed Rate Margin in
connection with Eurocurrency Rate Loans.
"EUROCURRENCY RATE ADVANCE" means an Advance which bears interest at the
Eurocurrency Rate.
"EUROCURRENCY RATE LOAN" means a Loan, or portion thereof, which bears
interest at the Eurocurrency Rate.
"EXCHANGE RATE" means with respect to any Eligible Currency on a
particular date, the rate at which such Eligible Currency may be exchanged into
Dollars, calculated on the basis of the arithmetical mean of the buy and sell
spot rates of exchange of the Administrative Agent or Alternate Currency Agent
in the London interbank market (or other market where the applicable Agent's
foreign currency exchange operations in respect of such Eligible Currency are
then being conducted) for such Eligible Currency at or about 1:00 p.m. local
time, on such date for the purchase of Dollars with such Eligible Currency for
delivery two (2) Business Days later; provided, however, that if at the time of
any such determination, for any reason, no such spot rate is being quoted, the
Administrative Agent or Alternate Currency Agent may use any reasonable method
it deems appropriate to determine such rate, and such determination shall be
conclusive absent manifest error.
"EXISTING LETTERS OF CREDIT" means the letters of credit issued prior to
the Closing Date by Bank One, Indiana, N.A. for the account of one or more of
the Borrowers and listed on Schedule 1.1.1.
"FEDERAL FUNDS EFFECTIVE RATE" is defined in the definition of Alternate
Base Rate above.
"FEES" is defined in Section 6.4(A) hereof.
"FIRST CHICAGO" means The First National Bank of Chicago, in its
individual capacity.
"FIXED CHARGE COVERAGE RATIO" is defined in Section 6.4(C) hereof.
"FIXED RATE LOANS" means any Loan which bears interest at a fixed interest
rate for the applicable Interest Period determined by reference to the
Eurocurrency Rate or, for Alternate Currency Loans, by reference to the
applicable fixed rate of interest set forth in the applicable Alternate
Currency Addendum.
"FLOATING RATE LOANS" means any Loan which bears interest at a fluctuating
interest rate determined by reference to the Alternate Base Rate or, for
Alternate Currency Loans, by reference to the applicable floating rate of
interest set forth in the applicable Alternate Currency Addendum.
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<PAGE> 23
"FOREIGN EMPLOYEE BENEFIT PLAN" means any employee benefit plan as defined
in Section 3(3) of ERISA which is maintained or contributed to for the benefit
of the employees of Brightpoint, any of its Subsidiaries or any members of its
Controlled Group and is not covered by ERISA pursuant to ERISA Section 4(b)(4).
"FOREIGN PENSION PLAN" means any employee benefit plan as described in
Section 3(3) of ERISA which (i) is maintained or contributed to for the benefit
of employees of Brightpoint, any of its Subsidiaries or any of its ERISA
Affiliates, (ii) is not covered by ERISA pursuant to Section 4(b)(4) of ERISA,
and (iii) under applicable local law, is required to be funded through a trust
or other funding vehicle.
"FRENCH FRANCS" or "FF" means the lawful money of the Republic of France.
"GOVERNMENTAL ACTS" is defined in Section 2.26(a) hereof.
"GOVERNMENTAL AUTHORITY" means any nation or government, any federal,
state, local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"GROSS NEGLIGENCE" means recklessness, the absence of the slightest care
or the complete disregard of consequences. Gross Negligence does not mean the
absence of ordinary care or diligence, or an inadvertent act or inadvertent
failure to act. If the term "gross negligence" is used with respect to any
Agent, the Arranger or any Lender or any Indemnitee in any of the other Loan
Documents, it shall have the meaning set forth herein.
"GUARANTOR ASSUMPTION LETTER" means a letter of a Subsidiary of
Brightpoint addressed to the Lenders substantially in the form of Exhibit D
hereto pursuant to which such Subsidiary agrees to become a "Guarantor" and
agrees to be bound by the terms hereof.
"GUARANTORS" shall mean (a) with respect to all of the Secured
Obligations, Brightpoint, BPI and any Subsidiary Borrower incorporated under
the laws of any state of the United States and (b) with respect to the Secured
Obligations made to the non-U.S. Subsidiary Borrowers, (i) as of the Closing
Date, Brightpoint (UK) Limited, Brightpoint Australia Pty Limited, Brightpoint
China Limited, Brightpoint EMA Limited, Brightpoint Australasia Pty Limited and
Brightpoint International (Asia Pacific) Pte Ltd, (ii) each Subsidiary of the
Borrower which becomes a Guarantor pursuant to the terms of Section 6.2(M),
(iii) all subsequently formed or acquired non-U.S. Subsidiaries and (iv) each
other Subsidiary of Brightpoint which holds Capital Stock of any non-U.S.
Subsidiary Borrower.
"HEDGING AGREEMENTS" is defined in Section 6.3(Q).
"HEDGING OBLIGATIONS" of a Person means any and all obligations of such
Person, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection
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<PAGE> 24
agreements, forward rate currency or interest rate options, puts and warrants,
and (ii) any and all cancellations, buy backs, reversals, terminations or
assignments of any of the foregoing.
"HOLDERS OF SECURED OBLIGATIONS" means the holders of the Secured
Obligations from time to time and shall refer to (i) each Lender in respect of
its Loans (including, if applicable, any agency or Affiliate of a Lender
utilized for making Alternate Currency Loans), (ii) the Issuing Lenders in
respect of Reimbursement Obligations and other Obligations relating to its
Letters of Credit, (iii) the Agents, the Arranger, the Swing Line Lender and
the Issuing Lenders in respect of all other present and future obligations and
liabilities of any Borrower or any of their subsidiaries of every type and
description arising under or in connection with this Agreement or any other
Loan Document, (iv) each Indemnitee in respect of the obligations and
liabilities of any Borrower to such Person hereunder or under any of the Loan
Documents, (v) each Lender (or any agency or Affiliate thereof) in respect of
all Hedging Obligations of any Borrower or any of their Subsidiaries to such
lender (or agency or Affiliate thereof) and (vi) their respective successors,
transferees and assigns.
"HONG KONG DOLLARS" or "HK$" means the lawful money of Hong Kong.
"INDEBTEDNESS" of any Person means (i) any indebtedness of such Person,
contingent or otherwise, (a) in respect of borrowed money including all
principal, interest, fees and expenses with respect thereto (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof), or (b) evidenced by bonds, notes, acceptances, debentures or
other instruments or letters of credit (or reimbursement obligations with
respect thereto, including, in the case of the Borrowers, Reimbursement
Obligations under the Letters of Credit) or representing the balance deferred
and unpaid of the purchase price of any property (including pursuant to
Capitalized Leases) or services, if and to the extent any of the foregoing
indebtedness would appear as a liability upon a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles (except that any
such balance that constitutes a trade payable and/or an accrued liability
arising in the ordinary course of business shall not be considered Indebtedness
and except that accounts payable in an amount not to exceed in the aggregate
$250,000 of the nature described above shall also not be considered
Indebtedness); (ii) to the extent not otherwise included, (a) interest accruing
after the commencement of any bankruptcy, insolvency, receivership or similar
proceedings and other interest that would have accrued but for the commencement
of such proceedings, (b) any Capitalized Lease Obligations, (c) obligations,
whether or not assumed, secured by Liens or payable out of the proceeds or
production from property now or hereafter owned or acquired by such Person, and
(d) Contingent Obligations (exclusive of whether such items would appear upon
such balance sheet). The amount of Indebtedness of any Person at any date shall
be without duplication (i) the outstanding balance at such date of all
unconditional obligations as described above and the maximum liability of any
such Contingent Obligations at such date and (ii) in the case of Indebtedness of
others secured by a Lien to which the property or assets owned or held by such
Person is subject, the lesser of the fair market value at such date of any asset
subject to a Lien securing the Indebtedness of others and the amount of the
Indebtedness secured. Notwithstanding anything herein to the contrary, if any
Contingent Obligations of Brightpoint or any of its Subsidiaries related to
liabilities of any other of Brightpoint and its Subsidiaries (the "Originator")
and such liabilities would not be considered Indebtedness of such Originator,
then the Contingent Obligation of the other Person with respect to such
liabilities shall also not be considered Indebtedness.
"INDEMNIFIED MATTERS" is defined in Section 10.7(B) hereof.
"INDEMNITEES" is defined in Section 10.7(B) hereof.
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<PAGE> 25
"INTEREST EXPENSE" is defined in Section 6.4(A) hereof.
"INTEREST EXPENSE COVERAGE RATIO" is defined in Section 6.4(B) hereof.
"INTEREST PERIOD" means, with respect to a Eurocurrency Rate Loan and,
unless the applicable Alternate Currency Addendum shall provide otherwise, with
respect to each Alternate Currency Loan that is a Fixed Rate Loan, a period of
one (1), two (2), three (3) or six (6) months commencing on a Business Day
selected by the applicable Borrower pursuant to this Agreement or the
applicable Alternate Currency Addendum. Such Interest Period shall end on (but
exclude) the day which corresponds numerically to such date one, two, three or
six months thereafter; provided, however, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month, such
Interest Period shall end on the last Business Day of such next, second, third
or sixth succeeding month. If an Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the next
succeeding Business Day, provided, however, that if said next succeeding
Business Day falls in a new calendar month, such Interest Period shall end on
the immediately preceding Business Day.
"INVENTORY" means any and all goods, including, without limitation, goods
in transit, wheresoever located, whether now owned or hereafter acquired by
Brightpoint or BPI which are held for sale or lease, furnished under any
contract of service or held as raw materials, work in process or supplies, and
all materials used or consumed in the business of Brightpoint or BPI, and shall
include such property the sale or other disposition of which has given rise to
Receivables and which has been returned to or repossessed or stopped in transit
by Brightpoint or BPI. Notwithstanding anything herein to the contrary,
"Inventory" shall not include any goods which are consigned to Brightpoint or
BPI by any third party.
"INVESTMENT" means, with respect to any Person, (i) any purchase or other
acquisition by that Person of any Equity Interest, notes, debentures or other
securities, or of a beneficial interest in any Equity Interest, notes,
debentures or other securities, issued by any other Person, (ii) any purchase
by that Person of all or substantially all of the assets of a business
conducted by another Person, and (iii) any loan, advance (other than deposits
with financial institutions available for withdrawal on demand, prepaid
expenses, accounts receivable, advances to employees and similar items in each
case made or incurred in the ordinary course of business) or capital
contribution by that Person to any other Person, including all Indebtedness to
such Person arising from a sale of property by such Person other than in the
ordinary course of its business.
"IRS" means the Internal Revenue Service and any Person succeeding to the
functions thereof.
"ISSUING LENDER" means, as the context may require, (i) First Chicago,
with respect to Letters of Credit issued by it pursuant to this Agreement,(ii)
Bank One, Indiana, National Association, with respect to the Existing Letters
of Credit and with respect to Letters of Credit issued by it pursuant to this
Agreement, (iii) any other Lender that becomes an Issuing Lender, pursuant to
Section 2.21, with respect to Letters of Credit issued by such Lender or (iv)
collectively, all the foregoing.
"ITALIAN LIRE" means the lawful money of Italy.
"JAPANESE YEN" means the lawful money of Japan.
"L/C DRAFT" means a draft drawn on an Issuing Lender pursuant to a Letter
of Credit.
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<PAGE> 26
"L/C INTEREST" is defined in Section 2.22.
"L/C OBLIGATIONS" means, without duplication, an amount equal to the sum
of (i) the aggregate of the amount then available for drawing under each of the
Letters of Credit, (ii) the face amount of all outstanding L/C Drafts
corresponding to the Letters of Credit, which L/C Drafts have been accepted by
the Issuing Lender, (iii) the aggregate outstanding amount of all Reimbursement
Obligations at such time and (iv) the aggregate face amount of all Letters of
Credit requested by any Borrower but not yet issued (unless the request for an
unissued Letter of Credit has been denied).
"LENDERS" means the lending institutions listed on the signature pages of
this Agreement, including the Issuing Lenders, Alternate Currency Lenders and
the Swing Line Lender and their respective successors and assigns.
"LENDING INSTALLATION" means, with respect to a Lender or the
Administrative Agent, any office, branch, subsidiary or affiliate of such
Lender or the Administrative Agent.
"LETTER(S) OF CREDIT" means (i) the Existing Letters of Credit and (ii)
the letters of credit to be issued by one of the Issuing Lenders pursuant to
Section 2.21 hereof.
"LIEN" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"LOAN(S)" means, (i) with respect to a Lender, such Lender's portion of
any Advance made pursuant to Section 2.1 or Section 2.3, as applicable, (ii)
with respect to the Swing Line Lender, its Swing Line Loans, (iii) with respect
to each Alternate Currency Agent, its Alternate Currency Swing Line Loans and
(iv) collectively all Loans, whether Revolving Loans or Alternate Currency
Loans and whether made or continued as or converted to Floating Rate Loans or
Fixed Rate Loans and including all Alternate Currency Swing Line Loans and all
Swing Line Loans.
"LOAN ACCOUNT" is defined in Section 2.15(F) hereof.
"LOAN DOCUMENTS" means this Agreement, the Alternate Currency Addenda, the
Notes, the Collateral Documents and all other documents, instruments and
agreements executed in connection therewith or contemplated thereby, including
the letter agreements regarding fees among the Administrative Agent, the
Arranger, the Syndication Agent and Brightpoint and between the Administrative
Agent and the Borrower, in each case as the same may be amended, restated or
otherwise modified and in effect from time to time.
"MANAGEMENT" means those Persons listed on Schedule 1.1.5 under such
heading.
"MARGIN STOCK" shall have the meaning ascribed to such term in
Regulation U.
"MATERIAL ADVERSE EFFECT" means a material adverse effect upon (a) the
business, condition (financial or otherwise), operations, performance,
properties or prospects of Brightpoint and its Subsidiaries taken as a whole,
(b) the ability of any Borrower to perform its respective obligations under the
Loan Documents in any material respect, or (c) the ability of the Lenders or
the Administrative Agent
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<PAGE> 27
to enforce in any material respect the Obligations or their rights with
respect to the Collateral other than any such inability resulting form the
Gross Negligence or willful misconduct of any Lender or any Agent.
"MAXIMUM AGGREGATE ALTERNATE CURRENCY AMOUNT" means Forty-Five Million and
00/100 Dollars ($45,000,000), as such amount may be adjusted from time to time
in accordance with the terms of this Agreement.
"MAXIMUM EUROCURRENCY AMOUNT" means Eighty-Five Million and 00/100 Dollars
($85,000,000).
"MULTIEMPLOYER PLAN" means a "Multiemployer Plan" as defined in Section
4001(a)(3) of ERISA which is, or within the immediately preceding six (6) years
was, contributed to by either Brightpoint or any member of the Controlled
Group.
"NET INCOME" is defined in Section 6.4(A) hereof.
"NON-BORROWER SUBSIDIARY INVESTMENT" means the sum of (a) all intercompany
loans made on or after the Closing Date from any Borrower to any Subsidiary of
Brightpoint which is not a Borrower; (b) all Investments made on or after the
Closing Date by any Borrower in any Subsidiary of Brightpoint which is not a
Borrower; (c) all dividends, distributions or other Restricted Junior Payments
made on or after the Closing Date from any Borrower to any Subsidiary of
Brightpoint which is not a Borrower; and (d) an amount equal to the net benefit
derived by the Subsidiaries of Brightpoint which are not Borrowers resulting
from any non-arms length transactions between the Borrowers and such
Subsidiaries.
"NON PRO RATA LOAN" is defined in Section 8.2 hereof.
"NOTES" means the Revolving Notes, any notes issued to evidence the
Alternate Currency Loans, any notes issued to evidence the Alternate Currency
Swing Line Loan Notes and the Swing Line Loan Note.
"NOTICE OF ASSIGNMENT" is defined in Section 13.3(B) hereof.
"OBLIGATIONS" means all Loans, advances, debts, liabilities, obligations,
covenants and duties owing by any of the Borrowers or Guarantors to the
Administrative Agent, the Arranger, the Syndication Agent, any Alternate
Currency Agent, any of the Lenders, the Issuing Lenders, the Swing Line Lender,
any Affiliate of any of the foregoing or any Indemnitee, of any kind or nature,
present or future, arising under this Agreement, the Notes, the Collateral
Documents, any other Loan Document, whether or not evidenced by any note,
guaranty or other instrument, whether or not for the payment of money, whether
arising by reason of an extension of credit, loan, guaranty, indemnification,
or in any other manner, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired. The term includes, without limitation,
all interest, charges, expenses, fees, attorneys' fees and disbursements,
paralegals' fees (in each case whether or not allowed), and any other sum
chargeable to any of the Borrowers or Guarantors under this Agreement or any
other Loan Document.
"OTHER TAXES" is defined in Section 2.15(E)(ii) hereof.
"PARTICIPANTS" is defined in Section 13.2(A) hereof.
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<PAGE> 28
"PAYMENT DATE" means the last Business Day of each March, June, September
and December.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"PERMITTED ACQUISITION" is defined in Section 6.3(G) hereof.
"PERMITTED EXISTING CONTINGENT OBLIGATIONS" means the Contingent
Obligations of the Borrowers and all other Subsidiaries of Brightpoint
identified as such on Schedule 1.1.2 to this Agreement.
"PERMITTED EXISTING INDEBTEDNESS" means the Indebtedness of the Borrowers
and all other Subsidiaries of Brightpoint identified as such on Schedule 1.1.3
to this Agreement.
"PERMITTED EXISTING INVESTMENTS" means the Investments of the Borrowers
and all other Subsidiaries of Brightpoint identified as such on Schedule 1.1.4
to this Agreement.
"PERMITTED EXISTING LIENS" means the Liens on assets of the Borrowers or
all other Subsidiaries of Brightpoint identified as such on Schedule 1.1.5 to
this Agreement.
"PERMITTED PURCHASE MONEY INDEBTEDNESS" is defined in Section 6.3(A)
hereof.
"PERSON" means any natural person, corporation, firm, company, joint
venture, partnership, association, enterprise, trust or other entity or
organization, or any government or political subdivision or any agency,
department or instrumentality thereof.
"PLAN" means an employee benefit plan defined in Section 3(3) of ERISA in
respect of which Brightpoint or any member of the Controlled Group is, or
within the immediately preceding six (6) years was, an "employer" as defined in
Section 3(5) of ERISA.
"PLEDGE AGREEMENTS" means (i) that certain Pledge Agreement of even date
herewith executed by Brightpoint in favor of the Administrative Agent for the
benefit of the Holders of Secured Obligations pledging 100% of the Capital
Stock of BPI to secure payment of the Secured Obligations; (ii) that certain
Equitable Share Charge of even date herewith executed by Brightpoint and
Brightpoint EMA Limited in favor of the Administrative Agent for the benefit of
the Holders of Secured Obligations pledging 20% and 45%, respectively, of the
Capital Stock of Brightpoint (UK) Limited to secure payment of the Secured
Obligations; (iii) that certain Share Mortgage of even date herewith executed
by Brightpoint and Brightpoint International (Asia Pacific) Pty Limited in
favor of the Administrative Agent for the benefit of the Holders of Secured
Obligations, together with any Notice of Identification delivered thereunder
with respect to the Capital Stock of Brightpoint Australia Pty Limited to
secure payment of the Secured Obligations; (iv) that certain Equitable Share
Charge of even date herewith executed by Brightpoint and Brightpoint
International (Asia Pacific) Pte Ltd in favor of the Administrative Agent for
the benefit of the Holders of Secured Obligations pledging 20% and 45%,
respectively, of the Capital Stock of Brightpoint China Limited to secure
payment of the Secured Obligations and (v) any other pledge agreements
subsequently executed by Brightpoint or any of its Subsidiaries to secure the
Secured Obligations, together in each case with all documents, instruments and
agreements executed in connection therewith or contemplated thereby.
"PRO RATA SHARE" means, with respect to any Lender, the percentage
obtained by dividing (A) the sum of (1) such Lender's Revolving Loan Commitment
at such time plus (2) such Lender's Alternate
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<PAGE> 29
Currency Commitments (in each case, as adjusted from time to time in
accordance with the provisions of this Agreement) by (B) the sum of (1) the
Aggregate Revolving Loan Commitments at such time plus (2) the aggregate of
the Alternate Currency Commitments at such time of all Alternate Currency
Lenders; provided, however, if all of the Commitments are terminated pursuant
to the terms of this Agreement, then "Pro Rata Share" means the percentage
obtained by dividing (x) the sum of all of such Lender's Loans and L/C
Obligations by (y) the aggregate amount of all Loans and L/C Obligations.
"PURCHASERS" is defined in Section 13.3(A) hereof.
"RATE OPTION" means the applicable Fixed Rate or Floating Rate.
"RECEIVABLE(S)" means and includes all of Brightpoint's or BPI's presently
existing and hereafter arising or acquired accounts, accounts receivable, and
all present and future rights of Brightpoint or BPI to payment for goods sold
or leased or for services rendered (except those evidenced by instruments or
chattel paper), whether or not they have been earned by performance, and all
rights in any merchandise or goods which any of the same may represent, and all
rights, title, security and guaranties with respect to each of the foregoing,
including, without limitation, any right of stoppage in transit.
"REGISTER" is defined in Section 13.3(C) hereof.
"REGULATION G" means Regulation G of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to
the extension of credit by nonbank, nonbroker lenders for the purpose of
purchasing or carrying margin stock (as defined therein).
"REGULATION T" means Regulation T of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to
the extension of credit by and to brokers and dealers of securities for the
purpose of purchasing or carrying margin stock (as defined therein).
"REGULATION U" means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to
the extension of credit by banks for the purpose of purchasing or carrying
Margin Stock applicable to member banks of the Federal Reserve System.
"REGULATION X" means Regulation X of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to
the extension of credit by foreign lenders for the purpose of purchasing or
carrying margin stock (as defined therein).
"REIMBURSEMENT OBLIGATION" is defined in Section 2.23 hereof.
"RELEASE" means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment, including the movement of Contaminants through or in
the air, soil, surface water or groundwater.
"RENTALS" is defined in Section 6.4(A) hereof.
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<PAGE> 30
"REPLACEMENT LENDER" is defined in Section 2.20 hereof.
"REPORTABLE EVENT" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days
after such event occurs; provided, however, that a failure to meet the minimum
funding standards of Section 412 of the Code and of Section 302 of ERISA shall
be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or
Section 412(d) of the Code.
"REQUEST FOR A NEW ALTERNATE CURRENCY FACILITY" is defined in Section 2.6.
"REQUIRED LENDERS" means Lenders whose Pro Rata Shares, in the aggregate,
are at least sixty-six and two-thirds percent (66-2/3%), provided, however,
that, if any of the Lenders shall have failed to fund its Revolving Credit
Share or Alternate Currency Share of any Loan requested by any Borrower which
such Lenders are obligated to fund under the terms of this Agreement and any
such failure has not been cured, then for so long as such failure continues,
"REQUIRED LENDERS" means Lenders (excluding all Lenders whose failure to fund
such Loans have not been so cured) whose Pro Rata Shares represent at least
sixty-six and two-thirds percent (66-2/3%) of the aggregate Pro Rata Shares of
such non-defaulting Lenders; provided, further, however, that, if the
Commitments have been terminated pursuant to the terms of this Agreement,
"REQUIRED LENDERS" means Lenders (without regard to such Lenders'
performance of their respective obligations hereunder) whose aggregate ratable
shares (stated as a percentage) of the aggregate outstanding principal balance
of all Loans and L/C Obligations are at least sixty-six and two-thirds percent
(66-2/3%).
"REQUIREMENTS OF LAW" means, as to any Person, the charter and by-laws or
other organizational or governing documents of such Person, and any law, rule
or regulation, or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject including, without limitation, the Securities Act, the Securities
Exchange Act, Regulations G, T, U and X, ERISA, the Fair Labor Standards Act,
the Worker Adjustment and Retraining Notification Act, Americans with
Disabilities Act of 1990, and any certificate of occupancy, zoning ordinance,
building, environmental or land use requirement or Permit or environmental,
labor, employment, occupational safety or health law, rule or regulation,
including Environmental, Health or Safety Requirements of Law.
"RESERVE REQUIREMENT" means the maximum reserve requirement, as prescribed
by the Board of Governors of the Federal Reserve System (or any successor) with
respect to "Eurocurrency liabilities" or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Eurocurrency Rate Loans is determined or category of extensions of credit or
other assets which includes loans by a non-United States office of any Lender
to United States residents.
"RESET DATE" is defined in Section 1.3.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other distribution,
direct or indirect, on account of any ownership, membership or other Equity
Interest in Brightpoint now or hereafter outstanding, except a dividend payable
solely in additional interests of the same type, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any ownership, membership or other Equity
Interest in Brightpoint or any such interests or shares of any
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<PAGE> 31
class of Capital Stock of Brightpoint now or hereafter outstanding, (iii) any
payment or prepayment of principal of, premium, if any, or interest, fees or
other charges on or with respect to, and any redemption, purchase, retirement,
defeasance, sinking fund or similar payment and any claim for rescission with
respect to any Permitted Subordinated Indebtedness, (iv) any payment made to
redeem, purchase, repurchase or retire, or to obtain the surrender of, any
outstanding options or other rights to acquire any ownership, membership or
other Equity Interests in Brightpoint, (v) any payment of a claim for the
rescission of the purchase or sale of, or for material damages arising
from the purchase or sale of any Permitted Subordinated Indebtedness or any
ownership, membership or other Equity Interests in Brightpoint or of a claim
for reimbursement, indemnification or contribution arising out of or related to
any such claim for damages or rescission and (vi) any payment of management
fees (or other fees of a similar nature) by Brightpoint to any holder of
ownership, membership or other Equity Interests in Brightpoint or any member of
management of Brightpoint or their Affiliates.
"REVOLVING ADVANCE" means a borrowing hereunder consisting of the
aggregate amount of the several ratable Revolving Loans (other than Swing Line
Loans) made by the Lenders having Revolving Loan Commitments (or purchased by
other Lenders pursuant to Section 2.12(f)) to Brightpoint of the same Type and,
in the case of Eurocurrency Rate Advances, denominated in the same currency and
for the same Interest Period.
"REVOLVING CREDIT AVAILABILITY" means, at any particular time, the amount
by which the Aggregate Revolving Loan Commitment at such time exceeds the
Dollar Amount of the Revolving Credit Obligations at such time.
"REVOLVING CREDIT OBLIGATIONS" means, at any particular time, the sum of
(i) the outstanding principal amount of the Revolving Loans at such time, plus
(ii) the L/C Obligations at such time plus (iii) the outstanding principal
amount of the Swing Line Loans at such time.
"REVOLVING CREDIT SHARE" means, with respect to any Lender, the percentage
obtained by dividing (A) such Revolving Lender's Revolving Loan Commitment at
such time by (B) the Aggregate Revolving Loan Commitment at such time.
"REVOLVING LOAN" is defined in Section 2.1.
"REVOLVING LOAN COMMITMENT" means, for each Lender, the obligation of such
Lender to make Revolving Loans, to purchase participations in Letters of Credit
and to purchase Alternate Currency Loans under Section 2.12(f) not exceeding
the Dollar Amount set forth on Exhibit E to this Agreement opposite its name
thereon under the heading "Revolving Loan Commitment" or in the assignment and
acceptance by which it became a Lender, as such amount may be modified from
time to time pursuant to the terms of this Agreement or to give effect to any
applicable assignment and acceptance.
"REVOLVING NOTE" means (a) the master promissory note, in substantially
the form of Exhibit F hereto, duly executed by a Borrower and issued to the
Administrative Agent on behalf of all of the Lenders which have made or
purchased Revolving Loans in the amount of the Aggregate Revolving Loan
Commitment, including any amendment, restatement, modification, renewal or
replacement of such Revolving Note and (b) any individual promissory note
issued by each of Brightpoint and BPI to any Lender requesting such individual
promissory note and in substantially the form of Exhibit G hereto, duly
executed by a Borrower and payable to the order of a Lender in the amount of
its Revolving Loan Commitment (or if to a Lender which purchased Revolving
Credit Obligations under Section 2.12(f) in the
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aggregate amount of the Revolving Credit Obligations so purchased), including
any amendment, restatement, modification, renewal or replacement of such
Revolving Note.
"RISK-BASED CAPITAL GUIDELINES" is defined in Section 3.2 hereof.
"SECURED OBLIGATIONS" means, collectively, (i) the Obligations and (ii)
all Hedging Obligations owing to one or more of the Lenders (or any agency or
Affiliate thereof).
"SECURITY AGREEMENTS" means those certain Security Agreements of even date
herewith executed by Brightpoint and BPI, respectively, in favor of the
Administrative Agent for the benefit of the Holders of Secured Obligations as
amended, restated or otherwise modified from time to time.
"SINGLE EMPLOYER PLAN" means a Plan maintained by Brightpoint or any
member of the Controlled Group for employees of Brightpoint or any member of
the Controlled Group.
"STERLING" means the lawful money of the United Kingdom.
"SUBSIDIARY" of a Person means (i) any corporation more than 50% of the
outstanding Capital Stock having ordinary voting power of which shall at the
time be owned or controlled, directly or indirectly, by such Person or by one
or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (ii) any company, partnership, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Subsidiary"
shall mean a direct or indirect Subsidiary of Brightpoint.
"SUBSIDIARY BORROWER" means each direct or indirect Subsidiary of
Brightpoint named as such on the signature pages hereto or any Subsidiary
Borrower duly designated by Brightpoint pursuant to Sections 2.12 and 2.29
hereof to request Advances hereunder; provided no Subsidiary may be a
Subsidiary Borrower if less than 80% of the combined voting power of such
Subsidiary's Capital Stock ordinarily having the right to vote at an election
of directors of such Subsidiary is owned of record and beneficially directly or
indirectly by Brightpoint, Brightpoint shall have the power, directly or
indirectly to elect a majority of the board of directors of such Subsidiary and
such Subsidiary shall have delivered to the Administrative Agent an Assumption
Letter in accordance with Section 2.29 and such other documents, instruments
and agreements as may be required pursuant to the terms of this Agreement.
"SWEDISH KRONER" means the lawful money of Sweden.
"SWING LINE LENDER" means First Chicago and any replacement Administrative
Agent that elects to be a Swing Line Lender.
"SWING LINE LOAN" means a loan made available to any of the Borrowers by
the Swing Line Lender pursuant to Section 2.2.
"SWING LINE LOAN COMMITMENT" means the obligation of the Swing Line Lender
to make Swing Line Loans up to a maximum principal amount of $5,000,000 at any
one time outstanding.
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"SWING LINE LOAN NOTE" means a Note in substantially the form of Exhibit H
hereto duly executed by Brightpoint and payable to the order of the Swing Line
Lender in the amount, if any, of its Swing Line Loan Commitment.
"SWISS FRANCS" means the lawful money of Switzerland.
"SYNDICATION AGENT" means Bank One, Indiana, National Association, in its
capacity as Syndication Agent with respect to this Agreement.
"TAXES" is defined in Section 2.15(E)(i) hereof.
"TERMINATION DATE" means the earlier of (a) June 24, 2002 or (b) the date
of termination of the Commitments pursuant to Section 2.6 or Section 8.1.
"TERMINATION EVENT" means (i) a Reportable Event with respect to any
Benefit Plan; (ii) the withdrawal of Brightpoint or any member of the
Controlled Group from a Benefit Plan during a plan year in which Brightpoint or
such Controlled Group member was a "substantial employer" as defined in Section
4001(a)(2) of ERISA or the cessation of operations which results in the
termination of employment of twenty percent (20%) of Benefit Plan participants
who are employees of Brightpoint or any member of the Controlled Group; (iii)
the imposition of an obligation on Brightpoint or any member of the Controlled
Group under Section 4041 of ERISA to provide affected parties written notice of
intent to terminate a Benefit Plan in a distress termination described in
Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to
terminate a Benefit Plan; (v) any event or condition which might constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Benefit Plan; or (vi) the partial or complete
withdrawal of Brightpoint or any member of the Controlled Group from a
Multiemployer Plan.
"TRADEMARK SECURITY AGREEMENT" means that certain Trademark Security
Agreement of even date herewith executed by Brightpoint in favor of the
Administrative Agent for the benefit of the Holders of Secured Obligations as
amended, restated or otherwise modified from time to time.
"TRANSFEREE" is defined in Section 13.5 hereof.
"TYPE" means, with respect to any Loan, its nature as a Base Rate Loan, a
Eurocurrency Rate Loan or an Alternate Currency Loan.
"UNMATURED DEFAULT" means an event which, but for the lapse of time or the
giving of notice, or both, would constitute a Default.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms. Any accounting terms used in this
Agreement which are not specifically defined herein shall have the meanings
customarily given them in accordance with United States generally accepted
accounting principles in existence as of the date hereof.
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1.2 Supplemental Disclosure. At any time at the request of the
Administrative Agent and at such additional times as Brightpoint determines,
Brightpoint shall supplement each schedule or representation herein or in the
other Loan Documents with respect to any matter hereafter arising which, if
existing or occurring at the date of this Agreement, would have been required
to be set forth or described in such schedule or as an exception to such
representation or which is necessary to correct any information in such
schedule or representation which has been rendered inaccurate thereby. If any
such supplement to such schedule or representation discloses the existence or
occurrence of events, facts or circumstances which are restricted or prohibited
by the terms of this Agreement or any other Loan Documents, such supplement to
such schedule or representation shall not be deemed an amendment thereof unless
expressly consented to in writing by Administrative Agent and the Required
Lenders, and no such amendments, except as the same may be consented to in a
writing which expressly includes a waiver, shall be or be deemed a waiver by
the Administrative Agent or any Lender of any Default disclosed therein. Any
items disclosed in any such supplemental disclosures shall be included in the
calculation of any limits, baskets or similar restrictions contained in this
Agreement or any of the other Loan Documents.
1.3 Currency Equivalents. Not later than 1:00 p.m., Chicago time or
local time, as applicable, on each Calculation Date, the Administrative Agent
and the Alternate Currency Agents, as applicable, shall (i) determine the
Exchange Rate as of such Calculation Date with respect to each Agreed Currency
and each Alternate Currency as to which an Alternate Currency Addendum is in
effect and (ii) give notice thereof to Brightpoint and the Lenders. The
Exchange Rates so determined shall become effective immediately with respect to
any new Loans being made or Letters of Credit being issued on any Calculation
Date and otherwise on the fifth Business Day immediately following the relevant
Calculation Date (a "RESET DATE"), shall remain effective until the next
succeeding Reset Date and shall during the period of their effectiveness be
employed in making any computation of currency equivalents required to be made
under this Agreement (other than any computation required under Section 2.12(f)
or Section 2.27).
ARTICLE II: THE CREDITS
2.1 Revolving Loans to Brightpoint and BPI. Upon the satisfaction of the
conditions precedent set forth in Sections 4.1 and 4.2 hereof, from and
including the date of this Agreement and prior to the Termination Date, each
Lender with a Revolving Loan Commitment severally and not jointly agrees, on
the terms and conditions set forth in this Agreement, to make revolving loans
to Brightpoint and/or BPI from time to time, in an Agreed Currency, in a Dollar
Amount not to exceed such Lender's Revolving Credit Share of the Dollar Amount
of the Revolving Credit Availability at such time (each individually, a
"REVOLVING LOAN" and, collectively, the "REVOLVING LOANS"); provided, however,
at no time shall the Dollar Amount of the Revolving Credit Obligations in
Agreed Currencies other than Dollars exceed the Maximum Eurocurrency Amount
other than as a result of currency fluctuations and then only to the extent
permitted in Section 2.5(B). Each Revolving Advance under this Section 2.1
shall consist of Revolving Loans made by each such Lender ratably in proportion
to such Lender's respective Revolving Credit Share. Subject to the terms of
this Agreement, Brightpoint and BPI may borrow, repay and reborrow at any time
prior to the Termination Date. The Revolving Loans made on the Closing Date
shall initially be Base Rate Loans and thereafter may be continued as Base Rate
Loans or converted into Eurocurrency Rate Loans in the manner provided in
Section 2.10 and subject to the other conditions and limitations therein set
forth and set forth in this Article II. On the Termination Date, the
outstanding principal balance of the Revolving Loans shall be paid in full by
the applicable Borrower and prior to the Termination Date prepayments of the
Revolving Loans shall be made if and to the extent required in Section 2.5.
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2.2 Swing Line Loans. (a) Amount of Swing Line Loans. Upon the
satisfaction of the conditions precedent set forth in Sections 4.1 and 4.2,
from and including the date of this Agreement and prior to the Termination
Date, the Swing Line Lender agrees, on the terms and conditions set forth in
this Agreement, to make Swing Line Loans in Dollars to Brightpoint from time to
time in an amount not to exceed the lesser of (i) its Swing Line Loan
Commitment minus the outstanding principal balance of all Swing Line Loans then
outstanding) and (ii) the Revolving Credit Availability at such time. Each
Swing Line Loan shall be in a minimum amount of not less than $100,000 (or such
lesser amount as may be agreed to by the Swing Line Lender) or an integral
multiple of $100,000 (or such lesser amount as may be agreed to by the Swing
Line Lender) in excess thereof, and all interest payable on the Swing Line
Loans shall be payable to the Swing Line Lender for its sole account.
(b) Borrowing Notice. Brightpoint shall deliver to the Administrative
Agent a Borrowing Notice signed by it not later than 11:00 a.m. (Chicago time)
on the Borrowing Date of each Swing Line Loan specifying (i) the applicable
Borrowing Date (which shall be a Business Day) and (ii) the aggregate amount of
the requested Swing Line Loan. The Swing Line Loans shall at all times be Base
Rate Loans.
(c) Making of Swing Line Loans. Not later than 2:00 p.m. (Chicago time)
on the applicable Borrowing Date, the Swing Line Lender shall make available
its Swing Line Loan in funds immediately available to Brightpoint.
(d) Repayment of Swing Line Loans. The Swing Line Loans shall be
evidenced by a Swing Line Loan Note and each Swing Line Loan shall be paid in
full by Brightpoint on or before the fifth Business Day after the Borrowing
Date for such Swing Line Loan. Outstanding Swing Line Loans may be repaid from
the proceeds of Revolving Loans or Swing Line Loans. Any repayment of a Swing
Line Loan shall be accompanied by accrued interest thereon and shall be in the
minimum amount of $100,000 (or such lesser amount as may be agreed to by the
Swing Line Lender) and in increments of $100,000 (or such lesser amount as may
be agreed to by the Swing Line Lender) in excess thereof or the full amount of
such Swing Line Loan. If Brightpoint at any time fails to repay a Swing Line
Loan on the applicable date when due, Brightpoint shall be deemed to have
elected to borrow a Base Rate Loan under Section 2.1 as of such date equal in
amount to the unpaid amount of such Swing Line Loan (notwithstanding the
minimum amount of Base Rate Advances as provided in Section 2.9). The proceeds
of any such Revolving Advance shall be used to repay such Swing Line Loan.
Unless the Administrative Agent shall have been notified in writing by the
Required Lenders prior to its making any Swing Line Loan, that the applicable
conditions precedent set forth in Article IV have not then been satisfied, each
Lender's obligation to make Revolving Loans pursuant to Section 2.1 and this
Section 2.2(d) or to purchase such Loans pursuant to Section 2.12(f) to repay
such Swing Line Loan shall be unconditional, continuing, irrevocable and
absolute and shall not be affected by any circumstances, including the
occurrence or continuance of a Default. In the event that any Lender fails to
make payment to the Administrative Agent of any amount due under this Section
2.2(d), the Administrative Agent shall be entitled to receive, retain and apply
against such obligation the principal and interest otherwise payable to such
Lender hereunder until the Administrative Agent receives such payment from such
Lender or such obligation is otherwise fully satisfied. In addition to the
foregoing, if for any reason any Lender fails to make payment to the
Administrative Agent of any amount due under this Section 2.2(d), such Lender
shall be deemed, at the option of the Administrative Agent, to have
unconditionally and irrevocably purchased from the applicable Swing Line
Lender, without recourse or warranty, an undivided interest in and
participation in the applicable Swing Line Loan in the amount of the Loan such
Lender was required to make pursuant to this Section 2.2(d) and such interest
and participation may be recovered from such Lender together with interest
thereon at the Federal Funds
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Effective Rate for each day during the period commencing on the date of demand
by the Administrative Agent and ending on the date such obligation is fully
satisfied.
2.3 Alternate Currency Loans.
(a) General Terms. Upon the satisfaction of the conditions
precedent set forth in Sections 4.1, 4.2 and 4.3 hereof and set forth in the
applicable Alternate Currency Addendum, from and including the later of the
date of this Agreement and the date of execution of the applicable Alternate
Currency Addendum and prior to the Termination Date (unless an earlier
Termination Date shall be specified in the applicable Alternate Currency
Addendum), the applicable Alternate Currency Agent agrees (or, if an Alternate
Currency Syndication Notice has been given and not withdrawn, each Alternate
Currency Lender that is a party to an Alternate Currency Addendum severally
and not jointly agrees), on the terms and conditions set forth in this
Agreement and in the applicable Alternate Currency Addendum, to make Alternate
Currency Loans under such Alternate Currency Addendum to the Subsidiary
Borrower party to such Alternate Currency Addendum from time to time in the
applicable Alternate Currency, in an amount not to exceed (i) in the case of
an Alternate Currency Loan made only by the Alternate Currency Agent, such
Alternate Currency Agent's Alternate Currency Commitment minus the aggregate
Dollar Amount of all outstanding Alternate Currency Swing Line Loans made by
such Alternate Currency Agent or (ii) in the case of Loans being made by all
Alternate Currency Lenders for such currency, such Alternate Currency Lender's
Alternate Currency Share of the applicable Alternate Currency Availability at
such time; provided, however, at no time shall the Dollar Amount of the
Alternate Currency Obligations for all Alternate Currencies exceed the Maximum
Aggregate Alternate Currency Amount other than as a result of currency
fluctuations and then only to the extent permitted in Section 2.5(B); provided,
further, at no time shall the Dollar Amount of the Alternate Currency
Obligations for any specific Alternate Currency exceed the maximum amount
specified as the maximum amount for such Alternate Currency in the applicable
Alternate Currency Addendum other than as a result of currency fluctuations
and then only to the extent permitted in Section 2.5(B). Each Alternate
Currency Advance under this Section 2.3 shall consist of (i) an Alternate
Currency Loan made solely by the Alternate Currency Agent or (ii) if an
Alternate Currency Syndication Notice has been given and not withdrawn by the
applicable Alternate Currency Agent, Alternate Currency Loans made by each
applicable Alternate Currency Lender ratably in proportion to such Alternate
Currency Lender's respective Alternate Currency Share. Subject to the terms of
this Agreement and the applicable Alternate Currency Addendum, the Subsidiary
Borrowers may borrow, repay and reborrow at any time prior to the Termination
Date. Unless otherwise specified in the applicable Alternate Currency
Addendum, the Alternate Currency Loans, if any, made on the Closing Date shall
initially be Floating Rate Loans and thereafter may be continued as Floating
Rate Loans or converted into Fixed Rate Loans in the manner provided in
Section 2.10 and the applicable Alternate Currency Addendum and subject to the
other conditions and limitations therein set forth and set forth in this
Article II. On the Termination Date, the outstanding principal balance of the
Alternate Currency Loans shall be paid in full by the applicable Borrower and
prior to the Termination Date prepayments of the Alternate Currency Loans
shall be made by the applicable Borrower if and to the extent required in
Section 2.5.
(b) Risk Participation and Syndication of Alternate Currency Loans
Fronted by the Alternate Currency Lender.
(i) (A) Unless the applicable Alternate Currency Agent shall have
been notified, in writing, by the Administrative Agent or the Required
Lenders prior to making any Alternate Currency Loan, that the applicable
conditions precedent in Article IV or the applicable Alternate
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Currency Addendum have not then been satisfied, immediately upon the
making of any Alternate Currency Loan by any Alternate Currency Agent
hereunder, each Alternate Currency Lender with respect to the applicable
currency shall be deemed to have automatically, irrevocably and
unconditionally committed and agreed to purchase and receive from the
applicable Alternate Currency Agent an assignment in such Alternate
Currency Loan and the obligations of the applicable Borrower in respect
thereof (an "A/C INTEREST") in an amount equal to such Alternate Currency
Lender's Alternate Currency Share of such Alternate Currency Loan. The
applicable Alternate Currency Agent shall have the option at any time or
from time to time upon written notice (an "ALTERNATE CURRENCY SYNDICATION
NOTICE") to each of the applicable Alternate Currency Lenders to require
each such Alternate Currency Lenders to purchase such A/C Interest.
(B) Effective on the date that is two (2) Business Days after any
such Alternate Currency Syndication Notice (the "SYNDICATION EFFECTIVE
DATE"), the applicable Alternate Currency Agent hereby sells, grants,
assigns and conveys to each applicable Alternate Currency Lender,
respectively, without recourse, warranty, or representation of any kind,
except as specifically provided herein, an undivided percentage in such
Alternate Currency Agent's right, title and interest in and to its
outstanding Alternate Currency Loans, in the amounts and percentages
necessary so that, from and after such sale, all Alternate Currency
Lenders' outstanding Alternate Currency Loans for such Alternate Currency
(including the Alternate Currency Agent's Alternate Currency Loans) shall
equal its Alternate Currency Share of the outstanding Alternate Currency
Loans for such currency. Effective on the Syndication Effective Date,
each Alternate Currency Lender hereby purchases and accepts such grant,
assignment and conveyance from the Alternate Currency Agent. Each Buying
Lender hereby agrees that its respective purchase price for the portion
of the outstanding Alternate Currency Loans shall equal the amount in
such Alternate Currency necessary so that, from and after payment of the
purchase price for such Alternate Currency Loans, each Alternate Currency
Lender's outstanding Alternate Currency Loans for such Alternate Currency
shall equal such Alternate Currency Lender's Alternate Currency Share of
the outstanding Alternate Currency Loans.
(C) In consideration for the sale and assignment of such Alternate
Currency Loans hereunder, (i) with respect to all Floating Rate Loans
made by the Alternate Currency Agent outstanding on the Syndication
Effective Date, the Alternate Currency Lenders shall pay the Alternate
Currency Agent, on the Syndication Effective Date, an amount equal to the
purchased percentage of all such Floating Rate Loans; and (ii) with
respect to each Fixed Rate Loan made by the Alternate Currency Lender
outstanding on the Syndication Effective Date, (a) on the last day of the
Interest Period therefor or (b) on such earlier date agreed to by the
Alternate Currency Agent and any Alternate Currency Lender or (c) on the
date on which any such Fixed Rate Loan either becomes due (by
acceleration or otherwise) or is prepaid (the date as described in the
foregoing clauses (a), (b) or (c) being hereinafter referred to as the
"PAYMENT DATE"), the Alternate Currency Lenders shall pay the Alternate
Currency Agent an amount equal to the purchased percentage of such Fixed
Rate Loan. In the event interest for the period from the Syndication
Effective Date to but not including the Payment Date is not paid by the
applicable Borrower with respect to any Fixed Rate Loan sold by the
Alternate Currency Agent to the Alternate Currency Agents hereunder, the
Alternate Currency Lenders shall pay to the Alternate Currency Agent
interest for such period on such Fixed Rate Loan at the applicable Fixed
Rate provided by this Agreement and the applicable Alternate Currency
Addendum.
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(D) The Alternate Currency Agent selling Alternate Currency Loans
hereunder hereby represents and warrants to each applicable Alternate
Currency Lender that such Alternate Currency Agent owns the Alternate
Currency Loans being sold and assigned hereby for its own account and has
not sold, transferred or encumbered any or all of its interest in such
Alternate Currency Loans.
(E) If for any reason any applicable Alternate Currency Lender
fails to make payment to the applicable Alternate Currency Agent of any
amount due under this Section 2.3(b), the applicable Alternate Currency
Agent shall be entitled to receive, retain and apply against such
obligation the principal and interest otherwise payable to such Alternate
Currency Lender hereunder until the Alternate Currency Agent receives
such payment from such Alternate Currency Lender or such obligation is
otherwise fully satisfied. In addition to the foregoing, if for any
reason any Alternate Currency Lender fails to make payment to the
applicable Alternate Currency Agent of any amount due under this Section
2.3(b), such Alternate Currency Lender shall be deemed, at the option of
the applicable Alternate Currency Agent, to have unconditionally and
irrevocably purchased from the applicable Alternate Currency Agent,
without recourse or warranty, an undivided interest in and participation
in the applicable Alternate Currency Loan in the amount of the A/C
Interest such Alternate Currency Lender was required to purchase pursuant
to this Section 2.3(b) and such interest and such participation may be
recovered from such Alternate Currency Lender together with interest
thereon at the Federal Funds Effective Rate for each day during the
period commencing on the date of demand by the applicable Alternate
Currency Agent and ending on the date such obligation is fully satisfied.
(ii) From and after such time as an Alternate Currency Agent gives
the applicable Alternate Currency Lenders an Alternate Currency
Syndication Notice, and until such time as such Alternate Currency
Syndication Notice has been withdrawn in writing, all Loans (other than
Alternate Currency Swing Line Loans) to be made in such Alternate
Currency shall be made ratably by each of the applicable Alternate
Currency Lenders in proportion to its respective Alternate Currency
Share.
(iv) Notwithstanding anything in this Agreement to the contrary,
interest payable on the Alternate Currency Loans (other than Alternate
Currency Swing Line Loans) shall be payable to the applicable Alternate
Currency Agent for application as follows (a) an amount equal to
one-eighth of one-percent (0.125%) per annum on the aggregate outstanding
amount of the Alternate Currency Loans to the Alternate Currency Agent
for its sole account and (b) the balance ratably among the Alternate
Currency Lenders for such currency (including the Alternate Currency
Agent in its capacity as such) in proportion to their Alternate Currency
Shares.
2.4 Alternate Currency Swing Line Loans. (a) Amount of Alternate
Currency Swing Line Loans. Upon the satisfaction of the conditions precedent
set forth in Article IV hereof and set forth in the applicable Alternate
Currency Addendum, from and including the later of the date of this Agreement
and the date of execution of the applicable Alternate Currency Addendum and
prior to the Termination Date (unless an earlier Termination Date shall be
specified in the applicable Alternate Currency Addendum), the applicable
Alternate Currency Agent agrees, on the terms and conditions set forth in this
Agreement and in the applicable Alternate Currency Addendum, to make Alternate
Currency Swing Line Loans (which may include loans under an overdraft
facility) in the applicable Alternate Currency to the Subsidiary Borrower
party to such Alternate Currency Addendum from time to time in a Dollar Amount
not to exceed the least of (i) $2,000,000 minus the outstanding principal
balance of all Alternate Currency Swing Line Loans in
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such Alternate Currency then outstanding; (ii) the Alternate Currency
Availability for such Alternate Currency at such time and (iii) the Alternate
Currency Agent's Alternate Currency Commitment with respect to such Alternate
Currency minus the outstanding principal balance of all Alternate Currency
Loans made by the Alternate Currency Agent with respect to such Alternate
Currency. Each Alternate Currency Swing Line Loan shall be in the minimum
amounts and multiples in excess thereof as set forth in the applicable
Alternate Currency Addendum (or such lesser amount as may be agreed to by the
Alternate Currency Agent), and all interest payable on the Alternate Currency
Swing Line Loans shall be payable to the Alternate Currency Agent for the
account of the Alternate Currency Agent.
(b) Borrowing Notice. Unless otherwise specified in the applicable
Alternate Currency Addendum, the applicable Subsidiary Borrower shall deliver
to the Administrative Agent and the applicable Alternate Currency Agent a
Borrowing Notice signed by it not later than 9:30 a.m. (local time in the time
zone of the applicable Alternate Currency Agent) on the Borrowing Date of each
Alternate Currency Swing Line Loan specifying (i) the applicable Borrowing Date
(which shall be a Business Day) and (ii) the aggregate amount of the requested
Alternate Currency Swing Line Loan (expressed in the applicable Alternate
Currency as well as the Dollar Amount thereof calculated by reference to the
then applicable Exchange Rate). Unless otherwise specified in the applicable
Alternate Currency Addendum, the Alternate Currency Swing Line Loans shall at
all times be Floating Rate Loans.
(c) Making of Alternate Currency Swing Line Loans. Promptly after
receipt of the Borrowing Notice under Section 2.4(b), the Administrative Agent
shall notify each Alternate Currency Lender for the applicable Alternate
Currency of the requested Alternate Currency Swing Line Loan. Not later than
2:00 p.m. (local time in the time zone of the applicable Alternate Currency
Agent) on the applicable Borrowing Date, the applicable Alternate Currency
Agent shall make available its Alternate Currency Swing Line Loan in the
Alternate Currency in funds immediately available directly to the applicable
Subsidiary Borrower.
(d) Repayment of Alternate Currency Swing Line Loans. If required under
the applicable Alternate Currency Addendum, the Alternate Currency Swing Line
Loans shall be evidenced by the Alternate Currency Swing Line Loan Notes and
each Alternate Currency Swing Line Loan shall be paid in full by the applicable
Subsidiary Borrower on or before the fifth Business Day after the Borrowing
Date for such Alternate Currency Swing Line Loan. Outstanding Alternate
Currency Swing Line Loans may be repaid from the proceeds of Alternate Currency
Loans or Alternate Currency Swing Line Loans. Any repayment of an Alternate
Currency Swing Line Loan shall be accompanied by accrued interest thereon and
shall be in the minimum amounts and multiples in excess thereof as set forth in
the applicable Alternate Currency Addendum (or such lesser amount as may be
agreed to by the applicable Alternate Currency Agent) or the full amount of
such Alternate Currency Swing Line Loan. If the applicable Subsidiary Borrower
at any time fails to repay an Alternate Currency Swing Line Loan on the
applicable date when due, such Subsidiary Borrower shall be deemed to have
elected to borrow a Floating Rate Alternate Currency Loan under Section 2.3 as
of such date equal in amount to the unpaid amount of such Alternate Currency
Swing Line Loan (notwithstanding the minimum amount of Advances as provided in
Section 2.9). The proceeds of any such Alternate Currency Advance shall be
used to repay such Alternate Currency Swing Line Loan. Unless the
Administrative Agent upon the request of or with the consent of the Required
Lenders shall have notified the applicable Alternate Currency Swing Line
Lender prior to such Alternate Currency Swing Line Lender making any
Alternate Currency Swing Line Loan, that the applicable conditions precedent
set forth in Article IV or the applicable Alternate Currency Addendum have not
then been satisfied, each applicable Lender's obligation to make Loans pursuant
to Section 2.3 and this Section 2.4(d) to repay such Alternate Currency Swing
Line Loan and each Lender's obligation
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<PAGE> 40
under Section 2.12(f) to purchase a portion of such Alternate Currency
Swing Line Loan or the Alternate Currency Loans made to repay such Alternate
Currency Swing Line Loan shall be unconditional, continuing, irrevocable and
absolute and shall not be affected by any circumstances, including the
occurrence or continuance of a Default. In the event that any Alternate
Currency Lender fails to make payment to the applicable Alternate Currency
Agent of any amount due under this Section 2.4(d), the Administrative Agent and
Alternate Currency Agent shall be entitled to receive, retain and apply against
such obligation the principal and interest otherwise payable to such Alternate
Currency Lender hereunder until the applicable Alternate Currency Agent
receives such payment from such Alternate Currency Lender or such obligation is
otherwise fully satisfied. In addition to the foregoing, if for any reason any
Alternate Currency Lender fails to make payment to the Alternate Current Agent
of any amount due under this Section 2.4(d), such Alternate Currency Lender
shall be deemed, at the option of the Alternate Currency Agent, to have
unconditionally and irrevocably purchased from the Alternate Currency Agent,
without recourse or warranty, an undivided interest in and participation in the
applicable Alternate Currency Swing Line Loan in the amount of the Alternate
Currency Loan such Alternate Currency Lender was required to make pursuant to
this Section 2.4(d) and such interest and participation may be recovered from
such Alternate Currency Lender together with interest thereon at the Federal
Funds Effective Rate for each day during the period commencing on the date of
demand by the Alternate Currency Agent and ending on the date such obligation
is fully satisfied.
2.5 Optional Payments; Mandatory Prepayments.
(A) Optional Payments. Except as otherwise specified in the applicable
Alternate Currency Addendum, if applicable, upon not less than one (1) Business
Days prior notice to the Administrative Agent or Alternate Currency Agent, as
applicable, which notice shall be given not later than 11:00 a.m. Chicago time
or local time as applicable), the Borrowers may from time to time repay or
prepay, without penalty or premium all or any part of outstanding Floating Rate
Advances. Except as otherwise specified in the applicable Alternate Currency
Addendum, if applicable, subject to payment of all amounts payable pursuant to
Section 3.4 and, in the case of any Alternate Currency Loan, subject to the
terms of the applicable Alternate Currency Addendum, upon not less than one (1)
Business Days prior notice to the Administrative Agent and, if applicable, the
Alternate Currency Agent, which notice shall be given not later than 11:00 a.m.
(Chicago time or local time as applicable), the Borrowers may from time to time
repay or prepay all or any part of the Fixed Rate Advances. Unless the
aggregate outstanding principal balance of the applicable Loans is to be
prepaid in full, voluntary prepayments of the Loans shall be in the same
aggregate minimum amounts and integral multiples in excess of such amounts as
are required for borrowings of Loans of the same Type and in the same currency
as set forth in Section 2.9 or in the applicable Alternate Currency Addendum.
(B) Mandatory Prepayments.
(i) Mandatory Prepayments of Alternate Currency Loans. If on any Reset
Date or the date of any borrowing of any Alternate Currency Loan (after giving
effect to any Alternate Currency Loans to be made or repaid on such date), the
Dollar Amount of all Alternate Currency Obligations under any Alternate
Currency Addendum exceeds 105% of the aggregate Alternate Currency Commitments
with respect thereto, the applicable Subsidiary Borrower shall on such Reset
Date or on the date of such borrowing prepay Alternate Currency Loans in an
aggregate amount such that after giving effect thereto the Dollar Amount of all
such Alternate Currency Obligations is less than or equal to the aggregate
Alternate Currency Commitments with respect thereto.
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<PAGE> 41
(ii) Mandatory Prepayments of Eurocurrency Rate Loans. If on any Reset
Date or the date of any borrowing (of any Eurocurrency Rate Loan after giving
effect to any Eurocurrency Rate Loans to be made or prepaid on such date), (a)
the Dollar Amount of all Revolving Loan Obligations exceeds 105% of the
Aggregate Revolving Loan Commitments or (b) the Dollar Amount of all
Eurocurrency Rate Loans in Agreed Currencies other than Dollars exceeds 105% of
the Maximum Eurocurrency Amount, the Borrowers shall on such Reset Date or on
the date of such borrowing prepay Revolving Loans in an aggregate amount such
that after giving effect thereof (y) the Dollar Amount of all Revolving Loan
Obligations is less than or equal to the Aggregate Revolving Loan Commitments
and (z) the Dollar Amount of all Eurocurrency Rate Loans in Agreed Currencies
other than Dollars is less than or equal to the Maximum Eurocurrency Amount.
2.6 Reduction of Commitments; Requests for New Alternate Currency
Facilities. Brightpoint may permanently reduce the Aggregate Revolving Loan
Commitment in whole, or in part ratably among the Lenders having Revolving Loan
Commitments, in an aggregate minimum and integral amounts of $3,000,000, upon
at least three (3) Business Days' prior written notice to the Administrative
Agent, which notice shall specify the amount of any such reduction; provided,
however, that the amount of the Aggregate Revolving Loan Commitment may not be
reduced below the aggregate principal amount of the outstanding Revolving
Credit Obligations. In addition, Brightpoint may permanently reduce the
Alternate Currency Commitments with respect to any Alternate Currency in whole,
or in part ratably among the applicable Alternate Currency Lenders, in an
aggregate minimum and integral amounts of $1,000,000 upon at least three (3)
Business Days' written notice to the Administrative Agent and the applicable
Alternate Currency Agent, which notice shall specify the amount of such
reduction; provided, however, that the amount of the Alternate Currency
Commitments with respect to any Alternate Currency may not be reduced below the
aggregate principal amount of the outstanding Alternate Currency Obligations
with respect thereto. Any reduction in the Alternate Currency Commitments
shall be an automatic reduction of the Maximum Aggregate Alternate Currency
Amount. Following any such reduction of the Alternate Currency Commitments and
the Maximum Aggregate Alternate Currency Amount, Brightpoint may, by written
notice to the Administrative Agent request the establishment of additional
Alternate Currency Commitments in additional Alternate Currencies other than
Sterling, Hong Kong Dollars and Australian Dollars in an amount not to exceed
the aggregate amount of any such reductions ("REQUEST FOR A NEW ALTERNATE
CURRENCY FACILITY"). The Administrative Agent will promptly forward to the
Lenders any Request for a New Alternate Currency Facility received from
Brightpoint; provided each Lender shall be deemed not to have agreed to such
request unless its written consent thereto has been received by the
Administrative Agent within ten (10) Business Days from the date of such
notification by the Administrative Agent to such Lender. In the event that the
Required Lenders consent to such Request for a New Alternate Currency Facility,
the Maximum Aggregate Alternate Currency Amount shall be reinstated by the
amount so approved, the Alternate Currency requested shall be an Agreed
Currency and upon execution of the applicable Alternate Currency Addendum and
the other documents, instruments and agreements required pursuant to this
Agreement and such Alternate Currency Addendum, the Alternate Currency Loans
with respect thereto may be made. All accrued facility fees shall be payable
on the effective date of any termination of the obligations of the Lenders to
make Loans hereunder.
2.7 Method of Borrowing.
(a) Revolving Loans. The Administrative Agent shall notify each Lender
having Revolving Loan Commitments by 12:00 noon (Chicago time) of each
Revolving Advance on the Borrowing Date of each Base Rate Advance, three
Business Days before the Borrowing Date of each Eurocurrency Rate Advance in
Dollars and four Business Days before the Borrowing Date for each Eurocurrency
Rate Advance in an
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<PAGE> 42
Agreed Currency other than Dollars and, not later than 1:00 p.m.
(Chicago time) on each Borrowing Date, each Lender having Revolving Credit
Commitments shall make available its Revolving Loan or Loans, in funds
immediately available in Chicago, Illinois to the Administrative Agent at its
address specified pursuant to Article XIV hereof unless the Administrative
Agent has notified the Lenders that such Loan is to be made available to the
applicable Borrower at the Administrative Agent's Eurocurrency Payment Office,
in which case each Lender shall make available its Revolving Loan or Loans, in
funds immediately available to the Administrative Agent at its Eurocurrency
Payment Office not later than 1:00 p.m. (local time in the city of the
Administrative Agent's Eurocurrency Payment Office) in the Agreed Currency
designated by the Administrative Agent. The Administrative Agent will promptly
make the funds so received from the Lenders available to the applicable
Borrower.
(b) Alternate Currency Loans. Subject to Section 2.10 and any
alternative procedures set forth in the applicable Alternate Currency Addendum,
if an Alternate Currency Loan is to be funded by all applicable Alternate
Currency Lenders, the applicable Alternate Currency Agent shall notify each
applicable Alternate Currency Lender by 10:00 a.m. (local time in the city of
the Alternate Currency Agent's office designated in the Alternate Currency
Addendum for payments for the Alternate Currency) of each Alternate Currency
Advance three Business Days before the Borrowing Date of each Alternate
Currency Advance and, not later than 1:00 p.m. (local time) on each Borrowing
Date, each such Alternate Currency Lender shall make available its Alternate
Currency Loan or Loans, in funds immediately available to the Alternate
Currency Agent at its office designated in the Alternate Currency Addendum for
payments of such Alternate Currency in the Alternate Currency. The Alternate
Currency Agent will promptly make the funds so received from the Alternate
Currency Lenders available to the applicable Borrower.
2.8 Method of Selecting Types and Interest Periods for Advances;
Determination of Applicable Margins. The Advances may be Floating Rate
Advances or Fixed Rate Advances, or a combination thereof, selected by the
applicable Borrower in accordance with this Article II and, if applicable, the
applicable Alternate Currency Addendum. The applicable Borrower may select, in
accordance with this Article II and, if applicable, the applicable Alternate
Currency Addendum, Rate Options and Interest Periods applicable to portions of
the Revolving Loans and the Alternate Currency Loans; provided all Swing Line
Loans and, unless otherwise specified in the applicable alternate Currency
Addendum, all Alternate Currency Swing Line Loans shall be Floating Rate Loans
bearing interest at the Base Rate in the case of Swing Line Loans or the
Floating Rate specified in the applicable Alternate Currency Addendum for
Alternate Currency Swing Line Loans.
(a) Method of Selecting Types and Interest Periods for Advances.
The applicable Borrower shall select the Type of Advance and, in the case
of each Fixed Rate Advance, the Interest Period and Agreed Currency or
Alternate Currency applicable to each Advance from time to time. Subject
to any alternative procedures for Alternate Currency Advances as set
forth in the applicable Alternate Currency Addendum, the applicable
Borrower shall give the Administrative Agent and, in the case of an
Alternate Currency Loan, the applicable Alternate Currency Agent
irrevocable notice (a "BORROWING NOTICE") (i) not later than 11:00 a.m.
(Chicago time or local time for Eurocurrency Rate Advances or Alternate
Currency Advances) (i) on the Borrowing Date of each Base Rate Advance;
(ii) three Business Days before the Borrowing Date for each Eurocurrency
Rate Advance in Dollars; and (iii) four Business Days before the
Borrowing Date for each Eurocurrency Rate Advance in an Agreed Currency
other than Dollars and each Alternate Currency Advance, specifying: (i)
the Borrowing Date (which shall be a Business Day) of such Advance; (ii)
the aggregate amount of such Advance; (iii) the Type of Advance selected;
(iv) in
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<PAGE> 43
the case of each Eurocurrency Rate Advance, the Interest Period
and Agreed Currency applicable thereto; and (v) in the case of each
Alternate Currency Advance, the Interest Period and Alternate Currency
applicable thereto. Each Revolving Advance in an Agreed Currency other
than Dollars must be a Eurocurrency Rate Advance. There shall be no more
than ten (10) Interest Periods in effect with respect to all of the
Revolving Loans at any time (with Interest Periods for the same term but
in different currencies or to different Borrowers being treated as
separate Interest Periods) and there shall be no more than the identified
maximum number of Interest Periods for any Alternate Currency as shall be
set forth in the applicable Alternate Currency Addendum. The Borrowers
shall select Interest Periods so that, to the best of the Borrowers'
knowledge, it will not be necessary to prepay all or any portion of any
Fixed Rate Advance prior to the last day of the applicable Interest
Period in order to make mandatory prepayments as required pursuant to the
terms hereof. Subject to any alternate pricing provisions set forth in
the applicable Alternate Currency Addendum for Alternate Currency
Advances, each Floating Rate Advance shall bear interest from and
including the date of the making of such Advance to (but not including)
the date of repayment thereof at the Base Rate, changing when and as such
Base Rate changes. Subject to any alternate pricing provisions set forth
in the applicable Alternate Currency Addendum for Alternate Currency
Advances, each Fixed Rate Advance shall bear interest from and including
the first day of the Interest Period applicable thereto to (but not
including) the last day of such Interest Period at the interest rate
determined as applicable to such Fixed Rate Advance. All Obligations
(other than Advances) shall bear interest from and including the date
such amount is payable under the terms of this Agreement or the other
Loan Documents to (but not including) the date of repayment thereof at
the Base Rate, changing when and as such Base Rate changes. Changes in
the rate of interest on that portion of any Advance maintained as a
Floating Rate Loan or such other Obligations will take effect
simultaneously with each change in the applicable Floating Rate.
(b) Determination of Applicable Margins, Applicable Letter of
Credit Fee and Applicable Facility Fee.
(i) Definitions. As used in this Section 2.8(b) and in this
Agreement, the following terms shall have the following meanings:
"Applicable Margins", "Applicable Facility Fee" and
"Applicable Letter of Credit Fee" shall mean the Applicable
Floating Rate Margin and/or Applicable Fixed Rate Margin, with
respect to Loans and the Applicable Facility Fee and/or Applicable
Letter of Credit Fee, with respect to fees payable as the case may
be. The Applicable Margins shall be determined, in accordance with
the provisions of this Section 2.8(b), by reference to the
following:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Level I Level II Level III Level IV Level V
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
< < <
Leverage Ratio > 3.50 - 3.50 to 1.00 - 3.00 to 1.00 - 2.00 to 1.00 < 1.00 to
to 1.00 and and and 1.00
> 3.00 to 1.00 > 2.00 to 1.00 > 1.00 to 1.00
- -------------------------------------------------------------------------------------
Applicable
Facility Fee 0.25% 0.20% 0.15% 0.125% 0.10%
- --------------------------------------------------------------------------------------
</TABLE>
- 34 -
<PAGE> 44
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Level I Level II Level III Level IV Level V
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Applicable Fixed
Rate Margin 1.125% 0.925% 0.725% 0.50% 0.40%
- -------------------------------------------------------------------------------
Applicable Floating
Rate
Margin 0% 0% 0% 0% 0%
- -------------------------------------------------------------------------------
Applicable Letter
of Credit Fee 1.00% 0.80% 0.60% 0.375% 0.275%
- -------------------------------------------------------------------------------
</TABLE>
"Leverage Ratio" shall have the meaning ascribed to that term
in Section 6.4(D).
(ii) Determination of Applicable Margins, Applicable Letter of
Credit Fee and Applicable Facility Fee.
(A) The Applicable Margin in respect of any Loan, the Applicable
Letter of Credit Fee payable under Section 2.25 and the Applicable
Facility Fee payable under Section 2.15(c) shall be determined by
reference to the table set forth in clause (i) above, as applicable, on
the basis of the Leverage Ratio (calculated as provided in Section
6.4(D)) determined by reference to the most recent financial statements
delivered pursuant to Section 6.1(A)(i) or 6.1(A)(ii); provided, however,
for the period from the Closing Date until the Applicable Margins,
Applicable Letter of Credit Fee and Applicable Facility Fee are first
adjusted pursuant to clause (B) below, it shall be assumed that the
Leverage Ratio is at Level III.
(B) Upon receipt of the financial statements delivered pursuant to
Section 6.1(A)(i) or Section 6.1(A)(ii), as applicable, the Applicable
Margins for all outstanding Loans, the Applicable Letter of Credit Fee
and Applicable Facility Fee shall be adjusted, such adjustment being
effective on the first (1st) Business Day after receipt of such
financial statements and the Compliance Certificate to be delivered
in connection therewith; provided, however, if the Borrowers shall
not have timely delivered such financial statements in accordance
with Section 6.1(A)(i) or Section 6.1(A)(ii), as applicable, beginning
with the date upon which such financial statements should have been
delivered and continuing until such financial statements are delivered,
it shall be assumed for purposes of determining the Applicable Margins,
the Applicable Facility Fee and the Applicable Letter of Credit Fee that
the Leverage Ratio was greater than 3.50 to 1.0.
2.9 Minimum Amount of Each Advance. Each Eurocurrency Rate Advance shall
be in the minimum amount of $1,000,000 or the Equivalent Amount of any Agreed
Currency other than Dollars (and in multiples of $250,000 or the Equivalent
Amount of any Agreed Currency other than Dollars if in excess thereof). Each
Base Rate Advance shall be in the minimum amount of $500,000 (and in multiples
of $250,000 if in excess thereof), provided, however, that any Base Rate
Advance may be in the amount of the unused Aggregate Revolving Loan Commitment.
Each Alternate Currency Advance shall be in the minimum amounts and multiples
in excess thereof as set forth in the applicable Alternate Currency Addendum.
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<PAGE> 45
2.10 Method of Selecting Types and Interest Periods for Conversion and
Continuation of Advances.
(A) Right to Convert. The Borrowers may elect from time to time, subject
to the provisions of Section 2.4, Section 2.8, this Section 2.10 and, if
applicable, any Alternate Currency Addendum, to convert all or any part of a
Loan (other than a Swing Line Loan or Alternate Currency Swing Line Loan) of
any Type into any other Type or Types of Loans; provided that any conversion of
any Fixed Rate Advance shall be made on, and only on, the last day of the
Interest Period applicable thereto.
(B) Automatic Conversion and Continuation. Floating Rate Loans shall
continue as Floating Rate Loans unless and until such Floating Rate Loans are
converted into Fixed Rate Loans. Fixed Rate Loans shall continue as Fixed Rate
Loans until the end of the then applicable Interest Period therefor, at which
time such Fixed Rate Loans (other than Fixed Rate Loans in an Alternate
Currency or Agreed Currency other than Dollars) shall be automatically
converted into Floating Rate Loans unless the applicable Borrower shall have
given the Administrative Agent and, if applicable, Alternate Currency Agent
notice in accordance with Section 2.10(D) requesting that, at the end of such
Interest Period, such Fixed Rate Loans continue as a Fixed Rate Loan. Fixed
Rate Loans in an Alternate Currency or Agreed Currency or Alternate Currency
other than Dollars shall automatically continue as Fixed Rate Loans with an
Interest Period of one (1) month unless the applicable Borrower notifies the
Administrative Agent and, if applicable, Alternate Currency Agent otherwise as
provided herein.
(C) No Conversion Post-Default or Post-Unmatured Default.
Notwithstanding anything to the contrary contained in Section 2.10(A) or
Section 2.10(B), no Loan may be converted into or continued as a Fixed Rate
Loan (other than a Eurocurrency Rate Loan in an Agreed Currency other than
Dollars) except with the consent of the Required Lenders when any Default or
Unmatured Default has occurred and is continuing.
(D) Conversion/Continuation Notice. The Borrower shall give the
Administrative Agent and, if applicable, Alternate Currency Agent irrevocable
notice (a "CONVERSION/CONTINUATION NOTICE") of each conversion of a Floating
Rate Loan into a Fixed Rate Loan or continuation of a Fixed Rate Loan (other
than a Eurocurrency Rate Loan in an Agreed Currency other than Dollars) not
later than 11:00 a.m. (Chicago time) three Business Days or with respect to the
continuation of a Fixed Rate Loan in an Alternate Currency or an Agreed
Currency other than Dollars or an Alternate Currency, four Business Days prior
to the date of the requested conversion or continuation, specifying: (1) the
requested date (which shall be a Business Day) of such conversion or
continuation; (2) the amount and Type of the Loan to be converted or continued;
and (3) the amounts of Fixed Rate Loan(s) into which such Loan is to be
converted or continued and the duration of the Interest Periods applicable
thereto. If no such notice is given with respect to a Eurocurrency Rate Loan
in an Agreed Currency other than Dollars or an Alternate Currency Loan, the
Interest Period applicable to the automatic continuation of such Loan shall be
one month.
2.11 Default Rate. After the occurrence and during the continuance of a
Default, at the option of the Administrative Agent or at the direction of the
Required Lenders, the interest rate(s) applicable to the Obligations and the
letter of credit fee payable under Section 2.25 with respect to Letters of
Credit shall be increased by two percent (2.0%) per annum above the Base Rate,
Eurocurrency Rate, the applicable rate of interest payable with respect to
Alternate Currency Advances or Applicable Letter of Credit Fee, as applicable.
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<PAGE> 46
2.12. Terms of Alternate Currency Facilities.
(a) Each of Brightpoint and one or more Alternate Currency Lenders may in
their respective discretion from time to time agree that one or more Subsidiary
Borrowers may borrow Alternate Currency Loans on a revolving basis from any one
or more Alternate Currency Lenders by delivering an Alternate Currency Addendum
to the Administrative Agent, executed by Brightpoint, BPI, each such Subsidiary
Borrower, the applicable Alternate Currency Agent and each such Alternate
Currency Lender; provided, however, that on the effective date of such
borrowing, (i) an Exchange Rate with respect to each Alternate Currency covered
by such Alternate Currency Addendum shall be determinable and (ii) no Default
or Unmatured Default shall have occurred and be continuing. Each reference in
this Agreement to any Lender shall, to the extent applicable, be deemed also to
be a reference to each Alternate Currency Lender, subject to the second
sentence of the definition of such term.
(b) Alternate Currency Addenda. Each Alternate Currency Addendum shall
set forth (i) the applicable Alternate Currency Agent, (ii) the maximum amount
(expressed in Dollars and without duplication) available to be borrowed from
all Alternate Currency Lenders under such Alternate Currency Addendum (as the
same may be reduced from time to time pursuant to Section 2.6) and (iii) with
respect to each Alternate Currency Lender party to such Alternate Currency
Addendum, its Alternate Currency Commitment (expressed in Dollars and without
duplication) available to be borrowed from such Alternate Currency Lender
thereunder (as the same may be reduced from time to time pursuant to Section
2.6. Except as provided herein, the making of Alternate Currency Loans by an
Alternate Currency Agent or Alternate Currency Lender under an Alternate
Currency Addendum shall under no circumstances reduce the amount, if any,
available to be borrowed from such Lender under any
other Alternate Currency Addendum to which such Lender is a party. The making
of Alternate Currency Loans by an Alternate Currency Agent or Alternate
Currency Lender under an Alternate Currency Addendum shall under no
circumstances reduce the amount, if any, available to be borrowed from such
Lender as a Revolving Loan.
(c) Limitations on Alternate Currency Loans; Enforcement. Except as
otherwise required by applicable law, in no event shall the Alternate Currency
Agent or Alternate Currency Lenders have the right to accelerate the Alternate
Currency Loans outstanding under any Alternate Currency Addendum or to
terminate their commitments (if any) thereunder to make Alternate Currency
Loans prior to the stated termination date in respect thereof, except that such
Alternate Currency Agent and Alternate Currency Lenders shall, in each case,
have such rights upon an acceleration of the Loans and a termination of the
Commitments pursuant to Article VIII. No Alternate Currency Loan may be made
if (i) an Exchange Rate with respect to the applicable Alternate Currency
cannot be determined, or (ii) after giving effect thereto, (A) the Dollar
Amount of the Alternate Currency Obligations for such Alternate Currency would
exceed the maximum amount specified as the maximum amount for such Alternate
Currency in the applicable Alternate Currency Addendum or (B) the Dollar Amount
of the Alternate Currency Obligations for all Alternate Currencies would
exceed the Maximum Aggregate Alternate Currency Amount.
(d) Reporting by Alternate Currency Agents. Each Alternate Currency
Agent shall furnish to the Administrative Agent and the applicable Alternate
Currency Lenders, not less frequently than monthly, and at any other time at
the reasonable request of the Administrative Agent, a statement setting forth
the outstanding Alternate Currency Loans made and repaid during the period
since the last such report under such Alternate Currency Addendum.
(e) Termination of Alternate Currency Addenda. Brightpoint may terminate
any Alternate Currency Addendum in its sole discretion if there are no Loans
outstanding thereunder, by written notice to
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<PAGE> 47
the Administrative Agent, which notice shall be executed by Brightpoint
and each relevant Subsidiary Borrower. Once notice of such termination is
received by the Administrative Agent, such Alternate Currency Addendum shall
immediately cease to be effective and no Alternate Currency Loans shall be made
thereunder; provided, however, without the prior approval of all of the
Lenders, no such termination of an Alternate Currency shall (a) operate as a
release of or otherwise relieve the relevant Subsidiary Borrower from any
obligations under this Agreement or the other Loan Documents, including,
without limitation, pursuant to Article IX or (b) operate as a release of any
Pledge Agreement executed by such Subsidiary Borrower or with respect to the
stock of such Subsidiary Borrower.
(f) Conversion of Alternate Currency Loans; Risk Sharing by All Lenders
in Alternate Currency Loans.
(1) Conversion Events. For purposes of this Agreement, "CONVERSION
EVENT" means the occurrence of any one or more of the following:
(A) with respect to all Alternate Currency Loans,
automatically upon the occurrence of any termination of the
commitments or acceleration of the Obligations pursuant to Section
8.1(a), without any election or action on the part of the
Administrative Agent, Alternate Currency Agent or any Lender;
(B) with respect to the Alternate Currency Loans of any
particular Borrower, automatically upon the occurrence of any
Default described in Section 7.1(f), 7.1(g) or 7.1(i) with respect
to such Borrower, without any election or action on the part of the
Administrative Agent, Alternate Currency Agent or any Lender;
(C) with respect to the Alternate Currency Loans of any
particular Borrower, upon (a) the occurrence of any Default
(whether such Default affects such Borrower or any other Borrower
or Guarantor) described in (i) Section 7.1(a) (payment default);
(2) Section 7.1(b) to the extent such Default results from a
violation of the covenants contained in Sections 6.2(N) as it
relates to such Borrower (post-closing requirements), 6.3(A)
(indebtedness, 6.3(B) (restricted junior payments), 6.3(H)
(affiliate transactions), or 6.4 (financial covenants); (3) Section
7.1(e) (default under other indebtedness); (4) Section 7.1(f)
(involuntary bankruptcy); (5) Section 7.1(g) (voluntary
bankruptcy); (6) Section 7.1(i) (dissolution); (7) Section 7.1(m)
(change of control) or (8) Section 7.1(p) (guarantor revocation)
and (b) the election by either the Alternate Currency Agent with
respect to such Alternate Currency or by the Alternate Currency
Lenders whose Alternate Currency Shares for such Alternate Currency
represent 66-2/3% or greater of the aggregate Alternate Currency
Commitments for such Alternate Currency; or
(D) with respect to all Alternate Currency Loans, upon (a) the
occurrence of any Default and (b) the election by the Required
Lenders (any election under clause (C) or this clause (D) being
sometimes referred to as a "CONVERSION ELECTION").
(2) Redenomination of Loans in Dollars Upon a Conversion Event.
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(A) Immediately upon the occurrence of any Conversion Event under
Section 2.12(f)(1)(A), all Loans denominated in any currency other than
Dollars shall automatically, without any election or action on the part
of the Administrative Agent, any Alternate Currency Agent or any Lender
be converted to and redenominated in Dollars and shall be deemed to be
"Converted Loans" for purposes of this Section 2.12(f).
(B) Immediately upon the occurrence of any Conversion Event under
Section 2.12(f)(2)(B), the Alternate Currency Loans of the particular
Borrower affected thereby shall automatically, without any election or
action on the part of the Administrative Agent, any Alternate Currency
Agent or any Lender be converted to and redenominated in Dollars and
shall be deemed "Converted Loans" for purposes of this Section 2.12(f).
(C) Upon the occurrence of any Conversion Election under Section
2.12(f)(2)(C), if such election is made by the Alternate Currency Lenders
for any particular Alternate Currency Loans, such Alternate Currency
Lenders shall advise the Alternate Currency Agent in writing of their
election, which notice shall state that it is a "Conversion Notice" and
shall specify the Subsidiary Borrower the Alternate Currency Loans of
which are to be converted. Promptly upon receipt of such written notice
or if any Conversion Election occurs under Section 2.12(f)(2)(C) as a
result of an election on the part of the Alternate Currency Agent, the
Alternate Currency Agent shall give a Conversion Notice to the
Administrative Agent and Brightpoint. On the date of the receipt by
Brightpoint of such Conversion Notice, the Alternate Currency Loans of
such Subsidiary Borrower shall automatically, without any further
election or action in the part of the Administrative Agent or any
Alternate Currency Agent or any Lender be converted to and redenominated
in Dollars and shall be deemed "Converted Loans" for purposes of this
Section 2.12(f).
(D) Upon the occurrence of any Conversion Election under Section
2.12(f)(2)(D), if such election is made by the Required Lenders, the
Required Lenders shall advise the Administrative Agent in writing of
their election, which notice shall state that it is a "Conversion
Notice". Promptly upon receipt of such written notice, the
Administrative Agent shall give a Conversion Notice to Brightpoint and
the Alternate Currency Agents. On the date of the receipt by Brightpoint
of such Conversion Notice, all Loans denominated in any currency other
than Dollars shall automatically, without any further election or action
in the part of any Agent or any Lender be converted to and redenominated
in Dollars and shall be deemed "Converted Loans" for purposes of this
Section 2.12(f).
The date of any conversions hereunder shall be referred to as the
"CONVERSION DATE".
(3) Exchange Rate for Conversions. Any Conversion Date (or as soon
thereafter as reasonably practicable if such conversion occurred
automatically and at a time when the applicable Alternate Currency Agent
was not made aware of the circumstances giving rise thereto) shall be a
Calculation Date for any currencies in which Converted Loans were
denominated and the Administrative Agent for Revolving Loans which are
Converted Loans and the Alternate Currency Agent or Alternate Currency
Agents for Alternate Currency Loans which are Converted Loans, as
applicable, shall (i) determine the Exchange Rate as of such Calculation
Date with respect to each currency in which Converted Loans were
denominated and (ii) give notice thereof to Brightpoint, the
Administrative Agent and the Lenders. The Exchange Rate so determined
shall be the Exchange Rate applicable with respect to all Converted Loans
initially denominated in such currency.
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(4) Payments in Dollars After Conversion; Conversion of Accrued
Interest; Termination of Alternate Currency Commitments and Obligations
to Make Revolving Loans in Currencies Other than Dollars.
Notwithstanding anything in this Agreement or any of the other Loan
Documents to the contrary, from and after any Conversion Date, all
payments with respect to the applicable Converted Loans, whether
principal, interest or otherwise, shall be made by the applicable
Borrower or Borrowers in Dollars. Accrued and unpaid interest with
respect to any Converted Loan shall, effective on the Conversion Date
applicable thereto, be converted into and redenominated in Dollars at the
Exchange Rate determined pursuant to clause (3) above. Upon the
occurrence of any Conversion Event with respect to the Alternate Currency
Loans to any Subsidiary Borrower, the Alternate Currency Commitments and
Alternate Currency Swing Line Loan Commitment to such Borrower shall be
automatically terminated. From and after the occurrence of any Conversion
Event with respect to Revolving Loans, any Revolving Loans made thereafter
shall only be made in Dollars and the Borrowers shall have no option to
select Agreed Currencies for Revolving Loans.
(5) Interest Rates for Converted Loans; Breakage Costs.
Notwithstanding anything in this Agreement or any of the other Loan
Documents to the contrary, the Converted Loans shall initially be Base
Rate Loans on the Conversion Date (and the Borrower shall be liable for
all amounts pursuant to Section 3.4 as a result of the conversion prior
to the end of the applicable Interest Period) and thereafter may be
continued as Base Rate Loans or converted into Eurocurrency Rate Loans
denominated in Dollars in the manner provided in Section 2.10 and subject
to the other conditions and limitations therein set forth and set forth
in this Article II.
(6) Reallocation of Shares; Assignment of Loans.
(A) Definitions. For purposes of this Section 2.12(f)(6) the
following terms shall have the following meanings:
"AC SELLING LENDER" means any Alternate Currency Lender which
made Alternate Currency Loans which have become Converted Loans and
which are being assigned and sold pursuant to the terms of this
Section 2.12(f)(6)..
"AC BUYING LENDER" shall mean each Lender which is required to
purchase any Converted Loan pursuant to the terms of this Section
2.12(f)(6) upon the occurrence of any Conversion Event.
"RC SELLING LENDER" means each Lender whose Reallocated Share
is a lesser percentage than its Revolving Credit Share immediately
prior to the Conversion Event and whose Revolving Loans and
Revolving Loan Commitment under the Agreement is being reduced as a
result of this Section 2.12(f)(6).
"RC BUYING LENDER" means each Lender whose Reallocated Share
is a greater percentage than its Revolving Credit Share immediately
prior to the Conversion Event and whose Revolving Loans and
Revolving Loan Commitment under this Agreement is being increased
as a result of this Section 2.12(f)(6).
"REALLOCATED SHARE" means, with respect to any Lender, the
percentage obtained by dividing (A) the sum of (1) such Lender's
Revolving Loan Commitment at the time of
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any Conversion Event plus (2) such Lender's Alternate Currency
Commitments with respect to all Alternate Currency Loans to which
such Conversion Event applies by (B) the sum of (1) the Aggregate
Revolving Loan Commitments at such time plus (2) the Aggregate of
the Alternate Currency Commitments at such time for all Alternate
Currency Lenders with respect to Alternate Currency Loans to which
such Conversion Event applies.
(B) Required Assignments and Acceptances Upon the Occurrence of any
Conversion Event.
(I) Effective on any Conversion Date, each of the Lenders
agrees to effect purchases and assignments of all the Converted
Loans and the Revolving Loans (whether or not converted) such that
after such purchases and assignments each Lender has its
Reallocated Share of all Loans other than any Alternate Currency
Loans which have not become Converted Loans.
(II) Effective on any Conversion Date each RC Selling Lender
and each AC Selling Lender (the "SELLING LENDERS"), hereby sells,
grants, assigns and conveys to each RC Buying Lender and AC Buying
Lender (the "BUYING LENDERS"), respectively, without recourse,
warranty, or representation of any kind, except as specifically
provided herein, an undivided percentage in such Selling Lender's
right, title and interest in and to its outstanding Revolving
Loans, Letter of Credit Obligations and Revolving Loan Commitment,
in the case of the RC Selling Lenders and to its Alternate Currency
Loans which are Converted Loans, in the case of the AC Selling
Lenders, in the respective Dollar amounts (except as set forth in
clause (IV) below) and percentages necessary so that, from and
after such sale, each such Selling Lender's and Buying's Lenders
outstanding Loans, Letter of Credit Obligations and Commitments
shall equal its Reallocated Share of the outstanding Loans, Letter
of Credit Obligations and Commitments under this Agreement (other
than Alternate Currency Loans and Alternate Currency Commitments in
connection with which no Conversion Event has occurred).
(III) Effective on any Conversion Date, each RC Buying Lender
and each AC Buying Lender (the "BUYING LENDERS") hereby purchases
and accepts such grant, assignment and conveyance from the Selling
Lenders. Each Buying Lender hereby agrees that its respective
purchase price for the portion of the outstanding Loans, Letter of
Credit Obligations and Commitment purchased hereby shall equal the
respective Dollar amount (except as set forth in clause (IV) below)
necessary so that, from and after such payments, each Buying
Lender's outstanding Loans, Letter of Credit Obligations and
Commitment shall equal such Buying Lender's Reallocated Share of
the outstanding Loans, Letter of Credit Obligations and Commitments
under this Agreement (other than Alternate Currency Loans and
Alternate Currency Commitments in connection with which no
Conversion Event has occurred). Except as set forth in clause (IV)
below, such amount shall be payable by the Buying Lenders in
Dollars on the applicable Conversion Date by wire transfer of
immediately available funds to the Administrative Agent. The
Administrative Agent, in turn, shall wire transfer any such funds
received to the Selling Lenders, in same day funds, for the sole
account of the Selling Lenders.
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<PAGE> 51
(IV) Notwithstanding anything herein to the contrary, if on
any Conversion Date the Revolving Loans in currencies other than
Dollars are not Converted Loans, then the following terms shall
apply to the purchase and sale of such Revolving Loans under this
Section 2.12(f)(6):
(a) the purchase price when paid by the RC Buying
Lenders for such sales shall be in the Agreed Currency or
Agreed Currencies in which such Revolving Loans have been
made;
(b) the purchase price shall be paid as follows: (i)
with respect to all Floating Rate Loans made by the Selling
RC Lenders outstanding on the Conversion Date, the Buying RC
Lenders shall each pay the Administrative Agent for the
account of the Selling RC Lenders, on the Conversion Date, an
amount equal to its purchased percentage of all such Floating
Rate Loans; and (ii) with respect to each Fixed Rate Loan
made by the Selling RC Lenders outstanding on the Conversion
Date, (a) on the last day of the Interest Period therefor or
(b) on the date on which any such Fixed Rate Loan either
becomes due (by acceleration or otherwise) or is prepaid (the
date as described in the foregoing clauses (a) or (b) being
hereinafter referred to as the "RC PAYMENT DATE"), each of
the RC Buying Lenders shall pay the Administrative Agent for
the account of the RC Selling Lenders an amount equal to its
purchased percentage of such Fixed Rate Loan. In the event
interest for the period from the Conversion Date to but not
including the RC Payment Date is not paid by the applicable
Borrower with respect to any Fixed Rate Loan sold by the
Selling RC Lenders to Buying RC Lenders hereunder, the Buying
RC Lenders shall pay to the Administrative Agent for the
account of the Selling RC Lenders interest for such period on
its portion of such Fixed Rate Loans at the applicable Fixed
Rate provided by this Agreement.
(V) Each Selling Lender hereby represents and warrants to
each Buying Lender that such Selling Lender owns the Loans, Letter
of Credit Obligations and the Commitment being sold and assigned
hereby for its own account and has not sold, transferred or
encumbered any or all of its interest in such Loans, Letter of
Credit Obligations or Commitment, except for participations which
will be extinguished upon payment to Selling Lender of an amount
equal to the portion of the outstanding Loans and Letter of Credit
Obligations being sold by such Selling Lender.
(VI) From and after a Conversion Event and upon consummation
of the purchases and assignments set forth herein, each reference
in this Agreement to a Lender's Revolving Credit Share shall be to
such Lender's Reallocated Share.
2.13 Method of Payment. All payments of principal, interest, and fees
hereunder shall be made, without setoff, deduction or counterclaim, to the
Administrative Agent or applicable Alternate Currency Agent (i) at the
Administrative Agent's office in Chicago, Illinois in immediately available
funds with respect to Advances denominated in Dollars, (ii) at the
Administrative Agent's Eurocurrency Payment Office in immediately available
funds with respect to any Eurocurrency Advance denominated in an Agreed
Currency other than Dollars and (iii) at the applicable Alternate Currency
Agent's payment office specified in the applicable Alternate Currency Addendum
in immediately available funds with respect to any Alternate Currency Advance,
in each case, or at any other Lending Installation of the Administrative
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Agent or applicable Alternate Currency Agent specified in writing (by
9:00 a.m. (Chicago time) on the day before the date when due) by the
Administrative Agent or applicable Alternate Currency Agent to the Borrower, by
12:00 noon local time in Chicago with respect to Advances denominated in
Dollars and 12:00 noon local time at the applicable payment office with respect
to Advances denominated in an Agreed Currency or Alternate Currency other than
Dollars on the date when due and shall be made ratably among the applicable
Lenders with respect to Revolving Advances in proportion to their Revolving
Credit Shares (unless such amount is not to be shared ratably in accordance
with the other terms hereof) or ratably among the applicable Lenders with
respect to Alternate Currency Lenders (unless such amount is not to be shared
ratably by such Alternate Currency Lenders in accordance with the other terms
hereof) in proportion to their Alternate Currency Shares with respect thereto.
Unless such Advance has been redenominated in Dollars pursuant to the terms of
Section 2.12(f), each Advance shall be repaid or prepaid in the currency in
which it was made in the amount borrowed and interest payable thereon shall be
paid in such currency. Each payment delivered to the Administrative Agent or
applicable Alternate Currency Agent for the account of any Lender shall be
delivered promptly by the Administrative Agent or applicable Alternate Currency
Agent to such Lender in the same type of funds which the Administrative Agent
or applicable Alternate Currency Agent received at its address specified
pursuant to Article XIV or at any Lending Installation specified in a notice
received by the Administrative Agent or applicable Alternate Currency Agent
from such Lender. The Borrowers authorize the Administrative Agent to charge
any account of any Borrower maintained with First Chicago, as applicable, for
each payment of principal, interest and fees as it becomes due hereunder.
Notwithstanding the foregoing provisions of this Section, if, after the making
of any Advance in any currency other than Dollars, currency control or exchange
regulations are imposed in the country in which such currency is issued with
the result that different types of such currency (the "NEW CURRENCY") are
introduced and the type of currency in which the Advance was made (the
"ORIGINAL CURRENCY") no longer exists or the applicable Borrower is not able to
make payment to the Administrative Agent or applicable Alternate Currency Agent
for the account of the applicable Lenders in such Original Currency, then all
payments to be made by the applicable Borrower hereunder or under the Notes in
such Original Currency shall be made in such amount and such type of the New
Currency or Dollars as shall be equivalent to the amount of such payment
otherwise due hereunder or under the Notes in the Original Currency as
determined as of the date of repayment, it being the intention of the parties
hereto that the Borrowers take all risks of the imposition of any such currency
control or exchange regulations.
2.14 Notes, Telephonic Notices. The applicable Agent is authorized to
record the principal amount of each of the Loans and each repayment with
respect to Loans on the schedule attached to the applicable master Note issued
to evidence the Revolving Loans or Alternate Currency Loans, as applicable; in
the event any Note is issued to any individual Lender, such Lender is
authorized to record the principal amount of each of its Loans and each
repayment with respect to its Loans on the schedule attached to its Note; the
Swing Line Lender and Alternate Currency Agents are authorized to record the
principal amount of each Swing Line Loan or Alternate Currency Swing Line Loan
and each repayment with respect to such Loans on the schedules attached to the
applicable Note; provided, however, in each such case that the failure to so
record shall not affect the applicable Borrower's obligations under any such
Note. In the event that any Note is issued to any individual Lender, such
Lender shall provide notice to that effect to the Administrative Agent or
Alternate Currency Agent, as applicable, and such Agent shall make a notation
on the applicable master Note reflecting such issuance. The Administrative
Agent and Alternate Currency Agents will hold the Notes issued to them on
behalf of other Lenders and will make the Notes available for inspection by the
applicable Borrower or any Lender during normal business hours upon prior
reasonable notice therefor. The Borrowers authorize the Lenders, the
Administrative Agent and the Alternate Currency Agents to extend Advances,
effect selections of Types of Advances and to transfer
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funds based on telephonic notices made by any person or persons the
Administrative Agent, Alternate Currency Agents or any Lender in good faith
believes to be acting on behalf of one or more of the Borrowers. The Borrowers
agree to deliver promptly to the Administrative Agent or Alternate Currency
Agent a written confirmation, signed by an Authorized Officer, if such
confirmation is requested by the Administrative Agent, Alternate Currency Agent
or any Lender, of each telephonic notice. If the written confirmation differs
in any material respect from the action taken by the Administrative Agent,
Alternate Currency Agent and the Lenders, (i) the telephonic notice shall
govern absent manifest error and (ii) the Administrative Agent, Alternate
Currency Agent or the Lender, as applicable, shall promptly notify the
Authorizing Officer who provided such confirmation of such difference.
2.15 Promise to Pay; Interest and Fees; Interest Payment Dates; Interest
and Fee Basis; Taxes; Loan and Control Accounts.
(A) Promise to Pay. Each of the Borrowers unconditionally promises to
pay when due the principal amount of each Loan made to it and all other
Obligations incurred by it, and to pay all unpaid interest accrued thereon, in
accordance with the terms of this Agreement and the Notes, it being understood
and agreed that each non-U.S. Borrower shall be obligated to repay only the
Loans made to it and pay the other Obligations incurred by it and certain other
Loans made and Obligations incurred by other non-U.S. Borrowers.
(B) Interest Payment Dates. Interest accrued on each Base Rate Loan
shall be payable on each Payment Date, commencing with the first such date to
occur after the date hereof, on any date on which the Base Rate Loan is
prepaid, whether due to acceleration or otherwise, and at maturity (whether by
acceleration or otherwise). Interest accrued on each Eurocurrency Rate Loan
and, unless otherwise specified in the applicable Alternate Currency Addendum
on each Alternate Currency Loan shall be payable on the last day of its
applicable Interest Period, on any date on which the Eurocurrency Rate Loan or
Alternate Currency Loan is prepaid, whether by acceleration or otherwise, and
at maturity; provided, interest accrued on each Eurocurrency Rate Loan or
Alternate Currency Loan having an Interest Period longer than three months
shall also be payable on the last day of each three-month interval during such
Interest Period. Interest accrued on the principal balance of all other
Obligations shall be payable in arrears (i) upon repayment thereof in full or
in part, (ii) if not theretofore paid in full, at the time such other
Obligation becomes due and payable (whether by acceleration or otherwise) and
(iii) if not theretofore paid in full, on demand, commencing on the first such
day following the date such Obligation became payable pursuant to the terms of
this Agreement or the other Loan Documents.
(C) Fees. (i) Brightpoint shall pay or cause the appropriate Subsidiary
to pay to the Administrative Agent, for the account of the Lenders in
accordance with their Pro Rata Shares, a facility fee accruing at the rate of
the Applicable Facility Fee per annum from and after the Closing Date until the
Termination Date on the sum of the Aggregate Revolving Loan Commitment in
effect from time to time plus the Maximum Aggregate Alternate Currency Amount
in effect from time to time. All such facility fees payable under this clause
(C) shall be payable quarterly in arrears on each Payment Date commencing June
30, 1997 and on the Termination Date.
(ii) Brightpoint agrees to pay or cause the appropriate Subsidiary to pay
to the Administrative Agent and the Syndication Agent, as applicable, the fees
set forth in the letter agreements (A) between the Administrative Agent and
Brightpoint dated April 16, 1997 and (B) among Brightpoint, the Agents and the
Arranger dated April 16, 1997.
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(D) Interest and Fee Basis. Interest on Eurocurrency Rate Loans and fees
shall be calculated for actual days elapsed on the basis of a 360-day year.
Interest on Base Rate Loans and Alternate Currency Loans shall be calculated
for actual days elapsed on the basis of a 365/366-day year. Interest shall be
payable for the day an Obligation is incurred but not for the day of any
payment on the amount paid if payment is received prior to 12:00 noon local
time in Chicago with respect to Advances denominated in Dollars and 12:00 noon
local time at the place of payment in the Administrative Agent's or Alternate
Currency Agent's applicable payment office with respect to Advances denominated
in an Agreed Currency other than Dollars or an Alternate Currency. If any
payment of principal of or interest on a Loan or any payment of any other
Obligations shall become due on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day and, in the case of a
principal payment, such extension of time shall be included in computing
interest in connection with such payment; provided, however, if such extension
of payment would cause payment of principal or interest on any Fixed Rate Loan
to be made in the next following calendar month, such payment shall be made on
the immediately preceding Business Day.
(E) Taxes.
(i) Any and all payments by any of the Borrowers or Guarantors
hereunder shall be made free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings or any liabilities with respect thereto including those
arising after the date hereof as a result of the adoption of or any
change in any law, treaty, rule, regulation, guideline or determination
of a Governmental Authority or any change in the interpretation or
application thereof by a Governmental Authority but excluding, in the
case of each Lender, Alternate Currency Agent and the Administrative
Agent, such taxes (including income taxes, franchise taxes and branch
profit taxes) as are imposed on or measured by such Lender's, Alternate
Currency Agent's or Administrative Agent's, as the case may be, income by
the United States of America or any Governmental Authority of the
jurisdiction under the laws of which such Lender, Alternate Currency
Agent or Administrative Agent, as the case may be, is organized or
incorporated (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings, and liabilities which the Administrative Agent or
a Lender determines to be applicable to this Agreement, the other Loan
Documents, the Revolving Loan Commitments, the Loans or the Letters of
Credit being hereinafter referred to as "TAXES"). Subject to Section
2.15(E)(vii), if any of the Borrowers or Guarantors shall be required by
law to deduct any Taxes from or in respect of any sum payable hereunder
or under the other Loan Documents to any Lender, Alternate Currency Agent
or the Administrative Agent, (i) the sum payable shall be increased as
may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section
2.15(E)) such Lender, Alternate Currency Agent or Administrative Agent
(as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) such Borrower or
Guarantor shall make such deductions, and (iii) such Borrower or
Guarantor shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law. If a
withholding tax of the United States of America or any other
Governmental Authority shall be or become applicable (y) after the date
of this Agreement, to such payments by any of the Borrowers made to the
Lending Installation or any other office that a Lender may claim as its
Lending Installation, or (z) after such Lender's selection and
designation of any other Lending Installation, to such payments made to
such other Lending Installation, such Lender shall use reasonable
efforts to make, fund and maintain its Loans through another Lending
Installation of such Lender in another jurisdiction so as to reduce the
Borrowers' liability hereunder, if the making, funding or maintenance of
such Loans through such other
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Lending Installation of such Lender does not, in the good faith judgment
of such Lender, otherwise adversely affect such Loans, or obligations
under the Revolving Loan Commitments or such Lender. With respect to
such deduction or withholding for or on account of any Taxes and to
confirm that all such Taxes have been paid to the appropriate
Governmental Authorities, Brightpoint shall promptly (and in any event
not later than thirty (30) days after receipt) furnish to each Lender,
Alternate Currency Agent and the Administrative Agent such certificates,
receipts and other documents as may be required (in the judgment of such
Lender, Alternate Currency Agent or the Administrative Agent) to
establish any tax credit to which such Lender, Alternate Currency Agent
or the Administrative Agent may be entitled. A payment may be made by
Brightpoint or by the Subsidiary that is the Borrower with respect to
the Loan that gives rise to such payment.
(ii) In addition, Brightpoint agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes,
charges, or similar levies that arise from any payment made hereunder,
from the issuance of Letters of Credit hereunder, or from the execution,
delivery or registration of, or otherwise with respect to, this
Agreement, the other Loan Documents, the Revolving Loan Commitments, the
Loans or the Letters of Credit (hereinafter referred to as "OTHER
TAXES").
(iii) Subject to Section 2.15(E)(vii), Brightpoint indemnifies each
Lender, the Alternate Currency Agent and the Administrative Agent for the
full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any Governmental Authority on amounts
payable under this Section 2.15(E)) paid by such Lender, the Alternate
Currency Agent or the Administrative Agent (as the case may be) and any
liability (including penalties, interest, and expenses) arising therefrom
or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted. This indemnification shall be made within
thirty (30) days after the date such Lender, Alternate Currency Agent or
the Administrative Agent (as the case may be) makes written demand
therefor. A certificate as to any additional amount payable to any
Lender, Alternate Currency Agent or the Administrative Agent under this
Section 2.15(E) submitted to Brightpoint and the Administrative Agent (if
a Lender or Alternate Currency Agent is so submitting) by such Lender,
Alternate Currency Agent or the Administrative Agent shall show in
reasonable detail the amount payable and the calculations used to
determine such amount and shall, absent manifest error, be final,
conclusive and binding upon all parties hereto.
(iv) Within thirty (30) days after the date of any payment of Taxes
or Other Taxes by any Borrower or Guarantor, such Borrower or Guarantor
shall furnish to the Administrative Agent the original or a certified
copy of a receipt evidencing payment thereof.
(v) Without prejudice to the survival of any other agreement of any
of the Borrowers or Guarantor hereunder, the agreements and obligations
of the Borrowers and Guarantor contained in this Section 2.15(E) shall
survive the payment in full of principal and interest hereunder, the
termination of the Letters of Credit and the termination of this
Agreement.
(vi) Without limiting the obligations of the Borrowers and
Guarantors under this Section 2.15(E) (except as expressly provided by
subsection (vii) below), (A) each Lender that has a Revolving Loan
Commitment that is not created or organized under the laws of the United
States of America or a political subdivision thereof shall deliver to
Brightpoint and the Administrative Agent on or before the Closing Date,
or, if later, the date on which such Lender becomes a Lender
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pursuant to Section 13.3 hereof, a true and accurate certificate executed
in duplicate by a duly authorized officer of such Lender, in a form
satisfactory to Brightpoint and the Administrative Agent, to the effect
that such Lender is capable under the provisions of an applicable tax
treaty concluded by the United States of America (in which case the
certificate shall be accompanied by two executed copies of Form 1001 of
the IRS) or under Section 1442 of the Code (in which case the certificate
shall be accompanied by two copies of Form 4224 of the IRS) of receiving
payments of interest and fees hereunder without deduction or withholding
of United States federal income tax and (B) each Alternate Currency
Lender that is not created or organized under the laws of the
jurisdiction where the applicable Subsidiary Borrower is organized shall
deliver to Brightpoint, the applicable Alternate Currency Agent and the
Administrative Agent on or before the Closing Date, or, if later, the
date on which such Alternate Currency Lender becomes an Alternate
Currency Lender, a true and accurate certificate executed in duplicate by
a duly authorized officer of such Alternate Currency Lender, in a form
satisfactory to Brightpoint and the Administrative Agent, to the effect
that such Alternate Currency Lender is capable under the provisions of an
applicable tax treaty or under the provisions of applicable law of
receiving payments of interest with respect to the Alternate Currency
Loans hereunder without deduction or withholding of income tax. Each
such Lender further agrees to deliver to Brightpoint, the Administrative
Agent and, if applicable, the Alternate Currency Agent, from time to time
a true and accurate certificate executed in duplicate by a duly
authorized officer of such Lender substantially in a form satisfactory to
Brightpoint, the Administrative Agent and, if applicable, the Alternate
Currency Agent, before or promptly upon the occurrence of any event
requiring a change in the most recent certificate previously delivered by
it pursuant to this Section 2.15(E)(vi). Further, each Lender which
delivers a certificate accompanied by Form 1001 of the IRS covenants and
agrees to deliver to Brightpoint and the Administrative Agent within
fifteen (15) days prior to January 1, 1998, and every third (3rd)
anniversary of such date thereafter, on which this Agreement is still in
effect, another such certificate and two accurate and complete original
signed copies of Form 1001 (or any successor form or forms required under
the Code or the applicable regulations promulgated thereunder), and each
Lender that delivers a certificate accompanied by Form 4224 of the IRS
covenants and agrees to deliver to Brightpoint and the Administrative
Agent within fifteen (15) days prior to the beginning of each subsequent
taxable year of such Lender during which this Agreement is still in
effect, another such certificate and two accurate and complete original
signed copies of IRS Form 4224 (or any successor form or forms required
under the Code or the applicable regulations promulgated thereunder).
Each such certificate shall certify pursuant to this Section
2.15(E)(vi) as to one of the following:
(a) that such Lender is capable of receiving payments
of interest hereunder without deduction or withholding of
United States of America federal income tax or, in the case
of Alternate Currency Lenders, under the applicable
jurisdiction where the Subsidiary Borrower is organized;
(b) that such Lender is not capable of receiving
payments of interest hereunder without deduction or
withholding of the applicable income tax as specified
therein but is capable of recovering the full amount of any
such deduction or withholding from a source other than the
Borrowers and the Guarantors and will not seek any such
recovery from the Borrowers or the Guarantors; or
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(c) that, as a result of the adoption of or any change
in any law, treaty, rule, regulation, guideline or
determination of a Governmental Authority or any change in
the interpretation or application thereof by a Governmental
Authority after the date such Lender became a party hereto,
such Lender is not capable of receiving payments of interest
hereunder without deduction or withholding of applicable
income tax as specified therein and that it is not capable
of recovering the full amount of the same from a source
other than the Borrowers and the Guarantors.
Nothing in this Section 2.15(E)(vi) shall require any such
certificate to be provided by any Lender in connection with any Loans in
which it is required to purchase an interest pursuant to Section 2.12(f)
and the obligations of the Borrowers and Guarantors under this Section
2.15(E) shall not be impaired as a result of the occurrence of a
Conversion Event.
Each Lender shall promptly furnish to Brightpoint, the
Administrative Agent and, if applicable, the Alternate Currency Agent
such additional documents as may be reasonably required by Brightpoint,
the Administrative Agent or the Alternate Currency Agent to establish any
exemption from or reduction of any Taxes or Other Taxes required to be
deducted or withheld and which may be obtained without undue expense to
such Lender.
A Borrower shall provide such information and take such action as a
Lender may reasonably request without undue expense to such Borrower to
enable the Lender to comply with the foregoing provisions of this
subsection (vi).
(vii) None of the Borrowers shall be required to pay any additional
amounts under subsection (i) above or indemnification under subsection
(iii) above to the extent that the obligation to pay such additional
amounts or indemnification would not have arisen but for: (a)
a failure by the Lender or Administrative Agent to comply with the
provisions of subsection (vi) above; or (b) the certifications referred
to in subsection (vi) above not being true.
(viii) Each Lender, each Alternate Currency Agent and the
Administrative Agent agree that if it shall become aware that it is
entitled to receive a refund in respect of Taxes or Other Taxes as to
which it has been indemnified by Brightpoint or any other Borrower
pursuant to this Section 2.15(E), it shall promptly notify Brightpoint of
the availability of such refund and at the request of Brightpoint will
apply for such refund; provided, however the failure to provide such
notice shall not relieve Brightpoint or any other Borrower of any of
their Obligations hereunder. Upon receipt of such refund, the Lender,
Alternate Currency Agent or Administrative Agent agrees to pay such
refund to the applicable Borrower along with any interest actually
received from the taxing authority, net of all out-of-pocket expenses of
such Lender, Alternate Currency Agent or Administrative Agent incurred
with respect to such refund.
(F) Loan Account. Each Lender shall maintain in accordance with its
usual practice an account or accounts (a "LOAN ACCOUNT") evidencing the
Obligations of each of the Borrowers to such Lender owing to such Lender from
time to time, including the amount of principal and interest payable paid to
such Lender from time to time hereunder and under the Notes.
(G) Control Account. The Register maintained by the Administrative Agent
pursuant to Section 13.3(C) shall include a control account, and a subsidiary
account for each Lender and each Borrower, in
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which accounts (taken together) shall be recorded (i) the date and
amount of each Advance made hereunder, the type and currency of each Loan
comprising such Advance, the Borrower of such Advance, and any Interest Period
applicable thereto, (ii) the effective date and amount of each assignment and
acceptance delivered to and accepted by it and the parties thereto pursuant to
Section 13.3, (iii) the amount of any principal or interest due and payable or
to become due and payable from any Borrower to each Lender hereunder or under
the Notes, (iv) the amount of any sum received by the Administrative Agent from
each of the Borrowers hereunder and each Lender's share thereof, and (v) all
other appropriate debits and credits as provided in this Agreement, including,
without limitation, all fees, charges, expenses and interest.
(H) Entries Binding. The entries made in the Register and each Loan
Account shall be conclusive and binding for all purposes, absent manifest
error, unless the Borrowers object to information contained in the Register and
each Loan Account within thirty (30) days of the Borrowers' receipt of such
information.
2.16 Notification of Advances, Interest Rates, Prepayments and Aggregate
Revolving Loan Commitment Reductions. Promptly after receipt thereof, the
Administrative Agent will notify each applicable Lender of the contents of each
Aggregate Revolving Loan Commitment reduction notice, Borrowing Notice for
Revolving Loans, Continuation/Conversion Notice with respect to Revolving
Loans, and repayment notice received by it hereunder. The Administrative Agent
will notify each applicable Lender of the interest rate applicable to each
Eurocurrency Rate Loan promptly upon determination of such interest rate, the
Administrative Agent will give each applicable Lender prompt notice of each
change in the Alternate Base Rate. In the event that an Alternate Currency
Syndication Notice is in effect for any Alternate Currency, in addition to the
periodic report required pursuant to Section 2.12(d), the Alternate Currency
Agent for such applicable Alternate Currency shall provide the applicable
correlative notices of advances, interest rates, commitment reductions and
repayments as set forth above for the Administrative Agent. For any Alternate
Currency in connection with which no Alternate Currency Syndication Notice is
in effect, the Alternate Currency Agent shall provide the periodic reports
required pursuant to Section 2.12(d).
2.17 Lending Installations. Each Lender may book its Loans at any
Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to any
such Lending Installation and the Notes shall be deemed held by each Lender for
the benefit of such Lending Installation. Each Lender may, by written or
facsimile notice to the Administrative Agent, the Alternate Currency Agent, if
applicable, and the Borrowers, designate a Lending Installation through which
Loans will be made by it and for whose account Loan payments are to be made.
2.18 Non-Receipt of Funds by the Applicable Agent. Unless the applicable
Borrower or a Lender, as the case may be, notifies the Administrative Agent or
Alternate Currency Agent, as applicable, prior to the date on which it is
scheduled to make payment to the Administrative Agent or Alternate Currency
Agent, as applicable, of (i) in the case of a Lender, the proceeds of a Loan or
(ii) in the case of a Borrower, a payment of principal, interest or fees to the
Administrative Agent for the account of the Lenders or the Alternate Currency
Agent for the account of the applicable Alternate Currency Lenders, that it
does not intend to make such payment, the Administrative Agent or Alternate
Currency Agent, as applicable, may assume that such payment has been made. The
Administrative Agent or Alternate Currency Agent, as applicable, may, but shall
not be obligated to, make the amount of such payment available to the intended
recipient in reliance upon such assumption. If such Lender or Borrower, as the
case may be, has not in fact made such payment to the Administrative Agent or
Alternate Currency Agent, as applicable, the recipient of such payment shall,
on demand by the Administrative Agent, repay to the
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Administrative Agent the amount so made available together with
interest thereon in respect of each day during the period commencing on the
date such amount was so made available by the Administrative Agent or Alternate
Currency Agent, as applicable, until the date the Administrative Agent or
Alternate Currency Agent, as applicable, recovers such amount at a rate per
annum equal to (i) in the case of payment by a Lender, the Federal Funds
Effective Rate for such day or (ii) in the case of payment by a Borrower, the
interest rate applicable to the relevant Loan.
2.19 Termination Date. This Agreement shall be effective until the
Termination Date. Notwithstanding the termination of this Agreement on the
Termination Date, until all of the Obligations (other than contingent indemnity
and reimbursement obligations) shall have been fully and indefeasibly paid and
satisfied, all financing arrangements among the Borrowers and the Lenders shall
have been terminated (other than under Hedging Agreements) and all of the
Letters of Credit shall have expired, been canceled or terminated, all of the
rights and remedies under this Agreement and the other Loan Documents shall
survive and the Administrative Agent shall be entitled to retain its security
interest in and to all existing and future Collateral for the benefit of itself
and the Holders of Secured Obligations.
2.20 Replacement of Certain Lenders. In the event a Lender ("AFFECTED
LENDER") shall have: (i) failed to fund its Revolving Credit Share or
Alternate Currency Share, as applicable, of any Advance requested by any
Borrower which such Lender is obligated to fund under the terms of this
Agreement and which failure has not been cured, (ii) requested compensation
from any Borrower under Sections 2.15(E), 3.1 or 3.2 to recover Taxes, Other
Taxes or other additional costs incurred by such Lender which are not being
incurred generally by the other Lenders, (iii) delivered a notice pursuant to
Section 3.3 claiming that such Lender is unable to extend Eurocurrency Rate
Loans to any Borrower for reasons not generally applicable to the other Lenders
or (iv) has invoked Section 10.2, then, in any such case, any Borrower or the
Administrative Agent may make written demand on such Affected Lender (with a
copy to the Administrative Agent in the case of a demand by any Borrower and a
copy to the Borrowers in the case of a demand by the Administrative Agent) for
the Affected Lender to assign, and such Affected Lender shall use its best
efforts to assign pursuant to one or more duly executed assignment and
acceptance agreements in substantially the form of Exhibit I five (5) Business
Days after the date of such demand, to one or more financial institutions that
comply with the provisions of Section 13.3(A) (and, if selected by the
Borrowers is reasonably acceptable to the Administrative Agent and, if
applicable, the Alternate Currency Agent) which any Borrower or the
Administrative Agent, as the case may be, shall have engaged for such purpose
("REPLACEMENT LENDER"), all of such Affected Lender's rights and obligations
under this Agreement and the other Loan Documents (including, without
limitation, its Revolving Loan Commitment, Alternate Currency Commitment, all
Loans owing to it, all of its participation interests in existing Letters of
Credit and Alternate Currency Loans, and its obligation to participate in
Letters of Credit and Alternate Currency Loans hereunder) in accordance with
Section 12.3. The Administrative Agent agrees, upon the occurrence of such
events with respect to an Affected Lender and upon the written request of any
Borrower, to use its reasonable efforts to obtain the commitments from one or
more financial institutions qualified to act as a Replacement Lender. Further,
with respect to such assignment the Affected Lender shall have concurrently
received, in cash, all amounts due and owing to the Affected Lender hereunder
or under any other Loan Document, including, without limitation, the aggregate
outstanding principal amount of the Loans owed to such Lender, together with
accrued interest thereon through the date of such assignment, amounts payable
under Sections 2.15(E), 3.1, and 3.2 with respect to such Affected Lender and
compensation payable under Section 2.15(C) in the event of any replacement of
any Affected Lender under clause (ii) or clause (iii) of this Section 2.20;
provided that upon such Affected Lender's replacement, such Affected Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.15(E), 3.1, 3.2, 3.4, and 10.7, as well as to any fees
accrued for its account hereunder and not yet paid,
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and shall continue to be obligated under Section 11.8. Upon the
replacement of any Affected Lender pursuant to this Section 2.20, the
provisions of Section 8.2 shall continue to apply with respect to Advances
which are then outstanding with respect to which the Affected Lender failed to
fund its Revolving Credit Share and/or Alternate Currency Share and which
failure has not been cured.
2.21 Letter of Credit Facility. Upon receipt of duly executed
applications therefor, and such other documents, instructions and agreements as
such Issuing Lender may reasonably require, and subject to the provisions of
Article IV, the Administrative Agent shall, or any other Lender in its sole
discretion may, issue letters of credit denominated in Dollars or in any Agreed
Currency for the account of Brightpoint or BPI, on terms as are satisfactory to
such Issuing Lender; provided, however, that no Letter of Credit will be issued
for the account of any Brightpoint or BPI by an Issuing Lender if on the date
of issuance, before or after taking such Letter of Credit into account, (i) the
Dollar Amount of the Revolving Credit Obligations at such time would exceed the
Aggregate Revolving Loan Commitments at such time or (ii) the aggregate
outstanding Dollar Amount of the L/C Obligations exceeds Forty Million and
00/100 Dollars ($40,000,000); and provided, further, that no Letter of Credit
shall be issued which has an expiration date more than one year after the date
of issuance of such Letter of Credit or an expiration date later than the date
which is five (5) Business Days immediately preceding the Termination Date;
provided, further, that although such letters of credit were issued prior to
the date of this Agreement, effective on the Closing Date all Existing Letters
of Credit shall be treated as Letters of Credit hereunder. Each Letter of
Credit may, upon the request of the applicable Borrower, include a provision
whereby such Letter of Credit shall be renewed automatically for additional
consecutive periods of 12 months or less (but not beyond the date that is five
Business Days prior to the Termination Date) unless the Issuing Lender
notifies the beneficiary thereof at least 30 days prior to the then-applicable
expiry date that such Letter of Credit will not be renewed. Prior to issuing
any Letter of Credit, the applicable Issuing Lender shall request and the
Administrative Agent shall provide confirmation that the request for such
Letter of Credit complies with the provisions of this Section 2.21. If the
Administrative Agent notifies the applicable Issuing Lender that it is
authorized to issue such Letter of Credit, and the conditions described in
Article IV have been satisfied, then such Issuing Lender shall issue such
Letter of Credit as requested. The applicable Issuing Lender shall give the
Administrative Agent and each Lender prompt notice of the issuance of any such
Letter of Credit by it. Each Issuing Lender shall furnish to the
Administrative Agent and each Lender on the first Business Day of each month a
written report, with respect to each outstanding Letter of Credit issued by
such Issuing Lender, summarizing whether such Letter of Credit is a standby or
commercial Letter of Credit, the maximum amount available to be drawn thereon,
and the beneficiary and the issuance and expiration dates thereof. Together
with each such monthly report each Issuing Lender shall provide the
Administrative Agent a copy of each Letter of Credit issued by such
Issuing Bank during the previous month.
2.22 Letter of Credit Participation. Immediately on the Closing Date
with respect to the Existing Letters of Credit and upon the issuance of each
Letter of Credit by any Issuing Lender hereunder, each Lender that has a
Revolving Loan Commitment shall be deemed to have automatically, irrevocably
and unconditionally purchased and received from the applicable Issuing Lender
an undivided interest and participation in and to such Letter of Credit, the
obligations of the applicable Borrower in respect thereof, and the liability of
the applicable Issuing Lender thereunder (collectively, an "L/C INTEREST") in
an amount equal to the amount available for drawing under such Letter of Credit
multiplied by such Lender's Revolving Credit Share.
The applicable Issuing Lender will notify the Administrative Agent
promptly upon presentation to it of an L/C Draft or upon any other draw under a
Letter of Credit and the Administrative Agent will
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promptly notify each Lender that has a Revolving Loan Commitment. On
or before the Business Day on which the applicable Issuing Lender makes payment
of each such L/C Draft or any other draw on a Letter of Credit, on demand of
the Issuing Lender received by each Lender that has a Revolving Loan Commitment
not later than 12:00 noon (Chicago time) on such Business Day, each Lender
shall make payment on such Business Day to the Administrative Agent for the
account of the applicable Issuing Lender, in immediately available funds in the
applicable currency in an amount equal to such Lender's Revolving Credit Share
of the amount of such payment or draw.
Upon the Administrative Agent's receipt of funds as a result of an Issuing
Lender's payment on an L/C Draft or any other draw on a Letter of Credit issued
by an Issuing Lender, the Administrative Agent shall promptly pay such funds to
the Issuing Lender. The obligation of each Lender that has a Revolving
Loan Commitment to pay the Administrative Agent for the account of the
applicable Issuing Lender under this Section 2.22 shall be unconditional,
continuing, irrevocable and absolute. In the event that any such Lender fails
to make payment to the Administrative Agent of any amount due under this
Section 2.22, the Administrative Agent shall be entitled to receive, retain and
apply against such obligation the principal and interest otherwise payable to
such Lender hereunder until the Administrative Agent on behalf of the
applicable Issuing Lender receives such payment from such Lender or such
obligation is otherwise fully satisfied; provided, however, that nothing
contained in this sentence shall relieve such Lender of its obligation to
reimburse the Administrative Agent for such amount in accordance with this
Section 2.22.
2.23 Reimbursement Obligation. Each of the Borrowers agrees
unconditionally, irrevocably and absolutely upon receipt of notice from the
Administrative Agent or the applicable Issuing Lender to pay immediately to the
Administrative Agent, for the account of the applicable Issuing Lender or the
account of the Lenders, as the case may be, the amount of each advance which
may be drawn under or pursuant to a Letter of Credit issued for its account or
an L/C Draft related thereto (such obligation of each of the Borrowers to
reimburse the Issuing Lender or the Administrative Agent for an advance made
under a Letter of Credit or L/C Draft being hereinafter referred to as a
"REIMBURSEMENT OBLIGATION" with respect to such Letter of Credit or L/C Draft),
each such payment to be made by the applicable Borrower to the Administrative
Agent no later than 1:00 p.m. (Chicago time) on the Business Day on which the
applicable Issuing Lender makes payment of each such L/C Draft or, in the case
of any other draw on a Letter of Credit, 1:00 p.m. (Chicago time) on the date
specified in a demand by the Administrative Agent and such payment shall be
made in the applicable currency in which such Letter of Credit was issued. Any
Issuing Lender may direct the Administrative Agent to make such demand with
respect to Letters of Credit issued by such Issuing Lender. If any Borrower at
any time fails to repay a Reimbursement Obligation pursuant to this Section
2.23, such Borrower shall be deemed to have elected to borrow a Revolving Loan
from the applicable Lenders, as of the date of the Advance giving rise to the
Reimbursement Obligation equal in amount to the amount of the unpaid
Reimbursement Obligation. Such Revolving Loan shall be made as of the date of
the payment giving rise to such Reimbursement Obligation, automatically,
without notice and without any requirement to satisfy the conditions precedent
otherwise applicable to an Advance of Revolving Loans if such Borrower shall
have failed to make such payment to the Administrative Agent for the account of
the applicable Issuing Lender prior to such time. Such Revolving Loans shall
constitute a Base Rate Advance, the proceeds of which Advance shall be used to
repay such Reimbursement Obligation. If, for any reason, such Borrower fails
to repay a Reimbursement Obligation on the day such Reimbursement Obligation
arises and, for any reason, the Lenders are unable to make or have no
obligation to make a Revolving Loan, then such Reimbursement Obligation shall
bear interest from and after such day, until paid in full, at the interest rate
applicable to a Base Rate Advance.
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2.24 Cash Collateral. Notwithstanding anything to the contrary herein or
in any application for a Letter of Credit, after the occurrence and during the
continuance of Default, each Borrower shall, upon the Administrative Agent's
demand, deliver to the Administrative Agent for the benefit of the Lenders,
cash, or other collateral of a type satisfactory to the Required Lenders,
having a value, as determined by such Lenders, equal to the aggregate
outstanding L/C Obligations of such Borrower. Any such collateral shall be
held by the Administrative Agent in a separate account appropriately designated
as a cash collateral account in relation to this Agreement and the Letters of
Credit and retained by the Administrative Agent for the benefit of the Lenders
as collateral security for the Borrowers' obligations in respect of this
Agreement and each of the Letters of Credit and L/C Drafts. Such amounts
shall be applied to reimburse the Administrative Agent or each Issuing Lender,
as applicable, for drawings or payments under or pursuant to Letters of Credit
or L/C Drafts, or if no such reimbursement is required, to payment of such of
the other Obligations as the Administrative Agent shall determine. If no
Default shall be continuing, amounts remaining in any cash collateral account
established pursuant to this Section 2.24 which are not to be applied to
reimburse the Administrative Agent for amounts actually paid or to be paid by
the Administrative Agent in respect of a Letter of Credit or L/C Draft, shall
be returned to the applicable Borrower (after deduction of the Administrative
Agent's expenses incurred in connection with such cash collateral account).
2.25 Letter of Credit Fees. Each of the Borrowers agrees to pay (i)
quarterly, in arrears, on each Payment Date to the Administrative Agent for the
ratable benefit of the Lenders having Revolving Loan Commitments, except as set
forth in Section 8.2, a letter of credit fee ("LETTER OF CREDIT FEE") in the
amount of the Applicable Letter of Credit Fee Rate per annum on the aggregate
average daily outstanding Dollar Amount available for drawing under all of the
Letters of Credit issued for its account, and (ii) to the Administrative Agent
for the benefit of the Issuing Lenders, a fronting fee of one-eighth of one
percent (0.125%) per annum on the aggregate average daily outstanding Dollar
Amount available for drawing under all of the Letters of Credit issued for its
account payable quarterly, in arrears, on each Payment Date, plus all customary
fees and other issuance, amendment, document examination, negotiation and
presentment expenses and related charges in connection with the issuance,
amendment, presentation of L/C Drafts, and the like customarily charged by the
Issuing Lender with respect to standby and commercial Letters of Credit,
including, without limitation, standard commissions with respect to commercial
Letters of Credit, payable at the time of invoice of such amounts.
2.26 Indemnification; Exoneration. (a) In addition to amounts payable
as elsewhere provided in this Agreement, each Borrower with respect to Letters
of Credit issued for its account agrees to protect, indemnify, pay and save
harmless the Administrative Agent, each Issuing Lender and each Lender from and
against any and all liabilities and costs which the Administrative Agent, any
Issuing Lender or any Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit other than, in
the case of the Issuing Lender, as a result of its Gross Negligence or willful
misconduct, as determined by the final judgment of a court of competent
jurisdiction, or (ii) the failure of the Issuing Lender of a Letter of Credit
to honor a drawing under such Letter of Credit as a result of any act or
omission, whether rightful or wrongful, of any present or future de jure or de
facto Governmental Authority (all such acts or omissions herein called
"GOVERNMENTAL ACTS").
(b) As among the Borrowers, the Lenders, the Issuing Lenders and the
Administrative Agent, the Borrowers assume all risks of the acts and omissions
of, or misuse of such Letter of Credit by, the beneficiary of any Letter of
Credit. In furtherance and not in limitation of the foregoing, subject to the
provisions of the Letter of Credit applications and Letter of Credit
reimbursement agreements executed by the applicable Borrower at the time of
request for any Letter of Credit, the Issuing Lender of a Letter of
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Credit, the Administrative Agent and the Lenders shall not be
responsible (in the absence of Gross Negligence or willful misconduct in
connection therewith, as determined by the final judgment of a court of
competent jurisdiction): (i) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in
connection with the application for and issuance of the Letters
of Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the validity
or sufficiency of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (iii) for failure of the beneficiary of a Letter of
Credit to comply duly with conditions required in order to draw upon such
Letter of Credit; (iv) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex, or
other similar form of teletransmission or otherwise; (v) for errors in
interpretation of technical trade terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any Letter of Credit or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of a Letter of Credit of the proceeds of any
drawing under such Letter of Credit; and (viii) for any consequences arising
from causes beyond the control of the Administrative Agent, the Issuing Lender
and the Lenders including, without limitation, any Governmental Acts. None of
the above shall affect, impair, or prevent the vesting of any of the Issuing
Lender's rights or powers under this Section 2.26.
(c) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by an Issuing
Lender under or in connection with Letters of Credit issued on behalf of any
Borrower or any related certificates shall not, in the absence of Gross
Negligence or willful misconduct, as determined by the final judgment of a
court of competent jurisdiction, put the Issuing Lender, the Administrative
Agent or any Lender under any resulting liability to any Borrower or relieve
any Borrower of any of its obligations hereunder to any such Person.
(d) Without prejudice to the survival of any other agreement of the
Borrowers hereunder, the agreements and obligations of the Borrowers contained
in this Section 2.26 shall survive the payment in full of principal and
interest hereunder, the termination of the Letters of Credit and the
termination of this Agreement.
2.27 Judgment Currency. If, for the purposes of obtaining judgment in
any court, it is necessary to convert a sum due from a Borrower hereunder or
under any of the Notes in the currency expressed to be payable herein or under
the Notes (the "SPECIFIED CURRENCY") into another currency, the parties hereto
agree, to the fullest extent that they may effectively do so, that the rate of
exchange used shall be that at which in accordance with normal banking
procedures the Administrative Agent could purchase the specified currency with
such other currency at the Administrative Agent's main office in Chicago,
Illinois on the Business Day preceding that on which the final, non-appealable
judgment is given. The obligations of the applicable Borrower in respect of
any sum due to any Lender or any Agent hereunder or under any Note shall,
notwithstanding any judgment in a currency other than the specified currency,
be discharged only to the extent that on the Business Day following receipt by
such Lender or Agent (as the case may be) of any sum adjudged to be so due in
such other currency such Lender or Agent (as the case may be) may in accordance
with normal, reasonable banking procedures purchase the specified currency with
such other currency. If the amount of the specified currency so purchased is
less than the sum originally due to such Lender or Agent, as the case may be,
in the specified currency, the applicable Borrower agrees, to the fullest
extent that it may effectively do so, as a separate obligation and
notwithstanding any such judgment, to indemnify such Lender or Agent, as the
case may be, against such loss, and if the amount of the specified currency so
purchased exceeds (a) the sum originally due to any Lender or Agent, as the
case
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may be, in the specified currency and (b) any amounts shared with other
Lenders as a result of allocations of such excess as a disproportionate payment
to such Lender under Section 12.2, such Lender or Agent, as the case may be,
agrees to remit such excess to the applicable Borrower. Without prejudice to
the survival of any of the other agreements of the Borrowers hereunder, the
agreements and obligations of the Borrowers in this Section 2.27 shall survive
the termination of this Agreement and the payment of all other amounts owing
hereunder.
2.28 Market Disruption; Deposits Unavailable, Interest Rate
Unascertainable or Inadequate; Impracticability. Notwithstanding the
satisfaction of all conditions referred to in Article II with respect to any
Advance in any currency other than Dollars, if there shall occur on or prior to
the date of such Advance any event which results in a currency no longer
qualifying as an Eligible Currency or any change in national or international
financial, political or economic conditions or currency exchange rates or
exchange controls which would in the reasonable opinion of the Administrative
Agent or the Required Lenders with respect to Eurocurrency Rate Loans or the
applicable Alternate Currency Agent or Alternate Currency Lenders with at least
66-2/3% of the Alternate Currency Shares for such currency, with respect to
Alternate Currency Loans make it impracticable for the Eurocurrency Rate Loans
or Alternate Currency Loans comprising such Advance to be denominated in the
currency specified by the applicable Borrower, then the Administrative Agent or
Alternate Currency Agent, as applicable, shall forthwith give notice thereof to
Brightpoint and the Lenders, and such Loans shall not be denominated in such
currency but shall be made on such Borrowing Date as Base Rate Loans in
Dollars, in an aggregate principal amount equal to the Dollar Amount of the
aggregate principal amount specified in the related Borrowing Notice unless the
applicable Borrower notifies the Administrative Agent or Alternate Currency
Agent at least one Business Day before such date that (i) it elects not to
borrow on such date or (ii) with respect to Eurocurrency Rate Loans it elects
to borrow on such date in a different currency, as the case may be, in which
the denomination of such Loans would in the opinion of the Administrative Agent
and the Required Lenders be practicable and in an aggregate principal amount
equal to the Dollar Amount of the aggregate principal amount specified in the
related Borrowing Notice. If, and on each occasion, that on the day two
Business Days prior to the commencement of any Interest Period for a
Eurocurrency Advance or an Alternate Currency Advance the Administrative Agent
or Alternate Currency Agent shall have determined (i) that deposits in the
applicable currency in the principal amounts of the Loans comprising such
Advance are not generally available in the London interbank market, Paris
interbank market (for Alternate Currency Loans denominated in Sterling) or any
other market in which the Lenders shall be funding such Loans, (ii) that the
rates at which such deposits in the applicable currency are being offered will
not adequately and fairly reflect the cost to the Lenders having Revolving Loan
Commitments or Alternate Currency Commitments representing at least 66-2/3% of
the Aggregate Revolving Loan Commitments or Alternate Currency Commitments for
such currency at such time under the applicable Alternate Currency Addendum, as
applicable,) of making or maintaining their Eurocurrency Rate Loans or
Alternate Currency Loans during such Interest Period or (iii) that reasonable
means do not exist for ascertaining the Eurocurrency Rate or any other rate to
be used in determining the interest rate applicable to any Alternate Currency
Loans, the Administrative Agent or applicable Alternate Currency Agent shall,
as soon as practicable thereafter, give telecopy notice of such determination
to Brightpoint and the applicable Lenders. In the event of any such
determination, until the Administrative Agent or applicable Alternate Currency
Agent shall have advised Brightpoint and the applicable Lenders that the
circumstances giving rise to such notice no longer exist, any request by a
Borrower for a Eurocurrency Advance pursuant to Section 2.7 or for an Alternate
Currency Advance denominated in the applicable Alternate Currency pursuant to
Section 2.3 shall be of no force and effect and shall be denied by the
Administrative Agent or applicable Alternate Currency Agent, and any request
by a Borrower for a Eurocurrency Advance denominated in Dollars pursuant to
Section 2.7 shall be deemed to be a request for a Base Rate Advance. Each
determination by the
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Administrative Agent hereunder shall be presumed correct in the absence of
facts indicating that such determination is erroneous (it being understood
that the Borrower shall not have access to the internal records of the
Administrative Agent or any Lender for the purpose of confirming such
determination).
2.29 Subsidiary Borrowers. Brightpoint may at any time or from time to
time, with the consent of the Administrative Agent, which consent shall not be
unreasonably withheld, add as a party to this Agreement any Subsidiary to be a
"Subsidiary Borrower" hereunder by (a) the execution and delivery to the
Administrative Agent of a duly completed Assumption Letter by such Subsidiary,
with the written consent of Brightpoint at the foot thereof and (b) the
execution and delivery to the Administrative Agent of such pledge, guaranty and
security documents as may be reasonably required by the Administrative Agent.
Upon such execution, delivery and consent, such Subsidiary shall for all
purposes be a party hereto as a Subsidiary Borrower as fully as if it had
executed and delivered this Agreement. So long as the principal of and
interest on any Advances made to any Subsidiary Borrower under this Agreement
shall have been repaid or paid in full, all Letters of Credit issued for the
account of such Subsidiary Borrower have expired or been returned and
terminated and all other obligations of such Subsidiary Borrower under this
Agreement shall have been fully performed, Brightpoint may, by not less than
five Business Days' prior notice to the Administrative Agent (which shall
promptly notify the Lenders thereof), terminate such Subsidiary Borrower's
status as a "Subsidiary Borrower"; provided, however, without the prior
approval of all of the Lenders, no such termination shall (a) operate as a
release of or otherwise relieve the relevant Subsidiary Borrower from any
obligations under this Agreement or the other Loan Documents, including,
without limitation, pursuant to Article IX or (b) operate as a release of any
Pledge Agreement executed by such Subsidiary Borrower or with respect to the
Capital Stock of such Subsidiary Borrower.
ARTICLE III: CHANGE IN CIRCUMSTANCES
3.1 Yield Protection. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law) adopted after the date of this Agreement and
having general applicability to all banks within the jurisdiction in which such
Lender operates (excluding, for the avoidance of doubt, the effect of and
phasing in of capital requirements or other regulations or guidelines passed
prior to the date of this Agreement), or any interpretation or application
thereof by any Governmental Authority charged with the interpretation or
application thereof, or the compliance of any Lender therewith,
(i) subjects any Lender (each reference in this Section 3.1 to a
Lender being in its capacity as a Lender, Alternate Currency Lender or an
Issuing Lender, or all of the foregoing) or any applicable Lending
Installation to any tax, duty, charge or withholding on or from payments
due from any of the Borrowers (excluding taxation imposed by the United
States of America or any Governmental Authority of the jurisdiction under
the laws of which such Lender is organized, on the overall net income of
any Lender or applicable Lending Installation), or changes the basis of
taxation of payments to any Lender in respect of its Loans, its L/C
Interests, the Letters of Credit or other amounts due it hereunder,
provided however that this clause (i) shall not apply with respect to
any Taxes to which Section 2.15(E) applies, or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, any Lender or any applicable Lending Installation with
respect to its
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Eurocurrency Rate Loans, Alternate Currency Loans, L/C Interests or the
Letters of Credit (other than reserves and assessments taken into
account in calculating the Eurocurrency Rate), or
(iii) imposes any other condition the result of which is to
increase the cost to any Lender or any applicable Lending Installation of
making, funding or maintaining the Eurocurrency Rate Loans, Alternate
Currency Loans, the L/C Interests or the Letters of Credit or reduces any
amount received by any Lender or any applicable Lending Installation in
connection with Eurocurrency Rate Loans, Alternate Currency Loans or
Letters of Credit, or requires any Lender or any applicable Lending
Installation to make any payment calculated by reference to the amount of
Loans or L/C Interests held or interest received by it or by reference to
the Letters of Credit, by an amount deemed material by such Lender;
and the result of any of the foregoing is to increase the cost to that Lender
of making, renewing or maintaining its Loans, L/C Interests or Letters of
Credit or to reduce any amount received under this Agreement, then, within 15
days after receipt by Brightpoint of written demand by such Lender pursuant to
Section 3.5, Brightpoint shall pay or cause the appropriate Subsidiary to pay
such Lender that portion of such increased expense incurred or reduction in an
amount received which such Lender determines is attributable to making, funding
and maintaining its Loans, L/C Interests, Letters of Credit and its Revolving
Loan Commitment.
3.2 Changes in Capital Adequacy Regulations. If a Lender (each reference
in this Section 3.2 to a Lender being in its capacity as a Lender, Alternate
Currency Lender or an Issuing Lender, or all of the foregoing) determines (i)
the amount of capital required or expected to be maintained by such Lender, any
Lending Installation of such Lender or any corporation controlling such Lender
is increased as a result of a "Change" (as defined below), and (ii) such
increase in capital will result in an increase in the cost to such Lender of
maintaining its Loans, L/C Interests, the Letters of Credit or its obligation
to make Loans hereunder, then, within 15 days after receipt by Brightpoint of
written demand by such Lender pursuant to Section 3.5, Brightpoint shall pay or
cause the appropriate Subsidiary to pay such Lender the amount necessary to
compensate for any shortfall in the rate of return on the portion of such
increased capital which such Lender determines is attributable to this
Agreement, its Loans, its L/C Interests, the Letters of Credit or its
obligation to make Loans hereunder (after taking into account such Lender's
policies as to capital adequacy). "CHANGE" means (i) any change after the date
of this Agreement in the "Risk-Based Capital Guidelines" (as defined below)
excluding, for the avoidance of doubt, the effect of any phasing in of such
Risk-Based Capital Guidelines or any other capital requirements passed prior to
the date hereof, or (ii) any adoption of or change in any other law,
governmental or quasi-governmental rule, regulation, policy, guideline,
interpretation, or directive (whether or not having the force of law) after the
date of this Agreement and having general applicability to all banks and
financial institutions within the jurisdiction in which such Lender operates
which affects the amount of capital required or expected to be maintained by
any Lender or any Lending Installation or any corporation controlling any
Lender. "RISK-BASED CAPITAL GUIDELINES" means (i) the risk-based capital
guidelines in effect in the United States on the date of this Agreement,
including transition rules, and (ii) the corresponding capital regulations
promulgated by regulatory authorities outside the United States implementing
the July 1988 report of the Basle Committee on Banking Regulation and
Supervisory Practices Entitled "International Convergence of Capital
Measurements and Capital Standards," including transition rules, and any
amendments to such regulations adopted prior to the date of this Agreement.
3.3 Availability of Types of Advances. If (i) any Lender determines that
maintenance of its Eurocurrency Rate Loans or Alternate Currency Loans at a
suitable Lending Installation would violate any
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applicable law, rule, regulation or directive, whether or not having
the force of law, or (ii) the Required Lenders determine that (x) deposits of a
type, currency and maturity appropriate to match fund Fixed Rate Advances are
not available or (y) the interest rate applicable to a Eurocurrency Rate
Advance or Alternate Currency Advance does not accurately reflect the cost of
making or maintaining such a Eurocurrency Rate Advance or Alternate Currency
Advance, then the Administrative Agent shall suspend the availability of
Eurocurrency Rate Advances or Alternate Currency Advances and, in the case of
any occurrence set forth in clause (i), require any Eurocurrency Rate Advances
to be repaid or, at the option of Brightpoint, converted to Base Rate Advances.
3.4 Funding Indemnification. If (i) any payment of a Fixed Rate Advance
occurs on a date which is not the last day of the applicable Interest Period,
(ii) any Loan in any currency is converted to a Loan in any other currency on a
date which is not the last day of the applicable Interest Period, (iii) any
payment of a Fixed Rate Advance is deemed to have occurred on a date which is
not the last day of the applicable Interest Period as a result of a Conversion
Event under Section 2.12(f), in each case under clauses (i) through (iii)
whether because of acceleration, prepayment, or otherwise, or if a Fixed Rate
Advance or Alternate Currency Advance is not made or continued on the date
specified by the applicable Borrower for any reason other than default by the
Lenders, the applicable Borrower agrees to compensate and indemnify each
Lender, on demand, for any loss or cost incurred by it resulting therefrom,
including, without limitation, any loss or cost in liquidating or employing
deposits acquired to fund or maintain the Fixed Rate Advance. In connection
with any assignment by any Lender of any portion of the Loans made pursuant to
Section 2.12(f), the applicable Borrowers shall be deemed to have repaid all
outstanding Fixed Rate Advances being assigned as of such date and reborrowed
such amount as a Base Rate Advance and the indemnification provisions under
this Section 3.4 shall apply.
3.5 Lender Statements; Survival of Indemnity. If reasonably possible,
each Lender shall designate an alternate Lending Installation with respect to
its Fixed Rate Loans to reduce any liability of Brightpoint to such Lender
under Sections 3.1 and 3.2 or to avoid the unavailability of a Type of Advance
under Section 3.3, so long as such designation is not disadvantageous to such
Lender. Each Lender requiring compensation pursuant to Section 2.15(E) or to
this Article III shall use its reasonable efforts to notify Brightpoint and the
Administrative Agent in writing of any Change, law, policy, rule, guideline or
directive giving rise to such demand for compensation not later than ninety
(90) days following the date upon which the responsible account officer of such
Lender knows or should have known of such Change, law, policy, rule, guideline
or directive; provided, that failure to give such notice shall not affect any
obligations of the Borrowers hereunder with respect thereto. Any demand for
compensation pursuant to this Article III shall be in writing and shall state
the amount due, if any, under Section 3.1, 3.2 or 3.4 and shall set forth in
reasonable detail the calculations upon which such Lender determined such
amount. Such written demand shall be rebuttably presumed correct for all
purposes. Determination of amounts payable under such Sections in connection
with a Fixed Rate Loan shall be calculated as though each Lender funded its
Fixed Rate Loan through the purchase of a deposit of the type, currency and
maturity corresponding to the deposit used as a reference in determining the
Fixed Rate applicable to such Loan, whether in fact that is the case or not.
The obligations of the Borrowers under Sections 3.1, 3.2 and 3.4 shall survive
payment of the Obligations and termination of this Agreement.
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ARTICLE IV: CONDITIONS PRECEDENT
4.1 Initial Advances and Letters of Credit. The Lenders shall not be
required to make the initial Loans or issue any Letters of Credit unless the
Borrowers have furnished to the Administrative Agent, with sufficient copies
for the Lenders, such documents as the Administrative Agent or any Lender or
its counsel may have reasonably requested, including, without limitation, all
of the documents reflected on the List of Closing Documents attached as Exhibit
J to this Agreement (other than those designated to be delivered post-closing).
4.2 Each Advance and Letter of Credit. Except as expressly provided in
Sections 2.2, 2.3, 2.4, 2.12 and 2.23 with respect to the purchase of Loans,
participations in Loans or making of Loans to repay Swing Line Loans or
Alternate Currency Swing Line Loans, the Lenders shall not be required to make
any Advance and the Issuing Lender shall not be required to issue any Letter of
Credit, unless on the applicable Borrowing Date, or in the case of a Letter of
Credit, the date on which the Letter of Credit is to be issued:
(i) There exists no Default or Unmatured Default; and
(ii) The representations and warranties contained in Article V are
true and correct in all material respects as of such Borrowing Date,
except for representations and warranties made with reference to a
specific date which representations and warranties shall be true and
correct in all material respects as of such date, and except for
amendments to the Schedules made pursuant to the provisions of Section
1.3.
Each Borrowing Notice with respect to each such Advance and the letter of
credit application with respect to a Letter of Credit shall constitute a
representation and warranty by the Borrowers that the conditions contained in
Sections 4.2(i) and (ii) will have been satisfied as of the date of such
Advance or the issuance of such Letter of Credit. Any Lender may require a
duly completed officer's certificate in substantially the form of Exhibit K
hereto and/or a duly completed compliance certificate in substantially the form
of Exhibit C hereto as a condition to making an Advance; provided, however, no
such officer's certificate or compliance certificate shall be required without
at least 3 Business Days' prior notice unless the Lender requesting such
certificate has a good faith basis for believing that the conditions contained
in Section 4.2(i) and (ii) cannot be met in connection with any such borrowing.
4.3 Conditions Precedent to Initial Borrowing by each Subsidiary
Borrower. The obligation of the Alternate Currency Agent or any Alternate
Currency Lender to make an Alternate Currency Loan on
the occasion of the first borrowing by each Subsidiary Borrower is subject to
the satisfaction of the condition that the Administrative Agent shall have
received the following:
(a) for any proposed Subsidiary Borrower that is not a party hereto,
an Assumption Letter executed by such Subsidiary Borrower and
acknowledged by each other Borrower;
(b) a master Note payable to the Alternate Currency Agent on behalf
of the Alternate Currency Lenders, signed by such Subsidiary Borrower;
(c) all documents as shall reasonably demonstrate the existence of
such Subsidiary Borrower, the corporate power and authority of such
Subsidiary Borrower to enter into and the validity with respect to such
Subsidiary Borrower of this Agreement and the other Loan
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Documents and any other matters relevant hereto (including an opinion of
counsel), all in form and substance satisfactory to the Administrative
Agent;
(d) an Alternate Currency Addendum for such Subsidiary Borrower duly
executed by Brightpoint, BPI, such Subsidiary Borrower, the applicable
Alternate Currency Lenders and the applicable Alternate Currency Agent;
(e) consent from the Lenders to include the proposed currency for
Loans to such Subsidiary Borrower as an Alternate Currency;
(f) a Pledge Agreement shall have been duly executed and delivered
in respect of 65% of the shares of such Subsidiary and the Administrative
Agent shall be satisfied that it has a first priority perfected pledge of
or charge over such shares; and
(g) any governmental and third party approvals necessary or
advisable in connection with the execution, delivery and performance of
this Agreement by such Subsidiary Borrower.
ARTICLE V: REPRESENTATIONS AND WARRANTIES
In order to induce the Agents and the Lenders to enter into this Agreement
and to make the Loans and the other financial accommodations to the Borrowers
and in order to induce the Issuing Lender to issue the Letters of Credit
described herein, each of the Borrowers represents and warrants as follows to
each Lender and each Agent as of the Closing Date and thereafter on each date
as required by Section 4.2:
5.1 Organization; Powers. Each of the Borrowers and each of their
respective Subsidiaries (i) is a duly organized corporation validly existing
and in good standing under the laws of the jurisdiction of its organization,
(ii) is duly qualified to do business as a foreign company or corporation and
is in good standing under the laws of each jurisdiction in which failure to be
so qualified and in good standing could have a Material Adverse Effect, and
(iii) has all requisite power and authority to own, operate and encumber its
property and to conduct its business as presently conducted and as proposed to
be conducted in connection with and following the consummation of the
transactions contemplated by this Agreement.
5.2 Authority.
(A) Each of the Borrowers and each of their respective Subsidiaries has
the requisite power and authority (i) to execute, deliver and perform each of
the Loan Documents which have been executed by it as required by this Agreement
and (ii) to file the Loan Documents which must be filed by it with any
Governmental Authority.
(B) The execution, delivery, performance and filing, as the case may be,
of each of the Loan Documents which must be executed or filed by any of the
Borrowers or any other Subsidiary of Brightpoint which have been executed or
filed as required by this Agreement and to which any of the Borrowers or any
other Subsidiary of Brightpoint is party, and the consummation of the
transactions contemplated thereby, have been duly approved, to the extent
required, by the respective boards of managers or directors, as applicable,
and, if necessary, the members or shareholders or workers' councils of the
applicable Borrower or Subsidiary, as applicable, and such approvals have not
been rescinded. No
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other action or proceedings on the part of any Borrower or any other Person
are necessary to consummate such transactions.
(C) Each of the Loan Documents to which any of the Borrowers or any other
Subsidiary of Brightpoint is a party has been duly executed, delivered or
filed, as the case may be, by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms (except as
enforceability may be limited by bankruptcy, insolvency, or similar laws
affecting the enforcement of creditor's rights generally), is in full force and
effect and no material term or condition thereof has been amended, modified or
waived from the terms and conditions contained in the Loan Documents delivered
to the Administrative Agent pursuant to Section 4.1 without the prior written
consent of the Required Lenders, and each of the Borrowers or each other
Subsidiary of Brightpoint have, and, to the best of such Borrower's or
Subsidiary's knowledge, all other parties thereto have performed and complied
with all the terms, provisions, agreements and conditions set forth therein and
required to be performed or complied with by such parties, and no unmatured
default, default or breach of any covenant by any such party exists thereunder.
5.3 No Conflict; Governmental Consents. The execution, delivery and
performance of each of the Loan Documents to which any of the Borrowers or any
other Subsidiary of Brightpoint is a party do not and will not (i) conflict
with the documents of organization or governance of such Borrower or Subsidiary
(ii) constitute tortious interference with any Contractual Obligation of any
Person or conflict with, result in a breach of or constitute (with or without
notice or lapse of time or both) a default under any Requirement of Law
(including, without limitation, any Environmental Property Transfer Act) or
Contractual Obligation of any Borrower or any such Subsidiary, or require
termination of any Contractual Obligation, except such interference, breach,
default or termination which individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect or to subject the
Agents, the Arranger, any of the Lenders or the Issuing Lender to any
liability, (iii) with respect to the Loan Documents, result in or require the
creation or imposition of any Lien whatsoever upon any of the property or
assets of any Borrower or any such Subsidiary, other than Liens permitted by
the Loan Documents, or (iv) require any approval of the Borrower's or any such
Subsidiary's members, shareholders, workers' council or other similar
constituent group except such as have been obtained. The execution, delivery
and performance of each of the Loan Documents to which any Borrower or any
other Subsidiary is a party do not and will not require any registration with,
consent or approval of, or notice to, or other action to, with or by any
Governmental Authority, including under any Environmental Property Transfer
Act, except (i) filings, consents or notices which have been or, in the case
of any of the foregoing, not required prior to the Closing Date, will be made,
obtained or given, or which, if not made, obtained or given, individually or
in the aggregate would not reasonably be expected to have a Material Adverse
Effect, and (ii) filings necessary to create or perfect security interests in
the Collateral.
5.4 Financial Statements. The historical and forecasted financial
statements (the "Statements") of Brightpoint and its Subsidiaries, copies of
which are attached hereto as Exhibit L, (i) with respect to the historical
Statements, (a) were prepared in accordance with generally accepted accounting
principles consistently applied throughout the period covered thereby, except
as otherwise expressly noted therein, (b) fairly present the consolidated
financial position of Brightpoint and its Subsidiaries as of the date thereof
and consolidated results of operations for the period covered thereby; and (c)
show all material indebtedness and other liabilities, direct or contingent, of
Brightpoint and its consolidated Subsidiaries as of the date thereof, including
liabilities for taxes, material commitments and Contingent Obligations; and
(ii) with respect to the forecasted Statements, the projections and assumptions
expressed therein were
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prepared in good faith and represent management's opinion based on the
information available to Brightpoint at the time so furnished.
5.5 No Material Adverse Change. (a) Since March 31, 1997 up to the
Closing Date, there has occurred no change in the business, properties,
condition (financial or otherwise) or results of operations of Brightpoint and
its Subsidiaries taken as a whole or any other event which has had or is
reasonably likely to have a Material Adverse Effect.
(b) Since the Closing Date, there has occurred no change in the business,
properties, condition (financial or otherwise) or results of operations of
Brightpoint and its Subsidiaries taken as a whole or any other event which has
had or is reasonably likely to have a Material Adverse Effect.
5.6 Taxes.
(A) Tax Examinations. All deficiencies which have been asserted against
Brightpoint or any of Brightpoint's Subsidiaries as a result of any federal,
state, local or foreign tax examination for each taxable year in respect of
which an examination has been conducted have been fully paid or finally settled
or are being contested in good faith, and as of the Closing Date no issue has
been raised by any taxing authority in any such examination which, by
application of similar principles, reasonably can be expected to result in
assertion by such taxing authority of a material deficiency for any other year
not so examined which has not been reserved for in Brightpoint's consolidated
financial statements to the extent, if any, required by Agreement Accounting
Principles. Except as permitted pursuant to Section 6.2(D), neither
Brightpoint nor any of Brightpoint's Subsidiaries anticipates any material tax
liability with respect to the years which have not been closed pursuant to
applicable law.
(B) Payment of Taxes. All tax returns and reports of each of
Brightpoint, BPI and Brightpoint's other Subsidiaries required to be filed have
been timely filed, and all taxes, assessments, fees and other
governmental charges thereupon and upon their respective property, assets,
income and franchises which are shown in such returns or reports to be due and
payable have been paid except those items which are being contested in good
faith and have been reserved for in accordance with Agreement Accounting
Principles. Brightpoint has no knowledge of any proposed tax assessment
against Brightpoint, BPI, or any of Brightpoint's other Subsidiaries that will
have or is reasonably likely to have a Material Adverse Effect.
5.7 Litigation; Loss Contingencies and Violations. Except for Permitted
Existing Contingent Obligations and as set forth in Schedules 5.7 to this
Agreement, there is no action, suit, proceeding, investigation of which
Brightpoint has knowledge or arbitration before or by any Governmental
Authority or private arbitrator pending or, to the knowledge of Brightpoint or
any of its Subsidiaries, threatened against Brightpoint or any of its
Subsidiaries or any property of any of them (i) challenging the validity or the
enforceability of any material provision of the Loan Documents or (ii) which
will have or is reasonably likely to have a Material Adverse Effect. There is
no material loss contingency within the meaning of Agreement Accounting
Principles which has not been reflected in the consolidated financial
statements of Brightpoint prepared and delivered pursuant to Section 6.1(A) for
the fiscal period during which such material loss contingency was incurred.
Neither Brightpoint nor any of its Subsidiaries is (A) in violation of any
applicable Requirements of Law which violation will have or is reasonably
likely to have a Material Adverse Effect, or (B) subject to or in default with
respect to any final judgment, writ, injunction, restraining order or order of
any nature, decree, rule or regulation of any court or Governmental Authority
which will have or is reasonably likely to have a Material Adverse Effect.
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5.8 Subsidiaries. Schedule 5.8 to this Agreement (i) contains a
description (both narratively and in flow chart form) of the corporate
structure of Brightpoint, Brightpoint's Subsidiaries and any other Person in
which Brightpoint or any of its Subsidiaries holds an equity interest; and (ii)
accurately sets forth (A) the correct legal name, the jurisdiction of
organization or incorporation and the jurisdictions in which each Borrower and
the direct and indirect Subsidiaries of Brightpoint is qualified to transact
business as a foreign company or corporation, (B) the authorized, issued and
outstanding shares of each class of Capital Stock of each entity referred to
above that is a corporation and the owners of such shares (both as of the
Closing Date and on a fully-diluted basis), and (C) a summary of the direct and
indirect ownership, membership, partnership, joint venture, or other equity
interests, if any, of Brightpoint and each Subsidiary of Brightpoint in any
Person that is not a corporation.
5.9 ERISA. No Benefit Plan has incurred any accumulated funding
deficiency (as defined in Sections 302(a)(2) of ERISA and 412(a) of the Code)
whether or not waived. Neither Brightpoint nor any member of the Controlled
Group has incurred any liability to the PBGC which remains outstanding other
than the payment of premiums, and there are no premium payments which have
become due which are unpaid. Schedule B to the most recent annual report filed
with the IRS with respect to each Benefit Plan and furnished to the lenders is
complete and accurate. Since the date of each such Schedule B, there has been
no material adverse change in the funding status or financial condition of the
Benefit Plan relating to such Schedule B. Neither Brightpoint nor any member
of the Controlled Group has (i) failed to make a required contribution or
payment to a Multiemployer Plan or (ii) made a complete or partial withdrawal
under Sections 4203 or 4205 of ERISA from a Multiemployer Plan. Neither
Brightpoint nor any member of the Controlled Group has failed to make a
required installment or any other required payment under Section 412 of the
Code on or before the due date for such installment or other payment.
Neither Brightpoint nor any member of the Controlled Group is required to
provide security to a Benefit Plan under Section 401(a)(29) of the Code due to
a Plan amendment that results in an increase in current liability for the plan
year. Neither Brightpoint nor any of its Subsidiaries maintains or contributes
to any employee welfare benefit plan within the meaning of Section 3(1) of
ERISA which provides benefits to employees after termination of employment
other than as required by Section 601 of ERISA. Each Plan which is intended to
be qualified under Section 401(a) of the Code as currently in effect is so
qualified, and each trust related to any such Plan is exempt from federal
income tax under Section 501(a) of the Code as currently in effect.
Brightpoint and all Subsidiaries are in compliance in all material respects
with the responsibilities, obligations and duties imposed on them by ERISA and
the Code with respect to all Plans. Neither Brightpoint nor any of its
Subsidiaries nor any fiduciary of any Plan has engaged in a nonexempt
prohibited transaction described in Sections 406 of ERISA or 4975 of the Code
which could reasonably be expected to subject Brightpoint to liability
individually or in the aggregate in excess of $250,000. Neither Brightpoint
nor any member of the Controlled Group has taken or failed to take any action
which would constitute or result in a Termination Event, which action or
inaction could reasonably be expected to subject Brightpoint nor any of its
Subsidiaries to liability in excess of $250,000. Neither Brightpoint nor any
Subsidiary is subject to any liability under Sections 4063, 4064, 4069, 4204 or
4212(c) of ERISA and no other member of the Controlled Group is subject to any
liability under Sections 4063, 4064, 4069, 4204 or 4212(c) of ERISA which could
reasonably be expected to subject Brightpoint to or any of its Subsidiaries
liability individually or in the aggregate in excess of $250,000. Neither
Brightpoint nor any of its Subsidiaries has, by reason of the transactions
contemplated hereby, any obligation to make any payment to any employee
pursuant to any Plan or existing contract or arrangement.
5.10 Accuracy of Information. The information, exhibits and reports
furnished by or on behalf of Brightpoint and any of its Subsidiaries to the
Administrative Agent or to any Lender in connection with the negotiation of, or
compliance with, the Loan Documents, including, without limitation, the
Confidential
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Information Memorandum reviewed by Brightpoint (provided that except as
set forth in Section 5.4, no representation or warranty is made with respect to
the forward looking information contained therein), the representations and
warranties of Brightpoint and its Subsidiaries contained in the Loan Documents,
and all certificates and documents delivered to the Administrative Agent and
the Lenders pursuant to the terms thereof do not contain as of the date
furnished any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements contained herein or therein, in
light of the circumstances under which they were made, not misleading.
5.11 Securities Activities. Neither Brightpoint nor any of its
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying Margin Stock.
5.12 Material Agreements. Neither Brightpoint nor any Subsidiary is a
party to any agreement or instrument or subject to any charter or other
contractual or corporate restriction which will have or is reasonably likely to
have a Material Adverse Effect. Neither Brightpoint nor any of its
Subsidiaries has received notice or has knowledge that (i) it is in default in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any Contractual Obligation applicable to it, or (ii)
any condition exists which, with the giving of notice or the lapse of time or
both, would constitute a default with respect to any such Contractual
Obligation, in each case, except where such default or defaults, if any, will
not have or are not reasonably likely to have a Material Adverse Effect.
5.13 Compliance with Laws. Brightpoint and its Subsidiaries are in
compliance with all Requirements of Law applicable to them and their respective
businesses, in each case where the failure to so comply individually or in the
aggregate will have or is reasonably likely to have a Material Adverse Effect.
5.14 Assets and Properties. Brightpoint and each of its Subsidiaries has
good and marketable title to all of its assets and properties (tangible and
intangible, real or personal) owned by it or a valid leasehold interest in all
of its leased assets (except insofar as marketability may be limited by any
laws or regulations of any Governmental Authority affecting such assets), and
all such assets and property are free and clear of all Liens, except Liens
securing the Obligations and Liens permitted under Section 6.3(C).
Substantially all of the assets and properties owned by, leased to or used by
Brightpoint and/or each such Subsidiary of Brightpoint are in adequate
operating condition and repair, ordinary wear and tear excepted. Except for
Liens granted to the Administrative Agent for the benefit of the Administrative
Agent and the Holders of Secured Obligations, neither this Agreement nor any
other Loan Document, nor any transaction contemplated under any such agreement,
will affect any right, title or interest of Brightpoint or such Subsidiary in
and to any of such assets in a manner that will have or is reasonably likely to
have a Material Adverse Effect.
5.15 Statutory Indebtedness Restrictions. Neither Brightpoint, nor any
of its Subsidiaries is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, or the
Investment Company Act of 1940, or any other federal, state, local or foreign
statute or regulation which limits its ability to incur indebtedness or its
ability to consummate the transactions contemplated hereby.
5.16 Post-Retirement Benefits. As of the Closing Date, Brightpoint and
its Subsidiaries have no expected cost of post-retirement medical and insurance
benefits payable by Brightpoint or its Subsidiaries to its employees and former
employees, as estimated by Brightpoint in accordance with Financial Accounting
Standards Board Statement No. 106.
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5.17 Insurance. Schedule 5.17 to this Agreement accurately sets forth as
of the Closing Date all insurance policies and programs currently in effect
with respect to the respective properties and assets and business of
Brightpoint and its Subsidiaries, specifying for each such policy and program,
(i) the amount thereof, (ii) the risks insured against thereby, (iii) the name
of the insurer and each insured party thereunder, (iv) the policy or other
identification number thereof, (v) the expiration date thereof, (vi) the annual
premium with respect thereto and (vii) describes any reserves, relating to any
self-insurance program that is in effect. Such insurance policies and programs
reflect coverage that is reasonably consistent with prudent industry practice.
5.18 Contingent Obligations. Except for Permitted Existing Contingent
Obligations, neither Brightpoint nor any of its Subsidiaries has any Contingent
Obligation, contingent liability, long-term lease, synthetic lease or
commitment, not reflected in the financial statements attached hereto as
Exhibit L or otherwise disclosed to the Administrative Agent and the Lenders in
the other Schedules to this Agreement, which could reasonably be expected to
subject Brightpoint nor any of its Subsidiaries to liability individually or in
the aggregate in excess of (a) $10,000,000 with respect to Contingent Purchase
Price Payments or (b) $1,000,000 for other amounts.
5.19 Restricted Junior Payments. Neither Brightpoint nor any of its
Subsidiaries has directly or indirectly declared, ordered, paid or made or set
apart any sum or properties for any Restricted Junior Payment or agreed to do
so, except to the extent permitted pursuant to Section 6.3(F) of this
Agreement.
5.20 Labor Matters.
(A) There are on the Closing Date no collective bargaining agreements,
other labor agreements or Multiemployer Plans covering any of the employees of
Brightpoint or any of its Subsidiaries. As of the Closing Date, no labor
disputes, strikes or walkouts affecting the operations of Brightpoint or any of
its Subsidiaries, is pending, or, to Brightpoint's knowledge, threatened,
planned or contemplated.
(B) Set forth in Schedule 5.20 to this Agreement is a list, as of the
Closing Date, of all material consulting agreements, executive compensation
plans, deferred compensation agreements, employee pension plans or retirement
plans, employee profit sharing plans, employee stock purchase and stock option
plans, severance plans, group life insurance, hospitalization insurance or
other plans or arrangements of Brightpoint and its Subsidiaries providing for
benefits for employees of Brightpoint or its Subsidiaries.
5.21 Environmental Matters. (a) Except as disclosed on Schedule 5.21:
(i) the operations of Brightpoint and its Subsidiaries comply in
all material respects with Environmental, Health or Safety Requirements
of Law;
(ii) Brightpoint and its Subsidiaries have all material permits,
licenses or other authorizations required under Environmental, Health or
Safety Requirements of Law and are in material compliance with such
permits;
(iii) neither Brightpoint, any of its Subsidiaries nor any of their
respective present property or operations, or, to the best of,
Brightpoint's or any of its Subsidiaries' knowledge, any of their
respective past property or operations, are subject to or the subject of,
any investigation known to Brightpoint or any of its Subsidiaries, any
judicial or administrative proceeding, order,
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judgment, decree, settlement or other agreement respecting: (A) any
material violation of Environmental, Health or Safety Requirements of
Law; (B) any material remedial action; or (C) any material claims or
liabilities arising from the Release or threatened Release of a
Contaminant into the environment;
(iv) there is not now, nor to the best of Brightpoint's or any of
its Subsidiaries' knowledge has there ever been on or in the property of
Brightpoint or any of its Subsidiaries any material landfill, waste pile,
underground storage tanks, aboveground storage tanks, surface impoundment
or hazardous waste storage facility of any kind, polychlorinated
biphenyls (PCBs) used in hydraulic oils, electric transformers or other
equipment, or asbestos-containing material; and
(v) neither Brightpoint nor any of its Subsidiaries has any
material Contingent Obligation or material contingent liability in
connection with any Release or threatened Release of a Contaminant into
the environment.
(b) For purposes of this Section 5.21 "material" means any noncompliance
or basis for liability which could reasonably be likely to subject Brightpoint
to liability individually or in the aggregate in excess of $250,000.
5.22 Foreign Employee Benefit Matters. To the best of Brightpoint's and
its Subsidiaries' knowledge after diligent inquiry of all relevant Persons:
(a) each Foreign Employee Benefit Plan is in compliance in all respects with
all laws, regulations and rules applicable thereto and the respective
requirements of the governing documents for such Plan, except for any
non-compliance the consequences of which, in the aggregate, would not result in
a material obligation to pay money; (b) the aggregate of the accumulated
benefit obligations under all Foreign Pension Plans does not exceed the current
fair market value of the assets held in the trusts or similar funding vehicles
for such Plans or reasonable reserves have been established in accordance with
prudent business practices or as required by Agreement Accounting Principles
with respect to any shortfall; (c) with respect to any Foreign Employee Benefit
Plan maintained or contributed to by Brightpoint or any Subsidiary or any
member of its Controlled Group (other than a Foreign Pension Plan), reasonable
reserves have been established in accordance with prudent business practice or
where required by ordinary accounting practices in the jurisdiction in which
such Plan is maintained; and (d) there are no actions, suits or claims (other
than routine claims for benefits) pending or, to the knowledge of Brightpoint
and its Subsidiaries, threatened against Brightpoint or any Subsidiary of it or
any ERISA Affiliate with respect to any Foreign Employee Benefit Plan.
ARTICLE VI: COVENANTS
Each of the Borrowers covenants and agrees that so long as any Commitments
are outstanding and thereafter until payment in full of all of the Obligations
(other than contingent indemnity and reimbursement obligations), unless the
Required Lenders shall otherwise give prior written consent:
6.1 Reporting. The Borrowers shall:
(A) Financial Reporting. Furnish to the Administrative Agent (which will
furnish copies of the following to the Lenders):
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(i) Quarterly Reports. As soon as practicable, and in any event
within forty-five (45) days after the end of the first three fiscal
quarters in each fiscal year beginning with the fiscal quarter ending
June 30, 1997, the consolidated and consolidating balance sheets of
Brightpoint and its Subsidiaries as at the end of such period, the
related consolidated and consolidating statements of income and the
related consolidated statement of stockholders' equity and cash flow of
Brightpoint and its Subsidiaries for such fiscal quarter and for the
period from the beginning of the then current fiscal year to the end of
such fiscal quarter, certified by the chief financial officer of
Brightpoint on behalf of Brightpoint as fairly presenting in all material
respects the consolidated and, as applicable, consolidating financial
position of Brightpoint and its Subsidiaries as at the dates indicated
and the results of their operations and cash flow for the periods
indicated in accordance with Agreement Accounting Principles, subject to
normal year end adjustments.
(ii) Annual Reports. As soon as practicable, and in any event
within one hundred twenty (120) days after the end of each fiscal year,
(a) the consolidated and consolidating balance sheet of Brightpoint and
its Subsidiaries as at the end of such fiscal year and the related
consolidated and consolidating statements of income and the related
consolidated statement of stockholders' equity and cash flow of
Brightpoint and its Subsidiaries for such fiscal year, and, in
comparative form the corresponding figures for the previous fiscal year,
(b) a schedule from Brightpoint setting forth for each item in clause (a)
hereof, the corresponding figures from the consolidated financial budget
for the current fiscal year delivered pursuant to Section 6.1(A)(iv), and
(c) an audit report on the items (other than the consolidating financial
statements) listed in clause (a) hereof of independent certified public
accountants of recognized national standing, which audit report shall be
unqualified and shall state that such financial statements fairly present
in all material respects the consolidated financial position of
Brightpoint and its Subsidiaries as at the dates indicated and the
results of their operations and cash flow for the periods indicated in
conformity with Agreement Accounting Principles and that the examination
by such accountants in connection with such consolidated financial
statements has been made in accordance with generally accepted auditing
standards. The deliveries made pursuant to this clause (ii) shall be
accompanied by (y) the report on internal controls prepared by the
above-referenced accountants and (z) a certificate of such accountants
that, in the course of their examination necessary for their
certification of the foregoing (such examination utilizing only their
customary audit procedures without any necessity of conducting extra
procedures for purposes of this certificates), they have obtained no
knowledge of any Default or Unmatured Default, or if, in the opinion of
such accountants, any Default or Unmatured Default shall exist, stating
the nature and status thereof.
(iii) Officer's Certificate. Together with each delivery of any
financial statement pursuant to clauses (i) and (ii) of this Section
6.1(A), (a) an Officer's Certificate of Brightpoint, substantially in the
form of Exhibit K attached hereto and made a part hereof, stating that no
Default or Unmatured Default exists, or if any Default or Unmatured
Default exists, stating the nature and status thereof and (b) a
Compliance Certificate, substantially in the form of Exhibit C attached
hereto and made a part hereof, signed by Brightpoint's chief financial
officer or treasurer, setting forth Brightpoint's calculations for the
period then ended for Section 2.5(B) and for Section 2.8(b) and which
demonstrate compliance, when applicable, with the provisions of Section
6.4.
(iv) Budgets. As soon as practicable and in any event not later
than thirty (30) days following the beginning of each fiscal year
beginning with the fiscal year beginning January 1, 1998, a copy of the
budget (including a budgeted balance sheet and income statement) of
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Brightpoint for the upcoming fiscal year prepared in such detail as shall
be reasonably satisfactory to the Administrative Agent.
(B) Notice of Default. Promptly upon any of the chief executive officer,
chief operating officer, chief financial officer, treasurer or controller of
Brightpoint or BPI obtaining knowledge (i) of any condition or event which
constitutes a Default or Unmatured Default, or becoming aware that any Lender
or Administrative Agent has given any written notice with respect to a claimed
Default or Unmatured Default under this Agreement, or (ii) that any Person has
given any written notice to Brightpoint or any Subsidiary of Brightpoint or
taken any other action with respect to a claimed default or event or condition
of the type referred to in Section 7.1(e), deliver to the Administrative Agent
and the Lenders an Officer's Certificate specifying (a) the nature and period
of existence of any such claimed default, Default, Unmatured Default, condition
or event, (b) the notice given or action taken by such Person in connection
therewith, and (c) what action Brightpoint has taken, is taking and proposes to
take with respect thereto.
(C) Lawsuits. (i) Promptly upon Brightpoint obtaining knowledge of the
institution of, or written threat of, any action, suit, proceeding,
governmental investigation or arbitration against or affecting Brightpoint or
any of its Subsidiaries or any property of Brightpoint or any of its
Subsidiaries not previously disclosed pursuant to Section 5.7, which action,
suit, proceeding, governmental investigation or arbitration exposes, or in the
case of multiple actions, suits, proceedings, governmental investigations or
arbitrations arising out of the same general allegations or circumstances which
expose, in Brightpoint's reasonable judgment, Brightpoint or any of its
Subsidiaries to liability in an amount aggregating $1,000,000 or more, give
written notice thereof to the Administrative Agent on behalf of the Lenders and
provide such other information as may be reasonably available to enable each
Lender and the Administrative Agent and its counsel to evaluate such matters;
and (ii) in addition to the requirements set forth in clause (i) of this
Section 6.1(C), upon request of the Administrative Agent or the Required
Lenders, promptly give written notice of the status of any action, suit,
proceeding, governmental investigation or arbitration disclosed on Schedule 5.7
or covered by a report delivered pursuant to clause (i) above and provide such
other information as may be reasonably available to it that would not result in
loss of any attorney-client privilege by disclosure to the Lenders to enable
each Lender and the Administrative Agent and its counsel to evaluate such
matters.
(D) Insurance. As soon as practicable and in any event within one
hundred twenty (120) days of the end of each fiscal year commencing with fiscal
year ending December 31, 1997, deliver to the Administrative Agent and the
Lenders (i) a report in form and substance reasonably satisfactory to the
Administrative Agent and the Lenders outlining all material insurance coverage
maintained as of the date of such report by Brightpoint and its Subsidiaries
and the duration of such coverage and (ii) an insurance broker's statement that
all premiums with respect to such coverage have been paid when due.
(E) ERISA Notices. Deliver or cause to be delivered to the
Administrative Agent and the Lenders, at Brightpoint's expense, the following
information and notices as soon as reasonably possible, and in any event:
(i) (a) within ten (10) Business Days after any Borrower obtains
knowledge that a Termination Event has occurred, a written statement of
the chief financial officer of Brightpoint describing such Termination
Event and the action, if any, which Brightpoint has taken, is taking or
proposes to take with respect thereto, and when known, any action taken or
threatened by the IRS, DOL or PBGC with respect thereto and (b) within ten
(10) Business Days after any member of the Controlled Group obtains
knowledge that a Termination Event has occurred which could
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reasonably be expected to subject Brightpoint to or any of its
Subsidiaries liability individually or in the aggregate in excess of
$100,000, a written statement of the chief financial officer of
Brightpoint describing such Termination Event and the action, if any,
which the member of the Controlled Group has taken, is taking or proposes
to take with respect thereto, and when known, any action taken or
threatened by the IRS, DOL or PBGC with respect thereto;
(ii) within ten (10) Business Days after Brightpoint or any of its
Subsidiaries obtains knowledge that a prohibited transaction (defined in
Sections 406 of ERISA and Section 4975 of the Code) has occurred, a
statement of the chief financial officer of Brightpoint describing such
transaction and the action which Brightpoint or such Subsidiary has
taken, is taking or proposes to take with respect thereto;
(iii) within ten (10) Business Days after any material increase in
the benefits of any existing Plan or the establishment of any new Benefit
Plan or the commencement of, or obligation to commence, contributions to
any Benefit Plan or Multiemployer Plan to which Brightpoint or any member
of the Controlled Group was not previously contributing, notification of
such increase, establishment, commencement or obligation to commence and
the amount of such contributions;
(iv) within ten (10) Business Days after Brightpoint or any of its
Subsidiaries receives notice of any unfavorable determination letter from
the IRS regarding the qualification of a Plan under Section 401(a) of the
Code, copies of each such letter;
(v) within thirty (30) Business Days after the establishment of any
Foreign Employee Benefit Plan or the commencement of, or obligation to
commence, contributions to any Foreign Employee Benefit Plan to which
Brightpoint or any Subsidiary was not previously contributing,
notification of such establishment, commencement or obligation to
commence and the amount of such contributions;
(vi) within ten (10) Business Days after the filing thereof with
the IRS, a copy of each funding waiver request filed with respect to any
Benefit Plan and all communications received by Brightpoint or a member
of the Controlled Group with respect to such request;
(vii) within ten (10) Business Days after receipt by Brightpoint or
any member of the Controlled Group of the PBGC's intention to terminate a
Benefit Plan or to have a trustee appointed to administer a Benefit Plan,
copies of each such notice;
(viii) within ten (10) Business Days after receipt by Brightpoint
or any member of the Controlled Group of a notice from a Multiemployer
Plan regarding the imposition of withdrawal liability, copies of each
such notice;
(ix) within ten (10) Business Days after Brightpoint or any member
of the Controlled Group fails to make a required installment or any other
required payment under Section 412 of the Internal Revenue Code on or
before the due date for such installment or payment, a notification of
such failure; and
(x) within ten (10) Business Days after Brightpoint or any member
of the Controlled Group knows or has reason to know that (a) a
Multiemployer Plan has been terminated, (b) the
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administrator or plan sponsor of a Multiemployer Plan intends to
terminate a Multiemployer Plan, or (c) the PBGC has instituted or will
institute proceedings under Section 4042 of ERISA to terminate a
Multiemployer Plan.
For purposes of this Section 6.1(E), Brightpoint, any of its Subsidiaries and
any member of the Controlled Group shall be deemed to know all facts known by
the Administrator of any Plan of which the Borrower or any member of the
Controlled Group or such Subsidiary is the plan sponsor.
(F) Labor Matters. Notify the Administrative Agent and the Lenders in
writing, promptly upon Brightpoint's or any of its Subsidiaries' learning
thereof, of (i) any labor dispute to which Brightpoint or any of its
Subsidiaries may become a party, including, without limitation, any strikes,
lockouts or other disputes relating to such Persons' plants and other
facilities and (ii) any Worker Adjustment and Retraining Notification Act
liability incurred with respect to the closing of any plant or other facility
of Brightpoint or any of its Subsidiaries where, in the case of (i) or (ii),
such is reasonably likely to have a Material Adverse Effect.
(G) Other Indebtedness. Deliver to the Administrative Agent (i) a copy
of each regular report, notice or communication regarding potential or actual
defaults (including any accompanying officers' certificate) delivered by or on
behalf of Brightpoint or any of its Subsidiaries to the holders of Indebtedness
for money borrowed with respect to Indebtedness the outstanding principal
balance of which is at least $250,000 pursuant to the terms of the agreements
governing such Indebtedness, such delivery to be made at the same time and by
the same means as such notice or other communication is delivered to such
holders, and (ii) a copy of each notice or other communication received by
Brightpoint or any of its Subsidiaries from the holders of Indebtedness for
money borrowed with respect to Indebtedness the outstanding principal balance
of which is at least $250,000 pursuant to the terms of such Indebtedness, such
delivery to be made promptly after such notice or other communication is
received by Brightpoint or the applicable Subsidiary.
(H) Other Reports. Deliver or cause to be delivered to the
Administrative Agent and the Lenders copies of all 10-Ks, 10-Qs and 8-Ks filed
with the Commission by Brightpoint, and all notifications received from the
Commission by Brightpoint or its Subsidiaries pursuant to the Securities
Exchange Act and the rules promulgated thereunder.
(I) Environmental Notices. As soon as possible and in any event within
ten (10) days after receipt by Brightpoint or any of its Subsidiaries, a copy
of (i) any notice or claim to the effect that Brightpoint or any of its
Subsidiaries is or may be liable to any Person as a result of the Release by
Brightpoint, any of its Subsidiaries, or any other Person of any Contaminant
into the environment, and (ii) any notice alleging any violation of any
Environmental, Health or Safety Requirements of Law by Brightpoint or any of
its Subsidiaries if, in either case, such notice or claim relates to an event
which could reasonably be expected to subject Brightpoint or any of its
Subsidiaries to liability individually or in the aggregate in excess of
$250,000.
(J) Other Information. Within a reasonable period of time following
receipt of a request therefor from the Administrative Agent, prepare and
deliver to the Administrative Agent and the Lenders such other information with
respect to Brightpoint, any of its Subsidiaries, or the Collateral, including,
without limitation, schedules identifying and describing the Collateral and any
dispositions thereof, as from time to time may be reasonably requested by the
Administrative Agent.
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6.2 Affirmative Covenants.
(A) Existence, Etc. Brightpoint shall, and shall cause each of its
Subsidiaries to, at all times maintain its existence and preserve and keep, or
cause to be preserved and kept, in full force and effect its rights and
franchises material to its businesses except that any Subsidiary of Brightpoint
may merge with or liquidate into Brightpoint or any other Subsidiary of
Brightpoint, provided that the surviving entity expressly assumes any
liabilities, if any, of either of such Subsidiaries with respect to the
Obligations pursuant to an assumption agreement reasonably satisfactory to the
Administrative Agent; provided further that the consolidated net worth of the
surviving corporation is not less than the consolidated net worth of the
Subsidiary with any liability with respect to the Obligations immediately prior
to such merger; and provided further, if the corporation being merged out of
existence or liquidated is a party to a Pledge Agreement or an Alternate
Currency Addendum, the surviving entity shall execute and deliver such
documents, instruments, agreements and opinions in connection therewith as
shall be required by the Administrative Agent in connection with any such
Pledge Agreement and the Alternate Currency Loans (and all accrued interest in
connection therewith) of such entity shall be repaid in full as of the date of
such liquidation or merger.
(B) Powers. Brightpoint shall, and shall cause each of its Subsidiaries
to qualify and remain qualified to do business in each jurisdiction in which
the nature of its business requires it to be so qualified and where the failure
to be so qualified will have or is reasonably likely to have a Material Adverse
Effect.
(C) Compliance with Laws, Etc. Brightpoint shall, and shall cause its
Subsidiaries to, (a) comply with all Requirements of Law and all restrictive
covenants affecting such Person or the business, properties, assets or
operations of such Person, and (b) obtain as needed all Permits necessary for
its operations and maintain such Permits in good standing unless failure to
comply or obtain could not reasonably be anticipated to have a Material Adverse
Effect.
(D) Payment of Taxes and Claims; Tax Consolidation. Brightpoint shall
pay, and cause each of its Subsidiaries to pay, (i) all taxes, assessments and
other governmental charges imposed upon it or on any of its properties or
assets or in respect of any of its franchises, business, income or property
before any penalty or interest accrues thereon, and (ii) all claims (including,
without limitation, claims for labor, services, materials and supplies) for
sums which have become due and payable and which by law have or may become a
Lien (other than a Lien permitted by Section 6.3(C)) upon any of Brightpoint's
or such Subsidiary's property or assets, prior to the time when any penalty or
fine shall be incurred with respect thereto; provided, however, that no such
taxes, assessments and governmental charges referred to in clause (i) above or
claims referred to in clause (ii) above (and interest, penalties or fines
relating thereto) need be paid if being contested in good faith by appropriate
proceedings diligently instituted and conducted and if such reserve or other
appropriate provision, if any, as shall be required in conformity with
Agreement Accounting Principles shall have been made therefor. Brightpoint
will not permit any of its Subsidiaries to file or consent to the filing of
any consolidated income tax return with any Person other than Brightpoint or
any of its Subsidiaries.
(E) Insurance. Brightpoint shall maintain for itself and its
Subsidiaries, or shall cause each of its Subsidiaries to maintain in full force
and effect the insurance policies and programs listed on Schedule 5.17 to this
Agreement or substantially similar policies and programs or other policies and
programs as reflect coverage that is reasonably consistent with prudent
industry practice. Brightpoint shall deliver to the Administrative Agent
endorsements (y) to all "All Risk" physical damage insurance policies on all of
Brightpoint's and BPI's domestic tangible real and personal property and assets
and business interruption
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insurance policies naming the Administrative Agent loss payee, and (z)
to all general liability and other liability policies naming the Administrative
Agent an additional insured. In the event Brightpoint, at any time or times
hereafter shall fail to obtain or maintain any of the policies or insurance
required herein or to pay any premium in whole or in part relating thereto,
then the Administrative Agent, without waiving or releasing any obligations or
resulting Default hereunder, may at any time or times thereafter (but shall be
under no obligation to do so) obtain and maintain such policies of insurance
and pay such premiums and take any other action with respect thereto which the
Administrative Agent deems advisable. All sums so disbursed by the
Administrative Agent shall constitute part of the Obligations, payable as
provided in this Agreement.
(F) Inspection of Property; Books and Records; Discussions. Brightpoint
shall permit, and cause each of Brightpoint's Subsidiaries to permit, any
authorized representative(s) designated by either the Administrative Agent,
Alternate Currency Agent or any Lender to visit and inspect any of the
properties of Brightpoint or any of its Subsidiaries, to examine, audit, check
and make copies of their respective financial and accounting records, books,
journals, orders, receipts and any non-privileged correspondence and other data
relating to their respective businesses or the transactions contemplated hereby
(including, without limitation, in connection with environmental compliance,
hazard or liability), and to discuss their affairs, finances and accounts with
their officers and independent certified public accountants, all upon
reasonable notice and at such reasonable times during normal business hours, as
often as may be reasonably requested; provided each of the Lenders shall, so
long as no Default or Unmatured Default has occurred and is continuing,
coordinate its visits or inspections through either the Administrative Agent or
Syndication Agent. To the extent reasonably practicable, any such inspection
with respect to a Subsidiary Borrower will be coordinated with an Authorized
Officer of Brightpoint. Brightpoint shall keep and maintain, and cause each of
Brightpoint's Subsidiaries to keep and maintain, in all material respects,
proper books of record and account in which entries in conformity with
Agreement Accounting Principles shall be made of all dealings and transactions
in relation to their respective businesses and activities, including, without
limitation, transactions and other dealings with respect to the Collateral. If
a Default has occurred and is continuing, Brightpoint, upon the Administrative
Agent's request, shall turn over copies of any such records to the
Administrative Agent or its representatives.
(G) Insurance and Condemnation Proceeds. Brightpoint and BPI shall
direct (and, if applicable, shall cause their Subsidiaries to direct) all
insurers under policies of property damage, boiler and machinery and business
interruption insurance and payors of any condemnation claim or award relating
to the Collateral to pay all proceeds (the "PROCEEDS") payable under such
policies or with respect to such claim or award for any loss with respect to
the Collateral directly to the Administrative Agent, for the benefit of the
Administrative Agent and the Holders of the Secured Obligations; provided,
however, unless a Default or Unmatured Default shall have occurred and be
continuing, the Administrative Agent shall remit all Proceeds to Brightpoint.
Each such policy shall contain a long-form loss-payable endorsement naming the
Administrative Agent as loss payee, which endorsement shall be in form and
substance acceptable to the Administrative Agent. Promptly after the receipt
of any Proceeds, Brightpoint shall repair or replace the Collateral or other
assets the loss or damage of which gave rise to such Proceeds, provided,
however, that upon the earlier to occur of (a) 120 days after Brightpoint
receives such Proceeds or (b) the occurrence of a Default or an Unmatured
Default, Brightpoint shall return any Proceeds not so used to repair or replace
such Collateral or other assets at such time to the Administrative Agent. The
Administrative Agent shall apply the same to the principal amount of the
Revolving Loans outstanding at the time of such receipt or hold them as cash
collateral for the Obligations.
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(H) ERISA Compliance. Brightpoint shall, and shall cause each of its
domestic Subsidiaries to, establish, maintain and operate all Plans to comply
in all material respects with the provisions of ERISA, the Code, all other
applicable laws, and the regulations and interpretations thereunder and the
respective requirements of the governing documents for such Plans.
(I) Maintenance of Property. Brightpoint shall cause all property used
or useful in the conduct of its business or the business of any Subsidiary to
be maintained and kept in adequate condition, repair and working order and
supplied with all necessary equipment and shall cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as
in the judgment of Brightpoint may be necessary so that the business carried on
in connection therewith may be properly conducted at all times; provided,
however, that nothing in this Section 6.2(I) shall prevent Brightpoint from
discontinuing the operation or maintenance of any of such property if such
discontinuance is, in the judgment of Brightpoint, desirable in the conduct of
its business or the business of any Subsidiary and not disadvantageous in any
respect to the Administrative Agent or the Lenders.
(J) Environmental Compliance. Brightpoint and its Subsidiaries shall
comply with all Environmental, Health or Safety Requirements of Law, except
where noncompliance will not have or is not reasonably likely to subject
Brightpoint and its Subsidiaries to liability, individually or in the
aggregate, in excess of $250,000.
(K) Use of Proceeds. The Borrower shall use the proceeds of the Loans to
pay transaction costs in connection with the transactions evidenced by the Loan
Documents, to refinance existing indebtedness of Brightpoint and its
Subsidiaries and to provide funds for the working capital needs and other
general corporate purposes of the Borrowers and their Subsidiaries.
Brightpoint will not, nor will it permit any Subsidiary to, use any of the
proceeds of the Loans to purchase or carry any "Margin Stock" or to make any
Acquisition, other than any Permitted Acquisition pursuant to Section 6.3(G).
(L) Foreign Employee Benefit Compliance. Brightpoint shall, and shall
cause each of its Subsidiaries and ERISA Affiliates to, establish, maintain and
operate all Foreign Employee Benefit Plans to comply in all material respects
with all laws, regulations and rules applicable thereto and the
respective requirements of the governing documents for such Plans, except for
failures to comply which, in the aggregate, would not result in a material
obligation to pay money.
(M) Additional Guarantors. Brightpoint will cause (i) each direct and
indirect Subsidiary formed or acquired after the Closing Date which is not a
Subsidiary Borrower, within 30 days after becoming a direct or indirect
Subsidiary of Brightpoint, and (ii) each of RPS Industries Company Limited,
Brightpoint F.S.C., Inc. and Brightpoint Sweden Aktiebolag, within 45 days of
the Closing Date, to execute and deliver to the Administrative Agent a
Guarantor Assumption Letter pursuant to which it agrees to be bound by the
provisions of Article IX, together with corporate resolutions and such other
corporate documentation as the Administrative Agent may reasonably request, all
in form and substance reasonably satisfactory to the Administrative Agent.
(N) Post-Closing Requirements. Brightpoint will and will cause each of
its Subsidiaries to comply, with the requirements set forth in Schedule 6.3(N)
on or before the expiration of the time periods set forth therein.
6.3 Negative Covenants.
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<PAGE> 83
(A) Indebtedness. Neither Brightpoint nor any of its Subsidiaries shall
directly or indirectly create, incur, assume or otherwise become or remain
directly or indirectly liable with respect to any Indebtedness, except:
(a) the Obligations;
(b) Permitted Existing Indebtedness, and any extension, renewal,
refunding or refinancing thereof, provided that any such extension,
renewal, refunding or refinancing is in an aggregate principal amount not
greater than the principal amount of and interest, fees and expenses
accrued on, such Permitted Existing Indebtedness outstanding at the time
thereof and is on terms (including, without limitation, maturity,
amortization, interest rate, premiums, fees, covenants, subordination,
events of default, and remedies) not materially less favorable to the
obligor or adverse to the Lenders than the terms of such Permitted
Existing Indebtedness;
(c) Indebtedness arising from intercompany loans from (1)
Brightpoint, BPI or any other Subsidiary of Brightpoint to any Borrower,
(2) any Subsidiary that is not a Borrower to any other Subsidiary or (3)
any Borrower to any Subsidiary of Brightpoint which is not a Borrower
provided the aggregate Non-Borrower Subsidiary Investment does not exceed
fifteen percent (15%) of Consolidated Book Equity at any time, and
provided further that all such Indebtedness to Brightpoint or BPI is
evidenced by notes (or other evidence of indebtedness acceptable to the
Administrative Agent) which are pledged to the Administrative Agent;
(d) Indebtedness in respect of Hedging Agreements permitted under
Section 6.3(Q);
(e) secured or unsecured purchase money Indebtedness (including
Capitalized Leases) incurred by Brightpoint or any of its Subsidiaries
after the Closing Date to finance the acquisition of fixed assets, if (1)
at the time of such incurrence, no Default or Unmatured Default
has occurred and is continuing or would result from such incurrence, (2)
such Indebtedness has a scheduled maturity and is not due on demand, (3)
such Indebtedness does not exceed in the aggregate outstanding at any
time $5,000,000, and (4) any Lien securing such Indebtedness is permitted
under Section 6.3(C) (such Indebtedness being referred to herein as
"PERMITTED PURCHASE MONEY INDEBTEDNESS");
(f) Indebtedness with respect to surety, appeal and performance
bonds obtained by Brightpoint or any of its Subsidiaries in the ordinary
course of business;
(g) Indebtedness constituting Contingent Obligations permitted by
Section 6.3(E);
(h) unsecured Indebtedness and other liabilities incurred in the
ordinary course of business and consistent with past practice, but not
incurred through the borrowing of money or the obtaining of credit (other
than customary trade terms); and
(i) other unsecured Indebtedness provided such other Indebtedness
does not exceed in the aggregate outstanding at any time $5,000,000.
(B) Sales of Assets. Neither Brightpoint nor any of its Subsidiaries
shall sell, assign, transfer, lease, convey or otherwise dispose of any
property, whether now owned or hereafter acquired, or any income or profits
therefrom, or enter into any agreement to do so, except:
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<PAGE> 84
(i) sales of Inventory in the ordinary course of business;
(ii) the disposition of obsolete Equipment in the ordinary course
of business; and
(iii) sales, assignments, transfers, leases, conveyances or other
dispositions of other assets if such transaction (a) is for all cash
consideration with respect to any Collateral which is sold, (b) is for
not less than fair market value, and (c) when combined with all such
other sales, assignments, transfers, conveyances or other dispositions
(i) in the immediately preceding twelve-month period represents the
disposition of not greater than five percent (5.0%) of Brightpoint's
consolidated net worth as of the beginning of such 12-month period and
(ii) in the period from the Closing Date to the date of such transaction
represents the disposition of not greater than fifteen percent (15%) of
Brightpoint's consolidated net worth as of the Closing Date.
(C) Liens. Neither Brightpoint nor any of its Subsidiaries shall
directly or indirectly create, incur, assume, permit or suffer to exist any
Lien on or with respect to any of their respective property or assets except:
(i) Liens created by the Loan Documents;
(ii) Permitted Existing Liens;
(iii) Customary Permitted Liens; and
(iv) purchase money Liens (including the interest of a lessor under
a Capitalized Lease and Liens to which any property is subject at the
time of the acquisition thereof by Brightpoint or one of its
Subsidiaries) securing Permitted Purchase Money Indebtedness; provided
that such Liens shall not apply to any property of Brightpoint or its
Subsidiaries other than that purchased or subject to such Capitalized
Lease.
In addition, neither Brightpoint nor any or its Subsidiaries shall become a
party to any agreement, note, indenture or other instrument, or take any other
action, which would prohibit the creation of a Lien on any of its properties or
other assets in favor of the Administrative Agent for the benefit of itself and
the Holders of Secured Obligations, as additional collateral for the
Obligations; provided that any agreement, note, indenture or other instrument
in connection with Permitted Purchase Money Indebtedness (including Leases) may
prohibit the creation of a Lien in favor of the Administrative Agent for the
benefit of itself and the Holders of the Secured Obligations on the items of
property obtained with the proceeds of such Permitted Purchase Money
Indebtedness.
(D) Investments. Except for Permitted Existing Investments in an amount
not greater than the amount thereof on the Closing Date and except to the
extent permitted pursuant to paragraph (G) below, neither Brightpoint nor any
of its Subsidiaries shall directly or indirectly make or own any Investment
except:
(i) Investments in Cash Equivalents;
(ii) Investments in Subsidiary Borrowers;
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<PAGE> 85
(iii) Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers and suppliers arising
in the ordinary course of business;
(iv) Investments consisting of deposit accounts maintained by
Brightpoint and its Subsidiaries in connection with its cash management
system in the ordinary course of business and consistent with past
practice;
(v) Investments consisting of Indebtedness permitted pursuant to
Section 6.3(A)(c) or other Investments in any non-Borrower Subsidiary;
provided the Non-Borrower Subsidiary Investment shall not exceed fifteen
percent (15%) of Consolidated Book Equity at any time; and
(vi) Investments resulting from Acquisitions permitted by Section
6.3(G); and
(vii) Investments with any other Persons which do not exceed
$5,000,000 in the aggregate at any time.
(E) Contingent Obligations. Neither Brightpoint nor any of its
Subsidiaries shall directly or indirectly create or become or be liable with
respect to any Contingent Obligation, contingent liability, long-term lease,
synthetic lease, commitment or Contractual Obligation, not reflected in the
financial statements attached hereto as Exhibit L, except: (i) as set forth on
Schedule 5.18, (ii) recourse obligations resulting from endorsement of
negotiable instruments for collection in the ordinary course of business;
(iii) Permitted Existing Contingent Obligations and any extensions, renewals or
replacements thereof, provided that any such extension, renewal or replacement
is not greater than the Indebtedness under, and shall be on terms no less
favorable to Brightpoint or such Subsidiary than the terms of, the Permitted
Existing Contingent Obligation being extended, renewed or replaced; (iv)
obligations, warranties, and indemnities, not relating to Indebtedness of any
Person, which have been or are undertaken or made in the ordinary course of
business and not for the benefit of or in favor of an Affiliate of Brightpoint
or such Subsidiary; (v) Contingent Obligations of Brightpoint or any of its
Subsidiaries with respect to any Indebtedness permitted by this Agreement; (vi)
Contingent Obligations with respect to surety, appeal and performance bonds
obtained by Brightpoint or any Subsidiary in the ordinary course of business;
(vii) contingent liabilities consisting of Contingent Purchase Price
Obligations which could not reasonably be expected to subject Brightpoint or
any of its Subsidiaries to liability individually or in the aggregate in excess
of $10,000,000; and (viii) additional Contingent Obligations, liabilities and
the like which do not exceed $1,000,000 in the aggregate at any time.
(F) Restricted Junior Payments. Neither Brightpoint nor any of its
Subsidiaries shall declare or make any Restricted Junior Payment, except:
(i) payments made in connection with the repurchase of Capital
Stock or other Equity Interests in Brightpoint or any of its Subsidiaries
from any Person in connection with the termination (voluntarily or
involuntarily) of such Person's employment with Brightpoint or any of its
Subsidiaries which, in the aggregate, exceed the aggregate amount
received by Brightpoint or any of its Subsidiaries from the
contemporaneous resale or reissuance of such interests by not more than
$1,000,000; and
(ii) payments of customary and reasonable fees and expense
reimbursements to members of the board of directors of Brightpoint and
any Subsidiary;
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<PAGE> 86
(iii) Restricted Junior Payments made by any Subsidiary of
Brightpoint to Brightpoint or any other Subsidiary of Brightpoint except
that no Subsidiary that is a Borrower shall make any Restricted Junior
Payment to a Subsidiary of Brightpoint that is not a Borrower unless the
Non-Borrower Subsidiary Investment shall not at any time exceed fifteen
percent (15%) of Consolidated Book Equity; and
(iv) Restricted Junior Payments as set forth on Schedule 6.3(F);
provided, however, that the Restricted Junior Payments described in clause (i)
shall not be permitted if either a Default or an Unmatured Default shall have
occurred and be continuing at the date of declaration or payment thereof or
would result therefrom.
(G) Conduct of Business; Subsidiaries; Acquisitions. Neither Brightpoint
nor any of its Subsidiaries shall engage in any business other than the
businesses engaged in by them on the date hereof and any business or activities
which are substantially similar, related or incidental thereto. Brightpoint
shall not and shall not permit any of its Subsidiaries to create, capitalize or
acquire any Subsidiary after the date hereof or enter into any transaction or
series of transactions in which it acquires all or any significant portion of
the assets of another Person unless such purchase meets the following
requirements (each such purchase constituting a "PERMITTED ACQUISITION"):
(1) no Default or Unmatured Default shall have occurred and be
continuing or would result from such transaction or transactions or the
incurrence of any Indebtedness in connection therewith;
(2) prior to each such purchase, Brightpoint shall deliver to the
Administrative Agent and the Lenders a certificate from one of
Brightpoint's Authorized Officers demonstrating to the satisfaction of
the Administrative Agent and the Required Lenders that after giving
effect to such transaction or transactions and the incurrence of any
Indebtedness permitted by Section 6.3(A) in connection therewith on a pro
forma basis as if such acquisition and such incurrence of Indebtedness
had occurred on the first day of the twelve-month period ending on the
last day of Brightpoint's most recently completed fiscal quarter,
Brightpoint would have been in compliance with all provisions of Section
6.4 at all times during such twelve-month period;
(3) the purchase is consummated pursuant to a negotiated
acquisition agreement on a non-hostile basis and involves the purchase of
a business line similar, related or incidental to that of Brightpoint's
and its Subsidiaries as of the Closing Date; and
(4) the aggregate purchase price (including assumed liabilities) in
connection with all such transactions during any twelve month period
shall not exceed:
(A) for any single transaction or series of related
transactions, $10,000,000; provided not more than $5,000,000 of
such amount shall be consideration paid in cash or Cash
Equivalents; and
(B) for all transactions during the twelve-month period
ending on the date of such transaction, $20,000,000; provided not
more than $10,000,000 of such amount shall be consideration paid in
cash or Cash Equivalents.
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<PAGE> 87
(H) Transactions with Shareholders and Affiliates. Neither Brightpoint
nor any of its Subsidiaries shall directly or indirectly (i) except as
permitted in Section 6.3(F), pay any fees or compensation to Management or any
other employees who are holders of Capital Stock or other Equity Interests in
Brightpoint or any of its Subsidiaries, other than wages, salaries and bonuses
of employees in the ordinary course and consistent with past practices; (ii)
enter into or permit to exist any transaction (including, without limitation,
the purchase, sale, lease or exchange of any property or the rendering of any
service) with any holder or holders of any Capital Stock or other Equity
Interests in Brightpoint, or with any Affiliate of Brightpoint, on terms that
are less favorable to Brightpoint or its Subsidiaries, as applicable, than
those that might be obtained in an arm's length transaction at the time from
Persons who are not such a holder or Affiliate; or (iii) enter into or permit
to exist any such non-arm's length transaction between any Borrower and any
Subsidiary of Brightpoint which is not a Borrower if as a result thereof the
Non-Borrower Subsidiary Investment would at any time exceed fifteen percent
(15%) of Consolidated Book Equity.
(I) Restriction on Fundamental Changes. Neither Brightpoint nor any
of its Subsidiaries shall enter into any merger or consolidation, or liquidate,
wind-up or dissolve (or suffer any liquidation or dissolution), or convey,
lease, sell, transfer or otherwise dispose of, in one transaction or series of
transactions, all or substantially all of Brightpoint's or any such
Subsidiary's business or property, whether now or hereafter acquired, except
transactions permitted under Section 6.3(B) and except that any Subsidiary of
Brightpoint or BPI may merge with or liquidate into Brightpoint or BPI or any
other Subsidiary of Brightpoint, provided that the surviving entity expressly
assumes any liabilities, if any, of either of such Subsidiaries with respect to
the Obligations pursuant to an assumption agreement reasonably satisfactory to
the Administrative Agent and provided further that the consolidated net worth
of the surviving corporation is not less than the consolidated net worth of the
Subsidiary with any liability with respect to the Obligations immediately prior
to such merger.
(J) Sales and Leasebacks. Neither Brightpoint nor any of its
Subsidiaries shall become liable, directly, by assumption or by Contingent
Obligation, with respect to any lease, whether an Operating Lease or a
Capitalized Lease, of any property (whether real or personal or mixed) (i)
which it or one of its Subsidiaries sold or transferred or is to sell or
transfer to any other Person, or (ii) which it or one of its Subsidiaries
intends to use for substantially the same purposes as any other property which
has been or is to be sold or transferred by it or one of its Subsidiaries to
any other Person in connection with such lease, unless in either case the sale
involved is not prohibited under Section 6.3(B) and the lease involved is not
prohibited under Section 6.3(A).
(K) Margin Regulations. Neither the Borrower nor any of its
Subsidiaries, shall use all or any portion of the proceeds of any credit
extended under this Agreement to purchase or carry Margin Stock.
(L) ERISA. Brightpoint shall not (i) engage, or permit any of its
Subsidiaries to engage, in any prohibited transaction described in Sections 406
of ERISA or 4975 of the Code for which a statutory or class exemption is not
available or a private exemption has not been previously obtained from the DOL;
(ii) permit to exist any accumulated funding deficiency (as defined
in Sections 302 of ERISA and 412 of the Internal Revenue Code), with
respect to any Benefit Plan, whether or not waived;
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<PAGE> 88
(iii) fail, or permit any Controlled Group member to fail, to pay
timely required contributions or annual installments due with respect to
any waived funding deficiency to any Benefit Plan;
(iv) terminate, or permit any Controlled Group member to terminate,
any Benefit Plan which would result in any liability of Brightpoint or
any Controlled Group member under Title IV of ERISA;
(v) fail to make any contribution or payment to any Multiemployer
Plan which Brightpoint or any Controlled Group member may be required to
make under any agreement relating to such Multiemployer Plan, or any law
pertaining thereto;
(vi) fail, or permit any Controlled Group member to fail, to pay
any required installment or any other payment required under Section 412
of the Internal Revenue Code on or before the due date for such
installment or other payment; or
(vii) amend, or permit any Controlled Group member to amend, a Plan
resulting in an increase in current liability for the plan year such that
Brightpoint or any Controlled group member is required to provide
security to such Plan under Section 401(a)(29) of the Code.
(M) Issuance of Equity Interests. Neither Brightpoint nor any of its
Subsidiaries shall issue any ownership, membership or other equity interests
after the date of this Agreement if such issuance causes a Change of Control to
occur.
(N) Organizational Documents. Neither Brightpoint nor any of its
Subsidiaries shall amend, modify or otherwise change any of the terms or
provisions in any of their respective organizational documents as in effect on
the date hereof in any manner adverse to the interests of the Lenders without
the prior written consent of the Required Lenders.
(O) Other Indebtedness. Neither Brightpoint nor any of its Subsidiaries
shall amend, supplement or otherwise modify the terms of any Indebtedness
(other than the Obligations) permitted under Section 6.3(A) except Indebtedness
owed by a Borrower or Guarantor to a Borrower or Guarantor in any way that
would not be materially less advantageous to Brightpoint or such Subsidiary or
materially adverse to the Lenders, including, without limitation, with respect
to amount, maturity, amortization, interest rate, premiums, fees, covenants,
subordination, events of default and remedies.
(P) Fiscal Year. Neither Brightpoint nor any of its consolidated
Subsidiaries shall change its fiscal year for accounting or tax purposes from a
period consisting of the 12-month period ending on December 31 of each calendar
year.
(Q) Hedging Obligations. Brightpoint shall not and shall not permit any
of its Subsidiaries to enter into any interest rate, commodity or foreign
currency exchange, swap, collar, cap or similar agreements other than interest
rate, foreign currency or commodity exchange, swap, collar, cap, leveraged
derivative or similar agreements pursuant to which Brightpoint or any of its
Subsidiaries have hedged its or their actual interest rate, foreign currency or
commodity exposure (such hedging agreements are sometimes referred to herein as
"HEDGING AGREEMENTS"). In the event a Lender elects to enter into any Hedging
Agreements with Brightpoint or any of its Subsidiaries, the obligations of
Brightpoint or such Subsidiary with respect to such Hedging Agreements shall be
Secured Obligations secured by the Collateral.
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<PAGE> 89
6.4 Financial Covenants. Brightpoint shall comply with the following:
(A) Defined Terms for Financial Covenants. The following terms used in
this Agreement shall have the following meanings (such meanings to be
applicable, except to the extent otherwise indicated in a definition of a
particular term, both to the singular and the plural forms of the terms
defined):
"CAPITAL EXPENDITURES" means, for any period, the aggregate of all
expenditures (whether paid in cash or accrued as liabilities and including
Capitalized Leases and Permitted Purchase Money Indebtedness) by Brightpoint
and its Subsidiaries during that period that, in conformity with Agreement
Accounting Principles, are required to be included in or reflected by the
property, plant, equipment or similar fixed asset accounts reflected in the
consolidated balance sheet of Brightpoint and its Subsidiaries other than with
respect to the acquisition of inventory in the ordinary course of business.
"CONSOLIDATED BOOK EQUITY" shall mean, at a particular date, all amounts
which would be included under consolidated book equity for Brightpoint and its
Subsidiaries determined on a consolidated basis in accordance with Agreement
Accounting Principles.
"EBITDA" means, for any period, on a consolidated basis for Brightpoint
and its consolidated Subsidiaries, the sum of the amounts for such period,
without duplication, of (i) Net Income, plus (ii) charges against income for
foreign income taxes or U.S. income taxes to the extent deducted in computing
Net Income, plus (iii) Interest Expense to the extent deducted in computing Net
Income, plus (iv) depreciation expense to the extent deducted in computing Net
Income, plus (v) amortization expense, including, without limitation,
amortization of goodwill and other intangible assets to the extent deducted in
computing Net Income, plus (vi) other non-cash charges (including, without
duplication, any effect of any write-up in the value of Inventory attributable
to purchase accounting) in accordance with Agreement Accounting Principles to
the extent deducted in computing Net Income, plus (vii) income attributable to
minority interests to the extent excluded from Net Income, minus (viii)
interest income, minus (ix) Net Extraordinary Gains. As used herein "NET
EXTRAORDINARY GAINS" shall mean the sum of, but only if positive, extraordinary
gains (and any nonrecurring unusual gains arising in or outside of the ordinary
course of business not included in extraordinary gains determined in accordance
with Agreement Accounting Principles which have been included in the
determination of Net Income) minus extraordinary losses (and any nonrecurring
unusual losses arising in or outside of the ordinary course of business not
included in extraordinary losses determined in accordance with Agreement
Accounting Principles).
"INTEREST EXPENSE" means, for any period, the consolidated total interest
expense of Brightpoint and its Subsidiaries, determined on a consolidated
basis, whether paid or accrued, but without duplication (including the interest
component of Capitalized Leases), but excluding interest expense not payable in
cash (including amortization of discount), all as determined in conformity with
Agreement Accounting Principles.
"NET INCOME" means, for any period, the net earnings (or loss) after taxes
of Brightpoint and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in conformity with Agreement
Accounting Principles.
"RENTALS" of a Person means the aggregate fixed amounts payable by such
Person under any lease of real or personal property but does not include any
amounts payable under Capitalized Leases of such Person.
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<PAGE> 90
(B) Fixed Charge Coverage Ratio. Brightpoint shall maintain a ratio
("FIXED CHARGE COVERAGE RATIO") of: (i) the sum of the amounts of Net Income,
plus (b) charges against income for foreign income taxes or U.S. income taxes
to the extent deducted in computing Net Income, plus (c) Interest Expense to
the extent deducted in computing Net Income plus (d) Rentals to the extent
deducted in computing Net Income to (ii) the sum of the amounts of (a) Interest
Expense to the extent deducted in computing Net Income, plus (b) Rentals to the
extent deducted in computing Net Income, plus (c) scheduled
amortization of the principal portion of all Indebtedness of Brightpoint and
its Subsidiaries during such period of at least the ratio set forth below as of
the end of each fiscal quarter ending during the periods set forth below:
<TABLE>
<CAPTION>
MINIMUM FIXED CHARGE
PERIOD COVERAGE RATIO
------ --------------------
<S> <C>
June 30, 1997 through 2.50 to 1.00
December 31, 1997
March 31, 1998 through 3.00 to 1.00
September 30, 1998
December 31, 1998 and 3.25 to 1.00
thereafter
</TABLE>
In each case the Fixed Charge Coverage Ratio shall be determined as of the last
day of each fiscal quarter for the four-quarter period ending on such day.
(C) Minimum Consolidated Book Equity. Brightpoint shall not permit its
Consolidated Book Equity at any time to be less than the sum of (a)
$84,000,000, plus (b) fifty percent (50%) of Net Income (if positive)
calculated separately for each fiscal quarter ending after December 31, 1996,
plus (c) seventy-five percent (75%) of the net cash proceeds resulting from the
issuance by Brightpoint of any of its Capital Stock.
(D) Maximum Leverage Ratio. Brightpoint shall not permit the ratio
("LEVERAGE RATIO") of (i) the sum of (a) Indebtedness of Brightpoint and its
consolidated Subsidiaries for borrowed money and (b) Capitalized Lease
Obligations to (ii) EBITDA to be greater than the ratio set forth below at the
end of the fiscal quarter ending on the corresponding date set forth below:
<TABLE>
<CAPTION>
PERIOD ENDING MAXIMUM LEVERAGE RATIO
------------- ----------------------
<S> <C>
June 30, 1997 4.00 to 1.00
September 30, 1997 4.00 to 1.00
December 31, 1997 4.00 to 1.00
March 31, 1998 3.75 to 1.00
June 30, 1998 3.75 to 1.00
September 30, 1998 3.75 to 1.00
December 31, 1998 3.50 to 1.00
and each quarter
thereafter
</TABLE>
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The Leverage Ratio shall be calculated, in each case, determined as of the last
day of each fiscal quarter based upon (A) for Indebtedness, Indebtedness as of
the last day of each such fiscal quarter; and (B) for EBITDA, the actual
amount for the four-quarter period ending on such day (provided, however, that
for the fiscal quarter ending June 30, 1997, the Leverage Ratio shall be
calculated using EBITDA for the period beginning September 30, 1996 and ending
on June 30, 1997 multiplied by 1.33).
(E) Current Asset Coverage Ratio. Brightpoint shall maintain a ratio
("CURRENT ASSET COVERAGE RATIO") of (i) the sum of (a) Receivables (other than
Receivables owing from any consolidated Subsidiary), (b) Inventory and (c) cash
and Cash Equivalents in each case maintained by Brightpoint and BPI in the
United States to (ii) the sum of (a) Indebtedness of Brightpoint and its
consolidated Subsidiaries for borrowed money and (b) Capitalized Lease
Obligations to be greater than 0.75 to 1.00 at the end of any fiscal quarter.
(F) Capital Expenditures. Brightpoint will not, nor will it permit any
Subsidiary to, expend, or be committed to expend, for Capital Expenditures
during any one fiscal year in the aggregate for Brightpoint and its
Subsidiaries in excess of (a) $13,500,000 for the fiscal year ending December
31, 1997, (b) $15,000,000 for the fiscal year ending December 31, 1998 and (c)
for each fiscal year thereafter the sum of (i) $15,000,000 plus (ii) the
product of $2,000,000 multiplied by the number of complete fiscal years after
December 31, 1998.
ARTICLE VII: DEFAULTS
7.1 Defaults. Each of the following occurrences shall constitute a
Default under this Agreement:
(a) Failure to Make Payments When Due. Any Borrower shall (i) fail to
pay when due any of the Obligations consisting of principal with respect to the
Loans or (ii) shall fail to pay within five (5) days of the date when due any
of the other Obligations under this Agreement or the other Loan Documents.
(b) Breach of Certain Covenants. Any Borrower shall fail duly and
punctually to perform or observe any agreement, covenant or obligation binding
on such Borrower under Sections 6.1 (other than clauses (A), (D), (E), (F) or
(H) thereof), 6.2(K), 6.2(M), 6.2(N), 6.3 or 6.4.
(c) Breach of Representation or Warranty. Any representation or warranty
made or deemed made by any Borrower or Guarantor to the Administrative Agent or
any Lender herein or by Brightpoint or any of its Subsidiaries in any of the
other Loan Documents or in any statement or certificate at any time given by
any such Person pursuant to any of the Loan Documents shall be false or
misleading in any material respect on the date as of which made (or deemed
made).
(d) Other Defaults. Any Borrower shall default in the performance of or
compliance with any term contained in this Agreement (other than as covered by
paragraphs (a), (b) or (c) of this Section 7.1), or Brightpoint or any of its
Subsidiaries shall default in the performance of or compliance with any term
contained in any of the other Loan Documents, and such default shall continue
for ten (10) days after the earlier to occur of (i) notice from the
Administrative Agent or any Lender to Brightpoint of such Default and (ii)
Brightpoint or any of its Subsidiaries knew of such default or should have
known of such default exercising reasonable diligence.
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(e) Default as to Other Indebtedness. Any of Brightpoint or any of its
Subsidiaries shall fail to make any payment when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) with respect
to any Indebtedness (other than the Obligations) the outstanding principal
amount of which Indebtedness is in excess of $2,500,000; or any breach, default
or event of default shall occur, or any other condition shall exist under any
instrument, agreement or indenture pertaining to any such Indebtedness, if the
effect thereof is to cause an acceleration, mandatory redemption, a requirement
that Brightpoint or any such Subsidiary offer to purchase such Indebtedness or
other required repurchase of such Indebtedness, or permit the holder(s) of such
Indebtedness to accelerate the maturity of any such Indebtedness or require a
redemption or other repurchase of such Indebtedness; or any such Indebtedness
shall be otherwise declared to be due and payable (by acceleration or
otherwise) or required to be prepaid, redeemed or otherwise repurchased by
Brightpoint or any of its Subsidiaries (other than by a regularly scheduled
required prepayment) prior to the stated maturity thereof.
(f) Involuntary Bankruptcy; Appointment of Receiver, Etc.
(i) An involuntary case shall be commenced against Brightpoint or
any of its Subsidiaries and the petition shall not be dismissed, stayed,
bonded or discharged within sixty (60) days after commencement of the
case; or a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of Brightpoint or any of its Subsidiaries
in an involuntary case, under any applicable bankruptcy, insolvency or
other similar law now or hereinafter in effect; or any other similar
relief shall be granted under any applicable federal, state, local or
foreign law.
(ii) A decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator,
trustee, custodian or other officer having similar powers over
Brightpoint or any of its Subsidiaries or over all or a substantial part
of the property of Brightpoint or any of its Subsidiaries shall be
entered; or an interim receiver, trustee or other custodian of
Brightpoint or any of its Subsidiaries or of all or a substantial part of
the property of Brightpoint or any of its Subsidiaries shall be appointed
or a warrant of attachment, execution or similar process against any
substantial part of the property of Brightpoint or any of its
Subsidiaries shall be issued and any such event shall not be stayed,
dismissed, bonded or discharged within sixty (60) days after entry,
appointment or issuance.
(g) Voluntary Bankruptcy; Appointment of Receiver, Etc. Brightpoint or
any of its Subsidiaries shall (i) commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, (ii) consent to the entry of an order for relief in an involuntary
case, or to the conversion of an involuntary case to a voluntary case, under
any such law, (iii) consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a substantial part of its
property, (iv) make any assignment for the benefit of creditors or (v) take any
corporate action to authorize any of the foregoing.
(h) Judgments and Attachments. Any money judgment(s), writ or warrant of
attachment, or similar process against any of Brightpoint or any of its
Subsidiaries or any of their respective assets involving in any single case or
in the aggregate an amount in excess of $2,500,000 is (are) entered and shall
remain undischarged, unvacated, unbonded or unstayed for a period of sixty (60)
days or in any event later than fifteen (15) days prior to the date of any
proposed sale thereunder.
(i) Dissolution. Any order, judgment or decree shall be entered against
Brightpoint or any of its Subsidiaries decreeing its involuntary dissolution or
split up and such order shall remain undischarged and
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unstayed for a period in excess of sixty (60) days; or Brightpoint or
any of its Subsidiaries shall otherwise dissolve or cease to exist except as
specifically permitted by this Agreement unless the dissolving entity is a
limited liability company which elects to continue its existence.
(j) Loan Documents; Failure of Security. At any time, for any reason,
(i) any Loan Document as a whole that materially affects the ability of the
Administrative Agent, or any of the Lenders to enforce the Obligations or
enforce their rights against the Collateral ceases to be in full force and
effect or any of Brightpoint or any of its Subsidiaries party thereto seeks to
repudiate its obligations thereunder and the Liens intended to be created
thereby are, or any of Brightpoint or any such Subsidiary seeks to render such
Liens, invalid and unperfected, or (ii) Liens on Collateral with a fair market
value in excess of $2,000,000 in favor of the Administrative Agent
contemplated by the Loan Documents shall, at any time, for any reason, be
invalidated or otherwise cease to be in full force and effect, or such Liens
shall not have the priority contemplated by this Agreement or the Loan
Documents.
(k) Termination Event. Any Termination Event occurs which the Required
Lenders believe is reasonably likely to subject Brightpoint or any of its
Subsidiaries to liability individually or in the aggregate in excess of
$1,000,000.
(l) Waiver of Minimum Funding Standard. If the plan administrator of any
Plan applies under Section 412(d) of the Code for a waiver of the minimum
funding standards of Section 412(a) of the Code and any Lender believes the
substantial business hardship upon which the application for the waiver is
based could reasonably be expected to subject either Brightpoint or any
Controlled Group member to liability individually or in the aggregate in excess
of $250,000.
(m) Change of Control. A Change of Control shall occur.
(n) Hedging Agreements. Nonpayment by Brightpoint or any of its
Subsidiaries of any obligation under any Hedging Agreements entered into with
any Lender or any Affiliate of any Lender on the date such payment is due or
the breach by Brightpoint or any of its Subsidiaries of any other term,
provision or condition contained in any such Hedging Agreements which breach
remains unremedied for five (5) days.
(o) Environmental Matters. Brightpoint or any of its Subsidiaries shall
be the subject of any proceeding or investigation pertaining to (i) the Release
by Brightpoint or any of its Subsidiaries of any Contaminant into the
environment, (ii) the liability of any of Brightpoint or any of its
Subsidiaries arising from the Release by any other Person of any Contaminant
into the environment, or (iii) any violation of any Environmental, Health or
Safety Requirements of Law by Brightpoint or any of its Subsidiaries, which, in
any case, has or is reasonably likely to subject Brightpoint or any of its
Subsidiaries to liability individually or in the aggregate in excess of
$250,000.
(p) Guarantor Revocation. Any guarantor of the Obligations shall
terminate or revoke or refuse to perform any of its payment obligations under
the applicable guarantee agreement or breach any of the other terms of such
guarantee agreement which breach remains unremedied for five (5) days.
A Default shall be deemed "continuing" until waived in writing in
accordance with Section 8.3.
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ARTICLE VIII: ACCELERATION, DEFAULTING LENDERS; WAIVERS, AMENDMENTS AND
REMEDIES
8.1 Remedies
(a) Termination of Commitments; Acceleration. If any Default described
in Section 7.1(f) or 7.1(g) occurs with respect to any of the Borrowers, the
obligations of the Lenders to make Loans hereunder and the obligation of the
Administrative Agent or any Issuing Lender to issue Letters of Credit hereunder
shall automatically terminate and the Obligations shall immediately become due
and payable without any election or action on the part of the Administrative
Agent, any Lender or any Issuing Lender. If any other Default occurs, the
Required Lenders may (i) terminate or suspend the obligations of the Lenders to
make Loans hereunder and the obligation of the Issuing Lenders to issue Letters
of Credit hereunder, or (ii) declare the Obligations to be due and payable, or
both, and upon any declaration under clause (ii), the Obligations shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which the Borrowers expressly waive.
(b) Rescission. If at any time after termination of the Lenders'
obligations to make Loans or acceleration of the maturity of the Loans,
Borrowers shall pay all arrears of interest and all payments on account of
principal of the Loans and Reimbursement Obligations which shall have become
due otherwise than by acceleration (with interest on principal and, to the
extent permitted by law, on overdue interest, at the rates specified in this
Agreement) and all Defaults and Unmatured Defaults (other than nonpayment of
principal of and accrued interest on the Loans due and payable solely by virtue
of acceleration) shall be waived pursuant to Section 8.3, then upon the written
consent of the Required Lenders and written notice to Borrowers, the
termination of Lenders' respective obligations to make Loans and the respective
Lenders' and the Issuing Lenders' obligations to participate in or issue
Letters of Credit or the aforesaid acceleration and its consequences may be
rescinded and annulled; but such action shall not affect any subsequent Default
or Unmatured Default or impair any right or remedy consequent thereon. The
provisions of the preceding sentence are intended merely to bind the Lenders
and the Issuing Lenders to a decision which may be made at the election of the
Required Lenders; they are not intended to benefit Borrowers and do not give
Borrowers the right to require the Lenders to rescind or annul any termination
of the aforesaid obligations of the Lenders or Issuing Lenders or any
acceleration hereunder, even if the conditions set forth herein are met.
(c) Enforcement. The Borrowers acknowledge that in the event the
Borrowers fail to perform, observe or discharge any of their respective
obligations or liabilities under this Agreement or any other Loan Document, any
remedy of law may prove to be inadequate relief to the Agents, the Issuing
Lenders and the Lenders; therefore, Borrowers agree that the Agents, the
Issuing Lenders and the Lenders shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages.
8.2 Defaulting Lender. In the event that any Lender fails to fund its
Revolving Credit Share or Alternate Currency Share of any Advance requested or
deemed requested by any Borrower which such Lender is obligated to fund under
the terms of this Agreement (the funded portion of such Advance being
hereinafter referred to as a "NON PRO RATA LOAN"), until the earlier of such
Lender's cure of such failure and the termination of the Commitments, the
proceeds of all amounts thereafter repaid to the Administrative Agent by the
Borrowers and otherwise required to be applied to such Lender's share of all
other Obligations pursuant to the terms of this Agreement shall be advanced to
the Borrowers by the
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Administrative Agent ("CURE LOANS") on behalf of such
Lender to cure, in full or in part, such failure by such Lender, but shall
nevertheless be deemed to have been paid to such Lender in satisfaction of such
other Obligations. Notwithstanding anything in this Agreement to the contrary:
(i) the foregoing provisions of this Section 8.2 shall apply
only with respect to the proceeds of payments of Obligations and
shall not affect the conversion or continuation of Loans pursuant
to Section 2.10;
(ii) any such Lender shall be deemed to have cured its
failure to fund its Revolving Credit Share or Alternate Currency
Share, as applicable, of any Advance at such time as an amount
equal to such Lender's original Revolving Credit Share or
Alternate Currency Share, as applicable, of the requested
principal portion of such Advance is fully funded to the
applicable Borrower, whether made by such Lender itself or by
operation of the terms of this Section 8.2, and whether or not the
Non Pro Rata Loan with respect thereto has been repaid, converted
or continued;
(iii) amounts advanced to any Borrower to cure, in full or
in part, any such Lender's failure to fund its Revolving Credit
Share of any Advance shall bear interest at the rate applicable to
Base Rate Loans in effect from time to time, and for all other
purposes of this Agreement shall be treated as if they were Base
Rate Loans;
(iv) regardless of whether or not a Default has occurred or
is continuing, and notwithstanding the instructions of the
applicable Borrower as to its desired application, all repayments
of principal which, in accordance with the other terms of this
Agreement, would be applied to the outstanding Base Rate Loans
shall be applied first, ratably to all Base Rate Loans
constituting Non Pro Rata Loans, second, ratably to Base Rate
Loans other than those constituting Non Pro Rata Loans or Cure
Loans and, third, ratably to Base Rate Loans constituting Cure
Loans;
(v) for so long as and until the earlier of any such
Lender's cure of the failure to fund its Revolving Credit Share or
Alternate Currency Share, as applicable, of any Advance and the
termination of the Commitments, the term "Required Lenders" for
purposes of this Agreement shall mean Lenders (excluding all
Lenders whose failure to fund their respective Revolving Credit
Shares or Alternate Currency Share, as applicable, of such Advance
have not been so cured) whose Pro Rata Shares represent at
least sixty-six and two-thirds (66-2/3%) of the aggregate Pro Rata
Shares of such Lenders; and
(vi) for so long as and until any such Lender's failure to
fund its Revolving Credit Share or Alternate Currency Share, as
applicable, of any Advance is cured in accordance with Section
8.2(ii), (A) such Lender shall not be entitled to any facility
fees with respect to its Commitments and (B) such Lender shall not
be entitled to any letter of credit fees, which facility fees and
letter of credit fees shall accrue in favor of the non-defaulting,
shall be allocated among such performing Lenders ratably based
upon their relative Revolving Loan Commitments.
8.3 Amendments. Subject to the provisions of this Article VIII, the
Required Lenders (or the Administrative Agent with the consent in writing of
the Required Lenders) and the Borrowers may enter into agreements supplemental
hereto for the purpose of adding or modifying any provisions to the Loan
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Documents or changing in any manner the rights of the Lenders or the Borrowers
hereunder or waiving any Default hereunder; provided, however, that no such
supplemental agreement shall, without the consent of each Lender affected
thereby:
(i) Postpone or extend the Termination Date or any other date fixed
for any payment of principal of, or interest on, the Loans, the
Reimbursement Obligations or any fees or other amounts payable to such
Lender (except with respect to (a) any modifications of the provisions
relating to prepayments of Loans and other Obligations and (b) a waiver
of the application of the default rate of interest pursuant to Section
2.11 hereof).
(ii) Reduce the principal amount of any Loans or L/C Obligations,
or reduce the rate or extend the time of payment of interest or fees
thereon.
(iii) Reduce the percentage specified in the definition of Required
Lenders or any other percentage of Lenders specified to be the applicable
percentage in this Agreement to act on specified matters.
(iv) Increase the amount of the Revolving Loan Commitment or
Alternate Currency Commitment of any Lender hereunder (except with
respect to an increase in any sublimits for any Types of Loans within the
Commitments).
(v) Permit any Borrower to assign its rights under this Agreement.
(vi) Amend this Section 8.3.
(vii) Release any Guarantor from its obligations under Article IX,
release any other guarantor of all or any part of the Obligations or
release all or substantially all of the Collateral.
No amendment of any provision of this Agreement relating to the Administrative
Agent shall be effective without the written consent of the Administrative
Agent. No amendment of any provision of this Agreement relating to any Issuing
Lender shall be effective without the written consent of the
Administrative Agent and each of the Issuing Lenders. No amendment of any
provision of this Agreement relative to the Swing Line Lender shall be
effective without the written consent of the Swing Line Lenders. No amendment
of any provision of this Agreement relating to any Alternate Currency Agent
shall be effective without the written consent of such Alternate Currency
Agent. No amendment of any provision of any Alternate Currency Addendum shall
be effective without the consent of the Required Lenders and Alternate Currency
Lenders having Alternate Currency Commitments under such Alternate Currency
Addendum representing at least 66-2/3% of all such Alternate Currency
Commitments at such time. The Administrative Agent may waive payment of the
fee required under Section 13.3(B) without obtaining the consent of any of the
Lenders.
8.4 Preservation of Rights. No delay or omission of the Lenders, the
Issuing Lenders, the Administrative Agent to exercise any right under the Loan
Documents shall impair such right or be construed to be a waiver of any Default
or an acquiescence therein, and the making of a Loan or the issuance of a
Letter of Credit notwithstanding the existence of a Default or the inability of
the Borrowers to satisfy the conditions precedent to such Loan or issuance of
such Letter of Credit shall not constitute any waiver or acquiescence. Any
single or partial exercise of any such right shall not preclude other or
further exercise thereof or the exercise of any other right, and no waiver,
amendment or other variation of the
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terms, conditions or provisions of the Loan Documents whatsoever shall
be valid unless in writing signed by the Lenders required pursuant to Section
8.3, and then only to the extent in such writing specifically set forth. All
remedies contained in the Loan Documents or by law afforded shall be cumulative
and all shall be available to the Administrative Agent, the Issuing Lenders and
the Lenders until the Obligations have been paid in full.
ARTICLE IX: GUARANTEE
9.1 Guarantee; Modifications to Obligations. In order to induce the
Lenders to extend credit hereunder and the Issuing Banks to issue the Letters
of Credit hereunder, each Guarantor fully and unconditionally guarantees, as a
primary obligor and not merely as a surety, jointly with the other Guarantors
and severally, the Obligations (including, without limitation, interest
accruing hereunder after the commencement of any case under the United States
Bankruptcy Code, whether or not allowed as a claim in such case); provided,
however, the guaranty hereunder by each Guarantor which is a non-U.S.
Subsidiary of Brightpoint shall be limited to the Obligations of all of the
non-U.S. Subsidiary Borrowers. Each Guarantor further agrees that the
Obligations may be extended or renewed, in whole or in part, without notice to
or further assent from it, and that it will remain bound upon its guarantee
("GUARANTEE") hereunder notwithstanding any such extension or renewal of any
Obligation.
9.2 Waivers. Each Guarantor waives presentment to, demand of payment
from and protest to any Borrower of any of the Obligations, and also waives
notice of acceptance of its obligations and notice of protest for nonpayment.
The obligations of the Guarantors hereunder shall not be affected by the
failure of any Lender, any Issuing Bank or any Agent to assert any claim or
demand or to enforce any right or remedy against any Borrower or any other
Guarantor under the provisions of this Agreement or any of the other Loan
Documents or otherwise, or, except as specifically provided therein, by any
rescission, waiver, amendment or modification of any of the terms or provisions
of this Agreement, any of the other Loan Documents or any other agreement.
Each Guarantor further agrees that its Guarantee hereunder constitutes a
promise of payment when due and not merely of collection, and waives any right
to require that resort be had by any Lender or any Issuing Bank to any balance
of any deposit account or credit on the books of any Lender or any Issuing Bank
in favor of any Borrower or any other person.
9.3 Guarantee Unconditional. Each Guarantor agrees that its obligations
under this Guarantee shall be unconditional, irrespective of:
(i) the validity, enforceability, avoidance, novation or
subordination of any of the Obligations or any of the Loan Documents;
(ii) the absence of any attempt by, or on behalf of, any Lender, any
Issuing Bank or any Agent to collect, or to take any other action to
enforce, all or any part of the Obligations whether from or against any
Borrower, any other guarantor of the Obligations or any other Person;
(iii) the election of any remedy by, or on behalf of, any Lender,
any Issuing Bank or any Agent with respect to all or any part of the
Obligations;
(iv) the waiver, consent, extension, forbearance or granting of any
indulgence by, or on behalf of, any Lender, any Issuing Bank or any Agent
with respect to any provision of any of the Loan Documents;
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(v) the failure of the Administrative Agent to take any steps to
perfect and maintain its security interest in, or to preserve its rights
to, any security or collateral for the Obligations;
(vi) the election by, or on behalf of, any one or more of the
Lenders or Issuing Banks, in any proceeding instituted under Chapter 11
of Title 11 of the United States Code (11 U.S.C. 101 et seq.) (the
"BANKRUPTCY CODE"), of the application of Section 1111(b)(2) of the
Bankruptcy Code;
(vii) any borrowing or grant of a security interest by any Borrower,
as debtor-in-possession, under Section 364 of the Bankruptcy Code;
(viii) the disallowance, under Section 502 of the Bankruptcy Code,
of all or any portion of the claims of any of the Lenders, any of the
Issuing Banks or any Agent for repayment of all or any part of the
Obligations; or
(ix) any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of any Borrower or any Guarantor.
The obligations of the Guarantors hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason, and
shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever, by reason of the invalidity, illegality or
unenforceability of the Obligations, any impossibility in the performance of
the Obligations or otherwise.
9.4 Extensions and Other Modifications of Obligations. The Lenders
and Issuing Banks, either themselves or acting through the Agents, are
authorized, without notice or demand and without affecting the liability of any
Guarantor hereunder, from time to time, (a) to renew, extend, accelerate or
otherwise change the time for payment of, or other terms relating to, all or
any part of the Obligations, or to otherwise modify, amend or change the terms
of any of the Loan Documents; (b) to accept partial payments on all or any part
of the Obligations; (c) to take and hold security or collateral for the payment
of all or any part of the Obligations, this Guarantee, or any other guaranties
of all or any part of the Obligations, (d) to exchange, enforce, waive and
release any such security or collateral; (e) to apply such security or
collateral and direct the order or manner of sale thereof as in their
discretion they may determine; (f) to settle, release, exchange, enforce,
waive, compromise or collect or otherwise liquidate all or any part of the
Obligations, this Guarantee, any other guaranty of all or any part of the
Obligations, and any security or collateral for the Obligations or for any such
guaranty.
9.5 No Marshalling; Reinstatement of Guarantee. The Guarantors
consent and agree that none of the Lenders, Issuing Banks nor any Agent nor any
Person acting for or on behalf of the Lenders, Issuing Banks or any Agent shall
be under any obligation to marshall any assets in favor of any Guarantor or
against or in payment of any or all of the Obligations. The Guarantors further
agree that, to the extent that any Borrower, any Guarantor or any other
guarantor of all or any part of the Obligations makes a payment or payments to
any Lender, any Issuing Bank or any Agent, or any Lender, any Issuing Bank or
any Agent receives any proceeds of collateral for all or any part of the
Obligations, which payment or payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to such Borrower, such Guarantor, such other guarantor or
any other Person, or their respective estates, trustees, receivers or any other
party, under any bankruptcy law, state or federal law, common law or equitable
cause, then, to the extent of such payment or repayment, the part of the
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Obligations which has been paid, reduced or satisfied by such amount shall be
reinstated and continued in full force and effect as of the time immediately
preceding such initial payment, reduction or satisfaction.
9.6 Agreement to Pay Obligations; Currency Issues. In furtherance of the
foregoing and not in limitation of any other right which the Administrative
Agent or any Lender may have at law or in equity against the Guarantors by
virtue hereof, upon the failure of any Borrower to pay any of the Obligations
when and as the same shall become due, whether at maturity, by acceleration,
after notice of prepayment or otherwise, each Guarantor promises to and will,
upon receipt of written demand by the Administrative Agent, forthwith pay, or
cause to be paid, in cash, the amount of such unpaid Obligations; provided,
however, the payment obligations hereunder by each Guarantor which is a
non-U.S. Subsidiary of Brightpoint shall be limited to the Obligations of each
non-U.S. Subsidiary Borrower. The Guarantors further agree, jointly and
severally, that if payment in respect of any of the Obligations owed to any
Agent, any Lender or any Issuing Bank shall be due in a currency other than
Dollars and/or at a place of payment other than Chicago, Illinois and if, by
reason of any Change, disruption of currency or foreign exchange markets, war
or civil disturbance or other event, payment of such Obligations in such
currency or such place of payment shall be impossible or, in the judgment of
such Lender, Agent or Issuing Bank, not consistent with the protection of its
rights or interests, then, at the election of such Lender, Agent or Issuing
Bank, the Guarantors shall make payment of such Obligation in Dollars (based
upon the applicable Exchange Rate in effect on the date of payment) and/or in
Chicago, Illinois, and shall indemnify such Lender or Issuing Bank against any
losses or expenses that it shall sustain as a result of such alternative
payment.
9.7 Subordination of Subrogation. Until the Obligations have been
indefeasibly paid in full in cash, the Guarantors (i) shall have no right of
subrogation with respect to such Obligations and (ii) waive any right to
enforce any remedy which the Lenders, Issuing Banks or the Agents (or any of
them) now have or may hereafter have against any Borrower, any endorser or any
guarantor of all or any part of the Obligations or any other Person, and the
Guarantors waive any benefit of, and any right to participate in, any security
or collateral given to the Lenders, the Issuing Banks and the Agents (or any of
them) to secure the payment or performance of all or any part of the
Obligations or any other liability of the Borrowers to the Lenders or Issuing
Banks. Should any Guarantor have the right, notwithstanding the foregoing to
exercise its subrogation rights, except as set forth in Section 9.9, each
Guarantor hereby expressly and irrevocably subordinates to payment of the
Secured Obligations any and all rights at law or in equity to subrogation,
reimbursement, exoneration, contribution, indemnification or set off and any
and all defenses available to a surety, guarantor or accommodation co-obligor
until the Secured Obligations are indefeasibly paid in full in cash. Each
Guarantor acknowledges and agrees that this subordination is intended to
benefit the Agents, the Lenders and the other Holders of Secured Obligations
and shall not limit or otherwise affect such Guarantor's liability hereunder or
the enforceability of this Article IX, and that Agents, the Lenders and their
respective successors and assigns are intended third party beneficiaries of the
waivers and agreements set forth in this Section 9.7.
9.8 Election of Remedies. If any Agent or any Lender may, under
applicable law, proceed to realize its benefits under any of the Loan Documents
giving any Agent or such Lender a Lien upon any Collateral, whether owned by
any Borrower or by any other Person, either by judicial foreclosure or by
non-judicial sale or enforcement, any Agent or any Lender may, at its sole
option, determine which of its remedies or rights it may pursue without
affecting any of its rights and remedies under this Article IX. If, in the
exercise of any of its rights and remedies, any Agent or any Lender shall
forfeit any of its rights or remedies, including its right to enter a
deficiency judgment against any Borrower or any other Person, whether because
of any applicable laws pertaining to "election of remedies" or the like, each
Guarantor
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hereby consents to such action by such Agent or such Lender and waives any
claim based upon such action, even if such action by such Agent or such
Lender shall result in a full or partial loss of any rights of subrogation
which each Guarantor might otherwise have had but for such action by such Agent
or such Lender. Any election of remedies which results in the denial or
impairment of the right of any Agent or any Lender to seek a deficiency
judgment against any Borrower or any other Guarantor shall not impair any other
Guarantor's obligation to pay the full amount of the Obligations guaranteed by
it under this Article IX. In the event any Agent or any Lender shall bid at
any foreclosure or trustee's sale or at any private sale permitted by law or
the Loan Documents, any Agent or any Lender may bid all or less than the amount
of the Obligations and the amount of such bid need not be paid by such Agent or
such Lender but shall be credited against the Obligations. The amount of the
successful bid at any such sale, whether by any Agent, any Lender or any other
party is the successful bidder, shall be conclusively deemed to be the fair
market value of the Collateral and the difference between such bid amount and
the remaining balance of the Obligations shall be conclusively deemed to be the
amount of the Obligations guaranteed under this Article IX (subject to the
limitations contained in Section 9.1 with respect to the Obligations guaranteed
by the non-U.S. Guarantors), notwithstanding that any present or future law or
court decision or ruling may have the effect of reducing the amount of any
deficiency claim to which any Agent or any Lender might otherwise be entitled
but for such bidding at any such sale.
9.9 Limitation. Notwithstanding any provision herein contained to the
contrary, each Guarantor's liability under this Article IX (which liability is
in any event in addition to amounts for which such entity may be primarily
liable as a Borrower or otherwise) shall be limited to an amount not to exceed
as of any date of determination the greater of:
(a) the net amount of all Loans advanced to any other Borrower
under this Agreement and then re-loaned or otherwise transferred to, or
for the benefit of, such Guarantor; and
(b) the amount which could be claimed by the Agents and the Lenders
from such Guarantor under this Article IX without rendering such claim
voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy
Code or under any applicable state Uniform Fraudulent Transfer Act,
Uniform Fraudulent Conveyance Act or similar statute or common law after
taking into account, among other things, such Guarantor's right of
contribution and indemnification from each other Guarantor under Section
9.9.
9.9 Contribution with Respect to Guaranty Obligations.
(a) To the extent that any Guarantor shall make a payment under this
Article IX of all or any of the Secured Obligations (other than Loans made to
that Guarantor as a Borrower for which it is primarily liable) (a "GUARANTOR
PAYMENT") which, taking into account all other Guarantor Payments then
previously or concurrently made by any other Guarantor, exceeds the amount
which such Guarantor would otherwise have paid if each Guarantor had paid the
aggregate Obligations satisfied by such Guarantor Payment in the same
proportion that such Guarantor's "Allocable Amount" (as defined below) (as
determined immediately prior to such Guarantor Payment) bore to the aggregate
Allocable Amounts of each of the Guarantors as determined immediately prior to
the making of such Guarantor Payment, then, following indefeasible payment in
full in cash of the Obligations and termination of the Commitments, such
Guarantor shall be entitled to receive contribution and indemnification
payments from, and be reimbursed by, each other Guarantor for the amount of
such excess, pro rata based upon their respective Allocable Amounts in effect
immediately prior to such Guarantor Payment.
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(b) As of any date of determination, the "ALLOCABLE AMOUNT" of any
Guarantor shall be equal to the maximum amount of the claim which could then be
recovered from such Guarantor under this Article IX without rendering such
claim voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy
Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform
Fraudulent Conveyance Act or similar statute or common law.
(c) This Section 9.9 is intended only to define the relative rights of
the Guarantors and nothing set forth in this Section 9.9 is intended to or
shall impair the obligations of the Guarantors, jointly and severally, to pay
any amounts as and when the same shall become due and payable in accordance
with the terms of this Agreement, including Section 9.1. Nothing contained in
this Section 9.9 shall limit the liability of any Borrower to pay the Loans
made directly or indirectly to that Borrower and accrued interest, fees and
expenses with respect thereto for which such Borrower shall be primarily
liable.
(d) The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of the Guarantor to which
such contribution and indemnification is owing.
(e) The rights of the indemnifying Guarantors against other Borrowers or
Guarantors under this Section 9.9 shall be exercisable upon the full and
indefeasible payment of the Secured Obligations and the termination of the
Commitments.
9.10 Liability Cumulative. The liability of the Guarantors under this
Article IX is in addition to and shall be cumulative with all liabilities of
each Guarantor or Borrower to the Agents and the Lenders under this Agreement
and the other Loan Documents to which such Guarantor or Borrower is a party or
in respect of any Obligations or obligation of any other Guarantor or Borrower,
without any limitation as to amount, unless the instrument or agreement
evidencing or creating such other liability specifically provides to the
contrary.
9.11 No Revocation; Term of Guarantee. This Guarantee shall continue in
full force and effect and may not be terminated or otherwise revoked until the
Secured Obligations shall have been fully and indefeasibly paid (in cash) and
discharged and this Agreement and all financing arrangements among the
Borrowers, the Guarantors, the Lenders, the Agents and the Issuing Lenders
shall have been terminated. If, notwithstanding the foregoing, the Guarantors
(or any of them) shall have any right under applicable law to terminate or
revoke this Guarantee, the Guarantors agree that such termination or revocation
shall not be effective until a written notice of such revocation or
termination, specifically referring hereto, signed by the Guarantors, is
actually received by the Administrative Agent. Such notice shall not affect
the right and power of any of the Lenders, any of the Issuing Lenders or any
Agent to enforce rights arising prior to receipt thereof by the Administrative
Agent. If any Lender or any Agent grants loans or takes other action, or any
Issuing Bank issues Letters of Credit, after a Guarantor terminates or revokes
this Guarantee but before the Administrative Agent receives such written
notice, the rights of such Lender or Issuing Bank with respect thereto shall be
the same as if such termination or revocation had not occurred. The provisions
of this Article IX shall remain in full force and effect, notwithstanding any
termination of this Agreement, until the Secured Obligations shall have been
fully and indefeasibly paid (in cash) and discharged.
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ARTICLE X: GENERAL PROVISIONS
10.1 Survival of Representations. All representations and warranties of
the Borrowers and Guarantors contained in this Agreement shall survive delivery
of the Notes and the making of the Loans herein contemplated.
10.2 Governmental Regulation. Anything contained in this Agreement to
the contrary notwithstanding, no Lender shall be obligated to extend credit to
the Borrowers and neither the Administrative Agent nor any Issuing Lender shall
be obligated to issue any Letter of Credit for the account of any Borrower in
violation of any limitation or prohibition provided by any applicable statute
or regulation.
10.3 Performance of Obligations. Each of the Borrowers agrees that the
Administrative Agent may, but shall have no obligation to (i) at any time, pay
or discharge taxes, liens, security interests or other encumbrances levied or
placed on or threatened against any Collateral and (ii) after the occurrence
and during the continuance of a Default make any other payment or perform any
act required of any Borrower under any Loan Document or take any other action
which the Administrative Agent in its discretion deems necessary or desirable
to protect or preserve the Collateral, including, without limitation, any
action to (y) effect any repairs or obtain any insurance called for by the
terms of any of the Loan Documents and to pay all or any part of the premiums
therefor and the costs thereof and (z) pay any rents payable by any Borrower
which are more than 30 days past due, or as to which the landlord has given
notice of termination, under any lease. The Administrative Agent shall use
its best efforts to give the applicable Borrower notice of any action taken
under this Section 10.3 prior to the taking of such action or promptly
thereafter provided the failure to give such notice shall not affect the
applicable Borrower's obligations in respect thereof. Each of the Borrowers
agrees to pay the Administrative Agent, upon demand, the principal amount of
all funds advanced by the Administrative Agent under this Section 10.3,
together with interest thereon at the rate from time to time applicable to
Base Rate Loans from the date of such advance until the outstanding principal
balance thereof is paid in full. If any Borrower fails to make payment in
respect of any such advance under this Section 10.3 within one (1) Business
Day after the date such Borrower receives written demand therefor from the
Administrative Agent, the Administrative Agent shall promptly notify each
Lender and each Lender agrees that it shall thereupon make available to the
Administrative Agent, in Dollars in immediately available funds, the amount
equal to such Lender's Pro Rata Share of such advance. If such funds are not
made available to the Administrative Agent by such Lender within one
(1) Business Day after the Administrative Agent's demand therefor, the
Administrative Agent will be entitled to recover any such amount from such
Lender together with interest thereon at the Effective Federal Funds Rate for
each day during the period commencing on the date of such demand and ending on
the date such amount is received. The failure of any Lender to make available
to the Administrative Agent its Pro Rata Share of any such unreimbursed advance
under this Section 10.3 shall neither relieve any other Lender of its
obligation hereunder to make available to the Administrative Agent such other
Lender's Pro Rata Share of such advance on the date such payment is to be made
nor increase the obligation of any other Lender to make such payment to the
Administrative Agent. All outstanding principal of, and interest on, advances
made under this Section 10.3 shall constitute Obligations secured by the
Collateral until paid in full by the Borrowers.
10.4 Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any
of the provisions of the Loan Documents.
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10.5 Entire Agreement. The Loan Documents embody the entire agreement
and understanding among the Borrowers, the Guarantors, the Administrative
Agent, the Syndication Agent, the Alternate Currency Agents and the Lenders and
supersede all prior agreements and understandings relating to the subject
matter thereof.
10.6 Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other. The failure of any Lender to
perform any of its obligations hereunder shall not relieve any other Lender
from any of its obligations hereunder. This Agreement shall not be construed
so as to confer any right or benefit upon any Person other than the parties to
this Agreement and their respective successors and assigns.
10.7 Expenses; Indemnification.
(A) Expenses. Subject to the letter agreement dated April 22, 1997 among
Brightpoint, the Administrative Agent, the Arranger and the Syndication Agent
with respect to costs and expenses incurred on or prior to the Closing Date,
the Borrowers shall reimburse the Agents and the Arranger for any reasonable
costs, internal charges and out-of-pocket expenses (including attorneys' and
paralegals' fees and time charges of attorneys and paralegals for any Agent or
the Arranger, which attorneys and paralegals may be employees of any Agent or
the Arranger) paid or incurred by any Agent or Arranger in connection with the
preparation, negotiation, execution, delivery, syndication, review, amendment,
modification, and administration of the Loan Documents. Each of the Borrowers
also agrees to reimburse the Agents, the Lenders and the Issuing Lenders for
any costs, internal charges and out-of-pocket expenses (including attorneys'
and paralegals' fees and time charges of attorneys and paralegals for the
Agents, the Lenders and the Issuing Lenders, which attorneys and paralegals may
be employees of any Agent, the Lenders or the Issuing Lenders) paid or incurred
by any Agent, any Lender or any Issuing Lender in connection with the
collection of the Obligations and enforcement of the Loan Documents. In
addition to expenses set forth above, each of the Borrowers agrees to reimburse
the Administrative Agent, promptly after the request therefor, for each audit,
collateral analysis or other business analysis performed by or for the benefit
of the Lenders in connection with this Agreement or the other Loan Documents in
an amount equal to the Administrative Agent's then customary charges for each
person employed to perform such audit or analysis, plus all costs and expenses
(including without limitation, travel expenses) incurred by the Administrative
Agent in the performance of such audit or analysis; provided, however, the
Borrowers shall not be obligated to so reimburse the Administrative Agent
during any period of 12 consecutive months in an amount in excess of $8,000 for
such audits, collateral analyses or other business analyses conducted at a time
when no Default or Unmatured Default has occurred and is continuing. The
Administrative Agent shall provide the Borrowers with a detailed statement of
all reimbursements requested under this Section 10.7(A).
(B) Indemnity. Each of the Borrowers and Guarantors further agrees to
defend, protect, indemnify, and hold harmless the Agents, the Arranger, each
and all of the Lenders, each and all of the Issuing Lenders, the Swing Loan
Lender and each of their respective Affiliates, and each of such Agent's,
Arranger's, Lender's, Issuing Lender's or Affiliate's respective officers,
directors, employees, attorneys and agents (including, without limitation,
those retained in connection with the satisfaction or attempted satisfaction of
any of the conditions set forth in Article IV) (collectively, the
"INDEMNITEES") from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses of any
kind or nature whatsoever (including, without limitation, the fees and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding,
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whether or not such Indemnitees shall be designated a party thereto), imposed
on, incurred by, or asserted against such Indemnitees in any manner relating
to or arising out of:
(i) this Agreement, the other Loan Documents, or any act, event or
transaction related or attendant thereto or to the Stock Acquisition, the
making of the Loans, and the issuance of and participation in Letters of
Credit hereunder, the management of such Loans or Letters of Credit, the
use or intended use of the proceeds of the Loans or Letters of Credit
hereunder, or any of the other transactions contemplated by the Loan
Documents; or
(ii) any liabilities, obligations, responsibilities, losses,
damages, personal injury, death, punitive damages, economic damages,
consequential damages, treble damages, intentional, willful or wanton
injury, damage or threat to the environment, natural resources or public
health or welfare, costs and expenses (including, without limitation,
attorney, expert and consulting fees and costs of investigation,
feasibility or remedial action studies), fines, penalties and monetary
sanctions, interest, direct or indirect, known or unknown, absolute or
contingent, past, present or future relating to violation of any
Environmental, Health or Safety Requirements of Law arising from or in
connection with the past, present or future operations of Brightpoint,
its Subsidiaries or any of their respective predecessors in interest, or,
the past, present or future environmental, health or safety condition of
any respective property of Brightpoint or its Subsidiaries, the presence
of asbestos-containing materials at any respective property of
Brightpoint or its Subsidiaries or the Release or threatened Release of
any Contaminant into the environment (collectively, the "INDEMNIFIED
MATTERS");
provided, however, the Borrowers and Guarantors shall have no obligation to an
Indemnitee hereunder with respect to (i) Indemnified Matters caused solely by
or resulting solely from the willful misconduct or Gross Negligence of such
Indemnitee, as determined by the final non-appealable judgment of a court of
competent jurisdiction or (ii) Indemnified Matters arising solely out of a
dispute between the Agents or a dispute between any Lender and any Agent. If
the undertaking to indemnify, pay and hold harmless set forth in the preceding
sentence may be unenforceable because it is violative of any law or public
policy, the Borrowers and Guarantors shall contribute the maximum portion which
it is permitted to pay and satisfy under applicable law, to the payment and
satisfaction of all Indemnified Matters incurred by the Indemnitees.
(C) Waiver of Certain Claims; Settlement of Claims. Each of the
Borrowers and each of the Guarantors agrees to assert no claim against any of
the Indemnitees on any theory of liability for consequential damages, indirect
damages, exemplary damages, punitive damages or any other similar theory of
damages howsoever categorized. No settlement shall be entered into by
Brightpoint or any if its Subsidiaries with respect to any claim, litigation,
arbitration or other proceeding relating to or arising out of the transaction
evidenced by this Agreement or the other Loan Documents(whether or not any
Agent, any Lender, any Issuing Lender or any Indemnitee is a party thereto)
unless such settlement releases all Indemnitees from any and all liability
with respect thereto.
(D) Survival of Agreements. The obligations and agreements of the
Borrowers and Guarantors under this Section 10.7 shall survive the termination
of this Agreement.
10.8 Numbers of Documents. All statements, notices, closing documents,
and requests hereunder shall be furnished to the Administrative Agent with
sufficient counterparts so that the Administrative Agent may furnish one to
each of the Lenders.
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10.9 Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.
10.10 Severability of Provisions. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are
declared to be severable.
10.11 Nonliability of Lenders. The relationship among the Borrowers and
the Lenders, Issuing Lenders, the Swing Line Lender and the Agents shall be
solely that of borrower and lender. Neither any Agent nor any Lender nor any
Issuing Lender shall have any fiduciary responsibilities to the Borrowers or to
the Guarantors. Neither any Agent, nor any Lender, nor any Issuing Lender
undertakes any responsibility to the Borrowers or the Guarantors to review or
inform the Borrowers or Guarantors of any matter in connection with any phase
of the Borrowers' or Guarantors' business or operations.
10.12 GOVERNING LAW. THE ADMINISTRATIVE AGENT ACCEPTS THIS AGREEMENT, ON
BEHALF OF ITSELF, THE OTHER AGENTS, THE LENDERS AND THE ISSUING LENDERS, AT
CHICAGO, ILLINOIS BY ACKNOWLEDGING AND AGREEING TO IT THERE. THIS AGREEMENT
SHALL BE GOVERNED BY AND INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE
INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE
OF ILLINOIS. WITHOUT LIMITING THE FOREGOING, ANY DISPUTE BETWEEN ANY BORROWER
OR ANY GUARANTOR AND ANY AGENT, ANY LENDER, ANY ISSUING LENDER OR ANY OTHER
HOLDER OF SECURED OBLIGATIONS ARISING OUT OF, CONNECTED WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH,
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, AND WHETHER ARISING IN
CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE
INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE
OF ILLINOIS.
10.13 CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.
(A) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION (B), EACH
OF THE PARTIES HERETO AGREES THAT ALL DISPUTES AMONG THEM ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG
THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED
EXCLUSIVELY BY STATE OR FEDERAL COURTS LOCATED IN CHICAGO, ILLINOIS, BUT THE
PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE OF CHICAGO, ILLINOIS. EACH OF THE PARTIES
HERETO WAIVES IN ALL DISPUTES BROUGHT PURSUANT TO THIS SUBSECTION (A) ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE
DISPUTE.
(B) OTHER JURISDICTIONS. EACH OF THE BORROWERS AND GUARANTORS AGREES
THAT ANY AGENT, ANY LENDER, ANY ISSUING LENDER OR ANY HOLDER OF
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SECURED OBLIGATIONS SHALL HAVE THE RIGHT TO PROCEED AGAINST ANY
BORROWER OR ANY GUARANTOR OR ANY BORROWER'S OR GUARANTOR'S PROPERTY IN A COURT
IN ANY LOCATION TO ENABLE SUCH PERSON TO (1) OBTAIN PERSONAL JURISDICTION OVER
SUCH BORROWER OR GUARANTOR OR (2) REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE SECURED OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER COURT
ORDER ENTERED IN FAVOR OF SUCH PERSON. EACH OF THE BORROWERS AND GUARANTORS
AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING
BROUGHT UNDER THIS CLAUSE (B) BY SUCH PERSON TO REALIZE ON THE COLLATERAL OR
ANY OTHER SECURITY FOR THE OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER COURT
ORDER IN FAVOR OF SUCH PERSON ALL OF WHICH PERMISSIVE COUNTERCLAIMS MAY BE
BROUGHT ONLY IN THE JURISDICTION SET FORTH IN CLAUSE (A) ABOVE. EACH OF THE
BORROWERS AND GUARANTORS WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION
OF THE COURT IN WHICH SUCH PERSON HAS COMMENCED A PROCEEDING DESCRIBED IN THIS
SUBSECTION (B).
(C) SERVICE OF PROCESS; VENUE. EACH OF THE BORROWERS AND GUARANTORS
WAIVES PERSONAL SERVICE OF PROCESS UPON IT AND, AS ADDITIONAL SECURITY FOR THE
SECURED OBLIGATIONS, IRREVOCABLY APPOINTS [_________________________] AS THEIR
AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS ISSUED BY ANY COURT.
EACH OF THE BORROWERS AND GUARANTORS IRREVOCABLY WAIVES ANY OBJECTION
(INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED
ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH IN ANY JURISDICTION SET FORTH ABOVE.
(D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES
ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO AGREES AND CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART
OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(E) WAIVER OF BOND. EACH OF THE BORROWERS AND GUARANTORS WAIVES THE
POSTING OF ANY BOND OTHERWISE REQUIRED OF ANY PARTY HERETO IN CONNECTION WITH
ANY JUDICIAL PROCESS OR PROCEEDING TO REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE OBLIGATIONS OR TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER
ENTERED IN FAVOR OF SUCH PARTY, OR TO ENFORCE BY SPECIFIC PERFORMANCE,
TEMPORARY RESTRAINING ORDER,
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PRELIMINARY OR PERMANENT INJUNCTION, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
(F) ADVICE OF COUNSEL. EACH OF THE PARTIES REPRESENTS TO EACH OTHER
PARTY HERETO THAT IT HAS DISCUSSED THIS AGREEMENT AND, SPECIFICALLY, THE
PROVISIONS OF THIS SECTION 10.13, WITH ITS COUNSEL.
10.14 Subordination of Intercompany Indebtedness. Each of the Borrowers
and Guarantors agrees that any and all claims of such Borrower or Guarantor
against any other Borrower, any Guarantor, any endorser, obligor or any other
guarantor of all or any part of the Secured Obligations, or against any of its
properties shall be subordinate and subject in right of payment to the prior
payment, in full and in cash, of all Secured Obligations. Notwithstanding any
right of any Borrower or Guarantor to ask, demand, sue for, take or receive any
payment from any other Borrower or any Guarantor, all rights, liens and
security interests of any Borrower or Guarantor, whether now or hereafter
arising and howsoever existing, in any assets of any other Borrower or any
Guarantor (whether constituting part of Collateral given to any Holder of
Secured Obligations or the Agent to secure payment of all or any part of the
Secured Obligations or otherwise) shall be and are subordinated to the rights
of the Holders of Secured Obligations and the Agent in those assets. No
Borrower or Guarantor shall have any right to possession of any such asset or
to foreclose upon any such asset, whether by judicial action or otherwise,
unless and until all of the Secured Obligations (other than contingent
indemnity obligations) shall have been fully paid and satisfied and all
financing arrangements among the Borrowers, Guarantors and the Holders of
Secured Obligations have been terminated. If all or any part of the assets of
any Borrower or Guarantor, or the proceeds thereof, are subject to any
distribution, division or application to the creditors of such Borrower or
Guarantor, whether partial or complete, voluntary or involuntary, and whether
by reason of liquidation, bankruptcy, arrangement, receivership, assignment for
the benefit of creditors or any other action or proceeding, or if the business
of any Borrower or Guarantor is dissolved or if substantially all of the assets
of any Borrower or Guarantor are sold, then, and in any such event, any payment
or distribution of any kind or character, either in cash, securities or other
property, which shall be payable or deliverable upon or with respect to any
indebtedness of any such Borrower or Guarantor to any other Borrower or
Guarantor ("INTERCOMPANY INDEBTEDNESS") shall be paid or delivered directly to
the Administrative Agent for application on any of the Secured Obligations, due
or to become due, until such Secured Obligations (other than contingent
indemnity obligations) shall have first been fully paid and satisfied. The
Borrowers and the Guarantors irrevocably authorize and empower the
Administrative Agent to demand, sue for, collect and receive every such payment
or distribution and give acquittance therefor and to make and present for and
on behalf of the applicable Borrower or Guarantor such proofs of claim and take
such other action, in the Administrative Agent's own name or in the name of the
applicable Borrower or Guarantor or otherwise, as the Administrative Agent may
deem necessary or advisable for the enforcement of this Section 10.14. The
Administrative Agent may vote such proofs of claim in any such proceeding,
receive and collect any and all dividends or other payments or disbursements
made thereon in whatever form the same may be paid or issued and apply the same
on account of any of the Secured Obligations. Should any payment,
distribution, security or instrument or proceeds thereof be received by any
Borrower or Guarantor upon or with respect to the Intercompany Indebtedness
prior to the satisfaction of all of the Secured Obligations (other than
contingent indemnity obligations) and the termination of all financing
arrangements among the Borrowers, the Guarantors and the Holders of Secured
Obligations, the applicable Borrower or Guarantor shall receive and hold the
same in trust, as trustee, for the benefit of the Holders of Secured
Obligations and shall forthwith deliver the same to the Administrative Agent,
for the benefit of the Holders of Secured Obligations, in precisely the form
received (except for the endorsement or assignment of the Borrower where
necessary), for application to any of the Secured Obligations, due or not due,
and, until so delivered,
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the same shall be held in trust by the Borrower or Guarantor, as applicable,
as the property of the Holders of Secured Obligations. If any Borrower
or Guarantor fails to make any such endorsement or assignment to the Agent,
the Agent or any of its officers or employees are irrevocably authorized
to make the same. The Borrowers and Guarantors agree that until the Secured
Obligations (other than the contingent indemnity obligations) have been paid in
full (in cash) and satisfied and all financing arrangements among the
Borrowers, Guarantors and the Holders of Secured Obligations have been
terminated, the Borrowers and Guarantors will not assign or transfer to any
Person (other than the Administrative Agent) any claim such Borrower or
Guarantor has or may have against any other Borrower or Guarantor.
10.15 No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
10.16 Alternate Currency Addenda Binding on Each Lender; Provisions
Regarding Alternate Currency Agents. Each of the Lenders agrees that it shall
be bound by the provisions of each Alternate Currency Addendum entered into in
connection herewith, in particular as it relates to the provisions applicable
to the Alternate Currency Agent appointed thereunder.
ARTICLE XI: THE ADMINISTRATIVE AGENT
11.1 Appointment; Nature of Relationship. First Chicago is appointed by
the Lenders (each reference in this Article XI to a Lender being in its
capacity either as a Lender or an Issuing Lender or a Swing Line Lender, or any
or all of the foregoing) as the Administrative Agent hereunder and under each
other Loan Document, and each of the Lenders irrevocably authorizes the
Administrative Agent to act as the contractual representative of such Lender
with the rights and duties expressly set forth herein and in the other Loan
Documents. The Administrative Agent agrees to act as such contractual
representative upon the express conditions contained in this Article XI.
Notwithstanding the use of the defined term "Administrative Agent," it is
expressly understood and agreed that the Administrative Agent shall not have
any fiduciary responsibilities to any Lender by reason of this Agreement and
that the Administrative Agent is merely acting as the representative of the
Lenders with only those duties as are expressly set forth in this Agreement and
the other Loan Documents. In its capacity as the Lenders' contractual
representative, the Administrative Agent (i) does not assume any fiduciary
duties to any of the Lenders, (ii) is a "representative" of the Lenders within
the meaning of Section 9-105 of the Uniform Commercial Code and (iii) is acting
as an independent contractor, the rights and duties of which are limited to
those expressly set forth in this Agreement and the other Loan Documents. Each
of the Lenders agrees to assert no claim against the Administrative Agent on
any agency theory or any other theory of liability for breach of fiduciary
duty, all of which claims each Lender waives.
11.2 Powers. The Administrative Agent shall have and may exercise such
powers under the Loan Documents as are specifically delegated to the
Administrative Agent by the terms of each thereof, together with such powers
as are reasonably incidental thereto. The Administrative Agent shall have no
implied duties or fiduciary duties to the Lenders, or any obligation to the
Lenders to take any action hereunder or under any of the other Loan Documents
except any action specifically provided by the Loan Documents required to be
taken by the Administrative Agent.
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11.3 General Immunity. Neither the Administrative Agent nor any of its
respective directors, officers, agents or employees shall be liable to any of
the Borrowers, the Guarantors, the Lenders or any Lender for any action taken
or omitted to be taken by it or them hereunder or under any other Loan Document
or in connection herewith or therewith except to the extent such action or
inaction is found in a final non-appealable judgment by a court of competent
jurisdiction to have arisen solely from the Gross Negligence or willful
misconduct of such Person.
11.4 No Responsibility for Loans, Creditworthiness, Collateral, Recitals,
Etc. Neither the Administrative Agent nor any of its respective directors,
officers, agents or employees shall be responsible for or have any duty to
ascertain, inquire into, or verify (i) any statement, warranty or
representation made in connection with any Loan Document or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document; (iii) the satisfaction of
any condition specified in Article IV; (iv) the existence or possible existence
of any Default or (v) the validity, effectiveness or genuineness of any Loan
Document or any other instrument or writing furnished in connection therewith.
The Administrative Agent shall not be responsible to any Lender for any
recitals, statements, representations or warranties herein or in any of the
other Loan Documents, for the perfection or priority of any of the Liens on any
of the Collateral, or for the execution, effectiveness, genuineness, validity,
legality, enforceability, collectibility, or sufficiency of this Agreement or
any of the other Loan Documents or the transactions contemplated thereby, or
for the financial condition of any Guarantor of any or all of the Obligations,
Brightpoint or any of its Subsidiaries.
11.5 Action on Instructions of Lenders. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting,
hereunder and under any other Loan Document in accordance with written
instructions signed by the Required Lenders (except with respect to actions
that require the consent of all of the Lenders as provided in Section 8.3), and
such instructions and any action taken or failure to act pursuant thereto shall
be binding on all of the Lenders and on all Holders of Secured Obligations.
The Administrative Agent shall be fully justified in failing or refusing to
take any action hereunder and under any other Loan Document unless it shall
first be indemnified to its satisfaction by the Lenders pro rata against any
and all liability, cost and expense that it may incur by reason of taking or
continuing to take any such action.
11.6 Employment of Agents and Counsel. The Administrative Agent may
execute any of its duties hereunder and under any other Loan Document by or
through employees, agents, and attorneys-in-fact, and shall not be answerable
to the Lenders, except as to money or securities received by it or its
authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The Administrative
Agent shall be entitled to advice of counsel concerning the contractual
arrangement among the Administrative Agent and the Lenders, as the case may be,
and all matters pertaining to its duties hereunder and under any other Loan
Document.
11.7 Reliance on Documents; Counsel. The Administrative Agent shall be
entitled to rely upon any Note, notice, consent, certificate, affidavit,
letter, telegram, statement, paper or document believed by it to be genuine and
correct and to have been signed or sent by the proper person or persons, and,
in respect to legal matters, upon the opinion of counsel selected by the
Administrative Agent, which counsel may be employees of the Administrative
Agent.
11.8 The Administrative Agent's Reimbursement and Indemnification. The
Lenders agree to reimburse and indemnify the Administrative Agent ratably in
proportion to their respective Pro Rata Shares (i) for any amounts not
reimbursed by the Borrowers or Guarantors for which the Administrative
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Agent is entitled to reimbursement or indemnification by the Borrowers or
Guarantors under the Loan Documents, (ii) for any other expenses incurred by
the Administrative Agent on behalf of the Lenders, in connection with the
preparation, execution, delivery, administration and enforcement of the Loan
Documents including as a result of a dispute among the Lenders or between any
Lender and any Agent, and (iii) for any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever which may be imposed on, incurred by or
asserted against the Administrative Agent in any way relating to or arising out
of the Loan Documents or any other document delivered in connection therewith
or the transactions contemplated thereby, or the enforcement of any of the
terms thereof or of any such other documents, including as a result of a
dispute among the Lenders or between any Lender and any Agent, provided that
no Lender shall be liable for any of the foregoing to the extent any of the
foregoing is found in a final non-appealable judgment by a court of competent
jurisdiction to have arisen solely from the Gross Negligence or willful
misconduct of the Administrative Agent.
11.9 Rights as a Lender. With respect to its Commitments, Loans made by
it, the Notes issued to it in its individual capacity and Letters of Credit
issued by it as an Issuing Lender, the Administrative Agent shall have the same
rights and powers hereunder and under any other Loan Document as any Lender and
may exercise the same as through it were not the Administrative Agent, and the
term "Lender" or "Lenders" or "Issuing Lender" or "Issuing Lenders", as
applicable, shall, unless the context otherwise indicates, include the
Administrative Agent in its individual capacity. The Administrative Agent may
accept deposits from, lend money to, enter into Hedging Agreements and
generally engage in any kind of trust, debt, equity or other transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with Brightpoint or any of its Subsidiaries in which such Person is not
prohibited hereby from engaging with any other Person.
11.10 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent or any other
Lender and based on the financial statements prepared by Brightpoint, the
Borrowers and the Guarantors and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement and the other Loan Documents. Each Lender also acknowledges
that it will, independently and without reliance upon the Administrative Agent
or any other Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents.
11.11 Successor Administrative Agent. The Administrative Agent may
resign at any time by giving written notice thereof to the Lenders and the
Borrowers. Upon any such resignation, the Required Lenders shall have the
right to appoint, on behalf of the Borrowers and the Lenders, a successor
Administrative Agent. If no successor Administrative Agent shall have been
so appointed by the Required Lenders and shall have accepted such appointment
within thirty days after the retiring Administrative Agent's giving notice of
resignation, then the retiring Administrative Agent may appoint, on behalf of
the Borrowers and the Lenders, a successor Administrative Agent.
Notwithstanding anything herein to the contrary, so long as no Default has
occurred and is continuing, each such successor Administrative Agent shall be
subject to approval by Brightpoint, which approval shall not be unreasonably
withheld. Such successor Administrative Agent shall be a commercial bank
having capital and retained earnings of at least $500,000,000. Upon the
acceptance of any appointment as the Administrative Agent hereunder by a
successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder and under
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the other Loan Documents. After any retiring Administrative Agent's
resignation hereunder as Administrative Agent, the provisions of this Article
XI shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Administrative Agent
hereunder and under the other Loan Documents.
11.12 Collateral Documents. Each Lender authorizes the Administrative
Agent to enter into each of the Collateral Documents to which it is a party and
to take all action contemplated by such documents. Each Lender agrees that no
Lender shall have the right individually to seek to realize upon the security
granted by any Collateral Document, it being understood and agreed that such
rights and remedies may be exercised solely by the Administrative Agent for the
benefit of the Holders of Secured Obligations upon the terms of the Collateral
Documents.
11.13. No Duties Imposed Upon Arranger or Syndication Agent. None of the
Persons identified on the cover page to this Agreement, the signature pages to
this Agreement or otherwise in this Agreement as an "Arranger" or "Syndication
Agent" shall have any right, power, obligation, liability, responsibility or
duty under this Agreement other than those applicable to all Lenders as such.
Without limiting the foregoing, none of the Lenders identified on the cover
page to this Agreement, the signature pages to this Agreement or otherwise in
this Agreements as an "Arranger" or "Syndication Agent" shall have or be deemed
to have any fiduciary duty to or fiduciary relationship with any Lender. In
addition to the agreements set forth in Section 11.10, each of the Lenders
acknowledges that it has not relied, and will not rely, on any of the Lenders
so identified in deciding to enter into this Agreement or in taking or not
taking action hereunder.
ARTICLE XII: SETOFF; RATABLE PAYMENTS
12.1 Setoff. In addition to, and without limitation of, any rights of
the Lenders or Issuing Lenders under applicable law, if any Default occurs and
is continuing, any indebtedness from any Lender or Issuing Lender to any of the
Borrowers or Guarantors (including all account balances, whether provisional or
final and whether or not collected or available) may be offset and applied
toward the payment of the Obligations owing to such Lender, such Issuing Lender
and the other Obligations, whether or not the Obligations, or any part hereof,
shall then be due.
12.2 Ratable Payments. If any Lender, whether by setoff or otherwise,
has payment made to it upon its Loans (other than payments received pursuant to
Sections 3.1, 3.2 or 3.4) in a greater proportion than that received by any
other Lender, such Lender agrees, promptly upon demand, to purchase a portion
of the Loans held by the other Lenders so that after such purchase each Lender
will hold its ratable proportion of Loans. If any Lender, whether in
connection with setoff or amounts which might be subject to setoff or
otherwise, receives collateral or other protection for its Obligation or such
amounts which may be subject to setoff, such Lender agrees, promptly upon
demand, to take such action necessary such that all Lenders share in the
benefits of such collateral ratably in proportion to the obligations owing to
them. In case any such payment is disturbed by legal process, or otherwise,
appropriate further adjustments shall be made.
12.3 Application of Payments. Subject to the provisions of Section 8.2,
the Administrative Agent shall, unless otherwise specified at the direction of
the Required Lenders which direction shall be consistent with the last sentence
of this Section 12.3, apply all payments and prepayments in respect of any
Obligations and all proceeds of Collateral in the following order:
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(A) first, to pay interest on and then principal of any portion of
the Loans which the Administrative Agent may have advanced on behalf of
any Lender for which the Administrative Agent has not then been
reimbursed by such Lender or the Borrower or Guarantor;
(B) second, to pay interest on and then principal of any advance
made under Section 10.3 for which the Administrative Agent has not then
been paid by the Borrowers or the Guarantors or reimbursed by the
Lenders;
(C) third, to pay Obligations in respect of any fees, expense
reimbursements or indemnities then due to the Administrative Agent;
(D) fourth, to pay Obligations in respect of any fees, expenses,
reimbursements or indemnities then due to the Lenders and Issuing Lender;
(E) fifth, to pay interest due in respect of Loans and L/C
Obligations;
(F) sixth, to the ratable payment or prepayment of principal
outstanding on Loans and Reimbursement Obligations and Hedging
Obligations in such order as the Administrative Agent may determine in
its sole discretion;
(G) seventh, to provide required cash collateral if any pursuant to
Section 2.24; and
(H) eighth, to the ratable payment of all other Obligations.
Unless otherwise designated (which designation shall only be applicable prior
to the occurrence of a Default) by the Borrowers, all principal payments in
respect of Loans shall be applied first, to repay outstanding Floating Rate
Loans, and then to repay outstanding Fixed Rate Loans with those Fixed Rate
Loans which have earlier expiring Interest Periods being repaid prior to those
which have later expiring Interest Periods. The order of priority set forth in
this Section 12.3 and the related provisions of this
Agreement are set forth solely to determine the rights and priorities of the
Administrative Agent, the Lenders, the Issuing Lender and other Holders of
Secured Obligations as among themselves. The order of priority set forth in
clauses (D) through (H) of this Section 12.3 may at any time and from time to
time be changed by the Required Lenders without necessity of notice to or
consent of or approval by the Borrowers, the Guarantors, or any other Person.
The order of priority set forth in clauses (A) through (C) of this Section 12.3
may be changed only with the prior written consent of the Administrative Agent.
12.4 Relations Among Lenders.
(a) Except with respect to the exercise of set-off rights of any Lender
in accordance with Section 12.1, the proceeds of which are applied in
accordance with this Agreement, and each Lender agrees that it will not take
any action, nor institute any actions or proceedings, against any Borrower, any
Guarantor or any other obligor hereunder or with respect to any Collateral or
Loan Document, without the prior written consent of the Required Lenders or, as
may be provided in this Agreement or the other Loan Documents, at the direction
of the Administrative Agent.
(b) The Lenders are not partners or co-venturers, and no Lender shall be
liable for the acts or omissions of, or (except as otherwise set forth herein
in case of the Administrative Agent) authorized to act for, any other Lender.
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ARTICLE XIII: BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
13.1 Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrowers, the
Guarantors and the Lenders and their respective successors and assigns, except
that (i) none of the Borrowers or Guarantors shall have the right to assign
their rights or obligations under the Loan Documents and (ii) any assignment by
any Lender must be made in compliance with Section 13.3 hereof.
Notwithstanding clause (ii) of this Section 13.1, any Lender may at any time,
without the consent of any Borrower, any Guarantor or the Administrative Agent,
assign all or any portion of its rights under this Agreement and Notes, if any,
issued to it to a Federal Reserve Bank; provided, however, that no such
assignment shall release the transferor Lender from its obligations hereunder.
The Administrative Agent may treat the payee of any Note issued to any
individual Lender as the owner thereof for all purposes hereof unless and until
such payee complies with Section 13.3 hereof in the case of an assignment
thereof or, in the case of any other transfer, a written notice of the transfer
is filed with the Administrative Agent. Any assignee or transferee of a Note
or of an interest in the Loans agrees by acceptance thereof to be bound by all
the terms and provisions of the Loan Documents. Any request, authority or
consent of any Person, who at the time of making such request or giving such
authority or consent is the holder of any Note, shall be conclusive and binding
on any subsequent holder, transferee or assignee of such Note or of any Note or
Notes issued in exchange therefor.
13.2 Participations.
(A) Permitted Participants; Effect. Subject to the terms set forth in
this Section 13.2, any Lender may, in the ordinary course of its business and
in accordance with applicable law, at any time sell
to one or more banks or other entities ("PARTICIPANTS") participating interests
in any Loan owing to such Lender, any Note held by such Lender, any Commitment
of such Lender, any L/C Interest of such Lender or any other interest of such
Lender under the Loan Documents on a pro-rata or non-pro-rata basis; provided
that without the prior written consent of the Administrative Agent, the amount
of such participation shall not be for less than $5,000,000. Notice of such
participation to Brightpoint and the Administrative Agent shall be required
prior to any participation becoming effective with respect to a Participant
which is not a Lender or an Affiliate thereof. In the event of any such sale
by a Lender of participating interests to a Participant, such Lender's
obligations under the Loan Documents shall remain unchanged, such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, such Lender shall remain the holder of any such Note for all
purposes under the Loan Documents, all amounts payable by the Borrowers and
Guarantors under this Agreement shall be determined as if such Lender had not
sold such participating interests, and the Borrowers, Guarantors and the
Administrative Agent shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under the Loan
Documents except that, for purposes of Article III hereof, the Participants
shall be entitled to the same rights as if they were Lenders; provided however
that no Participant shall be entitled to receive any greater payment under such
Article III than the Lender would have been entitled to receive with respect to
the rights participated.
(B) Voting Rights. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, modification or waiver
of any provision of the Loan Documents other than any amendment, modification
or waiver with respect to any Loan or Commitment in which such Participant has
an interest which requires the consent of all of the Lenders under Section 8.3.
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(C) Benefit of Setoff. The Borrowers and the Guarantors agree that each
Participant shall be deemed to have the right of setoff provided in Section
12.1 hereof in respect to its participating interest in amounts owing under the
Loan Documents to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under the Loan Documents,
provided that each Lender shall retain the right of setoff provided in Section
12.1 hereof with respect to the amount of participating interests sold to each
Participant except to the extent such Participant exercises its right of set
off. The Lenders agree to share with each Participant, and each Participant,
by exercising the right of setoff provided in Section 12.1 hereof, agrees to
share with each Lender, any amount received pursuant to the exercise of its
right of setoff, such amounts to be shared in accordance with Section 11.2 as
if each Participant were a Lender.
13.3 Assignments.
(A) Permitted Assignments. Any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time assign to one or
more banks or other entities ("PURCHASERS") all or a portion of its rights and
obligations under this Agreement (including, without limitation, any
Commitments, any Loans owing to it, all of its interests as Issuing Lender with
respect to Letters of Credit, all of its participation interests in existing
Letters of Credit, Swing Line Loans and Alternate Currency Swing Line Loans,
and its obligation to participate in additional Letters of Credit, Swing Line
Loans and Alternate Currency Swing Line Loans hereunder) in accordance with the
provisions of this Section 13.3. Such assignment shall be substantially in the
form of Exhibit I hereto and, without the prior consent of the Administrative
Agent, shall not be permitted hereunder unless such assignment is
either for all of such Lender's rights and obligations under the Loan Documents
or involves Loans and Commitments in an aggregate amount of at least
$5,000,000. Notice to the Administrative Agent and Brightpoint and consent of
Brightpoint and the Administrative Agent (which consents will not be
unreasonably withheld) shall be required prior to an assignment becoming
effective with respect to a Purchaser which is not a Lender or an Affiliate
thereof; provided, however, no consent of Brightpoint shall be required for any
assignment to become effective at a time when a Default has occurred and is
continuing.
(B) Effect; Effective Date. Upon (i) delivery to the Administrative
Agent of a notice of assignment, substantially in the form attached as Appendix
I to Exhibit I hereto (a "NOTICE OF ASSIGNMENT"), together with any consent
required by Section 13.3(A) hereof, and (ii) payment of a $3,500 fee to the
Administrative Agent for processing such assignment, such assignment shall
become effective on the effective date specified in such Notice of Assignment.
The Notice of Assignment shall contain a representation by the Purchaser to the
effect that none of the consideration used to make the purchase of the
Commitment, Loans and L/C Obligations under the applicable assignment agreement
are "plan assets" as defined under ERISA and that the rights and interests of
the Purchaser in and under the Loan Documents will not be "plan assets" under
ERISA. On and after the effective date of such assignment, such Purchaser, if
not already a Lender, shall for all purposes be a Lender party to this
Agreement and any other Loan Documents executed by the Lenders and shall have
all the rights and obligations of a Lender under the Loan Documents, to the
same extent as if it were an original party hereto, and no consent or action by
any of the Borrowers, Guarantors or the Lenders and no further consent or
action by the Administrative Agent shall be required to release the transferor
Lender with respect to the percentage of the Commitments, Loans and Letter of
Credit participations assigned to such Purchaser. Upon the consummation of any
assignment to a Purchaser pursuant to this Section 13.3(B), if requested by the
transferor Lender or Purchaser, the transferor Lender, the Administrative Agent
and the Borrowers shall make appropriate arrangements so that replacement Notes
are issued to such transferor Lender and new Notes or, as appropriate,
replacement Notes, are issued to such Purchaser, in each case in principal
amounts reflecting their Commitments, as adjusted pursuant to such assignment
provided if no such
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request is made, the master Note(s) shall reflect their Commitments, as
adjusted pursuant to such assignment.
(C) The Register. The Administrative Agent shall maintain at its address
referred to in Section 14.1 a copy of each assignment delivered to and accepted
by it pursuant to this Section 13.3 and a register (the "REGISTER") for the
recordation of the names and addresses of the Lenders and the Commitments of
and principal amount of the Loans owing to, each Lender from time to time and
whether such Lender is an original Lender or the assignee of another Lender
pursuant to an assignment under this Section 13.3. The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and
Brightpoint and each of its Subsidiaries, the Administrative Agent and the
Lenders may treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrowers or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
13.4 Confidentiality. Subject to Section 13.5, the Agents and the
Lenders shall hold all nonpublic information obtained pursuant to the
requirements of this Agreement and identified as such by Brightpoint in
accordance with such Person's customary procedures for handling confidential
information of this nature and in accordance with safe and sound banking
practices. Each of the Agents and the Lenders agrees that it will not make use
of any such confidential information for personal gain or for transactions
other than those contemplated by this Agreement, except to the extent that such
information (i) was or becomes generally available to the public other than as
a result of disclosure by such Agent or such Lender, or (ii) was or becomes
available on a nonconfidential basis from a source other than Brightpoint and
its Subsidiaries provided that such source is not bound by a confidentiality
agreement known to such Agent or such Lender; provided, however, that any Agent
and any Lender may disclose such information (A) at the request or pursuant to
any requirement of any Governmental Authority to which such Agent or such
Lender is subject or in connection with an examination of such Agent or such
Lender by any such Governmental Authority; (B) pursuant to subpoena or other
court process; (C) when required to do so in accordance with the provisions of
any applicable requirement of law; (D) to the extent reasonably required in
connection with any litigation or proceeding to which any Agent, any Lender or
their respective affiliates may be party; (E) to the extent reasonably required
in connection with the exercise of any remedy hereunder or under any other Loan
Document; (F) to such Agent's or such Lender's independent auditors,
accountants, attorneys and other professional advisors; (G) to any affiliate of
the Agent or such Lender, or to any prospective Transferee, provided that such
affiliate or prospective Transferee agrees to keep such information
confidential to the same extent required of the Agents and the Lenders
hereunder; and (H) as expressly permitted under the terms of any other document
or agreement regarding confidentiality to which Brightpoint or any of its
Subsidiaries is party or is deemed party with such Agent or such Lender. In
any event, the Agents and the Lenders may make disclosure reasonably required
by a prospective Transferee in connection with the contemplated participation
or assignment or as required or requested by any Governmental Authority or
representative thereof or pursuant to legal process and shall require any such
Transferee or prospective Transferee to agree (and require any of its
Transferees to agree) to comply with this Section 13.4. In no event shall any
Agent or any Lender be obligated or required to return any materials furnished
by the Borrowers or Guarantors; provided, however, each prospective Transferee
shall be required to agree that if it does not become a participant or assignee
it shall return all materials furnished to it by or on behalf of the Borrowers
or Guarantors in connection with this Agreement.
13.5 Dissemination of Information. Each of the Borrowers and Guarantors
authorizes each Lender to disclose to any Participant or Purchaser or any other
Person acquiring an interest in the Loan Documents by operation of law (each a
"TRANSFEREE") and any prospective Transferee any and all
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information in such Lender's possession concerning Brightpoint and its
Subsidiaries and the Collateral; provided that prior to any such disclosure,
such prospective Transferee shall agree to preserve in accordance with Section
13.4 the confidentiality of any confidential information described therein.
ARTICLE XIV: NOTICES
14.1 Giving Notice. Except as otherwise permitted by Section 2.14 or the
Alternate Currency Addenda with respect to borrowing notices, all notices and
other communications provided to any party hereto under this Agreement or any
other Loan Documents shall be in writing or by telex or by facsimile and
addressed or delivered to such party, with respect to any Borrower or any
Guarantor, in care of Brightpoint at the address set forth below, and for any
other party at its address set forth below its signature hereto or at such
other address as may be designated by such party in a notice to the other
parties. Any notice, if mailed and properly addressed with postage prepaid,
shall be deemed given when received; any notice, if transmitted by telex or
facsimile, shall be deemed given when transmitted (answerback confirmed in the
case of telexes); or, if by courier, one (1) Business Day after deposit with a
reputable overnight carrier services, with all charges paid. Notices to any
Borrower or any Guarantor shall be addressed as follows:
Brightpoint, Inc.
6402 Corporate Drive
Indianapolis, IN 46278
Attention: John P. Delaney and Steven E. Fivel
Phone: 317/297-6100
Facsimile: 317/387-5479
14.2 Change of Address. Any of the Borrowers, Guarantors, the
Administrative Agent and any Lender may each change the address for service of
notice upon it by a notice in writing to the other parties hereto.
ARTICLE XV: COUNTERPARTS
This Agreement and any amendments, waivers, consents or supplements may be
executed in any number of counterparts, all of which taken together shall
constitute one agreement, and any of the parties hereto may execute this
Agreement by signing any such counterpart. Delivery of an executed signature
page hereof or thereof by facsimile transmission shall be effective as delivery
of a manually signed counterpart. This Agreement shall be effective when it
has been executed by the Borrowers, the Guarantors, the Administrative Agent
and the Lenders and each party as notified the Administrative Agent by telex or
telephone, that it has taken such action.
- 107 -
<PAGE> 117
IN WITNESS WHEREOF, the Borrowers, the Guarantors, the Lenders, the
Administrative Agent and the Syndication Agent have executed this Agreement as
of the date first above written.
BRIGHTPOINT, INC.
as a Borrower and Guarantor
By:___________________________
Name:
Title:
BRIGHTPOINT INTERNATIONAL LTD.
as a Borrower and Guarantor
By:___________________________
Name:
Title:
BRIGHTPOINT (UK) LIMITED,
as a Subsidiary Borrower and Guarantor
By:___________________________
Name:
Title:
BRIGHTPOINT AUSTRALIA PTY. LIMITED,
as a Subsidiary Borrower and Guarantor
By:___________________________
Name:
Title:
BRIGHTPOINT CHINA LIMITED,
as a Subsidiary Borrower and Guarantor
By:___________________________
Name:
Title:
S-1
<PAGE> 118
BRIGHTPOINT EMA LIMITED,
as a Guarantor
By:___________________________
Name:
Title:
BRIGHTPOINT AUSTRALASIA PTY. LIMITED,
as a Guarantor
By:___________________________
Name:
Title:
BRIGHTPOINT INTERNATIONAL (ASIA PACIFIC) PTE
LTD., as a Guarantor
By:___________________________
Name:
Title:
S-2
<PAGE> 119
THE FIRST NATIONAL BANK OF CHICAGO
as the Administrative Agent, an Issuing Lender, the
Swing Line Lender, an Alternate Currency Agent
and as a Lender
By:___________________________
Name:
Title:
Notice Address:
One First National Plaza
10th Floor
Chicago, Illinois 60670
Attention: Cory S. Olson
Telephone No.: 312/732-1706
Facsimile No.: 312/732-2991
Payment Address for Dollars: Same as above.
Eurocurrency Payment Address: Same as above.
S-3
<PAGE> 120
BANK ONE, INDIANA, NATIONAL ASSOCIATION
as the Syndication Agent, an Issuing Lender and as a
Lender
By:___________________________
Name:
Title:
Notice Address:
111 Monument Circle
Suite 1921
Indianapolis, IN 46204
Attention: Brian D. Smith
Telephone No.: (317) 321-8354
Facsimile No.: (317) 321-8079
Payment Address for Dollars:
ABA #074000010
Account Name: Brightpoint
Account No.: 053 1510100263
Attention: Sharon Abell
Eurocurrency Payment Address:
Same as Above
S-4
<PAGE> 121
BANK BOSTON, N.A.
as a Lender
By:___________________________
Name:
Title:
Notice Address:
100 Federal Street
Boston, MA 02110
Attention: Lisa Marshall
Telephone No.: (617) 434-4117
Facsimile No.: (617) 434-6685
Payment Address for Dollars:
ABA #: 011 000390
Ref: Brightpoint
Attention: Comm. Loan Svcs. Adm - $43
Eurocurrency Payment Address:
Same as Above
S-5
<PAGE> 122
CORESTATES BANK, N.A.
as a Lender
By:___________________________
Name:
Title:
Notice Address:
1339 Chestnut Street
Philadelphia, PA 19103-7618
Attention: Farina Rashid
Telephone No.: (215) 973-2193
Facsimile No.: (215) 973-6745
Payment Address for Dollars:
Same as Above
Eurocurrency Payment Address:
Same as Above
S-6
<PAGE> 123
SUNTRUST BANK OF CENTRAL FLORIDA,
NATIONAL ASSOCIATION
as a Lender
By:___________________________
Name:
Title:
Notice Address:
200 S. Orange Avenue
Orlando, FL 32801
Attention: Christopher Black
Telephone No.: (407) 237-2467
Facsimile No.: (407) 237-6894
Payment Address for Dollars:
ABA #: 063 102152
Commercial Loans Operations
Account #: 9215004320
For further credit to Brightpoint
Ref: 1045425802
Eurocurrency Payment Address:
Same as Above
S-7
<PAGE> 124
THE BANK OF NOVA SCOTIA
as a Lender
By:___________________________
Name:
Title:
Notice Address:
600 Peachtree Street N.E.
Suite 2700
Atlanta, GA 30308
Attention: Vicki Gibson
Telephone No.: (404) 877-1557
Facsimile No.: (404) 888-8998
Payment Address for Dollars:
ABA #: 260 02532
Credit Bank of Nova Scotia, Atlanta
Account: 0606634
Ref: Brightpoint
Eurocurrency Payment Address:
Same as Above
S-8
<PAGE> 125
CREDIT LYONNAIS CHICAGO BRANCH
as a Lender
By:___________________________
Name:
Title:
Notice Address:
227 West Monroe Street
Suite 3800
Chicago, IL 60606
Attention: Michael Lord
Telephone No.: (312) 220-7318
Facsimile No.: (312) 641-0527
Payment Address for Dollars:
FED FUNDS - CREDIT LYONNAIS NEW YORK
ABA# : 0260-0807-3
For Account of Credit Lyonnais Chicago Branch
Account: 01.00688.0001.00
Ref: Brightpoint
Eurocurrency Payment Address:
Same as Above
S-9
<PAGE> 126
THE BANK OF TOKYO-MITSUBISHI, LTD.
CHICAGO BRANCH
as a Lender
By:___________________________
Name:
Title:
Notice Address:
227 West Monroe Street
Suite 2300
Chicago, IL 60606
Attention: Christopher Jones
Telephone No.: (312) 696-4656
Facsimile No.: (312) 696-4585
Payment Address for Dollars:
ABA #: 071002341
Account: Bank of Tokyo-Mitsubishi Ltd. Chicago
Ref: Brightpoint
Eurocurrency Payment Address:
Same as Above
S-10
<PAGE> 127
THE FUJI BANK, LIMITED
as a Lender
By:___________________________
Name:
Title:
Notice Address:
225 West Wacker Drive
Suite 2000
Chicago, IL 60602
Attention: James R. Fayen
Telephone No.: (312) 621-0397
Facsimile No.: (312) 621-0539
Payment Address for Dollars:
The First National Bank of Chicago
071-000-013
Account: The Fuji Bank Limited Chicago Branch
Account No.: 15-04797
Ref: Brightpoint
Attention: Loan Administrator
Eurocurrency Payment Address:
Same as Above
S-11
<PAGE> 128
EXHIBIT A
TO
MULTICURRENCY CREDIT AGREEMENT
Form of Alternate Currency Addendum
Attached
<PAGE> 129
EXHIBIT B
TO
MULTICURRENCY CREDIT AGREEMENT
Form of Assumption Agreement
__________________,______
To the Lenders party to the
Credit Agreement referred
to below
Ladies and Gentlemen:
Reference is made to the Multicurrency Credit Agreement dated as of June
__, 1997 initially among Brightpoint, Inc., Brightpoint International Ltd.,
certain borrowing subsidiaries party thereto from time to time, certain
guarantors party thereto from time to time, the institutions from time to time
party thereto as Lenders (the "Lenders"), The First National Bank of Chicago,
as administrative agent for the Lenders (the "Administrative Agent") and Bank
One, Indiana, National Association, as syndication agent for the Lenders (as
amended and in effect from time to time, the "Credit Agreement"). Terms
defined in the Credit Agreement and used herein are used herein as defined
therein.
The undersigned, [ ] (the "Subsidiary"), a
[corporation] organized under the laws of [ ],
wishes to become a Subsidiary Borrower" and a "Guarantor" under the Credit
Agreement, and accordingly hereby agrees that from the date hereof it shall
become a "Subsidiary Borrower" and a "Guarantor" under the Credit Agreement and
agrees that from the date hereof and until the payment in full of all of the
Secured Obligations, it shall perform, comply with and be bound by each of the
provisions of the Credit Agreement which are stated to apply to a "Borrower," a
"Subsidiary Borrower" and a "Guarantor." Without limiting the generality of
the foregoing, the Subsidiary hereby represents and warrants that: (i) each of
the representations and warranties set forth in the Credit Agreement is hereby
made by such Subsidiary on and as of the date hereof as if made on and as of
the date hereof and as if such Subsidiary is a "Borrower" and this Assumption
Letter is the "Agreement" referenced therein, (ii) it has heretofore received a
true and correct copy of the Credit Agreement (including any modifications
thereof or supplements or waivers thereto) as in effect on the date hereof,
(iii) each of the representations and warranties set forth in Article V is
hereby made by such Subsidiary on and as of the date hereof, and (iv) such
Subsidiary expressly assumes all of the obligations and liabilities of a
"Guarantor" pursuant to Article IX. In addition, the Subsidiary hereby
authorizes Brightpoint to act on its behalf as and to the extent provided for
in Article II of the Credit Agreement in connection with the selection of Types
and Interest Periods for Advances and with the making of Swing Loans and the
issuance of Letters of Credit, and the conversion and continuation of Advances.
<PAGE> 130
GOVERNING LAW. ANY DISPUTE BETWEEN ANY AGENT OR ANY HOLDER OF SECURED
OBLIGATIONS AND BRIGHTPOINT OR ANY SUBSIDIARY BORROWER OR GUARANTOR ARISING OUT
OF OR RELATED TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH
THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE,
SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT REGARD TO THE
CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF ILLINOIS.
-2-
<PAGE> 131
IN WITNESS WHEREOF, the Subsidiary has duly executed and delivered this
Assumption Letter as of the date and year first above written.
[______________________________]
By:
------------------------------
Name:
Title:
Address for Notices under
the Credit Agreement
__________________________
__________________________
__________________________
Attn: _____________________
Telephone No. ______________
Facsimile No. _______________
Consented to:
BRIGHTPOINT, INC.
By:
--------------------------------------
Name:
Title:
- 3 -
<PAGE> 132
EXHIBIT C
TO
MULTICURRENCY CREDIT AGREEMENT
Form Of Compliance Certificate
Pursuant to [Section 4.2] [Section 6.1(A)(iv)] of the Credit Agreement (as
amended, modified, restated or supplemented from time to time, the "Credit
Agreement"), dated as of June __, 1997, by and among Brightpoint, Inc.
("Brightpoint"), Brightpoint International Ltd., certain borrowing subsidiaries
from time to time parties thereto, certain guarantors from time to time parties
thereto, the financial institutions from time to time party thereto (the
"Lenders"), The First National Bank of Chicago, as Administrative Agent and
Bank One, Indiana, National Association, as Syndication Agent, Brightpoint,
through its ___________________________, hereby delivers to the Administrative
Agent[, together with the financial statements being delivered to the
Administrative Agent pursuant to Section 6.1(A) of the Credit Agreement,] this
Compliance Certificate (the "Certificate") [for the accounting period from
____________, 19__ to ___________, 19__]. Capitalized terms used herein shall
have the meanings set forth in the Credit Agreement. Subsection references
herein relate to subsections of the Credit Agreement.
I. FINANCIAL COVENANTS
A. MINIMUM FIXED CHARGE COVERAGE RATIO (Section 6.4(B))
The ratio of (1) Net Income + taxes + Interest Expense + Rentals to
(2) Interest Expense + Rentals + Scheduled amortization of
Indebtedness of Brightpoint and its Subsidiaries for the period
from _______ to ________
___ to 1.0
B. MINIMUM CONSOLIDATED BOOK EQUITY (Section 6.4(C))
1. The lowest Consolidated Book Equity for the fiscal quarter
ended ____________
$____________
2. Borrower's calculation of minimum required:
(a) $84,000,000
(b) 50% of Net Income for each quarter
after 12/31/96 = $________
(c) 75% of Capital Stock proceeds = $________
(d) Minimum required (sum of (a) - (c)) = $_________
<PAGE> 133
C. MAXIMUM LEVERAGE RATIO (Section 6.4(D))
1. Indebtedness of Brightpoint and its Subsidiaries $___________
2. Capitalized Lease Obligations $___________
3. EBITDA
(a) Net Income $__________
(b) Taxes $__________
(c) Interest Expense $__________
(d) Depreciation Expense $__________
(e) Amortization Expense $__________
(f) Other non-cash charges $__________
(g) Minority interests $__________
(h) Interest Income ($__________)
(i) Net Extraordinary Gains ($__________) = $___________
4. Leverage Ratio (Sum to (1) + (2) to (3)) ___ to 1.0
D. CURRENT ASSET COVERAGE RATIO (Section 6.4E)
The ratio of (1) Receivables (other than from Consolidated
Subsidiaries) + domestic Inventory + domestic cash and Cash
Equivalents to (2) Indebtedness of Brightpoint and its Subsidiaries
for borrowed money + Capitalized Lease Obligations ___ to 1.0
E. CAPITAL EXPENDITURES (Section 6.4(F))
Amount of any Capital Expenditures made or incurred
during the period from ______ to ______.
$__________
II. OTHER COVENANTS
A. NON-BORROWER SUBSIDIARY INVESTMENT
1. Post-closing intercompany loans to any
Non-Borrower Subsidiary $__________
2. Post-closing Investments in Non-Borrower
Subsidiaries $__________
3. Post-closing dividends, distributions or
other Restricted Junior Payments to
Non-Borrower Subsidiaries $__________
-2-
<PAGE> 134
4. Net benefit of post-closing non-arm's-length
transactions $__________
B. INVESTMENTS - If any, detail on attached schedule.
C. RESTRICTED JUNIOR PAYMENTS - If any, detail on attached schedule.
- 3 -
<PAGE> 135
Brightpoint hereby certifies, through its _________________, that the
information set forth above is accurate as of _______________, ____, to the
best of such officer's knowledge, after diligent inquiry, and that the
financial statements delivered herewith present fairly in all material respects
the financial position of Brightpoint and its Subsidiaries at the dates
indicated and the results of their operations and their cash flows for the
periods indicated in conformity with Agreement Accounting Principles,
consistently applied.
Dated: ______________, ____
BRIGHTPOINT, INC.
By:__________________________
Name:
Title:
- 4 -
<PAGE> 136
EXHIBIT D
TO
MULTICURRENCY CREDIT AGREEMENT
Form of Guarantor Assumption Letter
____________,_____
To the Lenders party to the
Credit Agreement referred
to below
Ladies and Gentlemen:
Reference is made to the Multicurrency Credit Agreement dated as of June
__, 1997 initially among Brightpoint, Inc., Brightpoint International Ltd.,
certain borrowing subsidiaries party thereto from time to time, certain
guarantors party thereto from time to time, the institutions from time to time
party thereto as Lenders (the "Lenders"), The First National Bank of Chicago,
as administrative agent for the Lenders (the "Administrative Agent") and Bank
One, Indiana, National Association, as syndication agent for the Lenders (as
amended and in effect from time to time, the "Credit Agreement"). Terms
defined in the Credit Agreement and used herein are used herein as defined
therein.
The undersigned, [___________________] (the "Subsidiary"), a
[corporation] organized under the laws of [___________________________],
hereby agrees that from the date hereof it shall become a "Subsidiary Borrower"
and a "Guarantor" under the Credit Agreement and agrees that from the date
hereof and until the payment in full of all of the Secured Obligations, it
shall perform, comply with and be bound by each of the provisions of the Credit
Agreement which are stated to apply to a "Subsidiary Borrower and a
"Guarantor." Without limiting the generality of the foregoing, the Subsidiary
hereby represents and warrants that: (i) each of the representations and
warranties set forth in the Credit Agreement is hereby made by such Subsidiary
on and as of the date hereof as if made on and as of the date hereof and as if
such Subsidiary is a "Borrower" and this Assumption Letter is the "Agreement"
referenced therein, (ii) it has heretofore received a true and correct copy of
the Credit Agreement (including any modifications thereof or supplements or
waivers thereto) as in effect on the date hereof, (iii) each of the
representations and warranties set forth in Article V is hereby made by such
Subsidiary on and as of the date hereof, and (iv) such Subsidiary expressly
assumes all of the obligations and liabilities of a "Guarantor" pursuant to
Article IX.
GOVERNING LAW. ANY DISPUTE BETWEEN ANY AGENT OR ANY HOLDER OF SECURED
OBLIGATIONS AND BRIGHTPOINT OR ANY SUBSIDIARY BORROWER OR GUARANTOR ARISING OUT
OF OR RELATED TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH
THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE,
SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT REGARD TO THE
CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF ILLINOIS.
<PAGE> 137
IN WITNESS WHEREOF, the Subsidiary has duly executed and delivered this
Assumption Letter as of the date and year first above written.
[______________________]
By:
-------------------------
Name:
Title:
Address for Notices under
the Credit Agreement
Consented to:
BRIGHTPOINT, INC.
By:
-------------------------------
Name:
Title:
- 2 -
<PAGE> 138
EXHIBIT E
TO
MULTICURRENCY CREDIT AGREEMENT
Commitments
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
ALTERNATE CURRENCY ALTERNATE CURRENCY ALTERNATE CURRENCY
REVOLVING LOAN LOAN COMMITMENT: LOAN COMMITMENT: LOAN COMMITMENT:
LENDER COMMITMENT HONG KONG AUSTRALIA U.K. TOTAL COMMITMENT
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
First Chicago-
Admin Agt. -- $15 $15 -- $30
- -------------------------------------------------------------------------------------------------------------------------
Bank One - Synd. Agt $30 -- -- -- $30
- -------------------------------------------------------------------------------------------------------------------------
Corestates $7 -- -- $15 $22
- -------------------------------------------------------------------------------------------------------------------------
Sun Trust Bank $22 -- -- -- $22
- -------------------------------------------------------------------------------------------------------------------------
Bank of Nova Scotia $22 -- -- -- $22
- -------------------------------------------------------------------------------------------------------------------------
Bank of
Tokyo-Mitsubishi $22 -- -- -- $22
- -------------------------------------------------------------------------------------------------------------------------
Credit Lyonnais $22 -- -- -- $22
- -------------------------------------------------------------------------------------------------------------------------
Bank of Boston $15 -- -- -- $15
- -------------------------------------------------------------------------------------------------------------------------
Fuji Bank $15 -- -- -- $15
- -------------------------------------------------------------------------------------------------------------------------
Totals $155 $15 $15 $15 $200
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 139
EXHIBIT F
TO
MULTICURRENCY CREDIT AGREEMENT
Form of Master Revolving Note
MASTER REVOLVING LOAN NOTE
U.S. $155,000,000 [Chicago, Illinois]
[Date]
FOR VALUE RECEIVED, the undersigned, [INSERT NAME OF APPLICABLE BORROWER],
a Delaware corporation (the "Borrower"), HEREBY UNCONDITIONALLY PROMISES TO PAY
to the order of THE FIRST NATIONAL BANK OF CHICAGO, in its capacity as
administrative agent (the "Administrative Agent") for itself and the other
"Lenders" (as defined in the Credit Agreement referred to below) the principal
sum of ONE HUNDRED AND FIFTY FIVE MILLION AND NO/100 DOLLARS ($155,000,000),
or, if less, the aggregate unpaid amount of all "Revolving Loans" (as defined
in the Credit Agreement) made by the Lenders to such Borrower pursuant to the
"Credit Agreement" (as defined below), on the "Termination Date" (as defined in
the Credit Agreement) or on such earlier date as may be required by the terms
of the Credit Agreement. Capitalized terms used herein and not otherwise
defined herein are as defined in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount of
each Revolving Loan made to it from the date of such Revolving Loan until such
principal amount is paid in full at a rate or rates per annum determined in
accordance with the terms of the Credit Agreement. Interest hereunder is due
and payable at such times and on such dates as set forth in the Credit
Agreement.
Both principal and interest are payable in lawful money of the United
States of America if the applicable Revolving Loan was made in or converted to
Dollars or in the applicable Agreed Currency if made in an Agreed Currency to
the Administrative Agent, to such account as the Administrative Agent may
designate, in same day funds. At the time of each Revolving Loan, and upon
each payment or prepayment of principal of each Revolving Loan, the
Administrative Agent shall make a notation either on the schedule attached
hereto and made a part hereof, or in the Administrative Agent's own books and
records, in each case specifying the amount of such Revolving Loan, the
respective Interest Period thereof, in the case of Eurocurrency Rate Loans, the
applicable currency, in the case of Eurocurrency Rate Loans, or the amount of
principal paid or prepaid with respect to such Revolving Loan, as the case may
be; provided that the failure of the Administrative Agent to make any such
recordation or notation shall not affect the Obligations of the Borrower
hereunder or under the Credit Agreement.
This Master Revolving Loan Note is the master promissory note and one of
the "Revolving Notes" referred to in, and is entitled to the benefits of, the
Multicurrency Credit Agreement dated as of June __, 1997 (as amended, restated,
supplemented or modified from time to time, the "Credit Agreement") among
Brightpoint, Inc., Brightpoint International Ltd., certain
subsidiary borrowers from time to time parties thereto, certain guarantors from
time to time parties thereto, the financial institutions from time to time
parties thereto (such financial institutions being herein referred to
collectively as the "Lenders"), the Administrative Agent and
<PAGE> 140
Bank One, Indiana, National Association, as syndication agent. The Credit
Agreement, among other things, (i) provides for the making of Revolving Loans
by the Lenders to the Borrower and [Brightpoint] [BPI] under the Credit
Agreement from time to time in an aggregate amount not to exceed at any time
outstanding the U.S. Dollar amount first above mentioned, the indebtedness of
the Borrower resulting from each such Revolving Loan to it being evidenced by
this Master Revolving Loan Note, and (ii) contains provisions for acceleration
of the maturity hereof upon the happening of certain stated events and also for
prepayments of the principal hereof prior to the maturity hereof upon the terms
and conditions therein specified.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by the Borrower.
Whenever in this Master Revolving Loan Note reference is made to the
Administrative Agent, the Syndication Agent, any Lender or the Borrower, such
reference shall be deemed to include, as applicable, a reference to their
respective successors and assigns. The provisions of this Master Revolving
Loan Note shall be binding upon and shall inure to the benefit of said
successors and assigns. The Borrower's successors and assigns shall include,
without limitation, a receiver, trustee or debtor in possession of or for the
Borrower.
This Master Revolving Loan Note shall be interpreted, and the rights and
liabilities of the parties hereto determined, in accordance with the laws of
the State of Illinois.
[Name of Applicable Borrower]
By:_______________________________
Name:
Title:
- 2 -
<PAGE> 141
SCHEDULE OF REVOLVING LOANS AND PAYMENTS OR PREPAYMENTS
<TABLE>
<CAPTION>
Amount of
Principal Unpaid
Amount of Type of Interest Paid or Principal Notation
Date Loan Loan Period/Rate Currency Prepaid Balance Made By
- ---- --------- ------- ------------ -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 142
EXHIBIT G
TO
MULTICURRENCY CREDIT AGREEMENT
Form of Individual Revolving Note
REVOLVING LOAN NOTE
U.S. $_________ [Chicago, Illinois]
[Date]
FOR VALUE RECEIVED, the undersigned, [INSERT NAME OF APPLICABLE BORROWER],
a [Delaware corporation [insert alternative organizational information] (the
"Borrower"), HEREBY UNCONDITIONALLY PROMISES TO PAY to the order of [INSERT
NAME OF LENDER] (the "Lender") the principal sum of [_____________] AND NO/100
DOLLARS ($[____]), or, if less, the aggregate unpaid amount of all "Revolving
Loans" (as defined in the Credit Agreement referred to below) made by the
Lender to such Borrower pursuant to the "Credit Agreement" (as defined below),
on the "Termination Date" (as defined in the Credit Agreement) or on such
earlier date as may be required by the terms of the Credit Agreement.
Capitalized terms used herein and not otherwise defined herein are as defined
in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount of
each Revolving Loan made to it from the date of such Revolving Loan until such
principal amount is paid in full at a rate or rates per annum determined in
accordance with the terms of the Credit Agreement. Interest hereunder is due
and payable at such times and on such dates as set forth in the Credit
Agreement.
Both principal and interest are payable in lawful money of the United
States of America if the applicable Revolving Loan was made in or converted to
Dollars or in the applicable Agreed Currency if made in an Agreed Currency to
the Administrative Agent (as defined below), to such account as the
Administrative Agent may designate, in same day funds. At the time of each
Revolving Loan, and upon each payment or prepayment of principal of each
Revolving Loan, the Lender shall make a notation either on the schedule
attached hereto and made a part hereof, or in such Lender's own books and
records, in each case specifying the amount of such Revolving Loan, the
respective Interest Period thereof, in the case of Eurocurrency Rate Loans, the
applicable currency, in the case of Eurocurrency Rate Loans or the amount of
principal paid or prepaid with respect to such Revolving Loan, as the case may
be; provided that the failure of the Lender to make any such recordation or
notation shall not affect the Obligations of the Borrower hereunder or under
the Credit Agreement.
This Revolving Loan Note is one of the "Revolving Notes" referred to in,
and is entitled to the benefits of, the Multicurrency Credit Agreement dated as
of June __, 1997 (as amended, restated, supplemented or modified from time to
time, the "Credit Agreement") among
<PAGE> 143
Brightpoint, Inc., Brightpoint International Ltd., certain subsidiary
borrowers from time to time parties thereto, certain guarantors from time to
time parties thereto, the financial institutions from time to time parties
thereto (such financial institutions being herein referred to collectively as
the "Lenders"), The First National Bank of Chicago, as the Administrative Agent
and Bank One, Indiana, National Association, as syndication agent. The Credit
Agreement, among other things, (i) provides for the making of Revolving Loans by
the Lender to the Borrower and the other Borrowers under the Credit Agreement
from time to time in an aggregate amount not to exceed at any time outstanding
the U.S. Dollar amount first above mentioned, the indebtedness of the Borrower
resulting from each such Revolving Loan to it being evidenced by this Revolving
Loan Note, and (ii) contains provisions for acceleration of the maturity hereof
upon the happening of certain stated events and also for prepayments of the
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by the Borrower.
Whenever in this Revolving Loan Note reference is made to the
Administrative Agent, the Syndication Agent, the Lender or the Borrower, such
reference shall be deemed to include, as applicable, a reference to their
respective successors and assigns. The provisions of this Revolving Loan Note
shall be binding upon and shall inure to the benefit of said successors and
assigns. The Borrower's successors and assigns shall include, without
limitation, a receiver, trustee or debtor in possession of or for the Borrower.
This Revolving Loan Note shall be interpreted, and the rights and
liabilities of the parties hereto determined, in accordance with the laws of
the State of Illinois.
[Name of Applicable Borrower]
By: _____________________________________
Name:
Title:
- 2 -
<PAGE> 144
SCHEDULE OF REVOLVING LOANS AND PAYMENTS OR PREPAYMENTS
<TABLE>
<CAPTION>
Amount of
Principal Unpaid
Amount of Type of Interest Paid or Principal Notation
Date Loan Loan Period/Rate Currency Prepaid Balance Made By
- ---- --------- ------- ----------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 145
EXHIBIT H
TO
MULTICURRENCY CREDIT AGREEMENT
Form of Swing Line Loan Note
SWING LINE LOAN NOTE
U.S. $5,000,000.00 Chicago, Illinois
[Date]
FOR VALUE RECEIVED, the undersigned, BRIGHTPOINT, INC., a Delaware
corporation (the "Borrower"), HEREBY UNCONDITIONALLY PROMISES TO PAY to the
order of THE FIRST NATIONAL BANK OF CHICAGO (the "Lender") the principal sum of
FIVE MILLION AND NO/100 DOLLARS ($5,000,000), or, if less, the aggregate unpaid
amount of all "Swing Line Loans" (as defined in the Credit Agreement referred
to below) made by the Lender to the Borrower pursuant to Section 2.2 of the
"Credit Agreement" (as defined below) on or before the fifth Business Day after
the making of such Swing Line Loan and in any event on the "Termination Date"
(as defined in the Credit Agreement referred to below). Capitalized terms used
herein and not otherwise defined herein are as defined in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount of
the Lender's Swing Line Loans from the date of such Swing Line Loans until such
principal amount is paid in full at a rate or rates per annum determined in
accordance with the terms of the Credit Agreement. Interest hereunder is due
and payable at such times and on such dates as set forth in the Credit
Agreement.
Both principal and interest are payable in lawful money of the United
States of America, to such account as the Administrative Agent may designate,
in same day funds. At the time of each payment or prepayment of principal of
the Lender's Swing Line Loans, the Lender shall make a notation either on the
schedule attached hereto and made a part hereof, or in such Lender's own books
and records, in each case specifying the amount of principal paid or prepaid
with respect to such Swing Line Loans; provided that the failure of the Lender
to make any such recordation or notation shall not affect the Obligations of
the Borrower hereunder or under the Credit Agreement.
This Swing Line Loan Note is the "Swing Line Loan Note" referred to in,
and is entitled to the benefits of, the Multicurrency Credit Agreement dated as
of June __, 1997 (as amended, restated, supplemented or modified from time to
time, the "Credit Agreement") among Brightpoint, Inc., Brightpoint
International, Ltd., certain borrowing subsidiaries from time to time parties
thereto, certain guarantors from time to time parties thereto, the financial
institutions from time to time parties thereto (such financial institutions
being herein referred to collectively as the "Lenders"), The First National Bank
of Chicago, as the Administrative Agent and Bank One, Indiana, National
Association, as syndication agent. The Credit Agreement, among other things,
(i) provides for the making of the Lender's Swing Line Loans, the indebtedness
of the Borrower resulting therefrom being evidenced by this Swing Line Loan
Note, and (ii) contains
<PAGE> 146
provisions for acceleration of the maturity hereof upon the happening of
certain stated events and also for prepayments of the principal hereof prior to
the maturity hereof upon the terms and conditions therein specified.
Demand, presentment, protest and notice of nonpayment and protest are
hereby waived by the Borrower.
Whenever in this Swing Line Loan Note reference is made to the
Administrative Agent, the Syndication Agent, the Lender or the Borrower, such
reference shall be deemed to include, as applicable, a reference to their
respective successors and assigns. The provisions of this Swing Line Loan Note
shall be binding upon and shall inure to the benefit of said successors and
assigns. The Borrower's successors and assigns shall include, without
limitation, a receiver, trustee or debtor in possession of or for the Borrower.
This Swing Line Loan Note shall be interpreted, and the rights and
liabilities of the parties hereto determined, in accordance with the laws (as
distinguished from the conflicts of law provisions) of the State of Illinois.
BRIGHTPOINT, INC.
By:______________________________
Name:
Title:
- 2 -
<PAGE> 147
EXHIBIT I
TO
MULTICURRENCY CREDIT AGREEMENT
Form of Assignment Agreement
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "ASSIGNMENT AGREEMENT") between __________
(the "ASSIGNOR") and ________________ (the "ASSIGNEE") is
dated as of _______________, _____. The parties hereto agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Multicurrency
Credit Agreement (which, as it may be amended, modified, supplemented,
restated, renewed or extended from time to time is herein called (the "CREDIT
AGREEMENT") described in Item 1 of Schedule 1 attached hereto ("SCHEDULE 1").
Capitalized terms used herein and not otherwise defined herein shall have the
meanings attributed to them in the Credit Agreement.
2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to
the Assignee, and the Assignee hereby purchases and assumes from the Assignor,
an interest in and to the Assignor's rights and obligations under the Credit
Agreement such that after giving effect to such assignment the Assignee shall
have purchased pursuant to this Assignment Agreement the percentage interest
specified in Item 3 of Schedule 1 of all outstanding rights and obligations
under the Credit Agreement relating to the facilities listed in Item 3 of
Schedule 1 and the other Loan Documents. The aggregate Commitment (or Loans,
if the applicable Commitment has been terminated) purchased by the Assignee
hereunder is set forth in Item 4 of Schedule 1.
3. EFFECTIVE DATE. The effective date of this Assignment Agreement (the
"EFFECTIVE DATE") shall be the later of the date specified in Item 5 of
Schedule 1 or two Business Days (or such shorter period agreed to by the
Administrative Agent) after a Notice of Assignment substantially in the form of
Attachment I attached hereto has been delivered to the Administrative Agent.
Such Notice of Assignment must include any consents required to be delivered to
the Administrative Agent by Section 13.3(A) of the Credit Agreement. In no
event will the Effective Date occur if the payments required to be made by the
Assignee to the Assignor on the Effective Date under Sections 4 and 5 hereof
are not made on the proposed Effective Date. The Assignor will notify the
Assignee of the proposed Effective Date no later than the Business Day prior to
the proposed Effective Date. As of the Effective Date, (i) the Assignee shall
have the rights and obligations of a Lender under the Loan Documents with
respect to the rights and obligations assigned to the Assignee hereunder and
(ii) the Assignor shall relinquish its rights and be released from its
corresponding obligations under the Loan Documents with respect to the rights
and obligations assigned to the Assignee hereunder.
<PAGE> 148
4. PAYMENTS OBLIGATIONS. On and after the Effective Date, the
Assignee shall be entitled to receive from the Administrative Agent all
payments of principal, interest and fees with respect to the interest assigned
hereby. The Assignee shall advance funds directly to the Administrative Agent
with respect to all Loans and reimbursement payments made on or after the
Effective Date with respect to the interest assigned hereby. In consideration
for the sale and assignment of Loans hereunder, (i) the Assignee shall pay the
Assignor, on the Effective Date, an amount equal to the principal amount of the
portion of all Floating Rate Loans assigned to the Assignee hereunder and (ii)
with respect to each Eurocurrency Rate Loan made by the Assignor and assigned
to the Assignee hereunder which is outstanding on the Effective Date, (a) on
the last day of the Interest Period therefor or (b) on such earlier date agreed
to by the Assignor and the Assignee or (c) on the date on which any such
Eurocurrency Rate Loan either becomes due (by acceleration or otherwise) or is
prepaid (the date as described in the foregoing clauses (a), (b) or (c) being
hereinafter referred to as the "PAYMENT DATE"), the Assignee shall pay the
Assignor an amount equal to the principal amount of the portion of such
Eurocurrency Rate Loan assigned to the Assignee which is outstanding on the
Payment Date. If the Assignor and the Assignee agree that the Payment Date for
such Eurocurrency Rate Loan shall be the Effective Date, they shall agree to
the interest rate applicable to the portion of such Loan assigned hereunder for
the period from the Effective Date to the end of the existing Interest Period
applicable to such Eurocurrency Rate Loan (the "AGREED INTEREST RATE") and any
interest received by the Assignee in excess of the Agreed Interest Rate shall
be remitted to the Assignor. In the event interest for the period from the
Effective Date to but not including the Payment Date is not paid by any
Borrower with respect to any Eurocurrency Rate Loan sold by the Assignor to the
Assignee hereunder, the Assignee shall pay to the Assignor interest for such
period on the portion of such Eurocurrency Rate Loan sold by the Assignor to
the Assignee hereunder at the applicable rate provided by the Credit Agreement.
In the event a prepayment of any Eurocurrency Rate Loan which is existing on
the Payment Date and assigned by the Assignor to the Assignee hereunder occurs
after the Payment Date but before the end of the Interest Period applicable to
such Eurocurrency Rate Loan, the Assignee shall remit to the Assignor the
excess of the prepayment penalty paid with respect to the portion of such
Eurocurrency Rate Loan assigned to the Assignee hereunder over the amount which
would have been paid if such prepayment penalty was calculated based on the
Agreed Interest Rate. The Assignee will also promptly remit to the Assignor
(i) any principal payments received from the Administrative Agent with respect
to Eurocurrency Rate Loans prior to the Payment Date and (ii) any amounts of
interest on Loans and fees received from the Administrative Agent which relate
to the portion of the Loans assigned to the Assignee hereunder for periods
prior to the Effective Date, in the case of Floating Rate Loans, or the Payment
Date, in the case of Eurocurrency Rate Loans, and not previously paid by the
Assignee to the Assignor.] (1) In the event that either party hereto receives
any payment to which the other party hereto is entitled under this Assignment
Agreement, then the party receiving such amount shall promptly remit it to the
other party hereto.
5. FEES PAYABLE BY THE ASSIGNEE. The Assignee shall pay to the Assignor
a fee on each day on which a payment of interest or commitment fees is made
under the Credit
- ------------------------
(1) Each Assignor may insert its standard payment provisions in lieu of the
payment terms included in this Exhibit.
- 2 -
<PAGE> 149
Agreement with respect to the amounts assigned to the Assignee hereunder (other
than a payment of interest or commitment fees for the period prior to the
Effective Date or, in the case of Eurocurrency Rate Loans, the Payment Date,
which the Assignee is obligated to deliver to the Assignor pursuant to Section
4 hereof). The amount of such fee shall be the difference between (i) the
interest or fee, as applicable, paid with respect to the amounts assigned to
the Assignee hereunder and (ii) the interest or fee, as applicable, which would
have been paid with respect to the amounts assigned to the Assignee hereunder
if each interest rate was of 1% less than the interest rate paid by the
Borrowers or if the commitment fee was of 1% less than the commitment fee
paid by the Borrowers, as applicable. In addition, the Assignee agrees to pay
the processing fee required to be paid to the Administrative Agent pursuant to
Section 13.3(B) of the Credit Agreement in connection with this Assignment
Agreement.
6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR'S
LIABILITY. The Assignor represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim created by the Assignor. It is
understood and agreed that the assignment and assumption hereunder are made
without recourse to the Assignor and that the Assignor makes no other
representation or warranty of any kind to the Assignee. Neither the Assignor
nor any of its officers, directors, employees, agents or attorneys shall be
responsible for (i) the due execution, legality, validity, enforceability,
genuineness, sufficiency or collectability of any Loan Document, including
without limitation, documents granting the Assignor and the other Lenders a
security interest in assets of any Borrower or any Guarantor, (ii) any
representation, warranty or statement made in or in connection with any of the
Loan Documents, (iii) the financial condition or creditworthiness of any
Borrower or any Guarantor, (iv) the performance of or compliance with any of
the terms or provisions of any of the Loan Documents, (v) inspecting any of the
property, books or records of any Borrower, (vi) the validity, enforceability,
perfection, priority, condition, value or sufficiency of any collateral
securing or purporting to secure the Loans or (vii) any mistake, error of
judgment, or action taken or omitted to be taken in connection with the Loans
or the Loan Documents.
7. REPRESENTATIONS OF THE ASSIGNEE. The Assignee (i) confirms that it has
received a copy of the Credit Agreement, together with copies of the financial
statements requested by the Assignee and such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into this Assignment Agreement, (ii) agrees that it will, independently
and without reliance upon the Administrative Agent, the Assignor or any other
Lender and based on such documents and information at it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Loan Documents, (iii) appoints and authorizes the
Administrative Agent to take such action as its contractual representative on
its behalf and to exercise such powers under the Loan Documents as are
delegated to the Administrative Agent by the terms thereof, together with such
powers as are reasonably incidental thereto, (iv) agrees that it will perform
in accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender, (v) agrees that
its payment instructions and notice instructions are as set forth in the
attachment to Schedule 1, (vi) confirms that none of the funds, monies,
assets or other consideration being used to make the purchase and assumption
hereunder are "plan
- 3 -
<PAGE> 150
assets" as defined under ERISA and that its rights, benefits and
interests in and under the Loan Documents will not be "plan assets" under
ERISA, [and (viii) attaches the forms prescribed by the Internal Revenue
Service of the United States certifying that the Assignee is entitled to
receive payments under the Loan Documents without deduction or withholding of
any United States federal income taxes].(2)
8. INDEMNITY. The Assignee agrees to indemnify and hold the Assignor
harmless against any and all losses, costs and expenses (including, without
limitation, reasonable attorneys' fees) and liabilities incurred by the
Assignor in connection with or arising in any manner from the Assignee's
non-performance of the obligations assumed under this Assignment Agreement.
9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee shall
have the right pursuant to Section 13.3(A) of the Credit Agreement to assign
the rights which are assigned to the Assignee hereunder to any entity or
person, provided that (i) any such subsequent assignment does not violate any
of the terms and conditions of the Loan Documents or any law, rule, regulation,
order, writ, judgment, injunction or decree and that any consent required under
the terms of the Loan Documents has been obtained and (ii) unless the prior
written consent of the Assignor is obtained, the Assignee is not thereby
released from its obligations to the Assignor hereunder, if any remain
unsatisfied, including, without limitation, its obligations under Sections 4, 5
and 8 hereof.
10. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in the
Aggregate Commitment occurs between the date of this Assignment Agreement and
the Effective Date, the percentage interest specified in Item 3 of Schedule 1
shall remain the same, but the dollar amount purchased shall be recalculated
based on the reduced Aggregate Commitment.
11. ENTIRE AGREEMENT. This Assignment Agreement and the attached Notice
of Assignment embody the entire agreement and understanding between the parties
hereto and supersede all prior agreements and understandings between the
parties hereto relating to the subject matter hereof.
12. GOVERNING LAW. This Assignment Agreement shall be governed by the
internal law, and not the law of conflicts, of the State of Illinois.
13. NOTICES. Notices shall be given under this Assignment Agreement in
the manner set forth in the Credit Agreement. For the purpose hereof, the
addresses of the parties hereto (until notice of a change is delivered) shall
be the address set forth in the attachment to Schedule 1.
- -----------------------
(2) To be inserted if the Assignee is not incorporated under the laws of the
United States, or a state thereof.
- 4 -
<PAGE> 151
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above written.
[NAME OF ASSIGNOR]
By:______________________
Title: __________________
[NAME OF ASSIGNEE]
By:_____________________
Title:__________________
- 5 -
<PAGE> 152
SCHEDULE 1
to Assignment Agreement
1. Description and Date of Credit Agreement:
Multicurrency Credit Agreement dated as of June __, 1997 among
BRIGHTPOINT, INC., BRIGHTPOINT INTERNATIONAL LTD., the subsidiary
borrowers from time to time party thereto, the guarantors from time to
time party thereto, the financial institutions from time to time parties
thereto as lenders, THE FIRST NATIONAL BANK OF CHICAGO, as administrative
agent and BANK ONE, INDIANA, NATIONAL ASSOCIATION, as syndication agent.
(3)
2. Date of Assignment Agreement: _________________,_____
3. Amounts (As of Date of Item 2 above):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
REVOLVING [ALTERNATE SWING
LOAN CURRENCY LINE
FACILITY FACILITY] FACILITY
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL OF
COMMITMENTS(4)
UNDER
THE CREDIT
AGREEMENT $_________ $ __________ $_________
- -----------------------------------------------------------------------------
ASSIGNEE'S
PERCENTAGE(5) OF EACH
FACILITY PURCHASED
UNDER THE
ASSIGNMENT
AGREEMENT __________% __________% __________%
- -----------------------------------------------------------------------------
AMOUNT OF ASSIGNED
SHARE OF EACH
FACILITY UNDER THE
ASSIGNMENT
AGREEMENT $_________ $ __________ $_________
- -----------------------------------------------------------------------------
</TABLE>
4. Assignee's Aggregate
Commitment(6) Purchased Hereunder: $
--------
5. Proposed Effective Date: _________ , _____
Accepted and Agreed:
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: By:
-------------------- ----------------------
Title: Title:
-------------------- ----------------------
- -------------------
(3) Insert description of any subsequent amendments.
(4) Insert amount of Revolving Loans and L/C Obligations if Commitments have
been terminated.
(5) Percentage taken to 10 decimal places.
(6) If Commitment has been terminated, add outstanding Revolving Loans and L/C
Obligations in place of Commitment.
<PAGE> 153
Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT
Attach Assignor's Administrative Information Sheet, which must
include notice address for the Assignor and the Assignee
<PAGE> 154
Attachment I
to Assignment Agreement
NOTICE
OF ASSIGNMENT
__________ , _____
To: BRIGHTPOINT, INC. (7)
[Address]
Telecopy: _______________
Confirmation: ____________
THE FIRST NATIONAL BANK OF CHICAGO,
AS ADMINISTRATIVE AGENT
[Address]
Attn: __________________
Telecopier: ______________
Confirmation: ____________
From: [NAME OF ASSIGNOR] (the "Assignor")
[NAME OF ASSIGNEE] (the "Assignee")
1. We refer to that Credit Agreement (the "Credit Agreement") described in
Item 1 of Schedule 1 attached hereto ("Schedule 1"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings attributed to
them in the Credit Agreement.
2. This Notice of Assignment (this "Notice") is given and delivered to
Brightpoint and the Administrative Agent pursuant to Section 13.3(B) of the
Credit Agreement.
3. The Assignor and the Assignee have entered into an Assignment
Agreement, dated as of , (the "Assignment"), pursuant to which,
among other things, the Assignor has sold, assigned, delegated and transferred
to the Assignee, and the Assignee has purchased, accepted and assumed from the
Assignor the percentage interest specified in Item 3 of Schedule 1 of all
outstandings, rights and obligations under the Credit Agreement relating to the
facilities listed in Item 3 of Schedule 1. The Effective Date of the
Assignment shall be the later of the date specified in Item 5 of Schedule 1 or
two Business Days (or such shorter period as agreed to by the Administrative
Agent) after this Notice of Assignment and any consents and fees required by
Section 13.3 (A) and (B) of the Credit Agreement have been delivered to the
Administrative
_______________________
(7) To be included only if consent must be obtained from Brightpoint pursuant
to Section 13.3(A) of the Credit Agreement.
<PAGE> 155
Agent, provided that the Effective Date shall not occur if any condition
precedent agreed to by the Assignor and the Assignee has not been satisfied.
4. The Assignor and the Assignee hereby give to the Brightpoint and the
Administrative Agent notice of the assignment and delegation referred to
herein. The Assignor will confer with the Administrative Agent before the date
specified in Item 5 of Schedule 1 to determine if the Assignment Agreement will
become effective on such date pursuant to Section 3 hereof, and will confer
with the Administrative Agent to determine the Effective Date pursuant to
Section 3 hereof if it occurs thereafter. The Assignor shall notify the
Administrative Agent if the Assignment Agreement does not become effective on
any proposed Effective Date as a result of the failure to satisfy the
conditions precedent agreed to by the Assignor and the Assignee. At the
request of the Administrative Agent, the Assignor will give the Administrative
Agent written confirmation of the satisfaction of the conditions precedent.
5. The Assignor or the Assignee shall pay to the Administrative Agent on
or before the Effective Date the processing fee of $3,500 required by Section
13.3 (B) of the Credit Agreement.
6. If Notes are outstanding on the Effective Date, the Assignor and the
Assignee request and direct that the Administrative Agent prepare and cause the
Borrowers to execute and deliver new Notes or, as appropriate, replacements
notes, to the Assignor and the Assignee. The Assignor and, if applicable, the
Assignee each agree to deliver to the Administrative Agent the original Notes,
if any, received by it from the Borrowers upon its receipt of a new Notes in
the appropriate amount.
7. The Assignee advises the Administrative Agent that notice and payment
instructions are set forth in the attachment to Schedule 1.
8. The Assignee hereby represents and warrants that none of the funds,
monies, assets or other consideration being used to make the purchase pursuant
to the Assignment are "plan assets" as defined under ERISA and that its rights,
benefits, and interests in and under the Loan Documents will not be "plan
assets" under ERISA.
- 2 -
<PAGE> 156
9. The Assignee authorizes the Administrative Agent to act as its
contractual representative under the Loan Documents in accordance with the
terms thereof. The Assignee acknowledges that the Administrative Agent has no
duty to supply information with respect to the Borrowers or Guarantors or the
Loan Documents to the Assignee until the Assignee becomes a party to the Credit
Agreement.(8)
NAME OF ASSIGNOR NAME OF ASSIGNEE
By: By:
---------------- ----------------
Title: Title:
---------------- ----------------
ACKNOWLEDGED [AND CONSENTED ACKNOWLEDGED [AND
TO] BY THE FIRST NATIONAL BANK CONSENTED TO]
OF CHICAGO, AS ADMINISTRATIVE AGENT BY CTS CORPORATION
By: By:
---------------- ----------------
Title: Title:
---------------- ----------------
[Attach photocopy of Schedule 1 to Assignment]
_________________________
(8) May be eliminated if Assignee is a party to the Credit Agreement prior to
the Effective Date.
- 3 -
<PAGE> 157
EXHIBIT J
TO
MULTICURRENCY CREDIT AGREEMENT
List of Closing Documents
Attached
<PAGE> 158
EXHIBIT K
TO
MULTICURRENCY CREDIT AGREEMENT
Form of Officer's Certificate
OFFICER'S CERTIFICATE
I, the undersigned, hereby certify that I am the______________________
of Brightpoint, Inc., a corporation duly organized and existing
under the laws of the State of Delaware ("Brightpoint"). Capitalized terms
used herein and not otherwise defined herein are as defined in that certain
Credit Agreement dated as of June 24, 1997, among Brightpoint, Brightpoint
International Ltd., certain borrowing subsidiaries from time to time parties
thereto, certain guarantors from time to time parties thereto, the financial
institutions from time to time parties thereto, The First National Bank of
Chicago, as Administrative Agent and Bank One, Indiana, National Association,
as Syndication Agent (as amended, restated, supplemented or modified from time
to time, the "Credit Agreement").
I further certify on behalf of Brightpoint, pursuant to [Section 4.2]
[Section 6.1(A)] of the Credit Agreement, that as of the date hereof, to the
best of my knowledge, after diligent inquiry of all relevant persons at
Brightpoint and its Subsidiaries, no Default or Unmatured Default exists [other
than the following (describe the nature of the Default or Unmatured Default and
the status thereof)].
IN WITNESS WHEREOF, I hereby subscribe my name on behalf of Brightpoint on
this ____ day of ___________, ____.
____________________________
[Insert Name of Officer]
<PAGE> 159
EXHIBIT L
TO
MULTICURRENCY CREDIT AGREEMENT
Pro Forma Financial Statements
Attached
<PAGE> 160
EXECUTION COPY
SECURITY AGREEMENT
DATED AS OF JUNE 24, 1997
between
BRIGHTPOINT, INC.
AND
THE FIRST NATIONAL BANK OF CHICAGO,
AS ADMINISTRATIVE AGENT
<PAGE> 161
SECURITY AGREEMENT
This SECURITY AGREEMENT ("Agreement"), dated as of June 24, 1997 is made
by BRIGHTPOINT, INC., a Delaware corporation (together with its successors and
assigns, including a debtor-in-possession on behalf of Brightpoint,
Inc.,"Grantor"), in favor of THE FIRST NATIONAL BANK OF CHICAGO (the
"Administrative Agent") for its benefit and for the benefit of the "Holders of
Secured Obligations" (as defined below) who are, or may hereafter become,
parties to the Credit Agreement referred to below.
PRELIMINARY STATEMENT
Grantor has entered into a certain Multicurrency Credit Agreement of even
date herewith among Grantor, Brightpoint International Ltd., the borrowing
subsidiaries from time to time parties thereto, the guarantors from time to
time parties thereto, the institutions from time to time parties thereto as
lenders (the "Lenders"), the Administrative Agent as the contractual
representative for the Lenders, and Bank One, Indiana, National Association,
as syndication agent (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"), providing for
the making of loans, advances and other financial accommodations (including,
without limitation, issuing letters of credit) (all such loans, advances and
other financial accommodations being hereinafter referred to collectively as
the "Loans") to or for the benefit of Grantor and the other borrowers
thereunder. It is a condition precedent to the making of the Loans under the
Credit Agreement that Grantor shall have granted the security interest
contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Defined Terms. Unless otherwise defined herein, terms
defined in the Credit Agreement are used herein as therein defined, and the
following terms shall have the following meanings (such meanings being equally
applicable to both the singular and the plural forms of the terms defined):
"Agreement" shall mean this Security Agreement, as the same may from time
to time be amended, restated, modified or supplemented, and shall refer to this
Agreement as the same may be in effect at the time such reference becomes
operative.
"Collateral" shall mean all property and rights in property now owned or
hereafter at any time acquired by Grantor in or upon which a Lien is granted in
favor of the Administrative Agent by Grantor under this Agreement, including,
without limitation, the property described in Section 2.
<PAGE> 162
"Permitted Consignment Inventory" shall mean, at any time, (a) the
Inventory held by the consignees described on Schedule 4 hereof at the location
or locations described on Schedule 4 provided the book value, with respect to
each such consignee, is not greater than the amount set forth adjacent to the
name of such consignee on Schedule 4; and (b) Inventory held by additional
consignees with whom the Grantor enters into consignment arrangements after the
Closing Date provided (i) prior to placing such Inventory on consignment the
Grantor has informed the Administrative Agent of the locations(s) where such
Inventory will be held and has executed the UCC financing statements required
under this Agreement for such locations; (ii) the aggregate book value of all
Inventory held at any time by any such consignee is not greater than $100,000
and (iii) the aggregate book value of all Inventory held at any time by all
such consignees is not greater than $500,000. If at any time the Grantor has
complied with the requirements set forth in Section 6 (including, without
limitation, clause (vii) thereof) with respect to such Inventory it shall no
longer be counted towards the individual or aggregate amounts of Inventory
specified in this definition of Permitted Consignment Inventory.
"UCC" shall mean the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of Illinois; provided, however, in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the Administrative Agent's and the Holders of Secured
Obligations' security interest in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the State of
Illinois, the term "UCC" shall mean the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of definitions related to
such provisions.
SECTION 2. Grant of Security. To secure the prompt and complete
payment, observance and performance of all of the Secured Obligations, Grantor
hereby assigns and pledges to the Administrative Agent, for the benefit of
itself and the Holders of Secured Obligations, and hereby grants to the
Administrative Agent, for the benefit of itself and the Holders of Secured
Obligations, a security interest in all of Grantor's right, title and interest
in and to the following, whether now owned or existing or hereafter arising or
acquired and wheresoever located in the United States:
ACCOUNTS: All "accounts" as such term is defined in Section 9-106 of the
UCC, whether now owned or hereafter acquired or arising; Grantor intends that
the term "accounts", as used herein, be construed in its broadest sense, and
such term shall include, without limitation, all present and future accounts,
accounts receivable and other rights of Grantor to payment for goods sold or
leased or for services rendered (except those evidenced by instruments or
chattel paper), whether now existing or hereafter arising and wherever arising,
and whether or not they have been earned by performance (collectively,
"Accounts");
INVENTORY: All "inventory" as defined in Section 9-109(4) of the UCC,
whether now owned or hereafter acquired or arising; Grantor intends that the
term "inventory", as used herein, be construed in its broadest sense, and such
term shall include, without limitation, all goods now owned or hereafter
acquired by Grantor (wherever located, whether in the possession of Grantor or
of a bailee or other person for sale, storage, transit, processing, use or
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otherwise and whether consisting of whole goods, spare parts, components,
supplies, materials, or consigned, returned or repossessed goods) which are
held for sale or lease, which are to be furnished (or have been furnished)
under any contract of service or which are raw materials, work in process or
materials used or consumed in Grantor's business (collectively, "Inventory");
EQUIPMENT: All "equipment" as such term is defined in Section 9-109(2) of
the UCC, whether now owned or hereafter acquired or arising; Grantor intends
that the term "equipment", as used herein, be construed in its broadest sense,
and such term shall include, without limitation, all machinery, all
manufacturing, distribution, selling, data processing and office equipment, all
furniture, furnishings, appliances, fixtures and trade fixtures, tools,
tooling, molds, dies, vehicles, vessels, trucks, buses, motor vehicles and all
other goods of every type and description (other than Inventory), in each
instance whether now owned or hereafter acquired by Grantor and wherever
located (collectively, "Equipment");
GENERAL INTANGIBLES: All "general intangibles" as defined in Section
9-106 of the UCC, whether now owned or hereafter acquired or arising; Grantor
intends that the term "general intangibles", as used herein, be construed in
its broadest sense, and such term shall include, without limitation, all
rights, interests, choses in action, causes of actions, claims and all other
intangible property of Grantor of every kind and nature (other than Accounts),
in each instance whether now owned or hereafter acquired by Grantor and however
and whenever arising, including, without limitation, all corporate and other
business records; all loans, royalties, and other obligations receivable;
customer lists, credit files, correspondence, and advertising materials; firm
sale orders, other contracts and contract rights; all interests in partnerships
and joint ventures; all tax refunds and tax refund claims; all right, title and
interest under leases, subleases, licenses and concessions and other agreements
relating to real or personal property; all payments due or made to Grantor in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of any property by any person or governmental authority; all deposit
accounts (general or special) with any bank or other financial institution,
including, without limitation, any deposits or other sums at any time credited
by or due to Grantor from any of the Holders of Secured Obligations or any of
their respective Affiliates with the same rights therein as if the deposits or
other sums were credited by or due from such Holder of Secured Obligations; all
credits with and other claims against carriers and shippers; all rights to
indemnification; all patents, and patent applications (including all reissues,
divisions, continuations and extensions); all service marks and service mark
applications; all trade secrets and inventions; all copyrights and copyright
applications (including all computer software and related documentation); all
rights and interests in and to trademarks, trademark registrations and
applications therefor, trade names, corporate names, brand names, slogans, all
goodwill associated with the foregoing; all license agreements and franchise
agreements, all reversionary interests in pension and profit sharing plans and
reversionary, beneficial and residual interest in trusts; all proceeds of
insurance of which Grantor is beneficiary; and all letters of credit,
guaranties, liens, security interests and other security held by or granted to
Grantor; and all other intangible property, whether or not similar to the
foregoing;
LAB PROCESSING AND ENGINEERING INFORMATION: All rights and interests in
and to processes, lab journals, and notebooks, data, trade secrets, know-how,
product
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formulae and information, manufacturing, engineering and other drawings
and manuals, technology, blueprints, research and development reports, agency
agreements, technical information, technical assistance, engineering data,
design and engineering specifications, and similar materials recording or
evidencing expertise used in or employed by Grantor (including any license for
the foregoing);
CONTRACT RIGHTS: All rights and interests in and to any pending or
executory contracts, requests for quotations, invitations for bid, agreements,
leases and arrangements of which Grantor is a party to or in which Grantor has
an interest;
CHATTEL PAPER, INSTRUMENTS AND DOCUMENTS: All chattel paper, leases, all
instruments, including, without limitation, the notes and debt instruments
described in Schedule 1 (the "Pledged Debt") and all payments thereunder and
instruments and other property from time to time delivered in respect thereof
or in exchange therefor, and all bills of sale, bills of lading, warehouse
receipts and other documents of title, in each instance whether now owned or
hereafter acquired by Grantor;
INTEREST AND CURRENCY CONTRACTS: Any and all interest rate or currency
exchange agreements or derivative agreements, including without limitation,
cap, collar, floor, forward or similar agreements or other rate protection
arrangements; and
OTHER PROPERTY: All personal property or interests in personal property
now owned or hereafter acquired by Grantor which now may be owned or hereafter
may come into the possession, custody or control of the Administrative Agent or
any of the Holders of Secured Obligations or any agent or Affiliate of any of
them in any way and for any purpose (whether for safekeeping, deposit, custody,
pledge, transmission, collection or otherwise); and all rights and interests of
Grantor, now existing or hereafter arising and however and wherever arising, in
respect of any and all (i) notes, drafts, letters of credit, stocks, bonds, and
debt and equity securities, whether or not certificated, investment property
(as defined in Section 9-115(1)(f) of the UCC) and warrants, options, puts and
calls and other rights to acquire or otherwise relating to the same; provided,
however this clause (i) shall not include Capital Stock of a Subsidiary of the
Grantor; (ii) money; (iii) proceeds of loans, including, without limitation,
loans made under the Credit Agreement; and (iv) insurance proceeds and books
and records relating to any of the property covered by this Agreement;
together, in each instance, with all accessions and additions thereto,
substitutions therefor, and replacements, proceeds and products thereof.
SECTION 3. Authorization. Grantor hereby authorizes the
Administrative Agent to retain and each Holder of Secured Obligations, and each
Affiliate of the Administrative Agent and of each Holder of Secured
Obligations, to pay or deliver to the Administrative Agent, for the benefit of
the Holders of Secured Obligations, without any necessity on any Holder of
Secured Obligation's part to resort to other security or sources of
reimbursement for the Secured Obligations, at any time following the occurrence
and during the continuance of any Default, and without further notice to
Grantor (such notice being expressly waived), any of the deposits referred to
in Section 2 (whether general or special, time or demand, provisional or final)
or other sums or property held by such Person, for application against any
portion of the Secured
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Obligations, irrespective of whether any demand has been made or whether
such portion of the Secured Obligations is mature. The Administrative Agent
will promptly notify Grantor of the Administrative Agent's receipt of such
funds or other property for application against the Secured Obligations, but
failure to do so will not affect the validity or enforceability thereof. The
Administrative Agent may give notice of the above grant of security interest
and assignment of the aforesaid deposits and other sums, and authorization, to,
and make any suitable arrangements with, any such Holder of Secured Obligations
for effectuation thereof, and Grantor hereby irrevocably appoints the
Administrative Agent as its attorney to collect, following the occurrence and
during the continuance of a Default, any and all such deposits or other sums to
the extent any such payment is not made to the Administrative Agent by such
Holder of Secured Obligations or Affiliate thereof.
SECTION 4. Grantor Remains Liable. Anything herein to the contrary
notwithstanding, (a) Grantor shall remain solely liable under the contracts and
agreements included in the Collateral to the extent set forth therein to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Administrative
Agent of any of its rights hereunder shall not release Grantor from any of its
duties or obligations under the contracts and agreements included in the
Collateral, and (c) neither the Administrative Agent nor the Holders of Secured
Obligations shall have any responsibility, obligation or liability under the
contracts and agreements included in the Collateral by reason of this
Agreement, nor shall the Administrative Agent or the Holders of Secured
Obligations be required or obligated, in any manner, to (i) perform or fulfill
any of the obligations or duties of Grantor thereunder, (ii) make any payment,
or make any inquiry as to the nature or sufficiency of any payment received by
Grantor or the sufficiency of any performance by any party under any such
contract or agreement or (iii) present or file any claim, or take any action to
collect or enforce any claim for payment assigned hereunder.
SECTION 5. Representations and Warranties. Grantor represents and
warrants, as of the date of this Agreement and as of each date hereafter
(except for changes permitted or contemplated by this Agreement) until
termination of this Agreement pursuant to Section 25:
(a) The correct corporate name of Grantor is set forth in the first
paragraph of this Agreement and the Grantor's Federal tax identification number
is 35-1778566. The locations listed on Schedule 2 constitute all locations at
which Inventory and/or Equipment is located and Grantor has exclusive
possession and control of such Equipment and Inventory, except for such
Inventory and Equipment which is (i) temporarily in transit between such
locations, or (ii) temporarily stored with third parties or held by third
parties for processing, storage, engineering, evaluation or repairs, the proper
corporate names of which third parties, the location of such Inventory and/or
Equipment, the nature of the relationship between Grantor and such third
parties, and the maximum value of Inventory and/or Equipment at such third
parties are set forth in Schedule 2-A. Schedules 2 and 2A may be amended to
reflect (1) additional locations acquired or utilized in connection with
Permitted Acquisitions or (2) new arrangements with third parties for storage,
bailment or consignment provided in each case the Grantor is in full compliance
with Sections 6 and 10 below in connection with such locations. The chief
place of business and chief executive office of Grantor are located at the
address of Grantor set forth below the Grantor's
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signature on the Credit Agreement. All records concerning any Accounts and all
originals of all chattel paper which evidence any Account are located at the
addresses listed on Schedule 2 and none of the Accounts is evidenced by a
promissory note or other instrument except for such notes and other instruments
delivered to the Administrative Agent.
(b) Grantor is the legal and beneficial owner of the Collateral free and
clear of all Liens except for Liens permitted by Section 6.3(C) of the Credit
Agreement. Grantor currently conducts business under the name Brightpoint,
Inc. and, in certain areas and for certain operations, the additional trade
names listed on Schedule 3. The Grantor uses no trade names or fictitious
names, except as set forth on Schedule 3.
(c) This Agreement creates in favor of the Administrative Agent a legal,
valid and enforceable security interest in the Collateral. When financing
statements have been filed against Grantor in the offices listed on Schedule
2-B, the Administrative Agent will have a fully perfected first priority lien
on, and security interest in, the Collateral (other than Permitted Consignment
Inventory) in which a security interest may be perfected by such filing,
subject only to Liens permitted by Section 6.3(C) of the Credit Agreement.
(d) No authorization, approval or other action by, and no notice to or
filing with, any Governmental Authority that has not already been taken or made
and is in full force and effect is required (i) for the grant by Grantor of the
security interest in the Collateral granted hereby; (ii) for the execution,
delivery or performance of this Agreement by Grantor; or (iii) for the exercise
by the Administrative Agent of any of its rights or remedies hereunder.
(e) The Pledged Debt issued by any Affiliate of Grantor, and to the best
of Grantor's knowledge, all other Pledged Debt, has been duly authorized,
issued and delivered, and is the legal, valid, binding and enforceable
obligation of the respective issuer thereof.
SECTION 6. Perfection and Maintenance of Security Interests and Liens.
Grantor agrees that until all of the Obligations (other than contingent
indemnity Obligations) have been fully satisfied and the Credit Agreement has
been terminated, the Administrative Agent's security interests in and Liens on
and against the Collateral and all proceeds and products thereof shall continue
in full force and effect. Grantor shall perform any and all steps reasonably
requested by the Administrative Agent to perfect, maintain and protect the
Administrative Agent's security interests in and Liens on and against the
Collateral granted or purported to be granted hereby or to enable the
Administrative Agent to exercise its rights and remedies hereunder with respect
to any Collateral, including, without limitation:
(i) executing and filing financing or continuation statements, or
amendments thereof, in form and substance reasonably satisfactory to the
Administrative Agent;
(ii) delivering to the Administrative Agent all certificates, notes and
other instruments (including, without limitation, all letters of credit on
which Grantor is named as a beneficiary) representing or evidencing
Collateral, which certificates, notes and other instruments have been duly
endorsed or are accompanied by duly executed instruments of
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transfer or assignment, including, but not limited to, note powers,
all in form and substance satisfactory to the Administrative Agent;
(iii) at the reasonable direction of Required Lenders, delivering to
the Administrative Agent warehouse receipts covering that portion of the
Collateral, if any, located in warehouses and for which warehouse
receipts are issued;
(iv) after the occurrence and during the continuance of a Default,
transferring Inventory and Equipment to warehouses designated by the
Administrative Agent or taking such other steps as are deemed necessary
by the Administrative Agent to maintain the Administrative Agent's
control of the Inventory and Equipment;
(v) marking conspicuously each instrument and chattel paper with a
legend, in form and substance satisfactory to the Administrative Agent,
indicating that such document, contract, chattel paper, or Collateral is
subject to the security interest granted hereby;
(vi) obtaining waivers of Liens and access agreements in
substantially the form of Exhibit A hereto (or such other form as may be
agreed to by the Administrative Agent) from landlords with respect to
Grantor's leased premises as of the Closing Date and with respect to all
leases entered into by the Grantor after the Closing Date;
(vii) obtaining waivers of Liens and access agreements in
substantially the form of Exhibit B (or such other form as may be agreed
to by the Administrative Agent) from bailees, consignees and warehousemen
with respect to any of the Inventory (other than Permitted Consignment
Inventory) held by any bailee or consignee or stored in warehouse
facilities, together with executed financing statements naming any such
bailee/consignee, as debtor, Grantor as secured party, and the
Administrative Agent as assignee of the secured party; and
(viii) executing and delivering all further instruments and
documents, and taking all further action, as the Administrative Agent may
reasonably request.
SECTION 7. Financing Statements. To the extent permitted by
applicable law, Grantor hereby authorizes the Administrative Agent to file one
or more financing or continuation statements and amendments thereto, disclosing
the security interest granted to the Administrative Agent under this Agreement
without Grantor's signature appearing thereon, and the Administrative Agent
agrees to notify Grantor when such a filing has been made. Grantor agrees that
a carbon, photographic, photostatic, or other reproduction of this Agreement or
of a financing statement is sufficient as a financing statement. If any
Inventory (other than Permitted Consignment Inventory) or Equipment is in the
possession or control of any warehouseman or Grantor's agents or processors,
Grantor shall, upon the Administrative Agent's request, notify such
warehouseman, agent or processor of the Administrative Agent's security
interest in such Inventory and Equipment and, upon the Administrative Agent's
request, instruct them to hold all
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such Inventory or Equipment for the Administrative Agent's account and subject
to the Administrative Agent's instructions.
SECTION 8. Filing Costs. Grantor shall pay the costs of, or
incidental to, all recordings or filings of all financing statements,
including, without limitation, any filing expenses incurred by the
Administrative Agent pursuant to Section 7.
SECTION 9. Schedule of Collateral. Grantor shall furnish to the
Administrative Agent from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Administrative Agent may reasonably request, all in
reasonable detail.
SECTION 10. Equipment and Inventory. Grantor covenants and agrees
with the Administrative Agent that from the date of this Agreement and until
termination of this Agreement pursuant to Section 25, Grantor shall:
(a) Keep the Equipment and Inventory (other than Equipment or Inventory
sold or disposed of as permitted by the Credit Agreement) at the places
specified in Section 5(a), except for Equipment and Inventory temporarily in
transit between such locations, and deliver written notice to the
Administrative Agent at least thirty (30) days prior to establishing any other
location at which or third party with which it reasonably expects to maintain
Inventory and/or Equipment in which location or with which third party all
action required by this Agreement shall have been taken with respect to all
such Equipment and Inventory;
(b) Maintain or cause to be maintained in good repair, working order and
condition, excepting ordinary wear and tear and damage due to casualty, all of
the Equipment, and make or cause to be made all appropriate repairs, renewals
and replacements thereof, as quickly as practicable after the occurrence of any
loss or damage thereto which are necessary or desirable to such end; and
(c) Comply with the terms of the Credit Agreement with respect to such
Equipment and Inventory, including, without limitation, the maintenance and
insurance provisions set forth in Section 6.2 of the Credit Agreement.
SECTION 11. Accounts. Grantor covenants and agrees with the
Administrative Agent that from and after the date of this Agreement and until
termination of this Agreement pursuant to Section 25, Grantor shall:
(a) Keep its chief place of business and chief executive office and the
office where it keeps its records concerning the Accounts at its address set
forth below the Grantor's signature on the Credit Agreement, and keep the
offices where it keeps all originals of all chattel paper which evidence
Accounts at the locations therefor specified in Section 5(a) or, upon thirty
(30) days' prior written notice to the Administrative Agent, at such other
locations within the United States in a jurisdiction where all actions required
by Section 6 shall have been taken with respect to the Accounts. Grantor will
hold and preserve such records (in accordance with Grantor's usual
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document retention practices) and chattel paper and will permit representatives
of the Administrative Agent at any time during normal business hours to inspect
and make abstracts from such records and chattel paper; and
(b) In any suit, proceeding or action brought by the Administrative Agent
under any Account comprising part of the Collateral, Grantor will save,
indemnify and keep each of the Holders of Secured Obligations harmless from and
against all expenses, loss or damage suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction of liability whatsoever of the obligor
thereunder, arising out of a breach by Grantor of any obligation or arising out
of any other agreement, indebtedness or liability at any time owing to or in
favor of such Holder of Secured Obligations from Grantor, and all such
obligations of Grantor shall be and shall remain enforceable against and only
against Grantor and shall not be enforceable against any of the Holders of
Secured Obligations.
SECTION 12. Report of Third Party Locations; Leased Real Property.
Grantor covenants and agrees with the Administrative Agent that from and after
the date of this Agreement and until termination of this Agreement pursuant to
Section 25, that:
(a) Promptly following, but not later than ninety (90) days after, the
close of each fiscal year Grantor will furnish to the Administrative Agent a
report certified to be true and correct by Grantor containing a list of each of
the Grantor's leased premises or premises where Inventory is or may be stored
with bailees, consignees or a warehouseman; the name or names of all owners of
such premises; rentals or other fees being paid; and whether Grantor has
obtained waivers of Liens and access agreements from the appropriate Person
with respect to such Collateral at such premises in accordance with Section 6;
and
(b) Grantor agrees that, from and after the occurrence of a Default, the
Administrative Agent may, but need not, make any payment or perform any act
hereinbefore required of Grantor with respect to the Grantor's leased premises
in any form and manner deemed expedient. All money paid for any of the
purposes herein authorized and all other moneys advanced by the Administrative
Agent to protect the lien hereof shall be additional Secured Obligations
secured hereby and shall become immediately due and payable without notice and
shall bear interest thereon at the default interest rate applicable to Base
Rate Loans as provided in Section 2.11 of the Credit Agreement until paid to
the Administrative Agent in full.
(c) Grantor agrees that it will not amend any lease in a manner that
materially and adversely affects the interests of the Holders of Secured
Obligations without the Administrative Agent's prior written consent.
SECTION 13. General Covenants. Grantor covenants and agrees with the
Administrative Agent that from and after the date of this Agreement and until
termination of this Agreement pursuant to Section 25, Grantor shall:
(a) Keep and maintain at Grantor's own cost and expense satisfactory and
complete records of Grantor's Collateral in a manner consistent with Grantor's
current business
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practice, including, without limitation, a record of all payments received and
all credits granted with respect to such Collateral. Grantor shall, for the
Administrative Agent's further security, deliver and turn over to the
Administrative Agent or Administrative Agent's designated representatives at
any time following the occurrence and during the continuation of a Default,
copies of any such books and records (including, without limitation, any and
all computer tapes, programs and source and object codes relating to such
Collateral in which Grantor has an interest or any part or parts thereof); and
(b) Grantor will not create, permit or suffer to exist, and will
defend the Collateral against, and take such other action as is necessary to
remove, any Lien on such Collateral other than Liens permitted under Section
6.3(C) of the Credit Agreement, and will defend the right, title and interest
of the Administrative Agent in and to Grantor's rights to such Collateral,
including, without limitation, the proceeds and products thereof, against the
claims and demands of all Persons whatsoever.
SECTION 14. The Administrative Agent Appointed Attorney-in-Fact.
Grantor hereby irrevocably appoints the Administrative Agent as Grantor's
attorney-in-fact, with full authority in the place and stead of Grantor and in
the name of Grantor or otherwise, from time to time in the Administrative
Agent's discretion, to take any action and to execute any instrument which the
Administrative Agent may deem reasonably necessary or advisable to accomplish
the purposes of this Agreement, including, without limitation, (a) following
the occurrence and during the continuance of a Default, to:
(i) obtain and adjust insurance required to be paid to the
Administrative Agent or any Holders of Secured Obligations
pursuant to the Credit Agreement;
(ii) ask, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to
become due under or in respect of any of the Collateral;
(iii) receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with
clause (i) or (ii) above; and
(iv) file any claims or take any action or institute any
proceedings which the Administrative Agent may deem necessary or
desirable for the collection of any of the Collateral, or
otherwise to enforce the rights of the Administrative Agent with
respect to any of the Collateral;
and (b) at any time, to:
(i) obtain access to records maintained for Grantor by
computer services companies and other service companies or
bureaus;
(ii) send requests under Grantor's, the Administrative
Agent's or a fictitious name to Grantor's customers or account
debtors for verification of Accounts
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provided that the Administrative Agent gives the Grantor notice
prior to initiating any such verifications; and
(iii) do all other things reasonably necessary to carry out
this Agreement.
SECTION 15. The Administrative Agent May Perform. If Grantor fails
to perform any agreement contained herein or in the Credit Agreement, the
Administrative Agent may, upon three days' prior notice to the Grantor,
perform, or cause performance of, such agreement, and the expenses of the
Administrative Agent incurred in connection therewith shall be payable by
Grantor under Section 22.
SECTION 16. The Administrative Agent's Duties. The powers conferred
on the Administrative Agent hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the safe custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Administrative
Agent shall not have any duty as to any Collateral. The Administrative Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which the Administrative Agent accords
its own property, it being understood that the Administrative Agent shall be
under no obligation to take any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral, but may do so
at its option, and all reasonable expenses incurred in connection therewith
shall be for the sole account of Grantor and shall be added to the Secured
Obligations.
SECTION 17. Remedies. (a) If any Default shall have occurred and
be continuing:
(i) The Administrative Agent shall have, in addition to other rights and
remedies provided for herein or otherwise available to it, all the rights and
remedies of a secured party upon default under the UCC (whether or not the UCC
applies to the affected Collateral) and further, the Administrative Agent may,
without notice, demand or legal process of any kind (except as may be required
by law), all of which Grantor waives, at any time or times, (x) enter Grantor's
owned or leased premises and take physical possession of the Collateral and
maintain such possession on Grantor's owned or leased premises, at no cost to
the Administrative Agent or any of the Holders of Secured Obligations, or
remove the Collateral, or any part thereof, to such other place(s) as the
Administrative Agent may desire, (y) require Grantor to, and Grantor hereby
agrees that it will at its expense and upon request of the Administrative Agent
forthwith, assemble all or any part of the Collateral as directed by the
Administrative Agent and make it available to the Administrative Agent at a
place to be designated by the Administrative Agent which is reasonably
convenient to the Administrative Agent and (z) without notice except as
specified below, sell, lease, assign, grant an option or options to purchase or
otherwise dispose of the Collateral or any part thereof at public or private
sale, at any exchange, broker's board or at any of the offices of the
Administrative Agent or elsewhere, for cash, on credit or for future delivery,
and upon such other terms as the Administrative Agent may deem commercially
reasonable. Grantor agrees that, to the extent notice of sale shall be
required by law, at least ten
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(10) days' written notice to Grantor of the time and place of any public
sale or the time after which any private sale is to be made shall constitute
reasonable notification. The Administrative Agent shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given.
The Administrative Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned;
(ii) The Administrative Agent shall apply all cash proceeds received by
the Administrative Agent in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral (after payment of any
amounts payable to the Administrative Agent pursuant to Section 22), for the
benefit of the Holders of Secured Obligations, against all or any part of the
Secured Obligations in such order as may be required by the Credit Agreement
or, to the extent not specified therein, as is determined by the Required
Lenders. Any surplus of such cash or cash proceeds held by the Administrative
Agent and remaining after payment in full of all the Secured Obligations shall
be paid over to Grantor or to whomsoever may be lawfully entitled to receive
such surplus;
(b) Grantor waives all claims, damages and demands against the
Administrative Agent arising out of the repossession, retention or sale of any
of the Collateral or any part or parts thereof, except any such claims, damages
and awards arising out of the gross negligence or willful misconduct of the
Administrative Agent or any of the Holders of Secured Obligations, as the case
may be, as determined in a final non-appealable judgment of a court of
competent jurisdiction; and
(c) The rights and remedies provided under this Agreement are cumulative
and may be exercised singly or concurrently and are not exclusive of any rights
and remedies provided by law or equity.
SECTION 18. Exercise of Remedies. In connection with the exercise of
its remedies pursuant to Section 17, the Administrative Agent may, (i)
exchange, enforce, waive or release any portion of the Collateral and any other
security for the Secured Obligations; (ii) apply such Collateral or security
and direct the order or manner of sale thereof as the Administrative Agent may,
from time to time, determine; and (iii) settle, compromise, collect or
otherwise liquidate any such Collateral or security in any manner following the
occurrence of a Default, without affecting or impairing the Administrative
Agent's right to take any other further action with respect to any Collateral
or security or any part thereof.
SECTION 19. License. The Administrative Agent is hereby granted a
license or other right to use, following the occurrence and during the
continuance of a Default, without charge, (a) Grantor's labels, patents,
copyrights, trade secrets, trade names, trademarks, service marks, customer
lists and advertising matter, or any property of a similar nature, as it
pertains to the Collateral, in completing production of, advertising for sale,
and selling any Collateral, provided that the Administrative Agent uses quality
standards at least substantially equivalent to those of Grantor for the
manufacture, advertising, sale and distribution of Grantor's products and
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services and (b) Grantor's rights under all licenses to the extent that such
sub-license does not constitute a breach of Grantor's license.
SECTION 20. Injunctive Relief. Grantor recognizes that in the event
Grantor fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy of law may prove to be inadequate
relief to the Holders of Secured Obligations; therefore, Grantor agrees that
the Holders of Secured Obligations, if the Administrative Agent so determines
and requests, shall be entitled to temporary and permanent injunctive relief in
any such case without the necessity of proving actual damages.
SECTION 21. Interpretation and Inconsistencies; Merger.
(a) The rights and duties created by this Agreement shall, in all cases,
be interpreted consistently with, and shall be in addition to (and not in lieu
of), the rights and duties created by the Credit Agreement and the other Loan
Documents. In the event that any provision of this Agreement shall be
inconsistent with any provision of any other Loan Document, such provision of
the other Loan Document shall govern.
(b) Except as provided in subsection (a) above, this Agreement represents
the final agreement of the Grantor and the Administrative Agent with respect to
the matters contained herein and may not be contradicted by evidence of prior
or contemporaneous agreements, or subsequent oral agreements, between the
Grantor and the Administrative Agent or any other Holder of Secured
Obligations.
SECTION 22. Expenses. Grantor will upon demand pay to the
Administrative Agent and/or the Holders of Secured Obligations the amount of
any and all reasonable expenses, including the reasonable fees and
disbursements of their counsel and of any experts and agents, as provided in
Section 10.7 of the Credit Agreement.
SECTION 23. Amendments, Etc. No amendment or waiver of any provision
of this Agreement nor consent to any departure by Grantor herefrom shall in any
event be effective unless the same shall be in writing and signed by the
Administrative Agent and Grantor, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
SECTION 24. Notices. All notices and other communications provided
for hereunder shall be delivered in the manner set forth in Section 14.1 of the
Credit Agreement.
SECTION 25. Continuing Security Interest; Termination. (a) Except as
provided in Section 25(b), this Agreement shall create a continuing security
interest in the Collateral and shall (i) remain in full force and effect until
the later of the payment or satisfaction in full of the Obligations (other than
contingent indemnity obligations) and the termination of the Credit Agreement,
(ii) be binding upon Grantor, its successors and assigns and (iii) except to
the extent that the rights of any transferor or assignor are limited by the
terms of the Credit Agreement, inure, together with the rights and remedies of
the Administrative Agent hereunder, to the benefit
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of the Administrative Agent and any of the Holders of Secured Obligations.
Nothing set forth herein or in any other Loan Document is intended or shall be
construed to give any other Person any right, remedy or claim under, to or in
respect of this Agreement or any other Loan Document or any Collateral.
Grantor's successors and assigns shall include, without limitation, a receiver,
trustee or debtor-in-possession thereof or therefor.
(b) Upon the payment in full in cash of the Obligations (other than
contingent indemnity obligations) and the termination of the Credit Agreement,
this Agreement and the security interest granted hereby shall terminate and all
rights to the Collateral shall revert to Grantor. Upon any such termination of
security interest, Grantor shall be entitled to the return, upon its request
and at its expense, of such of the Collateral held by the Administrative Agent
as shall not have been sold or otherwise applied pursuant to the terms hereof
and the Administrative Agent will, at Grantor's expense, execute and deliver to
Grantor such other documents as Grantor shall reasonably request to evidence
such termination. In connection with any sales of assets permitted under the
Credit Agreement, the Administrative Agent will release and terminate the liens
and security interests granted under this Agreement with respect to such
assets.
SECTION 26. Severability; No Strict Construction.
(a) It is the parties' intention that this Agreement be interpreted in
such a way that it is valid and effective under applicable law. However, if
one or more of the provisions of this Agreement shall for any reason be found
to be invalid or unenforceable, the remaining provisions of this Agreement
shall be unimpaired.
(b) The parties hereto have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties hereto and no presumption or burden or proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provisions
of this Agreement.
SECTION 27. GOVERNING LAW. THE ADMINISTRATIVE AGENT ACCEPTS THIS
AGREEMENT, ON BEHALF OF ITSELF AND THE HOLDERS OF SECURED OBLIGATIONS, AT
CHICAGO, ILLINOIS BY ACKNOWLEDGING AND AGREEING TO IT THERE. THIS AGREEMENT
SHALL BE GOVERNED BY AND INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE
INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE
OF ILLINOIS. WITHOUT LIMITING THE FOREGOING, ANY DISPUTE BETWEEN THE GRANTOR
AND THE ADMINISTRATIVE AGENT, ANY LENDER, OR ANY OTHER HOLDER OF SECURED
OBLIGATIONS ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT, AND
WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN
ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICTS OF LAWS
PROVISIONS) OF THE STATE OF ILLINOIS.
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SECTION 28. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.
(A) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION (B), EACH
OF THE PARTIES HERETO AGREES THAT ALL DISPUTES BETWEEN THEM ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, WHETHER ARISING IN CONTRACT,
TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED EXCLUSIVELY BY STATE OR FEDERAL
COURTS LOCATED IN CHICAGO, ILLINOIS, BUT THE PARTIES HERETO ACKNOWLEDGE THAT
ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE
OF CHICAGO, ILLINOIS. EACH OF THE PARTIES HERETO WAIVES IN ALL DISPUTES
BROUGHT PURSUANT TO THIS SUBSECTION ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(B) OTHER JURISDICTIONS. GRANTOR AGREES THAT THE ADMINISTRATIVE AGENT,
ANY OTHER LENDER OR ANY HOLDER OF SECURED OBLIGATIONS SHALL HAVE THE RIGHT TO
PROCEED AGAINST GRANTOR OR ITS PROPERTY IN A COURT IN ANY LOCATION TO ENABLE
SUCH PERSON TO (1) OBTAIN PERSONAL JURISDICTION OVER THE GRANTOR OR (2) REALIZE
ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE SECURED OBLIGATIONS OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF SUCH PERSON.
GRANTOR AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY
PROCEEDING BROUGHT UNDER THIS CLAUSE (B) BY SUCH PERSON TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER IN FAVOR OF SUCH PERSON ALL OF WHICH PERMISSIVE
COUNTERCLAIMS MAY BE BROUGHT ONLY IN THE JURISDICTION SET FORTH IN CLAUSE (A)
ABOVE. GRANTOR WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE
COURT IN WHICH SUCH PERSON HAS COMMENCED A PROCEEDING DESCRIBED IN THIS
SUBSECTION (B).
(C) SERVICE OF PROCESS; VENUE. GRANTOR WAIVES PERSONAL SERVICE OF ANY
PROCESS UPON IT AND, AS ADDITIONAL SECURITY FOR THE SECURED OBLIGATIONS,
IRREVOCABLY APPOINTS CT CORPORATION SYSTEM, 208 S. LASALLE STREET, CHICAGO,
ILLINOIS 60604 AS GRANTOR'S AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF
PROCESS ISSUED BY ANY COURT. GRANTOR IRREVOCABLY WAIVES ANY OBJECTION
(INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED
ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER
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INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH
IN ANY JURISDICTION SET FORTH ABOVE.
(D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH,
RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH. EACH OF THE PARTIES HERETO
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
(E) WAIVER OF BOND. GRANTOR WAIVES THE POSTING OF ANY BOND OTHERWISE
REQUIRED OF ANY PARTY HERETO IN CONNECTION WITH ANY JUDICIAL PROCESS OR
PROCEEDING TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE SECURED
OBLIGATIONS OR TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
SUCH PARTY, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER,
PRELIMINARY OR PERMANENT INJUNCTION, THIS AGREEMENT.
(F) ADVICE OF COUNSEL. GRANTOR REPRESENTS TO THE ADMINISTRATIVE AGENT
THAT IT HAS DISCUSSED THIS AGREEMENT AND, SPECIFICALLY, THE PROVISIONS OF THIS
SECTION 28, WITH ITS COUNSEL, THAT IT BELIEVES THAT IF FULLY UNDERSTANDS ALL
RIGHTS THAT IT IS WAIVING AND THE EFFECT OF SUCH WAIVERS, THAT IT ASSUMES THE
RISK OF ANY MISUNDERSTANDING THAT IT AMY HAVE REGARDING ANY OF THE FOREGOING,
AND THAT IT INTENDS THAT SUCH WAIVERS SHALL BE A MATERIAL INDUEMENT TO THE
ADMINISTRATIVE AGENT AND THE HOLDERS OF SECURED OBLIGATIONS TO EXTEND THE
INDEBTEDNESS SECURED HEREBY.
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IN WITNESS WHEREOF, Grantor has caused this Agreement to be duly executed
and delivered by its officer thereunto duly authorized as of the date first
above written.
BRIGHTPOINT, INC.
By:_____________________________________
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
as ADMINISTRATIVE AGENT
By:_______________________________
Name:
Title:
Signature Page to Brightpoint Inc. Security Agreement
<PAGE> 178
EXHIBIT A
To
Security Agreement
Form of Landlord Agreement
To: The First National Bank of Chicago,
as Administrative Agent
One First National Plaza
10th Floor
Chicago, Illinois 60670
Attention: Cory Olson
Brightpoint, Inc., a Delaware corporation ("Borrower"), is the lessee
under a lease between Borrower and [ ] (the
"Lessor") covering the premises located at [ ] (the
"Premises") as more fully described in the lease attached hereto as Exhibit A
and as modified by any amendments, if any, attached thereto (collectively, the
"Lease"). The Lessor is the sole owner of the Premises. Borrower has certain
of its assets located on the Premises.
Borrower intends to enter into certain financing arrangements with a
group of lenders ("Lenders") including The First National Bank of Chicago, as
contractual representative for the Lenders (the "Administrative Agent") and, as
a condition to the Lenders agreeing to make loans and other financial
accommodations and extensions of credit to Borrower, the Administrative Agent
and Lenders require, among other things, that Borrower grant liens in favor of
the Administrative Agent for the benefit of the Administrative Agent and
Lenders on all of Borrower's personal property located on the Premises
("Collateral")[.] [and that Borrower grant a mortgage in favor of the Lender
covering Borrower's leasehold estate created by and under the Lease.]
In order to induce the Administrative Agent and Lenders (together with
their respective agents, successors and assigns) to enter into said financing
arrangements, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned hereby certifies
and agrees that:
(i) the Lease is in full force and effect, and in the form attached
hereto as Exhibit A, represents the full and complete agreement between
Borrower and the undersigned concerning the Premises and the Lease shall
not be amended or modified in any material respect without the
Administrative Agent's prior written consent, which consent shall not be
unreasonably withheld;
(ii) Borrower is not in default under the Lease, nor, to the
undersigned's knowledge, are there any events or conditions which, by the
passage of time or giving of notice or both, would constitute a default
thereunder by Borrower;
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(iii) the undersigned will not assert against any of Borrower's
assets any statutory or possessory liens, including, without limitation,
rights of levy or distraint for rent, all of which it hereby waives [and
hereby subordinates to the lien of the Leasehold Mortgage];
(iv) the undersigned is not aware of any dispute, action, suit,
condemnation proceeding, claim, or right of setoff pending or threatened
with respect to the Lease or the Premises;
(v) none of the Collateral located on the Premises shall be deemed
to be fixtures;
(vi) the undersigned will notify the Administrative Agent if
Borrower defaults on its lease obligations to the undersigned and allow
the Administrative Agent thirty (30) days from the Administrative Agent's
receipt of notice in which to cure or cause Borrower to cure any such
defaults. If such default cannot reasonably be cured within the thirty
(30) day period, and provided the Administrative Agent is diligently
pursuing a cure, then the Administrative Agent shall have a reasonable
period to cure such default;
(vii) The undersigned shall accept performance by the
Administrative Agent of the Borrower's obligations under the Lease as
though the same had been performed by the holder of the Borrower's
interest therein at the time of such performance. Upon the cure of any
such default, any notice of Landlord advising of any default or any
action of the undersigned to terminate the Lease or to interfere with the
occupancy, use or enjoyment of the Premises by reason thereof, which
action has not been completed, shall be deemed rescinded and the Lease
shall continue in full force and effect. The undersigned shall not be
required to continue any possession or continue any action to obtain
possession upon the cure of any such default;
(viii) if, for any reason whatsoever, the undersigned either deems
itself entitled to redeem or to take possession of the Premises during
the term of Borrower's lease or intends to sell or otherwise transfer all
or any part of its interest in the Premises, the undersigned will notify
the Administrative Agent five (5) days before taking such action;
(ix) if Borrower defaults on its obligations to the Administrative
Agent or any Lender and, as a result, the Administrative Agent undertakes
to enforce its security interest in the Collateral, the undersigned will
cooperate with the Administrative Agent in its efforts to assemble all of
the Collateral located on the Premises, will permit the Administrative
Agent to remain on the Premises for ninety (90)days after the
Administrative Agent gives the undersigned notice of the default,
provided the Administrative Agent pays the rental payments due under the
Lease for the period of time the Administrative Agent uses the Premises,
or, at the Administrative Agent's option, to remove the Collateral from
the Premises within a reasonable time, not to exceed ninety (90) days
after the Administrative Agent gives the undersigned notice of the
default, provided the Administrative Agent pays the rental payments due
under the Lease for the period of time the Administrative Agent uses the
Premises, and will not hinder the Administrative Agent's actions in
enforcing its liens on the Collateral;
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<PAGE> 180
(x) if Borrower defaults on its obligations to the Lenders and the
Administrative Agent undertakes to enforce its security interest in the
Collateral [and/or to foreclose on Borrower's leasehold estate pursuant
to the Leasehold Mortgage], the Administrative Agent may, at its option
and by written notice to the undersigned, (1) lease the Premises from the
undersigned on the same terms as set forth in the Lease and exercise the
other rights as lessee thereunder as described therein and/or (2) assign
the Lease and/or the attornment rights hereunder to, or enter into a
sublease with, a purchaser of the Collateral which purchaser is
reasonably acceptable to the undersigned, and the undersigned shall
cooperate with any such enforcement action or foreclosure and consent to
the assumption of the Lease, the sublet of the Premises or foreclosure
sale of the leasehold estate; and
(xi) in the event that Borrower shall become a debtor under the
Federal Bankruptcy Code and, in connection therewith, Borrower shall
reject the Lease as an executory contract, then within thirty (30) days
following such rejection, upon the written request by the Administrative
Agent, the undersigned shall enter into a new lease of the Premises with
the Administrative Agent or its designee (who shall be reasonably
acceptable to the undersigned), for the benefit of the Lenders which new
lease (1) shall be effective as of the date of the termination of the
Lease, (2) shall be for a term expiring as of the last day of the term of
the Lease, and (3) shall be on substantially the same terms and
conditions as the Lease (including any provisions for renewal or
extension of the term of the Lease); provided that the Lender or such
designee, as the case may be, shall be required, as a condition to the
effectiveness of such new lease, to pay the Lessor any amount equal to
any rent remaining unpaid by Borrower under the Lease.
[The undersigned consents to the granting of the Leasehold Mortgage to the
Administrative Agent and to the liens, security interests and encumbrances
created by and resulting from the Leasehold Mortgage or other documents
collateral thereto in the form attached hereto as Exhibit B.]
Any notice(s) required or desired to be given hereunder shall be
directed to the party to be notified at the address stated herein.
The agreements contained herein shall continue in force until the
earlier of (i) the expiration date of the Lease (provided no provision is made
for the extension or renewal of the Lease) or (ii) the date on which all of
Borrower's obligations and liabilities to the Administrative Agent and Lenders
are paid and satisfied in full and all financing arrangements between the
Administrative Agent, Lenders and Borrower have been terminated.
The Lessor will notify all successor owners, transferees, purchasers
and mortgagees of the existence of this waiver. This waiver may not be
modified or terminated orally and shall be binding upon the successors, assigns
and personal representatives of the Lessor, upon any successor owner or
transferee of the Premises, and upon any purchasers, including any mortgagee,
from the Lessor.
3
<PAGE> 181
THE LESSOR AGREES THAT NOTHING CONTAINED IN THIS WAIVER SHALL BE CONSTRUED
AS AN ASSUMPTION BY THE ADMINISTRATIVE AGENT OR ANY OF THE OTHER LENDERS OF ANY
OBLIGATIONS OF BORROWER CONTAINED IN THE LEASE.
THIS WAIVER SHALL NOT IMPAIR OR OTHERWISE AFFECT BORROWER'S OBLIGATIONS TO
PAY RENT AND ANY OTHER SUMS PAYABLE BY BORROWER OR TO OTHERWISE PERFORM ITS
OBLIGATIONS TO THE LESSOR PURSUANT TO THE TERMS OF THE LEASE.
Executed and delivered this ____ day of ___________ , l997, at
_______________________, ______________________.
[Name of Lessor]
By:__________________________
Title:_______________________
Address:
_______________________
_______________________
_______________________
AGREED & ACKNOWLEDGED:
BRIGHTPOINT, INC.
By:_____________________
Title:__________________
Address:
4
<PAGE> 182
ACKNOWLEDGMENT (CORPORATE)
STATE OF _______________ )
) SS.
COUNTY OF ______________ )
Before me, a Notary Public in and for said County, personally appeared
____________, a ____________________ corporation, by the _________________ of
such corporation, who acknowledged that (s)he did sign the foregoing instrument
on behalf of said corporation and that said instrument is the voluntary act and
deed of said corporation and his/her voluntary act and deed as such officer of
said corporation.
IN TESTIMONY WHEREOF, I have hereunto subscribed my name and affixed my
official seal this ___ day of _____________, 1997 at ________, ________________.
_____________________________
Notary Public
My Commission Expires:
(Notarial Seal)
5
<PAGE> 183
ACKNOWLEDGMENT (CORPORATE)
STATE OF _______________ )
) SS.
COUNTY OF ______________ )
Before me, a Notary Public in and for said County, personally appeared
Brightpoint, Inc., a Delaware corporation, by the _______________________
of such corporation, who acknowledged that (s)he did sign the foregoing
instrument on behalf of said corporation and that said instrument is the
voluntary act and deed of said corporation and his/her voluntary act and deed
as such officer of said corporation.
IN TESTIMONY WHEREOF, I have hereunto subscribed my name and affixed my
official seal this ____ day of ____________, 1997 at ________, ________________.
____________________________
Notary Public
My Commission Expires:
(Notarial Seal)
6
<PAGE> 184
EXHIBIT B
TO
SECURITY AGREEMENT
Form of Bailee , Consignee and Warehouseman Letter
To: The First National Bank of Chicago,
as Administrative Agent
One First National Plaza
Suite 0374
Chicago, Illinois 60670-0374
Attention:
Ladies and Gentlemen:
Brightpoint, Inc., a Delaware corporation ("Borrower"), now does or
hereafter may deliver certain of its merchandise, inventory, or other of its
personal property at premises located at [ ] (the
"Premises") owned or leased by the undersigned for processing, storage,
consignment or for the redirection of shipment.
Borrower has entered into certain financing arrangements with a group of
lenders (the "Lenders") including The First National Bank of Chicago (the
"Administrative Agent") and, as a condition to the loans and other financial
accommodations of the Lenders to Borrower, the Administrative Agent and the
Lenders require, among other things, that Borrower grant liens in favor of the
Administrative Agent for the benefit of the Administrative Agent and the
Lenders on all of Borrower's property located on the Premises ("Collateral").
To induce the Administrative Agent and the Lenders (together with their
respective agents, successors and assigns) to enter into said financing
arrangements, and for other good and valuable consideration, the undersigned
hereby agrees that:
(i) it will not assert against any of Borrower's assets any
statutory or possessory liens, including, without limitation, rights of
levy or distraint for rent, all of which it hereby waives;
(ii) the Collateral shall be identifiable as being owned by
Borrower and kept reasonably separate and distinct from other property in
the possession of the undersigned;
(iii) none of the Collateral located on the Premises shall be deemed
to be fixtures; and
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<PAGE> 185
(iv) if Borrower defaults on its obligations to the Lenders or the
Administrative Agent and, as a result, the Administrative Agent undertakes
to enforce its security interest in the Collateral, the undersigned (a)
will cooperate with the Administrative Agent in its efforts to assemble
all of the Collateral located on the Premises, (b) will permit the
Administrative Agent to either remain on the Premises for ninety (90)days
after the Administrative Agent gives the undersigned notice of default or,
at the Administrative Agent's option, to remove the Collateral from the
Premises within a reasonable time, not to exceed ninety (90)days after the
Administrative Agent gives the undersigned notice of default, provided in
either instance that the Administrative Agent leaves the Premises in the
same condition as existed immediately prior to such ninety (90)day period,
and the Administrative Agent shall indemnify the undersigned for any
damages arising solely out of its occupancy of the Premises, and (c) will
not hinder the Administrative Agent's actions in enforcing its liens on
the Collateral.
Any notice(s) required or desired to be given hereunder shall be directed
to the party to be notified at the address stated herein.
The agreements contained herein shall continue in force until all of
Borrower's obligations and liabilities to the Administrative Agent and Lenders
are paid and satisfied in full and all financing arrangements among the
Administrative Agent, the Lenders and Borrower have been terminated.
The undersigned will notify all successor owners, transferees, purchasers
and mortgagees of the existence of this agreement. The agreements contained
herein may not be modified or terminated orally and shall be binding upon the
successors, assigns and personal representatives of the undersigned, upon any
successor owner or transferee of any of the Premises, and upon any purchasers,
including any mortgagee, from the undersigned.
Executed and delivered this ____ day of __________, 199_, at
_______________________.
[Name and Address of Bailee,
Consignee or Warehouseman]
(By)_______________________
2
<PAGE> 186
SCHEDULE 1
TO
SECURITY AGREEMENT
Pledged Debt:
1
<PAGE> 187
SCHEDULE 2
TO
SECURITY AGREEMENT
Locations of Collateral:
(for Owned or Leased Locations)
2
<PAGE> 188
SCHEDULE 2-A
TO
SECURITY AGREEMENT
Third Party Locations:
Corporate Name and Collateral Description Maximum
Address of Third Party Address of Relationship Amount
- ---------------------- ---------- --------------- -------
3
<PAGE> 189
SCHEDULE 2-B
TO
SECURITY AGREEMENT
Financing Statement Filing Locations:
4
<PAGE> 190
SCHEDULE 3
TO
SECURITY AGREEMENT
Trade Names:
5
<PAGE> 191
SCHEDULE 4
TO
SECURITY AGREEMENT
Permitted Consignment Inventory
6
<PAGE> 192
TABLE OF CONTENTS
SECTION 1. Defined Terms...................................................1
SECTION 2. Grant of Security...............................................2
SECTION 3. Authorization...................................................4
SECTION 4. Grantor Remains Liable..........................................5
SECTION 5. Representations and Warranties..................................5
SECTION 6. Perfection and Maintenance of Security Interests and Liens......6
SECTION 7. Financing Statements............................................7
SECTION 8. Filing Costs....................................................8
SECTION 9. Schedule of Collateral..........................................8
SECTION 10. Equipment and Inventory.........................................8
SECTION 11. Accounts........................................................8
SECTION 12. Report of Third Party Locations; Leased Real Property...........9
SECTION 13. General Covenants...............................................9
SECTION 14. The Administrative Agent Appointed Attorney-in-Fact............10
SECTION 15. The Administrative Agent May Perform...........................11
SECTION 16. The Administrative Agent's Duties..............................11
SECTION 17. Remedies.......................................................11
SECTION 18. Exercise of Remedies...........................................12
SECTION 19. License........................................................12
SECTION 20. Injunctive Relief..............................................12
SECTION 21. Interpretation and Inconsistencies; Merger.....................13
7
<PAGE> 193
SECTION 22. Expenses.......................................................13
SECTION 23. Amendments, Etc................................................13
SECTION 24. Notices........................................................13
SECTION 25. Continuing Security Interest; Termination......................13
SECTION 26. Severability; No Strict Construction...........................14
SECTION 27. GOVERNING LAW..................................................14
SECTION 28. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL........14
(A) EXCLUSIVE JURISDICTION....................................14
(B) OTHER JURISDICTIONS.......................................15
(D) WAIVER OF JURY TRIAL......................................15
(E) WAIVER OF BOND............................................16
(F) ADVICE OF COUNSEL.........................................16
8
<PAGE> 194
EXECUTION COPY
SECURITY AGREEMENT
DATED AS OF JUNE 24, 1997
between
BRIGHTPOINT, INC.
AND
THE FIRST NATIONAL BANK OF CHICAGO,
AS ADMINISTRATIVE AGENT
<PAGE> 195
SECURITY AGREEMENT
This SECURITY AGREEMENT ("Agreement"), dated as of June 24, 1997 is made
by BRIGHTPOINT, INC., a Delaware corporation (together with its successors and
assigns, including a debtor-in-possession on behalf of Brightpoint,
Inc.,"Grantor"), in favor of THE FIRST NATIONAL BANK OF CHICAGO (the
"Administrative Agent") for its benefit and for the benefit of the "Holders of
Secured Obligations" (as defined below) who are, or may hereafter become,
parties to the Credit Agreement referred to below.
PRELIMINARY STATEMENT
Grantor has entered into a certain Multicurrency Credit Agreement of even
date herewith among Grantor, Brightpoint International Ltd., the borrowing
subsidiaries from time to time parties thereto, the guarantors from time to
time parties thereto, the institutions from time to time parties thereto as
lenders (the "Lenders"), the Administrative Agent as the contractual
representative for the Lenders, and Bank One, Indiana, National Association,
as syndication agent (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"), providing for
the making of loans, advances and other financial accommodations (including,
without limitation, issuing letters of credit) (all such loans, advances and
other financial accommodations being hereinafter referred to collectively as
the "Loans") to or for the benefit of Grantor and the other borrowers
thereunder. It is a condition precedent to the making of the Loans under the
Credit Agreement that Grantor shall have granted the security interest
contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Defined Terms. Unless otherwise defined herein, terms
defined in the Credit Agreement are used herein as therein defined, and the
following terms shall have the following meanings (such meanings being equally
applicable to both the singular and the plural forms of the terms defined):
"Agreement" shall mean this Security Agreement, as the same may from time
to time be amended, restated, modified or supplemented, and shall refer to this
Agreement as the same may be in effect at the time such reference becomes
operative.
"Collateral" shall mean all property and rights in property now owned or
hereafter at any time acquired by Grantor in or upon which a Lien is granted in
favor of the Administrative Agent by Grantor under this Agreement, including,
without limitation, the property described in Section 2.
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"Permitted Consignment Inventory" shall mean, at any time, (a) the
Inventory held by the consignees described on Schedule 4 hereof at the location
or locations described on Schedule 4 provided the book value, with respect to
each such consignee, is not greater than the amount set forth adjacent to the
name of such consignee on Schedule 4; and (b) Inventory held by additional
consignees with whom the Grantor enters into consignment arrangements after the
Closing Date provided (i) prior to placing such Inventory on consignment the
Grantor has informed the Administrative Agent of the locations(s) where such
Inventory will be held and has executed the UCC financing statements required
under this Agreement for such locations; (ii) the aggregate book value of all
Inventory held at any time by any such consignee is not greater than $100,000
and (iii) the aggregate book value of all Inventory held at any time by all
such consignees is not greater than $500,000. If at any time the Grantor has
complied with the requirements set forth in Section 6 (including, without
limitation, clause (vii) thereof) with respect to such Inventory it shall no
longer be counted towards the individual or aggregate amounts of Inventory
specified in this definition of Permitted Consignment Inventory.
"UCC" shall mean the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of Illinois; provided, however, in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the Administrative Agent's and the Holders of Secured
Obligations' security interest in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the State of
Illinois, the term "UCC" shall mean the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of definitions related to
such provisions.
SECTION 2. Grant of Security. To secure the prompt and complete
payment, observance and performance of all of the Secured Obligations, Grantor
hereby assigns and pledges to the Administrative Agent, for the benefit of
itself and the Holders of Secured Obligations, and hereby grants to the
Administrative Agent, for the benefit of itself and the Holders of Secured
Obligations, a security interest in all of Grantor's right, title and interest
in and to the following, whether now owned or existing or hereafter arising or
acquired and wheresoever located in the United States:
ACCOUNTS: All "accounts" as such term is defined in Section 9-106 of the
UCC, whether now owned or hereafter acquired or arising; Grantor intends that
the term "accounts", as used herein, be construed in its broadest sense, and
such term shall include, without limitation, all present and future accounts,
accounts receivable and other rights of Grantor to payment for goods sold or
leased or for services rendered (except those evidenced by instruments or
chattel paper), whether now existing or hereafter arising and wherever arising,
and whether or not they have been earned by performance (collectively,
"Accounts");
INVENTORY: All "inventory" as defined in Section 9-109(4) of the UCC,
whether now owned or hereafter acquired or arising; Grantor intends that the
term "inventory", as used herein, be construed in its broadest sense, and such
term shall include, without limitation, all goods now owned or hereafter
acquired by Grantor (wherever located, whether in the possession of Grantor or
of a bailee or other person for sale, storage, transit, processing, use or
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otherwise and whether consisting of whole goods, spare parts, components,
supplies, materials, or consigned, returned or repossessed goods) which are
held for sale or lease, which are to be furnished (or have been furnished)
under any contract of service or which are raw materials, work in process or
materials used or consumed in Grantor's business (collectively, "Inventory");
EQUIPMENT: All "equipment" as such term is defined in Section 9-109(2) of
the UCC, whether now owned or hereafter acquired or arising; Grantor intends
that the term "equipment", as used herein, be construed in its broadest sense,
and such term shall include, without limitation, all machinery, all
manufacturing, distribution, selling, data processing and office equipment, all
furniture, furnishings, appliances, fixtures and trade fixtures, tools,
tooling, molds, dies, vehicles, vessels, trucks, buses, motor vehicles and all
other goods of every type and description (other than Inventory), in each
instance whether now owned or hereafter acquired by Grantor and wherever
located (collectively, "Equipment");
GENERAL INTANGIBLES: All "general intangibles" as defined in Section
9-106 of the UCC, whether now owned or hereafter acquired or arising; Grantor
intends that the term "general intangibles", as used herein, be construed in
its broadest sense, and such term shall include, without limitation, all
rights, interests, choses in action, causes of actions, claims and all other
intangible property of Grantor of every kind and nature (other than Accounts),
in each instance whether now owned or hereafter acquired by Grantor and however
and whenever arising, including, without limitation, all corporate and other
business records; all loans, royalties, and other obligations receivable;
customer lists, credit files, correspondence, and advertising materials; firm
sale orders, other contracts and contract rights; all interests in partnerships
and joint ventures; all tax refunds and tax refund claims; all right, title and
interest under leases, subleases, licenses and concessions and other agreements
relating to real or personal property; all payments due or made to Grantor in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of any property by any person or governmental authority; all deposit
accounts (general or special) with any bank or other financial institution,
including, without limitation, any deposits or other sums at any time credited
by or due to Grantor from any of the Holders of Secured Obligations or any of
their respective Affiliates with the same rights therein as if the deposits or
other sums were credited by or due from such Holder of Secured Obligations; all
credits with and other claims against carriers and shippers; all rights to
indemnification; all patents, and patent applications (including all reissues,
divisions, continuations and extensions); all service marks and service mark
applications; all trade secrets and inventions; all copyrights and copyright
applications (including all computer software and related documentation); all
rights and interests in and to trademarks, trademark registrations and
applications therefor, trade names, corporate names, brand names, slogans, all
goodwill associated with the foregoing; all license agreements and franchise
agreements, all reversionary interests in pension and profit sharing plans and
reversionary, beneficial and residual interest in trusts; all proceeds of
insurance of which Grantor is beneficiary; and all letters of credit,
guaranties, liens, security interests and other security held by or granted to
Grantor; and all other intangible property, whether or not similar to the
foregoing;
LAB PROCESSING AND ENGINEERING INFORMATION: All rights and interests in
and to processes, lab journals, and notebooks, data, trade secrets, know-how,
product
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formulae and information, manufacturing, engineering and other drawings
and manuals, technology, blueprints, research and development reports, agency
agreements, technical information, technical assistance, engineering data,
design and engineering specifications, and similar materials recording or
evidencing expertise used in or employed by Grantor (including any license for
the foregoing);
CONTRACT RIGHTS: All rights and interests in and to any pending or
executory contracts, requests for quotations, invitations for bid, agreements,
leases and arrangements of which Grantor is a party to or in which Grantor has
an interest;
CHATTEL PAPER, INSTRUMENTS AND DOCUMENTS: All chattel paper, leases, all
instruments, including, without limitation, the notes and debt instruments
described in Schedule 1 (the "Pledged Debt") and all payments thereunder and
instruments and other property from time to time delivered in respect thereof
or in exchange therefor, and all bills of sale, bills of lading, warehouse
receipts and other documents of title, in each instance whether now owned or
hereafter acquired by Grantor;
INTEREST AND CURRENCY CONTRACTS: Any and all interest rate or currency
exchange agreements or derivative agreements, including without limitation,
cap, collar, floor, forward or similar agreements or other rate protection
arrangements; and
OTHER PROPERTY: All personal property or interests in personal property
now owned or hereafter acquired by Grantor which now may be owned or hereafter
may come into the possession, custody or control of the Administrative Agent or
any of the Holders of Secured Obligations or any agent or Affiliate of any of
them in any way and for any purpose (whether for safekeeping, deposit, custody,
pledge, transmission, collection or otherwise); and all rights and interests of
Grantor, now existing or hereafter arising and however and wherever arising, in
respect of any and all (i) notes, drafts, letters of credit, stocks, bonds, and
debt and equity securities, whether or not certificated, investment property
(as defined in Section 9-115(1)(f) of the UCC) and warrants, options, puts and
calls and other rights to acquire or otherwise relating to the same; provided,
however this clause (i) shall not include Capital Stock of a Subsidiary of the
Grantor; (ii) money; (iii) proceeds of loans, including, without limitation,
loans made under the Credit Agreement; and (iv) insurance proceeds and books
and records relating to any of the property covered by this Agreement;
together, in each instance, with all accessions and additions thereto,
substitutions therefor, and replacements, proceeds and products thereof.
SECTION 3. Authorization. Grantor hereby authorizes the Administrative
Agent to retain and each Holder of Secured Obligations, and each Affiliate of
the Administrative Agent and of each Holder of Secured Obligations, to pay or
deliver to the Administrative Agent, for the benefit of the Holders of Secured
Obligations, without any necessity on any Holder of Secured Obligation's part
to resort to other security or sources of reimbursement for the Secured
Obligations, at any time following the occurrence and during the continuance of
any Default, and without further notice to Grantor (such notice being expressly
waived), any of the deposits referred to in Section 2 (whether general or
special, time or demand, provisional or final) or other sums or property held
by such Person, for application against any portion of the Secured
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Obligations, irrespective of whether any demand has been made or whether
such portion of the Secured Obligations is mature. The Administrative Agent
will promptly notify Grantor of the Administrative Agent's receipt of such
funds or other property for application against the Secured Obligations, but
failure to do so will not affect the validity or enforceability thereof. The
Administrative Agent may give notice of the above grant of security interest
and assignment of the aforesaid deposits and other sums, and authorization, to,
and make any suitable arrangements with, any such Holder of Secured Obligations
for effectuation thereof, and Grantor hereby irrevocably appoints the
Administrative Agent as its attorney to collect, following the occurrence and
during the continuance of a Default, any and all such deposits or other sums to
the extent any such payment is not made to the Administrative Agent by such
Holder of Secured Obligations or Affiliate thereof.
SECTION 4. Grantor Remains Liable. Anything herein to the contrary
notwithstanding, (a) Grantor shall remain solely liable under the contracts and
agreements included in the Collateral to the extent set forth therein to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Administrative
Agent of any of its rights hereunder shall not release Grantor from any of its
duties or obligations under the contracts and agreements included in the
Collateral, and (c) neither the Administrative Agent nor the Holders of Secured
Obligations shall have any responsibility, obligation or liability under the
contracts and agreements included in the Collateral by reason of this
Agreement, nor shall the Administrative Agent or the Holders of Secured
Obligations be required or obligated, in any manner, to (i) perform or fulfill
any of the obligations or duties of Grantor thereunder, (ii) make any payment,
or make any inquiry as to the nature or sufficiency of any payment received by
Grantor or the sufficiency of any performance by any party under any such
contract or agreement or (iii) present or file any claim, or take any action to
collect or enforce any claim for payment assigned hereunder.
SECTION 5. Representations and Warranties. Grantor represents and
warrants, as of the date of this Agreement and as of each date hereafter
(except for changes permitted or contemplated by this Agreement) until
termination of this Agreement pursuant to Section 25:
(a) The correct corporate name of Grantor is set forth in the first
paragraph of this Agreement and the Grantor's Federal tax identification number
is 35-1778566. The locations listed on Schedule 2 constitute all locations at
which Inventory and/or Equipment is located and Grantor has exclusive
possession and control of such Equipment and Inventory, except for such
Inventory and Equipment which is (i) temporarily in transit between such
locations, or (ii) temporarily stored with third parties or held by third
parties for processing, storage, engineering, evaluation or repairs, the proper
corporate names of which third parties, the location of such Inventory and/or
Equipment, the nature of the relationship between Grantor and such third
parties, and the maximum value of Inventory and/or Equipment at such third
parties are set forth in Schedule 2-A. Schedules 2 and 2A may be amended to
reflect (1) additional locations acquired or utilized in connection with
Permitted Acquisitions or (2) new arrangements with third parties for storage,
bailment or consignment provided in each case the Grantor is in full compliance
with Sections 6 and 10 below in connection with such locations. The chief
place of business and chief executive office of Grantor are located at the
address of Grantor set forth below the Grantor's
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signature on the Credit Agreement. All records concerning any Accounts and all
originals of all chattel paper which evidence any Account are located at the
addresses listed on Schedule 2 and none of the Accounts is evidenced by a
promissory note or other instrument except for such notes and other instruments
delivered to the Administrative Agent.
(b) Grantor is the legal and beneficial owner of the Collateral free and
clear of all Liens except for Liens permitted by Section 6.3(C) of the Credit
Agreement. Grantor currently conducts business under the name Brightpoint,
Inc. and, in certain areas and for certain operations, the additional trade
names listed on Schedule 3. The Grantor uses no trade names or fictitious
names, except as set forth on Schedule 3.
(c) This Agreement creates in favor of the Administrative Agent a legal,
valid and enforceable security interest in the Collateral. When financing
statements have been filed against Grantor in the offices listed on Schedule
2-B, the Administrative Agent will have a fully perfected first priority lien
on, and security interest in, the Collateral (other than Permitted Consignment
Inventory) in which a security interest may be perfected by such filing,
subject only to Liens permitted by Section 6.3(C) of the Credit Agreement.
(d) No authorization, approval or other action by, and no notice to or
filing with, any Governmental Authority that has not already been taken or made
and is in full force and effect is required (i) for the grant by Grantor of the
security interest in the Collateral granted hereby; (ii) for the execution,
delivery or performance of this Agreement by Grantor; or (iii) for the exercise
by the Administrative Agent of any of its rights or remedies hereunder.
(e) The Pledged Debt issued by any Affiliate of Grantor, and to the best
of Grantor's knowledge, all other Pledged Debt, has been duly authorized,
issued and delivered, and is the legal, valid, binding and enforceable
obligation of the respective issuer thereof.
SECTION 6. Perfection and Maintenance of Security Interests and Liens.
Grantor agrees that until all of the Obligations (other than contingent
indemnity Obligations) have been fully satisfied and the Credit Agreement has
been terminated, the Administrative Agent's security interests in and Liens on
and against the Collateral and all proceeds and products thereof shall continue
in full force and effect. Grantor shall perform any and all steps reasonably
requested by the Administrative Agent to perfect, maintain and protect the
Administrative Agent's security interests in and Liens on and against the
Collateral granted or purported to be granted hereby or to enable the
Administrative Agent to exercise its rights and remedies hereunder with respect
to any Collateral, including, without limitation:
(i) executing and filing financing or continuation statements, or
amendments thereof, in form and substance reasonably satisfactory to the
Administrative Agent;
(ii) delivering to the Administrative Agent all certificates, notes
and other instruments (including, without limitation, all letters of
credit on which Grantor is named as a beneficiary) representing or
evidencing Collateral, which certificates, notes and other instruments
have been duly endorsed or are accompanied by duly executed instruments
of
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transfer or assignment, including, but not limited to, note powers,
all in form and substance satisfactory to the Administrative Agent;
(iii) at the reasonable direction of Required Lenders, delivering to
the Administrative Agent warehouse receipts covering that portion of the
Collateral, if any, located in warehouses and for which warehouse
receipts are issued;
(iv) after the occurrence and during the continuance of a Default,
transferring Inventory and Equipment to warehouses designated by the
Administrative Agent or taking such other steps as are deemed necessary
by the Administrative Agent to maintain the Administrative Agent's
control of the Inventory and Equipment;
(v) marking conspicuously each instrument and chattel paper with a
legend, in form and substance satisfactory to the Administrative Agent,
indicating that such document, contract, chattel paper, or Collateral is
subject to the security interest granted hereby;
(vi) obtaining waivers of Liens and access agreements in
substantially the form of Exhibit A hereto (or such other form as may be
agreed to by the Administrative Agent) from landlords with respect to
Grantor's leased premises as of the Closing Date and with respect to all
leases entered into by the Grantor after the Closing Date;
(vii) obtaining waivers of Liens and access agreements in
substantially the form of Exhibit B (or such other form as may be agreed
to by the Administrative Agent) from bailees, consignees and warehousemen
with respect to any of the Inventory (other than Permitted Consignment
Inventory) held by any bailee or consignee or stored in warehouse
facilities, together with executed financing statements naming any such
bailee/consignee, as debtor, Grantor as secured party, and the
Administrative Agent as assignee of the secured party; and
(viii) executing and delivering all further instruments and
documents, and taking all further action, as the Administrative Agent may
reasonably request.
SECTION 7. Financing Statements. To the extent permitted by applicable
law, Grantor hereby authorizes the Administrative Agent to file one or more
financing or continuation statements and amendments thereto, disclosing the
security interest granted to the Administrative Agent under this Agreement
without Grantor's signature appearing thereon, and the Administrative Agent
agrees to notify Grantor when such a filing has been made. Grantor agrees that
a carbon, photographic, photostatic, or other reproduction of this Agreement or
of a financing statement is sufficient as a financing statement. If any
Inventory (other than Permitted Consignment Inventory) or Equipment is in the
possession or control of any warehouseman or Grantor's agents or processors,
Grantor shall, upon the Administrative Agent's request, notify such
warehouseman, agent or processor of the Administrative Agent's security
interest in such Inventory and Equipment and, upon the Administrative Agent's
request, instruct them to hold all such Inventory or Equipment for the
Administrative Agent's account and subject to the
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Administrative Agent's instructions.
SECTION 8. Filing Costs. Grantor shall pay the costs of, or incidental
to, all recordings or filings of all financing statements, including, without
limitation, any filing expenses incurred by the Administrative Agent pursuant
to Section 7.
SECTION 9. Schedule of Collateral. Grantor shall furnish to the
Administrative Agent from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Administrative Agent may reasonably request, all in
reasonable detail.
SECTION 10. Equipment and Inventory. Grantor covenants and agrees with
the Administrative Agent that from the date of this Agreement and until
termination of this Agreement pursuant to Section 25, Grantor shall:
(a) Keep the Equipment and Inventory (other than Equipment or Inventory
sold or disposed of as permitted by the Credit Agreement) at the places
specified in Section 5(a), except for Equipment and Inventory temporarily in
transit between such locations, and deliver written notice to the
Administrative Agent at least thirty (30) days prior to establishing any other
location at which or third party with which it reasonably expects to maintain
Inventory and/or Equipment in which location or with which third party all
action required by this Agreement shall have been taken with respect to all
such Equipment and Inventory;
(b) Maintain or cause to be maintained in good repair, working order and
condition, excepting ordinary wear and tear and damage due to casualty, all of
the Equipment, and make or cause to be made all appropriate repairs, renewals
and replacements thereof, as quickly as practicable after the occurrence of any
loss or damage thereto which are necessary or desirable to such end; and
(c) Comply with the terms of the Credit Agreement with respect to such
Equipment and Inventory, including, without limitation, the maintenance and
insurance provisions set forth in Section 6.2 of the Credit Agreement.
SECTION 11. Accounts. Grantor covenants and agrees with the
Administrative Agent that from and after the date of this Agreement and until
termination of this Agreement pursuant to Section 25, Grantor shall:
(a) Keep its chief place of business and chief executive office and the
office where it keeps its records concerning the Accounts at its address set
forth below the Grantor's signature on the Credit Agreement, and keep the
offices where it keeps all originals of all chattel paper which evidence
Accounts at the locations therefor specified in Section 5(a) or, upon thirty
(30) days' prior written notice to the Administrative Agent, at such other
locations within the United States in a jurisdiction where all actions required
by Section 6 shall have been taken with respect to the Accounts. Grantor will
hold and preserve such records (in accordance with Grantor's usual document
retention practices) and chattel paper and will permit representatives of the
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Administrative Agent at any time during normal business hours to inspect and
make abstracts from such records and chattel paper; and
(b) In any suit, proceeding or action brought by the Administrative Agent
under any Account comprising part of the Collateral, Grantor will save,
indemnify and keep each of the Holders of Secured Obligations harmless from and
against all expenses, loss or damage suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction of liability whatsoever of the obligor
thereunder, arising out of a breach by Grantor of any obligation or arising out
of any other agreement, indebtedness or liability at any time owing to or in
favor of such Holder of Secured Obligations from Grantor, and all such
obligations of Grantor shall be and shall remain enforceable against and only
against Grantor and shall not be enforceable against any of the Holders of
Secured Obligations.
SECTION 12. Report of Third Party Locations; Leased Real Property.
Grantor covenants and agrees with the Administrative Agent that from and after
the date of this Agreement and until termination of this Agreement pursuant to
Section 25, that:
(a) Promptly following, but not later than ninety (90) days after, the
close of each fiscal year Grantor will furnish to the Administrative Agent a
report certified to be true and correct by Grantor containing a list of each of
the Grantor's leased premises or premises where Inventory is or may be stored
with bailees, consignees or a warehouseman; the name or names of all owners of
such premises; rentals or other fees being paid; and whether Grantor has
obtained waivers of Liens and access agreements from the appropriate Person
with respect to such Collateral at such premises in accordance with Section 6;
and
(b) Grantor agrees that, from and after the occurrence of a Default, the
Administrative Agent may, but need not, make any payment or perform any act
hereinbefore required of Grantor with respect to the Grantor's leased premises
in any form and manner deemed expedient. All money paid for any of the
purposes herein authorized and all other moneys advanced by the Administrative
Agent to protect the lien hereof shall be additional Secured Obligations
secured hereby and shall become immediately due and payable without notice and
shall bear interest thereon at the default interest rate applicable to Base
Rate Loans as provided in Section 2.11 of the Credit Agreement until paid to
the Administrative Agent in full.
(c) Grantor agrees that it will not amend any lease in a manner that
materially and adversely affects the interests of the Holders of Secured
Obligations without the Administrative Agent's prior written consent.
SECTION 13. General Covenants. Grantor covenants and agrees with the
Administrative Agent that from and after the date of this Agreement and until
termination of this Agreement pursuant to Section 25, Grantor shall:
(a) Keep and maintain at Grantor's own cost and expense satisfactory and
complete records of Grantor's Collateral in a manner consistent with Grantor's
current business practice, including, without limitation, a record of all
payments received and all credits granted
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with respect to such Collateral. Grantor shall, for the Administrative
Agent's further security, deliver and turn over to the Administrative Agent or
Administrative Agent's designated representatives at any time following the
occurrence and during the continuation of a Default, copies of any such books
and records (including, without limitation, any and all computer tapes,
programs and source and object codes relating to such Collateral in which
Grantor has an interest or any part or parts thereof); and
(b) Grantor will not create, permit or suffer to exist, and will defend
the Collateral against, and take such other action as is necessary to remove,
any Lien on such Collateral other than Liens permitted under Section 6.3(C) of
the Credit Agreement, and will defend the right, title and interest of the
Administrative Agent in and to Grantor's rights to such Collateral, including,
without limitation, the proceeds and products thereof, against the claims and
demands of all Persons whatsoever.
SECTION 14. The Administrative Agent Appointed Attorney-in-Fact. Grantor
hereby irrevocably appoints the Administrative Agent as Grantor's
attorney-in-fact, with full authority in the place and stead of Grantor and in
the name of Grantor or otherwise, from time to time in the Administrative
Agent's discretion, to take any action and to execute any instrument which the
Administrative Agent may deem reasonably necessary or advisable to accomplish
the purposes of this Agreement, including, without limitation, (a) following
the occurrence and during the continuance of a Default, to:
(i) obtain and adjust insurance required to be paid to the
Administrative Agent or any Holders of Secured Obligations
pursuant to the Credit Agreement;
(ii) ask, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to
become due under or in respect of any of the Collateral;
(iii) receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with
clause (i) or (ii) above; and
(iv) file any claims or take any action or institute any
proceedings which the Administrative Agent may deem necessary or
desirable for the collection of any of the Collateral, or
otherwise to enforce the rights of the Administrative Agent with
respect to any of the Collateral;
and (b) at any time, to:
(i) obtain access to records maintained for Grantor by
computer services companies and other service companies or
bureaus;
(ii) send requests under Grantor's, the Administrative
Agent's or a fictitious name to Grantor's customers or account
debtors for verification of Accounts provided that the
Administrative Agent gives the Grantor notice prior to initiating
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any such verifications; and
(iii) do all other things reasonably necessary to carry out
this Agreement.
SECTION 15. The Administrative Agent May Perform. If Grantor fails to
perform any agreement contained herein or in the Credit Agreement, the
Administrative Agent may, upon three days' prior notice to the Grantor,
perform, or cause performance of, such agreement, and the expenses of the
Administrative Agent incurred in connection therewith shall be payable by
Grantor under Section 22.
SECTION 16. The Administrative Agent's Duties. The powers conferred on
the Administrative Agent hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the safe custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Administrative
Agent shall not have any duty as to any Collateral. The Administrative Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which the Administrative Agent accords
its own property, it being understood that the Administrative Agent shall be
under no obligation to take any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral, but may do so
at its option, and all reasonable expenses incurred in connection therewith
shall be for the sole account of Grantor and shall be added to the Secured
Obligations.
SECTION 17. Remedies. (a) If any Default shall have occurred and be
continuing:
(i) The Administrative Agent shall have, in addition to other rights and
remedies provided for herein or otherwise available to it, all the rights and
remedies of a secured party upon default under the UCC (whether or not the UCC
applies to the affected Collateral) and further, the Administrative Agent may,
without notice, demand or legal process of any kind (except as may be required
by law), all of which Grantor waives, at any time or times, (x) enter Grantor's
owned or leased premises and take physical possession of the Collateral and
maintain such possession on Grantor's owned or leased premises, at no cost to
the Administrative Agent or any of the Holders of Secured Obligations, or
remove the Collateral, or any part thereof, to such other place(s) as the
Administrative Agent may desire, (y) require Grantor to, and Grantor hereby
agrees that it will at its expense and upon request of the Administrative Agent
forthwith, assemble all or any part of the Collateral as directed by the
Administrative Agent and make it available to the Administrative Agent at a
place to be designated by the Administrative Agent which is reasonably
convenient to the Administrative Agent and (z) without notice except as
specified below, sell, lease, assign, grant an option or options to purchase or
otherwise dispose of the Collateral or any part thereof at public or private
sale, at any exchange, broker's board or at any of the offices of the
Administrative Agent or elsewhere, for cash, on credit or for future delivery,
and upon such other terms as the Administrative Agent may deem commercially
reasonable. Grantor agrees that, to the extent notice of sale shall be
required by law, at least ten (10) days' written notice to Grantor of the time
and place of any public sale or the time after
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<PAGE> 206
which any private sale is to be made shall constitute reasonable notification.
The Administrative Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Administrative Agent may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned;
(ii) The Administrative Agent shall apply all cash proceeds received by
the Administrative Agent in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral (after payment of any
amounts payable to the Administrative Agent pursuant to Section 22), for the
benefit of the Holders of Secured Obligations, against all or any part of the
Secured Obligations in such order as may be required by the Credit Agreement
or, to the extent not specified therein, as is determined by the Required
Lenders. Any surplus of such cash or cash proceeds held by the Administrative
Agent and remaining after payment in full of all the Secured Obligations shall
be paid over to Grantor or to whomsoever may be lawfully entitled to receive
such surplus;
(b) Grantor waives all claims, damages and demands against the
Administrative Agent arising out of the repossession, retention or sale of any
of the Collateral or any part or parts thereof, except any such claims, damages
and awards arising out of the gross negligence or willful misconduct of the
Administrative Agent or any of the Holders of Secured Obligations, as the case
may be, as determined in a final non-appealable judgment of a court of
competent jurisdiction; and
(c) The rights and remedies provided under this Agreement are cumulative
and may be exercised singly or concurrently and are not exclusive of any rights
and remedies provided by law or equity.
SECTION 18. Exercise of Remedies. In connection with the exercise of
its remedies pursuant to Section 17, the Administrative Agent may, (i)
exchange, enforce, waive or release any portion of the Collateral and any other
security for the Secured Obligations; (ii) apply such Collateral or security
and direct the order or manner of sale thereof as the Administrative Agent may,
from time to time, determine; and (iii) settle, compromise, collect or
otherwise liquidate any such Collateral or security in any manner following the
occurrence of a Default, without affecting or impairing the Administrative
Agent's right to take any other further action with respect to any Collateral
or security or any part thereof.
SECTION 19. License. The Administrative Agent is hereby granted a
license or other right to use, following the occurrence and during the
continuance of a Default, without charge, (a) Grantor's labels, patents,
copyrights, trade secrets, trade names, trademarks, service marks, customer
lists and advertising matter, or any property of a similar nature, as it
pertains to the Collateral, in completing production of, advertising for sale,
and selling any Collateral, provided that the Administrative Agent uses quality
standards at least substantially equivalent to those of Grantor for the
manufacture, advertising, sale and distribution of Grantor's products and
services and (b) Grantor's rights under all licenses to the extent that such
sub-license does not constitute a breach of Grantor's license.
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SECTION 20. Injunctive Relief. Grantor recognizes that in the event
Grantor fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy of law may prove to be inadequate
relief to the Holders of Secured Obligations; therefore, Grantor agrees that
the Holders of Secured Obligations, if the Administrative Agent so determines
and requests, shall be entitled to temporary and permanent injunctive relief in
any such case without the necessity of proving actual damages.
SECTION 21. Interpretation and Inconsistencies; Merger.
(a) The rights and duties created by this Agreement shall, in all cases,
be interpreted consistently with, and shall be in addition to (and not in lieu
of), the rights and duties created by the Credit Agreement and the other Loan
Documents. In the event that any provision of this Agreement shall be
inconsistent with any provision of any other Loan Document, such provision of
the other Loan Document shall govern.
(b) Except as provided in subsection (a) above, this Agreement represents
the final agreement of the Grantor and the Administrative Agent with respect to
the matters contained herein and may not be contradicted by evidence of prior
or contemporaneous agreements, or subsequent oral agreements, between the
Grantor and the Administrative Agent or any other Holder of Secured
Obligations.
SECTION 22. Expenses. Grantor will upon demand pay to the Administrative
Agent and/or the Holders of Secured Obligations the amount of any and all
reasonable expenses, including the reasonable fees and disbursements of their
counsel and of any experts and agents, as provided in Section 10.7 of the
Credit Agreement.
SECTION 23. Amendments, Etc. No amendment or waiver of any provision of
this Agreement nor consent to any departure by Grantor herefrom shall in any
event be effective unless the same shall be in writing and signed by the
Administrative Agent and Grantor, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
SECTION 24. Notices. All notices and other communications provided for
hereunder shall be delivered in the manner set forth in Section 14.1 of the
Credit Agreement.
SECTION 25. Continuing Security Interest; Termination. (a) Except as
provided in Section 25(b), this Agreement shall create a continuing security
interest in the Collateral and shall (i) remain in full force and effect until
the later of the payment or satisfaction in full of the Obligations (other than
contingent indemnity obligations) and the termination of the Credit Agreement,
(ii) be binding upon Grantor, its successors and assigns and (iii) except to
the extent that the rights of any transferor or assignor are limited by the
terms of the Credit Agreement, inure, together with the rights and remedies of
the Administrative Agent hereunder, to the benefit of the Administrative Agent
and any of the Holders of Secured Obligations. Nothing set forth herein or in
any other Loan Document is intended or shall be construed to give any other
Person any right, remedy or claim under, to or in respect of this Agreement or
any other Loan Document
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<PAGE> 208
or any Collateral. Grantor's successors and assigns shall include, without
limitation, a receiver, trustee or debtor-in-possession thereof or therefor.
(b) Upon the payment in full in cash of the Obligations (other than
contingent indemnity obligations) and the termination of the Credit Agreement,
this Agreement and the security interest granted hereby shall terminate and all
rights to the Collateral shall revert to Grantor. Upon any such termination of
security interest, Grantor shall be entitled to the return, upon its request
and at its expense, of such of the Collateral held by the Administrative Agent
as shall not have been sold or otherwise applied pursuant to the terms hereof
and the Administrative Agent will, at Grantor's expense, execute and deliver to
Grantor such other documents as Grantor shall reasonably request to evidence
such termination. In connection with any sales of assets permitted under the
Credit Agreement, the Administrative Agent will release and terminate the liens
and security interests granted under this Agreement with respect to such
assets.
SECTION 26. Severability; No Strict Construction.
(a) It is the parties' intention that this Agreement be interpreted in
such a way that it is valid and effective under applicable law. However, if
one or more of the provisions of this Agreement shall for any reason be found
to be invalid or unenforceable, the remaining provisions of this Agreement
shall be unimpaired.
(b) The parties hereto have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties hereto and no presumption or burden or proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provisions
of this Agreement.
SECTION 27. GOVERNING LAW. THE ADMINISTRATIVE AGENT ACCEPTS THIS
AGREEMENT, ON BEHALF OF ITSELF AND THE HOLDERS OF SECURED OBLIGATIONS, AT
CHICAGO, ILLINOIS BY ACKNOWLEDGING AND AGREEING TO IT THERE. THIS AGREEMENT
SHALL BE GOVERNED BY AND INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE
INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE
OF ILLINOIS. WITHOUT LIMITING THE FOREGOING, ANY DISPUTE BETWEEN THE GRANTOR
AND THE ADMINISTRATIVE AGENT, ANY LENDER, OR ANY OTHER HOLDER OF SECURED
OBLIGATIONS ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT, AND
WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN
ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICTS OF LAWS
PROVISIONS) OF THE STATE OF ILLINOIS.
SECTION 28. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.
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(A) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION (B), EACH
OF THE PARTIES HERETO AGREES THAT ALL DISPUTES BETWEEN THEM ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, WHETHER ARISING IN CONTRACT,
TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED EXCLUSIVELY BY STATE OR FEDERAL
COURTS LOCATED IN CHICAGO, ILLINOIS, BUT THE PARTIES HERETO ACKNOWLEDGE THAT
ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE
OF CHICAGO, ILLINOIS. EACH OF THE PARTIES HERETO WAIVES IN ALL DISPUTES
BROUGHT PURSUANT TO THIS SUBSECTION ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(B) OTHER JURISDICTIONS. GRANTOR AGREES THAT THE ADMINISTRATIVE AGENT,
ANY OTHER LENDER OR ANY HOLDER OF SECURED OBLIGATIONS SHALL HAVE THE RIGHT TO
PROCEED AGAINST GRANTOR OR ITS PROPERTY IN A COURT IN ANY LOCATION TO ENABLE
SUCH PERSON TO (1) OBTAIN PERSONAL JURISDICTION OVER THE GRANTOR OR (2) REALIZE
ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE SECURED OBLIGATIONS OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF SUCH PERSON.
GRANTOR AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY
PROCEEDING BROUGHT UNDER THIS CLAUSE (B) BY SUCH PERSON TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER IN FAVOR OF SUCH PERSON ALL OF WHICH PERMISSIVE
COUNTERCLAIMS MAY BE BROUGHT ONLY IN THE JURISDICTION SET FORTH IN CLAUSE (A)
ABOVE. GRANTOR WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE
COURT IN WHICH SUCH PERSON HAS COMMENCED A PROCEEDING DESCRIBED IN THIS
SUBSECTION (B).
(C) SERVICE OF PROCESS; VENUE. GRANTOR WAIVES PERSONAL SERVICE OF ANY
PROCESS UPON IT AND, AS ADDITIONAL SECURITY FOR THE SECURED OBLIGATIONS,
IRREVOCABLY APPOINTS CT CORPORATION SYSTEM, 208 S. LASALLE STREET, CHICAGO,
ILLINOIS 60604 AS GRANTOR'S AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF
PROCESS ISSUED BY ANY COURT. GRANTOR IRREVOCABLY WAIVES ANY OBJECTION
(INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED
ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH IN ANY JURISDICTION SET FORTH ABOVE.
(D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
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<PAGE> 210
IRREVOCABLY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF,
CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH. EACH OF
THE PARTIES HERETO AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY
PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(E) WAIVER OF BOND. GRANTOR WAIVES THE POSTING OF ANY BOND OTHERWISE
REQUIRED OF ANY PARTY HERETO IN CONNECTION WITH ANY JUDICIAL PROCESS OR
PROCEEDING TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE SECURED
OBLIGATIONS OR TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
SUCH PARTY, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER,
PRELIMINARY OR PERMANENT INJUNCTION, THIS AGREEMENT.
(F) ADVICE OF COUNSEL. GRANTOR REPRESENTS TO THE ADMINISTRATIVE AGENT
THAT IT HAS DISCUSSED THIS AGREEMENT AND, SPECIFICALLY, THE PROVISIONS OF THIS
SECTION 28, WITH ITS COUNSEL, THAT IT BELIEVES THAT IF FULLY UNDERSTANDS ALL
RIGHTS THAT IT IS WAIVING AND THE EFFECT OF SUCH WAIVERS, THAT IT ASSUMES THE
RISK OF ANY MISUNDERSTANDING THAT IT AMY HAVE REGARDING ANY OF THE FOREGOING,
AND THAT IT INTENDS THAT SUCH WAIVERS SHALL BE A MATERIAL INDUEMENT TO THE
ADMINISTRATIVE AGENT AND THE HOLDERS OF SECURED OBLIGATIONS TO EXTEND THE
INDEBTEDNESS SECURED HEREBY..
IN WITNESS WHEREOF, Grantor has caused this Agreement to be duly executed
and delivered by its officer thereunto duly authorized as of the date first
above written.
BRIGHTPOINT, INC.
By:_____________________________________
Name:
Title:
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THE FIRST NATIONAL BANK OF CHICAGO,
as ADMINISTRATIVE AGENT
By:_______________________________
Name:
Title:
Signature Page to Brightpoint Inc. Security Agreement
<PAGE> 212
EXHIBIT A
To
Security Agreement
Form of Landlord Agreement
To: The First National Bank of Chicago,
as Administrative Agent
One First National Plaza
10th Floor
Chicago, Illinois 60670
Attention: Cory Olson
Brightpoint, Inc., a Delaware corporation ("Borrower"), is the lessee
under a lease between Borrower and [____________________________________ ] (the
"Lessor") covering the premises located at [__________________________] (the
"Premises") as more fully described in the lease attached hereto as Exhibit A
and as modified by any amendments, if any, attached thereto (collectively, the
"Lease"). The Lessor is the sole owner of the Premises. Borrower has certain
of its assets located on the Premises.
Borrower intends to enter into certain financing arrangements with a group
of lenders ("Lenders") including The First National Bank of Chicago, as
contractual representative for the Lenders (the "Administrative Agent") and, as
a condition to the Lenders agreeing to make loans and other financial
accommodations and extensions of credit to Borrower, the Administrative Agent
and Lenders require, among other things, that Borrower grant liens in favor of
the Administrative Agent for the benefit of the Administrative Agent and
Lenders on all of Borrower's personal property located on the Premises
("Collateral")[.] [and that Borrower grant a mortgage in favor of the Lender
covering Borrower's leasehold estate created by and under the Lease.]
In order to induce the Administrative Agent and Lenders (together with
their respective agents, successors and assigns) to enter into said financing
arrangements, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned hereby certifies
and agrees that:
(i) the Lease is in full force and effect, and in the form attached
hereto as Exhibit A, represents the full and complete agreement between
Borrower and the undersigned concerning the Premises and the Lease shall not be
amended or modified in any material respect without the Administrative Agent's
prior written consent, which consent shall not be unreasonably withheld;
(ii) Borrower is not in default under the Lease, nor, to the
undersigned's knowledge, are there any events or conditions which, by the
passage of time or giving of
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notice or both, would constitute a default thereunder by Borrower;
(iii) the undersigned will not assert against any of Borrower's
assets any statutory or possessory liens, including, without limitation,
rights of levy or distraint for rent, all of which it hereby waives [and
hereby subordinates to the lien of the Leasehold Mortgage];
(iv) the undersigned is not aware of any dispute, action, suit,
condemnation proceeding, claim, or right of setoff pending or threatened
with respect to the Lease or the Premises;
(v) none of the Collateral located on the Premises shall be deemed
to be fixtures;
(vi) the undersigned will notify the Administrative Agent if
Borrower defaults on its lease obligations to the undersigned and allow
the Administrative Agent thirty (30) days from the Administrative Agent's
receipt of notice in which to cure or cause Borrower to cure any such
defaults. If such default cannot reasonably be cured within the thirty
(30) day period, and provided the Administrative Agent is diligently
pursuing a cure, then the Administrative Agent shall have a reasonable
period to cure such default;
(vii) The undersigned shall accept performance by the
Administrative Agent of the Borrower's obligations under the Lease as
though the same had been performed by the holder of the Borrower's
interest therein at the time of such performance. Upon the cure of any
such default, any notice of Landlord advising of any default or any
action of the undersigned to terminate the Lease or to interfere with the
occupancy, use or enjoyment of the Premises by reason thereof, which
action has not been completed, shall be deemed rescinded and the Lease
shall continue in full force and effect. The undersigned shall not be
required to continue any possession or continue any action to obtain
possession upon the cure of any such default;
(viii) if, for any reason whatsoever, the undersigned either deems
itself entitled to redeem or to take possession of the Premises during
the term of Borrower's lease or intends to sell or otherwise transfer all
or any part of its interest in the Premises, the undersigned will notify
the Administrative Agent five (5) days before taking such action;
(ix) if Borrower defaults on its obligations to the Administrative
Agent or any Lender and, as a result, the Administrative Agent undertakes
to enforce its security interest in the Collateral, the undersigned will
cooperate with the Administrative Agent in its efforts to assemble all of
the Collateral located on the Premises, will permit the Administrative
Agent to remain on the Premises for ninety (90)days after the
Administrative Agent gives the undersigned notice of the default,
provided the Administrative Agent pays the rental payments due under the
Lease for the period of time the Administrative Agent uses the Premises,
or, at the Administrative Agent's option, to remove the Collateral from
the Premises within a reasonable time, not to exceed ninety (90) days
after the Administrative Agent gives the undersigned notice of the
default, provided the Administrative Agent pays the rental payments due
under the Lease for the period of time the Administrative Agent uses the
Premises, and will not hinder the
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<PAGE> 214
Administrative Agent's actions in enforcing its liens on the Collateral;
(x) if Borrower defaults on its obligations to the Lenders and the
Administrative Agent undertakes to enforce its security interest in the
Collateral [and/or to foreclose on Borrower's leasehold estate pursuant
to the Leasehold Mortgage], the Administrative Agent may, at its option
and by written notice to the undersigned, (1) lease the Premises from the
undersigned on the same terms as set forth in the Lease and exercise the
other rights as lessee thereunder as described therein and/or (2) assign
the Lease and/or the attornment rights hereunder to, or enter into a
sublease with, a purchaser of the Collateral which purchaser is
reasonably acceptable to the undersigned, and the undersigned shall
cooperate with any such enforcement action or foreclosure and consent to
the assumption of the Lease, the sublet of the Premises or foreclosure
sale of the leasehold estate; and
(xi) in the event that Borrower shall become a debtor under the
Federal Bankruptcy Code and, in connection therewith, Borrower shall
reject the Lease as an executory contract, then within thirty (30) days
following such rejection, upon the written request by the Administrative
Agent, the undersigned shall enter into a new lease of the Premises with
the Administrative Agent or its designee (who shall be reasonably
acceptable to the undersigned), for the benefit of the Lenders which new
lease (1) shall be effective as of the date of the termination of the
Lease, (2) shall be for a term expiring as of the last day of the term of
the Lease, and (3) shall be on substantially the same terms and
conditions as the Lease (including any provisions for renewal or
extension of the term of the Lease); provided that the Lender or such
designee, as the case may be, shall be required, as a condition to the
effectiveness of such new lease, to pay the Lessor any amount equal to
any rent remaining unpaid by Borrower under the Lease.
[The undersigned consents to the granting of the Leasehold Mortgage to the
Administrative Agent and to the liens, security interests and encumbrances
created by and resulting from the Leasehold Mortgage or other documents
collateral thereto in the form attached hereto as Exhibit B.]
Any notice(s) required or desired to be given hereunder shall be directed
to the party to be notified at the address stated herein.
The agreements contained herein shall continue in force until the earlier
of (i) the expiration date of the Lease (provided no provision is made for the
extension or renewal of the Lease) or (ii) the date on which all of Borrower's
obligations and liabilities to the Administrative Agent and Lenders are paid
and satisfied in full and all financing arrangements between the Administrative
Agent, Lenders and Borrower have been terminated.
The Lessor will notify all successor owners, transferees, purchasers and
mortgagees of the existence of this waiver. This waiver may not be modified or
terminated orally and shall be binding upon the successors, assigns and
personal representatives of the Lessor, upon any successor owner or transferee
of the Premises, and upon any purchasers, including any mortgagee, from the
Lessor.
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<PAGE> 215
THE LESSOR AGREES THAT NOTHING CONTAINED IN THIS WAIVER SHALL BE CONSTRUED
AS AN ASSUMPTION BY THE ADMINISTRATIVE AGENT OR ANY OF THE OTHER LENDERS OF ANY
OBLIGATIONS OF BORROWER CONTAINED IN THE LEASE.
THIS WAIVER SHALL NOT IMPAIR OR OTHERWISE AFFECT BORROWER'S OBLIGATIONS TO
PAY RENT AND ANY OTHER SUMS PAYABLE BY BORROWER OR TO OTHERWISE PERFORM ITS
OBLIGATIONS TO THE LESSOR PURSUANT TO THE TERMS OF THE LEASE.
Executed and delivered this ____ day of____________________ , l997, at
_______________________, ______________________.
[Name of Lessor]
By:__________________________
Title:____________________
Address:
_______________________
_______________________
______________________
AGREED & ACKNOWLEDGED:
BRIGHTPOINT, INC.
By:_______________
Title:____________
Address:
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<PAGE> 216
ACKNOWLEDGMENT (CORPORATE)
STATE OF _________________ )
) SS.
COUNTY OF_________________ )
Before me, a Notary Public in and for said County, personally appeared
____________, a __________________corporation, by the___________ of such
corporation, who acknowledged that (s)he did sign the foregoing instrument on
behalf of said corporation and that said instrument is the voluntary act and
deed of said corporation and his/her voluntary act and deed as such officer of
said corporation.
IN TESTIMONY WHEREOF, I have hereunto subscribed my name and affixed my
official seal this _____ day of_________________,1997 at ________________,
___________________________.
_______________________________
Notary Public
My Commission Expires:
(Notarial Seal)
5
<PAGE> 217
ACKNOWLEDGMENT (CORPORATE)
STATE OF__________________ )
) SS.
COUNTY OF________________ )
Before me, a Notary Public in and for said County, personally appeared
Brightpoint, Inc., a Delaware corporation, by the ___________________________
of such corporation, who acknowledged that (s)he did sign the foregoing
instrument on behalf of said corporation and that said instrument is the
voluntary act and deed of said corporation and his/her voluntary act and deed
as such officer of said corporation.
IN TESTIMONY WHEREOF, I have hereunto subscribed my name and affixed my
official seal this ______ day of _______________,1997 at ________________,
____________________________.
_______________________________
Notary Public
My Commission Expires:
(Notarial Seal)
6
<PAGE> 218
EXHIBIT B
TO
SECURITY AGREEMENT
Form of Bailee, Consignee and Warehouseman Letter
To: The First National Bank of Chicago,
as Administrative Agent
One First National Plaza
Suite 0374
Chicago, Illinois 60670-0374
Attention:
Ladies and Gentlemen:
Brightpoint, Inc., a Delaware corporation ("Borrower"), now does or
hereafter may deliver certain of its merchandise, inventory, or other of its
personal property at premises located at [______________________ ] (the
"Premises") owned or leased by the undersigned for processing, storage,
consignment or for the redirection of shipment.
Borrower has entered into certain financing arrangements with a group of
lenders (the "Lenders") including The First National Bank of Chicago (the
"Administrative Agent") and, as a condition to the loans and other financial
accommodations of the Lenders to Borrower, the Administrative Agent and the
Lenders require, among other things, that Borrower grant liens in favor of the
Administrative Agent for the benefit of the Administrative Agent and the
Lenders on all of Borrower's property located on the Premises ("Collateral").
To induce the Administrative Agent and the Lenders (together with their
respective agents, successors and assigns) to enter into said financing
arrangements, and for other good and valuable consideration, the undersigned
hereby agrees that:
(i) it will not assert against any of Borrower's assets any
statutory or possessory liens, including, without limitation,
rights of levy or distraint for rent, all of which it hereby
waives;
(ii) the Collateral shall be identifiable as being owned by
Borrower and kept reasonably separate and distinct from other
property in the possession of the undersigned;
(iii) none of the Collateral located on the Premises shall
be deemed to be fixtures; and
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(iv) if Borrower defaults on its obligations to the Lenders
or the Administrative Agent and, as a result, the Administrative
Agent undertakes to enforce its security interest in the
Collateral, the undersigned (a) will cooperate with the
Administrative Agent in its efforts to assemble all of the
Collateral located on the Premises, (b) will permit the
Administrative Agent to either remain on the Premises for ninety
(90)days after the Administrative Agent gives the undersigned
notice of default or, at the Administrative Agent's option, to
remove the Collateral from the Premises within a reasonable time,
not to exceed ninety (90)days after the Administrative Agent gives
the undersigned notice of default, provided in either instance
that the Administrative Agent leaves the Premises in the same
condition as existed immediately prior to such ninety (90)day
period, and the Administrative Agent shall indemnify the
undersigned for any damages arising solely out of its occupancy of
the Premises, and (c) will not hinder the Administrative Agent's
actions in enforcing its liens on the Collateral.
Any notice(s) required or desired to be given hereunder shall be directed
to the party to be notified at the address stated herein.
The agreements contained herein shall continue in force until all of
Borrower's obligations and liabilities to the Administrative Agent and Lenders
are paid and satisfied in full and all financing arrangements among the
Administrative Agent, the Lenders and Borrower have been terminated.
The undersigned will notify all successor owners, transferees, purchasers
and mortgagees of the existence of this agreement. The agreements contained
herein may not be modified or terminated orally and shall be binding upon the
successors, assigns and personal representatives of the undersigned, upon any
successor owner or transferee of any of the Premises, and upon any purchasers,
including any mortgagee, from the undersigned.
Executed and delivered this ____ day of __________, 199_, at
_______________________.
[Name and Address of Bailee,
Consignee or Warehouseman]
(By)_______________________
2
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SCHEDULE 1
TO
SECURITY AGREEMENT
Pledged Debt:
1
<PAGE> 221
SCHEDULE 2
TO
SECURITY AGREEMENT
Locations of Collateral:
(for Owned or Leased Locations)
2
<PAGE> 222
SCHEDULE 2-A
TO
SECURITY AGREEMENT
Third Party Locations:
Corporate Name and Collateral Description Maximum
Address of Third Party Address of Relationship Amount
---------------------- ---------- --------------- -------
3
<PAGE> 223
SCHEDULE 2-B
TO
SECURITY AGREEMENT
Financing Statement Filing Locations:
4
<PAGE> 224
SCHEDULE 3
TO
SECURITY AGREEMENT
Trade Names:
5
<PAGE> 225
SCHEDULE 4
TO
SECURITY AGREEMENT
Permitted Consignment Inventory
6
<PAGE> 226
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1. Defined Terms................................................ 1
SECTION 2. Grant of Security............................................ 2
SECTION 3. Authorization................................................ 4
SECTION 4. Grantor Remains Liable....................................... 5
SECTION 5. Representations and Warranties............................... 5
SECTION 6. Perfection and Maintenance of Security Interests and Liens... 6
SECTION 7. Financing Statements......................................... 7
SECTION 8. Filing Costs................................................. 8
SECTION 9. Schedule of Collateral....................................... 8
SECTION 10. Equipment and Inventory...................................... 8
SECTION 11. Accounts..................................................... 8
SECTION 12. Report of Third Party Locations; Leased Real Property........ 9
SECTION 13. General Covenants............................................ 9
SECTION 14. The Administrative Agent Appointed Attorney-in-Fact......... 10
SECTION 15. The Administrative Agent May Perform........................ 11
SECTION 16. The Administrative Agent's Duties........................... 11
SECTION 17. Remedies.................................................... 11
SECTION 18. Exercise of Remedies........................................ 12
SECTION 19. License..................................................... 12
SECTION 20. Injunctive Relief........................................... 12
SECTION 21. Interpretation and Inconsistencies; Merger.................. 13
</TABLE>
7
<PAGE> 227
<TABLE>
<S> <C>
SECTION 22. Expenses.................................................... 13
SECTION 23. Amendments, Etc. ........................................... 13
SECTION 24. Notices..................................................... 13
SECTION 25. Continuing Security Interest; Termination................... 13
SECTION 26. Severability; No Strict Construction........................ 14
SECTION 27. GOVERNING LAW............................................... 14
SECTION 28. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL..... 14
(A) EXCLUSIVE JURISDICTION................................. 14
(B) OTHER JURISDICTIONS.................................... 15
(D) WAIVER OF JURY TRIAL................................... 15
(E) WAIVER OF BOND......................................... 16
(F) ADVICE OF COUNSEL...................................... 16
</TABLE>
8
<PAGE> 1
Exhibit (11.1)
Statement Re: Computation of Earnings Per Share
(000s omitted, except per share data)
<TABLE>
<CAPTION>
Six Months Ended June 30
------------------------
1996 1997
--------- -------
<S> <C> <C>
Primary:
Average shares outstanding 19,952 22,114
Net effect of stock options and warrants-
based on the treasury stock method using
average market price 754 1,045
------- -------
Total 20,706 23,159
======= =======
Historical income before income taxes $ 5,270
Deduct pro forma income taxes 2,447
-------
Pro forma net income (A) $ 2,823 $10,283
======= =======
Per share amount $ 0.14 $ 0.44
======= =======
Fully diluted:
Average shares outstanding 19,952 22,114
Net effect of dilutive stock options and
warrants - based on the treasury stock
method using the greater of period end
market price or the average market price 857 1,045
------- -------
Total 20,809 23,159
======= =======
Historical income before income taxes $ 5,270
Deduct pro forma income taxes 2,447
-------
Pro forma net income (A) $ 2,823 $10,283
======= =======
Per share amount $ 0.14 $ 0.44
======= =======
</TABLE>
(A) 1996 includes a provision for income taxes as if Allied Communications had
been subject to income taxes for the entire period presented.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP
We consent to the reference to our firm under caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Brightpoint, Inc.
for the registration of 4,600,000 shares of its common stock and to the
inclusion of and incorporation by reference therein of our report dated January
28, 1997, with respect to the financial statements of Brightpoint, Inc. included
therein and incorporated by reference in its Annual Report (Form 10-K) for the
year ended December 31, 1996 and the related financial statement schedule
included therein, filed with the Securities and Exchange Commission.
Ernst & Young LLP
Indianapolis, Indiana
July 14, 1997
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Registration Statement on Form S-3/A of
Brightpoint, Inc. of our report on Allied Communications, Inc. and Affiliates
dated February 23, 1996 on our audits of the financial statements of Allied
Communications, Inc. and Affiliates. We also consent to the reference to our
Firm under the caption "Experts."
COOPERS & LYBRAND LLP
Philadelphia, Pennsylvania
July 11, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
UNAUDITED FINANCIAL STATEMENTS AS OF JUNE 30, 1997 AND FOR THE SIX MONTHS THEN
ENDED INCLUDED IN THE FORM S-3 (No. 333-29533) FILED ON JULY 15, 1997, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 16,939
<SECURITIES> 0
<RECEIVABLES> 119,343
<ALLOWANCES> 2,161
<INVENTORY> 98,729
<CURRENT-ASSETS> 245,366
<PP&E> 19,175
<DEPRECIATION> 2,369
<TOTAL-ASSETS> 286,157
<CURRENT-LIABILITIES> 77,802
<BONDS> 97,501
223
0
<COMMON> 0
<OTHER-SE> 110,012
<TOTAL-LIABILITY-AND-EQUITY> 286,157
<SALES> 419,196
<TOTAL-REVENUES> 419,196
<CGS> 385,180
<TOTAL-COSTS> 385,180
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,106
<INCOME-PRETAX> 15,206
<INCOME-TAX> 4,540
<INCOME-CONTINUING> 10,283
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,283
<EPS-PRIMARY> .44
<EPS-DILUTED> .44
</TABLE>
