[▇▇▇▇▇▇ CAPITAL PARTNERS LETTERHEAD]
EXHIBIT 10.36
June 6, 2002
PRIVILEGED AND CONFIDENTIAL
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Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Executive Vice President, Chief Financial Officer and Treasurer
Brightpoint, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Mr. ▇▇▇▇▇▇▇:
The purpose of this letter is to confirm the understanding and agreement (the
"Agreement") with Brightpoint, Inc. and its wholly and majority owned
subsidiaries (collectively, the "Company" or "Brightpoint"), concerning the
engagement of ▇▇▇▇▇▇ Capital Partners ("▇▇▇▇▇▇").
1. Engagement: ▇▇▇▇▇▇ is being retained to provide financial advisory services
for the Company in connection with the analysis, design and formulation of
financial restructuring options and, subsequently, the execution of a
restructuring plan adopted by the Company. ▇▇▇▇▇▇ is hereby engaged to
render financial advisory and, to the extent provided below, investment
banking services to the Company in relation to the areas described herein.
▇▇▇▇▇▇ agrees to staff this assignment with the following individuals:
▇▇▇▇▇▇ ▇▇▇▇▇, Managing Director; ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Managing Director; ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, Vice President; one associate and one analyst.
Upon retention, ▇▇▇▇▇▇ will work at the direction of the Company and in
conjunction with other advisors retained by the Company to immediately
review the Company's financial position, cash flow requirements, financial
history, operations, competitive environment, and assets to assist the
Company in determining its various financial restructuring alternatives. We
will also assist the Company in preparing business and restructuring plans,
in valuing the Company and its business lines, as appropriate, in
presenting valuation and capital structure options, and in formulating,
negotiating and consummating a financial restructuring or sale or merger
transaction that is acceptable to the Company (a "Restructuring
Transaction"). A Restructuring Transaction shall include, but not be
limited to a restructuring of existing obligations, an exchange
transaction, or a plan of reorganization consummated either out-of-court or
in-court. We will also assist the Company in raising capital at
management's direction (a "Corporate Finance Transaction"). A Corporate
Finance Transaction shall include: (i) contacting selected sources of
either bank, subordinated debt or equity capital, (ii) assist in
structuring the proposed financing, and (iii) assist in closing the
proposed financing. Provided, however, a Corporate Finance Transaction
shall not
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include any debt or equity issued by the Company in exchange for the
Convertible Notes or otherwise in connection with a Restructuring
Transaction. We will also assist the Company, at management's direction, in
connection with a merger and acquisition transaction which originates after
May 31, 2002 to a new group identified by ▇▇▇▇▇▇ or a group which ▇▇▇▇▇▇
negotiated with that results in (i) the acquisition of all of the
outstanding common stock of the Company, (ii) the acquisition of all, or
substantially all, of the assets of the Company, or (iii) any transaction
which results in the purchase of greater than 15% of the outstanding common
stock of the Company by an entity, person or group unrelated to the Company
(excluding any purchase of common stock as a result of the conversion, of,
or any purchase or other transfer of the Company's common stock, directly
or indirectly, related to the Convertible Notes) (a "Merger and Acquisition
Transaction"). A Merger and Acquisition Transaction shall include: (i)
contacting selected financial and strategic investors; (ii) assisting in
structuring a proposed Merger and Acquisition Transaction, and (iii)
closing a proposed Merger and Acquisition Transaction.
2. Term of Agreement: The term of this Agreement shall commence on July 1,
2002 and shall continue on a month-to-month basis for a period of twelve
calendar months, unless either party gives 15 days prior written notice of
termination to the other party. Upon any termination, the provisions of
section 3 shall survive the termination of this Agreement and shall remain
in effect with respect to the payment of fees due on or before the
effective date of termination and expenses incurred on or before the
effective date of termination. Additionally, if this Agreement is
terminated (other than termination of this Agreement by the Company for
cause or upon ▇▇▇▇▇▇'▇ failure to perform the services hereunder) or is not
renewed by the Company, ▇▇▇▇▇▇ shall be entitled to payment of the
Restructuring Fee if a Restructuring Transaction or the Merger and
Acquisition Fee if a Merger and Acquisition Transaction is consummated
within six months of the effective date of such termination. This Agreement
is terminable upon 15 days written notice by either ▇▇▇▇▇▇ or the Company
without cause; provided, however, that in no event shall the term of the
Agreement be less than 90 days if terminated by the Company.
3. Fees and Expenses:
(a) Monthly Advisory Fee: The Company shall pay ▇▇▇▇▇▇ a fee of $125,000
per month (the "Monthly Advisory Fees") for the term of the
engagement. Monthly Fees are payable on the first day of each calendar
month during the term hereof in advance and in cash. The first Monthly
Advisory Fee shall commence July 1, 2002.
(b) Expenses: ▇▇▇▇▇▇ shall be entitled to monthly reimbursement of
reasonable and actual out-of-pocket expenses incurred in connection
with the services provided under this Agreement. Out-of-pocket
expenses shall include, but not be limited to all reasonable travel
expenses (it being agreed that ▇▇▇▇▇▇ will only use coach air travel,
unless the Company approves another class of air travel in writing),
computer and research charges, attorney fees (provided that such
attorney fees shall not exceed $25,000 without the Company's prior
consent) messenger services, facsimile and long-distance telephone
calls incurred by ▇▇▇▇▇▇ in connection with the services to be
provided to the Company.
(c) Monthly Advisory Fees plus Expenses as billed are due within 10 days
of billing.
In addition to the Monthly Advisory Fees, ▇▇▇▇▇▇ shall be entitled to
the following Success Fees, upon ▇▇▇▇▇▇ meeting the applicable
conditions set forth herein. The Monthly Advisory Fees are
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credited 100% against any Success Fees earned. Success Fees shall
include any one of the following:
(d) Corporate Finance Fee: In connection with a Corporate Finance
Transaction, the Corporate Finance Fee is payable upon the funding of
new senior secured bank debt, unsecured debt, or equity. The fee is
calculated as five percent (5%) of any new equity capital raised,
three percent (3%) of any new unsecured debt raised, and one percent
(1%) of any new senior secured debt raised; or;
(e) Restructuring Fee: In connection with a Restructuring Transaction, the
Restructuring Fee shall be $1.5 million payable in cash upon (1)
closing of an out-of-court restructuring through an exchange or tender
offer or other mechanism, (2) obtaining the requisite consents from
the requisite constituencies to a "pre-packaged" in-court
restructuring plan of reorganization, and the confirmation thereof, or
(3) the confirmation of a plan of reorganization (other than a
"pre-packaged" plan, which is described in (2) above) in an in-court
restructuring (in each case approved by the Company's Board of
Directors). The Restructuring Fee shall not be payable in the event
the zero-coupon, subordinated convertible notes due 2018 (the
"Convertible Notes") are put to the Company in March 2003; or;
(f) Merger and Acquisition Fee: In connection with a Merger and
Acquisition Transaction, the Company shall pay ▇▇▇▇▇▇ a merger and
acquisition fee (the "Merger and Acquisition Fee") in cash equal to
one and one-half percent (1.5%) of the Aggregate Consideration
received by the Company in a Merger and Acquisition Transaction.
Aggregate Consideration shall include (but not be limited to) the
value to Shareholders or Creditors of the Company, including any
assumption of trade debt, bank debt, other funded debt, letters of
credit and convertible bond debt (at the lesser of accreted value or
assumed claim amount). ▇▇▇▇▇▇ agrees to provide a fairness opinion to
the Company as part of this fee. However, a separate engagement letter
defining precise terms of this agreement will be negotiated in good
faith by the Company and ▇▇▇▇▇▇. The Merger and Acquisition Fee is due
and payable upon completion of the Merger and Acquisition Transaction.
In the event that a Merger and Acquisition Transaction is contemplated
with a party that commenced discussion with the Company prior to May
31, 2002, the Company will use its reasonable efforts to provide
▇▇▇▇▇▇ the right to provide the Company with a fairness opinion. Any
such engagement shall be subject to entering into a mutually
acceptable separate letter agreement which stipulates customary terms
and conditions for such services.
In the event a Restructuring Transaction is not completed during ▇▇▇▇▇▇'▇
engagement, but is completed within six months after the termination of this
Agreement by the Company (other than because of a breach by ▇▇▇▇▇▇ of this
Agreement), then the Restructuring Transaction Fee (as applicable) shall be
payable to ▇▇▇▇▇▇ upon the completion of such Restructuring Transaction.
The fees payable to ▇▇▇▇▇▇ pursuant to this Agreement are for the various
advisory services described herein, including, without limitation, Restructuring
Transaction. To the extent ▇▇▇▇▇▇ is requested by the Company to perform any
financing, or other divestiture or investment banking services not specifically
provided by this Agreement, such fees shall be mutually agreed upon by ▇▇▇▇▇▇
and the Company in writing, in advance and may be in addition to the fees
described above, depending on the level and type of services required.
4. Company Information: The Company understands that ▇▇▇▇▇▇ will not be
responsible for independently verifying the accuracy of the information
provided by the Company (the "Information") and shall not be liable for
inaccuracies in any Information provided by or on behalf of the Company to
▇▇▇▇▇▇. The Company will use reasonable efforts to assure that all
Information supplied to ▇▇▇▇▇▇ by or on behalf of
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the Company will, as of its respective dates, be accurate and complete in
all material respects. Furthermore, the Company will reasonably cooperate
with ▇▇▇▇▇▇ in all phases of its financial advisory services. Unless
required by subpoena or other valid legal process, and prior written notice
is provided to you so that you may challenge such disclosure, we will not
disclose to any third party (other than our counsel) any portion of the
information so provided by you which constitutes confidential information.
We will not use such confidential information for any purpose other than
pursuant to our engagement hereunder.
5. Indemnification: As ▇▇▇▇▇▇ will be acting on behalf of the Company, the
Company agrees to the indemnification and other obligations set forth in
Schedule I hereto, which is an integral part hereof and is hereby
incorporated by reference. Further, in the event the Indemnified Person (as
defined in Schedule I) is requested or required to appear as a witness
(unless such appearance is as a result of such Indemnified Person's breach
of this Agreement) in any action brought by or on behalf of or against the
Company or which otherwise relates to this Agreement or the services
rendered by ▇▇▇▇▇▇ hereunder, the Company agrees to reimburse ▇▇▇▇▇▇ and
the Indemnified Person for all reasonable expenses incurred by them in
connection with such Indemnified Person appearing and preparing to appear
as such a witness, including without limitation, the reasonable fees and
disbursements of legal counsel.
6. Bankruptcy Court Approval: In the event the Company commences an in-court
restructuring case, this Agreement is subject to the entry of an order of
the court having jurisdiction over such case approving the retention of
▇▇▇▇▇▇ pursuant to the terms hereof. The Company shall use its best efforts
to obtain prompt authorization of the retention of ▇▇▇▇▇▇ on the terms and
provisions in this Agreement pursuant to section 328(a) of the Bankruptcy
Code. The order approving the Agreement and authorizing the retention shall
be acceptable to ▇▇▇▇▇▇ in its reasonable discretion.
7. Entire Agreement: This Agreement represents the entire Agreement between
the parties and may not be modified except in writing signed by both
parties. This Agreement shall be governed by the laws of the State of New
York. This Agreement may be executed in counterparts, each of which shall
constitute an original. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provision.
8. Survival: The provisions of paragraphs 5, 6, 7, 8, 9, and 10 shall survive
the termination of this Agreement and shall remain in effect (to the extent
they apply specifically to the period following termination of this
Agreement).
9. Affiliation: The Company recognizes that ▇▇▇▇▇▇ has been retained only by
the Company and that the Company's engagement of ▇▇▇▇▇▇ is not deemed to be
on behalf of and is not intended to and does not confer rights upon any
security holders of the Company or any officers, agents, employees or
representatives of either the Company or any of the Company's affiliates.
No one other than the Company is authorized to rely upon the engagement of
▇▇▇▇▇▇ hereunder or any statements, advice, opinions or conduct of ▇▇▇▇▇▇
(except for the fairness opinion referred to in subsection (f) above.
10. Other Matters: If this letter correctly sets forth our Agreement on the
matters covered herein, please so indicate by signing and returning the
enclosed copy of this letter and signing and retaining the duplicate we are
enclosing for your records. Upon execution by both parties, this letter
will constitute a legally binding Agreement between the Company and ▇▇▇▇▇▇.
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We trust the foregoing terms and provisions are agreeable to you, and request
that you sign and return the enclosed copy of this Agreement to us.
▇▇▇▇▇▇ CAPITAL PARTNERS
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Its: Vice President
BRIGHTPOINT, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Executive Vice President, Chief Financial Officer and Treasurer
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SCHEDULE I
This Schedule I is a part of and is incorporated into that certain
letter agreement (the "Agreement"), dated June 1, 2002 by and between
Brightpoint, Inc. (the "Company") and ▇▇▇▇▇▇ Capital Partners L.L.C.
("▇▇▇▇▇▇"). Capitalized terms not defined herein shall have the same meaning
assigned in the Agreement.
The Company shall indemnify and hold harmless ▇▇▇▇▇▇ and its affiliates
and their respective directors, officers, employees, attorneys and other agents
appointed by any of the foregoing and each other person, if any, controlling
▇▇▇▇▇▇ or any of its affiliates (▇▇▇▇▇▇ and each such person and entity being
referred to as an "Indemnified Person"), from and against any finally determined
losses, claims, damages, judgments, assessments, costs and other liabilities
(collectively, "Liabilities"), and will reimburse each Indemnified Person for
all fees and expenses (including the reasonable fees and expenses of counsel)
(collectively, "Expenses") as they are incurred in investigating, preparing,
pursuing or defending any claim, action, proceeding or investigation, whether or
not in connection with pending or threatened litigation and whether or not any
Indemnified Person is a party (collectively, "Actions"), arising out of or in
connection with advice or services rendered or to be rendered by an Indemnified
Person pursuant to the Agreement, the transaction contemplated thereby or any
Indemnified Persons' actions or inactions in connection with any such advice,
services or transaction (the "Services"); provided that the Company will not be
responsible for any Liabilities or Expenses of any Indemnified Person that are
determined by a judgment of a court of competent jurisdiction, which judgment is
no longer subject to appeal or further review, to have resulted from such
Indemnified Person's gross negligence or willful misconduct in connection with
any of the advice, actions, inactions or services referred to above. The Company
shall also reimburse ▇▇▇▇▇▇ for all Expenses as they are incurred in connection
with enforcing such Indemnified Persons' rights under the Agreement (including
without limitation its rights under this Schedule I). Such Indemnified Person
shall reasonably cooperate with the defense of any Actions. Notwithstanding the
foregoing, the Company shall not be responsible for (i) expenses (including
attorney fees) related to disputes as to the Agreement between the Company and
▇▇▇▇▇▇, or (ii) as to ▇▇▇▇▇▇'▇ work hereunder.
Upon receipt by an Indemnified Person of actual notice of an Action
against such Indemnified Person with respect to which indemnity may be sought
under the Agreement, such Indemnified Person shall promptly notify the Company
in writing; provided that failure to so notify the Company shall not relieve the
Company from any liability which the Company or any other person may have on
account of this indemnity or otherwise, except to the extent the Company shall
have been materially prejudiced by such failure. The Company may, upon receipt
of notice, assume the defense of any such Action including the employment of
counsel reasonably satisfactory to ▇▇▇▇▇▇. Any Indemnified Person shall have the
right to employ separate counsel in any Action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person, unless: (i) the Company has failed promptly to assume
the defense and employ counsel or (ii) in the written opinion of ▇▇▇▇▇▇'▇ legal
counsel a conflict of interest exists with the Company; provided that the
Company shall not in such event be responsible hereunder for the fees and
expenses of more that one separate counsel in connection with any Action in the
same jurisdiction, in addition to any local counsel. The Company shall not be
liable for any settlement of any Action effected without its written consent
(which shall not be unreasonably withheld). In addition, the Company will not,
without prior written consent of ▇▇▇▇▇▇ (which shall not be unreasonably
withheld), settle, compromise or consent to the entry of any judgment in or
otherwise seek to terminate any pending or threatened Action in respect of which
indemnification or contribution may be sought hereunder (whether or not any
Indemnified Person is a party thereto) unless such settlement, compromise,
consent or termination includes an unconditional release of such Indemnified
Person from all liabilities arising out of such Action.
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In the event that the foregoing indemnity is not available to an
Indemnified Person in accordance with the Agreement pursuant to the requirements
of applicable law, the Company shall contribute to the Liabilities and Expenses
paid or payable by such Indemnified Person in such proportion as is appropriate
to reflect (i) the relative benefits to the Company, on the one hand, and to
▇▇▇▇▇▇, on the other hand, of the matters contemplated by the Agreement, or (ii)
if the allocation provided by the immediately preceding clause is not permitted
by the applicable law, not only such relative benefits but also the relative
fault of the Company, on the one hand, and ▇▇▇▇▇▇, on the other hand, in
connection with the matters as to which such Liabilities or Expenses relate, as
well as any other relevant equitable considerations. For purposes of this
paragraph, the relative benefits to the Company, on the one hand, and to ▇▇▇▇▇▇,
on the other hand, of the matters contemplated by this Agreement shall be deemed
to be in the same proportion as (a) the total value paid or received or
contemplated to be paid or received by the Company in the transaction, whether
or not any transaction is consummated, bears to (b) the fees paid or payable to
▇▇▇▇▇▇ under the Agreement.
No Indemnified Person shall have any liability (whether direct or
indirect, in contract or tort or otherwise) to the Company for or in connection
with advice or services rendered or to be rendered by any Indemnified Person
pursuant to the Agreement, the transactions contemplated thereby or any
Indemnified Person's actions or inactions in connection with any such advice,
services or transactions except for Liabilities (and related Expenses) of the
Company that are determined by a judgment of a court of competent jurisdiction,
which judgment is no longer subject to appeal or further review, to have
resulted solely from such Indemnified Person's gross negligence or willful
misconduct in connection with any such advice, actions, inactions or services.
These indemnification, contribution and other provisions of this
Schedule I shall (i) remain operative and in full force and effect regardless of
any termination of the Agreement or completion of the engagement by ▇▇▇▇▇▇; (ii)
inure to the benefit of any successors, assigns, heirs or personal
representative of any Indemnified Person; and (iii) be in addition to any other
rights that any Indemnified Person may have.
If, before the earlier of (i) the entry of an order confirming a
Chapter 11 plan for the Company (that order having become a final order no
longer subject to appeal), and (ii) the entry of an order closing the Company's
Chapter 11 cases, ▇▇▇▇▇▇ believes that it is entitled to the payment of any
amounts by the Company on account of the Company's indemnification, contribution
and/or reimbursement obligations under the Engagement Letter and Schedule I,
including without limitation the advancement of defense costs, ▇▇▇▇▇▇ will file
an application therefor in the Bankruptcy Court and the Company shall not pay
any such amounts to ▇▇▇▇▇▇ before the entry of a final order by the Bankruptcy
Court approving the payment. This paragraph is intended only to specify the
period of time under which the Bankruptcy Court shall have jurisdiction over any
request for fees and expenses by ▇▇▇▇▇▇ for indemnification, contribution or
reimbursement and is not a provision limiting the duration of the Company's
obligation to indemnify ▇▇▇▇▇▇.
Subject to the preceding paragraph, the Company shall indemnify ▇▇▇▇▇▇,
in accordance with the Engagement Letter and Schedule I thereto for any claim
arising from, related to, or in connection with the Services, but not for any
claim arising from, related to, or in connection with ▇▇▇▇▇▇'▇ performance of
any services other than the Services occurring following the commencement of
Chapter 11 proceedings over the Company unless such post-petition services and
indemnification therefor are approved by the Bankruptcy Court.
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