Appaloosa Management LP – ‘SC 13D/A’ on 8/1/06 re: Delphi Corp – EX-5

On:  Tuesday, 8/1/06, at 8:32am ET   ·   Accession #:  950127-6-467   ·   File #:  5-56957

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Amendment to General Statement of Beneficial Ownership   —   Schedule 13D
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: SC 13D/A    Amendment No. 1 to Schedule 13D                       11     42K 
 2: EX-3        Agreement                                              9     36K 
 3: EX-4        Engagement Letter                                      6     28K 
 4: EX-5        Agreement                                              7     30K 

EX-5   —   Agreement

EX-5
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                                                                       Exhibit 5
                                                                       ---------

July 31, 2006                                                                   

Appaloosa Management L.P.                                                       
26 Main Street                                                                  
Chatham, NJ 07928                                                               
Attention: Ronald Goldstein                                                     
Vice President                                                                  

Harbinger Capital Partners Master Fund I, Ltd.                                  
555 Madison Avenue, 16th Floor                                                  
New York, NY 10022                                                              
Attn: Philip A. Falcone                                                         

Gentlemen:                                                                      

Pursuant to our recent conversations, we are pleased to confirm the             
arrangements under which Merrill Lynch & Co. ("Merrill Lynch") will act         
as financial advisor to Appaloosa Management L.P. ("AMLP") and                  
Harbinger Capital Partners Master Fund I, Ltd. ("HCP") in connection            
with any potential restructuring, acquisition or other transaction              
involving Delphi Corporation (together with its affiliates and                  
subsidiaries, "Delphi")(a "Transaction").                                       

1. SCOPE OF ENGAGEMENT. As your financial advisor, we will perform such         
financial advisory and investment banking services for AMLP and HCP as          
are customary and appropriate in transactions of this type and as you           
reasonably request, including assisting AMLP and HCP in analyzing,              
structuring, negotiating and effecting the proposed Transaction on the          
terms and conditions of this letter agreement. In this regard, we               
propose to undertake certain activities on your behalf, including, if           
appropriate, the following:                                                     

(a)  performing financial analyses of Delphi in the context of the    
Transaction;                                                

     (b)  preparing financial analyses relating to Delphi's business plan in the
        context of the Transaction and assisting AMLP and HCP in structuring
and negotiating the financial aspects of any AMLP Sponsored 
Transaction (as defined below);                             

(c)  assisting AMLP and HCP in reviewing and analyzing financing      
alternatives for any proposed Transaction;                  

 (d)  assuming an agreement in principle is reached for the Transaction,
   advising and assisting AMLP and HCP in negotiating a definitive
Transaction agreement;                                      

  (e)  assisting AMLP and HCP in any proceedings relating to regulatory or
court approvals required for the Transaction; and           

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(f)  rendering such other financial advisory and investment banking   
      services as may from time to time be agreed upon by Merrill Lynch,
AMLP and HCP.                                               

In addition to the services described above, Merrill Lynch agrees to  
proceed with its internal review and commitment approval process to determine   
whether Merrill Lynch is prepared to undertake any required committed financing,
including as a backstop funder (a "Committed Financing"). Merrill Lynch agrees  
to use its reasonable best efforts to complete such approval process to obtain  
preliminary approval, subject to finalization of definitive terms, prior to     
making any financing proposal to AMLP and HCP with respect to any AMLP Sponsored
Transaction.                                                                    

As you are aware, financing transactions of this type are subject to  
satisfactory market conditions and to other customary conditions in the context 
of any such financing such as the determination of the ultimate structure of the
Transaction, including the terms of the Committed Financing, satisfactory       
completion of a business and legal due diligence review, Merrill Lynch          
commencing and completing its customary internal committee review and obtaining 
approval pursuant thereto and execution of definitive documentation in a form   
satisfactory to Merrill Lynch. This letter is not intended to be and should not 
be construed as a commitment with respect to the Committed Financing or any     
other financing and creates no obligation or liability on the part of Merrill   
Lynch or any of its affiliates in connection with or any agreement by Merrill   
Lynch or any of its affiliates to provide, place, underwrite or participate in  
any financing.                                                                  

     2. OTHER TRANSACTIONS. In consideration of the provision of Merrill Lynch's
services hereunder, AMLP and HCP agree that, during the Term (as defined below),
Merrill Lynch will be afforded an opportunity to participate with UBS Securities
LLC as backstop funders in respect of any debt or equity financing (including,  
without limitation, any bank or bond financing, broadly distributed equity or   
bond rights offering, any public or Rule 144A (under the Securities Act of 1933,
as amended) equity or debt financing and any private placement of equity or debt
for which placement an investment bank is hired) in connection with any         
Transaction sponsored by AMLP and not financed by (or the financing for which is
not led by) AMLP (an "AMLP Sponsored Transaction").                             

 Notwithstanding the foregoing, during the Term, Merrill Lynch will not,
without the express prior written consent of AMLP and HCP, (a) be engaged to act
as a financial advisor to any other party with respect to any Transaction (other
than an AMLP Sponsored Transaction or any other restructuring, acquisition or   
other transaction involving Delphi supported by AMLP) and (b) act as underwriter
or placement agent in an offering of any securities of Delphi that is not an    
AMLP Supported Transaction or that is in connection with any other              
restructuring, acquisition or other transaction involving Delphi that is not    
supported by AMLP; provided that in any event such restrictions will not apply  
upon the effective date of Delphi's emergence from bankruptcy. AMLP and HCP each
agrees to promptly inform Merrill Lynch whether or not it intends to support any
other restructuring, acquisition or other transaction involving Delphi.         

   Notwithstanding anything else in this letter agreement, Merrill Lynch and
its affiliates may effect or recommend transactions, vote or otherwise exercise 
its discretion in connection with holdings of any securities or other financial 
instruments or indebtedness, either as principal or as agent on behalf of third 
parties, in the ordinary course of Merrill Lynch's business or the business of  
its affiliates, in, relating to or involving (i) securities or financial        
instruments of Delphi, including, without limitation,                           

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transactions in which Merrill Lynch or its affiliates are acting as an          
investment advisor, an investment company, a broker or dealer in securities or  
other financial instruments, as a lender, loan participant, or as counterparty, 
a market maker, a specialist, an arbitrageur or other similar role, and (ii)    
financial assets and liabilities and related securitizations, factoring and     
servicing operations of Delphi, including, without limitation, transactions     
involving deposit accounts, commercial and consumer loans, commercial and       
residential mortgages, accounts receivable and other evidences of indebtedness. 

3. DISCLOSURE. Any document, advice, opinion or analysis provided by Merrill    
Lynch hereunder will be solely for the use and benefit of AMLP and HCP and,     
except as required by law or regulation, will not be quoted, reproduced,        
summarized, or otherwise disclosed, nor will any reference to Merrill Lynch be  
made, without Merrill Lynch's prior written consent; provided, however, that in 
the event of any such disclosure required by law or regulation, AMLP and HCP    
agree to give Merrill Lynch prompt notice thereof and to reasonably cooperate   
with Merrill Lynch in securing a protective order in the event of such          
disclosure and that any disclosure made pursuant to public filings shall be     
subject to Merrill Lynch's prior review. Notwithstanding any other provision of 
this letter agreement, immediately upon the commencement of discussions with    
respect to the transactions contemplated hereby, AMLP and HCP (and each         
employee, representative or other agent of AMLP and HCP) may disclose to any and
all persons, without limitation of any kind, the tax treatment and tax structure
of the transactions contemplated by this letter agreement and all materials of  
any kind (including opinions or other tax analyses) that are provided to AMLP   
and HCP relating to such tax treatment and tax structure.                       

4. INFORMATION. AMLP and HCP each agrees that it will furnish, or arrange to    
have furnished to, Merrill Lynch such information as Merrill Lynch believes     
appropriate to its engagement hereunder (for any information about Delphi, only 
to the extent it is reasonably able to do so), and will update such information 
as appropriate, and Merrill Lynch will use and rely on publicly available       
information available from generally recognized public sources (all such        
information so furnished or publicly available being the "Information"). AMLP   
and HCP recognize and consent to the fact that Merrill Lynch (i) will use and   
rely on the accuracy and completeness of the Information supplied or otherwise  
made available to Merrill Lynch without having any obligation to independently  
verify the same, (ii) does not assume responsibility for the accuracy or        
completeness of the Information or such other information, (iii) has no         
obligation to undertake an independent evaluation, appraisal or physical        
inspection of any assets or liabilities of AMLP, HCP or Delphi, and (iv) with   
respect to any financial forecasts (including cost savings and synergies) that  
may be furnished to or discussed with Merrill Lynch by AMLP, HCP or Delphi, will
assume that they have been reasonably prepared and reflect the best then        
currently available estimates and judgment of AMLP, HCP or Delphi's management. 

5. INDEPENDENT CONTRACTOR. It is understood and agreed that Merrill Lynch is    
retained to act solely as financial advisor and, in such capacity, shall act as 
an independent contractor with duties solely to AMLP and HCP and nothing in this
letter agreement or the nature of the services shall be deemed to create a      
fiduciary or agency relationship between Merrill Lynch, on the one hand, and    
AMLP, HCP or their respective stockholders, partners, members, creditors,       
employees or any other party, on the other hand.                                

6. TERM AND TERMINATION. This engagement may be terminated by AMLP, HCP or      
Merrill Lynch at any time after the date hereof upon 30 days prior written      
notice (the                                                                     

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"Term"), it being understood that the provisions of the last two                
paragraphs of Sections 2 (Other Transactions), 3 (Disclosure), 5 (Independent   
Contractor), 6 (Term and Termination), 7 (Indemnity) and 8 (Miscellaneous) shall
survive termination of this letter agreement.                                   

7. INDEMNITY. In connection with engagements such as this, it is Merrill Lynch's
policy to receive indemnification. AMLP and HCP agree to the provisions with    
respect to the indemnification of Merrill Lynch and the other matters set forth 
in Annex A. Annex A is incorporated by reference in its entirety into this      
letter. The obligations of AMLP and HCP hereunder shall be several (and not     
joint and several) obligations. The pro rata share of each party's obligation is
set forth under the name of such party on the signature pages to this letter    
agreement.                                                                      

8. MISCELLANEOUS.                                                               

(a)     Merrill Lynch is acting as Financial Advisor and is not an expert on,   
and cannot render opinions regarding, legal, accounting, regulatory or tax      
matters. You should consult with your other professional advisors concerning    
these matters before undertaking the proposed transaction.                      

(b)     Merrill Lynch is a full service securities firm engaged, either directly
or through its affiliates, in various activities including securities trading,  
investment management, financing and brokerage activities and financial advisory
services for companies, governments and individuals. In the ordinary course of  
these activities, Merrill Lynch and its affiliates may actively trade the debt  
and equity securities or other financial instruments (or related derivative     
instruments) of Delphi or other parties which may be the subject of the         
engagement contemplated by this letter agreement for their own account and for  
the accounts of their customers and may at any time hold long and short         
positions in such securities or instruments. The interests of the parties       
described in this Section 8(b) may conflict with yours.                         

(c)     Each party hereto acknowledges and agrees that (i) neither AMLP nor HCP 
has determined to pursue or support any Transaction (including, in the case of  
AMLP, an AMLP Sponsored Transaction), (ii) that AMLP, in its sole discretion,   
may decide not to pursue an AMLP Sponsored Transaction, (iii) that AMLP and HCP 
have no understandings, agreements or arrangements, whatsoever, among themselves
with respect to any Transaction (including an AMLP Sponsored Transaction) or    
with respect to the voting, disposition or any other investment decision with   
respect to the securities of Delphi, and (iv) that AMLP and HCP may vote,       
dispose of, and/or invest in any securities of Delphi without obligation or     
notice to any other party.                                                      

(d)     AMLP and HCP hereby consent to Merrill Lynch or its affiliates acting as
principal and not as agent or fiduciary of, or financial advisor to, AMLP and   
HCP with respect to any Committed Financing.                                    

(d)     No waiver, amendment or other modification of this letter agreement     
shall be effective unless in writing and signed by each party to be bound       
thereby. This letter agreement shall inure to the benefit of and be binding on  
AMLP, HCP and Merrill Lynch and their respective successors.                    

(e)     In case any provision of this letter agreement shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining    
provisions of this letter agreement shall not in any way be affected or impaired
thereby.                                                                        

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(f)     This letter agreement shall be governed by, and construed and           
interpreted in accordance with, the laws of the State of New York. Each of      
Merrill Lynch, AMLP and HCP (each on its own behalf and, to the extent permitted
by applicable law, on behalf of its stakeholders) waives all right to trial by  
jury in any action, proceeding or counterclaim (whether based upon contract,    
tort or otherwise) related to or arising out of this letter agreement.          

 Please confirm that the foregoing correctly sets forth our agreement by
signing and returning to Merrill Lynch the duplicate copy of this letter        
agreement enclosed herewith. We are delighted to accept this engagement and look
forward to working with you on the assignment.                                  

                                       Very truly yours,

                                                   MERRILL LYNCH, PIERCE, FENNER
                                              & SMITH INCORPORATED

                                       By /s/ Scott Levy
                                                      --------------------------
                                      Scott Levy
                                             Managing Director
                                                    Investment Banking Group

Accepted and Agreed to as of                                                    
the date first written above:                                                   

APPALOOSA MANAGEMENT L.P.                                                       
Pro rate share: 66.242%                                                     

By /s/ K. Maiman                                                                
---------------------------                                               
Kenneth Maiman, Authorized Signatory                                      

HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD.                                  
Pro rate share: 33.758%                                                     

By:  Harbinger Capital Partners Offshore Manager, LLC,                          
as investment manager                                                 

By /s/ Philip A. Falcone                                                        
---------------------------                                               
Philip A. Falcone, Senior Managing Director                               

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 ANNEX A

In the event that Merrill Lynch becomes involved in any threatened or 
pending claim, suit, action, proceeding, investigation or inquiry (including,   
without limitation, any shareholder or derivative action or arbitration         
proceeding) (collectively, a "Proceeding") to the extent such Proceeding arises 
out of or is in connection with Merrill Lynch's engagement as financial advisor 
pursuant to the engagement letter, including, without limitation, with respect  
to related services and activities prior to the date of the engagement letter,  
AMLP and HCP agree to indemnify, defend and hold Merrill Lynch harmless to the  
fullest extent permitted by law, from and against any losses, claims, damages,  
liabilities and expenses in connection with any such Proceeding, except to the  
extent that it shall be determined by a court of competent jurisdiction in a    
final judgment that such losses, claims, damages, liabilities and expenses      
resulted from the gross negligence or willful misconduct of Merrill Lynch. In   
the event that Merrill Lynch becomes involved in any capacity in any such       
threatened or pending Proceeding, AMLP and HCP will reimburse Merrill Lynch for 
its legal and other expenses (including the cost of any investigation and       
preparation) as such expenses are incurred by Merrill Lynch in connection       
therewith; provided to the extent it shall be determined by a court of competent
jurisdiction in a final judgment that such reimbursed expenses resulted from the
gross negligence or willful misconduct of Merrill Lynch, Merrill Lynch will     
promptly refund any such reimbursed expenses to AMLP and HCP.                   

     If such indemnification were not to be available for any reason (other than
a judicial determination of the gross negligence or willful misconduct of       
Merrill Lynch as set forth above), AMLP and HCP agree to contribute to the      
losses, claims, damages, liabilities and expenses involved (i) in the proportion
appropriate to reflect the relative benefits received or sought to be received  
by AMLP and HCP, on the one hand, and Merrill Lynch, on the other hand, in      
connection with the matters contemplated by the engagement letter (whether or   
not a Transaction is consummated) or (ii) if (but only if) the allocation       
provided in for clause (i) is for any reason held unenforceable, in the         
proportion appropriate to reflect the relative fault of AMLP and HCP, on the one
hand, and Merrill Lynch, on the other hand, as well as any other relevant       
equitable considerations. AMLP and HCP agree that for the purposes of clause (i)
in the prior sentence the relative benefits to AMLP, HCP and Merrill Lynch shall
be deemed to be in the same proportion that the total value paid or issued or   
contemplated to be paid or issued by AMLP and HCP to Delphi, its shareholders,  
stakeholders or creditors, as appropriate, or the total value received or       
contemplated to be received by AMLP and HCP from Delphi, as appropriate, in each
case as a result of or in connection with the Transaction, bears to the fees    
paid or to be paid to Merrill Lynch under the engagement letter; provided that, 
in no event (other than a final judicial determination of the gross negligence  
or willful misconduct of Merrill Lynch) shall AMLP and HCP contribute less than 
the amount necessary to assure that Merrill Lynch is not liable for losses,     
claims, damages, liabilities and expenses (including legal and other expenses)  
in excess of the amount of fees actually received by Merrill Lynch pursuant to  
the engagement letter.                                                          

   AMLP and HCP will not settle any Proceeding in respect of which indemnity
may be sought hereunder, whether or not Merrill Lynch or any other Indemnified  
Party is an actual or potential party to such Proceeding, without Merrill       
Lynch's prior written consent (which consent shall not be unreasonably withheld 
in the case of a Proceeding involving only the payment of money damages), unless
such settlement is confidential and (i) includes an unconditional release of    
Merrill Lynch from all liability in any way related to or arising out of such   
Proceeding and (ii) does not include an admission of                            

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fault, culpability or a failure to act by or with respect to Merrill Lynch or an
adverse statement regarding the reputation or conduct of Merrill Lynch.         

AMLP and HCP agree that no Indemnified Party shall have any direct or 
indirect liability to AMLP or HCP or any person asserting claims on behalf of or
in right of AMLP or HCP (including, without limitation, any of their respective 
security holders, partners or creditors) in connection with or as a result of   
either Merrill Lynch's engagement under the engagement letter or any matter     
referred to in the engagement letter, including, without limitation, related    
services and activities prior to the date of the engagement letter, except to   
the extent that it shall be determined by a court of competent jurisdiction in a
final judgment that any losses, claims, damages, liabilities or expenses        
incurred by AMLP and/or HCP resulted from the gross negligence or willful       
misconduct of Merrill Lynch in performing the services that are the subject of  
the engagement letter.                                                          

 For purposes of this Indemnification Annex, Merrill Lynch shall include
Merrill Lynch, Pierce, Fenner & Smith Incorporated, any of its affiliates, each 
other person, if any, controlling Merrill Lynch or any of its affiliates, their 
respective officers, current and former directors, employees and agents, and the
successors and assigns of all of the foregoing persons. The foregoing indemnity 
and contribution agreement shall be in addition to any rights that any          
indemnified party may have at common law or otherwise.                          

 It is understood that this Annex A shall not apply to any Proceeding in
connection with or arising out of any financings in connection with any         
Transaction. The indemnification arrangements with respect to any such          
financings shall be between Delphi and the arrangers/underwriters as provided in
the definitive agreements governing any such financings.                        

  AMLP and HCP agree to use their reasonable efforts to have Delphi assume
the obligations of AMLP and HCP under this Annex A and to the extent Delphi     
assumes such obligations, AMLP and HCP will thereafter be relieved of any       
further obligations under this Annex A.                                         

    The provisions of this Annex A shall continue to apply and shall remain in
full force and effect regardless of any modification or termination of the      
engagement or engagement letter of which this Annex A is a part or the          
completion of Merrill Lynch's services thereunder.                              

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
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Filed on:		8/1/06
		7/31/06		1					8-K,  SC 13D/A
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