SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement. [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2)).
[ ] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Section 240.14a-12
Brightpoint, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
--------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
--------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
--------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------------------------------
(3) Filing Party:
--------------------------------------------------------------------------------
(4) Date Filed:
--------------------------------------------------------------------------------
BRIGHTPOINT, INC.
600 EAST 96TH STREET, SUITE 575
INDIANAPOLIS, INDIANA 46240
May 23, 2002
Dear Brightpoint, Inc. Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders
of Brightpoint, Inc. (the "Company") which will be held on Wednesday, June 26,
2002, at 9:00 A.M. Indianapolis time, at the Parkwood IV Conference Center, 500
East 96th Street, Indianapolis, Indiana 46240.
The Company's 2002 annual meeting will be held solely to tabulate the
votes cast and report the results of voting on (a) the election of the Class II
directors, (b) the proposal to amend the Company's Certificate of Incorporation
to effect a reverse split of the Company's issued and outstanding Common Stock,
(c) the ratification of the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending December 31, 2002 and those
other matters listed in the accompanying Proxy Statement. It is not anticipated
that any presentations or other business will be conducted at the meeting. A
written report of the results of the vote will be posted on the Company's web
site following the annual meeting.
This Proxy Statement and the accompanying proxy card are furnished to
the stockholders of the Company in connection with the solicitation by the Board
of Directors of the Company of proxies to be voted at the Annual Meeting of
Stockholders to be held on June 26, 2002, and any adjournment thereof.
The Notice of Annual Meeting and Proxy Statement which follow describe
the business to be conducted at the annual meeting.
Your Board of Directors unanimously believes that the election as a
director of the nominees listed in the accompanying Proxy Statement is in the
best interests of the Company and its stockholders, and accordingly, recommends
a vote "FOR" such nominees. Further, your Board of Directors unanimously
believes that an amendment to the Company's Certificate of Incorporation to
effect a reverse split of the Company's issued and outstanding shares of Common
Stock and the appointment of Ernst & Young LLP as the Company's independent
auditors is in the best interests of the Company and its stockholders, and
accordingly, recommends a vote "FOR" such proposals.
It is important that your shares be represented and voted. After
reading the enclosed Notice of Annual Meeting and Proxy Statement, please
complete, sign, date and return the enclosed proxy card in the envelope
provided. If the address on the accompanying material is incorrect, please
advise our Transfer Agent, American Stock Transfer & Trust Company, in writing,
at 59 Maiden Lane, New York, New York 10038.
You may submit your proxy vote with the enclosed paper card or you can
vote by telephone or via the Internet. See Voting by Telephone or via the
Internet in the Proxy Statement for further details. Please note that there are
separate telephone and Internet voting arrangements depending upon whether
shares are registered in your name or in the name of a bank or broker.
YOUR VOTE IS VERY IMPORTANT, AND WE WILL APPRECIATE A PROMPT RETURN OF
YOUR SIGNED PROXY CARD, YOUR PROMPT VOTE BY TELEPHONE OR VIA THE INTERNET. WE
APPRECIATE YOUR CONTINUED SUPPORT.
Sincerely yours,
Robert J. Laikin
Chairman of the Board and
Chief Executive Officer
PRELIMINARY BRIGHTPOINT, INC.
COPIES 600 EAST 96TH STREET, SUITE 575
INDIANAPOLIS, INDIANA 46240
--------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD WEDNESDAY, JUNE 26, 2002
--------------------------------------------------------------------------------
To the Stockholders of BRIGHTPOINT, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Brightpoint, Inc. ("Annual Meeting") will be held on Wednesday, June 26, 2002,
at 9:00 A.M. Indianapolis time, at the Parkwood IV Conference Center, 500 East
96th Street, Indianapolis, Indiana 46240 for the following purposes:
1. To elect three (3) Class II directors to hold office until the
Annual Meeting of Stockholders to be held in 2005 and until their
successors have been duly elected and qualified;
2. To consider and vote upon a proposed amendment to the Company's
Certificate of Incorporation to effect a combination of the Company's
issued and outstanding shares of Common Stock (the "Reverse Split");
3. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending December 31, 2002; and
4. To transact such other business as may properly come before the
Annual Meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on May 15, 2002
are entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
Brightpoint, Inc.'s 2002 Annual Meeting will be held solely to tabulate
the votes cast and report the results of voting on the matters listed in the
accompanying Proxy Statement. Certain senior executives of Brightpoint, Inc. may
be in attendance to answer questions following the Annual Meeting, however, no
formal presentation concerning the business of Brightpoint, Inc. will be made at
the Annual Meeting.
PLEASE NOTE THAT ATTENDANCE AT THE ANNUAL MEETING WILL BE LIMITED TO
STOCKHOLDERS OF BRIGHTPOINT, INC. AS OF THE RECORD DATE (OR THEIR AUTHORIZED
REPRESENTATIVES). IF YOUR SHARES ARE HELD BY A BANK OR BROKER, PLEASE BRING TO
THE MEETING YOUR BANK OR BROKER STATEMENT EVIDENCING YOUR BENEFICIAL OWNERSHIP
OF BRIGHTPOINT STOCK TO GAIN ADMISSION TO THE MEETING.
By Order of the Board of Directors,
Steven E. Fivel
Secretary
May 23, 2002
IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING:
PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PAPER PROXY CARD IN THE
ENVELOPE PROVIDED FOR THAT PURPOSE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. IF YOU CHOOSE YOU MAY ALSO VOTE BY TELEPHONE OR VIA THE INTERNET.
YOUR PROXY MAY BE REVOKED AT ANY TIME PRIOR TO EXERCISE, AND IF YOU ARE PRESENT
AT THE MEETING YOU MAY, IF YOU WISH, REVOKE YOUR PROXY AT THAT TIME AND EXERCISE
THE RIGHT TO VOTE YOUR SHARES PERSONALLY.
PRELIMINARY BRIGHTPOINT, INC.
COPIES
600 EAST 96TH STREET, SUITE 575
INDIANAPOLIS, INDIANA 46240
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, JUNE 26, 2002
This proxy statement (the "Proxy Statement") is furnished in
connection with the solicitation of proxies by the Board of Directors of
Brightpoint, Inc. (the "Company") for use at the Annual Meeting of Stockholders
(the "Annual Meeting") to be held on Wednesday, June 26, 2002, including any
adjournment or adjournments thereof, for the purposes set forth in the
accompanying Notice of Meeting.
Management intends to mail this Proxy Statement and the
accompanying form of proxy to stockholders on or about May 27, 2002.
Proxies in the accompanying form, duly executed and returned
to the management of the Company and not revoked, will be voted at the Annual
Meeting. Any proxy given pursuant to such solicitation may be revoked by the
stockholder at any time prior to the voting of the proxy by a subsequently dated
proxy, by written notification to the Secretary of the Company, or by personally
withdrawing the proxy at the Annual Meeting and voting in person.
The address and telephone number of the principal executive
offices of the Company are: 600 East 96th Street, Suite 575, Indianapolis,
Indiana 46240, telephone no.: (317) 805-4100.
The following questions and answers provide important
information about the Annual Meeting and this Proxy Statement:
Q. What am I voting on?
A. (a) Election of three Class II directors (Robert J. Laikin, Robert F. Wagner
and Rollin M. Dick), (b) amending the Company's Certificate of Incorporation to
effect a reverse split of the issued and outstanding shares of the Company's
common stock, and (c) ratifying the selection of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending December 31, 2002.
Q. Who is entitled to vote?
A. Stockholders of record as of the close of business on May 15, 2002, are
entitled to vote at the Annual Meeting. Each stockholder is entitled to one vote
for each share of the Company's common stock held.
Q. How do I vote?
A. You may sign and date each paper proxy card you receive and return it in the
prepaid envelope. If you return your signed proxy but do not indicate your
voting preferences, we will vote on your behalf FOR the election of the Class II
directors, the amendment of the Company's Certificate of Incorporation and the
ratification of Ernst & Young LLP as the Company's independent auditors as
specified in the Proxy Statement.
You may also vote by telephone or via the Internet. See Voting by Telephone or
via the Internet below for further details. Please note that there are separate
telephone and Internet voting arrangements depending upon whether shares are
registered in your name or in the name of a bank or broker.
Q. How may I revoke or change my vote?
A. You have the right to revoke your proxy any time before the meeting by (1)
notifying the Company's Secretary, or (2) returning a later-dated proxy. You may
also revoke your proxy by voting in person at the Annual Meeting.
Q. How do I sign the paper proxy card?
A. Sign your name exactly as it appears on the proxy card. If you are signing in
a representative capacity (for example, as an attorney, executor, administrator,
guardian, trustee, or the officer or agent of a company), you should indicate
your name and title or capacity. If the stock is held in custody for a minor
(for example, under the Uniform Transfers to Minors Act), the custodian should
sign, not the minor. If the stock is held in joint ownership, one owner may sign
on behalf of all the owners.
Q. What does it mean if I receive more than one proxy card?
A. It may mean that you hold shares registered in more than one account. Sign
and return all proxy cards to ensure that all your shares are voted. You may
call American Stock Transfer & Trust Company at 1-800-937-5449 if you have any
questions regarding the share information or your address appearing on the paper
proxy card.
Q. Who will count the votes?
A. A member of the Company's Corporate Finance staff will tabulate the votes and
act as the independent inspector of election.
Q. What constitutes a quorum?
A. A majority of the outstanding shares, present or represented by proxy, of the
Company's common stock constitutes a quorum for the Annual Meeting. As of May
15, 2002, 55,915,353 shares of the Company's common stock $.01 par value per
share (the "Common Stock") were issued and outstanding.
Q. How many votes are needed for the election of the directors?
A. The directors will be elected by a plurality of the affirmative votes cast at
the Annual Meeting, meaning the three nominees receiving the highest number of
votes FOR will be elected as directors. Only votes cast for a nominee will be
counted, except that a properly executed proxy that does not specify a vote with
respect to the nominees will be voted for the three nominees whose names are
printed on the proxy card (Robert J. Laikin, Robert F. Wagner and Rollin M.
Dick). Abstentions and broker non-votes (as described below) will have no effect
on the election of directors.
-2-
Q. How many votes are needed for the amendment to the Company's Certificate of
Incorporation to effect the Reverse Split?
A. The affirmative vote of the holders of a majority of the shares of Common
Stock outstanding on the Record Date is required to approve the amendment to the
Company's Certificate of Incorporation to effect the Reverse Split. Abstentions
and broker non-votes will have the same effect as a vote against the proposal to
amend the Company's Certificate of Incorporation to effect the Reverse Split.
Q. How many votes are needed for the ratification of the appointment of Ernst &
Young LLP as the Company's independent auditors for the fiscal year ending
December 31, 2002?
A. The affirmative vote of the holders of a majority of the shares of Common
Stock represented at the Annual Meeting in person or by proxy and entitled to
vote at the Annual Meeting is required for the ratification of the appointment
of Ernst & Young LLP as the Company's independent auditors for the fiscal year
ending December 31, 2002. Abstentions will have the same effect as a vote
against the proposal, however broker non-votes will not be treated as entitled
to vote on this matter and will therefore have no effect on the proposal to
ratify the appointment of Ernst & Young LLP as the Company's independent
auditors.
Q. What is a "broker non-vote"?
A. A "broker non-vote" occurs when a broker submits a proxy that does not
indicate a vote for some of the proposals because the broker has not received
instructions from the beneficial owners of how to vote on such proposals and
does not have discretionary authority to vote in the absence of instructions.
Q. Where will the Annual Meeting be held?
A. The Annual Meeting will be held at the Parkwood IV Conference Center, 500
East 96th Street, Indianapolis, Indiana 46240 on Wednesday, June 26, 2002, at
9:00 a.m Indianapolis time. Brightpoint, Inc.'s 2002 Annual Meeting will be held
solely to tabulate the votes cast and report the results of voting on the
matters listed in the proxy statement. Certain senior executives of the Company
may be in attendance to answer questions following the Annual Meeting, however,
no formal presentation concerning the Company's business will be made at the
Annual Meeting.
OUTSTANDING STOCK AND VOTING RIGHTS
Only stockholders of record at the close of business on May
15, 2002 (the "Record Date") are entitled to notice of and to vote at the Annual
Meeting. As of the Record Date, there were issued and outstanding 55,915,353
shares of Common Stock, the Company's only class of voting securities. Each
share entitles the holder to one vote on each matter submitted to a vote at the
Annual Meeting.
VOTING PROCEDURES AND PROXY INFORMATION
The Class II directors will be elected by the affirmative vote
of a plurality of the shares of Common Stock present in person or represented by
proxy at the Annual Meeting; approval of the amendment to the Company's
Certificate of Incorporation to effect the Reverse Split will require the
-3-
affirmative vote of a majority of the shares of Common Stock outstanding on the
Record Date; and ratification of the appointment of Ernst & Young LLP will
require the affirmative vote of a majority of the shares of Common Stock present
in person or represented by proxy and entitled to vote on the matter at the
Annual Meeting, in each case, provided a quorum exists. A quorum is established
if at least a majority of the outstanding shares of Common Stock as of the
Record Date are present in person or represented by proxy at the Annual Meeting.
All other matters at the meeting will be decided by the affirmative vote of a
majority of the shares of Common Stock present in person or represented by proxy
at the meeting and entitled to vote on the subject matter, provided a quorum
exists. Votes will be counted and certified by an Inspector of Election who is
expected to be a member of the Company's Corporate Finance staff.
In accordance with Delaware law, abstentions and "broker
non-votes" (i.e., proxies from brokers or nominees indicating that such persons
have not received instructions from the beneficial owner or other persons
entitled to vote shares as to a matter with respect to which the brokers or
nominees do not have discretionary power to vote) will be treated as present for
purposes of determining the presence of a quorum. For purposes of determining
approval of a matter presented at the meeting, abstentions will be deemed
present and entitled to vote and will, therefore, have the same legal effect as
a vote "against" a matter presented at the meeting. Broker non-votes will be
deemed not entitled to vote on the subject matter as to which the non-vote is
indicated. Abstentions and broker non-votes will have no effect on the election
of directors, but will have the same effect as a vote "against" the proposal to
amend the Company's Certificate of Incorporation to effect the Reverse Split.
Abstentions will have the same effect as a vote "against" the ratification of
the appointment of Ernst & Young as the Company's independent auditors, however
broker non-votes will not be treated as entitled to vote and therefore will have
no effect on such proposal.
The enclosed proxies will be voted in accordance with the
instructions thereon. Unless otherwise stated, all shares represented by such
proxy will be voted as instructed. Proxies may be revoked as noted above.
The entire cost of soliciting proxies, including the costs of
preparing, assembling, printing and mailing this Proxy Statement, the proxy and
any additional soliciting material furnished to stockholders, will be borne by
the Company. Arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries to send proxies and proxy materials to the
beneficial owners of stock, and such persons may be reimbursed for their
expenses by the Company.
VOTING BY TELEPHONE OR VIA THE INTERNET
For Shares Registered in the Name of a Brokerage Firm or Bank.
A number of brokerage firms and banks are participating in a program provided
through ADP Investor Communication Services that offers telephone and Internet
voting options. This program is different than the program provided by American
Stock Transfer & Trust Company for shares registered in the name of the
stockholder. If your shares are held in an account at a brokerage firm or bank
participating in the ADP program, you may vote those shares telephonically by
calling the telephone number referenced on your voting form. If your shares are
held in an account at a brokerage firm or bank participating in the ADP program,
you already have been offered the opportunity to elect to vote via the Internet.
Votes submitted via the Internet through the ADP program must be received by
11:59 p.m. (EDT) on June 25, 2002. The giving of such proxy will not affect your
right to vote in person should you decide to attend the Annual Meeting.
-4-
For Shares Directly Registered in the Name of the Stockholder.
Stockholders with shares registered directly with American Stock Transfer &
Trust Company may vote telephonically by calling American Stock Transfer & Trust
Company at 1-800-776-9437 or you may vote via the Internet at www.voteproxy.com.
The telephone and Internet voting procedures are designed to
authenticate stockholders identities, to allow stockholders to give their voting
instructions and to confirm that stockholders' instructions have been recorded
properly. Stockholders voting via the Internet through either American Stock
Transfer & Trust Company or ADP Investor Communication Services should
understand that there may be costs associated with electronic access, such as
usage charges from Internet access providers and telephone companies, that must
be borne by the stockholder.
-5-
ELECTION OF DIRECTORS
The Company's By-laws provide that the Board of Directors of
the Company is divided into three classes (Class I, Class II and Class III). At
each Annual Meeting of Stockholders, directors constituting one class are
elected for a three-year term. At this year's Annual Meeting, three (3) Class II
directors will be elected to hold office for a term expiring at the Annual
Meeting of Stockholders to be held in 2005. The Board of Directors has nominated
Robert J. Laikin, Robert F. Wagner and Rollin M. Dick to serve as Class II
directors. Each of the directors will be elected to serve during his term until
a successor is elected and qualified or until the director's earlier resignation
or removal.
At this year's Annual Meeting, the proxies granted by
stockholders will be voted individually for the election, as directors of the
Company, of the persons listed below, unless a proxy specifies that it is not to
be voted in favor of a nominee for director. In the event the nominees listed
below shall be unable to serve, it is intended that the proxy will be voted for
such other nominees as is designated by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ELECTION OF THE NOMINEES SPECIFIED BELOW.
The following table sets forth the name, age and principal
occupation of the nominees for election at this Annual Meeting and the length of
continuous service as a director of the Company:
CLASS II DIRECTORS
(To be elected)
(Term Expires in 2005)
PRINCIPAL OCCUPATION
NAME OF DIRECTOR AGE OR EMPLOYMENT DIRECTOR SINCE
---------------- --- ------------- --------------
Robert J. Laikin............. 38 Chairman of the Board and Chief Executive 1989
Officer of the Company
Robert F. Wagner............. 67 Partner of Law Firm of Lewis & Wagner 1994
Rollin M. Dick............... 70 Vice Chairman and Chief Financial 1994
Officer of Haverstick Consulting Inc.
-6-
The following tables set forth similar information with
respect to incumbent directors in Class I and Class III of the Board of
Directors who are not nominees for election at this Annual Meeting:
CLASS I DIRECTORS
(Term Expires in 2004)
PRINCIPAL OCCUPATION
NAME OF NOMINEE AGE OR EMPLOYMENT DIRECTOR SINCE
--------------- --- ------------- --------------
J. Mark Howell............... 37 President and Chief Operating Officer 1994
of the Company
Stephen H. Simon............. 36 President and Chief Executive Officer, 1994
Melvin Simon & Associates, Inc.
Todd H. Stuart............... 37 Vice President and Director of Stuart's 1997
Moving and Storage, Inc.
CLASS III DIRECTORS
(Term Expires in 2003)
PRINCIPAL OCCUPATION
NAME OF DIRECTOR AGE OR EMPLOYMENT DIRECTOR SINCE
---------------- --- ------------- --------------
John W. Adams ............... 53 Vice President of Browning Investments, 1994
Inc.
Jerre L. Stead .............. 59 Retired Chairman and Chief Executive 2000
Officer of Ingram Micro Inc.
-7-
Set forth below is a description of the backgrounds of each of
the directors and executive officers of the Company:
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
and Chief Operating Officer of the Company from September 1995 to April 16, 1998
and from July 16, 1998 to present. He 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.
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.
Rollin M. Dick has been a director of the Company since April
1994. From December 2000 to present Mr. Dick has been employed as the Vice
Chairman and Chief Financial Officer of Haverstick Consulting Inc., a
professional consulting firm offering business consulting, application
development and integration services. From February 1986 to April 2000, Mr. Dick
was Executive Vice President, Chief Financial Officer and a director of Conseco,
Inc., a publicly-held life insurance holding company.
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 an affiliate of Simon Property Group, a
publicly-held real estate investment trust. From November 1991 to December 1993,
Mr. Simon was Development Manager of Melvin Simon & Associates, Inc.
Jerre L. Stead has been a director of the Company since June
2000. From August 1996 to June 2000 he was Chairman of the Board and from August
1996 to March 2000 he was Chief Executive Officer of Ingram Micro Inc., a
worldwide distributor of information technology products and services. He served
as Chairman, President and Chief Executive Officer of Legent Corporation, a
software development company from January 1995 until its sale in September 1995.
Mr. Stead was Executive Vice President of American Telephone and Telegraph
Company, a telecommunications company and Chairman and Chief Executive Officer
of AT&T Global Information Solutions, a computer and communications company,
formerly NCR Corp. from 1993 to 1994. He was President of AT&T Global Business
Communications Systems, a communications company, from 1991 to 1993. Mr. Stead
was Chairman, President and Chief Executive Officer from 1989 to 1991 and
President from 1987 to 1989 of Square D Company, an industrial control and
electrical distribution products company. In addition, he held numerous
positions during a 21-year career at Honeywell. Mr. Stead is a Director of
Thomas & Betts Corp., Conexant Systems, Inc., Armstrong Holdings, Inc. and
Mobility Electronics, Inc.
-8-
Todd H. Stuart has been a director of the Company since
November 1997. Mr. Stuart has been Vice President, since May 1993, and Director
of Transportation, since May 1985, of Stuart's Moving and Storage, Inc., a
provider of domestic and international logistics and transportation services.
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.
Executive Officers:
In addition to Messrs. Laikin and Howell, the Company's
Executive Officers include Steven E. Fivel and Frank Terence.
Steven E. Fivel, age 41, 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 an affiliate of Simon
Property Group, 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.
Frank Terence, age 43, was appointed Executive Vice President,
Chief Financial Officer and Treasurer of the Company on April 22, 2002. From
August 2001 through April 2002, Mr. Terence was the Chief Financial Officer of
Velocitel, LLC, a wireless telecommunications infrastructure company with
operations in the United States, Latin America and Europe. From January 2000
through January 2001, Mr. Terence was Chief Financial Officer of eTranslate,
Inc., a web services company based in San Francisco. Previously, from October
1994 through December 1999, Mr. Terence was employed by Ingram Micro, Inc.,
holding several financial positions including Vice President and Chief Financial
Officer of its Frameworks Integration Services division and Vice President and
Chief Financial Officer for its Latin American division.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of Forms 3, 4 and 5 and amendments
thereto furnished to the Company with respect to its most recent fiscal year,
the Company believes that all required reports were filed on a timely basis.
MEETINGS OF DIRECTORS AND COMMITTEES
During the fiscal year ended December 31, 2001, the Board of
Directors held eight meetings. In addition, the Board took other action by
unanimous written consent in lieu of a meeting. During 2001, each member of the
Board participated in at least 75% of all Board and applicable committee
meetings held during the period for which he was a director.
The Board of Directors maintains a Compensation Committee
which has the power to establish the compensation policies of the Company and
the specific compensation of the Company's executive officers and to administer
the Company's 1994 Stock Option Plan, 1996 Stock Option Plan, the Non-Employee
Director Stock Option Plan and the Brightpoint, Inc. 1999 Employee Stock
Purchase Plan. The current members of the Compensation Committee are Messrs.
Wagner and Adams. During 2001, the Compensation Committee held one meeting and
also took action by unanimous written consent in lieu of a meeting.
-9-
The Board of Directors also maintains an Audit Committee which
has the power to recommend to the Board, and monitor the performance of, the
firm of independent public accountants to be selected by the Company and
supervise the audit and financial procedures of the Company. The current members
of the Audit Committee are Messrs. Dick, Stead and Stuart, none of whom are
employees of the Company and each of whom meet the independence and financial
literacy requirements under current National Association of Securities Dealers
corporate governance standards. The Audit Committee has a written charter that
sets forth the duties and responsibilities of its members. A copy of the charter
was attached as Exhibit A to the Company's Definitive Proxy Statement on
Schedule 14A filed with the Securities and Exchange Commission on April 27,
2001. During 2001, the Audit Committee held five meetings.
The Board of Directors has also designated an Executive
Committee which is comprised of Messrs. Dick, Howell, Laikin and Wagner. The
Executive Committee met two times in 2001. The Company does not have a
Nominating Committee.
REPORT OF AUDIT COMMITTEE
Prior to the filing of the Company's Annual Report on Form
10-K for the year ended December 31, 2001, the members of the Audit Committee
reviewed the audited financial statements to be included in the Form 10-K and
discussed the audited financial statements with members of management.
Subsequent to the filing of the Form 10-K, the Audit Committee conducted
discussions with its independent auditors, Ernst & Young LLP regarding the
matters required by the Statement on Auditing Standards No. 61 and, as required
by Independence Standards Board Standard No. 1, "Independence Discussion with
Audit Committees," the Audit Committee has discussed with and received the
required written disclosures and confirming letter from Ernst & Young LLP
regarding its independence and has discussed with Ernst & Young LLP its
independence. Based upon the review and discussions referred to above, the Audit
Committee has ratified its prior recommendation to the Board of Directors that
the audited financial statements be included in the Company's Annual Report on
Form 10-K for the year ended December 31, 2001.
Rollin M. Dick
Jerre L. Stead
Todd H. Stuart
-10-
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 (not including the Chief Executive
Officer) of the Company whose total individual compensation exceeded $100,000
for the Company's fiscal year ended December 31, 2001 (the "Named Executives").
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
------------------------------------------------------- -------
SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (1) OPTIONS
----------------------------------------- -----------------------------------------------------------------------------------------
Robert J. Laikin........................ 2001 $450,000 $- $88,550 140,000
Chairman of the Board and Chief 2000 350,000 288,750 2,550 340,000
Executive Officer 1999 275,000 250,000 2,400 350,000
J. Mark Howell.......................... 2001 325,000 - 76,050 110,000
President and Chief Operating Officer 2000 250,000 206,250 2,550 260,000(2)
1999 225,000 150,000 2,400 225,000
Phillip A. Bounsall (3)................. 2001 290,000 - 44,800 95,000
Executive Vice President, Chief 2000 225,000 185,625 2,550 230,000(2)
Financial Officer and Treasurer 1999 200,000 135,000 2,400 190,000
Steven E. Fivel......................... 2001 225,000 - 36,300 75,000
Executive Vice President, General 2000 175,000 108,400 2,550 175,000(2)
Counsel and Secretary 1999 162,500 100,000 2,400 110,000
(1) Represents the Company's matching contributions to the respective
employees 401(k) accounts. Does not include refunds to the 401(k) Plan
paid in 2001 of $1,349 and $1,251, respectively, relating to ERISA
compliance testing for the years 1999, 2000 and 2001. Also includes
payments received by the executive officers named above pursuant to the
offer to exchange certain stock options that the Company made to its
employees and directors during 2001.
(2) Does not include certain options originally granted in fiscal 1996 and
1997 to Messrs. Howell (750,000); Bounsall (125,000) and Fivel (62,500),
the expiration dates of which were extended during fiscal 2000 for three
years from their original expiration dates.
(3) Mr. Bounsall ceased to be Executive Vice President, Chief Financial
Officer and Treasurer of the Company on April 22, 2002.
-11-
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information with respect to
individual stock options granted during fiscal 2001 to each of the Named
Executives:
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
SHARES % OF TOTAL STOCK PRICE APPRECIATION FOR
UNDERLYING OPTIONS GRANTED OPTION TERM (2)
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION -----------------------------
NAME GRANTED(1) FISCAL YEAR PRICE ($/SH) DATE 5% 10%
---- --------- --------------- ----------- ---------- -------------- ------------
Robert J. Laikin............. 140,000 14.6 $ 3.875 2/22/2006 $ 149,883 $ 331,202
J. Mark Howell............... 110,000 11.5 3.875 2/22/2006 117,765 260,230
Phillip A. Bounsall(3)....... 95,000 9.9 3.875 2/22/2006 101,706 224,744
Steven E. Fivel.............. 75,000 7.8 3.875 2/22/2006 80,294 177,429
---------------
(1) All options were granted under the Company's 1994 Stock Option Plan.
All options are exercisable as to one-third of the shares covered
thereby on the first, second and third anniversaries of the date of
grant.
(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.
(3) Mr. Bounsall ceased to be Executive Vice President, Chief Financial
Officer and Treasurer of the Company effective on April 22, 2002.
-12-
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, 2001 and the value of unexercised stock options held by the Named
Executives as of December 31, 2001:
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT DECEMBER 31, 2001 DECEMBER 31, 2001 (1)
ACQUIRED VALUE ---------------------------- -----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------------- ----------- -------- ----------- ------------- ----------- -------------
Robert J. Laikin......... -- $ -- 350,001 339,999 $ -- $ --
J. Mark Howell........... -- -- 983,374 251,666 -- --
Phillip A. Bounsall(2)... -- -- 321,667 223,333 -- --
Steven E. Fivel.......... -- -- 192,501 164,999 -- --
---------------
(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.
(2) Mr. Bounsall ceased to be Executive Vice President, Chief Financial Officer
and Treasurer of the Company on April 22, 2002.
On August 31, 2001, the Company made an offer (the "Offer to
Exchange"), to its employees and members of the Board of Directors, to exchange
all options to purchase shares of the Company's common stock, outstanding under
its 1994 Stock Option Plan, 1996 Stock Option Plan and Non-Employee Directors
Stock Option Plan which options had (i) a grant date prior to March 1, 2001, and
(ii) an exercise price in excess of $10.00 per share. In exchange for the
options, participants received (a) a cash payment and (b) the grant of a new
option or new options, as applicable, in the amounts upon the terms and subject
to the conditions as set forth in the Offer to Exchange.
This Offer to Exchange expired on October 15, 2001. The total amount
of cash paid and recognized as compensation expense in 2001 pursuant to the
Offer to Exchange was $0.4 million. The individuals that were eligible and
elected to participate in the Offer were granted a new option or new options, as
applicable, on April 18, 2002. The number of shares subject to the new option or
new options, as applicable, was equal to one-third of the shares subject to the
options tendered and accepted by the Company for cancellation, rounded up to the
nearest whole share. The Company was contractually obligated to issue certain
additional options to officers, directors and other employees who participated
in the Offer to Exchange, which additional options had been authorized for grant
in August 2001 (the "August 2001 Options"), prior to the Offer to Exchange, but
deferred pending such officers, directors and employees participation in the
Offer to Exchange. Messrs. Laikin, Howell, Fivel and Bounsall, who were entitled
to receive 140,000, 110,000, 75,000, and 95,000 August 2001 Options,
respectively, have agreed to waive their rights to receive all such options.
DIRECTOR COMPENSATION
For the fiscal year ended December 31, 2001, non-employee directors
received annual cash compensation of $30,000 for services rendered in their
capacity as Board members. In addition,
-13-
members of the Executive, Audit and Compensation Committees received annual
payments of $6,400, $3,600 and $3,600, respectively, as members of such
committees. The Company has adopted a Non-Employee Director Stock Option Plan
(the "Director Plan") pursuant to which 937,500 shares of Common Stock are
reserved for issuance to non-employee directors. 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, Dick,
Simon and Wagner options to purchase 106,625 shares of Common Stock pursuant to
the Director Plan and 10,000 shares of Common Stock pursuant to the Company's
1996 Stock Option Plan and has granted Mr. Stuart and Mr. Stead options to
purchase 36,000, and 14,000 shares of Common Stock, respectively pursuant to the
Director Plan. During the year ended December 31, 2001, the Company granted
options to purchase 4,000 shares of Common Stock, at an exercise price of $4.016
per share, to each of Messrs. Adams, Dick, Simon, Stead, Stuart and Wagner.
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Company has entered into five-year "evergreen" employment
agreements with each of Messrs. Laikin and Howell which are automatically
renewable for successive one-year periods and provide for an annual base
compensation of $450,000 and $325,000 respectively, and such bonuses as 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 or terminates
the agreement without cause, 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 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 by the employee, without Good Reason, as defined, within 12 months
after a "change of control," or if prior to and not as a result of a change of
control, the employee's employment is terminated either by the employee for Good
Reason or by the Company other than for disability or Cause, as defined, the
employee will be entitled to receive severance pay equal to the highest of (a)
$2,250,000 for Mr. Laikin and $1,625,000 for Mr. Howell or (b) five times the
total compensation (including salary, bonus and the value of all perquisites)
received from the Company during the twelve months prior to the date of
termination. If after or as a result of a change of control, the employee's
employment is terminated either by the employee for Good Reason or by the
Company other than for disability or Cause, 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
granted to the employee) received from the Company during the twelve months
prior to the date of termination. In addition, (a) upon the occurrence of a
change of control, (b) if in breach of the agreement, the Company terminates the
employee's employment other than for disability or Cause, or (c) if the employee
terminates his employment for Good Reason at any time, the vesting of all
options granted to the employee will be accelerated so that the options become
immediately exercisable. For the 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) individuals who constituted the then current
Board of Directors of the Company ceasing to constitute a majority of the Board
of Directors, (ii) subject to certain specified exceptions, the acquisition of
beneficial ownership of 15% or more of the voting securities of the Company by
any person or entity not affiliated with the respective employee or the Company,
(iii) the commencement of a proxy contest against management for the election of
a majority
-14-
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 15% of the voting
securities of the Company, (iv) the consummation under certain conditions by the
Company of a reorganization, merger or consolidation or sale of all or
substantially all of the assets of the Company to any person or entity not
affiliated with the respective employee or the Company, or (v) the complete
liquidation or dissolution of the Company.
In addition, the Company has entered into a three-year "evergreen"
employment agreement with Mr. Fivel, which is automatically renewable for
successive one-year periods and provides for an annual base compensation of
$275,000. If the Company provides Mr. Fivel with notice that it desires to
terminate the agreement without cause, there is a final three year term
commencing on the date of such notice. The agreement provides otherwise for
substantially the same terms as the employment agreements described above,
except that if Mr. Fivel terminates his employment without Good Reason, as
defined, within 12 months after a "change of control," or if prior to and not as
a result of a change of control, Mr. Fivel terminates his employment for Good
Reason or his employment is terminated by the Company other than for disability
or Cause, as defined, Mr. Fivel will be entitled to receive the highest of (a)
$825,000 or (b) three times the total compensation (including salary, bonus and
the value of all perquisites ) received from the Company during the twelve
months prior to the date of termination. If after or as a result of a change of
control, Mr. Fivel terminates his employment for Good Reason or his employment
is terminated by the Company other than for disability or Cause, Mr. Fivel will
be entitled to receive severance pay equal to six times the compensation
(including, salary, bonus, and the value of all perquisites and the value of all
stock options granted to the employee) received or earned from the Company
during the twelve months prior to the date of termination. In addition, (a) upon
the occurrence of a change of control, (b) if in breach of the agreement, the
Company terminates Mr. Fivel's employment other than for disability or Cause, or
(c) if Mr. Fivel terminates his employment for Good Reason at any time, the
vesting of all options granted to Mr. Fivel will be accelerated so that the
options become immediately exercisable.
The Company had entered into an employment agreement with Mr. Bounsall
similar in all respects to the terms and conditions of its agreement with Mr.
Fivel except that (a) the annual base compensation for Mr. Bounsall under the
terms of the agreement was $290,000 and (b) if Mr. Bounsall terminated his
employment without Good Reason, as defined, within 12 months after a "change in
control" or if prior to and not as a result of a change in control, Mr. Bounsall
terminated his employment for Good Reason or his employment was terminated by
the Company other than for disability or cause, as defined in the agreement, Mr.
Bounsall would be entitled to receive the highest of (i) $870,000 or (ii) three
times the total compensation (including salary, bonus and the value of all
perquisites) received from the Company during the twelve months prior to the
date of termination. Mr. Bounsall ceased to be Executive Vice President, Chief
Financial Officer and Treasurer of the Company effective as of April 22, 2002.
In connection with the termination of Mr. Bounsall's employment and his
employment agreement with the Company, the Company has reached an agreement in
principal with Mr. Bounsall pursuant to which the Company expects to pay Mr.
Bounsall a severance payment in the aggregate amount of $1 million of which
$500,000 is expected to be paid to Mr. Bounsall on the date of execution of a
severance agreement and the balance of $500,000 is expected to be placed in
escrow to be released to him in January 2003.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company has a Compensation Committee of the Board of Directors
comprised of non-employee directors and 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. Mr. Wagner is a
partner in a law firm which received fees in exchange for services rendered to
the Company during the year ended December 31, 2001. The Board of Directors
which includes
-15-
Messrs. Laikin and Howell 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, 2001, 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.
REPORT ON EXECUTIVE COMPENSATION
As noted above, compensation of the Company's executive officers is
determined by the Board of Directors pursuant to recommendations made by the
Compensation Committee. There is no formal compensation policy for the Company's
executive officers, other than the employment agreements described above.
Compensation for executive officers consists of base salary, bonus and stock
option awards all of which are determined after taking into consideration a
variety of factors, including the Company's desire to retain key employees.
Base Salary. The base salaries of the Company's executives are fixed
pursuant to the terms of their respective employment agreements with the Company
subject to any increases as determined by the Board of Directors or the
Compensation Committee. The Compensation Committee reviews the salary of
executive officers for reasonableness based on job responsibilities and a
limited review of compensation practices for comparable positions at
corporations which compete with the Company in its business or are of comparable
size and scope of operations. The Committee's recommendations to the Board of
Directors are based primarily on informal judgments reasonably believed to be in
the best interests of the Company. In determining the base salaries of the
Company's executives during 2001, the Committee considered the Company's
financial and operating results in light of current market and industry
conditions. Salaries are reevaluated by the Committee each year to determine
whether such salaries are reasonable in light of each executive's expected
duties.
Certain executive officers who participated in the Company's October
2001 Offer to Exchange certain outstanding options, received cash as partial
consideration for the exchange of their eligible options, including payments of
$86,000 to Mr. Laikin, $73,000 to Mr. Howell, $33,750 to Mr. Fivel and $42,250
to Mr. Bounsall. The Compensation Committee did not consider such cash amounts
as part of the compensation paid to the Company's executive officers,
respectively, for their services in such capacities.
Bonuses. Bonuses for the Company's executive officers are not
determined through the use of specific criteria. Rather, the Committee bases
bonuses on the Company's overall performance, including, but not limited to
profitability, capital management and other qualitative and quantitative
measurements. In determining the amount of bonuses awarded, the Committee
considers current market factors, the Company's revenues and profitability for
the applicable period and each executive's contribution to the Company.
Primarily as a result of the Company's performance in 2001, the compensation
committee determined not to grant bonuses to the Company's executive officers
with respect to fiscal 2001.
Stock Options. Stock option awards under the Company's stock option
plans are intended to attract, retain and motivate personnel by affording them
an opportunity to receive additional compensation based upon the performance of
the Company's Common Stock. The size and grant of actual awards during 2001 was
determined by the Committee. The Committee's determination as to the size of
actual awards to individual executives was made after taking into account, among
other things, the relative responsibilities and contributions of the individual
executives. In October 2001, the
-16-
Company effectuated an Offer to Exchange to its employees, including executive
officers, and members of the Board of Directors, all outstanding options under
the Company's 1994 Stock Option Plan, 1996 Stock Option Plan and Non-Employee
Directors Stock Option Plan which had (i) a grant date prior to March 1, 2001
and (ii) an exercise price in excess of $10.00 per share. In exchange for
tendering their eligible options, participants, including executive officers of
the Company, received (a) a cash payment and (b) the grant of new options equal
to approximately one-third of the respective options tendered, which grant of
new options was made on April 18, 2002. In addition, on the date of grant of the
new options, the Company also granted certain additional options to those
participants in the Offer to Exchange for whom the Company had authorized the
grant of such additional options in August 2001, but had deferred the granting
of such additional options pending their participation in the Offer to Exchange.
Mr. Laikin's base salary, was paid in accordance with his employment
agreement. As noted above, as a result of the Company's performance in 2001, no
bonuses were awarded to the Company's executive officers, including Mr. Laikin.
Stock option awards for the year ended December 31, 2001 were based on the
Company's overall performance and, on the Offer to Exchange made by the Company
in October 2001. As discussed above in the section entitled "Aggregate Option
Exercises and Fiscal Year End Option Values," Mr. Laikin was among several
executives of the Company who agreed to waive their rights to receive all of
their August 2001 Options that were authorized for grant in August 2001 but
deferred pending their participation in the Offer to Exchange.
COMPENSATION COMMITTEE
Robert F. Wagner
John W. Adams
-17-
STOCK PERFORMANCE GRAPH
The following line graph compares, from December 31, 1996 through
December 31, 2001, the cumulative total stockholder return on the Company's
Common Stock with the cumulative total return on the stocks comprising the
NASDAQ Market Value Index and the Media General Financial Services Electronics
Wholesale Industry Group Index ("MG Group Index"). During 1998, Media General
Financial Services restructured its industry group classification system
replacing its former Electronic Equipment Distributors group with the
Electronics Wholesale Industry Group. The Company believes that this
restructuring did not materially affect the applicable index. The comparison
assumes $100 was invested on December 31,1996 in the Company's Common Stock and
in each of the foregoing indices and assumes reinvestment of all cash dividends,
if any, paid on such securities. The Company has not paid any cash dividends
and, therefore, the cumulative total return calculation for the Company is based
solely upon stock price appreciation and not upon reinvestment of cash
dividends. Historical stock price is not necessarily indicative of future stock
price performance.
[PERFORMANCE GRAPH]
12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
-------- -------- -------- -------- -------- --------
Brightpoint, Inc. 100.00 116.60 115.55 110.29 29.41 26.39
MG Group Index 100.00 108.94 89.74 107.66 82.45 81.50
NASDAQ Market Value Index 100.00 122.32 172.52 304.29 191.25 152.46
-18-
VOTING SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock as of the Record Date, based on
information obtained from the persons named below, (i) by each person known by
the Company to own beneficially more than five percent of the Company's Common
Stock, (ii) by each of the Named Executives, (iii) by each of the Company's
directors, and (iv) by all executive officers and directors of the Company as a
group:
AMOUNT AND
NATURE OF PERCENTAGE OF
BENEFICIAL OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNERSHIP(2) SHARES OWNED
--------------------------------------- ------------ -------------
Robert J. Laikin (3)......................... 889,533 1.5
J. Mark Howell (4)........................... 1,051,137 1.8
Steven E. Fivel (5).......................... 224,228 *
Phillip A. Bounsall (6)...................... 675,068 1.2
John W. Adams (7)............................ 8,900 *
Rollin M. Dick (8)........................... 808,999 1.4
Stephen H. Simon (9)......................... 44,000 *
Jerre L. Stead (10).......................... 4,000 *
Todd H. Stuart (11).......................... 4,000 *
Robert F. Wagner (12)........................ 24,150 *
Dimensional Fund Advisors Inc. (13).......... 3,051,722 5.3
All executive officers and directors
as a group (ten persons) (14)................ 3,058,947 5.4
-------------------
* Less than 1%.
(1) The address for each of such individuals, unless specified otherwise in a
subsequent footnote, is in care of Brightpoint, Inc., 600 East 96th Street,
Suite 575, Indianapolis, Indiana 46240.
(2) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the Record Date 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 Record Date have been exercised. Unless otherwise
indicated, we believe 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.
-19-
(3) Includes 396,668 shares which are exercisable within 60 days of the Record
Date. Includes 452,956 shares owned by Mr. Laikin. Includes 19,728 shares
allocated from the Brightpoint, Inc. 1999 Employee Stock Purchase Plan
("ESPP") and 20,181 shares allocated from the Brightpoint, Inc. 401k Plan
("401(k)"). Does not include options to purchase 523,332 shares.
(4) Includes 1,020,001 shares underlying options which are exercisable within
60 days of the Record Date. Includes 29,300 shares owned by J. Mark Howell
and 1,836 shares allocated from the 401(k). Does not include options to
purchase 418,333 shares.
(5) Includes 217,501 shares underlying options which are exercisable within 60
days of the Record Date. Includes 5,000 shares owned by Mr. Fivel. Includes
676 shares allocated from the ESPP and 1,051 shares allocated from the
401(k). Does not include options to purchase 219,999 shares.
(6) Includes 643,334 shares underlying options which are exercisable within 60
days of the Record Date. Includes 17,000 shares owned by Mr. Bounsall's
wife. Includes 7,948 shares allocated from the ESPP and 1,086 shares
allocated from the 401(k). Includes 5,700 shares held in the Howell Family
Educational Trust of which Mr. Bounsall is a trustee and as to which shares
Mr. Bounsall, as trustee, has voting and dispositive power.
(7) Includes (i) 4,900 shares owned through Mr. Adams' 401(K) Plan and (ii)
4,000 shares underlying options which are exercisable within 60 days of the
Record Date. Does not include options to purchase 14,667 shares.
(8) Includes: (i) 230,625 shares held in the name of Rollin M. Dick, (ii) 529,
874 shares held of record by JLT PR LLC, an entity in which Mr. Dick is the
sole managing member and a majority equity owner, (iii) 44,500 shares held
by the Helping Fund, a charitable organization established under Section
501(c)(3) of the Internal Revenue Code of 1986, of which Mr. Dick is a
trustee with shared voting and dispositive power, and (iv) 4,000 shares
underlying options which are exercisable within 60 days of the Record Date.
Does not include options to purchase 14,667 shares.
(9) Includes (i) 40,000 shares owned by Mr. Simon and (ii) 4,000 shares
underlying options which are exercisable within 60 days of the Record Date.
Does not include options to purchase 14,667 shares.
(10) Includes 4,000 shares underlying options which are exercisable within 60
days of the Record Date. Does not include options to purchase 7,334 shares.
(11) Includes 4,000 shares underlying options which are exercisable within 60
days of the Record Date. Does not include options to purchase 14,667
shares.
(12) Includes (i) 20,050 shares owned by Mr. Wagner and (ii) 100 shares held in
a joint account by Mr. Wagner and his emancipated son, of which shares Mr.
Wagner disclaims beneficial ownership and (iii) 4,000 shares underlying
options which are exercisable within 60 days of the Record Date. Does not
include options to purchase 14,667 shares.
(13) Based solely on a Schedule 13G filed with the Securities and Exchange
Commission by Dimensional Fund Advisors Inc. ("Dimensional"). According to
the Schedule 13G Dimensional is
-20-
an investment advisor registered under Section 203 of the Investment
Advisors Act of 1940, furnishes investment advice to four investment
companies registered under the Investment Company Act of 1940, and serves
as investment manager to certain other commingled group trusts and separate
accounts. In its role as investment advisor or manager, Dimensional
possesses voting and /or investment power over these shares. Dimensional
disclaims beneficial ownership of all such shares. The address of
Dimensional is 1299 Ocean Avenue, 11th Floor, Santa Monica, California
90401.
(14) Includes an aggregate of 1,658,170 shares underlying options which are
exercisable within 60 days of the Record Date. Does not include 300,000
shares underlying options granted to Frank Terence, the Company's recently
appointed Executive Vice President, Chief Financial Officer and Treasurer,
which options are not currently exercisable.
CERTAIN TRANSACTIONS
The Company utilizes the services of a third party for the purchase of
corporate gifts, promotional items and standard personalized stationery. Mrs.
Judy Laikin, the mother of Robert J. Laikin, the Company's Chief Executive
Officer, was an independent consultant to this third party during 2001 and prior
to June 1, 2000 was the owner of the third party. For the year ended December
31, 2001, the Company purchased approximately $127,000 of services and products
from this third party. The Company believes that these purchases were made on
terms no less favorable than it could have obtained from an unrelated party.
During the fiscal year ended December 31, 2001, an entity in which the
father of Robert J. Laikin is a fifty percent (50%) equity owner, provided risk
management services to the Company for which the Company paid the entity
$167,000 in consulting fees. During the fiscal year ended December 31, 2001 the
Company paid to an insurance brokerage firm, for which the father of Robert J.
Laikin acts as an independent insurance broker, $180,000 in service fees and
certain insurance premiums, which premiums were forwarded to the Company's
respective insurance carriers.
During the fiscal year ended December 31, 2001, in accordance with the
terms of the Company's Offer to Exchange certain options with its employees and
directors, the Company paid its officers and directors who participated in the
Offer to Exchange an aggregate of $251,700 in partial consideration of the
options they surrendered. Of the aggregate amount, $86,000 was paid to Robert J.
Laikin and $73,500 was paid to J. Mark Howell, the Company's President and Chief
Operating Officer.
The Company's Certificate of Incorporation and By-laws provide for the
Company to indemnify its officers and directors to the extent permitted by law.
In connection therewith, the Company has entered into indemnification agreements
with its executive officers and directors. In accordance with the terms of these
agreements, the Company intends to reimburse them for their personal legal
expenses arising from certain pending litigation and regulatory matters
Mr. Bounsall ceased to be Executive Vice President, Chief Financial Officer
and Treasurer of the Company effective on April 22, 2002. In connection with the
termination of Mr. Bounsall's employment and his employment agreement with the
Company, the Company has reached an agreement in principal with Mr. Bounsall
pursuant to which the Company expects to pay Mr. Bounsall a severance payment in
the aggregate amount of $1 million of which $500,000 is expected to be paid to
-21-
Mr. Bounsall on the date of execution of a severance agreement and the balance
of $500,000 is expected to be placed in escrow to be released to him in
January 2003.
Set forth below is a description of certain litigation in which certain of
the Company's officers and directors are named as defendants:
In February 2002, Nora Lee, filed a complaint in the Circuit Court, Marion
County, Indiana, against all of the Company's current directors, its former
corporate controller and its current independent auditors Ernst & Young LLP,
which action is entitled Nora Lee Derivatively on Behalf of Nominal Defendant
Brightpoint, Inc., vs. Robert J. Laikin, et. al. and Brightpoint, Inc. as a
Nominal Defendant, Cause No. 49C01-0202-CT-000399.
The plaintiff alleges, among other things, that certain of the individual
defendants sold the Company's Common Stock while in possession of material
non-public information regarding the Company, that the individual defendants
violated their fiduciary duties of loyalty, good faith and due care by, among
other things, causing the Company to disseminate misleading and inaccurate
financial information, failing to implement and maintain internal adequate
accounting control systems, wasting corporate assets and exposing the Company to
losses. The plaintiff is seeking to recover unspecified damages from all
defendants, the imposition of a constructive trust for the amounts of profits
received by the individual defendants who sold the Company's common stock and
recovery of reasonable litigation costs and expenses.
The Company and several of its executive officers and directors were named
as defendants in two complaints filed in November and December 2001, in the
United States District Court for the Southern District of Indiana, entitled
Weiss v. Brightpoint, Inc., et. al., Cause No. IP01-1796-C-T/K; and Mueller v.
Brightpoint, Inc., et. al., Cause No. IP01-1922-C-M/S. In February 2002, the
Court consolidated the Weiss and Mueller actions and appointed John Kilcoyne as
lead plaintiff in this action which is now known as In re Brightpoint, Inc.
Securities Litigation. A consolidated amended complaint was filed in April 2002.
The amended complaint, among other things, adds the Company's current
independent auditors as a defendant.
The action is a purported class action asserted on behalf of all purchasers
of the Company's publicly traded securities between January 29, 1999 and January
31, 2002, alleging violations of Section 10(b) of the Securities Exchange Act of
1934 and Rule 10b-5 promulgated thereunder by the Company and certain of its
officers and directors, as well as the Company's current independent auditors
and violations of Section 20(a) of the Exchange Act by the individual
defendants.
The amended complaint alleges, among other things, that the Company
intentionally concealed and falsified its financial condition, and issued
financial statements which violated generally accepted accounting principles,
in order that it would not be declared in default of its loan covenants under
its line of credit. The amended complaint alleges that, due to the false
financial statements, the Company's stock was traded at artificially inflated
prices. Plaintiff seeds compensatory damages, including interest, against all
of the defendants and recovery of their reasonable litigation costs and
expenses. The Company disputes these claims and intends to vigorously defend
this matter.
-22-
PROPOSAL I
AMENDMENT TO THE CERTIFICATE OF INCORPORATION
TO EFFECT A REVERSE SPLIT OF THE OUTSTANDING COMMON STOCK
The Board of Directors has adopted, and proposes that the stockholders
of the Company approve, a proposal for the amendment to the Certificate of
Incorporation of the Company, to effect a combination (the "Reverse Split") of
the Company's issued and outstanding Common Stock on the basis of one (1) share
of Common Stock for each seven (7) shares of issued and outstanding Common Stock
immediately prior to such Reverse Split. The par value of the Common Stock will
remain $0.01 per share and the number of shares of Common Stock authorized to be
issued will remain at 100,000,000. Approval of the Reverse Split will also
authorize the Board of Directors in its discretion to abandon and not effect the
Reverse Split at any time after the Annual Meeting and prior to the date and
time at which the Reverse Split becomes effective. The Board may also delay
effecting the Reverse Split for up to three months from the date of stockholder
approval assuming that the same is obtained at this Annual Meeting.
Notwithstanding the prior sentence, if stockholder approval is obtained at the
Annual Meeting and the Board determines to proceed with the Reverse Split, the
Company intends to promptly effect the Reverse Split by an amendment to the
Company's Certificate of Incorporation.
Purpose and Effect of the Proposed Amendment
The Board of Directors proposes the Reverse Split for stockholder
approval primarily to facilitate the continued listing of the Common Stock on
the NASDAQ National Market System and to provide for additional authorized
shares of common stock which may be issued by the Company in the event that
outstanding options, warrants, certain zero-coupon subordinated convertible
notes ("Convertible Notes") and other securities convertible into or
exchangeable for Common Stock of the Company are actually converted into or
exchanged for Common Stock. With respect to Nasdaq, one criteria for continued
listing on the NASDAQ National Market System is that the applicant's common
share minimum bid price must be at least $1.00 per share. The per share price of
the Company's Common Stock does not currently meet the minimum bid price
requirement of the NASDAQ National Market System. The Company believes the
completion of the Reverse Split will cause the trading price of the Common Stock
to increase above the minimum trading price requirement of the NASDAQ National
Market System. There can be no assurance, however, that the Reverse Split will
result in any change in the price of the Company's Common Stock or that, if the
price of the Company's Common Stock does increase as a result of the Reverse
Split, such increase will be sufficient to allow the Company to comply with the
continued listing requirements of the NASDAQ National Market System.
If the Common Stock were delisted, it would then be eligible for
quotation on the OTC Bulletin Board maintained by NASDAQ, another
over-the-counter quotation system or the "pink sheets" maintained by the
National Quotation Bureau, Inc. If that occurred, the liquidity and
marketability of shares of the Common Stock would be decreased, and therefore
stockholders of the Company might find it more difficult to buy or sell Common
Stock at a price they believe to be favorable. Additionally, an
-23-
investor may find it more difficult to obtain quotations as to the market value
of the Common Stock, or the quotations might not accurately reflect the fair
market value of the Common Stock.
The holders of the Company's Convertible Notes have the right and may
require the Company to purchase the Convertible Notes at the accreted value of
the Convertible Notes on March 11, 2003. If the holders of the Convertible Notes
exercise their mandatory purchase rights, as noted above, and if the Company
determines to satisfy all or a substantial portion of the purchase obligation in
shares of its Common Stock rather than cash, based upon the current market price
of the Company's Common Stock, the Company would not have sufficient authorized
but unissued shares available to satisfy its purchase obligation. The Company
believes that it would, however, have sufficient authorized but unissued shares
of Common Stock to satisfy its purchase obligation if the Reverse Split is
effected. In addition, with respect to shares issuable upon exercise or
conversion, as the case may be, whether or not the same are currently
exercisable, of options, warrants and Convertible Notes, outstanding as of May
6, 2002, an aggregate of approximately 10.8 million shares of Common Stock would
be issuable in the event that all outstanding options, warrants and Convertible
Notes were exercised for or converted into shares of the Company's Common Stock
by the holders thereof; and an additional 4.5 million shares of Common Stock
(without giving effect to the Reverse Split) are reserved for issuance with
respect to options available for future grant under the Company's stock option
plans. The Reverse Split will provide the Company with additional authorized but
unissued shares of Common Stock in the event of the exercise and/or conversion,
as the case may be, of currently outstanding options, warrants and Convertible
Notes as well as options available for future grant under the Company's stock
option plans. The additional authorized but unissued shares of Common Stock may
also be available to provide for an anti-takeover defense, to raise capital in
the future, to finance future acquisitions, to retire debt or to compensate
employees. The Company currently has no plans, arrangements or understandings
regarding future issuances of Common Stock except in connection with the
Company's stock option plans, the Convertible Notes and the Company's
shareholder rights plan.
As a part of the Reverse Split, the Company's surplus would be
increased as a result of maintaining the par value of the Common Stock at $0.01
per share but decreasing the number of issued shares of the Company. Under the
Delaware General Corporation Law, a corporation is permitted to purchase its own
shares of capital stock or to declare dividends only to the extent that the
corporation has an amount of surplus equal to or greater than the amount of the
stock redemption or dividend. Under the Delaware General Corporation Law, the
"surplus" of a corporation is defined as the excess of the net assets of a
corporation less the stated capital of a corporation. The "stated capital" of a
corporation is equal to the number of issued shares of the corporation
multiplied by the par value of the shares. The "net assets" of a corporation is
the total assets minus the total liabilities of a corporation. Because the
number of issued shares of the Company will decrease as a result of the Reverse
Split but the par value will remain the same, the stated capital of the Company
will necessarily decrease. The amount by which the stated capital decreases will
be considered additional surplus of the Company.
The number of authorized shares of Common Stock of the Company, which
currently is 100,000,000, will not be reduced as a result of the Reverse Split
and there will be no change to the 1,000,000 authorized shares of Preferred
Stock as a result of the Reverse Split. Consequently, the number of shares of
Common Stock of the Company available for issuance will increase as a result of
the Reverse Split.
Authorized but unissued shares of Common Stock may be issued at such
times, for such purposes and for such consideration as the Board of Directors
may determine to be appropriate. Except for the proposals set forth in this
Proxy Statement, no further authorization by vote of the stockholders will be
solicited for the issuance of the additional shares of Common Stock, except as
might be required by law, regulatory authorities or rules of NASDAQ or any stock
exchange on which the Company's
-24-
shares may then be listed. Under the rules applicable to the Company as a
NASDAQ National Market System issuer, the Company is required to obtain
stockholder approval of certain transactions including, among others, any
transaction (a) other than a public offering, in which 20% or more of the then
outstanding Common Stock (before giving effect to the transaction) would be
issued or if the consideration received for such issuance is less than the
greater of the book or market value of the Common Stock, or (b) that will result
in a change of control of the Company, although in appropriate circumstances,
the application of such rule could be waived. In addition, the Delaware General
Corporation Law, which governs the actions of the Company generally requires
stockholder approval for the Company to issue shares in connection with a merger
or consolidation with another entity. The stockholders do not have any right to
purchase or subscribe for any part of any new or additional issuance of the
Company's securities. The issuance of such authorized but unissued shares may
have the effect of diluting the earnings per share and book value per share of
outstanding Common Stock. Another potential effect of the increase in the number
of authorized but unissued shares of Common Stock is that the interests of the
existing stockholders in the Company could be diluted substantially, by way of
ownership percentage and voting power, through the issuance of authorized but
unissued shares of Common Stock (but subject to compliance with the NASDAQ
National Market System rules set forth above), without stockholder approval.
Effect of Reverse Split
Because the number of issued shares of the Company would decrease, but
the par value would remain the same after the Reverse Split, the Company's
stated capital would decrease and the Company's surplus account would increase
by a corresponding amount. This change in the Company's capital accounts would
be reflected in the Company's financial statements, along with a notation of the
change in outstanding shares of Common Stock, as a result of the Reverse Split.
The proposed Reverse Split will not affect any stockholder's
proportionate equity interest in the Company, except for minor adjustments to
those stockholders who would receive cash in lieu of fractional shares. Holders
of Common Stock will continue to be entitled to receive such dividends as may be
declared by the Board of Directors. Outstanding stock options and the total
number of shares authorized for issuance under the Company's stock plans will be
proportionately adjusted to reflect the Reverse Split if it is effected. The
Company's reporting obligations under the Securities Exchange Act of 1934, as
amended, will not be affected by the Reverse Split.
There were no shares of Preferred Stock issued on the Record Date. The
Company is not conducting a reverse split of any Preferred Stock since no shares
of Preferred Stock have been issued. However, in accordance with the Company's
shareholder rights agreement, the percentage of Series A Junior Participating
Preferred Shares purchasable by the Share Purchase Right associated with each
share of Common Stock outstanding, shall be increased by a factor equal to
seven.
If the amendment is approved by the stockholders and the Board
determines to implement the Reverse Split, the Company intends to promptly
effect the Reverse Split by filing a certificate of amendment to its Certificate
of Incorporation with the Secretary of State of the State of Delaware. The text
of the proposed Reverse Split Amendment is set forth as Exhibit A to this Proxy
Statement; however, such text is subject to such changes as may be required by
the Delaware Secretary of State. The proposed amendment would become effective
as stated therein and, without further action of the Company or its
stockholders, every seven shares of Common Stock outstanding would automatically
be deemed to represent one share.
-25-
Exchange of Certificates; No Fractional Shares
No fractional shares of Common Stock will be issued in connection with
the proposed Reverse Split. Assuming the approval of the Reverse Split, a
stockholder who would otherwise be entitled to receive a fractional share of
Common Stock will receive, in lieu thereof, cash in a proportional amount equal
to the closing price of the Common Stock on the NASDAQ National Market System on
the date of this proxy statement.
The Company will appoint American Stock Transfer & Trust Company as
exchange agent in connection with the Reverse Split. As soon as practicable
after the effective date of the Reverse Split, holders of Common Stock will be
notified and requested to surrender to the exchange agent any certificate(s)
representing outstanding shares of Common Stock in exchange for certificate(s)
representing the reduced number of shares of Common Stock that will result from
the Reverse Split, together with cash in lieu of any fractional share. The
Company's stock records will be adjusted to reflect the shares held by each
holder of Common Stock after the Reverse Split. On the effective date, each
certificate representing shares of Common Stock will be deemed for all purposes
to represent the reduced number of shares of Common Stock that will result from
the Reverse Split, whether or not the certificates representing the outstanding
Common Stock are surrendered for exchange. The Company will deposit with the
exchange agent, as soon as practicable after the effective date, cash in an
amount equal to the value of the estimated aggregate number of fractional shares
that will result from the Reverse Split. Any portion of the cash deposited with
the exchange agent to pay for fractional shares that is held by the exchange
agent six months after the effective date will be returned to the Company, on
demand. Thereafter, holders of shares eligible for this cash settlement for
fractional shares would be paid directly by the Company. The Company intends to
use cash it holds to make the payments in lieu of fractional shares. As of May
[15], 2002, there were approximately [464] stockholders of record. The Company
does not anticipate this number to change materially as a result of the Reverse
Split.
No Dissenter's Rights
Neither the Certificate of Incorporation or bylaws of the Company nor
the laws of the State of Delaware require that appraisal rights be available to
stockholders that do not vote to approve the Reverse Split.
Resales of Restricted Securities
The proposed amendment will not affect the transferability of shares
of Common Stock or any present restriction on the sale thereof. Therefore, for
purposes of determining the relevant holding period as prescribed by Rule 144
under the Securities Act of 1933, as amended, the shares of Common Stock to be
issued to each stockholder after the effective date will be deemed to have been
acquired on the date on which the stockholder acquired the shares of Common
Stock held immediately prior to the effective date.
United States Federal Income Tax Consequences
The following description of federal income tax consequences is based
on the Internal Revenue Code of 1986, as amended (the "Code"), applicable
Treasury Regulations promulgated thereunder, judicial authority and current
administrative rulings and practices as in effect on the date of this Proxy
Statement. This discussion is for general information only and does not discuss
consequences
-26-
which may apply to special classes of taxpayers (e.g., non-resident aliens,
broker/dealers or insurance companies). The state and local tax consequences of
the Reverse Stock split may vary significantly as to each stockholder, depending
upon the state in which such stockholder resides. Stockholders are urged to
consult their own tax advisors to determine the particular consequences to them.
The conversion of shares of the Common Stock outstanding immediately
prior to the Reverse Split into a reduced number of shares of Common Stock after
giving effect to the Reverse Split will not result in the recognition of gain or
loss (except in the case of cash received for fractional shares as described
below). The holding period of the shares of Common Stock after giving effect to
Reverse Split will include the stockholder's holding period for the shares of
Common Stock held immediately prior to Reverse Split, provided that the shares
of Common Stock were held as a capital asset. The tax basis of the shares of
Common Stock after giving effect to Reverse Split will be the same as the tax
basis of the shares of Common Stock immediately prior to giving effect to the
Reverse Split, reduced by the basis allocable to the receipt of cash in lieu of
fractional shares described below.
A stockholder who receives cash in lieu of fractional shares will be
treated as if the Company has issued fractional shares to such stockholder and
then immediately redeemed such shares for cash. Such stockholder should
recognize gain or loss, as the case may be, measured by the difference between
the amount of cash received and the basis of his Common Stock allocable to such
fractional shares, had they actually been issued. Such gain or loss will be a
capital gain or loss if such stockholder's Common Stock was held as a capital
asset and any such capital gain or loss will generally be long-term capital gain
or loss to the extent such stockholder's holding period for his Common Stock
exceeds 12 months.
The decrease in the number of outstanding shares of Common Stock as a
result of the Reverse Split will not produce any taxable income or gain or loss
to the Company.
Required Vote
In accordance with the laws of the State of Delaware, the affirmative
vote of the holders of a majority of the shares of Common Stock outstanding on
the Record Date is required to approve the Reverse Split. Approval of the
Reverse Split will also authorize the Board of Directors to, at any point and in
its sole discretion, abandon and not effect the Reverse Split.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT
TO EFFECT THE REVERSE SPLIT.
PROPOSAL II
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The Company has engaged Ernst & Young LLP as its independent auditors
since October 1994. Ernst & Young LLP reported on the financial statements of
the Company for the fiscal year ended December 31, 2001 and the Board of
Directors has appointed Ernst & Young LLP to audit and report on the financial
statements of the Company for the year ending December 31, 2002. Although
stockholder approval of the Board of Directors' appointment of Ernst & Young LLP
is not required by law, the Board of Directors believes that it is advisable to
give stockholders an opportunity to ratify this appointment. Furthermore,
although the Board of Directors is submitting the appointment of
-27-
Ernst & Young LLP for stockholder ratification, it reserves the right, even
after ratification by stockholders, to change the appointment of Ernst & Young
LLP as auditors, at any time during the 2002 fiscal year, if it deems such
change to be in the best interests of the Company. The Company expects
representatives of Ernst & Young LLP to be present at the Annual Meeting.
AUDIT FEES. The aggregate fees billed by Ernst & Young LLP for
professional services rendered for the audit of the Company's annual financial
statements for the fiscal year ended December 31, 2001 (the "2001 fiscal year")
and the reviews of the financial statements included in the Company's Form
10-Q's for the 2001 fiscal year totaled $694,200.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. There
were no fees billed for professional services related to financial information
systems design and implementation by Ernst & Young LLP for the 2001 fiscal year.
ALL OTHER FEES. The aggregate fees billed for services rendered by
Ernst & Young LLP, other than for audit and information technology services,
described in the preceding two paragraphs, totaled $718,315 for fiscal 2001.
These other fees were comprised of fees for audit related services of $386,700
and non-audit services of $331,615. Fees for audit related services were
primarily for statutory audits and other regulatory compliance reporting.
The Audit Committee has considered whether the provision of services
covered in the preceding two paragraphs is compatible with maintaining Ernst &
Young LLP's independence.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2002.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Stockholders who wish to present proposals appropriate for
consideration at the Company's Annual Meeting of Stockholders for its fiscal
year ending December 31, 2002 to be held in the year 2003 must submit the
proposal in proper form to the Secretary of the Company at its address set forth
on the first page of this Proxy Statement (or such other address as then
constitutes its executive offices) not later than [January 23], 2003 in order
for the proposition to be considered for inclusion in the Company's proxy
statement and form of proxy relating to such annual meeting. Such proposals must
be presented in a manner consistent with the Company's By-Laws and applicable
laws. Any such proposals, as well as any questions related thereto, should be
directed to the Secretary of the Company at 600 East 96th Street, Suite 575,
Indianapolis, Indiana 46240.
After the January [23], 2003 deadline, a stockholder may present a
proposal at the Company's 2003 Annual Meeting if it is submitted to the
Company's Secretary at the address set forth above no later than April [12],
2003. If timely submitted, the stockholder may present the proposal at the 2002
Annual Meeting but the Company is not obligated to present the matter in its
proxy statement.
OTHER INFORMATION
A copy of the Company's Annual Report to Stockholders for the year
ended December 31, 2001 is being furnished herewith to each stockholder of
record as of the close of business on May 15, 2002. Copies of the Company's
Annual Report on Form 10-K will be provided upon written request to the Company
at 600 East 96th Street, Suite 575, Indianapolis, Indiana 46240, Attention
Investor Relations. The Form 10-K also is available on the Company's website at
www.brightpoint.com.
-28-
The Board of Directors is aware of no other matters, except for those
incident to the conduct of the Annual Meeting, that are to be presented to
stockholders for formal action at the Annual Meeting. If, however, any other
matters properly come before the Annual Meeting or any adjournments thereof, it
is the intention of the persons named in the proxy to vote the proxy in
accordance with their judgment.
By order of the Board of Directors,
Steven E. Fivel
Secretary
May 23, 2002
-29-
EXHIBIT A
FORM OF AMENDMENT TO CERTIFICATE OF INCORPORATION
The Certificate of Incorporation is amended by the addition of the
following to Article "FOURTH":
The presently issued and outstanding shares of Common Stock,
exclusive of treasury stock, shall be combined in the ratio
of one (1) share of Common Stock for each seven (7) shares
of Common Stock currently issued and outstanding. Such
combination shall not change the stated capital of the
Corporation nor shall it affect the rights or preferences of
the holders of the shares of Common Stock now issued and
outstanding.
PRELIMINARY COPIES
BRIGHTPOINT, INC.
600 EAST 96TH STREET, SUITE 575
INDIANAPOLIS, INDIANA 46240
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 26, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints STEVEN E. FIVEL and FRANK
TERENCE, and each of them, Proxies, with full power of substitution in each of
them, in the name, place and stead of the undersigned, to vote at the Annual
Meeting of Stockholders of Brightpoint, Inc. (the "Company") on Wednesday, June
26, 2002 at 9:00 a.m. Indianapolis time, at the Parkwood IV Conference Center,
500 East 96th Street, Indianapolis, Indiana 46240 or at any adjournment or
adjournments thereof, according to the number of votes that the undersigned
would be entitled to vote if personally present, upon the following matters:
(Continued and to be signed on reverse side)
|X| PLEASE MARK YOUR VOTE AS IN THIS EXAMPLE
1. ELECTION OF CLASS |_| |_| Nominees: Robert J. Laikin 4. In their discretion, the
I I DIRECTORS: FOR the WITHHOLD Robert F. Wagner Proxies are authorized to vote
nominees AUTHORITY to Rollin M. Dick upon such other business as may
listed at vote for the properly come before the meeting.
right (except nominee
as marked to listed at
the contrary right.
below).
2. PROPOSAL TO AMEND |_| |_| |_| THIS PROXY WILL BE VOTED IN
THE COMPANY'S FOR AGAINST ABSTAIN ACCORDANCE WITH THE INSTRUCTIONS
CERTIFICATE OF GIVEN ABOVE. IF NO INSTRUCTIONS
INCORPORATION TO ARE GIVEN, THIS PROXY WILL BE
EFFECT THE REVERSE VOTED FOR THE NOMINEE LISTED
SPLIT ABOVE.
3. PROPOSAL TO RATIFY |_| |_| |_| Please mark, sign, date and
THE APPOINTMENT OF FOR AGAINST ABSTAIN return this proxy card using the
ERNST & YOUNG LLP enclosed envelope.
AS THE COMPANY'S
INDEPENDENT
AUDITORS FOR THE
FISCAL YEAR ENDING
DECEMBER 31, 2002
Signature: Signature if held jointly:
------------------------------------------
Dated: , 2002
-----------
NOTE: Please sign exactly as name appears hereon. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.