SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. __)
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Brightpoint, Inc.
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[BRIGHTPOINT(R) LOGO]
YOUR SUCCESS IS OUR BUSINESS
PRELIMINARY COPY
Dear Brightpoint, Inc. Stockholders:
You are cordially invited to attend the 2004 Annual Meeting of
Stockholders ("Annual Meeting") of Brightpoint, Inc. (the "Company") that will
be held on Thursday, June 3, 2004, at 9:00 a.m. local time, at the Company's
offices located at 501 Airtech Parkway, Plainfield, Indiana 46168.
Your Board of Directors unanimously believes that the election of the
nominees specified in the accompanying Proxy Statement as directors 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 approving the Company's Amended and Restated Independent Director
Stock Compensation Plan, approving the Company's 2004 Long-Term Incentive Plan,
changing the Company's state of incorporation from Delaware to Indiana and
ratifying the appointment of Ernst & Young LLP as the Company's independent
auditors for the fiscal year ending December 31, 2004 are in the best interests
of the Company and its stockholders and, accordingly, recommends a vote "FOR"
such proposals.
Your vote is very important, and we appreciate a prompt return of your
signed proxy card or your prompt vote by telephone or via the internet.
We appreciate your continued support.
Sincerely yours,
/s/ Robert J. Laikin
Robert J. Laikin
Chairman of the Board and
Chief Executive Officer
Brightpoint, Inc., 501 Airtech Parkway, Plainfield, Indiana 46168
[BRIGHTPOINT(R) LOGO]
YOUR SUCCESS IS OUR BUSINESS
PRELIMINARY COPY
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF BRIGHTPOINT, INC.
TO BE HELD THURSDAY, JUNE 3, 2004
To the Stockholders of Brightpoint, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Annual
Meeting") of Brightpoint, Inc. (the "Company") will be held on Thursday, June 3,
2004, at 9:00 A.M. local time, at the Company's offices located at 501 Airtech
Parkway, Plainfield, Indiana 46168 for the following purposes:
1. To elect two (2) Class I directors to hold office until the
Annual Meeting of Stockholders to be held in 2007 and until
their successors have been duly elected and qualified;
2. To consider and vote upon a proposal to approve the Company's
Amended and Restated Independent Director Stock Compensation
Plan;
3. To consider and vote upon a proposal to approve the Company's
2004 Long-Term Incentive Plan;
4. To consider and vote upon a proposal to change the Company's
state of incorporation from Delaware to Indiana;
5. To ratify the appointment of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending
December 31, 2004; and
6. To transact such other business as may properly come before
the Annual Meeting or any adjournment or adjournments thereof.
Presentations will be made after the foregoing business has been
conducted at the Annual Meeting. A written report of the results of the Annual
Meeting will be posted on the Company's web site following the Annual Meeting.
Only stockholders of record at the close of business on April 19, 2004
are entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof. 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 accompanying 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. Whether or not you attend the Annual Meeting 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 for that purpose or cast your vote by telephone or via the
Internet. 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.
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.
Notice of the Annual Meeting is hereby given,
By Order of the Board of Directors,
/s/ Steven E. Fivel
Steven E. Fivel
Secretary
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PRELIMINARY COPY
PROXY STATEMENT
BRIGHTPOINT, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, JUNE 3, 2004
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 Thursday, June 3, 2004, at 9:00 a.m. local time, at the
Company's offices located at 501 Airtech Parkway, Plainfield, Indiana 46168,
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 April 26, 2004.
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.
It is anticipated that all of the Company's Board of Directors and
Executive Officers will be present at the Annual Meeting and that a presentation
will be made after the conclusion of the business to be conducted at the Annual
Meeting.
The address and telephone number of the principal executive offices of
the Company are: 501 Airtech Parkway, Plainfield, Indiana 46168, telephone
number: (317) 707-2355.
The following questions and answers provide important information about
the Annual Meeting and this Proxy Statement:
Q. What am I voting on?
A. (i) Election of two Class I directors (V. William Hunt and Stephen H.
Simon), (ii) approval of the Company's Amended and Restated Independent Director
Stock Compensation Plan, (iii) approval of the Company's 2004 Long-Term
Incentive Plan, (iv) changing the Company's state of incorporation from Delaware
to Indiana, and (v) ratifying the appointment of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending December 31, 2004.
Q. Who is entitled to vote?
A. Stockholders of record as of the close of business on April 19, 2004
(the "Record Date"), 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 on the Record Date.
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 all proposals as
specified in the Proxy Statement.
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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
(i) notifying the Company's Secretary, or (ii) returning a later-dated proxy.
You may also revoke your proxy by voting in person at the Annual Meeting.
Q. What does it mean if I receive more than one proxy card?
A. It may mean that you are the registered holder of shares 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. An officer of the Company 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
the Record Date [19,266,018] 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 votes cast at the
Annual Meeting, meaning the two nominees receiving the highest number of votes
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 two nominees whose names are printed on
the proxy card (V. William Hunt and Stephen H. Simon). Abstentions and broker
non-votes (as described below) will have no effect on the election of directors.
Q. How many votes are needed for the approval of the Company's Amended and
Restated Independent Director Stock Compensation Plan?
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 to approve the Company's
Amended and Restated Independent Director Stock Compensation Plan. Broker
non-votes will not be treated as entitled to vote on this matter and will
therefore have no effect on the proposal to approve the Company's Amended and
Restated Independent Director Stock Compensation Plan.
Q. How many votes are needed for the approval of the Company's 2004
Long-Term Incentive Plan?
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 to approve the Company's 2004
Long-Term Incentive Plan. Broker non-votes will not be treated as entitled to
vote on this matter and will therefore have no effect on the proposal to approve
the Company's 2004 Long-Term Incentive Plan.
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Q. How many votes are needed for the approval of the change of the
Company's state of incorporation from Delaware to Indiana?
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 change of
the Company's state of incorporation from Delaware to Indiana. Abstentions and
broker non-votes will have the same effect as a vote against the proposal to
approve the change of the Company's state of incorporation from Delaware to
Indiana.
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, 2004?
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, 2004. 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 Company's offices located at 501
Airtech Parkway, Plainfield, Indiana 46168 on Thursday, June 3, 2004, at 9:00
a.m. local time.
Q: How may I communicate with the Board of Directors?
A: The Board of Directors, through its Corporate Governance and Nominating
Committee, has established a process for stockholders to send communications to
the Board of Directors. You may communicate with the Board of Directors
individually or as a group by writing to: The Board of Directors of Brightpoint,
Inc. c/o Corporate Secretary, 501 Airtech Parkway, Plainfield, Indiana 46168 or
via e-mail: board.directors@brightpoint.com. You should identify your
communication as being from a Brightpoint stockholder. The Corporate Secretary
may require reasonable evidence that your communication or other submission is
made by a Brightpoint stockholder before transmitting your communication to the
Board of Directors.
OUTSTANDING STOCK AND VOTING RIGHTS
Only stockholders of record at the close of business on 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 [19,266,018] 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 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.
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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. The Company has retained Innisfree M&A Incorporated, a proxy
solicitation firm, for assistance in connection with the solicitation of proxies
for the Annual Meeting at a cost of $10,000 plus reimbursement of reasonable out
of pocket expenses. In addition, 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 the Company may reimburse such
persons for their expenses.
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 2, 2004. The giving of such proxy will not affect your
right to vote in person should you decide to attend the Annual Meeting.
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-PROXIES (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.
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, two (2) Class I directors will
be elected to hold office for a term expiring at the annual meeting of
stockholders to be held in 2007 and until their successors have been duly
elected and qualified. Based upon the review of and recommendation by the
Company's Corporate Governance and Nominating Committee, the Board of Directors
has nominated V. William Hunt and Stephen H. Simon to serve as Class I
directors. Mr. Hunt was initially recommended to the Company's Corporate
Governance and Nominating Committee by an independent non-employee director of
the Company. Mr. J. Mark Howell and Mr. Todd H. Stuart are not Class I director
nominees to be elected at the Annual Meeting and, accordingly, their tenure as
Class I directors will expire at the Annual Meeting.
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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 are 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 I DIRECTORS
(NOMINEES TO BE ELECTED AS CLASS I DIRECTORS AT THE ANNUAL MEETING)
(Term Expires in 2007)
PRINCIPAL OCCUPATION
NAME OF NOMINEE AGE OR EMPLOYMENT DIRECTOR SINCE
--------------- --- ------------- --------------
V. William Hunt............ 59 Chairman, Hunt Capital Partners, LLC 2004
Stephen H. Simon........... 38 President and Chief Executive Officer, 1994
Melvin Simon & Associates, Inc.
The following tables set forth similar information with respect to
incumbent Class II and Class III directors who are not nominees for election at
the Annual Meeting:
CLASS II DIRECTORS
(Term Expires in 2005)
PRINCIPAL OCCUPATION
NAME OF NOMINEE AGE OR EMPLOYMENT DIRECTOR SINCE
--------------- --- ------------- --------------
Robert J. Laikin........... 40 Chairman of the Board and Chief Executive 1989
Officer of the Company
Robert F. Wagner........... 69 Partner of Law Firm of Lewis & Wagner 1994
Richard W. Roedel.......... 54 Executive Chairman and Interim Chief 2002
Executive Officer, Take-Two Interactive
Software Inc.
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CLASS III DIRECTORS
(Term Expires in 2006)
PRINCIPAL OCCUPATION
NAME OF NOMINEE AGE OR EMPLOYMENT DIRECTOR SINCE
--------------- --- ------------- --------------
Catherine M. Daily......... 41 Professor, Kelley School of Business at 2002
Indiana University
Eliza Hermann.............. 42 Vice President, Human Resources - Gas 2003
Power Renewables of BP plc
Marisa E. Pratt............ 39 Vice President - Finance of Eli Lilly 2003
Canada
Jerre L. Stead............. 61 Retired Chairman and Chief Executive 2000
Officer of Ingram Micro Inc.
Set forth below is a description of the backgrounds of each of our
directors and executive officers:
Directors:
Robert J. Laikin, 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 August 1995 to April 16, 1998 and from
July 16, 1998 to March 2003. 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 that owns and operates
automobile auctions in the United States and Canada. Prior thereto, Mr. Howell
was an accountant with Ernst & Young LLP. Mr. Howell is a Class I director who
is not a nominee to be elected at the Annual Meeting.
Catherine M. Daily has been a director of the Company since October
2002 and is currently Chairperson of the Company's Corporate Governance and
Nominating Committee. Since 1997, Ms. Daily has been a Professor at the Kelley
School of Business at Indiana University where she is currently the David H.
Jacobs Chair of Strategic Management. Prior thereto Ms. Daily served on the
faculties of Purdue University and The Ohio State University.
V. William Hunt was appointed to the Company's Board of Directors to
serve as a Class I Director in February 2004 by the Company's Board of Directors
and is a member of the Audit Committee. Since September 2001, Mr. Hunt has
served as Chairman of Hunt Capital Partners, LLC, a venture capital and
consulting firm based in Indianapolis, and devotes a substantial amount of
volunteer time to Indiana University in its economic engagement initiatives,
including the Central Indiana Life
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Sciences Initiative now known as BioCrossroads. Until August 2001, he was the
Vice Chairman and President of ArvinMeritor Inc., a global supplier of a broad
range of integrated systems, modules and components for light vehicle,
commercial truck, trailer and specialty original equipment manufacturers (OEMs)
and related after-markets. Prior to the July 2000 merger of Arvin Inc. and
Meritor Automotive Inc., Mr. Hunt was Chairman and CEO of Arvin, a global
manufacturer of automotive components, including exhaust systems; ride control
products and air, oil and fuel filters. Mr. Hunt joined Arvin as counsel in
1976, became Vice President, Administration; Secretary in 1982; and Executive
Vice President in 1990; President in 1996; and CEO in 1998. A member of Arvin's
board of directors since 1983, he was named Chairman in 1999. Before joining
Arvin, Mr. Hunt practiced labor relations law in Indianapolis and served as
labor counsel to TRW Automotive Worldwide.
Eliza Hermann has been a director of the Company since January 2003 and
is currently a member of the Company's Compensation and Human Resources
Committee. Since 1985, Ms. Hermann has been employed by BP plc where she serves
as the Vice President Human Resources - Gas Power and Renewables and previously
served as its Manager, Strategy and Business Transformation - Global Aromatics.
Marisa E. Pratt has been a director of the Company since January 2003
and is currently a member of the Company's Audit Committee. Since 1991, Ms.
Pratt has been employed by Eli Lilly in various finance and treasury related
positions. Since October of 2002, Ms. Pratt has been Vice President - Finance of
Eli Lilly Canada.
Richard W. Roedel has been a director and Chairperson of the Company's
Audit Committee since October 2002 and currently is a member of the Company's
Corporate Governance and Nominating Committee. Mr. Roedel is the Executive
Chairman and Interim Chief Executive Officer of Take-Two Interactive Software
Inc. a manufacturer and marketer of video games and a Director of Dade Behring
Holdings, Inc., a medical diagnostics equipment and related product
manufacturer. From 1999 to 2000, Mr. Roedel was Chairman and Chief Executive
Officer of the accounting firm BDO Seidman LLP, the United States member firm of
BDO International. Before becoming Chairman and Chief Executive Officer, he was
the Managing Partner of BDO Seidman's New York Metropolitan Area from 1994 to
1999, the Managing Partner of its Chicago office from 1990 to 1994 and an Audit
Partner from 1985 to 1990. Mr. Roedel is a Certified Public Accountant.
Stephen H. Simon has been a director of the Company since April 1994
and is currently a member of the Company's Compensation and Human Resources
Committee. 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 and
currently serves as the Company's Lead Independent Director and Chairperson of
the Company's Compensation and Human Resources Committee. He is also a member of
the Company's Corporate Governance and Nominating Committee. From August 1996 to
June 2000 Mr. Stead was Chairman of the Board of Ingram Micro Inc., a worldwide
distributor of information technology products and services. Concurrently from
August 1996 to March 2000, Mr. Stead served as the Chief Executive Officer of
Ingram Micro Inc. Mr. Stead served as Chairman, President and Chief Executive
Officer of Legent Corporation, a software development company from January 1995
until its sale in September 1995. From 1993 to 1994, Mr. Stead was Executive
Vice President of American Telephone and Telegraph Company, a telecommunications
company and Chairman
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and Chief Executive Officer of AT&T Global Information Solutions, a computer and
communications company, formerly NCR Corp. 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., Mindspeed Technologies, Armstrong
Holdings, Inc. and Mobility Electronics, Inc.
Todd H. Stuart has been a director of the Company since November 1997
and is currently a member of the Company's Audit Committee. 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. Mr. Stuart is a director of National Bank
of Indianapolis. Mr. Stuart is a Class I director who is not a nominee to be
elected at the Annual Meeting.
Robert F. Wagner has been a director of the Company since April 1994
and is currently a member of the Company's Compensation and Human Resources
Committee. Mr. Wagner has been engaged in the practice of law with the firm of
Lewis & Wagner since 1973.
Executive Officers:
Robert J. Laikin, See - "DIRECTORS."
J. Mark Howell, See - "DIRECTORS."
Frank Terence, age 45, has been Executive Vice President, Chief
Financial Officer and Treasurer of the Company since April 2002. From August
2001 through April 2002, Mr. Terence was the Chief Financial Officer of
Velocitel, LLC, a wireless telecommunications infrastructure company. From
January 2000 through January 2001, Mr. Terence was Chief Financial Officer of
eTranslate, Inc., a web services company. From October 1994 through December
1999, Mr. Terence was employed in various financial positions by Ingram Micro
Inc., a technology distribution company, which included Vice President and Chief
Financial Officer of its Frameworks Division and Vice President and Chief
Financial Officer for its Latin America Division. From 1990 to 1994, he held
regional controllerships and financial management roles for Borland
International, a software development company. From 1983 to 1990, he held
various financial roles with NCR, Rockwell International and PepsiCo. Mr.
Terence is a Certified Management Accountant.
Steven E. Fivel, age 43, 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.
Lisa M. Kelley, age 37, has been Senior Vice President, Corporate
Controller and Chief Accounting Officer of the Company since July 2003. Ms.
Kelley was formerly with Plexus Corp., a provider of product realization
services to original equipment manufacturers. During her tenure with Plexus from
1992 to June 2003, she held several financial positions including VP-Corporate
Development, VP-Finance, Corporate Controller and Treasurer. From 1986 to 1992,
Ms. Kelley held various financial positions with Virchow Krause & Company LLP, a
Midwest certified public accounting firm. Ms. Kelley is a Certified Public
Accountant and a Certified Management Accountant.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of Forms 3, 4 and 5 and amendments thereto
furnished to us with respect to our most recent fiscal year, we believe that all
required reports were filed on a timely basis, with the following exceptions:
Mr. Howell filing a late Form 4 with respect to two sales aggregating 5,527
shares of our common stock made by a family educational trust and Mr. Anthony
Boor, the Americas division CFO, filing a late Form 4 with respect to a sale of
399 shares made through our Employee Stock Purchase Plan.
DIRECTOR INDEPENDENCE
The Board has determined that all of the Company's current Directors,
with the exception of Mr. Laikin (the Company's Chairman of the Board and Chief
Executive Officer) and Mr. Howell (the Company's President), have met the
independence requirements of the NASDAQ Marketplace Rules and the Company's
Corporate Governance Principles. In making these determinations regarding a
Director's independence, the Board considers all relevant facts and
circumstances, including the Director's commercial, banking, consulting, legal,
accounting, charitable and familial relationships, and such other criteria as
the Board may determine from time to time.
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CORPORATE GOVERNANCE
The Board of Directors has adopted a set of Corporate Governance
Principles ("Governance Principles") which are consistent with the Board's
responsibility for management oversight. These Governance Principles are
designed to strengthen the Company and protect the interests of the stockholders
of the Company while helping to insure the continued vitality of the Board. A
copy of these Governance Principles is attached to this Proxy Statement as
APPENDIX A. Copies of these Governance Principles may also be accessed at the
Company's website, www.brightpoint.com.
Highlights of the Company's Governance Principles include:
- Requiring that the Board consist of a majority of Independent
Directors and adoption of a definition of independent director
that is designed to help ensure that persons who serve as
Independent Directors are truly independent;
- Appointing a Lead Independent Director to act as a liaison
between the Board and management;
- Limiting the payment by the Company of compensation of the
Independent Directors to monies received for Board or Board
Committee service;
- Requiring the Chairperson of the Audit Committee to be a
"Financial Expert";
- Prohibiting Independent Directors or their family members from
conducting business with the Company;
- Establishing director compensation practices intended to more
closely align the interests of the Independent Directors with
the Company's stockholders; and
- Requiring the Independent Directors to meet in executive
session.
MEETINGS OF DIRECTORS AND COMMITTEES
During the fiscal year ended December 31, 2003, the Board of Directors
held six (6) meetings. In addition, the Board of Directors also took other
action by unanimous written consent in lieu of a meeting. During 2003, each
member of the Board participated in at least 75% of all Board and applicable
committee meetings held during the period for which he or she was a director.
The Board of Directors and the Board Committees met regularly in executive
sessions. The Company has a policy that all members of the Board of Directors
should attend the Annual Meeting, absent exceptional circumstances. All persons
who were then serving on the Board of Directors were in attendance at last
year's annual meeting of stockholders.
BOARD COMMITTEES
The Board of Directors maintains an Audit Committee and, in furtherance
of its efforts to improve the Company's corporate governance, the Board has
established a Corporate Governance and Nominating Committee and a Compensation
and Human Resources Committee. The Audit Committee, Corporate Governance and
Nominating Committee and Compensation and Human Resources Committee are
comprised solely of persons who meet the definition of an Independent Director
under the Company's Governance Principles and NASDAQ Marketplace Rules. Each of
these committees has adopted a charter. The Charter of the Audit Committee is
attached hereto as APPENDIX B. The charters of the Corporate
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Governance and Nominating Committee and the Compensation and Human Resources
Committee may be accessed on the Company's website at www.brightpoint.com. A
description of the functions of each of the Board Committees is described below.
-13-
CORPORATE GOVERNANCE AND NOMINATING COMMITTEE
The Corporate Governance and Nominating Committee is responsible for
developing and reviewing the effectiveness of the Company's corporate governance
guidelines, recommending appropriate Board and Board Committee structures and
membership, establishing procedures for the director nomination process and
recommending nominees for election to the Board. In 2003, the Corporate
Governance and Nominating Committee met six (6) times. The Corporate Governance
and Nominating Committee will consider qualified nominees for the Company's
Board of Directors recommended by stockholders of the Company who follow the
procedures set forth under the caption "Stockholder Proposals for Next Annual
Meeting". The current members of the Corporate Governance and Nominating
Committee are:
Catherine M. Daily, Chairperson
Richard W. Roedel
Jerre L. Stead
COMPENSATION AND HUMAN RESOURCES COMMITTEE
The current members of the Compensation and Human Resources Committee
are:
Jerre L. Stead, Chairperson
Eliza Hermann
Stephen H. Simon
Robert F. Wagner
The Compensation and Human Resources Committee has responsibility for
approving the compensation policies of the Company, and for reviewing and
recommending for approval by the Company's Board of Directors, all elements of
compensation for the Company's officers and other highly compensated members of
management. The Committee provides oversight of the administration of the
Company's compensation program. The Committee also provides oversight of the
administration of the issuance of the Company's securities under the Company's
equity based compensation plans and cash incentive and deferred compensation
plans for the Company's executives. The Committee also has responsibility for
reviewing the supplementary benefits paid to Company executive officers' as well
as retirement and other benefit and any special compensation. The Committee also
reviews and recommends for approval by the Company's Board of Directors,
executive employment agreements, severance agreements and change in control
provisions for the Chief Executive Officer and other senior executives. The
Committee also directs the succession planning process for the Company's Chief
Executive Officer and other senior executives. The Committee is also responsible
for providing oversight of the Company's global diversity activities, and for
annually reviewing its Charter and evaluating its performance as a Committee.
The Compensation and Human Resources Committee met six (6) times in
2003, and in addition, took action by unanimous written consent in lieu of a
meeting. All Committee members participated in each meeting, which typically
lasted several hours. The Committee has direct access to independent
compensation consultants for survey data and other information as it deems
appropriate, and utilized these independent consultants from time to time during
the year.
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AUDIT COMMITTEE
The Audit Committee has the power to select and oversee the performance
of the Company's independent public accountants and supervise the audit and
financial procedures of the Company. During 2003, the Audit Committee held eight
(8) meetings and also took action by unanimous consent in lieu of a meeting. The
current members of the Audit Committee are:
Richard W. Roedel, Chairperson
Marisa E. Pratt
Todd H. Stuart
V. William Hunt
none of whom are employees of the Company and each of whom meets the
independence and financial literacy requirements under current NASDAQ
Marketplace Rules. In addition, the Board of Directors of the Company has
determined that Mr. Roedel is an "audit committee financial expert" as defined
under Item 401(h) of Regulation S-K of the United States Securities and Exchange
Commission.
REPORT OF AUDIT COMMITTEE
During 2003, the Company's Audit Committee consisted of the following
directors: Richard W. Roedel (Chairperson), Marisa E. Pratt and Todd H. Stuart.
In February 2004, V. William Hunt was appointed as a member of the Audit
Committee. Each member of the Committee is "independent" as defined under Item
7(d)(3)(iv) of Schedule 14A of the Securities Exchange Act of 1934 ("Exchange
Act") and under applicable NASDAQ Marketplace Rules and the Company's Corporate
Governance Principles. The Committee operates under a written charter that was
adopted by the Board of Directors and is reviewed by the Committee on an annual
basis.
The responsibilities of the Audit Committee are to oversee the
Company's financial reporting process and internal audit function on behalf of
the Board and to report the results of their activities to the Board. The
Committee fulfills its responsibilities through periodic meetings with the
Company's independent auditors, internal auditors and members of management.
Throughout the year the Audit Committee monitors matters related to the
independence of Ernst & Young LLP, the Company's independent auditors. As part
of its monitoring activities, the Committee obtained a letter from Ernst & Young
LLP, containing a description of all relationships between the auditors and the
Company. After reviewing the letter and discussing it with management, the
Committee discussed with the auditors its overall relationship with the Company
and any of those relationships described in the letter that could impact Ernst &
Young LLP's objectivity and independence. Based on its continued monitoring
activities and year-end review, the Committee satisfied itself as to the
auditors' independence. Ernst & Young LLP also has confirmed in its letter that,
in its professional judgment, it is independent of the Company within the
meaning of the Federal securities laws and within the requirements of
Independence Standard Board (ISB) Standard No. 1, Independence Discussion with
Audit Committees.
The Committee also discussed with management, the Company's internal
auditors and its independent auditors, the quality and adequacy of the Company's
internal controls and the internal audit function's management, organization,
responsibilities, budget and staffing. The Committee reviewed with both the
independent and the internal auditors their audit plans, audit scope, and
identification of audit risks.
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The Committee discussed and reviewed with the independent auditors all
matters required by auditing standards generally accepted in the United States
of America, including those described in SAS 61, "Communication with Audit
Committees". With and without management present, the Committee discussed and
reviewed the results of the independent auditors' examination of the financial
statements. The Committee also discussed the results of the internal audit
examinations.
The Committee reviewed the audited financial statements of the Company
as of and for the fiscal year ended December 31, 2003, with management and the
independent auditors. Management has the responsibility for the preparation and
integrity of the Company's financial statements and the independent auditors
have the responsibility for the examination of those statements. Based on the
above-mentioned review and discussions with management and the independent
auditors, the Committee recommended to the Board that the Company's audited
financial statements be included in its Annual Report on Form 10-K for the
fiscal year ended December 31, 2003, for filing with the Securities and Exchange
Commission. The Committee also reappointed Ernst & Young LLP as the Company's
independent auditors subject to stockholder ratification of such appointment.
AUDIT COMMITTEE:
Richard W. Roedel, Chairperson
Marisa E. Pratt
Todd H. Stuart
V. William Hunt
-16-
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table discloses for the periods presented the
compensation for the person who served as our Chief Executive Officer and for
each of our other executive officers (not including the Chief Executive Officer)
whose total individual compensation exceeded $100,000 for our fiscal year ended
December 31, 2003 (the "Named Executives").
Annual Compensation Long-Term
------------------------------------------ Compensation
Awards
-----------
Securities
Other Annual Underlying All Other
Name and Principal Position Year Salary Bonus Compensation (1) Options (2) Compensation
--------------------------------- ---- --------- --------- ---------------- ----------- ------------
Robert J. Laikin 2003 $ 600,000 $ 600,000 $ 6,000 - $ 420
Chairman of the Board and 2002 450,000 225 000 5,500 298,927 -
Chief Executive Officer 2001 450,000 - 88,550 44,996 -
J. Mark Howell 2003 $ 400,000 $ 300,000 $ 3,000 - $ 378
President, Brightpoint, Inc. and 2002 325,000 162,500 5,500 177,855 537
Brightpoint North America 2001 325,000 - 76,050 35,353 528
Frank Terence (3) 2003 $ 350,000 $ 262,500 $ 3,500 - $ 420
Executive Vice President, Chief 2002 181,278 97,994 182,578(5) 241,070 400
Financial Officer and Treasurer 2001 - - - - -
Steven E. Fivel 2003 $ 325,000 $ 243,750 $ 5,188 - $ 420
Executive Vice President, 2002 275,000 137,500 5,500 138,213 597
General Counsel 2001 225,000 - 36,300 24,103 528
and Secretary
Lisa M. Kelley (4) 2003 $ 100,000 $ 75,000 $ 11,287(6) 22,500 $ 378
Senior Vice President, Chief 2002 - - - - -
Accounting Officer and 2001 - - - - -
Controller
(1) Except as otherwise noted below, represents our matching contributions
to the respective employee's 401(k) accounts and includes immaterial
refunds of less than $5,000 per year from the 401(k) Plan paid in 2004,
2003 and 2002, relating to ERISA compliance testing for the years 2003,
2002 and 2001. Also includes payments received by the executive
officers named above pursuant to the offer to exchange certain stock
options that we made to our employees and directors during 2001.
(2) All option amounts and exercise prices have been adjusted to give
retroactive effect to a one for seven reverse split of our Common Stock
effected in June 2002 and the three for two stock splits of our Common
Stock effected in August and October of 2003.
(3) Mr. Terence joined the Company in April 2002. (4) Ms. Kelley joined the
Company in July 2003.
(5) Represents amounts paid for Mr. Terence's moving and relocation costs
during 2002.
(6) Represents amounts paid for Ms. Kelley's moving and relocation costs
during 2003.
-17-
2004 BONUS PLAN
Upon recommendation of the Compensation and Human Resources Committee,
the Board of Directors has established a 2004 bonus plan for executive officers
which is based upon certain pre-established targets for: (i) income from
continuing operations, (ii) return on invested capital, and (iii) certain
strategic objectives approved by the Board. If all of these targets are reached,
Mr. Laikin will receive 100% of his base salary as a bonus and each of the
executive officers will receive up to 50% of their base salary as a bonus.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information with respect to individual
stock options granted to each of the Named Executives during fiscal 2003:
% OF TOTAL POTENTIAL REALIZABLE VALUE
OPTIONS AT ASSUMED ANNUAL RATES OF
SHARES GRANTED TO STOCK PRICE APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERM ($) (2)
OPTIONS IN FISCAL PRICE EXPIRATION --------------------------
NAME GRANTED (1) YEAR ($/SH) DATE 5% 10%
---- ------------ ---------- -------- ----------- ----------- -----------
Lisa M. Kelley.... 22,500 22% $5.367 July 1, 2008 $ 33,363 $ 73,724
(1) The options were granted under our 1994 Stock Option Plan. The 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 our Common Stock appreciates at the
compounded rates specified over the term of the options. These numbers
do not take into account provisions of options providing for
termination of the option following termination of employment or
nontransferability of the options and do not make any provision for
taxes associated with exercise. Because actual gains will depend upon,
among other things, future performance of the Common Stock, there can
be no assurance that the amounts reflected in this table will be
achieved.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning each exercise of
stock options by each of the Named Executives during the fiscal year ended
December 31, 2003, and the value of unexercised stock options held by the Named
Executives as of December 31, 2003:
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 2003 DECEMBER 31, 2003 (1)
ACQUIRED ON VALUE ------------------------------- -----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
Robert J. Laikin.......... 193,929 $2,437,137 -- 214,278 $ -- $ 2,796,951
J. Mark Howell............ 340,531 2,102,735 23,571 130,352 122,498 1,693,630
Frank Terence............. 80,358 1,422,480 -- 160,712 -- 2,308,765
Steven E. Fivel........... 84,640 1,094,600 20,088 100,176 -- 1,293,139
Lisa M. Kelley............ -- -- -- 22,500 -- 267,368
(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.
-18-
DIRECTOR COMPENSATION
For the fiscal year ended December 31, 2003, non-employee directors
received annual cash compensation of $50,000 for services rendered in their
capacity as Board members. In addition, the lead independent director, the
Corporate Governance and Nominating Committee chairperson and Audit Committee
chairperson received $50,000, $10,000 and $10,000 for services rendered in those
roles. Members of the Audit Committee received annual payments of $10,000, for
services rendered in their capacity as committee members.
In 2003 we adopted and stockholders approved an Independent Director
Stock Compensation Plan pursuant to which 900,000 shares of Common Stock are
reserved for issuance to non-employee directors. Pursuant to the Company's
Independent Director Stock Compensation Plan, subject to the satisfaction of
certain conditions, 30% of our Independent Director's annual board compensation
(but not committee compensation) will be paid in the form of shares of our
restricted Common Stock. No shares were issued under the Independent Director
Stock Compensation Plan in 2003.
We have adopted a Non-Employee Director Stock Option Plan (the
"Director Option Plan") pursuant to which 301,338 shares of Common Stock are
reserved for issuance to non-employee directors, of which 113,308 are available
for grant as of December 31, 2003. The Director Option Plan provides that
eligible directors automatically receive a grant of options to purchase 2,000
shares of Common Stock upon first becoming a director and, thereafter, an annual
grant, in January of each year, of options to purchase 571 shares. Effective as
of December 31, 2002, the Board determined to suspend all future grants of
options under the Director Option Plan. All of the options that were granted
under the Director Option Plan were 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.
EMPLOYMENT AND SEVERANCE AGREEMENTS
We have 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
$670,000 and $410,000 respectively, and such bonuses as the Board of Directors
may from time to time determine. If we provide the employee with notice that we
desire to terminate the agreement or terminate 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 our business 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 us 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 us 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 us 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 us 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, we terminate the employee's employment other than
for disability or Cause, or (c) if the employee terminates his employment for
Good Reason at any time,
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the vesting of all options granted to the employee will be accelerated so that
the options become immediately exercisable. For purposes of such agreements, a
"change of control" shall be deemed to occur, unless previously consented to in
writing by the respective employee, upon (i) individuals who constituted our
then current Board of Directors 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 our voting securities by any person or
entity not affiliated with the respective employee or us, (iii) the commencement
of a proxy contest against management for the election of a majority of our
Board of Directors if the group conducting the proxy contest owns, has or gains
the power to vote at least 15% of our voting securities, (iv) the consummation
under certain conditions by us of a reorganization, merger or consolidation or
sale of all or substantially all of our assets to any person or entity not
affiliated with the respective employee or us, or (v) our complete liquidation
or dissolution.
In addition, we have 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 $335,000, and
such bonuses as the Board of Directors may from time to time determine. If we
provide the employee with notice that we desire to terminate the agreement
without Cause, there is a final three-year term commencing on the date of such
notice. The employment agreement provides otherwise for substantially the same
terms as the employment agreements described above, except 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 us other than for disability or Cause, as
defined, the employee 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 us 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 us other
than for disability or Cause, the employee 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 us 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, we terminate 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.
We have also entered into a three-year "evergreen" employment agreement
with Mr. Terence on April 22, 2002, which is automatically renewable for
successive one-year periods and provides for an annual base compensation of
$410,000 and such bonuses as the Board of Directors may from time to time
determine. The employment agreement provides for employment on a full-time basis
and contains a provision that the employee will not compete or engage in a
business competitive with our business during the term of the employment
agreement and for a period of two years thereafter. The employment agreement
also provides 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 us other
than for disability or Cause, as defined, the employee will be entitled to
receive severance pay equal to three times the total compensation (including
salary, bonus and the value of all perquisites) received from us during the
twelve months prior to the date of termination. For purposes of such agreement,
a "change of control" shall be deemed to occur, unless previously consented to
in writing by the employee, upon (i) individuals who constituted our then
current Board of Directors 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 our voting securities by any person or
entity not affiliated with the respective employee or us, (iii) the commencement
of a proxy contest against
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management for the election of a majority of our Board of Directors if the group
conducting the proxy contest owns, has or gains the power to vote at least 15%
of our voting securities, (iv) the consummation under certain conditions by us
of a reorganization, merger or consolidation or sale of all or substantially all
of our assets to any person or entity not affiliated with the respective
employee or us, or (v) our complete liquidation or dissolution. In addition, (a)
upon the occurrence of a change of control, (b) if in breach of the agreement,
we terminate 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.
We have also entered into a one-year "evergreen" employment agreement
with Ms. Kelley on June 9, 2003, which is automatically renewable for successive
one-year periods and provides for an annual base compensation of $200,000,
subject to any increase at the Company's discretion. She is also entitled to
such other discretionary cash bonuses and other compensation as the Company may
from time to time determine, provided that any discretionary bonus cannot exceed
50% of her base compensation. The employment agreement provides for employment
on a full-time basis and contains a provision that the employee will not compete
or engage in a business competitive with our business during the term of the
employment agreement and for a period of one year thereafter. The employment
agreement also allows the employee to terminate the agreement upon at least
thirty (30) days prior written notice and provides that if the employee's
employment is terminated by the employer other than due to death, disability or
for Cause, as defined, the employee shall be entitled to receive severance pay
equal to 12 months of her annual base salary, any earned but unpaid bonus and
reimbursement of certain business expenses. Moreover, upon a "change of
control," if the employee's employment is terminated by us other than for death,
disability or Cause, as defined, the employee will be entitled to an
acceleration of the vesting of any unvested stock options held by her, which
shall then remain exercisable for not less than 180 days. For purposes of such
agreement, a "change of control" shall be deemed to occur, unless previously
consented to in writing by the employee, upon (i) individuals who constituted
our then current Board of Directors 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 our voting securities by
any person or entity not affiliated with the respective employee or us, (iii)
the commencement of a proxy contest against management for the election of a
majority of our Board of Directors if the group conducting the proxy contest
owns, has or gains the power to vote at least 15% of our voting securities, (iv)
the consummation under certain conditions by us of a reorganization, merger or
consolidation or sale of all or substantially all of our assets to any person or
entity not affiliated with the employee or us, or (v) our complete liquidation
or dissolution.
In connection with the termination of the employment of our former
Executive Vice President and Chief Financial Officer, Phillip Bounsall, we
previously entered into a separation and general release agreement with Mr.
Bounsall pursuant to which we paid Mr. Bounsall a severance payment in the
aggregate amount of $1 million of which $500,000 was paid to Mr. Bounsall on the
date of execution of the severance agreement and the balance of $500,000 was
placed in escrow during 2002 and released to him in January of 2003. In
addition, pursuant to the separation and general release agreement with Mr.
Bounsall, the vesting of certain options to purchase our Common Stock was
accelerated. All of the options that were accelerated expire[d] on April 22,
2004.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
We have a Compensation and Human Resources Committee of the Board of
Directors comprised of four Independent Directors (as defined in our Governance
Principles and NASDAQ Marketplace Rules) and currently consisting of Mr. Stead
(Chairperson), Ms. Hermann, Mr. Simon, and Mr. Wagner. Decisions as to executive
compensation are currently made, subject to the approval of the Board of
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Directors, by the Compensation and Human Resources Committee. During the fiscal
year ended December 31, 2003, our Board of Directors, which currently includes
Messrs. Laikin and Howell, has not modified nor rejected any recommendations of
the Compensation and Human Resources Committee. Also during the fiscal year
ended December 31, 2003, none of our executive officers have served on the board
of directors or the compensation committee of any other company any of whose
executive officers serve on our Board of Directors or our Compensation and Human
Resources Committee.
REPORT OF THE COMPENSATION AND HUMAN RESOURCES COMMITTEE ON EXECUTIVE
COMPENSATION
The Compensation and Human Resources Committee, subject to the approval
of the Board of Directors, determines the compensation of the Company's
executive officers, including the Chief Executive Officer, and oversees the
administration of all executive compensation programs. As noted above, the
compensation policy of the Company is determined by the Compensation and Human
Resources Committee, which periodically reviews trends in compensation
practices. The executive compensation policy for the Company was reviewed and
approved during 2003 as follows:
Brightpoint offers executive compensation programs that align
individuals' financial incentives with our strategic direction and corporate
values. Our programs are designed to attract and retain key talent needed to
manage our business and enhance stockholder value. Our executive compensation
program includes cash (base pay and short term incentive) and non-cash (equity)
components. These programs aim to provide our executives with:
- Base pay in the aggregate at the median of the
relevant external market comparator group,
- An opportunity for total cash to significantly exceed
the market median when exceptional individual and
business performance is achieved, and
- Equity to ensure alignment of individual performance
with long-term business objectives.
To put this policy into practice, the Committee reviews total
compensation survey data provided by independent consultants. In 2003 the
Committee updated the external comparator data in order to focus on those
companies which either participate in the Company's industry, or operate in a
related industry and are of a comparable size and scope of operations.
Base Salary. The base salaries of the Company's executives are
determined taking into account the median of the comparator data set which
reflects the external labor market for comparable positions, and by relative
individual job performance. An executive's salary will also vary within this
framework based on responsibilities, experience, and leadership behaviors. A
relatively greater emphasis is placed on the variable (short and long term
incentive) components of compensation so as to put a greater portion of total
pay "at risk" based on Company and individual performance. Fiscal 2003 and
previous base salary data for the Company's Named Executive Officers is shown in
the "Summary Compensation Table" on PAGE [17].
Short Term Incentives - Bonuses. Bonuses for the Company's executive
officers in 2003 were awarded based on predetermined targets and metrics related
to the Company's profitability. In addition, the Compensation and Human
Resources Committee awarded the Company's executive officers additional bonuses
based upon the Company's capital management, revenue growth, and increased
stockholder value based on [in-year] Company performance. The total bonuses
awarded to the Company's executive officers with respect to fiscal 2003 are set
forth in the "Summary Compensation Table" on PAGE [17].
-22-
Long Term Incentives - Equity (Stock Options.) Stock option awards under the
Company's stock option plans are intended to align the interests of the
executives with those of the Company's stockholders. The size and grant of
actual awards during 2003 was determined by the Compensation and Human Resources
Committee, taking into account Company performance and total compensation
comparator data using the data set referred to above. The current share
ownership for all executive officers is shown in "Voting Security Ownership of
Certain Beneficial Owners and Management" on PAGE [25].
COMPENSATION AND
HUMAN RESOURCES COMMITTEE:
Jerre L. Stead, Chairperson
Eliza Hermann
Stephen H. Simon
Robert F. Wagner
-23-
STOCK PERFORMANCE GRAPH
The following line graph compares, from December 31, 1998 through
December 31, 2003, 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, 1998 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.
COMPARISON OF COMULATIVE TOTAL RETURN
[PERFORMANCE GRAPH]
12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
-------- -------- -------- -------- -------- --------
Brightpoint, Inc. $ 100.00 $ 95.45 $ 25.45 $ 22.84 $ 8.21 $ 40.28
MG Group Index 100.00 119.97 91.87 90.90 68.37 92.22
NASDAQ Market Value Index 100.00 176.37 110.86 88.37 61.64 92.68
-24-
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
us to own beneficially more than five percent of our Common Stock, (ii) by each
of the Named Executives, (iii) by each of our directors, and (iv) by all of our
executive officers and directors as a group:
AMOUNT AND
NATURE OF PERCENTAGE OF
BENEFICIAL OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER (1) OWNERSHIP (2) SHARES OWNED
---------------------------------------- ------------- ------------
Batterymarch Financial Management, Inc. (3)....... 1,638,263 8.5
Timothy S. Durham (4)............................. 1,094,290 5.6
Robert J. Laikin (5).............................. 139,637 *
J. Mark Howell (6)................................ 73,875 *
Frank Terence (7)................................. 48,213 *
Steven E. Fivel (8)............................... 39,603 *
Jerre L. Stead (9)................................ 32,532 *
Richard W. Roedel (10)............................ 23,500 *
Robert F. Wagner (11)............................. 9,220 *
Stephen H. Simon (12)............................. 6,459 *
Todd H. Stuart (13)............................... 1,142 *
Catherine M. Daily (14)........................... 5,000 *
Marisa K. Pratt (15).............................. 31 *
Eliza Hermann .................................... - *
Lisa M. Kelley (16)............................... - *
V. William Hunt .................................. - *
All executive officers and directors
as a group (fourteen persons) (17)................ 379,212 2.0
------------------------
* Less than 1%.
(1) The address for each of such individuals, unless specified otherwise in
a subsequent footnote, is in care of Brightpoint, Inc., 501 Airtech
Parkway, Plainfield, Indiana 46168.
(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.
-25-
(3) Based solely on a Schedule 13G filed with the United States Securities
and Exchange Commission by Batterymarch Financial Management, Inc. The
address of Batterymarch Financial Management, Inc. is 200 Clarendon
Street, Boston, MA 02116.
(4) Based solely on a joint Schedule 13D filed with the United States
Securities and Exchange Commission by Timothy S. Durham, Diamond
Investments, LLC, Henri B. Najem, Jr., Shelley Najem, Jeffrey Osler,
Neil Lucas, James F. Cochran, Jonathon B. Swain, Dr. Charles Durham,
Mitza Durham and Shannon Frantz. The address of Mr. Durham is 111
Monument Circle, Suite 4800, Indianapolis, Indiana 46204.
(5) Includes 39,636 shares underlying options, which are exercisable within
60 days of the Record Date. Includes 100,000 shares owned by Mr.
Laikin. Includes 1 share allocated from the Brightpoint, Inc. 1999
Employee Stock Purchase Plan ("ESPP"). Does not include options to
purchase 274,642 shares.
(6) Includes 57,138 shares underlying options, which are exercisable within
60 days of the Record Date. Includes 16,498 shares owned by J. Mark
Howell and 239 shares allocated from the 401(k). Does not include
options to purchase 146,785 shares.
(7) Includes 32,142 shares underlying options, which are exercisable within
60 days of the Record Date. Includes 8,037 shares owned by Mr. Terence
and 8,034 shares held by the Frank Terence and Katrina Marie Terence
Trust of October 31, 2001. Mr. Terence and his spouse are trustees of
this trust, which is for the benefit of his minor child. Does not
include options to purchase 178,570 shares.
(8) Includes 36,693 shares underlying options, which are exercisable within
60 days of the Record Date. Includes 2,569 shares owned by Mr. Fivel.
Includes 217 shares allocated from the ESPP and 124 shares allocated
from the 401(k). Does not include options to purchase 133,571 shares.
(9) Includes (i) 29,250 shares beneficially owned by Mr. Stead, which
shares are owned of record by JMJS Group LLP, and (ii) 3,282 shares
underlying options, which are exercisable within 60 days of the Record
Date. Does not include options to purchase 357 shares.
(10) Includes 22,500 shares underlying options, which are exercisable within
60 days of the Record Date. Includes 1,000 shares owned by Mr. Roedel.
(11) Includes 1,142 shares underlying options, which are exercisable within
60 days of the Record Date. Includes (i) 8,000 shares held by Robert F.
Wagner and Patricia D. Wagner and (ii) 78 shares held in a joint
account by Mr. Wagner and his emancipated son, of which shares Mr.
Wagner disclaims beneficial ownership. Does not include options to
purchase 1,142 shares.
(12) Includes (i) 1,607 shares owned by Mr. Simon and (ii) 4,852 shares
underlying options, which are exercisable within 60 days of the Record
Date. Does not include options to purchase 1,142 shares.
(13) Represents 1,142 shares underlying options, which are exercisable
within 60 days of the Record Date. Does not include options to purchase
1,142 shares.
(14) Represents 5,000 shares owned by Ms. Daily.
(15) Represents 31 shares owned by Ms. Pratt.
(16) Does not include options to purchase 42,500 shares.
(17) Includes an aggregate of 198,527 shares underlying options, which are
exercisable within 60 days of the Record Date, including those listed
in notes (5) through (16), above. Does not include options to purchase
an aggregate of 779,851 shares.
-26-
EQUITY COMPENSATION PLANS
The following table provides certain information with respect to all of
the Company's equity compensation plans in effect as of December 31, 2003.
Weighted- Number of securities
Number of securities average exercise remaining available for
to be issued upon price of issuance under equity
exercise of outstanding compensation plans,
outstanding options options and excluding securities
and rights rights reflected in column (a)
Plan Category (a) (b) (c)
---------------------------------------------------------- ------------------- ---------------- -----------------------
Independent Director Stock Compensation Plan 900,000
Equity compensation plans approved by security holders:
(1994 Stock Option Plan and Non-Employee Director Stock
Option Plan) 1,043,762 $7.76 402,152
Equity compensation plans not approved by security holders
(1): (1996 Stock Option Plan) 467,149 $5.32 283,511
--------- ----- ---------
Total 1,510,911 $7.00 1,585,663
========= ===== =========
(1) Represents the aggregate number of shares of common stock issuable upon
exercise of arrangements with option holders granted under our 1996
Stock Option Plan. These options are 5 to 10 years in duration, expire
at various dates between April 22, 2004 and November 14, 2012, contain
anti-dilution provisions providing for adjustments of the exercise
price under certain circumstances and have termination provisions
similar to options granted under stockholder approved plans. See Note
14 to the Consolidated Financial Statements included in the Company's
Form 10-K for the year ended December 31, 2003 for a description of the
1996 Stock Option Plan.
-27-
CERTAIN TRANSACTIONS
We utilize 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, our Chief Executive Officer, was the owner of
this third party until June 1, 2000 and is an independent consultant to this
third party. We purchased approximately $63,321 and $91,382 of services and
products from this third party during 2003 and 2002. We believe that these
purchases were made on terms no less favorable to us than we could have obtained
from an unrelated party.
During the fiscal year ended December 31, 2003 we paid to an insurance
brokerage firm, for which the father of Robert J. Laikin acts as an independent
insurance broker, $225,415 in service fees and certain insurance premiums, which
premiums were forwarded to our respective insurance carriers.
The Company's Certificate of Incorporation and By-Laws provide that it
indemnify its officers and directors to the extent permitted by law. In
connection therewith, the Company entered into indemnification agreements with
its executive officers and directors. In accordance with the terms of these
agreements the Company has reimbursed certain of its former executive officers
and intends to reimburse its officers and directors for their legal fees and
expenses incurred in connection with certain pending litigation and regulatory
matters. During 2003 and 2002, pursuant to their respective indemnification
agreements with Brightpoint, Inc., $26,606 and $93,280 in legal fees was paid on
behalf of Phillip Bounsall and $1,419 and $107,739 in legal fees was paid on
behalf of John Delaney.
-28-
PROPOSAL 2
APPROVAL OF THE
COMPANY'S AMENDED AND RESTATED INDEPENDENT
DIRECTOR STOCK COMPENSATION PLAN
Adoption of the Company's Independent Director Stock Compensation Plan
(the "Original Director Plan") was approved by the Company's Stockholders at the
2003 annual meeting of stockholders. In furtherance of the Company's Corporate
Governance Principles (the "Governance Principles"), the Board of Directors,
upon the recommendation of the Company's Compensation and Human Resources
Committee, has adopted and recommended for stockholder approval, the Company's
Amended and Restated Independent Director Stock Compensation Plan (the "Amended
Director Plan"). The Board of Directors believes that increasing the
compensation of Independent Directors through the issuance of additional shares
of Common Stock to them, as provided for in the Amended Director Plan, will help
the Board attract, retain and adequately compensate highly qualified individuals
to serve as Independent Directors on the Board of Directors thereby aligning the
interests of the Company's Independent Directors and the Company's stockholders.
SUMMARY OF THE AMENDED DIRECTOR PLAN
The following summary of the Amended Director Plan does not purport to
be complete, and is subject to, and qualified in its entirety by reference to,
the full text of the Amended Director Plan, set forth as APPENDIX C attached
hereto and made a part hereof.
The Amended Director Plan adds two types of awards to Independent
Directors that were not included in the Original Director Plan. First,
individuals who are elected or appointed as Independent Directors and who did
not previously receive options under the Company's Non-Employee Director Stock
Option Plan will automatically receive, on the date such individual is elected
or appointed to serve (or on such other date as determined by the Board of
Directors for Independent Directors first elected or appointed on or after
January 1, 2003 but prior to June 5, 2004) an award ("Initial Award") of up to
2,000 restricted shares of Common Stock. Second, on January 1 of each year (or
on the day an Independent Director commences service if later than January 1),
an individual serving as an Independent Director of the Company will
automatically receive an award of up to 2,000 restricted shares of Common Stock
(an "Annual Award" and together with Initial Awards, "Automatic Awards").
Subject to the limitations described above, the Board of Directors has
discretion to determine the amount of restricted shares granted as Automatic
Awards. All restricted shares subject to Automatic Awards vest 50% on each of
the first and second anniversaries of the award and are subject to anti-dilution
adjustments. If an individual ceases to serve as an Independent Director prior
to the vesting of a portion of the restricted shares subject to an Automatic
Award, the Board of Directors has discretion to accelerate the vesting of the
number of shares that the individual would have received if the individual
served the entire year in which the individual's service terminated. The Amended
Director Plan permits Independent Directors to defer any portion of, or all,
Automatic Awards and Elective Awards (defined below) to be received by such
Independent Director in the immediately succeeding year. Unless receipt of the
shares subject to an Automatic Award is deferred, the vested shares for any
given year will be issued to the Independent Director promptly after the date
such shares have vested. All shares granted in connection with Automatic Awards
are subject to a three-year restriction on sale or transfer from the date of the
Automatic Award.
After giving effect to two three for two Common Stock splits effected
in 2003, an aggregate of 900,000 shares of Common Stock are currently reserved
for issuance under the Original Director Plan. Under the Amended Director Plan,
the Company will reserve the same number of shares as are currently
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reserved for issuance under the Original Director Plan. Under both the Original
Director Plan and the Amended Director Plan, the number of shares reserved for
issuance is subject to anti-dilution adjustments that can be made at the
discretion of the Board of Directors upon the occurrence of events such as stock
dividends, split-ups, recapitalizations and mergers.
As under the Original Director Plan, only members of the Company's
Board of Directors who qualify as Independent Directors under the Governance
Principles are eligible to participate in the Amended Director Plan. The Amended
Director Plan, like the Original Director Plan, generally provides that 30% of
the annual cash compensation (excluding payments for Board Committee service and
reimbursement of travel expenses) to be paid to the Independent Directors for
Board service ("Board Compensation") shall be paid in the form of shares of
Common Stock from the Amended Director Plan (the "Required Share Condition").
Shares granted in any year as Automatic Awards or Elective Awards, whether or
not vested, are included in determining whether the Required Share Condition is
met. However, if on December 15 of any given year the fair market value of the
Common Stock owned by an Independent Director is equal to or greater than 200%
of the Board Compensation (the "Threshold Amount"), then such Independent
Director may choose to be paid in cash rather than in Common Stock. Under the
Amended Director Plan, as under the Original Director Plan, the Independent
Directors have the right to elect to take all of their Board Compensation in the
form of Common Stock which is 100% vested on the transfer of shares to such
Independent Director. The Common Stock to be awarded in lieu of cash ("Elective
Awards") will be issued on the 15th day of June and December in each year (or,
if such dates are not a business day then on the earliest preceding business
day) ("Award Dates") and the number of shares of Common Stock to be awarded will
be determined by dividing the applicable portion of the Board Compensation to be
paid to the Independent Director by the average of the fair market value of the
Common Stock for the five trading days ending on the third business day prior to
the applicable Award Date. No shares of Common Stock awarded under the Amended
Director Plan may be sold by an Independent Director until the earlier of (i)
the date the value of the director's Common Stock equals or exceeds the
Threshold Amount (to be determined each December 15 for the ensuing year) or
(ii) six months (or such other date as specified in the Governance Principles)
after the Independent Director ceases to be a director of the Company; provided,
however, that shares issued as Automatic Awards are subject to a three-year
restriction on sale or transfer from the date of the Automatic Award. No
participant in the Amended Director Plan may assign the right to receive any
award granted under the plan, except that upon the death of a participant in the
plan, any accrued but unpaid awards will be paid to the participant's designated
beneficiary or, if none, the executor or administrator of his estate.
The effective date of the Amended Director Plan will be the first
business day following stockholder approval of the plan, and the plan will
terminate 10 years from the effective date. The Amended Director Plan will be
administered by the Board of Directors, which has the discretion to amend or
terminate the plan. No amendment will be effective until duly approved by the
Company's stockholders if it would result in an increase in the number of shares
subject to the plan (other than with respect to the anti-dilution adjustments
discussed above) or where failure to obtain such approval would cause the plan
to fail to comply with the requirements of Rule 16(b) of the Exchange Act or an
applicable rule of either a principal securities exchange or a national
securities association on which the Company's Common Stock is listed for
trading.
If the stockholders do not approve the Amended Director Plan the
Original Director Plan will remain in place.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE AMENDED DIRECTOR PLAN
The following is a brief summary of the Federal income tax aspects of
Awards made under the Amended Director Plan based upon statutes, regulations and
interpretations in effect on the date hereof. This summary is not intended to be
exhaustive, and does not describe state or local tax consequences.
-30-
Upon transfer to the participant of an Elective Award, and upon the
vesting of the participant's Automatic Awards, the participant will recognize as
ordinary compensation income the excess (if any) of the fair market value of the
shares on the date of such transfer or vesting, as the case may be, over the
amount paid, if any, for the shares. The Company will qualify for a Federal
income tax deduction equal in amount to the amount that is included as
compensation in the gross income of the participant, subject to the requirements
that the compensation be reasonable and not limited under Section 162(m) of the
Internal Revenue Code of 1986. Upon sale of the shares, the participant will
recognize gain or loss equal to the difference (if any) between the amount
realized on such sale over the sum of the amount paid, if any, for the stock and
the amount of compensation income recognized by the participant on transfer or
vesting, as the case may be, of the award. If the participant holds the shares
as capital assets, the gain or loss will be long-term or short-term capital gain
or loss depending on whether his holding period exceeds one year.
NEW PLAN BENEFITS
The following table sets forth, to the extent determinable, benefits
that will be received under the Amended Director Plan by Independent Directors
as a group.
Number of
Name and Position Restricted Shares
----------------- -----------------
Non-Executive Director Group...... 21,770 (1)
(1) Reflects (i) Initial Awards of 2,000 shares and Annual Awards of 1,770,
2,000 and 2,000 shares respectively to each of Mr. Hunt (if elected by the
stockholders at the Annual Meeting), Ms. Hermann and Ms. Pratt, each of whom was
elected or appointed to the Board of Directors on or after January 1, 2003; and
(ii) Annual Awards of 2,000 shares to each of Mr. Simon (if elected by the
stockholders at the Annual Meeting), Mr. Wagner, Mr. Roedel, Ms. Daily and Mr.
Stead. Assuming the Amended Director Plan is approved, it is anticipated that
these Automatic Awards will be granted on the first business day following the
Annual Meeting. As a result of the foregoing, the Independent Directors
scheduled to receive these Automatic Awards may be deemed to have an interest in
the approval of the Amended Director Plan by the stockholders at the Annual
Meeting.
Future grants of awards under the Amended Director Plan are not
determinable at this time, as such grants depend upon future election and/or
continued service on the Board of Directors, and the amount of such grants is
subject to the discretion of the Board of Directors. Because participation in
the Amended Director Plan is limited to Independent Directors, no benefits will
accrue to any executive officer or other employee of the Company as a result of
approval of the Amended Director Plan. If Mr. Hunt and Mr. Simon are elected by
the stockholders at the Annual Meeting, the Company will have eight (8)
Independent Directors who will be participants in the Amended Director Plan.
RECOMMENDATION OF THE BOARD :
THE BOARD OF DIRECTORS BELIEVES THAT THE AMENDED AND RESTATED
INDEPENDENT DIRECTOR STOCK COMPENSATION PLAN IS IN THE BEST INTERESTS OF THE
COMPANY AND ITS STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL
OF THE ADOPTION OF THE AMENDED AND RESTATED INDEPENDENT DIRECTOR STOCK
COMPENSATION PLAN.
-31-
PROPOSAL 3
APPROVAL OF THE
COMPANY'S 2004 LONG-TERM
INCENTIVE PLAN
On February 20, 2004 the Board of Directors, upon the recommendation of
the Company's Compensation and Human Resources Committee, unanimously adopted
resolutions approving the Company's 2004 Long-Term Incentive Plan (the "2004
Plan"), recommending adoption of the 2004 Plan to stockholders and directing
that the plan be submitted to the stockholders for their approval. The Board
believes that, to enable the Company to continue to attract and retain personnel
of the highest caliber, provide incentive for officers, directors, employees and
other key persons and to promote the well-being of the Company, it is in the
best interest of the Company and its stockholders to provide to officers,
directors, employees, consultants and other independent contractors who perform
services for the Company, through the granting of stock options, restricted
stock, deferred stock or other stock-based or cash awards, the opportunity to
receive awards under the 2004 Plan. The Board has found that the grant of
options under its other option plans has proven to be a valuable tool in
attracting, retaining and motivating key employees and consultants. Accordingly,
the Board believes that the 2004 Plan, which provides the Board greater
flexibility with respect to certain terms under which awards may be granted, (i)
will provide the Company with significant means to attract and retain talented
personnel, (ii) will result in saving cash, which otherwise would be required to
maintain current employees and adequately attract and reward personnel and
others who perform services for the Company, and (iii) consequently, will prove
beneficial to the Company's ability to be competitive. The Board believes that
there is not a sufficient number of options and stock awards available for
future grant under the Company's other option plans to achieve the goals of
attracting and retaining the highest caliber personnel and providing incentives
for those covered by the 2004 Plan. Moreover, the Board believes that by
providing greater flexibility with respect to the types of awards that can be
granted, it will enable the Company to better achieve the goals of the 2004
Plan.
To date, no Awards have been granted under the 2004 Plan. If the 2004
Plan is approved by the stockholders, options or other stock or cash awards may
be granted under the 2004 Plan, the timing, amounts and specific terms of which
have not been determined at this time. On April 14, 2004, the closing price of
the Company's Common Stock was $14.72 per share.
SUMMARY OF THE 2004 PLAN
The following summary of the 2004 Plan does not purport to be complete,
and is subject to, and qualified in its entirety by reference to, the full text
of the 2004 Plan, set forth as APPENDIX D attached hereto and made a part
hereof.
The number of shares of Common Stock reserved for issuance under the
2004 Plan is 1,500,000. The 2004 Plan provides for the grant of any or all of
the following types of awards (collectively, "Awards"): (i) stock options, (ii)
performance units, (iii) restricted stock, (iv) deferred stock, (v) other
stock-based awards, and (vi) cash awards. The Compensation and Human Resources
Committee (the "Committee") of the Board of Directors administers the 2004 Plan.
The Committee determines eligibility for Awards. Officers and other employees of
the Company or any parent or subsidiary who are employed at the time and
contribute to the Company's management growth or profitability are
-32-
eligible for Awards. The Company's directors, independent agents, consultants
and attorneys are also eligible to receive Awards under the 2004 Plan. The
Committee determines to whom Awards will be granted, the term of the Awards and
the type and number of shares subject to each Award; provided, however, that
non-option Awards cannot exceed 750,000 shares in the aggregate. The Committee,
in its discretion, can adjust the number, price or kind of shares to be
delivered in respect of Awards if there is a forward or reverse stock split,
recapitalization, merger, or other similar corporate transaction that affects
the number of shares of Common Stock. No participant may be granted more than
750,000 shares of Common Stock in the aggregate under the 2004 Plan (subject to
adjustment, at the Committee's discretion, for stock splits, recapitalizations,
mergers or other similar corporate transactions that affects the number of
shares of Common Stock outstanding). No participant may receive Awards that are
settled in cash in an amount that exceeds the greater of the fair market value
on the date of grant or award of any stock awards received that year.
The effective date of the 2004 Plan will be the first business day
following approval of the 2004 Plan by the Company's stockholders. No Awards
under the 2004 Plan will be granted on or after the ten-year anniversary of the
effective date; provided, however, that Awards granted prior to the ten-year
anniversary of the effective date may extend beyond that date.
TYPES OF AWARDS UNDER THE 2004 PLAN
Stock Options. Only Non-Qualified Stock options may be granted under
the 2004 Plan. The Committee determines the exercise price, term and
exercisability of the options. The exercise price cannot be less than the fair
market value of the Common Stock at the time of grant. Options can be exercised
on a cash basis, by using Common Stock already owned, or on a broker assisted
"cashless" basis. The options granted under the 2004 Plan are generally not
transferable except under the laws of descent and distribution. Options granted
under the 2004 Plan automatically terminate if a holder terminates his service
to the Company for a reason other than death, disability or retirement, or
voluntary resignation. In the event of termination by death, such holder's
options may be exercised in accordance with the option agreement or for a period
determined by the Committee, provided that in no event shall the options remain
exercisable for more than one year after date of death. In the event of
termination by disability or voluntary retirement, the options may be exercised
in accordance with the option agreement or as determined by the Committee,
provided that neither period shall exceed one year from termination. If a holder
dies within one year of termination due to disability or voluntary resignation,
the Committee can permit any then exercisable options to remain exercisable for
a period not to exceed one year. Each grant of stock options under the 2004 Plan
will be subject to a written agreement between the Company and the holder.
Performance Units. Performance units are contingent rights awarded by
the Committee that are paid in cash and/or Common Stock. Performance units may
be awarded at the Committee's discretion if the Company meets Committee
established performance goals which may consist of, among other things, (i)
return on equity; (ii) operating income; (iii) earnings; and (iv) return on
invested capital. The Committee will establish a dollar value for the
performance units, the payout provisions of the performance units and the
performance goals to be met in order to obtain a payment for a performance unit.
The Committee will determine the period of time ("Performance Cycle") during
which the performance goals must be met. If a participant's service terminates
during a particular Performance Cycle, the Committee, in its discretion, will
determine what portion, if any, of the performance unit should be paid out. If a
participant is terminated for cause he will not be entitled to any portion of
the
-33-
performance unit. Performance units are generally not transferable other than
under the laws of descent or distribution.
Restricted Stock and Deferred Stock. Restricted and deferred stock
awards give the recipient the right to receive a specified number of shares of
Common Stock, subject to such terms, conditions and restrictions as the
Committee deems appropriate. Restricted and deferred stock awards may be granted
alone or in tandem with other awards. Restrictions may include limitations on
the right to transfer the stock until the expiration of a specified period of
time and forfeiture of the stock upon the occurrence of certain events such as
the termination of employment prior to expiration of a specified period of time.
A participant in the Plan who has received a deferred stock award may request,
under certain conditions, the Committee to defer the participant's receipt of
the award (or an installment of an award) for an additional specified period or
until the occurrence of a specified event.
Other Stock Based Awards. Other stock based awards, which may include
performance shares and shares valued by reference to the performance of the
Company or any parent or subsidiary of the Company, may be granted either alone
or with in tandem with other awards.
Cash Awards. Cash awards are subject to such terms, conditions and
restrictions, as the Committee deems appropriate. Restrictions may include the
vesting period of the award or the time or times within which such award may be
subject to forfeiture. The Committee can satisfy its obligation under a cash
award by distributing that number of shares of Common Stock, restricted or
deferred Stock, or options that have a fair market value equal to the amount of
the cash award. Upon termination of service of the recipient of a cash award,
any unvested portion of a cash award terminates.
In the event of a change in control of the Company, for example through
a merger after which the stockholders of the Company immediately prior to the
merger own less than 50% of the shares of the surviving entity, or where an
individual or group acquires more than a specified percentage of the outstanding
shares of Common Stock, all options subject to the 2004 Plan that have been
outstanding for at least six months will become immediately exercisable, and all
restrictions limitations and deferral obligations contained in restricted stock
awards, deferred stock awards, performance units and other stock awards granted
under the 2004 Plan shall lapse.
The Committee may suspend, terminate, amend or modify the 2004 Plan. No
amendment will be effective until duly approved by the Company's stockholders if
failure to obtain such approval would adversely effect the compliance of the
2004 Plan with the requirements of Rule 16b-3 of the Exchange Act. The Committee
may amend any Award granted under the 2004 Plan; provided, however, that no
amendment that would impair the participant's rights can be made without the
participant's consent, unless the amendment is necessary to maintain compliance
with Rule 16b-3 of the Exchange Act.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE 2004 PLAN
The following is a brief summary of the Federal income tax aspects of
Awards made under the 2004 Plan based upon statutes, regulations and
interpretations in effect on the date hereof. This summary is not intended to be
exhaustive, and does not describe state or local tax consequences.
Non-Qualified Stock Options. With respect to Non-Qualified Stock
Options, (i) upon grant of the option, the optionee will recognize no income;
(ii) upon exercise of the option (if the shares are not subject to a substantial
risk of forfeiture), the optionee will recognize ordinary compensation income in
an amount equal to the excess, if any, of the fair market value of the shares of
Common Stock acquired
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on the date of exercise over the exercise price, and the Company will qualify
for a deduction in the same amount, subject to the requirements that the
compensation be reasonable and not limited under Section 162(m) of the Code;
(iii) the Company will be required to comply with applicable Federal income tax
withholding requirements with respect to the amount of ordinary compensation
income recognized by the optionee; and (iv) on a sale of the shares, the
optionee will recognize gain or loss equal to the difference, if any, between
the amount realized and the sum of the exercise price and the ordinary
compensation income recognized. Such gain or loss will be treated as short-term
or long-term capital gain or loss (if the shares are capital assets in the
optionee's hands) depending upon the length of time that the optionee held the
shares. If the optionee's shares acquired upon exercise are subject to a
substantial risk of forfeiture, the optionee will have an election to treat the
exercise as a taxable event or defer the Federal income tax consequences
according to the rules described below in "Stock Awards."
Stock Awards. Unless a participant otherwise elects to be taxed upon
transfer to him or her of shares of restricted or deferred stock (which is
subject to a substantial risk of forfeiture) under the 2004 Plan, the
participant must include in his or her taxable income the excess (if any) of the
fair market value of the shares over the amount paid, if any, for the shares, as
of the first date the participant's interest in the shares is no longer subject
to a substantial risk of forfeiture or such shares become transferable. A
participant's rights in stock awarded under the 2004 Plan are subject to a
substantial risk of forfeiture if the rights to full enjoyment of the shares are
conditioned, directly or indirectly, upon the future performance of substantial
services by the participant. Where shares of stock received under the 2004 Plan
are subject to a substantial risk of forfeiture, the participant may elect to
report the excess (if any) of the fair market value of the shares on the date of
transfer to him or her over the amount paid, if any, for the stock as ordinary
income in the year of such transfer. To be effective, the election must be filed
with the Internal Revenue Service within 30 days after the date the shares are
transferred to the participant. The Company is entitled to a Federal income tax
deduction equal to the amount includable as compensation in the gross income of
the participant, subject to the requirements that the compensation be reasonable
and not limited under Section 162(m) of the Code. The amount of taxable gain
arising from a participant's sale of shares of restricted stock acquired
pursuant to the 2004 Plan is equal to the excess (if any) of the amount realized
on such sale over the sum of the amount paid, if any, for the stock and the
compensation element included by the participant in gross income.
Cash Awards. The participant will include in his gross income for his
taxable year in which he received the amount of any cash paid to him as a cash
award, in connection with a performance unit or otherwise.
Other Tax Matters. If unmatured installments of Awards are accelerated
as a result of a Change of Control (as defined in the 2004 Plan), any amounts
received from the exercise by a participant of a stock option, the lapse of
restrictions on restricted stock or the deemed satisfaction of conditions of
performance-based Awards may be included in determining whether or not a
participant has received an "excess parachute payment" under Section 280G of the
Code, which could result in (i) the imposition of a 20% Federal excise tax (in
addition to Federal income tax) payable by the participant on certain payments
of Common Stock or cash resulting from such exercise or deemed satisfaction of
conditions of performance Awards from such exercise or deemed satisfaction of
conditions of performance Awards or, in the case of restricted stock, on all or
a portion of the fair market value of the shares on the date the restrictions
lapse and (ii) the loss by the Company of a compensation deduction.
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RECOMMENDATION OF THE BOARD:
THE BOARD OF DIRECTORS BELIEVES THAT THE 2004 LONG-TERM INCENTIVE PLAN
IS IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND UNANIMOUSLY
RECOMMENDS A VOTE FOR THE APPROVAL OF THE 2004 LONG-TERM INCENTIVE PLAN.
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PROPOSAL 4
APPROVAL OF CHANGE
OF
THE COMPANY'S STATE OF INCORPORATION
FROM DELAWARE TO INDIANA
GENERAL
On February 20, 2004, the Company's Board of Directors, upon the
recommendation of the Company's Corporate Governance and Nominating Committee,
approved a proposal (the "Reincorporation Proposal") to change the Company's
state of incorporation from Delaware to Indiana. This change (the
"Reincorporation") will be accomplished through a merger of the Company into
Brightpoint Indiana Corp. ("Brightpoint Indiana"), a wholly owned subsidiary of
the Company which was recently formed as an Indiana corporation and the vehicle
to effect the Reincorporation. The name of the surviving corporation following
the merger will be Brightpoint, Inc. and reference hereafter to the Company
will, where appropriate, mean the surviving corporation. The Reincorporation
will be effected pursuant to the terms of the Plan and Agreement of Merger
between the Company and Brightpoint Indiana dated as of April __, 2004 (the
"Merger Agreement"). A copy of the Merger Agreement is attached as APPENDIX E to
this Proxy Statement.
As a Delaware corporation, the Company is governed by the Delaware
General Corporation Law (the "DGCL") and the terms of its Amended and Restated
Certificate of Incorporation (the "Present Charter") and its Amended and
Restated By-Laws (the "Present By-Laws"). Following the Reincorporation, the
surviving corporation will be governed by the Indiana Business Corporation Law
(the "IBCL") and the Restated Articles of Incorporation (the "New Articles") and
By-Laws, as amended and restated, (the "New By-Laws") that are attached as
Annexes 1 and 2, respectively, to the Merger Agreement. Because there are
differences between the DGCL and the IBCL and corresponding differences between
the Present Charter and Present By-Laws as compared to the New Articles and New
By-Laws, the Reincorporation will result in differences in the rights of
stockholders. These differences are discussed below.
PRINCIPAL REASONS FOR THE REINCORPORATION
The Company presently has its executive offices and significant
operations located in the State of Indiana. As a Delaware corporation, the
Company is subject to taxation not only in Delaware but also in Indiana at
substantially the same level as the case would be if it were an Indiana
corporation. Under Delaware's system of taxation, franchise taxes are assessed
against the Company based, in part, on the number of shares authorized. This
formula of taxation has resulted in increased tax costs to the Company. Indiana
has no comparable franchise tax system. If the Company had been an Indiana
corporation, it would have saved approximately $465,000 in the past three years.
The Company has paid Delaware franchise taxes totaling $150,020, $150,020 and
$165,025 in each of 2001, 2002 and 2003, respectively. Management believes that
the Reincorporation will permit the Company to realize a significant reduction
of state tax expense by approximately $150,000 per year. The Company is not
pursuing the Reincorporation to take advantage of certain provisions of Indiana
law which are considered to have potential anti-takeover effects. See -
"ANTITAKEOVER EFFECTS OF THE REINCORPORATION PROPOSAL" below.
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The Company was originally incorporated as Wholesale Cellular USA, Inc.
in August 1989 under the laws of the State of Indiana. In connection with its
initial public offering, in March 1994 the Company changed its state of
incorporation from Indiana to Delaware. In September 1995 the Company changed
its name from Wholesale Cellular USA, Inc to Brightpoint, Inc.
MANNER OF EFFECTING THE REINCORPORATION
The following summary does not purport to be a complete description of
the Reincorporation Proposal and is qualified in its entirety by reference to
the Merger Agreement.
The Reincorporation will be effected by merging the Company with and
into Brightpoint Indiana (the "Merger") pursuant to the terms of the Merger
Agreement. At the Effective Time (as defined in the Merger Agreement), the
separate corporate existence of the Company will cease; Brightpoint Indiana will
succeed to all the business, properties, assets and liabilities of the Company
and its name will be changed to "Brightpoint, Inc." The directors, officers and
employees of the Company will become the directors, officers and employees of
the surviving corporation. Shares of the Company's Common Stock issued and
outstanding immediately prior to the Effective Time will, by virtue of the
Merger, be converted into an equal number of fully paid and nonassessable shares
of Brightpoint Indiana's Common Stock ("Indiana Shares"). Indiana Shares will
have the same terms as the Company's Common Stock, subject to the differences
arising by virtue of the differences between the IBCL and the DGCL and
differences between the Present Charter and Present By-Laws as compared to the
New Articles and New By-Laws.
From and after the Effective Time, each holder of a certificate
representing shares of the Company's Common Stock (a "Delaware Certificate")
shall be deemed for all purposes to be the holder of the Indiana Shares into
which the shares represented by his or her Delaware Certificate have been
converted. Such certificates shall continue to represent Indiana Shares and need
not be surrendered for exchange. While it is not necessary for stockholders to
surrender their Delaware Certificates for certificates representing Indiana
Shares, following the Effective Time each holder of a Delaware Certificate
outstanding immediately prior to the Effective Time will be entitled to
surrender his or her Delaware Certificate for cancellation and in exchange for a
new certificate representing the same number of Indiana Shares.
The stock purchase rights attached to each share of the Company's
Common Stock pursuant to the Rights Agreement between the Company and
Continental Stock Transfer & Trust Company, Inc., as rights agent (the "Rights
Plan"), will continue to be in effect in relation to Indiana Shares, and the
terms of the Rights Plan will not be affected by the reincorporation. See -
"COMPARISON OF RIGHTS OF SHAREHOLDERS - RIGHTS PLAN."
Approval of the Reincorporation Proposal will not result in any change
in the name, business, management, location of the principal executive offices
or other facilities, capitalization, assets or liabilities of the Company. The
Indiana Shares will continue to be traded without interruption on the Nasdaq
Stock Market. The Company's 1994 Stock Option Plan, 1996 Stock Option Plan,
Non-Employee Director Stock Option Plan, the 2004 Plan (if approved by the
Company's stockholders at the Annual Meeting), the Company's Employee Stock
Purchase Plan and the Original Director Plan (or the Amended Director Plan, if
approved by the Company's stockholders at the Annual Meeting) will be continued
by the surviving corporation and each outstanding option or other award issued
pursuant to
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such plans will be converted into an option or other award for Indiana Shares
equal to the number of shares of the Company's Common Stock related to each such
option or other award immediately prior to the Effective Time, at the same price
per share and upon the same terms and subject to the same conditions as are in
effect immediately prior to the Effective Time. The Company's other employee
benefit plans and arrangements will also be continued by the surviving
corporation upon the same terms and subject to the same conditions.
It is anticipated that the Merger will become effective as promptly as
practicable following the approval of the stockholders at the Annual Meeting.
However, the Merger Agreement provides that the Merger may be abandoned by the
Board of Directors of the Company prior to the Effective Time either before or
after stockholder approval. In addition, the Merger Agreement may be amended
prior to the Effective Time, either before or after stockholder approval,
provided that the Merger Agreement may not be amended after stockholder approval
if such amendment would (i) alter or change the number or kind of shares to be
received by stockholders in the Merger, (ii) alter or change any term of the New
Articles or New By-Laws or (iii) alter or change any of the terms and conditions
of the Merger Agreement if such alteration or change would adversely affect the
stockholders of the Company.
Appraisal rights will not be available to holders of the Company's
Common Stock in connection with the Reincorporation Proposal.
ANTITAKEOVER EFFECTS OF THE REINCORPORATION PROPOSAL
Certain provisions of the IBCL, specifically the Constituent Interests
Provision and the Control Share Acquisitions Provisions as described in
"Comparison of Rights of Stockholders" below, have no comparable provisions
under Delaware law. These statutory provisions and certain provisions of the New
Articles and New By-Laws, specifically the provisions regarding Preferred Stock,
and the supermajority vote required for certain business combinations, some of
which are carried over from the Present Charter and Present By-Laws may have the
effect of discouraging an unsolicited attempt by another person or entity to
acquire control of the Company. Such provisions may make tender offers, and
certain other transactions, more difficult or more costly and could discourage
or limit stockholder participation in such types of transactions, whether or not
such transactions were favored by the majority of the stockholders. As of this
date, the Board of Directors is unaware of any specific effort to accumulate the
Company's Common Stock or to obtain control of the Company by means of a merger,
tender offer or otherwise.
The Company is not pursuing the Reincorporation to take advantage of
certain provisions of Indiana law which are considered to have potential
anti-takeover effects. Specifically, in the original articles of incorporation
of Brightpoint Indiana and the New Articles, the Company has opted out of the
Business Combination Provisions and the Control Share Acquisition Provisions of
the IBCL that would otherwise apply to it as an Indiana corporation. These
provisions are discussed further below. As a result, the Company will not be
subject to these anti-takeover provisions (which include what some commentators
describe as a "control share acquisition" provision, a "fair price" provision,
and a five-year "freeze out" provision). The Company could not become subject to
these provisions of Indiana law unless the New Articles are amended in the
future with the approval of the Company's stockholders.
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COMPARISON OF RIGHTS OF STOCKHOLDERS
The DGCL differs from the IBCL in many respects. The material
differences of these statutes are discussed below. Because of these statutory
differences, certain changes from the Present Charter and Present By-Laws have
been made to the New Articles and New By-Laws. The material differences between
the Present Charter and Present By-Laws as compared to the New Articles and New
By-Laws are also discussed below.
Capital Stock. The Reincorporation will not affect the capital stock of
the Company except to the extent that rights of stockholders will be governed by
Indiana law rather than Delaware law. The number of authorized shares will
remain at 101,000,000, consisting of 100,000,000 shares of Common Stock, par
value $0.01 per share, and 1,000,000 shares of Preferred Stock, par value $0.01
per share.
After the Reincorporation, holders of Common Stock will continue to be
entitled to one vote per share on all matters submitted to a vote of the
stockholders, including the election of directors. As a result, the holders of
Common Stock entitled to exercise more than 50% of the voting rights in an
election of directors can elect all of the directors to be elected if they
choose to do so. The holders of Common Stock will be entitled to such dividends
as may be declared from time to time by the Board of Directors from funds
legally available therefor, and will be entitled to receive, pro rata, all
assets available for distribution to such holders upon liquidation. No shares of
the Common Stock have any preemptive, redemption or conversion rights, or the
benefits of any sinking fund. All of the shares issued by the surviving
corporation in the Reincorporation will be validly issued, fully paid and
nonassessable.
Under the Present Charter, 22,000 shares of Preferred Stock, par value
$0.01 per share, have been designated as the Series A Junior Participating
Cumulative Preferred Stock. The powers, designations, preferences and relative
participating, optional and other special rights and the qualification,
limitations and restrictions of the Series A Junior Participating Cumulative
Preferred Stock under the New Articles will be identical to those outlined in
the Present Charter.
Both the DGCL and the IBCL permit the certificate or articles of
incorporation to allow the board of directors to issue and fix the dividend,
voting and redemption rights, liquidation preferences and other rights,
privileges and restrictions of one or more series of preferred stock without
further stockholder action. The Company's Preferred Stock may be issued from
time to time in one or more series with such relative dividend, voting and other
rights, privileges and restrictions as the Board of Directors may determine. The
ability of the Board to issue Preferred Stock and determine its relative
dividend, voting and other rights without further stockholder action will not be
affected by the Reincorporation. The issuance of Preferred Stock, while
providing flexibility in connection with possible acquisitions and other
corporate purposes, could, among other things, adversely affect the voting power
of the holders of Common Stock and, under certain circumstances, make it more
difficult for a third party to gain control of the Company, discourage bids for
the Company's Common Stock at a premium or otherwise affect the market price of
Common Stock.
Size and Classification of the Board of Directors. Section 141(b) of
the DGCL provides that the board of directors of a Delaware corporation shall
consist of one or more members. The number of directors shall be fixed by, or in
the manner provided in, the by-laws unless the certificate of incorporation
fixes the number of directors, in which case a change in the number of directors
shall be made only by amendment of the certificate. Section 23-1-33-3 of the
IBCL provides that the board of directors of an Indiana corporation must consist
of one or more individuals, with the number specified in or fixed in accordance
with the articles of incorporation or by-laws.
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Pursuant to Section 141(d) of the DGCL, the directors may, by the
certificate of incorporation, by an initial by-law or by a by-law adopted by a
vote of the stockholders, be divided into one, two or three classes. Section
23-1-33-6 of the IBCL provides that the articles of incorporation or the
by-laws, may provide for staggering the terms of directors by dividing the total
number of directors into either two or three classes, with each class containing
as closely as possible the same number of directors.
The Company's Board of Directors is currently classified into three
classes of members. Currently, two classes have three members and a third class
has four members. The Board of Directors of the Company following the
Reincorporation will have the same classifications.
Removal of Directors. Section 141(k) of the DGCL provides that any
director or the entire board of directors may generally be removed with or
without cause by a majority stockholder vote. However, a director of a
corporation with a classified board of directors may be removed only for cause
unless the certificate of incorporation otherwise provided.
Under Section 23-1-33-8 of the IBCL, directors may be removed in any
manner provided in the articles of incorporation. In addition, unless the
articles of incorporation provide otherwise, the stockholders or directors may
remove one or more directors with or without cause. A director may be removed by
the stockholders, if they are otherwise authorized to do so, only at a meeting
called for that purpose and such purpose must be stated in the notice of the
meeting. A director elected by a voting group of stockholders may be removed
only by that voting group.
The Present By-Laws permit directors to be removed from office with or
without cause only by a majority stockholder vote. The removal provisions of the
New Articles are the same as the Present By-Laws.
Newly Created Directorships and Vacancies. Under Section 223 of the
DGCL, unless the certificate of incorporation or the by-laws of a corporation
provide otherwise, a majority vote of the directors then in office may fill
vacancies and newly created directorships, even if the number of current
directors is less than a quorum or only one director remains. If the directors
filling a vacancy or newly created directorship on the board constitute less
than a majority of the whole board (as measured before an increase in the size
of the board), the Delaware Court of Chancery may, upon application of
stockholders holding at least 10% of the outstanding voting shares, summarily
order an election to fill the vacancy or newly created directorship or replace
directors chosen by the directors then in office. Unless otherwise provided in
the certificate of incorporation or by-laws, when one or more directors resign
effective at a future date, a majority of directors then in office, including
those who have so resigned, may vote to fill the vacancy.
Under Section 23-1-33-9 of the IBCL, unless the articles of
incorporation provide otherwise, if a vacancy occurs on the board of directors,
including a vacancy resulting from an increase in the number of directors, the
remaining directors, even if less than a quorum, may fill the vacancy by
majority vote. If the vacant office was held by a director elected by a voting
group of stockholders, only the holders of shares of that voting group may vote
to fill the vacancy if it is filled by stockholders. A vacancy that will occur
at a specific later date by reason of resignation of a director effective at a
later date may be filled before the vacancy occurs, but the new director may not
take office until the vacancy occurs.
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The Present By-Laws permit vacancies, including any vacancy created by
an increase in the number of directors, to be filled by a majority of the
directors then in office, although less than a quorum. The New By-Laws contain
the same provisions.
Quorum and Vote Required to Take Action. Section 141(b) of the DGCL
provides that a majority of the total number of directors shall constitute a
quorum for the transaction of business unless the certificate of incorporation
or by-laws of the corporation require a greater number. In addition, unless the
certificate of incorporation provides otherwise, the by-laws may provide for a
quorum of less than a majority, which in no case shall be less than one-third of
the total number of directors. The board of directors shall act by the vote of a
majority of the directors present at a meeting at which a quorum is present,
unless the certificate of incorporation or the by-laws require the vote of a
greater number.
Under Section 23-1-34-5 of the IBCL, unless the articles of
incorporation or by-laws require a greater number, a majority of the fixed or
prescribed number of directors constitutes a quorum. Additionally, the articles
of incorporation or by-laws may authorize a quorum of no fewer than one-third of
the fixed or prescribed number of directors. If a quorum is present when a vote
is taken, the affirmative vote of a majority of the directors present is the act
of the board of directors unless the articles of incorporation or by-laws
provide otherwise.
The Present By-Laws provide that the presence in person of a majority
of the members of the Board of Directors constitutes a quorum for the
transaction of business and that, unless otherwise provided by law, the
certificate of incorporation or the by-laws, the act of a majority of the
directors present at any meeting at which there is quorum is the act of the
Board of Directors. The New By-Laws contain the same provisions.
Limitation on Directors' Liability. Section 102(b)(7) of the DGCL
allows a corporation, through its certificate of incorporation, to limit or
eliminate the personal liability of directors to the corporation and its
stockholders for damages for breach of fiduciary duty as a director. However,
this provision excludes any limitation on the liability of a director for (i)
any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) willful or negligent
violation of the laws governing the payment of dividends or the purchase or
redemption of stock or (iv) any transaction from which the director derives an
improper personal benefit.
Section 23-1-35-1 of the IBCL provides that a director is not liable
for any action taken as a director, or any failure to act, unless the director
has breached or failed to perform the duties of the director's office in
compliance with Section 23-1-35-1 and the breach or failure to perform
constitutes willful misconduct or recklessness. Subject to this standard, a
director who votes or assents to distributions in violation of the IBCL or the
articles of incorporation is personally liable to the corporation for the amount
of the illegal distribution and is entitled to contribution from the other
directors who voted for or assented to such distribution and the stockholders
who received the distribution.
The Present Charter contains a provision limiting director liability as
permitted by Section 102(b) of the DGCL. The New Articles contain a provision
which outlines the necessary factors for compliance with Section 23-1-35-1 of
the IBCL.
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Indemnification of Directors and Officers. Section 145 of the DGCL
provides that a corporation may indemnify any person who was or is a party or
threatened to be made a party to any type of proceeding (other than actions by
or in right of the corporation) because he or she is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses,
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with such proceeding if such person acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation; and in a criminal proceeding, if he or she had no
reasonable cause to believe his or her conduct was unlawful. Expenses incurred
by an officer or director (or other employees or agents as deemed appropriate by
the board of directors) in defending a civil, criminal, administrative or
investigative proceeding may be paid by the corporation in advance of the final
disposition of such proceeding upon receipt of an undertaking by or on behalf of
such person to repay such amount if it is ultimately determined that such person
is not entitled to be indemnified by the corporation. To indemnify a party, the
corporation must determine that the party met the applicable standards of
conduct.
Section 23-1-37-8 and Section 23-1-37-13 of the IBCL provide that a
corporation may indemnify any individual made a party to a proceeding (including
a proceeding by or in the right of the corporation) because the individual is or
was a director, officer, employee or agent of the corporation against liability
incurred in the proceeding if the individual acted in good faith and reasonably
believed (i) in the case of conduct in the individual's official capacity with
the corporation, that the individual's conduct was in the corporation's best
interests and (ii) in all other cases, that the individual's conduct was at
least not opposed to the corporation's best interests. In the case of any
criminal proceeding, the individual must have also had either reasonable cause
to believe the conduct was lawful or no reasonable cause to believe that it was
unlawful. In addition, Section 23-1-37-9 and Section 23-1-37-13 provide that a
corporation, unless limited by its articles of incorporation, must indemnity a
director or officer who was wholly successful in the defense of any proceeding
to which the director or officer was a party because the director or officer is
or was a director or officer of the corporation against reasonable expenses
incurred by the director or officer in connection with the proceeding.
Both the Present Charter and the New Articles provide for mandatory
indemnification to the fullest extent permitted by law.
Loans to Directors. Section 143 of the DGCL allows a corporation to
lend money to, or guarantee an obligation of, or otherwise assist an officer or
employee, including one who acts as a director, if the assistance is reasonably
expected to benefit the corporation. Such assistance may be provided without
stockholder approval.
Pursuant to Section 23-1-35-3 of the IBCL, a corporation may not lend
money to, or guarantee the obligation of, a director of the corporation unless
(i) the loan or guarantee is approved by a majority of the disinterested shares,
or (ii) the board of directors determines that the loan or guarantee benefits
the corporation and either approves the specific loan or guarantee or a general
plan authorizing loans and guarantees.
Dividends. Subject to any restrictions in a corporation's certificate
of incorporation, Section 170 of the DGCL allows the board of directors of a
Delaware corporation to declare and pay dividends out of surplus or, if there is
no surplus, out of its net profits for the fiscal year in which the dividend is
declared and/or the preceding fiscal year.
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Section 23-1-28-1 of the IBCL allows a board of directors to make
distributions to stockholders, unless otherwise provided in the articles of
incorporation. However, pursuant to Section 23-1-28-3 of the IBCL, no
distribution may be made if it would cause (i) the corporation to be unable to
pay its debts as they become due in the ordinary course of business or (ii) the
corporation's assets to be less than the sum of its liabilities plus, except as
otherwise specifically allowed by the articles of incorporation, the amount that
would be needed, if the corporation were to be dissolved at the time of the
distribution, to satisfy the rights of preferential stockholders whose rights
are superior to those receiving the distribution.
Action by Stockholders through Written Consent. Under Section 228(a) of
the DGCL, unless otherwise provided in a corporation's certificate of
incorporation, any action required to be taken at an annual or special meeting
of the stockholders may be taken in the absence of a meeting, without prior
written notice and without a vote. Such action may be taken by the written
consent of stockholders in lieu of a meeting setting forth the action so taken
and signed by the holders of outstanding stock representing the minimum number
of votes necessary to take such action at a meeting at which all shares entitled
to vote were present and voted. Prompt notice of the taking of any corporate
action without a meeting by less than unanimous written consent must be given to
those stockholders who have not consented in writing and who, if the action had
been taken at a meeting, would have been entitled to notice of the meeting.
Under Section 23-1-29-4 of the IBCL, any action required or permitted
to be taken at a meeting of stockholders of an Indiana corporation that has a
class of equity securities registered under the Securities Exchange Act of 1934
may be taken without a meeting if a written consent thereto is signed by all the
stockholders entitled to vote on the action.
The New Articles contain a provision permitting stockholder action by
unanimous written consent.
Special Meetings of Stockholders. Under Section 211(d) of the DGCL,
special meetings of stockholders may be called by the board of directors and by
such other person or persons as may be authorized to do so by the corporation's
certificate of incorporation or by-laws.
Section 23-1-29-2 of the IBCL provides that a corporation with more
than 50 stockholders must hold a special meeting of stockholders on demand of
its board of directors or the person or persons specifically authorized to do so
by the articles of incorporation or by-laws.
Under the Present By-Laws, special meetings of the stockholders, for
any purpose, unless otherwise prescribed by law, may be called by the President
or Board of Directors. The New By-Laws contain the same provision.
Cumulative Voting. Both Section 214 of the DGCL and Section 23-1-30-9
of the IBCL allow a corporation to provide for cumulative voting in the
certificate of incorporation or the articles of incorporation.
Neither the Present Charter nor the New Articles provide for cumulative
voting.
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Necessary Vote to Effect Merger (Not Involving Interested Stockholder).
The DGCL requires a majority vote of the shares entitled to vote in order to
effectuate a merger between two Delaware corporations (Section 251(c)) or
between a Delaware corporation and a corporation organized under the laws of
another state (a "foreign corporation") (Section 252(c)). However, unless
required by the certificate of incorporation, Sections 251(f) and 252(e) do not
require a vote of the stockholders of a constituent corporation surviving the
merger if (i) the merger agreement does not amend that corporation's certificate
of incorporation, (ii) each share of that corporation's stock outstanding before
the effective date of the merger is identical to an outstanding or treasury
share of the surviving corporation after the merger and (iii) in the event the
merger plan provides for the issuance of common stock or securities convertible
into common stock by the surviving corporation, the common stock issued and the
common stock issuable upon conversion of the issued securities do not exceed 20%
of the shares outstanding immediately before the effective date of the merger.
Section 23-1-40-3 of the IBCL requires a majority vote of the shares
entitled to vote in order to effectuate a merger or share exchange unless the
articles of incorporation or the board of directors require a greater vote or a
vote by voting group. However, the vote of the stockholders of the surviving
corporation on a plan of merger is not required if (i) the articles of
incorporation of the surviving corporation will not differ from its articles
before the merger, (ii) each stockholder of the surviving corporation whose
shares were outstanding immediately before the effective date of the merger will
hold the same proportionate number of shares relative to the number of shares
held by all such stockholders (except for shares of the surviving corporation
received solely as a result of the stockholder's proportionate shareholdings in
the other corporations party to the merger), with identical designations,
preferences, limitations and relative rights, immediately after the merger,
(iii) the number of voting shares outstanding immediately after the merger, plus
the number of voting shares issuable as a result of the merger (either by the
conversion of securities issued pursuant to the merger or the exercise of rights
and warrants issued pursuant to the merger), will not exceed by more than 20%
the total number of voting shares of the surviving corporation outstanding
immediately before the merger and (iv) the number of participating shares
outstanding immediately after the merger, plus the number of participating
shares issuable as a result of the merger (either by the conversion of
securities issued pursuant to the merger or the exercise of rights and warrants
issued pursuant to the merger), will not exceed by more than 20% the total
number of participating shares of the surviving corporation outstanding
immediately before the merger.
Business Combinations Involving Interested Stockholders. Section 203 of
the DGCL provides that, with certain exceptions, a Delaware corporation may not
engage in any of a broad range of business combinations, such as mergers,
consolidations and sales of assets, with an "interested stockholder" for a
period of three years from the date that such person became an interested
stockholder unless (i) the transaction that results in the person's becoming an
interested stockholder or the business combination is approved by the board of
directors of the corporation before the person becomes an interested
stockholder, (ii) upon consummation of the transaction which results in the
stockholder becoming an interested stockholder, the interested stockholder owns
85% or more of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding shares owned by persons who are directors and
also officers and shares owned by certain employee stock plans or (iii) on or
after the date the person becomes an interested stockholder, the business
combination is approved by the corporation's board of directors and by holders
of at least two-thirds of the corporation's outstanding voting stock, excluding
shares owned by the interested stockholder, at a meeting of stockholders. Under
Section 203, an "interested stockholder" is defined as any person, other than
the corporation and any
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direct or indirect majority-owned subsidiary, that is (i) the owner of 15% or
more of the outstanding voting stock of the corporation or (ii) an affiliate or
associate of the corporation and was the owner of 15% or more of the outstanding
voting stock of the corporation at any time within the three-year period
immediately prior to the date on which it is sought to be determined whether
such person is an interested stockholder. Section 203 does not apply to a
corporation that so provides in an amendment to its certificate of incorporation
or by-laws passed by a majority of its outstanding shares entitled to vote. Such
stockholder action does not become effective for 12 months following its
adoption and would not apply to persons who were already interested stockholders
at the time of the amendment.
Sections 23-1-43-1 to 23-1-43-23 of the IBCL (the "Business Combination
Provisions") restrict the ability of a "resident domestic corporation" to engage
in any business combination with an "interested shareholder" for five years (the
"five year freeze") after the interested shareholder's date of acquiring shares
unless the business combination or the purchase of shares by the interested
shareholder on the interested shareholder's share acquisition date is approved
by the board of directors of the resident domestic corporation before that date.
If the combination was not previously approved, the interested shareholder may
effect a combination after the five-year freeze period only if such shareholder
receives approval from a majority of the disinterested shares or the offer meets
certain "fair price" requirements. For purposes of the above provisions,
"resident domestic corporation" means an Indiana corporation that has 100 or
more stockholders. "Interested shareholder" means any person, other than the
resident domestic corporation or its subsidiaries, who is (i) the beneficial
owner, directly or indirectly, of 10% or more of the voting power of the
outstanding voting shares of the resident domestic corporation or (ii) an
affiliate or associate of the resident domestic corporation and at any time
within the five-year period immediately before the date in question was the
beneficial owner of 10% or more of the voting power of the then outstanding
shares of the resident domestic corporation. The above provisions do not apply
to corporations that so elect in its original articles of incorporation or in an
amendment to its articles of incorporation approved by a majority of the
disinterested shares. Such an amendment, however, would not become effective for
18 months after its passage and would apply only to stock acquisitions occurring
after its effective date.
The Present Charter does not exclude the Company from restrictions
imposed under Section 203 of the DGCL. The original articles of incorporation
for Brightpoint Indiana and the New Articles specifically exclude the Company
from the Business Combination Provisions of the IBCL.
Control Share Acquisitions. Pursuant to Sections 23-1-42-1 to
23-1-42-11 of the IBCL (the "Control Share Acquisitions Provisions"), an
acquiring person who makes a "control share acquisition" in an "issuing public
corporation" may not exercise voting rights on any "control shares" unless such
voting rights are conferred by a majority vote of the disinterested stockholders
of the issuing corporation at a special meeting of such stockholders held upon
the request and at the expense of the acquiring person. Unless otherwise
provided in a corporation's articles of incorporation or by-laws before a
control share acquisition has occurred, in the event that control shares
acquired in a control share acquisition are accorded full voting rights and the
acquiring person acquires control shares with a majority or more of all voting
power, all stockholders of the issuing corporation have dissenters' rights to
receive the fair value of their shares. Under the IBCL, "control shares" means
shares acquired by a person that, when added to all other shares of the issuing
public corporation owned by that person or in respect of which that person may
exercise or direct the exercise of voting power, would otherwise entitle that
person to exercise voting power of the issuing public corporation in the
election of directors within any of the following ranges: (i) one-fifth or more
but less than one-third, (ii) one-third or more but less
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than a majority or (iii) a majority or more. "Control share acquisition" means,
subject to certain exceptions, the acquisition, directly or indirectly, by any
person of ownership of, or the power to direct the exercise of voting power with
respect to, issued and outstanding control shares. Shares acquired within 90
days or pursuant to a plan to make a control share acquisition are considered to
have been acquired in the same acquisition. "Issuing public corporation" means a
corporation which is organized in Indiana, has 100 or more stockholders, has its
principal place of business, its principal office or substantial assets within
Indiana and has either (i) more than 10% of its stockholders resident in
Indiana, (ii) more than 10% of its shares owned by Indiana residents or (iii)
10,000 stockholders resident in Indiana. The above provisions do not apply if,
before a control share acquisition is made, the corporation's articles of
incorporation or by-laws (including a board adopted by-laws) provide that said
provisions do not apply.
There is no corresponding provision under the DGCL.
The original articles of incorporation for Brightpoint Indiana and the
New Articles specifically exclude the Company from the Control Share Provisions
of the IBCL.
Constituent Interests. Section 23-1-35-1 of the IBCL (the "Constituent
Interests Provision") provides that the board of directors, in discharging its
duties, may consider, in its discretion, both the long-term and short-term best
interests of the corporation, taking into account, and weighing as the directors
deem appropriate, the effects of an action on the corporation's stockholders,
employees, suppliers and customers and the communities in which offices or other
facilities of the corporation are located and any other factors the directors
consider pertinent. Section 23-1-35-1 specifically provides that certain
judicial decisions in Delaware and other jurisdictions, which might be looked
upon for guidance in interpreting Indiana law, including decisions that propose
a higher or different degree of scrutiny in response to a proposed acquisition
of the corporation, are inconsistent with the proper application of that
section.
There is no corresponding provision in the DGCL.
Procedures to Regulate Changes in Control. Section 23-1-22-4 of
the IBCL provides that, in addition to any other provision authorized by any
other section of the IBCL or contained in the articles of incorporation or the
by-laws, a corporation may establish one or more procedures to regulate
transactions that would, when consummated, result in a change of "control" of
the corporation. Such a procedure may be established in the original articles of
incorporation or by-laws, by an amendment to the articles of incorporation or,
notwithstanding the fact that a vote of the stockholders would otherwise be
required by any other provision of the IBCL or the articles of incorporation, by
an amendment to the by-laws. For the purposes of Section 23-1-22-4, "control"
means, for any corporation that has 100 or more stockholders, the beneficial
ownership, or the direct or indirect power to direct the voting, of not less
than 10% of the voting shares of a corporation's outstanding voting shares.
There is no corresponding provision under the DGCL.
Appraisal Rights; Dissenters' Rights. Both Section 62 of the DGCL and
Section 23-1-44-8 of the IBCL provide that stockholders have the right, in some
circumstances, to dissent from certain corporate reorganizations and to instead
demand payment of the fair value of their shares. Under Section 262 of the DGCL,
unless a corporation's certificate of incorporation provides otherwise,
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dissenters do not have the rights of appraisal with respect to (i) a merger or
consolidation by a corporation, the shares of which are either listed on a
national securities exchange or designated as a national market system security
on an interdealer quotation system by the National Association of Securities
Dealers, Inc. ("NASD"), or held by more than 2,000 stockholders, if the
stockholders receive (a) shares in the surviving corporation, (b) shares of
another corporation that are publicly listed or held by more than 2,000
stockholders, (c) cash in lieu of fractional shares or (d) any combination of
the above, or (ii) stockholders of a corporation surviving a merger if no vote
of the stockholders of the surviving corporation is required to approve the
merger. Under Section 23-1-44-8 of the IBCL, dissenters do not have rights of
appraisal (i) with respect to shares of any class or series of stock registered
on a national securities exchange or traded on the NASD Automated Quotation
System Over-the-Counter Markets-National Market Issues or a similar market or
(ii) unless the articles of incorporation, by-laws or resolution of the board of
directors provide that voting or non-voting stockholders are entitled to
dissent, if they were not entitled to vote on the corporate reorganization.
Redeemable Shares. Section 151(b) of the DGCL provides that the
certificate of incorporation or a resolution of the board of directors may make
any class of stock subject to redemption at the option of the corporation or the
stockholders, or upon the happening of a specified event, as long as immediately
following any such redemption the corporation has at least one share of at least
on series of stock with full voting powers.
Section 23-1-25-1 of the IBCL provides that the articles of
incorporation of a corporation may authorize one or more classes of shares that
are redeemable or convertible as specified in the articles of incorporation at
the option of the corporation, the stockholder or another person or upon the
occurrence of a designated event.
Rights, Warrants or Options. Under Section 157 of the DGCL, rights or
options to purchase shares of any class of stock may be authorized by a
corporation's board of directors subject to the provisions of the certificate of
incorporation. The terms of such rights or options must be fixed and stated in
the certificate of incorporation or in a resolution or resolutions adopted by
the board of directors.
Under Section 23-1-26-5 of the IBCL, a corporation, acting through its
board of directors, may create or issue rights, options or warrants for the
purchase of shares or other securities of the corporation or any successor in
interest of the corporation. The board of directors shall determine the terms
upon which the rights, options or warrants are issued, their form and content
and the consideration for which the shares or other securities are to be issued.
Preemptive Rights. Under Section 102(b)(3) of the DGCL and Section
23-1-27-1 of the IBCL, absent an express provision in a corporation's
certificate of incorporation or articles of incorporation, a stockholder does
not, by operation of law, possess preemptive rights to subscribe to an
additional issue of stock. Neither the Present Charter nor the New Articles
provide for preemptive rights.
Amendment of Certificate or Articles of Incorporation and By-Laws.
Section 242 of the DGCL and Sections 23-1-38-3 and 23-1-38-4 of the IBCL permit
a corporation to amend its certificate of incorporation or articles of
incorporation in any respect, provided the amendment contains only provisions
that would be lawful in an original certificate of incorporation or articles of
incorporation filed at the time of amendment. To amend a certificate of
incorporation or the articles of incorporation,
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the board must adopt a resolution presenting the proposed amendment. In
addition, under the DGCL, a majority of the shares entitled to vote, as well as
a majority of shares of each class entitled to vote, must approve the amendment
to make it effective. Under the IBCL, an amendment to the articles of
incorporation of an Indiana corporation generally may be adopted if the votes
cast favoring the amendment exceed the votes cast opposing the amendment, except
that any amendment that would create dissenters' rights must be approved by a
majority of the votes entitled to be cast. Under the DGCL and the IBCL, when the
substantial rights of a class of shares will be affected by an amendment, the
holders of those shares are entitled to vote as a class even if the shares are
non-voting shares. When one or more series in a class of shares, and not the
entire class, will be adversely affected by an amendment, the affected series
may vote as a class. Under Section 242(b)(2) of the DGCL, the right to vote as a
class may be limited in certain circumstances. Any provision in the certificate
of incorporation which requires a greater vote than required by law cannot be
amended or repealed except by such greater vote. Section 242(c) of the DGCL
provides that, in its resolution proposing an amendment, the board may insert a
provision allowing the board to abandon the amendment, without concurrence by
stockholders, after the amendment has received stockholder approval but before
its filing with the Secretary of State.
The majority vote of the holders of the outstanding Common Stock of the
Company is required to amend the provisions of the Present Charter relating to
the number of authorized shares of any class of stock. The New Articles require
the affirmative vote of at least two-thirds of the outstanding shares of voting
stock as well as the majority vote of the independent stockholders, if
applicable, to amend the provisions of the New Articles relating to (1) the
votes needed to approve certain business combinations, a change in the number of
directors, the removal of one or more directors or the amendment of any other
provisions of the New Articles, or (2) the number of shares which must be
represented to demand a special meeting of the stockholders.
Section 109 of the DGCL provides that the power to amend the by-laws
rests with the stockholders entitled to vote, although the certificate of
incorporation may confer the power to amend the by-laws upon the board of
directors. Section 109 further provides that the fact that the certificate of
incorporation confers such power upon the board of directors neither limits nor
divests the stockholders of the power to amend the by-laws. Section 23-1-39-1 of
the IBCL, on the other hand, provides that, unless the articles of incorporation
provide otherwise, only the board of directors of a corporation may amend the
by-laws.
The Present By-Laws provide that the by-laws of the corporation may be
amended by a majority vote of the stockholders or by the Board of Directors,
except that any amendment with respect to the election and classification of
directors requires the vote of two-thirds of the Company's outstanding stock
entitled to vote thereon. The amendment provisions of the New By-Laws are the
same as the Present By-Laws.
Inspection of Books and Records. Section 220 of the DGCL entitles any
stockholder of record of a corporation, in person or by an agent, upon written
demand under oath stating the purpose thereof, to inspect during usual business
hours, for any proper purpose, the corporation's stock ledger, a list of its
stockholders and its other books and records, and to make copies or extracts
therefrom. A proper purpose means a purpose reasonably related to such person's
interest as a stockholder.
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Section 23-1-52-2 of the IBCL entitles any stockholder of a corporation
to inspect and copy, during regular business hours, certain enumerated corporate
records if the stockholder gives the corporation at least five days' advance
written notice. Certain records may be inspected only if: (i) the stockholder's
demand is made in good faith and for a proper purpose, (ii) the stockholder
describes with reasonable particularity the stockholder's purpose and (iii) the
records to be inspected are directly connected with the stockholder's purpose.
Advance Notice Provisions. The Present By-Laws establish an advance
notice procedure for stockholders to make nominations of candidates for election
as directors or to bring other business before any meeting of stockholders of
the Company. The Present By-Laws provide that only persons who are nominated by
the Board of Directors or a committee appointed by the Board of Directors or any
stockholder entitled to vote in the election of directors generally and who has
given timely written notice to the Secretary of the Company prior to the meeting
at which directors are to be elected, will be eligible for election as directors
of the Company. The Present By-Laws also provide that at a meeting of
stockholders only such business may be conducted as has been brought before the
meeting, by or at the direction of, the Board of Directors or the chairman of
the meeting or by a stockholder who has given timely written notice to the
Secretary of the Company of such stockholder's intention to bring such business
before such meeting. Under the Present By-Laws, for notice of stockholder
nominations or other business to be made at a meeting to be timely, such notice
must be received by the Company not less than 50 days nor more than 75 days
prior to the meeting, or in the event that less than 65 days' notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be received not later than the close
of business on the tenth day following the day on which such notice of the date
of the meeting was mailed or such public disclosure was made. Under the Present
By-Laws, a stockholder's notice must also contain certain information specified
in the by-laws.
The advance notice provisions of the Present By-Laws are carried over
into the New By-Laws.
Rights Plan. The Company has a stockholder rights plan which could
discourage unwanted or hostile takeover attempts which are not negotiated with
its Board of Directors. The Rights Plan discourages such attempts by causing
substantial dilution to any person who acquires an amount in excess of a
specified percentage of the Company's Common Stock and by making an acquisition
of the Company without the consent of its Board of Directors prohibitively
expensive.
Following the Merger, Brightpoint Indiana will assume the Company's
obligations under the Rights Plan, and the Rights will continue to be in effect
in relation to the Indiana Shares.
FEDERAL INCOME TAX CONSEQUENCES OF THE REINCORPORATION
The Company has been advised by counsel that, for federal income tax
purposes, the Reincorporation will constitute a reorganization under Section 368
of the Internal Revenue Code of 1986, as amended, and that consequently the
holders of the Company's Common Stock will not recognize any gain or loss as a
result of the Merger. In addition, for federal income tax purposes, each
stockholder will retain the same tax basis in the Indiana Shares issued in the
Merger as in the corresponding share of the Company's Common Stock held
immediately prior to the Effective Time, and the holding period for the Indiana
Shares will include the period during which the corresponding Company's Common
Stock was held, provided that such corresponding Common Stock was held as a
capital asset at the Effective Time.
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Although it is not anticipated that state or local income tax
consequences will vary from the federal income tax consequences described above,
stockholders should consult their own tax advisors as to the effect of the
reorganization under state, local or foreign income tax laws.
The Company further has been advised by counsel that the Company as an
Indiana corporation will not recognize any gain, loss or income for federal
income tax purposes as a result of the Reincorporation and Merger and that it
will succeed, without adjustment, to the tax attributes of the Company as a
Delaware corporation.
RECOMMENDATION OF THE BOARD
The Board of Directors believes that the Reincorporation will allow the
Company to avoid the higher tax cost imposed by Delaware's system of taxation
and to become incorporated in the State where its headquarters and significant
operations are located without materially diminishing any substantive rights of
stockholders.
THE BOARD OF DIRECTORS BELIEVES THAT THE REINCORORATION PROPOSAL IS IN
THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND UNANIMOUSLY
RECOMMENDS A VOTE FOR THE APPROVAL OF THE REINCORORATION PROPOSAL.
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PROPOSAL 5
RATIFICATION OF THE APPOINTMENT
OF ERNST & YOUNG LLP AS
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, 2003 and the Audit Committee
of 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, 2004.
Although stockholder approval of the 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 appointment of Ernst & Young LLP is being submitted for stockholder
ratification, the Audit Committee reserves the right, even after ratification by
stockholders, to change the appointment of Ernst & Young LLP as auditors, at any
time during the 2004 fiscal year, if it deems such change to be in the best
interests of the Company. Representatives of Ernst & Young LLP will be present
at the Annual Meeting, will have the opportunity to make a statement if they
desire to do so and are expected to be available to respond to appropriate
questions.
Audit Fees. The aggregate fees for professional services rendered by
Ernst & Young LLP for the audit of the Company's annual financial statements for
the years ended December 31, 2003 and 2002, the review of the financial
statements included in the Company's Forms 10-Q for 2003 and 2002 and statutory
audits of foreign subsidiaries totaled $1,041,515 and $980,810, respectively.
Audit-Related Fees. The aggregate fees for assurance and related
services by Ernst & Young LLP that are related to the performance of the audit
or review of the Company's financial statements, for the years ended December
31, 2003 and 2002, and are not disclosed in the paragraph captioned "Audit Fees"
above, were $53,820 and $27,500, respectively. The services performed by Ernst &
Young LLP in connection with these fees consisted of employee benefit plan
audits and internal controls consultation.
Tax Fees. The aggregate fees for professional services rendered by
Ernst & Young LLP for tax compliance, for the years ended December 31, 2003 and
2002, were $281,200 and $189,200, respectively. The aggregate fees billed by
Ernst & Young LLP for professional services rendered for tax advice and tax
planning, for the years ended December 31, 2003 and 2002, were $215,050 and
$140,300, respectively. The services performed by Ernst & Young LLP in
connection with these advisory and planning fees consisted of the following: tax
audits and consultation regarding various tax issues.
All Other Fees. There were no fees for products and services by Ernst &
Young LLP, other than the services described in the paragraphs captioned "Audit
Fees", "Audit-Related Fees", and "Tax Fees" above for the years ended December
31, 2003 and 2002.
The Audit Committee has established its pre-approval policies and
procedures, pursuant to which the Audit Committee approved the foregoing audit
and permissible non-audit services provided by Ernst & Young LLP in 2003. The
Audit Committee's pre-approval policy is as follows: Consistent with the Audit
Committee's responsibility for engaging our independent auditors, all audit and
permitted non-audit services require pre-approval by the Audit Committee. All
requests or applications for services to be provided by the independent auditor
that do not require specific approval by the Audit Committee
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will be submitted to the Chief Financial Officer and must include a detailed
description of the services to be rendered. The Chief Financial Officer will
determine whether such services are included within the list of services that
have received the general pre-approval of the Audit Committee. The Audit
Committee will be informed on a timely basis of any such services rendered by
the independent auditor. Request or applications to provide services that
require specific approval by the Audit Committee will be submitted to the Audit
Committee by both the independent auditor and the Chief Financial Officer, and
must include a joint statement as to whether, in their view, the request or
application is consistent with the SEC's rules on auditor independence. The
Audit Committee has designated the Vice President of Internal Audit to monitor
the performance of all services provided by the independent auditor and to
determine whether such services are in compliance with this policy. The Vice
President of Internal Audit will report to the Audit Committee on a periodic
basis on the results of its monitoring. The Vice President of Internal Audit and
management will immediately report to the chairman of the Audit Committee any
breach of this policy that comes to the attention of the Vice President of
Internal Audit or any member of management. The Audit Committee will also review
the internal auditor's annual internal audit plan to determine that the plan
provides for the monitoring of the independent auditor's services. Pursuant to
these procedures the Audit Committee approved the foregoing audit and
permissible non-audit services provided by Ernst & Young LLP in 2003.
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, 2004.
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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, 2004 to be held in the year 2005 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 December 28, 2004 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 501 Airtech Parkway, Plainfield, Indiana
46168. Under the Company's Corporate Governance Principles Nominees for
Directors should be sent to the Company's Lead Independent Director at:
board.directors@brightpoint.com.
If a stockholder submits a proposal after the December 28, 2004
deadline but still wishes to present the proposal at the Company's Annual
Meeting of Stockholders (but not in the Company's proxy statement) for the
fiscal year ending December 31, 2004, the proposal, which must be presented in a
manner consistent with the Company's By-Laws and applicable law, must be
submitted to the Secretary of the Company in proper form at the address set
forth above no later than March 12, 2005.
The Company did not receive notice of any proposed matter to be
submitted by stockholders for a vote at this Annual Meeting and, therefore, in
accordance with Exchange Act Rule 14a-4(c) any proxies held by persons
designated as proxies by the Company's Board of Directors and received in
respect of this Annual Meeting will be voted in the discretion of the Company's
management on such other matter which may properly come before the Annual
Meeting. Moreover, if the Company does not receive notice by March 12, 2005 of a
proposed matter to be submitted by a stockholder for stockholders vote at the
Annual Meeting of Stockholders for the fiscal year ending December 31, 2004,
then, in accordance with Exchange Act Rule 14a-4(c) any proxies held by persons
designated as proxies by the Company's Board of Directors in respect of such
Annual Meeting may be voted at the discretion of such persons on such matter if
it shall properly come before such Annual Meeting.
The qualities and skills sought in prospective members of the board are
determined by the Corporate Governance and Nominating Committee. The Corporate
Governance and Nominating Committee requires that director candidates be
qualified individuals who, if added to the Board, would provide the mix of
director characteristics and diverse experiences, perspectives and skills
appropriate for the Company. Criteria for selection of candidates will include,
but not be limited to: (i) business and financial acumen, as determined by the
Committee in its discretion, (ii) relevant education or training, (iii) a
commitment to business ethics and the "Brightpoint Values", (iv) tenure and
breadth of experience in a significant leadership capacity, as well as qualities
reflecting a proven record of accomplishment and ability to work with others,
(v) knowledgeable in the Company's industry, (vi) relevant experience and
knowledge of corporate governance practices, and (vii) expertise in an area
relevant to the Company. Any prospective director nominee must be "independent"
under NASDAQ Marketplace Rules and the Company's Corporate Governance
Principles. Such persons should not have commitments that would conflict with
the time commitments of a Director of the Company. Such persons shall be of high
repute and recognized integrity and not have been convicted in a criminal
proceeding or be named a subject of a pending criminal proceeding (excluding
traffic violations and other minor offenses). Such person shall not have been
found in a civil proceeding to have violated any federal or state securities or
commodities
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law, and shall not be subject to any court or regulatory order or decree
limiting his or her business activity, including in connection with the purchase
or sale of any security or commodity. Such persons shall have other
characteristics considered appropriate for membership on the Board of Directors,
as determined by the Corporate Governance and Nominating Committee.
The Corporate Governance and Nominating Committee has complete
discretion in considering nominations to the Board. A stockholder who wishes to
recommend a qualified candidate to the Company's Board of Director's may write
to the Company's Secretary at the address set forth above, stating in detail the
qualifications of the person they recommend. Pursuant to our Company's By-laws,
all nominations for the 2005 Annual Meeting must be submitted not less than 50
days nor more than 75 days prior to the Annual Meeting.
With respect to the deadlines discussed above, if the date of the
Annual Meeting to be held in 2005 is advanced by more than thirty days or
delayed (other than as a result of adjournment) by more than thirty days from
the anniversary of the Annual Meeting held in 2004, a stockholder must submit
any such proposal to the Company no later than the close of business on the
sixtieth day prior to the date of the 2005 Annual Meeting.
OTHER INFORMATION
A copy of the Company's 2003 Annual Report to Stockholders is being
furnished herewith to each stockholder of record as of the close of business on
April 19, 2004. Copies of the Company's Annual Report on Form 10-K will be
provided upon written request to the Company at 501 Airtech Parkway, Plainfield,
Indiana 46168, Attention Investor Relations. The Form 10-K also is available on
the Company's website at www.brightpoint.com.
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,
/s/ Steven E. Fivel
Steven E. Fivel
Secretary
April __, 2004
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APPENDIX A
BRIGHTPOINT, INC.
CORPORATE GOVERNANCE PRINCIPLES
The Board of Directors ("Board") of Brightpoint, Inc. ("Company" or
"Brightpoint") believes that effective corporate governance is built on
adherence to a number of "best practices." These practices are consistent with
the Board's responsibilities to effectively oversee the Company's strategy,
evaluate and compensate Company executives, and plan for management succession.
Most importantly, these practices are believed to strengthen the Company and
protect shareholders' interests. As such, the Board has developed and follows a
program of corporate governance that includes the following elements:
- Board Independence
- The Board shall be comprised of a majority of independent
directors. Director independence, at a minimum, is consistent
with applicable rules and regulations for Nasdaq-traded
issuers. The Board believes that independence is best achieved
when independent directors, their family members, or their
primary employers receive no consulting, legal, or other fees
from Brightpoint other than in their service as Board members.
- An Independent Director is specifically defined as a
director who:
- Is not an affiliate of the Company, the
Company's affiliates, any member of the
Company's senior management, or the
Company's suppliers or customers;
- Has not been employed by the Company or its
affiliates within the past five years;
- Has no personal services contract, such as a
consulting or advising relationship, with
the Company, its affiliates, or the
Company's executives;
- Has no business relationship with the
Company or its affiliates (other than in his
or her service as a Board member) that
requires Brightpoint to make disclosure
under Nasdaq or Securities and Exchange
Commission rules and regulations;
- Is not affiliated with a not-for-profit
organization that receives substantial
contributions from the Company or its
affiliates, as specified by Nasdaq rules or
regulations;
- Is not employed by an organization at which
an executive of Brightpoint serves as a
Board member;
- Is not a family member of any individuals
with the aforementioned relationships;
- Has not been affiliated with or employed by
a present or former auditor of the Company
or its affiliates until five years after the
end of either the affiliation or auditing
relationship.
- The Board is committed to Board Committee independence. Each
Board Committee will be chaired by an Independent Director of
the Board. Committee chairs, their family members, or their
primary employers shall receive no consulting, legal, or other
fees from Brightpoint other than in their service as Board
members. In compliance with Sarbanes-Oxley and Nasdaq rules
and regulations, the Audit Committee is comprised of three
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Independent Directors. In addition, the Audit Committee chair
shall be deemed a "financial expert", as specified by Nasdaq
rules and Section 407(b) of the Sarbanes-Oxley Act of 2002 and
any rules implemented by the Securities and Exchange
Commission. Committee chairs and members serve one year
renewable terms. Any director that is no longer considered an
Independent Director will be required to resign from any
Committee on which he or she serves.
- The Board presently believes that it is in the best interests
of the Company for the positions of Chief Executive Officer
and Board Chairperson to be combined, as this structure
provides for unified vision and leadership within the Company.
This combined leadership structure will be periodically
evaluated. Should the Board determine that such separation is
appropriate, these positions will be formally separated. The
CEO/Chairperson serves a critical role in establishing and
maintaining effective communications with the Company's
shareholders, customers, suppliers, employees, creditors,
communities, governments, and other stakeholders.
Communications between the Company and stakeholders will be
primarily through the CEO/Chairperson of the Board.
- When the Chief Executive Officer and Board Chairperson
positions are combined, the Board will maintain a Lead
Independent Director. This director will be selected by the
Independent Directors of the Board from among the Independent
Directors of the Board. The Lead Independent Director serves
as an important liaison between the Board and Management. A
key role of the Lead Independent Director is to work closely
with the Corporate Secretary so that Board members receive
meeting agendas and related materials with sufficient time to
effectively prepare for discussion at Board and/or Committee
meetings. The Lead Independent Director is also responsible
for scheduling meetings whereby the Independent Directors meet
in executive session. Executive sessions include only
Independent Directors, with guests invited at the discretion
of the Independent Directors. Management Board members and
other Management representatives will not, as a rule, be
present in these sessions. The Lead Independent Director sets
the executive session meeting agendas and presides over these
meetings. The Lead Independent Director also serves a central
role as liaison between the Board and external advisors
retained by the Board. The Lead Independent Director serves
for a one year renewable term. The Lead Independent Director
is evaluated by the full Board on an annual basis.
- As a matter of policy, and to ensure Board independence,
Independent Directors or directors who are not employed by the
Company or its affiliates, their family members, and their
primary employers will refrain from conducting any business
with the Company outside of directors' service as Board
members. This is consistent with the definition of an
Independent Director contained herein. Board member
independence will be assessed and affirmed annually.
Consideration will be given to replacing non-management
directors no longer considered independent.
- Board Budget
- In recognition of the Board's commitment to maintaining
independence, the Board maintains an operating budget separate
from Company funds. These funds are provided by the Company.
This enables the Board to engage in activities such as
determining Director compensation and hiring external experts
such as the external auditors and
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compensation consultants without having to request such
operating funds from Management. The Board's budget is
overseen by the Lead Independent Director and Audit Committee
Chairperson.
- Committee Charter
- The Board will maintain and make publicly available Board
Committee Charters for the three standing Board committees.
These Charters, the Company's Corporate Governance Guidelines,
and the Company's Code of Business Conduct and Ethics, which
may be modified as appropriate, are made available to the
public via the Company's website (www.brightpoint.com).
- Board Size
- The Board shall be comprised of between eight to 12 members.
Board size will be a function of the current needs of the
Company and the ability to effectively staff standing Board
committees. Board size will be, in part, a function of a
purposeful desire to enhance Board member diversity. Diversity
is accomplished through the inclusion of directors with
varying background characteristics and knowledge bases.
Directors are selected for their ability to provide unique
diverse perspectives and skills in their service as Board
members. Directors are re-evaluated as to their ability to
meet Board member diversity goals and effectively contribute
to the Board in the event their primary occupation or
employment status changes during their term. Consideration
will be given to replacing directors not fulfilling these
goals due to their occupational or employment status change.
- Director Compensation
- The Board believes that it is important to rely on director
compensation practices that promote director independence.
Directors' compensation is therefore in the form of a Board
retainer. No special fees are granted for Board or Committee
meeting attendance. The Lead Independent Director, Board
Committee chairs, and Audit Committee members receive
additional compensation in recognition of their additional
service responsibilities. The Board also believes that its
Independent Directors should make a meaningful investment in
Company stock. Consistent with this guideline, 30 percent of
an Independent Director's annual compensation will be, subject
to receipt of necessary approvals, in the form of restricted
stock grants until the fair market value of the Director's
stock holdings in the Company reach a level two times that of
the Director's annual Board retainer. Once a Director's stock
holdings reach this level, the Director generally may elect to
receive the annual retainer in the form of cash or a
combination of cash and restricted stock grants. Directors may
also choose to have the annual Board retainer paid entirely in
restricted shares. Unless the fair market value of the shares
of Common Stock held by a Director reaches a level of two
times that of the annual Board retainer the Director may not
sell any restricted shares issued as part of the Director's
annual Board compensation until six months after the
Director's retirement/resignation from the Board. Once a
Director's stock holdings reach the two times annual retainer
level (which holdings shall be measured in December of each
year) all restricted shares previously issued to the Director
as part of the Director's annual Board retainer and all
restricted shares to be issued to the Director in the ensuing
year may be sold in the ensuing year without the need to
comply with the restrictions set forth above. Any director
stock transactions will be posted on the Company's website
(www.brightpoint.com).
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- Board Meetings and Attendance
- The Board is committed to open communication among Board
members and between the Board and Management. Consistent with
this, the Board and Board Committees shall meet on a quarterly
basis. Board meeting dates are established on an annual basis
and approved by Board vote. Additional Board and/or Committee
meetings are scheduled on an "as needed" basis. The Board
believes that it is important for directors to participate in
scheduled Board and/or Committee meetings. Directors who
participate in less than 75 percent of scheduled Board and
Committee meetings are subject to being terminated as a Board
member or not receiving re-nomination to the Board.
- Director Access to Management
- Consistent with the need for open communication channels
between the Board and Management, non-management directors
have direct access to Company Management outside of formal
Board and/or Committee meetings.
- Board Education and Evaluation
- The Board is committed to ensuring that directors receive
ongoing educational opportunities that enhance their abilities
to effectively serve the Company. To this end, the Board
engages in continuing education experiences. Each director is
required to attend one director training seminar per calendar
year. Also, the Board as a whole engages in a joint
professional development experience each year. Additionally,
new Board members are provided with a comprehensive manual
that assists in their orientation to the Board and the
Company. The Board is also committed to evaluating the overall
effectiveness of the Board and individual directors. Board and
Board Committee evaluation occurs annually. Directors are
formally evaluated at the conclusion of their Board term and
prior to their consideration for re-nomination to the Board.
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APPENDIX B
BRIGHTPOINT, INC.
AUDIT COMMITTEE CHARTER
ORGANIZATION
This charter, which has been adopted by the board of directors of Brightpoint,
Inc. ("Company") governs the operations of the Audit Committee of the Board of
Directors of the Company ("Committee"). The Committee shall review and reassess
the adequacy of the charter at least annually and obtain the approval of the
board of directors of the Company for any changes in the charter recommended by
the Committee. The Committee shall be members of, and appointed by, the board of
directors and shall comprise at least three directors, each of whom are
independent of management and the Company ("Independent Directors"). Members of
the Committee shall be considered Independent Directors as long as they are in
compliance with the definition of Independent Directors as defined and set forth
in the Company's Corporate Governance Principles. All Committee members shall be
financially literate, and, at least one member shall be a "financial expert," as
defined by SEC regulations.
PURPOSE
The Audit Committee shall provide assistance to the board of directors in
fulfilling the board's oversight responsibility to the shareholders, potential
shareholders, the investment community, and others relating to:
- the integrity of the Company's financial statements and the related public
reports, disclosures and regulatory filings in which they appear ;
- the systems of internal control over financial reporting, operations, and
legal/regulatory compliance;
- the performance, qualifications and independence of the Company's
independent accountants;
- the performance, qualifications and independence of the Company's internal
audit function, and;
- compliance with the Company's ethics policies and applicable legal and
regulatory requirements.
In so doing, it is the responsibility of the Committee to maintain free and open
communication between the Committee, independent accountants, the internal
auditors, and management of the Company.
AUTHORITY
In discharging its oversight role, the Committee is empowered to investigate any
matter brought to its attention with full access to all books, records,
facilities, and personnel of the Company and the authority to engage and
determine the compensation of independent counsel and other advisers as it
determines necessary to carry out its duties.
ADMINISTRATION
The Committee will meet at least four times each year, one of which shall be an
annual meeting with authority to convene additional meetings, as circumstance
require.
The Committee shall fix its own rules of procedure, which shall be consistent
with the by-laws of the Company and this charter.
Unless a chair is elected by the board of directors, the members of the
Committee may designate a chair by majority vote of the full Committee.
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The chair of the Committee or a majority of the members of the Committee may
call a special meeting of the Committee.
A majority of the Committee shall constitute a quorum.
The Committee may form subcommittees for any purposes that the Committee deems
appropriate and may delegate to such subcommittees such power and authority as
the Committee deems appropriate.
Following each of its meetings, the Committee shall deliver a report on the
meeting, in the form of minutes or otherwise, to the board of directors,
including a description of all actions taken by the Committee at the meeting.
Members of the Committee shall serve until their resignation, retirement or
removal by the board of directors or until their successors shall be appointed
and qualify. No member of the Committee shall be removed unless by a majority
vote of the full board of directors.
A member of the Committee shall promptly notify the chair of the Committee and
the board of directors if the member is no longer an Independent Director. The
chair of the Committee shall promptly notify the full board of directors if the
chair is no longer an Independent Director.
All Committee members are expected to attend each meeting, in person or via
tele- or video conference. The Committee may invite members of management,
counsel, auditors or others to attend meetings and provide pertinent
information, as necessary. Meeting agendas will be prepared and provided in
advance to members, along with appropriate briefing materials. Minutes of each
meeting will be prepared.
DUTIES AND RESPONSIBILITIES
The primary responsibility of the Audit Committee is to oversee the Company's
financial reporting process on behalf of the board and report the results of
their activities to the board. While the Committee has the responsibilities and
powers set forth in this charter, it is not the duty of the Committee to plan or
conduct audits or to determine that the Company's financial statements are
complete and accurate and are in accordance with generally accepted accounting
principles. Management is responsible for the preparation, presentation, and
integrity of the Company's financial statements and for the appropriateness of
the accounting principles and reporting policies that are used by the Company.
The independent accountants are responsible for auditing the Company's financial
statements and for reviewing the Company's unaudited interim financial
statements.
In carrying out their responsibilities, the policies and procedures of the
Committee shall remain flexible, in order to best react to changing conditions
and circumstances. The following sections of this charter set forth the
principal duties and responsibilities of the Audit Committee, as a guide, with
the understanding that the Committee may supplement them as appropriate.
Relationship with the Independent Accountants
The independent accountants shall report directly to the Committee.
- The Committee shall be directly responsible for the appointment and
termination (subject to shareholder ratification, if applicable or required
as determined by the full board of directors), compensation, and oversight
of the work of the independent accountants, including pre-approval of all
audit services provided by the independent accountants and resolution of
any disagreements between management and the independent accountants
regarding financial reporting.
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- At least annually, the Committee shall obtain and review a report by the
independent accountants describing:
- The accounting firm's internal quality control procedures.
- Any material issues raised by the most recent internal quality control
review, or peer review, of the accounting firm, or by any inquiry or
investigation by governmental or professional authorities, within the
preceding five years, respecting one or more independent audits carried
out by the firm, and any steps taken to deal with any such issues.
- All relationships between the independent accountant and the Company
(to assess the auditor's independence).
- The Committee shall set clear hiring policies for employees or former
employees of the independent accountants that comply with SEC regulations
and applicable regulations on any stock exchange or quotation medium where
the Company's securities are listed for trading.
Accounting Matters and Financial & Regulatory Reporting
- The Committee shall receive regular reports from the independent accountant
on the critical policies and practices of the Company, and all alternative
treatments of financial information within generally accepted accounting
principles that have been discussed with management.
- Prior to their release, the Committee shall review and discuss with
management and the Company's Disclosure Committee, if then in existence,
earnings press releases, as well as financial information and earnings
guidance provided to analysts and rating agencies. The chair of the
Committee may represent the entire Committee for purpose of this review.
- The Committee shall review the interim financial statements and disclosures
under Management's Discussion and Analysis of Financial Condition and
Results of Operations with management and the independent accountants prior
to the filing of the Company's Quarterly Report on Form 10-Q. The Committee
shall also discuss the results of the quarterly review and any other
matters required to be communicated to the Committee by the independent
accountants under generally accepted auditing standards. The chair of the
Committee may represent the entire Committee for the purposes of this
review.
- The Committee shall review with management and the independent accountants
the financial statements and disclosures under Management's Discussion and
Analysis of Financial Condition and Results of Operations to be included in
the Company's Annual Report on Form 10-K (or the annual report to
shareholders if distributed prior to the filing of Form 10-K), including
their judgment about the quality of accounting principles, the
reasonableness of significant judgments, and the clarity and completeness
of the disclosures in the financial statements. Also, the Committee shall
discuss the results of the annual audit and any other matters required to
be communicated to the Committee by the independent accountants under
generally accepted auditing standards.
- The Committee shall prepare its report to be included in the Company's
annual proxy statement, as required by SEC regulations.
Non-Audit Services Provided by the Independent Accountant
- The Committee shall pre-approve all non-audit services provided by the
independent accountants and shall not engage the independent accountants to
perform the specific non-audit services prohibited by law or regulation.
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- The Committee may delegate pre-approval authority to a member of the Audit
Committee. The decisions of any Audit Committee member to whom pre-approval
authority is delegated must be presented to the full Audit Committee at its
next scheduled meeting.
Internal Audit
- The Internal Audit Director shall report to the Committee. The Committee
may delegate certain administrative responsibilities in connection with the
oversight of the Internal Audit Director to the Chief Financial Officer of
the Company or such other officer of the Company, from time to time. The
Committee shall review and approve the appointment, replacement or
dismissal of the Internal Audit Director.
- The Committee shall review with management and the Internal Audit Director,
the internal audit charter, plans, activities, staffing and organizational
structure of the internal audit function and shall approve the annual
internal audit plan and approval of the budget with respect thereto.
- The Committee shall review the effectiveness of the internal audit
function, including compliance with the Institute of Internal Auditors'
Standards for the Professional Practice of Internal Auditing.
Adequacy of Audit Scopes and Resources
- The Committee shall discuss with the internal auditors and the independent
accountants the overall scope and plans for their respective audits,
including the adequacy of staffing and resources.
Internal Controls
- The Committee shall discuss with management, the internal auditors, and the
independent accountants the adequacy and effectiveness of the accounting
and financial controls, including the Company's policies and procedures to
assess, monitor, and manage business risk, and legal and ethical compliance
programs (e.g., Company's Code of Conduct).
- The Committee shall review management's assertion on its assessment of the
effectiveness of internal controls as of the end of the most recent fiscal
year and the independent accountants' report on management's assertion.
Private & Executive Sessions
- The Committee shall meet separately and periodically with management, the
internal auditors, and the independent accountants to discuss issues and
concerns warranting Committee attention. The Committee shall provide
sufficient opportunity for the internal auditors and the independent
accountants to meet privately with the members of the Committee. The
Committee shall review with the internal auditors and the independent
accountants any audit problems or difficulties and management's response.
Other Matters
- The Committee shall establish procedures for the receipt, retention, and
treatment of complaints received by the Company regarding accounting,
internal accounting controls, or auditing matters, and the confidential,
anonymous submission by employees of the Company of concerns regarding
questionable accounting or auditing matters.
- The Committee shall receive corporate attorneys' reports of evidence of a
material violation of securities laws or breaches of fiduciary duty.
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- The Committee shall institute and oversee special investigations as needed.
- The Committee shall perform an evaluation of the Committee's and individual
members' performance at least annually to determine whether it is
functioning effectively.
- The Committee shall perform any other activities related to this charter as
may be requested by the board of directors or as the Committee determines
is necessary to carry out its duties and responsibilities.
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APPENDIX C
BRIGHTPOINT, INC.
AMENDED AND RESTATED
INDEPENDENT DIRECTOR STOCK COMPENSATION PLAN
1. Purpose.
The Amended and Restated Independent Director Stock Compensation (the
"Plan") is established to attract, retain and compensate for service highly
qualified individuals who qualify as independent directors of Brightpoint, Inc.
(the "Company") under the Company's Corporate Governance Principles ("CGP"), as
may be amended from time to time ("Independent Directors"), and to strengthen
the commonality of interest between Independent Directors and stockholders of
the Company through the Independent Directors' ownership in the Company's common
stock, $.01 par value (the "Common Stock").
2. Eligibility.
All members of the Company's Board of Directors who qualify as
Independent Directors under the CGP shall participate in the Plan, provided,
however, that in no event shall a member of the Company's Board of Directors be
eligible to participate in the Plan if he or she is employed by the Company or
any of its subsidiaries.
3. Scope and Duration.
A maximum of 900,000 shares of Common Stock may be issued under the
Plan, which shares may be, in whole or in part, authorized but unissued shares
or shares reacquired by the Company. As provided in Section 9 of the Plan, the
Plan shall become effective on the date that the Plan is approved by the
Company's stockholders.
4. Awards of Common Stock; Restrictions on Resale of Common Stock.
(a) Initial Awards. Persons who are elected or appointed as
Independent Directors and who did not previously receive options under the
Company's Non-Employee Director Stock Option Plan shall automatically receive,
on the date such person is first elected or appointed to the Board of Directors
of the Company (or on such other date as determined by the Board of Directors
for those Independent Directors first elected or appointed on or after January
1, 2003 but prior to June 5, 2004), an award of shares of Common Stock in an
amount determined by the Company's Board of Directors at or prior to the
commencement of such director's term of office with the Company (or such other
date as determined by the Board of Directors for those Independent Directors
first elected or appointed on or after January 1, 2003 but prior to June 5,
2004). Such award shall not exceed 2,000 shares (or such greater or lesser
number of shares resulting from any anti-dilution adjustment pursuant to Section
6 of the Plan). Shares awarded under this Section 4(a) shall vest as follows:
50% on the first anniversary of the date of award and 50% on the second
anniversary of the date of award; provided, however, that if an individual
ceases to serve as an Independent Director for any reason prior to the second
anniversary of an award under this Section 4(a), the Board of Directors, in its
discretion, can accelerate the vesting of any unvested shares awarded under this
Section 4(a) to enable such individual to receive, in addition to any shares
that had already vested, the number of shares that he or she would have received
if he or she had served for the
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entire year in which his or her service terminated. Unless receipt of these
shares is deferred pursuant to an election made by the Independent Director
pursuant to the provisions of Section 4(j) of the Plan, the vested shares for
any given year shall be issued to the Independent Director promptly after the
date such shares have vested. No shares granted under this Section 4(a) or any
interest therein may be sold or otherwise transferred by the Independent
Director prior to the third anniversary of the date of award of such shares.
Awards of shares of Common Stock granted under this Section 4(a) and Section
4(b) of the Plan are collectively referred to as ("Automatic Awards").
(b) Annual Awards. Each individual serving in any calendar year as
an Independent Director of the Company shall automatically receive, on (i)
January 1 of such calendar year; or (ii) the date on which the Independent
Director commences service as an Independent Director, for such service in the
calendar year an award of shares of Common Stock in an amount determined by the
Company's Board of Directors prior to the commencement of the calendar year
except that grants for the calendar year 2004 may be determined by the Board of
Directors at any time prior to stockholder approval of the amended Plan. Such
amount shall not exceed 2,000 shares (or such greater or lesser number of shares
resulting from any anti-dilution adjustment pursuant to Section 6 of the Plan);
provided, that with respect to an Independent Director who only served as such
for a part of a calendar year, the number of shares granted under this Section
4(b) for such calendar year shall not exceed 2,000 shares (or such greater or
lesser number of shares resulting from any anti-dilution adjustment pursuant to
Section 6 of the Plan) multiplied by a fraction, the numerator of which is the
actual number of calendar days in which the Independent Director served in that
year and the denominator of which is 365. Shares awarded under this Section 4(b)
shall vest as follows: 50% on the first anniversary of the date of award and 50%
on the second anniversary of the date of award; provided, however, that if an
individual ceases to serve as an Independent Director for any reason prior to
the second anniversary of an award under this Section 4(b), the Board of
Directors, in its discretion, can accelerate the vesting of any unvested shares
awarded under this Section 4(b) to enable such individual to receive, in
addition to any shares that had already vested, the number of shares that he or
she would have received if he or she had served for the entire year in which his
or her service terminated. Unless receipt of these shares is deferred pursuant
to an election made by the Independent Director pursuant to the provisions of
Section 4(j) of the Plan, the vested shares for any given year shall be issued
to the Independent Director promptly after the date such shares have vested. No
shares granted under this Section 4(b) may be sold or otherwise transferred by
the Independent Director prior to the third anniversary of the date of award of
such shares.
(c) Elective Awards. Awards of Common Stock made under this
Section 4(c) ("Elective Awards") shall be consistent with the director
compensation provisions set forth in the CGP. As set forth in the CGP, 30% (or
such other percentage as may be set forth in an amendment to the CGP subsequent
to the effective date of the Plan) of the annual cash compensation to be paid by
the Company to an Independent Director for Board services rendered by the
Independent Director ("Board Compensation") shall be paid through the issuance
of shares of Common Stock pursuant to the Plan (the "Required Share Condition").
Automatic Awards and Elective Awards granted under the Plan in any given year,
regardless of whether or not vested, shall be included in the calculation of
determining whether an Independent Director has satisfied the Required Share
Condition. For purposes of the Plan, Board Compensation shall not include
amounts paid to an Independent Director for (i) services as a member of a
Committee of the Board or (ii) travel and other expenses incurred by or on
behalf of an Independent Director for attending Board or Board Committee
meetings. Notwithstanding the foregoing, if the Fair Market Value (as defined
below) of the shares of Common Stock issued to an Independent Director under the
Plan, regardless of whether or not vested, or owned by the Independent Director
as of December 15 of any given year (which ownership shall consist of shares
owned directly or indirectly (e.g., in a controlled entity or a pension plan)
but shall not include shares underlying derivative
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securities such as options or warrants but which shall take into account
Automatic or Elective Awards made on or about December 15 of that year as
provided in Section 4(e) of the Plan, even if the certificates for the shares
have not yet been issued), is equal to or in excess of 200% of the annual Board
Compensation to be received by the Independent Director for the immediately
succeeding year (the "Threshold Amount") then in lieu of receiving the shares
subject to the Required Share Condition the Independent Director may elect to
receive all or a portion of the Board Compensation for the immediately
succeeding year that would otherwise be payable in shares of Common Stock in
cash or a combination of cash and Common Stock to be awarded under the Plan. In
addition, any Independent Director may, for any succeeding year elect to receive
all or a portion of his or her Board Compensation, that would otherwise be
payable in cash, in the form of Common Stock awarded under the Plan. Any such
election(s) must be received by the Company on or before December 31, and, once
made, an election shall govern the form of compensation to be received by the
Independent Director for such succeeding year. All elections must be made in 10%
increments.
(d) Grant of Elective Awards. Each Elective Award shall be payable
in arrears for Board services rendered by the Independent Director in the six
month period immediately preceding the date of the Award (the "Service Period").
The number of shares of Common Stock subject to an Elective Award and the
payment dates of the Elective Award shall be determined as provided below.
(e) Payment of Elective Awards. On the 15th day of June and
December in each year (or the immediately preceding business day if June 15 or
December 15 is not a business day) (each, an "Elective Award Date"), each
Independent Director who served as an Independent Director at any time during
the applicable Service Period shall, except as provided in Section 4(f) of the
Plan, automatically be awarded that number of shares of Common Stock determined
by dividing (i) the amount of Board Compensation that the Independent Director
was entitled to receive for services rendered by the Independent Director during
the applicable Service Period as determined in Section 4(d) of the Plan, by (ii)
the average of the Fair Market Value of the Common Stock for the five trading
days ending on the third business day immediately preceding the applicable
Elective Award Date. Certificates evidencing the shares of Common Stock
constituting Awards shall be registered in the respective names of the
participants in the Plan and shall be issued to each participant promptly after
an Elective Award Date but, in any event, no later than twenty (20) business
days after an Elective Award Date. With respect to an Independent Director who
only served as such for a portion of a Service Period the Independent Director
shall be entitled to receive that percentage of an Elective Award determined by
multiplying (x) the number of shares of Common Stock that the Independent
Director would have received if he or she had served for the entire Service
Period by (y) a fraction, the numerator of which is the actual number of days
during the applicable Service Period in which the Independent Director served
and the denominator of which is the total number of days in the applicable
Service Period.
(f) Cash Election. Notwithstanding the provisions set forth in
Sections 4(c) and 4(e) of the Plan, no Elective Award shall be granted to an
Independent Director who (i) is not subject to the Required Share Condition
because the value of the Common Stock issued to such Independent Director under
the Plan or owned by the Independent Director as of December 15 of any given
year is equal to or in excess of the Threshold Amount for such year, and who has
elected to receive his or her Board Compensation in the form of cash in lieu of
Common Stock for the Service Period covered by the Elective Award and (ii)
provides written notification of the election by the time specified in Section
4(c) of the Plan, addressed to the General Counsel of the Company at the
Company's then principal executive offices (currently located at 501 Airtech
Parkway, Plainfield, IN 46168), that he or she wishes to receive a cash payment
equal to the portion of the director compensation that would otherwise be
payable in Common Stock.
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(g) Restrictions on Sale and Transfer of Elective Awards. Shares
of Common Stock issued as Elective Awards may not be sold or transferred by an
Independent Director until the Fair Market Value of his or her share holdings
have reached the Threshold Amount which determination shall be made on December
15 of each year. Once an Independent Director has reached the Threshold Amount
in any given year he or she shall thereafter not be subject to any restrictions
under the Plan from selling, during the immediately succeeding year, any shares
of Common Stock that have been received by the Independent Director as Elective
Awards under the Plan at any time prior to the end of such immediately
succeeding year. If the Fair Market Value of the Independent Director's share
holdings do not reach the Threshold Amount then the shares of Common Stock that
are issued under the Plan as Elective Awards may not be sold until six months
(or such other period as specified in the CGP) after the Independent Director
ceases to be a director of the Company.
(h) Restrictive Legends. If applicable, the certificates
representing the shares of Common Stock issued under the Plan shall also contain
a legend with respect to any restrictions on transfer of the shares set forth in
the Plan, and stop transfer orders shall be placed with the transfer agent for
the Common Stock with respect to such restrictions.
(i) No Fractional Shares. No fractional share of Common Stock
shall be issued under the Plan and any fractional share shall be rounded up to
the next nearest number of whole shares. All determinations to be made by the
Company hereunder shall be made by the Board of Directors.
(j) Deferral of Board Compensation and Awards. Notwithstanding
anything in the Plan to the contrary, an Independent Director may, by completing
an Election Form and delivering it to the General Counsel of the Company on or
before December 15 of any year, elect (the "Elective Deferral") to defer the
receipt of any portion or all of the (i) Board Compensation; (ii) Automatic
Awards; or (iii) Elective Awards (in each case whether in cash or stock) to be
received by the Independent Director in the immediately succeeding year
("Deferred Compensation"), on such terms as the Company's Board of Directors may
permit.
An Elective Deferral shall be irrevocable, except that the Board of
Directors of the Company, in its sole discretion, may allow an Independent
Director to change or revoke such Elective Deferral.
The Company shall establish an account for each Independent Director
who makes an Elective Deferral reflecting Elective Deferrals made for such
director's benefit together with any additions to reflect any dividends paid
upon any shares of Common stock that have been deferred pursuant to an Elective
Deferral (the "Deferred Shares"). The Company shall establish sub-accounts for
each Independent Director who has more than one Elective Deferral in effect
under the Plan and such other sub-accounts as are necessary for the proper
administration of the Plan. As of December 15 of each year, the Company shall
provide the Independent Director with a statement of his or her account
reflecting the number of Deferred Shares or other Deferred Compensation, and any
dividends on the Deferred Shares credited thereto and distributions from such
account since the prior statement.
An Independent Director who makes an Elective Deferral shall be
immediately vested in and shall have a nonforfeitable right to, all Deferred
Compensation and all dividends, if any, on any Deferred Shares credited to his
or her account. In the event of the Company's insolvency, the Independent
Director shall have the same rights as a general creditor of the Company with
respect to his or her account balance.
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An Independent Director who makes an Elective Deferral shall designate
(on the Election Form used to make Elective Deferrals under the Plan) the
date(s) at which the Deferred Compensation and any dividends credited to his or
her account will be distributed to him or her, or his or her designated
beneficiary (in the event of death before full distribution), or estate if no
such beneficiary, or legal representative in the event of incompetence before
full distribution. The number of shares of Common Stock, if any, which are
attributable to dividends and credited to his or her account shall be based on
the per share Fair Market Value on the date of such dividend. Distributions
shall be made in cash and/or Common Stock in the proportions deferred.
Deferred Shares and shares attributable to dividends on any Deferred
Shares shall be subject to adjustment as set forth in Section 6 of the Plan.
Each such election regarding the date(s) for payments shall be
irrevocable, except that the Board of Directors of the Company, in its sole
discretion, may allow the Participant to change or revoke such election.
5. Administration and Amendment of the Plan.
Although to the extent possible, the Plan is intended to be
self-executing, the Plan shall be administered, to the extent necessary, by the
Board of Directors of the Company. The Plan may be terminated or amended by the
Board of Directors, as they deem advisable. No amendment to the Plan may be made
without stockholder approval which would (i) increase the number of shares of
Common Stock available for issuance under the Plan, other than as a result of
the application of the anti-dilution adjustments as provided for in Section 6 of
the Plan, (ii) cause the Plan to fail to comply with Rule 16b-3 under the
Securities Exchange Act of 1934, or any successor rule or (iii) cause the Plan
to fail to comply with any applicable rule of either a principal securities
exchange or national securities association on which the Company's common stock
is listed for trading.
6. Anti-Dilution Adjustments.
Notwithstanding any other provision of the Plan, the Board of Directors
of the Company may, at any time, make or provide for such adjustments to the
Plan, to the number and class of shares issuable thereunder or to any
outstanding Award as it shall deem appropriate to prevent dilution or
enlargement of rights, including adjustments in the event of changes in the
outstanding Common Stock by reason of stock dividends, split-ups,
recapitalizations, mergers, consolidations, combinations or exchanges of shares,
separations, reorganizations, liquidations and the like. Any such determination
by the Board of Directors shall be conclusive. Any fractional shares resulting
from such adjustments shall be eliminated.
7. Compliance with SEC and Other Regulations.
It is the Company's intent that the Plan comply in all respects with
Rule 16b-3 of the Securities Exchange Act of 1934 and any regulations
promulgated thereunder. If any provision of the Plan is later found not to be in
compliance with said rule or any successor rule, the provisions shall be deemed
null and void.
Neither the Plan nor the Company shall be obligated to issue any shares
of Common Stock pursuant to the Plan at any time unless and until all applicable
requirements imposed by any federal and state securities and other laws, rules
and regulations, by any regulatory agencies or by any stock exchanges or
quotation medium upon which the Common Stock may be listed or traded have been
fully met. As a condition precedent to any issuance of shares of Common Stock
and delivery of certificates
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evidencing such shares pursuant to the Plan, the Board may require a participant
in the Plan to take any such action and to make any such covenants, agreements
and representations as the Board, in its sole discretion deems necessary or
advisable to ensure compliance with such requirements. The Company shall in no
event be obligated to register the shares of Common Stock deliverable under the
Plan pursuant to the Securities Act of 1933, or to qualify or register such
shares under any securities laws of any state upon their issuance under the Plan
or at any time thereafter, or to take any other action in order to cause the
issuance and delivery of such shares under the Plan or any subsequent offer,
sale or other transfer of such shares to comply with any such law, regulation or
requirement. Participants in the Plan are responsible for complying with all
applicable federal and state securities and other laws, rules and regulations in
connection with any offer, sale or other transfer of the shares of Common Stock
issued under the Plan or any interest therein including, without limitation,
compliance with the registration requirements of the Securities Act of 1933
(unless an exemption therefrom is available), or with the provisions of Rule 144
promulgated thereunder, if applicable, or any successor provisions.
8. Miscellaneous.
(a) Nothing in the Plan or any action taken pursuant to the Plan
shall be construed as creating or constituting evidence of any agreement or
understanding, express or implied, that the Company will retain an Independent
Director who participates in the Plan as a director or in any other capacity for
any period of time or at a particular retainer or other rate of compensation, as
conferring upon any participant any legal or other right to continue as a
director or in any other capacity, or as limiting, interfering with or otherwise
affecting the right of the Company to terminate a participant in his or her
capacity as a director or otherwise at any time for any reason, with or without
cause, and without regard to the effect that such termination might have upon
him or her as a participant under the Plan.
(b) As said term is used in the Plan, the "Fair Market Value" of a
share of Common Stock on any day means: (i) if the principal market for the
Common Stock is a national securities exchange or the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ"), the closing
sales price of the Common Stock on such day as reported by such exchange or
market system, or on a consolidated tape reflecting transactions on such
exchange or market system, or (ii) if the principal market for the Common Stock
is not a national securities exchange or NASDAQ the mean between the highest bid
and lowest asked prices for the Common Stock on such day as reported by the
National Quotation Bureau, Inc.; provided that if clauses (i) and (ii) of this
Section 8(b) are all inapplicable, or if no trades have been made or no quotes
are available for such day, the Fair Market Value of the Common Stock shall be
determined by the Board of Directors whose determination shall be conclusive as
to the Fair Market Value of the Common Stock.
(c) No participant in the Plan shall have the right to assign the
right to receive any Award or any other right or interest under the Plan,
contingent or otherwise (except that upon the death of a participant in the Plan
any Award accrued but not paid shall be paid to the participant's designated
beneficiary or if none, to the executor, executrix or administrator of the
estate of the participant), or to cause or permit any encumbrance, pledge or
charge of any nature to be imposed on any such Award (prior to the issuance of
stock certificates evidencing such Award) or any such right or interest.
(d) In the event that any provision of the Plan is held invalid,
void or unenforceable, the same shall not affect, in any respect whatsoever, the
validity of any other provision of the Plan.
(e) To the extent not preempted by Federal law, the Plan shall be
governed by the laws of the State of Indiana.
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9. Effective Date.
The Plan shall become effective on the first business day following
approval of the Plan by the stockholders of the Company and shall terminate ten
years from such date. No Award shall be made prior to stockholder approval of
the Plan or prior to the effective date of a Registration Statement on Form S-8
to be filed by the Company with the Securities and Exchange Commission to
register the shares of Common Stock that may be issued under the Plan.
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APPENDIX D
BRIGHTPOINT, INC.
2004 LONG-TERM INCENTIVE PLAN
SECTION 1: PURPOSE.
The purpose of the Brightpoint, Inc. 2004 Long-Term Incentive Plan is
to enable Brightpoint, Inc. to offer to those of its employees and to the
employees of its Subsidiaries and directors, consultants and other persons who
are expected to contribute to the success of the Company and its Subsidiaries
Awards under the Plan, thereby enhancing the Company's ability to attract,
retain and reward such key employees or other persons, and to increase the
interest of those employees or other persons in the welfare of the Company and
its Subsidiaries.
SECTION 2: DEFINITIONS.
For purposes of the Plan, unless the context requires otherwise, the
following terms shall be defined as set forth below:
(a) "Award" means an award granted under the Plan in one of the
forms provided in Section 3.
(b) "Beneficiary" as applied to a participant in the Plan, means a
person or entity (including a trust or the estate of the participant) designated
in writing by the participant on such forms as the Committee may prescribe to
receive benefits under the Plan in the event of the death of the participant;
provided, however, that if, at the death of a participant, there shall not be
any living person or entity in existence so designated, the term "beneficiary"
shall mean the legal representative of the participant's estate.
(c) "Board" means the Board of Directors of the Company.
(d) "Cash Award" means an Award granted pursuant to Section 11.
(e) "Cause" has the meaning ascribed thereto in Section 6(b)(ix).
(f) "Change of Control" has the meaning ascribed thereto in
Section 12.
(g) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor thereto.
(h) "Committee" means the Compensation and Human Resources
Committee of the Board or any other committee of the Board which the Board may
designate, consisting of two or more members of the Board each of whom shall
meet the definition of an "independent director" under the listing rules of any
securities exchange or national securities association on which the Stock is
listed for trading and the requirements set forth in any other law, rule or
regulation applicable to the Plan hereinafter enacted, provided, however, that
(i) with respect to any Award that is intended to satisfy the requirements of
Rule 16b-3, such Award shall be granted and administered by a committee of the
Board consisting of at least such number of directors as are required from time
to time by Rule 16b-3, and each such committee member shall meet such
qualifications as are required by Rule 16b-3 and(ii)with respect to any Award
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that is intended to satisfy the requirements of Section 162(m) of the Code,
such Award shall be granted and administered by a committee of the Board
consisting of at least such number of directors as are required from time to
time by Section 162(m) of the Code, and each such committee member shall meet
such qualifications as are required by Section 162(m) of the Code.
(i) "Company" means Brightpoint, Inc., a corporation organized
under the laws of the State of Delaware or any successor entity.
(j) "Covered Employee" shall mean any employee of the Corporation
or any of its Subsidiaries who is deemed to be a "covered employee" within the
meaning of Section 162(m) of the Code.
(k) "Deferred Stock" means Stock to be received, under an Award
made pursuant to Section 9, at the end of a specified deferral period.
(l) "Disability" "Disability" of a participant in the Plan shall
mean the permanent and total disability as defined by Section 22(e)(3) of the
Code.
(m) "Early Retirement" means retirement, with the approval of the
Committee for purposes of one or more Award(s) hereunder, from active employment
with the Company or any Parent or Subsidiary prior to age 65.
(n) "Elective Deferral" has the meaning ascribed thereto in
Section 18.
(o) "Employee" means any common law employee of the Company, any
Parent or any Subsidiary (as defined in accordance with the Regulations and
Revenue Rulings then applicable under Section 3401(c) of the Code), including
any employee who is also a director and/or officer of such.
(p) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, as in effect from time to time.
(q) "Fair Market Value", unless otherwise required by any
applicable provision of the Code or any regulations issued thereunder, means, as
of any given date: (i) if the principal market for the Stock is a national
securities exchange or the National Association of Securities Dealers Automated
Quotations System ("NASDAQ), the closing sales price of the Stock on such day as
reported by such exchange or market system, or on a consolidated tape reflecting
transactions on such exchange or market system, or (ii) if the principal market
for the Stock is not a national securities exchange and the Stock is not quoted
on NASDAQ, the mean between the highest bid and lowest asked prices for the
Stock on such day as reported by NASDAQ or the National Quotation Bureau, Inc.;
provided that if clauses (i) and (ii) of this paragraph are both inapplicable,
or if no trades have been made or no quotes are available for such day, the Fair
Market Value of the Stock shall be determined in good faith by the Board or the
Committee, as the case may be, which determination shall be conclusive as to the
Fair Market Value of the Stock. In no event shall "Fair Market Value" be less
than the par value of the Stock.
(r) "Non-Qualified Stock Option" means any Stock Option that is
not an incentive stock option within the meaning of Section 422 of the Code.
(s) "Normal Retirement" means retirement from active employment
with the Company or any Parent or Subsidiary on or after age 65.
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(t) "Other Stock-Based Award" means an award under Section 10 that
is valued in whole or in part by reference to, or is otherwise based upon,
Stock.
(u) "Parent" means any present or future parent of the Company, as
such term is defined in Section 424(e) of the Code, or any successor thereto.
(v) "Performance Cycle" means the period of time established by
the Committee within which the Performance Goals are required to be attained or
satisfied.
(w) "Performance Goals" means the performance goals established by
the Committee with respect to the Company or any Subsidiary, in the Committee's
sole discretion in writing, based upon any one or any combination of the
following business criteria or such other business criteria as the Committee
shall determine: (i) return on equity, (ii) operating income, (iii) earnings and
(iv) return on invested capital.
(x) "Performance Unit" means a contingent right granted pursuant
to Section 7 to receive an award, payable either in cash and/or in Stock, if the
Performance Goals established by the Committee are attained.
(y) "Plan" means this Brightpoint, Inc. 2004 Long-Term Incentive
Plan, as hereinafter amended from time to time.
(z) "Restricted Stock" means Stock, received under an award made
pursuant to Section 8, that is subject to restrictions under said Section 8.
(aa) "Restricted Stock Agreement" shall have the meaning set forth
in Section 8(b)(iv).
(bb) "Retirement" means Normal Retirement or Early Retirement.
(cc) "Rule 16b-3" means Rule 16b-3 of the General Rules and
Regulations under the Exchange Act, as in effect from time to time.
(dd) "Securities Act" means the Securities Act of 1933, as amended,
as in effect from time to time.
(ee) "Stock" means the common stock of the Company, par value $.01
per share, which the Company is currently authorized to issue or may in the
future be authorized to issue or, in the event that the outstanding shares of
such common stock are hereinafter converted into or exchanged for shares of a
different stock or security of the Company or another corporation pursuant to
the terms of this Plan, such other stock or security.
(ff) "Stock Option" or "Option" means any option to purchase shares
of Stock which is granted pursuant to the Plan.
(gg) "Stock Option Agreement" has the meaning set forth in Section
6(b)(xi).
(hh) "Subsidiary" means any present or future subsidiary
corporation of the Company, as such term is defined in Section 424(f) of the
Code, or any successor thereto.
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(ii) "Termination of Service" occurs when a participant of the Plan
who is an Employee shall cease to serve as an Employee for any reason; or, when
a participant in the Plan who is a non-employee director shall cease to serve as
a director of the Company, any Parent and any Subsidiary for any reason. Except
as may be necessary or desirable to comply with applicable federal or state law,
a "Termination of Service" shall not be deemed to have occurred when a
participant in the Plan changes his or her status as an Employee or non-employee
director so long as after such change in status, the participant is either an
employee or non-employee director.
SECTION 3: ADMINISTRATION; TYPES OF AWARDS; DELEGATION OF AUTHORITY BY THE
COMMITTEE.
The Plan shall be administered by the Committee.
The Committee shall have the authority to grant, pursuant to the terms
of the Plan, to officers and other key employees or other persons eligible under
Section 5 the following type of Awards: (a) Stock Options, in accordance with
Section 6, (b) Performance Units in accordance with Section 7, (c) Restricted
Stock, in accordance with Section 8, (d) Deferred Stock, in accordance with
Section 9, (e) Other Stock-Based Awards, in accordance with Section 10 and/or
(f) Cash Awards in accordance with Section 11.
For purposes of illustration and not of limitation, the Committee shall
have the authority (subject to the express provisions of this Plan):
(i) to select the officers, other employees of the
Company or any Parent or Subsidiary and other persons to whom Awards may be from
time to time granted hereunder:
(ii) to determine the Non-Qualified Stock Options,
Performance Units, Restricted Stock, Deferred Stock and/or Other Stock-Based
Awards and/or Cash Awards, or any combination thereof, if any, to be granted
hereunder to one or more eligible Employees and other persons to whom Awards may
be from time to time granted hereunder;
(iii) to determine the number of shares of Stock and/or the
amount of any cash to be covered by each Award granted hereunder;
(iv) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any Award granted hereunder
(including, but not limited to, share price, any restrictions or limitations,
and any vesting, acceleration or forfeiture provisions);
(v) to determine the terms and conditions under which
Awards granted hereunder are to operate on a tandem basis and/or in conjunction
with or apart from other awards made by the Company or any Parent or Subsidiary
outside of this Plan;
(vi) to determine the extent and circumstances under which
Stock and other amounts payable with respect to an Award hereunder shall be
deferred; and
(vii) to substitute (A) new Stock Options for previously
granted Stock Options, including previously granted Stock Options having less
favorable terms, provided, however, that without stockholder approval, no such
substitution shall result in the reduction of the exercise price of a previously
granted Stock Option, and (B) new awards of any other type for previously
granted awards of the same type, including previously granted awards which
contain less favorable terms, provided that the exercise price of any new
Stock-based Award may not be reduced without stockholder approval.
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Subject to Section 13 hereof, the Committee shall have the authority to
adopt, alter and repeal such administrative rules, guidelines and practices
governing the Plan as it shall, from time to time, deem advisable, to interpret
the terms and provisions of the Plan and any Award issued under the Plan (and to
determine the form and substance of all agreements relating thereto), and
otherwise to supervise the administration of the Plan.
Subject to the express provisions of the Plan, all decisions made by
the Committee pursuant to the provisions of the Plan shall be made in the
Committee's sole discretion and shall be final and binding upon all persons,
including the Company, its Parent and Subsidiaries and the Plan participants.
Subject to the provisions of the Plan and notwithstanding anything to
the contrary above, the Committee may, in its sole discretion, from time to time
delegate to the Chief Executive Officer of the Company (the "CEO") the
authority, subject to such terms as the Committee shall determine, to determine
and designate from time to time the eligible persons to whom Awards may be
granted and to perform other specified functions under the Plan; provided,
however, that the CEO may not grant any Award to, or perform any function
related to an Award to, himself or any individual (i) then subject to Section 16
of the Exchange Act or (ii) who is or, in the determination of the Board or the
Committee, may become a Covered Employee, and any such grant or function
relating to such individuals shall be performed solely by the Committee to
ensure compliance with the applicable requirements of the Exchange Act and the
Code or (iii) where the grant or performance of such function by the CEO will
cause the Plan not to comply with any applicable regulation of any securities
exchange or automated quotation system where the Stock is listed for trading.
Any such delegation of authority by the Committee shall be by a
resolution adopted by the Committee and shall specify all of the terms and
conditions of the delegation. The resolution of the Committee granting such
authority may authorize the CEO to grant Awards pursuant to the Plan and may set
forth the types of Awards that may be granted; provided, however, that the
resolution shall (i) specify the maximum number of shares of Stock that may be
awarded to any individual Plan participant and to all participants during a
specified period of time, (ii) specify the maximum amount of any Cash Award and
any conditions, limitations, or restrictions to be imposed on Cash Awards, and
(iii) specify the exercise price (or the method for determining the exercise
price) of an Award, the vesting schedule, and any other terms, conditions, or
restrictions that may be imposed by the Committee in its sole discretion. The
resolution of the Committee shall also require the CEO to provide the Committee,
on at least a quarterly basis, a report that identifies the Awards granted and,
with respect to each Award: the name of the participant, the date of grant of
the Award, the number of shares of Stock subject to discretion as set forth in
the resolutions of the Committee granting such authority.
The Committee may also delegate to other officers of the Company,
pursuant to a written delegation, the authority to perform specified functions
under the Plan that are not inconsistent with Rule 16b-3 or other rules or
regulations applicable to the Plan. Any actions taken by any officers of the
Company pursuant to such written delegation of authority shall be deemed to have
been taken by the Committee.
SECTION 4: STOCK SUBJECT TO PLAN.
The total number of shares of Stock reserved and available for
distribution under the Plan shall be 1,500,000 shares. Such shares may consist,
in whole or in part, of authorized and unissued shares or treasury shares.
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If any shares of Stock that have been optioned cease to be subject to a
Stock Option for any reason, or if any shares of Stock that are subject to any
Restricted Stock Award, Deferred Stock Award, Performance Unit or Other
Stock-Based Award are forfeited or any such Award otherwise terminates without
the issuance of such shares, such shares shall again be available for
distribution under the Plan.
SECTION 5: ELIGIBILITY.
Officers and other employees of the Company or any Parent or Subsidiary
(but excluding any person whose eligibility would adversely affect the
compliance of the Plan with the requirements of Rule 16b-3) who are at the time
of the grant of an Award under the Plan employed by the Company or any Parent or
Subsidiary and who are responsible for or contribute to the management, growth
and/or profitability of the business of the Company or any Parent or Subsidiary,
are eligible to be granted Awards under the Plan. In addition, Awards may be
granted under the Plan to any person, including, but not limited to, directors
independent agents, consultants and attorneys who the Committee believes has
contributed or will contribute to the success of the Company. Eligibility under
the Plan shall be determined by the Committee.
SECTION 6: STOCK OPTIONS.
(a) Grant and Exercise. Stock Options granted under the Plan shall
be Non-Qualified Stock Options. Any Stock Option granted under the Plan shall
contain such terms as the Committee may be, may from time to time approve. The
Committee shall have the authority to grant to any optionee Non-Qualified Stock
Options, and they may be granted alone or in addition to other Awards granted
under the Plan. The grant of an Option shall be deemed to have occurred on the
date on which the Committee by resolution, designates an individual as a grantee
thereof, and determines the number of shares of Stock subject to, and the terms
and conditions of, said Option.
(b) Terms and Conditions. Stock Options granted under the Plan
shall be subject to the following terms and conditions:
(i) Option Price. The option price per share of Stock
purchasable under a Stock Option shall be determined by the Committee, at the
time of grant but shall be not less than 100% of the Fair Market Value of the
Stock at the time of grant.
(ii) Option Term. The term of each Stock Option shall be
fixed by the Committee.
(iii) Exercisability. Stock Options shall be exercisable at
such time or times and subject to such terms and conditions as shall be
determined by the Committee at the time of grant. If the Committee provides that
any Stock Option is exercisable only in installments, the Committee may waive
such installment exercise provisions at any time at or after the time of grant
in whole or in part.
(iv) Method of Exercise. Subject to whatever installment,
exercise and waiting period provisions are applicable in a particular case,
Stock Options may be exercised in whole or in part at any time during the option
period by giving written notice of exercise to the Company specifying the number
of shares of Stock to be purchased. Such notice shall be accompanied by payment
in full of the purchase price, which shall be in cash or, unless otherwise
provided in the Stock Option Agreement, in whole shares of Stock which are
already owned by the holder of the Option or, unless otherwise provided in the
Stock Option Agreement, partly in cash and partly in such Stock. Cash payments
shall be made by wire transfer, certified or bank check or personal check, in
each case payable to the order of the Company; provided, however, that the
Company shall not be required to deliver certificates for shares of Stock with
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respect to which an Option is exercised until the Company has confirmed the
receipt of good and available funds in payment of the purchase price thereof.
Payments in the form of Stock (which shall be valued at the Fair Market Value of
a share of Stock on the date of exercise) shall be made by delivery of stock
certificates in negotiable form which are effective to transfer good and valid
title thereto to the Company, free of any liens or encumbrances. In addition,
payment may be made by delivery by the holder to the Company of an executed
irrevocable option exercise form together with irrevocable instructions from the
holder to a broker or dealer, reasonably acceptable to the Company, to sell
certain of the shares of Stock purchased upon exercise of the Option with or to
pledge such shares as collateral for a loan and promptly deliver to the Company
the amount of the sale and/or loan proceeds necessary to pay such purchase
price, and/or in any other form of valid consideration that is acceptable to the
Committee in its sole discretion. Except as otherwise expressly provided in the
Plan or the Stock Option Agreement or unless waived by the Committee at or after
the time of grant, no Option granted to an Employee may be exercised at any time
unless the holder thereof is then an Employee. The holder of an Option shall
have none of the rights of a stockholder with respect to the shares subject to
the Option until the optionee has given written notice of exercise, has paid in
full for those shares of Stock and, if requested by the Committee has given the
representation described in Section 19(a) below.
(v) Transferability; Exercisability. Unless otherwise set
forth in the Stock Option Agreement (or unless waived by the Committee at or
after the time of grant), no Option shall be transferable by the optionee other
than by will or by the laws of descent and distribution, and all Options shall
be exercisable, during the optionee's lifetime, only by the optionee or his or
her guardian or legal representative.
(vi) Termination by Reason of Death. If an optionee's
Termination of Service occurs by reason of death, any Stock Option held by such
optionee may thereafter be exercised by the executor or administrator of the
estate of the optionee or the optionee's legal representative, to the extent it
was exercisable at the time of the optionee's Termination of Service or on such
accelerated basis as the Committee may determine at or after the time of grant.
Such Option may be exercised for a period of time as set forth in the Stock
Option Agreement or as the Committee may determine (at or after the date of
grant (in either case, not to exceed one year from Termination of Service) or as
until the expiration of the stated term of such Stock Option, whichever period
is the shorter.
(vii) Termination by Reason of Disability. If an optionee's
Termination of Service occurs by reason of Disability, any Stock Option held by
such optionee may thereafter be exercised by the optionee or his legal
representative, to the extent it was exercisable at the time of the optionee's
Termination of Service or on such accelerated basis as the Committee may
determine at or after the time of grant. Such Option may be exercised for a
period of time as set forth in the Stock Option Agreement or as the Committee
may determine at or after the time of grant (in either case, not to exceed one
year from Termination of Service) or until the expiration of the stated term of
such Stock Option, whichever period is the shorter; provided, however, that if
the optionee dies within such specified period any unexercised Stock Option held
by such optionee shall thereafter be exercisable to the extent to which it was
exercisable at the time of death for a period of time from the date of death
(not to exceed one year) as determined by the Committee or until the expiration
of the stated term of such Stock Option, whichever period is the shorter.
(viii) Termination by Reason of Retirement. If an optionee's
Termination of Service occurs by reason of Normal Retirement, any Stock Option
held by such optionee may thereafter be exercised by the optionee, to the extent
it was exercisable at the time of Termination of Service or on such accelerated
basis as the Committee may determine at or after
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the time of grant, for a period of time set forth in the Stock Option Agreement
or such other period as the Committee may specify at or after the time of grant
(in either case, not to exceed one year from the Termination of Service) or the
expiration of the stated term of such Stock Option, whichever period is the
shorter; provided, however, that if the optionee dies within such specified
period any unexercised Stock Option held by such optionee shall thereafter be
exercisable to the extent to which it was exercisable at the time of death for a
period of (not to exceed one year) from the date of death as determined by the
Committee or until the expiration of the stated term of such Stock Option,
whichever period is the shorter. If an optionee's Termination of Service occurs
by reason of Early Retirement, the Stock Option shall thereupon terminate;
provided, however, that if the Committee so approves at the time of Early
Retirement, any Stock Option held by the optionee may thereafter be exercised by
the optionee as provided above in connection with termination of employment by
reason of Normal Retirement.
(ix) Other Termination. Subject to the provisions of
Section 19(g) below and unless otherwise determined by the Committee at or after
the time of grant or otherwise set forth in the Stock Option Agreement, if a
holder's Termination of Service occurs for any reason other than death,
Disability or Retirement or the voluntary resignation of the holder, the Stock
Option shall thereupon automatically terminate, except that (a) if the
Termination of Service occurs as a result of the holder's voluntary resignation,
such Stock Option may be exercised to the extent it was exercisable at the time
of Termination of Service for a period of thirty (30) days or the expiration of
the stated term of the Stock Option, whichever is shorter, and (b) if the
optionee is involuntarily terminated by the Company or a Subsidiary or Parent
without Cause (as hereinafter defined), such Stock Option may be exercised to
the extent it was exercisable at the date of Termination of Service for six
months (or such other period set forth in the Stock Option Agreement which
period shall not exceed one year from the date of such Termination of Service)
or until the expiration of the stated term of such Stock Option, whichever
period is the shorter. For purposes of the Plan, "Cause" shall mean (A) the
conviction of the optionee of a felony under Federal law or the law of the state
in which such action occurred, (B) dishonesty by the optionee in the course of
fulfilling his or her employment duties, or (C) the willful and deliberate
failure on the part of the optionee to perform his or her employment duties in
any material respect. Notwithstanding the foregoing, if the optionee has an
employment agreement with the Company or a Subsidiary or Parent, the definition
of "Cause" shall have the meaning ascribed in such employment agreement.
(x) Alternative Settlement of Option. Upon the receipt of
written notice of exercise, the Committee, may elect to settle all or part of
any Stock Option by paying to the optionee an amount, in cash and/or Stock
(valued at Fair Market Value on the date of exercise), equal to the product of
the excess of the Fair Market Value of one share of Stock on the date of
exercise over the Option exercise price, multiplied by the number of shares of
Stock with respect to which the optionee proposes to exercise the Option. Any
such settlements which relate to Options which are held by optionees who are
subject to Section 16(b) of the Exchange Act shall comply with any existing
provisions of Rule 16b-3, to the extent applicable.
(xi) Stock Option Agreement. Each grant of a Stock Option
shall be confirmed by, and shall be subject to the terms of, an agreement
executed by the Company and the participant.
SECTION 7: PERFORMANCE UNITS.
Awards granted as Performance Units shall be subject to the following
provisions:
(a) The Performance Cycle for the attainment of the Performance
Goals shall be determined by the Committee. The Committee may establish more
than one cycle for any particular Performance Unit.
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(b) The Committee shall establish a dollar value for each
Performance Unit, the Performance Goals to be attained in respect of the
Performance Unit, the various percentages of the Performance Unit value to be
paid out upon the attainment, in whole or in part, of the Performance Goals and
such other Performance Unit terms, conditions and restrictions as the Committee
deems appropriate. Any Performance Goal may be modified by the Committee during
the course of a Performance Cycle to take into account changes in conditions
that occur. Notwithstanding the foregoing, in the case of a Performance Unit
granted to a Covered Employee, no business criteria other than those enumerated
in Section 2(w) may be used in establishing the Performance Goals for such
Performance Unit, and no such Performance Goals may be modified by the Committee
during the course of a Performance Cycle except in accordance with Section
162(m) of the Code. As soon as practicable after the termination of the
Performance Cycle, the Committee shall determine what, if any, payment is due on
the Performance Unit in accordance with the terms thereof.
(c) In the event of a participant's Termination of Service prior
to the expiration of the Performance Cycle established for any Performance Unit
he or she may have been awarded, the Committee may, in its sole discretion
provide for a full or partial credit and determine what percentage, if any, of
the Performance Unit is to be paid out. However, no unpaid portion of a
Performance Unit otherwise payable shall be paid to a Plan participant whose
Termination of Service is for Cause. Notwithstanding the foregoing, in the case
of Performance Units granted to Covered Employees, this paragraph 7.5(c) shall
not be given effect if, as a result thereof, such Performance Units shall lose
the protection afforded by Section 162(m) of the Code.
(d) Payment of Performance Units shall be made, at the sole
discretion of the Committee, either in cash in the amount of the dollar value of
the Performance Units awarded and/or in Stock having a Fair Market Value at the
time such award is paid equal to the excess of such dollar amount over the
amount of such cash.
(e) Except as otherwise set forth in the Plan, Performance Units
are not transferable other than by will or by the laws of descent and
distribution and during a participant's lifetime payments in respect thereof
shall be made only to the participant.
SECTION 8: RESTRICTED STOCK.
(a) Grant and Exercise. Shares of Restricted Stock may be issued
either alone or in addition to or in tandem with other Awards granted under the
Plan. The Committee shall determine the eligible persons to whom, and the time
or times at which, grants of Restricted Stock will be made, the number of shares
to be awarded, the price (if any) to be paid by the recipient, the time or times
within which such awards may be subject to forfeiture (the "Restriction
Period"), the vesting schedule and rights to acceleration thereof, and all other
terms and conditions of the Awards of Restricted Stock. Conditions of vesting
that the Committee may impose may include, among others, (i) length of
continuous service, (ii) achievement of specific business objectives, (iii)
increases in specific indices, (iv) attainment of specified growth rates, or any
other conditions as determined by the Committee. The Committee may remove any or
all of the restrictions on such Restricted Stock whenever it may determine that,
by reason of changes in applicable law or other changes in circumstances arising
after the date of the Award, such action is appropriate.
(b) Terms and Conditions. Each Restricted Stock Award shall also
be subject to the following terms and conditions:
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(i) Restricted Stock, when issued, will be represented by
a stock certificate or certificates registered in the name of the holder to whom
such Restricted Stock shall have been awarded. During the Restriction Period,
certificates representing the Restricted Stock and any securities constituting
Retained Distributions (as defined below) shall bear a restrictive legend to the
effect that ownership of the Restricted Stock (and such Retained Distributions),
and the enjoyment of all rights related thereto, are subject to the
restrictions, terms and conditions provided in the Plan and the Restricted Stock
Agreement. Such certificates shall bear a legend restricting sale or other
disposition in accordance with the Plan and the applicable Restricted Stock
Agreement.
(ii) Restricted Stock shall constitute issued and
outstanding shares of Common Stock for all corporate purposes, and the issuance
thereof shall be made for at least the minimum consideration (if any) necessary
to permit the shares of Restricted Stock to be deemed to be fully paid and
nonassessable. The holder will have the right to vote such Restricted Stock, to
receive and retain all regular cash dividends and other cash equivalent
distributions as the Board may designate, pay or distribute on such Restricted
Stock and to exercise all other rights, powers and privileges of a holder of
Stock with respect to such Restricted Stock, with the exceptions that (A) other
than regular cash dividends and other cash equivalent distributions as the Board
may designate, pay or distribute, the Company will retain custody of all
distributions ("Retained Distributions") made or declared with respect to the
Restricted Stock (and such Retained Distributions will be subject to the same
restrictions, terms and conditions as are applicable to the Restricted Stock)
until such time, if ever, as the Restricted Stock with respect to which such
Retained Distributions shall have been made, paid or declared shall have become
vested and with respect to which the Restriction Period shall have expired; (B)
the holder may not sell, assign, transfer, pledge, exchange, encumber or dispose
of the Restricted Stock or any Retained Distributions during the Restriction
Period; and (C) a breach of any of the restrictions, terms or conditions
contained in the Plan or the Restricted Stock agreement referred to in Section
8(b)(iv) below, or otherwise established by the Committee with respect to any
Restricted Stock or Retained Distributions will cause a forfeiture of such
Restricted Stock and any Retained Distributions with respect thereto.
(iii) Upon the expiration of the Restriction Period with
respect to each award of Restricted Stock and the satisfaction of any other
applicable restrictions, terms and conditions (A) all or part of such Restricted
Stock shall become vested in accordance with the terms of the Restricted Stock
Agreement, (B) any Retained Distributions with respect to such Restricted Stock
shall become vested to the extent that the Restricted Stock related thereto
shall have become vested and (C) the Company will return to the holder the
certificates representing the Restricted Stock and any Retained Distributions.
Any such Restricted Stock and Retained Distributions that do not vest shall be
forfeited to the Company and the holder shall not thereafter have any rights
with respect to such Restricted Stock and Retained Distributions that shall have
been so forfeited.
(iv) Each Restricted Stock Award shall be confirmed by,
and shall be subject to the terms of, an agreement executed by the Company and
the participant. The agreement shall require that each participant irrevocably
grant to the Company the power of attorney to transfer any shares of Restricted
Stock forfeited to the Company and agrees to execute any document required by
the Company in connection with such forfeiture and transfer.
SECTION 9: DEFERRED STOCK.
(a) Grant and Exercise. Deferred Stock may be awarded either alone
or in addition to or in tandem with other Awards granted under the Plan. The
Committee shall determine the eligible persons to whom and the time or times at
which Deferred Stock shall be awarded, the number of shares of Deferred Stock to
be awarded to any person, the duration of the period (the "Deferral Period")
during which, and the conditions under which, receipt of the Deferred Stock will
be deferred, and all the other terms and conditions of the Awards.
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(b) Terms and Conditions. Each Deferred Stock Award shall be
subject to the following terms and conditions:
(i) Subject to the provisions of this Plan and the
Deferred Stock Agreement referred to in Section 9(b)(vii) below, Deferred Stock
Awards may not be sold, assigned, transferred, pledged or otherwise encumbered
during the Deferral Period. At the expiration of the Deferral Period (or the
Additional Deferral Period referred to in Section 9(b)(vi) below, where
applicable), share certificates shall be delivered to the participant, or his
legal representative, in a number equal to the shares of Stock covered by the
Deferred Stock Award.
(ii) As determined by the Committee at the time of award,
amounts equal to any dividends declared during the Deferral Period (or the
Additional Deferral Period referred to in Section 9(b)(vi) below, where
applicable) with respect to the number of shares covered by a Deferred Stock
Award may be paid to the participant currently or deferred and deemed to be
reinvested in additional Deferred Stock.
(iii) Subject to the provisions of the Deferred Stock
Agreement referred to in Section 9(b)(vii) below and this Section 9 and Section
19(g) below, upon termination of a participant's employment with the Company or
any Parent or Subsidiary for any reason during the Deferral Period (or the
Additional Deferral Period referred to in Section 9(b)(vi) below, where
applicable) for a given award, the Deferred Stock in question will vest or be
forfeited in accordance with the terms and conditions established by the
Committee at the time of grant.
(iv) The Committee may, after grant, accelerate the
vesting of all or any part of any Deferred Stock Award and/or waive the deferral
limitations for all or any part of a Deferred Stock award.
(v) In the event of hardship or other special
circumstances of a participant whose employment with the Company or any Parent
or Subsidiary is involuntarily terminated (other than for Cause), the Committee
may waive in whole or in part any or all of the remaining deferral limitations
imposed hereunder or pursuant to the Deferred Stock Agreement referred to in
Section 9(b)(vii) below with respect to any or all of the participant's Deferred
Stock.
(vi) A participant may request to, and the Committee may
at any time, defer the receipt of an Award (or an installment of an Award) for
an additional specified period or until a specified event (the "Additional
Deferral Period"). Subject to any exceptions adopted by the Committee, such
request must be made at least one year prior to expiration of the Deferral
Period for such Deferred Stock Award (or such installment).
(vii) Each Deferred Stock Award shall be confirmed by, and
shall be subject to the terms of, an agreement executed by the Company and the
participant.
SECTION 10: OTHER STOCK-BASED AWARDS.
(a) Grant and Exercise. Other Stock-Based Awards may be granted
either alone or in addition to or in tandem with Stock Options, Performance
Units, Restricted Stock, Deferred Stock and/or Cash Awards.
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The Committee shall determine the eligible persons to whom, and the
time or times at which, such awards shall be made, the number of shares of Stock
to be awarded pursuant to such awards, and all other terms and conditions of the
awards. The Committee may also provide for the grant of Stock under such awards
upon the completion of a specified performance period.
(b) Terms and Conditions. Each Other Stock-Based Award shall be
subject to the following terms and conditions:
(i) Shares of Stock subject to an Other Stock-Based Award
may not be sold, assigned, transferred, pledged or otherwise encumbered prior to
the date on which the shares are issued, or, if later, the date on which any
applicable restriction or period of deferral lapses.
(ii) The recipient of an Other Stock-Based Award shall be
entitled to receive, currently or on a deferred basis, dividends or dividend
equivalents with respect to the number of shares covered by the award, as
determined by the Committee at the time of the award. The Committee may provide
that such amounts (if any) shall be deemed to have been reinvested in additional
Stock.
(iii) Any Other Stock-Based Award and any Stock covered by
any Other Stock-Based Award shall vest or be forfeited to the extent so provided
in the award agreement referred to in Section 10(b)(v) below, as determined by
the Committee.
(iv) In the event of the participant's Retirement,
Disability or death, or in cases of special circumstances, the Committee may
waive in whole or in part any or all of the limitations imposed hereunder (if
any) with respect to any or all of an Other Stock-Based award.
(v) Each Other Stock-Based Award shall be confirmed by,
and shall be subject to the terms of, an agreement executed by the Company and
by the participant.
SECTION 11: CASH AWARDS.
(a) Grant of Cash Awards. The Committee may, in its sole
discretion, grant Cash Awards in accordance with the terms and conditions set
forth in the Plan and in an agreement executed by the Company and the
participant ("Cash Award Agreement"). Each Cash Award Agreement shall set forth
(i) the amount of the Cash Award, (ii) the time or times within which such Award
may be subject to forfeiture, if any, (iii) specified performance goals, or
other criteria, if any, as the Committee may determine must be met in order to
remove any restrictions (including vesting) on such Award, and (iv) any other
terms, limitations, restrictions, and conditions of the Award that are
consistent with this Plan.
The Cash Award Agreement shall also set forth the vesting period for
the Cash Award, if any, which shall commence on the date of grant of the Cash
Award and, unless otherwise established by the Committee in the Cash Award
Agreement, shall expire upon satisfaction of the conditions set forth in the
Cash Award Agreement. Such conditions may provide for vesting based on (i)
length of continuous service, (ii) achievement of specific business objectives,
(iii) increases in specified indices, (iv) attainment of specified growth rates,
or (v) other comparable measurements of Company performance, as may be
determined by the Committee in its sole discretion.
(b) Termination of Service. Subject to the provisions of the
particular Cash Award Agreement, and unless otherwise permitted by the
Committee, in its sole discretion, upon termination of the participant's service
to the Company or its Parent and Subsidiaries for any reason during a vesting
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period (if any), the nonvested portion of a Cash Award shall be forfeited by the
participant. Upon any forfeiture, all rights of a Participant with respect to
the forfeited Cash Award shall cease and terminate, without any further
obligation on the part of the Company.
(c) Form of Payment. In the sole discretion of the Committee, the
Company may satisfy its obligation under a Cash Award by the distribution of
that number of shares of Common Stock or Restricted Stock, or any combination
thereof, having an aggregate Fair Market Value (as of the date of payment) equal
to the amount of cash otherwise payable to the participant, and/or by the
distribution of Stock Options having an aggregate Fair Market Value equal to the
amount of cash otherwise payable to the participant, with a cash settlement to
be made for any fractional share interests, or the Company may settle such
obligation in part with shares of Common Stock and in part with cash. If
required by Rule 16b-3 at the time of distribution, any shares of Common Stock
distributed to a participant must be held by such participant for at least six
(6) months from the date of distribution.
SECTION 12: CHANGE OF CONTROL PROVISIONS.
(a) A "Change of Control" shall be deemed to have occurred on the
tenth day after:
(i) any individual, firm, corporation or other entity, or
any group (as defined in Section 13(d)(3) of the Exchange Act) becomes, directly
or indirectly, the beneficial owner (as defined in the General Rules and
Regulations of the Securities and Exchange Commission with respect to Sections
13(d) and 13(g) of the Exchange Act) of more than 20% of the then outstanding
shares of the Company's capital stock entitled to vote generally in the election
of directors of the Company; or
(ii) the commencement of, or the first public announcement
of the intention of any individual, firm, corporation or other entity or of any
group (as defined in Section 13(d)(3) of the Exchange Act) to commence, a tender
or exchange offer subject to Section 14(d)(1) of the Exchange Act for any class
of the Company's capital stock; or
(iii) the stockholders of the Company approve (A) a
definitive agreement for the merger or other business combination of the Company
with or into another corporation pursuant to which the stockholders of the
Company do not own, immediately after the transaction, more than 50% of the
voting power of the corporation that survives, or (B) a definitive agreement for
the sale, exchange or other disposition of all or substantially all of the
assets of the Company, or (C) any plan or proposal for the liquidation or
dissolution of the Company; provided, however, that a "Change of Control" shall
not be deemed to have taken place if beneficial ownership is acquired by, or a
tender or exchange offer is commenced or announced by, the Company, any
profit-sharing, employee ownership or other employee benefit plan of the
Company, any trustee of or fiduciary with respect to any such plan when acting
in such capacity, or by a person who is an officer or director of the Company on
the effective date of the Plan, or by any group comprised solely of such persons
and/or entities.
(b) In the event of a "Change of Control" as defined in Section
13(a) above, awards granted under the Plan will be subject to the following
provisions, unless the provisions of this Section 13 are suspended or terminated
by an affirmative vote of a majority of the Board prior to the occurrence of
such a "Change of Control":
(i) all outstanding Stock Options which have been
outstanding for at least six months shall become exercisable in full, whether or
not otherwise exercisable at such time, and any such Stock Option shall remain
exercisable in full thereafter until it expires pursuant to its terms; and
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(ii) all restrictions and deferral limitations contained
in Restricted Stock Awards, Deferred Stock Awards, Performance Units and Other
Stock Based Awards granted under the Plan shall lapse.
SECTION 13: AMENDMENTS AND TERMINATION.
The Board or Committee may at any time, and from time to time, amend
any of the provisions of the Plan, and may at any time suspend or terminate the
Plan; provided, however, that no such amendment shall be effective unless and
until it has been duly approved by the holders of the outstanding shares of
Stock if the failure to obtain such approval would adversely affect the
compliance of the Plan with the requirements of Rule 16b-3 of the Exchange Act,
as in effect from time to time, or with the requirements of any other applicable
law, rule or regulation. The Committee may be, may amend the terms of any Stock
Option or other award theretofore granted under the Plan; provided, however,
that subject to Section 3 above, no such amendment may be made by the Committee
which in any material respect impairs the rights of the optionee or participant
without the optionee's or participant's consent, except for such amendments
which are made to cause the Plan to qualify for the exemption provided by Rule
16b-3 and no such amendment shall result in a reduction of the exercise price of
any Stock Option.
SECTION 14: UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing contained herein shall give any
such participant or optionee any rights that are greater than those of a general
creditor of the Company.
SECTION 15: LIMIT ON AWARDS TO ANY INDIVIDUAL.
Notwithstanding any provision contained herein, no participant may be
granted under the Plan, during any year, Options or any other Awards relating to
more than 750,000 shares of Common Stock in the aggregate, subject to adjustment
in accordance with Section 17. With respect to an Award that may be settled in
cash, no participant may be paid in respect of any fiscal year an amount that
exceeds the greater of the Market Value of the number of shares of Common Stock
set forth in the preceding sentence at the date of grant or at the date of
settlement of the Award, provided that this limitation is separate from and not
affected by the number of Awards granted during such fiscal year subject to the
limitation in the preceding sentence.
SECTION 16: LIMIT ON NON-OPTION AWARDS.
The number of shares that are subject to Non-Option Awards under the
Plan shall not exceed 750,000 shares of Common Stock in the aggregate, subject
to adjustment in accordance with Section 17.
SECTION 17: ADJUSTMENTS.
In the event that the Committee shall determine that any dividend or
other distribution (whether in the form of cash, shares of Common Stock or other
property), recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase or share exchange, or other
similar corporate transaction or event, affects the shares of Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of participants under the Plan, then
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the Committee shall, in such manner as it may deem equitable, adjust any or all
of (i) the number and kind of shares which may thereafter be delivered in
connection with Awards, (ii) the number and kind of shares that may be delivered
or deliverable in respect of outstanding Awards, (iii) the number of shares with
respect to which Awards may be granted to a given participant and (iv) the
exercise price, grant price, or purchase price relating to any Award or, if
deemed appropriate, make provision for a cash payment with respect to any
outstanding Award, and, with respect to Awards granted to Covered Employees, no
such adjustment shall be authorized to the extent that such adjustment would
cause such Award to lose the benefits of Section 162(m) of the Code and that the
number of shares of Stock subject to any award shall always be a whole number.
Such adjusted exercise price shall also be used to determine the amount which is
payable to the optionee upon the exercise by the Committee of the alternative
settlement right which is set forth in Section 6(b)(x) above.
SECTION 18: ELECTIVE DEFERRAL.
Notwithstanding anything in the Plan to the contrary, participant under
the Plan may, by completing an election form and delivering it to the General
Counsel of the Company on or before December 15 of any year, elect (the
"Elective Deferral") to defer the receipt of any of the cash or Stock to be
received by the participant in the immediately succeeding year, on such terms as
the Committee may permit.
An Elective Deferral shall be irrevocable, except that the Committee,
in its sole discretion, may allow a participant to change or revoke such
Elective Deferral.
The Company shall establish an account for each participant who makes
an Elective Deferral reflecting Elective Deferrals made for such participant's
benefit together with any additions to reflect any dividends paid upon any
shares of Stock that have been deferred pursuant to an Elective Deferral. The
Company shall establish sub-accounts for each participant who has more than one
Elective Deferral in effect under the Plan and such other sub-accounts as are
necessary for the proper administration of the Plan. As of the last business day
of each December 31 of each year, the Company shall provide the participant with
a statement of his or her account reflecting the number of deferred shares or
other deferred compensation under the Plan, and any dividends on such shares
credited thereto and distributions from such account since the prior statement.
A participant who makes an Elective Deferral shall be immediately
vested in, and shall have a nonforfeitable right to, all deferred shares and
other deferred compensation and all dividends, if any, on any deferred shares
credited to his or her account, except as otherwise provided by the Committee.
In the event of the Company's insolvency, the participant shall have the same
rights as a general creditor of the Company with respect to his or her account
balance.
A participant who makes an Elective Deferral shall designate (on the
election form used to make Elective Deferrals under the Plan) the date(s) at
which the deferred shares and other deferred compensation and any dividends
credited to his or her account will be distributed to him or her, or his or her
designated beneficiary (in the event of death before full distribution), or
estate if no such beneficiary, or legal representative in the event of
incompetence before full distribution. The number of shares of Stock, if any,
which are attributable to dividends and credited to his or her account shall be
based on the per share Fair Market Value on the date of such dividend.
Distributions shall be made in cash and/or Stock in the proportions deferred.
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Deferred shares and shares attributable to dividends on any Deferred
Shares shall be subject to adjustment as set forth in Section 167 of the Plan.
Each such election regarding the date(s) for payments shall be
irrevocable, except that the Committee, in its sole discretion, may allow the
participant to change or revoke such election.
SECTION 19: GENERAL PROVISIONS.
(a) The Committee may require each person acquiring shares of
Stock pursuant to a Stock Option or other Award under the Plan to represent to
and agree with the Company in writing that the optionee or participant is
acquiring the shares for investment without a view to distribution thereof.
All certificates for shares of Stock delivered under the Plan shall be
subject to such stop transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange or association upon which
the Stock is then listed or traded, any applicable Federal or state securities
law, and any applicable corporate law, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference to such
restrictions.
(b) Nothing contained in the Plan shall prevent the Board or,
where authorized by the Board, the Committee, as the case may be, from adopting
such other or additional incentive arrangements as it may deem desirable,
including, but not limited to, the granting of stock options and the awarding of
stock and cash otherwise than under the Plan; and such arrangements may be
either generally applicable or applicable only in specific cases.
(c) NOTHING CONTAINED IN THE PLAN OR IN ANY AWARD HEREUNDER SHALL
BE DEEMED TO CONFER UPON ANY EMPLOYEE OF THE COMPANY OR ANY PARENT OR SUBSIDIARY
ANY RIGHT TO CONTINUED EMPLOYMENT WITH THE COMPANY OR ANY PARENT OR SUBSIDIARY,
NOR SHALL IT INTERFERE IN ANY WAY WITH THE RIGHT OF THE COMPANY OR ANY
SUBSIDIARY TO TERMINATE THE EMPLOYMENT OF ANY OF ITS EMPLOYEES AT ANY TIME.
(d) Not later than the date as of which an amount first becomes
includable in the gross income of the participant for Federal, state or local
income tax purposes with respect to any Option or other Award under the Plan,
the participant shall pay to the Company, or make arrangements satisfactory to
the Committee, as the case may be, regarding the payment of, any Federal, state
and local taxes of any kind required by law to be withheld or paid with respect
to such amount. If permitted by the Committee, tax withholding or payment
obligations may be settled with Stock, including Stock that is part of the Award
that gives rise to the withholding requirement. The obligations of the Company
under the Plan shall be conditional upon such payment or arrangements and the
Company or the participant's employer (if not the Company) shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment of
any kind otherwise due to the participant from the Company, its Parent or any
Subsidiary.
(e) The Plan and all Awards made and actions taken thereunder
shall be governed by and construed in accordance with the laws of the State of
Indiana (without regard to choice of law provisions).
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(f) Any Stock Option granted or other Award made under the Plan
shall not be deemed compensation for purposes of computing benefits under any
retirement plan of the Company or any Parent or Subsidiary and shall not affect
any benefits under any other benefit plan now or subsequently in effect under
which the availability or amount of benefits is related to the level of
compensation (unless required by specific reference in any such other plan to
Awards under this Plan).
(g) A leave of absence, unless otherwise determined by the
Committee prior to the commencement thereof, shall not be considered a
termination of employment. Any Stock Option granted or awards made under the
Plan shall not be affected by any change of employment, so long as the holder
continues to be an employee of the Company, its Parent or any Subsidiary.
(h) Except as otherwise expressly provided in the Plan or in any
Stock Option Agreement, Restricted Stock agreement, Deferred Stock Agreement,
Performance Unit Agreement, Cash Award Agreement or any Other Stock-Based Award
agreement, no right or benefit under the Plan may be alienated, sold, assigned,
hypothecated, pledged, exchanged, transferred, encumbranced or charged, and any
attempt to alienate, sell, assign, hypothecate, pledge, exchange, transfer,
encumber or charge the same shall be void. No right or benefit hereunder shall
in any manner be subject to the debts, contracts or liabilities of the person
entitled to such benefit.
(i) The obligations of the Company with respect to all Stock
Options and Awards under the Plan shall be subject to (A) all applicable laws,
rules and regulations, and such approvals by any governmental agencies as may be
required, including, without limitation, the effectiveness of a registration
statement under the Securities Act, and (B) the rules and regulations of any
securities exchange or association on which the Stock may be listed or traded.
(j) If any of the terms or provisions of the Plan conflict with
the requirements of Rule 16b-3 as in effect from time to time, or with the
requirements of any other applicable law, rule or regulation then such terms or
provisions shall be deemed inoperative to the extent they so conflict with the
requirements of said Rule 16b-3.
(k) The Committee may terminate any Stock Option or other Award
made under the Plan if a written agreement relating thereto is not executed and
returned to the Company within 30 days after such agreement has been delivered
to the optionee or participant for his or her execution.
SECTION 20: EFFECTIVE DATE OF PLAN.
The Plan shall be effective as of the first business day following
approval of the Plan by the Company's stockholders.
SECTION 21: TERM OF PLAN.
No Stock Option, Restricted Stock Award, Deferred Stock Award,
Performance Unit or Other Stock-Based Award or Cash Award shall be granted
pursuant to the Plan on or after the tenth anniversary of the effective date of
the Plan, but Awards granted prior to such tenth anniversary may extend beyond
that date.
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APPENDIX E
PLAN AND AGREEMENT OF MERGER BETWEEN BRIGHTPOINT, INC.
AND BRIGHTPOINT INDIANA CORP.
THIS PLAN AND AGREEMENT OF MERGER ("Merger Agreement") dated as of
April __, 2004, is made by and between BRIGHTPOINT, INC., a Delaware corporation
("Brightpoint Delaware"), and BRIGHTPOINT INDIANA CORP., an Indiana corporation
("Brightpoint Indiana"). Brightpoint Delaware and Brightpoint Indiana are
hereinafter sometimes collectively referred to as the "Constituent
Corporations."
WHEREAS, the outstanding authorized capital stock of Brightpoint
Indiana consists of one (1) share of common stock, par value $0.01 per share,
which is owned by Brightpoint Delaware.
WHEREAS, Brightpoint Delaware, as the sole shareholder of Brightpoint
Indiana, desires to effect a merger of Brightpoint Delaware with and into
Brightpoint Indiana pursuant to the provisions of the General Corporation Law of
the State of Delaware (the "DGCL") and the Indiana Business Corporation Law (the
"IBCL").
WHEREAS, the respective Boards of Directors of Brightpoint Delaware and
Brightpoint Indiana have determined that it is advisable and in the best
interests of each of such corporations that Brightpoint Delaware be merged with
and into Brightpoint Indiana upon the terms and subject to the conditions herein
provided.
WHEREAS, the Board of Directors of Brightpoint Indiana and Brightpoint
Delaware, as the sole shareholder of Brightpoint Indiana, have approved this
Merger Agreement by unanimous written consents and directed that it be executed
by the undersigned officers.
WHEREAS, the Board of Directors of Brightpoint Delaware has approved
this Merger Agreement by unanimous written consent and directed that it be
executed by the undersigned officers and that it be submitted to a vote of the
shareholders of Brightpoint Delaware at the annual meeting.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties agree that Brightpoint Delaware shall
be merged with and into Brightpoint Indiana and that the terms and conditions of
the merger, the mode of carrying the merger into effect, the manner of
converting the shares of the Constituent Corporations and certain other
provisions relating thereto shall be as follows:
ARTICLE I
THE MERGER
1.01 Surviving Corporation. Subject to the terms and provisions of
this Agreement, and in accordance with the DGCL and the IBCL, at the Effective
Time (as defined in Section 1.08 hereof) Brightpoint Delaware shall be merged
with and into Brightpoint Indiana (the "Merger"). Brightpoint Indiana shall be
the surviving corporation (hereinafter sometimes called the "Surviving
Corporation") of the Merger and shall continue its corporate existence under the
laws of the State of Indiana. At the Effective Time, the separate corporate
existence of Brightpoint Delaware shall cease.
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1.02 Name of the Surviving Corporation. As of the Effective Time,
the name of the Surviving Corporation will be changed to "Brightpoint, Inc."
1.03 Effect of the Merger. At the Effective Time, the Merger shall
have the effects provided for herein and in Section 259 of the DGCL and Section
23-1-40-6 of the IBCL.
1.04 Articles of Incorporation. As of the Effective Time, the
Articles of Incorporation of Brightpoint Indiana, as in effect immediately prior
to the Effective Time, shall be amended and restated in their entirety by the
Restated Articles of Incorporation attached hereto as Annex 1, which Restated
Articles of Incorporation will become, at the Effective Time, the Articles of
Incorporation of the Surviving Corporation until thereafter duly altered,
amended or repealed in accordance with the provisions thereof and applicable
law.
1.05 By-Laws. As of the Effective Time, the By-Laws of Brightpoint
Indiana, as in effect immediately prior to the Effective Time, shall be amended
and restated in their entirety by the By-Laws attached hereto as Annex 2, which
By-Laws will become, at the Effective Time, the By-Laws of the Surviving
Corporation until thereafter duly altered, amended or repealed in accordance
with the provisions thereof, the Articles of Incorporation of the Surviving
Corporation and applicable law.
1.06 Directors of the Surviving Corporation. At the Effective Time,
each person who is a director of Brightpoint Delaware immediately prior to the
Effective Time shall become a director of the Surviving Corporation and each
such person shall serve as a director of the Surviving Corporation for the
balance of the term for which such person was elected as a director of
Brightpoint Delaware and until his or her successor is duly elected and
qualified in the manner provided in the By-Laws or the Articles of Incorporation
of the Surviving Corporation or as otherwise provided by law or until his or her
earlier death, resignation or removal in the manner provided in the By-Laws or
the Articles of Incorporation of the Surviving Corporation or as otherwise
provided by law.
1.07 Officers of the Surviving Corporation. At the Effective Time,
each person who is an officer of Brightpoint Delaware immediately prior to the
Effective Time shall become an officer of the Surviving Corporation with each
such person to hold the same office in the Surviving Corporation, in accordance
with the By-Laws thereof, as he or she held in Brightpoint Delaware immediately
prior to the Effective Time.
1.08 Effective Time. The Merger shall become effective in
accordance with the provisions of Section 23-1-40-5 of the IBCL and Section 252
of the DGCL, upon the later to occur of (a) completion of the filing of articles
of merger with the Secretary of State of Indiana, and (b) the filing of a
certificate of merger with the Secretary of State of Delaware; provided,
however, that such articles of merger and certificate of merger shall not be
filed prior to the date which is 20 calendar days after the date on which a
Proxy Statement of Brightpoint Delaware prepared in accordance with the rules of
the Securities Exchange Act of 1934, as amended, is mailed to Brightpoint
Delaware's shareholders of record on the record date determined by the board of
directors of Brightpoint Delaware. The date and time when the Merger shall
become effective is herein referred to as the "Effective Time."
1.09 Additional Actions. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any further
assignments or assurances in law or any other acts are necessary or desirable
(a) to vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation, title to and possession of any property or right of Brightpoint
Delaware acquired or to be acquired by reason or as a result of the Merger, or
(b) otherwise to carry out the purpose of this Merger
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Agreement, Brightpoint Delaware and its proper officers and directors shall be
deemed to have granted hereby to the Surviving Corporation an irrevocable power
of attorney to execute and deliver all such proper deeds, assignments and
assurances in law and to do all acts necessary or proper to vest, perfect or
confirm title to and the possession of such property or rights in the Surviving
Corporation and otherwise to carry out the purposes of this Merger Agreement,
and the proper officers and directors of the Surviving Corporation are hereby
fully authorized in the name of Brightpoint Delaware to take any and all such
action.
ARTICLE II
MANNER, BASIS AND EFFECT OF CONVERTING SHARES
2.01 Conversion of Shares. At the Effective Time:
(a) Each share of Common Stock of Brightpoint Delaware, par value
$0.01 per share ("Delaware Common Stock"), issued and
outstanding immediately prior to the Effective Time shall be
converted into one fully paid and nonassessable share of
Common Stock of Brightpoint Indiana, par value $0.01 per share
("Indiana Common Stock") by virtue of the Merger and without
any action on the part of the holder thereof.
(b) Each share of Delaware Common Stock held in the treasury of
Brightpoint Delaware immediately prior to the Effective Time
shall be converted into one fully paid and nonassessable share
of Indiana Common Stock by virtue of the Merger and without
any action on the part of Brightpoint Delaware and shall be
held in the treasury of the Surviving Corporation;
(c) Each share of Indiana Common Stock, issued and outstanding
immediately prior to the Effective Time shall be redeemed,
canceled and retired and shall cease to exist by virtue of the
Merger and without any action on the part of the holder
thereof.
2.02 Effect of Conversion. At and after the Effective Time, each
share certificate which immediately prior to the Effective Time represented
outstanding shares of Delaware Common Stock ("Delaware Certificate") shall be
deemed for all purposes to evidence ownership of, and to represent, the number
of shares of Indiana Common Stock into which the shares of Delaware Common Stock
represented by such certificate immediately prior to the Effective Time have
been converted pursuant to Section 2.01 hereof. The registered owner of any
Delaware Certificate outstanding immediately prior to the Effective Time, as
such owner appears in the books and records of Brightpoint Delaware or its
transfer agent immediately prior to the Effective Time, shall, until such
certificate is surrendered for transfer or exchange, have and be entitled to
exercise any voting and other rights with respect to and to receive any
dividends or other distributions on the shares of Indiana Common Stock into
which the shares represented by any such certificate have been converted
pursuant to Section 2.01 hereof.
2.03 Exchange of Certificate. Each holder of a Delaware Certificate
shall, upon the surrender of such certificate to the Surviving Corporation or
its transfer agent for cancellation after the Effective Time, be entitled to
receive from the Surviving Corporation or its transfer agent a certificate
representing the number of shares of Indiana Common Stock into which the shares
of Delaware Common Stock represented by such certificate have been converted
pursuant to Section 2.01 hereof.
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2.04 Stock Options and Incentive Plans. By virtue of the Merger and
without any action on the part of the holder, each right or option to purchase
shares of Delaware Common Stock granted under Brightpoint Delaware's 1994 Stock
Option Plan, 1996 Stock Option Plan, Non-Employee Director Stock Option Plan,
Independent Director Stock Compensation Plan (collectively, the "Plans") or
otherwise as to which Brightpoint Delaware or any of its affiliates has assumed
or incurred obligations (hereinafter collectively referred to as the "Options")
which is outstanding immediately prior to the Effective Time shall be converted
into and become a right or option to purchase the same number of shares of
Indiana Common Stock at the same option price per share and upon the same terms
and subject to the same conditions as are in effect at the Effective Time. The
Surviving Corporation shall reserve for purposes of the Options a number of
shares of Indiana Common Stock, equal to the number of shares of Delaware Common
Stock reserved by Brightpoint Delaware for issuance under the Options as of the
Effective Time. As of the Effective Time, Brightpoint Indiana hereby assumes
Brightpoint Delaware's Plans and Options and all obligations of Brightpoint
Delaware under the Options and under such Plans.
2.05 Other Employee Benefit Plans. Upon the Effective Time,
Brightpoint Indiana will assume all obligations of Brightpoint Delaware under
any and all employee benefit plans in effect as of the Effective Time or with
respect to which employee rights or accrued benefits are outstanding as of the
Effective Time.
2.06 Assumption of Stock Purchase Rights and Rights Agreement. Upon
the Effective Time, all outstanding preferred share purchase rights shall be
assumed by Brightpoint Indiana and become rights to purchase the Indiana Common
Stock with no other changes in the terms and conditions of such preferred share
purchase rights, including the exercise price. Upon the Effective Time,
Brightpoint Indiana also shall adopt and assume the Rights Agreement as
successor to Brightpoint Delaware.
ARTICLE III
APPROVAL; AMENDMENT; ABANDONMENT; MISCELLANEOUS
3.01 Approval. This Merger Agreement shall be submitted for
approval by the shareholders of Brightpoint Delaware at the annual meeting of
shareholders.
3.02 Amendment. Subject to applicable law, this Merger Agreement
may be amended, modified or supplemented by written agreement of the Constituent
Corporations at any time prior to the Effective Time, except that after the
approval contemplated by Section 3.01 hereof, there shall be no amendments that
would (a) alter or change the amount or kind of shares to be received by
shareholders in the Merger, (b) alter or change any term of the Restated
Articles of Incorporation or By-Laws of the Surviving Corporation that are to
take effect as of the Effective Time pursuant to Sections 1.04 and 1.05 hereof,
or (c) alter or change any of the terms and conditions of this Merger Agreement
if such alteration or change would adversely affect the holders of any class of
stock of either of the Constituent Corporations.
3.03 Abandonment. At any time prior to the Effective Time, this
Merger Agreement may be terminated and the Merger may be abandoned by the Board
of Directors of Brightpoint Indiana or Brightpoint Delaware, or both,
notwithstanding approval of this Merger Agreement by the sole shareholder of
Brightpoint Indiana and the shareholders of Brightpoint Delaware.
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3.04 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and the same
agreement.
3.05 Statutory Agent in Indiana. The name and address of the
statutory agent of the Surviving Corporation in Indiana upon whom any process,
notice or demand against Brightpoint Delaware or the Surviving Corporation may
be served are:
Brightpoint, Inc.
501 Airtech Parkway
Plainfield, Indiana 46168
Attention: Corporate Secretary
3.06 Designated Agent in Delaware. The Surviving Corporation agrees
that it may be served with process in the State of Delaware in any proceeding
for enforcement of any obligation of Brightpoint Delaware, as well as for
enforcement of any obligation of the Surviving Corporation arising from the
Merger, and the Surviving Corporation irrevocably appoints the Delaware
Secretary of State as its agent to accept service of process in any such suit or
other proceedings. A copy of such process is requested to be mailed by the
Delaware Secretary of State to:
Brightpoint, Inc.
501 Airtech Parkway
Plainfield, Indiana 46168
Attention: Corporate Secretary
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IN WITNESS WHEREOF, Brightpoint Delaware and Brightpoint Indiana have
caused this Merger Agreement to be signed by their respective duly authorized
officers as of the date first above written.
BRIGHTPOINT INDIANA CORP.
(an Indiana corporation)
By:________________________________
Steven E. Fivel, President
ATTEST:
By:_________________________
Steven E. Fivel, Secretary
BRIGHTPOINT, INC.,
(a Delaware corporation)
By:________________________________
Name
Title
ATTEST:
By:__________________________
Steven E. Fivel, Secretary
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ANNUAL MEETING OF STOCKHOLDERS OF
BRIGHTPOINT, INC.
JUNE 3, 2004
PROXY VOTING INSTRUCTIONS
MAIL - Date, sign and mail your proxy card
in the envelope provided as soon as
possible.
- OR -
TELEPHONE - Call toll-free 1-800-PROXIES COMPANY NUMBER
from any touch-tone telephone and follow
the instructions. Have your control number ACCOUNT NUMBER
and proxy card available when you call.
CONTROL NUMBER
- OR -
INTERNET - Access "WWW.VOTEPROXY.COM" and
follow the on-screen instructions. Have
your control number available when you
access the web page.
Please detach along perforated line and mail in the envelope provided IF you
are not voting via telephone or the Internet.
BRIGHTPOINT, INC.
501 AIRTECH PARKWAY
PLAINFIELD, INDIANA 46168
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 3, 2004
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 Thursday, June 3, 2004 at
9:00 a.m. local time, at the Company's office located at 501 Airtech Parkway,
Plainfield, Indiana 46168 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)
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
1. ELECTION OF CLASS I DIRECTORS:
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[ ] FOR ALL NOMINEES NOMINEES:
[ ] V. William Hunt
[ ] Stephen H. Simon
[ ] WITHHOLD AUTHORITY FOR ALL NOMINEES.
[ ] FOR ALL EXCEPT
(See instructions below)
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you wish to
withhold, as shown here: [ ]
2. PROPOSAL TO APPROVE THE COMPANY'S [ ] [ ] [ ]
AMENDED AND RESTATED INDEPENDENT FOR AGAINST ABSTAIN
DIRECTOR STOCK COMPENSATION PLAN
3. PROPOSAL TO APPROVE THE COMPANY'S [ ] [ ] [ ]
2004 LONG-TERM STOCK INCENTIVE FOR AGAINST ABSTAIN
PLAN
4. PROPOSAL TO APPROVE THE CHANGE OF [ ] [ ] [ ]
THE COMPANY'S STATE OF FOR AGAINST ABSTAIN
INCORPORATION FROM DELAWARE TO
INDIANA
5. PROPOSAL TO RATIFY THE APPOINTMENT [ ] [ ] [ ]
OF ERNST & YOUNG LLP AS THE FOR AGAINST ABSTAIN
COMPANY'S INDEPENDENT AUDITORS FOR
THE FISCAL YEAR ENDING DECEMBER
31, 2004
6. IN THEIR DISCRETION, THE PROXIES
ARE AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN ABOVE. IF NO
INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR THE NOMINEES AND PROPOSALS
LISTED ABOVE.
[ ]
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that changes
to the registered name(s) on the account may not be submitted via this method.
Signature of Stockholder _______________ Date _______
Signature of Stockholder _______________ Date _______
NOTE: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give
full title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as such.
If signer is a partnership, please sign in partnership name by
authorized person.
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