<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
</TABLE>
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE> 2
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
4900 HOPYARD ROAD, SUITE 200
PLEASANTON, CA 94588
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, JUNE 22, 2000
AT 10:00 A.M.
To the Stockholders:
The Annual Meeting of Stockholders of BrightStar Information Technology
Group, Inc. will be held at the Sheraton Four Points Hotel, Pleasanton,
California on Thursday, June 22, 2000 at 10:00 a.m. for the following reasons:
1. To elect five directors to serve for a one-year term and until
their successors have been elected and qualified.
2. To approve the Company's 2000 Long-Term Incentive Plan with
1,000,000 shares available for issuance.
3. To ratify the appointment of Grant Thornton LLP as the Company's
independent accountants for the fiscal year ending December 31,
2000.
4. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Only stockholders of record at the close of business on April 28, 2000 are
entitled to notice of, and to vote at, the meeting and any adjournment or
postponement thereof. In accordance with Delaware law, a list of the Company's
stockholders entitled to vote at the meeting will be available for examination
by any stockholder for any purpose germane to the meeting during normal business
hours at the Company's offices at 4900 Hopyard Road, Suite 200, Pleasanton,
California, 94588 for ten days prior to the meeting.
By Order of the Board of Directors
Donald W. Rowley
Secretary
Pleasanton, California
May 18, 2000
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. WHETHER
OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE PREPAID ENVELOPE.
<PAGE> 3
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
4900 HOPYARD ROAD, SUITE 200
PLEASANTON, CA 94588
PROXY STATEMENT
The accompanying proxy is solicited on behalf of the Board of Directors
(the "Board") of BrightStar Information Technology Group, Inc., a Delaware
corporation (the "Company"), for use at the Annual Meeting of Stockholders of
the Company to be held at 10:00 a.m. on June 22, 2000, and at any adjournment or
postponement thereof (the "Annual Meeting" or "Meeting"). Only stockholders of
record at the close of business on April 28, 2000 are entitled to notice of, and
to vote at, the Annual Meeting. On that date, the Company had outstanding
9,351,589 shares of Common Stock. Holders of Common Stock are entitled to one
vote for each share held.
If the enclosed form of proxy is properly signed and returned, the shares
represented thereby will be voted at the Annual Meeting in accordance with the
instructions specified thereon. If the proxy does not specify how the shares
represented thereby are to be voted, the proxy will be voted FOR the election of
the five directors proposed by the Board unless the authority to vote for the
election of directors (or for any one or more nominees) is withheld and, if no
contrary instructions are given, the proxy will be voted FOR the ratification of
the appointment of Grant Thornton LLP as the Company's independent accountants
for the fiscal year ending December 31, 2000, and FOR the approval of the
Company's 2000 Long-Term Incentive Plan (the "2000 Plan"). Any stockholder
signing a proxy in the form accompanying this Proxy Statement has the power to
revoke it prior to or at the Meeting. A proxy may be revoked by a writing
delivered to the Secretary of the Company stating that the proxy is revoked, by
a subsequent proxy signed by the person who signed the earlier proxy or by
attendance at the Meeting and voting in person. Votes will be tabulated by the
inspector of elections of the Meeting.
A majority of the shares entitled to vote, represented in person or by
proxy, constitutes a quorum. If a quorum is present, (i) a plurality vote of the
shares present, in person or by proxy, at the Meeting and entitled to vote is
required for the election of directors and (ii) the affirmative vote of the
majority of the shares present, in person or by proxy, at the Meeting and
entitled to vote is required for the ratification of the appointment of Grant
Thornton LLP and for the approval of the 2000 Plan. Abstentions are considered
shares present and entitled to vote, and therefore have the same legal effect as
a vote against a matter presented at the Meeting. Any shares held in street name
for which the broker or nominee receives no instructions from the beneficial
owner, and as to which such broker or nominee does not have discretionary voting
authority under applicable New York Stock Exchange rules, will be considered as
shares not entitled to vote and will therefore not be considered in the
tabulation of the votes. Accordingly, a broker non-vote will have no effect with
respect to any item of this Proxy Statement.
The expense of soliciting proxies will be paid by the Company. Following
the original mailing of the proxies and soliciting materials, employees of the
Company may solicit proxies by mail, telephone, facsimile transmission and
personal interviews. The Company will request brokers, custodians, nominees and
other record holders to forward copies of the proxies and soliciting materials
to persons for whom they hold shares of the Company's Common Stock and to
request authority for the exercise of proxies; in such cases, the Company will
reimburse such holders for their reasonable expenses.
This Proxy Statement was first mailed to stockholders on or about May 22,
2000.
ITEM 1 -- ELECTION OF DIRECTORS
NOMINEES
At the Annual Meeting of Stockholders, a Board of five directors will be
elected, each to hold office until a successor is elected and qualified, or
until the death, resignation or removal of the director. Shares represented by
the accompanying proxy will be voted for the election of the five nominees
(recommended by the Board of Directors) named in the following table, unless the
proxy is marked in such a manner as to withhold authority so to vote. All
nominees currently serve as directors of the Company. The Company has no
1
<PAGE> 4
reason to believe that the nominees for election will not be available to serve
their prescribed terms. However, if any nominee is for any reason unable to
serve or will not serve, the proxy may be voted for such substitute nominee as
the persons appointed in the proxy may in their discretion determine.
The following table sets forth certain information concerning the nominees,
based on data furnished by them.
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
- --------------- --- -------------------- --------
<S> <C> <C> <C>
George M. Siegel..................... 62 Chairman of the Board of the Company 1997
Jennifer T. Barrett.................. 50 Group Leader, Data Products Division, Acxiom 1998
Corporation
Michael A. Ober...................... 43 President and Chief Executive Officer of the 1998
Company
Donald W. Rowley..................... 48 Chief Financial Officer and Secretary of the 1999
Company
Joseph A. Wagda...................... 56 President of Altamont Capital Management 2000
</TABLE>
There is no family relationship between any of the foregoing nominees or
between any of such nominees and any of the Company's executive officers. The
Company's executive officers serve at the discretion of the Board of Directors.
George M. Siegel has served as Chairman of the Board of Directors of the
Company since its inception. Mr. Siegel co-founded Mindworks, a business
acquired by the Company in 1998. In 1990, he founded Dynamex Inc. (formerly
Parcelway Courier Systems, Inc.), a messenger and delivery service company and
served as its President and Chief Executive Officer until 1995.
Jennifer T. Barrett became a director of the Company at the closing of the
Company's initial public offering in 1998. She has served since 1974 in various
capacities with Acxiom Corporation, a leading data processing and related
computer-based services and software products company. She is currently a Group
Leader in the Data Products Division. Ms. Barrett serves on the Board's
Compensation Committee.
Michael A. Ober has served as a director and as the Company's President
since September 1998, and was named Chief Executive Officer in December 1998. In
1995, Mr. Ober founded SCS America, a business acquired by the Company in 1998,
and served as its president and chief executive officer through September 1998.
Mr. Ober has worked in the software and computing industries for over 20 years.
Prior to founding SCS America, Mr. Ober was a Director of Marketing for Novell,
Inc.
Donald W. Rowley joined the Company in January 1999 when he was appointed
its Chief Financial Officer and Secretary. Mr. Rowley was elected to the Board
at that time. Prior to that appointment, he was interim Chief Financial Officer
and a director of PetroChemNet, Inc., a business-to-business internet-based
marketplace serving the petrochemical and petroleum segments of the energy
industry, from 1998 to 1999. From 1995 to 1998, he was an independent management
consultant and worked with several companies, which included serving as interim
Chief Financial Officer of Norand Corporation, a public company engaged in the
design and development of mobile computing systems and wireless data networks.
From 1994 to 1995 Mr. Rowley was President and a director of VTX Electronics
Corporation, a public company engaged in the distribution of electronic
components and cable, and manufacture of electronic cable assemblies.
Joseph A. Wagda has been a director of BrightStar since April 2000.
President of Altamont Capital Management, Inc., since 1983 and a practicing
attorney, Mr. Wagda's business emphasizes special situation consulting and
investing, including involvement in distressed investments and venture capital
opportunities. Mr. Wagda also is a director of Abraxas Petroleum Corporation, an
independent oil and gas company with operations in Texas and Canada. Previously,
Mr. Wagda was President and CEO of American Heritage Group, a modular
homebuilder, and Senior Managing Director and co-founder of the Price Waterhouse
corporate finance practice. He also served with the finance staff of Chevron
Corporation and in the general counsel's office at Ford Motor Company.
2
<PAGE> 5
BOARD AND COMMITTEE MEETINGS
The Board of Directors met five times during 1999. Standing committees of
the Board include an Audit Committee, which met once, and a Compensation
Committee which did not meet and a Nominating Committee which did not meet.
The Audit Committee is comprised of Ms. Barrett and Mr. Wagda. Both members
are non-employee directors. Pursuant to the Audit Committee Charter, the
Committee addresses on a regular basis matters that include, among other things,
(1) making recommendations to the Board of Directors regarding the appointment
of independent auditors, (2) reviewing with Company financial management the
plans for, and results of, the independent audit engagement, (3) reviewing the
adequacy of the Company's system of internal accounting controls, (4) monitoring
the Company's internal audit program to assure that areas of potential risk are
adequately covered, and (5) reviewing legal and regulatory matters that may have
a material effect on the Company's financial statements.
The Compensation Committee is comprised of Ms. Barrett and Mr. Wagda, both
of whom are non-employee directors. The Committee's primary functions are to
determine remuneration policies applicable to the Company's executive officers
and to determine the bases of the compensation of the Chief Executive Officer,
including the factors and criteria on which such compensation is to be based.
The Committee also administers the Company's 2000 Plan and 1997 Long-Term
Incentive Plan (the "1997 Plan").
The Nominating Committee is comprised of Mr. Siegel, Ms. Barrett and Mr.
Wagda and will seek and consider qualified candidates to serve on the Board. The
Nominating Committee will consider nominees recommended in writing by the
Company's stockholders. Such recommendations should be submitted to the
Committee at the Company's principal executive office.
No incumbent director during 1999 attended fewer than seventy-five percent
(75%) of the aggregate of (1) the total number of meetings of the Board of
Directors (held during the period for which the individual has been a director)
and (2) the total number of meetings held by all committees of the Board on
which the director served, except for Mr. Wagda who became a director in April
2000.
COMPENSATION OF DIRECTORS
Except for the options described below, Directors do not presently receive
compensation for their services as a director. The Company reimburses directors
for their reasonable out-of-pocket expenses with respect to board meetings and
other Company business.
Directors who are not officers of the Company participate in the 1997 and
2000 Plans. Under the 1997 and 2000 Plans, options to purchase 5,000 shares of
the Company's Common Stock are automatically granted to each non-employee
director on the date such director is for the first time elected or appointed to
the Board of Directors. Thereafter, each such director is automatically granted
options to purchase 5,000 shares on the date of each annual stockholders
meeting, provided that such automatic option grants are made only if the
director was on the Board of Directors for the entire fiscal year then ending
(including the last business day of the fiscal year) and was not an employee of
the Company or any affiliate for any part of the fiscal year then ending. The
exercise price for all non-employee director options granted under the 1997 and
2000 Plans is 100% of the fair market value of the shares on the grant date. All
such options are immediately exercisable and expire no later than ten years
after the date of grant, unless sooner exercised or canceled due to termination
of service or death.
3
<PAGE> 6
MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table contains certain information regarding beneficial
ownership of the Company's Common Stock as of December 31, 1999 by (i) persons
known to the Company to be the beneficial owner of more than 5% of the Company's
Common Stock, and their respective addresses (ii) each of the Company's current
directors, (iii) the Chief Executive Officer and each of the Company's three
other executive officers, and (iv) all directors and executive officers as a
group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
--------------------------
NUMBER(1) PERCENT
----------- ---------
<S> <C> <C>
5% BENEFICIAL OWNERS:
Lord Abbett & Co............................................ 712,549 8.25%
767 Fifth Avenue
New York, New York 10153
Brian R. Blackmarr.......................................... 790,030 9.14%
4433 Belclaire
Dallas, Texas 75205
Camelot Management Corp.(2)................................. 571,313 6.61%
10 Glenville Street
Greenwich, Connecticut 06831-3638
NON-EMPLOYEE DIRECTORS:(3)
Jennifer T. Barrett....................................... 10,000 --*
David A. Reamer(4)........................................ 11,000 --*
Brian R. Blackmarr(5)..................................... 790,030 9.14%
Joseph A. Wagda(6)........................................ -- --
EXECUTIVE OFFICERS:
George M. Siegel.......................................... 167,870 1.94%
Michael A. Ober........................................... 110,410 1.32%
Donald W. Rowley.......................................... 13,500 --*
All directors and executive officers as a group (7
persons).................................................. 1,102,810(7) 12.76%
</TABLE>
- ---------------
* Less than 1%
(1) Represents shares held directly and with sole voting and investment power,
except as noted, or with voting and investment power shared with a spouse.
(2) Camelot Management Corp. reports that it shares voting and dispositive power
with respect to the shares it beneficially owns.
(3) As to each non-employee director, except Mr. Blackmarr, includes immediately
exercisable options to purchase 10,000 shares of Common Stock.
(4) Mr. Reamer resigned from the Board of Directors on January 19, 2000.
(5) Mr. Blackmarr has not been renominated to serve as a member of the Board of
Directors.
(6) Mr. Wagda became a director after December 31, 1999, but is included in the
table for informational purposes.
(7) Includes options to purchase 20,000 shares of Common Stock immediately
exercisable by non-employee directors.
4
<PAGE> 7
PROPOSAL NO. 1
RATIFICATION OF INDEPENDENT ACCOUNTANTS
INTRODUCTION
The Company is asking the stockholders to ratify the selection of Grant
Thornton LLP as the Company's independent accountants for the fiscal year ending
December 31, 2000. The affirmative vote of the holders of a majority of the
Common Stock present or represented at the Annual Meeting will be required to
ratify the selection of Grant Thornton LLP.
In the event the stockholders fail to ratify the appointment, the Board of
Directors will reconsider its selection. Even if the selection is ratified, the
Board in its discretion may direct the appointment of a different independent
accounting firm at any time during the year if the Board feels that such a
change would be in the best interests of the Company and its stockholders.
Grant Thornton LLP has audited the Company's financial statements beginning
with the fiscal year ended December 31, 1999. Its representatives are expected
to be present at the Annual Meeting. They will have the opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions.
APPROVAL REQUIRED
Approval of Proposal No. 1 requires the approval of the holders of a
majority of the Common Stock present in person or represented by proxy.
RECOMMENDATION OF BOARD OF DIRECTORS
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION
OF THE SELECTION OF GRANT THORNTON LLP.
EXECUTIVE COMPENSATION
The following table contains information concerning compensation earned by
Messrs. Siegel, Ober and Rowley, all named executive officers of the Company. In
addition the table includes the compensation of Mr. Daniel Arra, and Thomas
O'Gorman, Vice Presidents.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
TOTAL
BASE CASH
SALARY BONUS COMPENSATION
-------- ------- ------------
<S> <C> <C> <C> <C>
George M. Siegel..................................... 1999 $109,500 -- $109,500
1998 -- -- --
Michael A. Ober...................................... 1999 300,000 -- 300,000
1998 183,917 $70,000 253,917
Donald W. Rowley..................................... 1999 222,534 -- 222,534
1998 -- -- --
Daniel Arra.......................................... 1999 180,335 136,819 317,154
1998 120,000 234,295 354,295
Thomas O'Gorman...................................... 1999 226,000 47,500 273,500
1998 173,917 80,000 253,917
</TABLE>
5
<PAGE> 8
Employment Agreements
Mr. Ober ("employee") entered into an Executive Employment Agreement in
connection with the Company's initial public offering. The following summary of
his Executive Employment Agreement does not purport to be complete and is
qualified by reference to it, of which a copy has been filed with the Securities
and Exchange Commission. Mr. Ober's Executive Employment Agreement provides for
an annual base salary in an amount not less than the initial specified amount
and entitles him to participate in all of the employee benefit plans sponsored
by BrightStar. Mr. Ober's base salary was increased to $300,000, and a bonus of
up to $200,000 if the Company achieves certain revenue and profitability
milestones, at the time of his election as the Company's President. Mr. Ober's
agreement has an initial three-year term and continues thereafter on a
year-to-year basis on the same terms and conditions existing at the time of
renewal, subject to the right of BrightStar or Mr. Ober to terminate Mr. Ober's
employment at any time. If Mr. Ober's employment is terminated by BrightStar
without cause (as defined) during the initial three-year term, then Mr. Ober
will be entitled to (i) receive his current base salary for the period ending
the later of (a) the end of the initial three-year term of the agreement or (b)
12 months after termination of employment, (ii) any other earned and unpaid
compensation, vacation time accrued prior to termination and an amount equal to
the amount of any earned bonuses and commissions payable to Mr. Ober with
respect to the 12 calendar months preceding termination ("Severance Payments"),
and (iii) continued participation in BrightStar's employee benefit plans (other
than the granting of new awards under the 1997 Plan, 2000 Plan, or any other
performance-based plan) for a period of 12 months following the date of
termination. If Mr. Ober is terminated without cause during any one-year
extension of the initial term of the Agreement, then Mr. Ober shall continue to
receive Severance Payments for a period of 12 months after termination of such
employment and shall continue to participate for such period in BrightStar's
employee benefit plans (other than granting of new awards under the 1997 and
2000 Plans, or any other performance-based plan). If a change of control of
BrightStar occurs, and the terms of the employment agreement are not adopted,
Mr. Ober will be entitled to receive an amount equal to 36 months of his
then-current base salary under the agreement, payable on a monthly basis. Under
the Executive Employment Agreements, a "change of control" is defined as (A) the
sale of substantially all assets of the Company or (B) a merger, consolidation,
liquidation or reorganization of the Company in which the Company or an
affiliate of the Company is not the surviving entity, or which results, in any
event, in a change of control of the Company. Mr. Ober's Executive Employment
Agreement contain covenants limiting competition with the Company during the
term of the Executive Employment Agreement and for an additional period to be
the longer of four years from inception of the agreement, or one year after
termination of employment for cause.
Mr. Rowley and the Company entered into an Employment Agreement in January
1999. The agreement provides for a base salary of $250,000, and a bonus of up to
$150,000 if the Company achieves certain revenue and profitability milestones.
The agreement is terminable at will, but if Mr. Rowley's employment is
terminated without cause, he is entitled to one year of additional base salary,
or two years if such termination occurs following a change of control.
6
<PAGE> 9
Stock Options
The following table contains information concerning the grant of stock
options to the Named Executive Officers during 1999 under the Company's 1999
Plan:
STOCK OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO POTENTIAL REALIZABLE
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION VALUE FOR
NAME GRANTED FISCAL YEAR PRICE($/SH) DATE OPTION TERM(a)
- ---- ---------- ------------ ----------- ---------- --------------------
<S> <C> <C> <C> <C> <C>
George M. Siegel................ -- -- -- -- --
Michael A. Ober................. 60,000 * 6.00 6/09 $ 279,000
175,000 12.2% 7.50 12/09 1,230,250
Donald W. Rowley................ 40,000 * 6.00 6/09 186,000
125,000 8.7 7.50 12/09 878,750
Daniel Arra..................... 30,000 * 6.00 6/09 139,500
125,000 8.7 7.50 12/09 878,750
Thomas O'Gorman................. 30,000 * 6.00 6/09 139,500
125,000 8.7 7.50 12/09 878,750
</TABLE>
- ---------------
(a) Based on Black-Scholes model. assumes a risk free interest rate of 5.86%,
price volatility of 110% and a dividend yield of 0%
No options were exercised in 1999.
* Less than 1%.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Notwithstanding any statement to the contrary in any of the Company's
previous or future filings with the Securities and Exchange Commission, this
Report shall not be incorporated by reference into any such filings.
Compensation Philosophy. In developing the Company's executive compensation
policies, the Compensation Committee (the "Committee") has two principal
objectives: (1) attracting, rewarding and retaining officers who possess
outstanding talent, and (2) motivating officers to achieve Company performance
consistent with shareholder objectives. Accordingly, the Committee adopted the
following policies:
- The Company will pay compensation that is competitive with the practices
of other leading technology companies in the same or similar businesses;
- A significant portion of the officers' compensation will depend upon the
achievement of challenging performance goals for the Company and its
various business units and officers; and
- The Company will align the interests of its officers with those of the
Company's stockholders -- therefore, stock options will constitute a
significant portion of compensation.
Total Annual Compensation. Each officer's target total annual compensation
(that is, salary plus bonus) is determined after reviewing independent survey
data on the compensation paid to officers at a group of approximately 20
companies in the high technology industry. These companies strenuously compete
with the Company for executive talent and/or have revenues comparable to the
Company's revenues. The Company's goal is to set total target annual
compensation at a level that is near the median level for the officers at the
surveyed companies.
Bonuses. The actual bonus (that is, the percentage of the target bonus)
that any officer (other than the Named Executive Officers) actually receives
depends on the achievement of business unit objectives and
7
<PAGE> 10
financial performance goals for the Company. Typical business unit objectives
include both financial and operating goals including, for example, increased
profitability, customer satisfaction, and controlling profit and gross margin.
For each year, the performance goals are set in light of general business
conditions and the Company's strategies for the year. For 1999, the Committee
directed Company management to determine the performance targets for the
officers other than Named Executive Officers, using a philosophy approved by the
Committee. The Committee developed and approved the specific performance targets
for the Named Executive Officers, as described in the following paragraph.
Stock Options. The Committee strongly believes that stock options motivate
the officers to maximize stockholder value and to remain with the Company
despite a very competitive marketplace. All Company stock options have a per
share exercise price equal to the fair market value of the Company's stock on
the grant date. The number of options granted to each officer and each option's
vesting schedule are determined based on the officer's position at the Company,
his or her individual performance, the number of options the executive already
holds and other factors, including an estimate of the potential value of the
options.
In fiscal 1999, the Committee made these determinations for the Named
Executive Officers and other senior officers. For all other grants, the Chief
Executive Officer (that is, Mr. Ober) made these determinations, in consultation
with the Company's Human Resources organization.
Compensation of Chief Executive Officer. The Committee believes the Chief
Executive Officer's compensation should be tied directly to the performance of
the Company and in line with shareholder objectives. Consequently, Mr. Ober's
percentage of bonus to base salary is the highest of any officer.
Tax Deductibility of Executive Compensation. Under section 162(m) of the
Internal Revenue Code the Company generally receives a federal income tax
deduction for compensation paid to any of its Named Executive Officers only if
the compensation is less than $1 million during any fiscal year or is
"performance-based" under section 162(m). Both the Company's 1997 Equity
Incentive Plan and the Bonus Plan permit the Committee to pay compensation that
is "performance-based" and thus fully tax-deductible by the Company. The
Committee currently intends to continue seeking a tax deduction for all of the
Company's executive compensation, to the extent consistent with the best
interests of the Company.
Jennifer T. Barrett
Joseph A. Wagda
8
<PAGE> 11
COMPANY STOCK PERFORMANCE
The following graph sets forth a comparison of the cumulative total share
owner return on the Company's Common Shares for the period beginning April 17,
1998, the date Common Shares began trading on the Nasdaq National Market, and
ending December 31, 1999, the last trading day in fiscal 1999, as compared with
the cumulative total return of the S&P 500 Index and a Peer Group Index. The
Peer Group consists of the Nasdaq Computer & Data Processing Index. This graph
assumes an investment of $100 on April 17, 1998 in each of Common Shares, the
S&P 500 Index and the Peer Group Index, and assumes reinvestment of dividends,
if any. The stock price performance shown on the graph below is not necessarily
indicative of future stock price performance.
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BrightStar................................................. $100.00 $ 60.60 $ 63.50
S&P 500.................................................... $100.00 $110.60 $133.90
Peer Group................................................. $100.00 $130.50 $287.70
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1999, non-employee directors Ms. Barrett and Mr. Reamer served as
members of the Compensation Committee. None of the Compensation Committee
members or Named Executive Officers have any relationship that must be disclosed
under this caption.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and executive officers, and holders of more
than 10% of the Company's Common Stock, to file with the Securities and Exchange
Commission (the "SEC") initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Such
officers, directors and 10% stockholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file.
Based on its review of such forms that it received, or written
representations from reporting persons that no Forms 5 were required for such
persons, the Company believes that, during fiscal 1999, all Section 16(a) filing
requirements were satisfied on a timely basis, except for Mr. Rowley whose
initial statement and changes in beneficial ownership, Mr. Ober whose statement
of changes in beneficial ownership, and Ms. Barrett and Mr. Wagda whose annual
statement of changes in beneficial ownership were filed late.
9
<PAGE> 12
ITEM 2 -- ADOPTION OF 2000 LONG-TERM INCENTIVE PLAN
The Company's Board of Directors has approved the 2000 Plan with 1,000,000
shares available for issuance. The total number of shares currently authorized
to be issued pursuant to Awards granted under the 2000 Plan is 1,000,000.
Adoption of the 2000 Plan is subject to the approval of a majority of the shares
of the Company's Common Stock which are present in person or by proxy and
entitled to vote at the Annual Meeting.
GENERAL
The 2000 Plan allows the granting of stock options, stock appreciation
rights ("SARs"), restricted stock awards, performance unit awards, and
performance share awards (collectively, "Awards") to eligible 2000 Plan
participants. While the Company has no current intention to grant Awards other
than stock options, the Board of Directors believes that the ability to utilize
different types of equity compensation vehicles will give the Company the
flexibility needed to adapt most effectively over time to changes in the labor
market and in equity compensation practices.
If an Award expires or is canceled without having been fully exercised or
vested, the unvested or canceled shares generally will again be available for
grants of Awards. The number of shares available for grant under the 2000 Plan,
outstanding Awards, the formula for granting non-employee director options, and
the numerical limits for individual grants will be adjusted as appropriate to
reflect any stock splits, stock dividends, recapitalizations, reorganizations or
other changes to the capital structure of the Company.
PURPOSE OF THE 2000 PLAN
The 2000 Plan is intended to attract, motivate, and retain (1) employees of
the Company and its affiliates, (2) consultants who provide significant services
to the Company and its affiliates, and (3) directors of the Company who are
employees of neither the Company nor any affiliate ("non-employee directors").
The 2000 Plan also is designed to encourage stock ownership by participants,
thereby aligning their interests with those of the Company's stockholders.
ADMINISTRATION OF THE 2000 PLAN
The 2000 Plan is administered by the Board's Compensation Committee (the
"Committee"). The members of the Committee must qualify as "non-employee
directors" under Rule 16b-3 under the Securities Exchange Act of 1934, and as
"outside directors" under Section 162(m) of the Internal Revenue Code (for
purpose of qualifying amounts received under the 1997 Plan as "performance-based
compensation" under section 162(m)).
Subject to the terms of the 2000 Plan, the Committee has the sole
discretion to determine the employees and consultants who shall be granted
Awards, the size and types of such Awards, and the terms and conditions of such
Awards. The Committee may delegate its authority to grant and administer awards
to a separate committee appointed by the Committee, but only the Committee may
make Awards to participants who are executive officers of the Company.
The non-employee director portion of the 2000 Plan will be administered by
the Board of Directors (rather than by the Committee).
ELIGIBILITY TO RECEIVE AWARDS
Employees and consultants of the Company and its affiliates (i.e. any
corporation or other entity controlling, controlled by, or under common control
with the Company) are eligible to be selected to receive one or more Awards. The
actual number of employees and consultants who will receive Awards under the
2000 Plan cannot be determined because selection for participation in the 2000
Plan is in the discretion of the Committee. The 2000 Plan also provides for the
grant for the grant of stock options to the Company's non-employee directors.
Such options will be granted pursuant to an automatic nondiscretionary formula.
10
<PAGE> 13
OPTIONS
The Committee may grant nonqualified stock options, incentive stock options
(which are entitled to favorable tax treatment) ("ISOs"), or a combination
thereof. The number of shares covered by each option will be determined by the
Committee.
The exercise price of each option is set by the Committee but generally is
not less than 100% of the fair market value of the Company's Common Stock on the
date of grant. Thus, an option will have value only if the Company's Common
Stock appreciates in value after the date of grant.
The exercise price of an ISO must be at least 110% of the fair market value
if, on the grant date, the participant owns stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company or any of
its subsidiaries. Also, the aggregate fair market value of the shares
(determined on the grant date) covered by ISOs which first become exercisable by
any participant during any calendar year may not exceed $100,000.
The exercise price of each option must be paid in full at the time of
exercise. The Committee also may permit payment of the exercise price through
the tender of shares of the Company's Common Stock that are already owned by the
participant, or by any other means which the Committee determines to be
consistent with the 1997 Plan's purpose. Any taxes required to be withheld must
be paid by the participant at the time of exercise.
Options become exercisable at the times and on the terms established by the
Committee. Options expire at the times established by the Committee but
generally not later than 10 years after the date of grant, unless sooner
exercised or cancelled due to termination of service or death. The Committee's
current practice is to grant options which expire no later than ten years after
the date of grant.
NON-EMPLOYEE DIRECTOR OPTIONS
The 2000 Plan provides for (i) the automatic grant to any Non-Employee
Director of options to purchase 5,000 shares of Common Stock, effective on the
date of that person's initial election as a director, at an exercise price per
share equal to the per share fair market value of the Common Stock on the date
of that grant, and (ii) the automatic grant to each Non-Employee Director of
options to purchase 5,000 shares of Common Stock at each annual meeting of
stockholders thereafter at which that director is re-elected or remains a
director, at an exercise price per share equal to the per share fair market
value of the Common Stock on the date of grant. The Board may revoke these
automatic grants at any time. Each option granted to the Non-Employee Directors
shall be exercisable immediately and shall expire ten years after the date of
grant, unless sooner exercised or cancelled due to termination of service or
death.
STOCK APPRECIATION RIGHTS
The Committee determines the terms and conditions of each SAR. SARs may be
granted in conjunction with an option, or may be granted on an independent
basis. The number of shares covered by each SAR will be determined by the
Committee.
Upon exercise of an SAR, the participant will receive payment from the
Company in an amount determined by multiplying: (1) the difference between (a)
the fair market value of a share of Company Common Stock on the date of exercise
and (b) the exercise price, times (2) the number of shares with respect to which
the SAR is exercised. The per share exercise price of an SAR cannot be less than
100% of fair market value on the date of grant. Thus, an SAR will have value
only if the Company's Common Stock appreciates in value after the date of grant.
SARs are exercisable at the times and on the terms established by the
Committee. Proceeds from SAR exercises may be paid in cash or shares of the
Company's Common Stock, as determined by Committee. SARs expire at the times
established by the Committee, but subject to the same maximum time limits as are
applicable to employee options granted under the 2000 Plan.
11
<PAGE> 14
RESTRICTED STOCK AWARDS
Restricted stock awards are shares of the Company's Common Stock that vest
in accordance with terms established by the Committee. The number of shares of
restricted stock (if any) granted to a participant will be determined by the
Committee, but during any fiscal year of the Company.
In determining the vesting schedule for each Award of restricted stock, the
Committee may impose additional conditions to vesting as it determines to be
appropriate. For example, the Committee may provide that restricted stock will
vest only if one or more performance goals are satisfied. In order for the Award
to qualify as "performance-based" compensation under section 162(m) of the
Internal Revenue Code (see "Report of the Stock Option and Compensation
Committee of the Board of Directors-Tax Deductibility of Executive
Compensation"), it must use one or more of the following measures in setting the
performance goals: (1) annual revenue, (2) controllable profits, (3) customer
satisfaction management by objectives, (4) earnings per share, (5) individual
management by objectives, (6) net income, (7) new orders, (8) pro forma net
income, (9) return on designated assets, and (10) return on sales. The Committee
may apply the performance measures on a corporate or business unit basis, as
deemed appropriate in light of the participant's specific responsibilities.
PERFORMANCE AWARDS AND OTHER STOCK-BASED INCENTIVE AWARDS
The 2000 Plan permits the grant of other performance awards and stock-based
incentive awards. Such awards will be determined by the Committee.
Whether such an award will result in a payment to a participant will depend
upon the extent to which performance goals established by the Committee are
satisfied. In particular, the 2000 Plan permits the Committee to use the same
performance goals as are discussed above with respect to restricted stock.
After a performance or stock-based incentive award has vested (that is,
after the applicable performance goal or goals have been achieved), the
participant will be entitled to receive a payout of cash, Common Stock, or a
combination thereof, as determined by the Committee. Unvested performance
units/shares will be forfeited upon the earlier of the recipient's termination
of employment or the date set forth in the Award agreement.
OPTIONS TO BE GRANTED TO CERTAIN INDIVIDUALS AND GROUPS
As described above, the Committee has discretion to determine the number of
Awards (if any) to be granted to any individual under the 2000 Plan.
Accordingly, the actual number of Awards that any individual may receive in the
future is not determinable.
NONTRANSFERABILITY OF AWARDS
Awards granted under the 2000 Plan may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the
applicable laws of descent and distribution. However, in the discretion of the
Committee, a participant may designate one or more beneficiaries to receive any
exercisable or Vested Awards following his or her death.
TAX ASPECTS
The following discussion is intended to provide an overview of the U.S.
federal income tax laws which are generally applicable to Awards granted under
the 2000 Plan as of the date of this Proxy Statement. People or entities in
differing circumstances may have different tax consequences, and the tax laws
may change in the future. This discussion is not to be construed as tax advice.
A recipient of a stock option or SAR will not have taxable income on the
date of grant. Upon the exercise of nonqualified options and SARs, the
participant will recognize ordinary income equal to the difference between the
fair market value of the shares on the date of exercise and the exercise price.
Any gain or loss recognized upon any later disposition of the shares generally
will be capital gain or loss.
12
<PAGE> 15
Purchase of shares upon exercise of an ISO will not result in any taxable
income to the participant, except for purposes of the alternative minimum tax.
Gain or loss recognized by the participant on a later sale or other disposition
will either be capital gain or loss or ordinary income, depending upon how long
the participant holds the shares. Any ordinary income recognized will be in the
amount, if any, by which the lesser of (1) the fair market value of such shares
on the date of exercise or (2) the amount realized from the sale, exceeds the
exercise price.
Upon receipt of restricted stock or a performance unit/share, the
participant will not have taxable income unless he or she elects to be taxed.
Absent such election, upon vesting the participant will recognize ordinary
income equal to the fair market value of the shares or units at such time.
The Committee may permit participants to satisfy tax withholding
requirements in connection with the exercise or receipt of an Award by: (1)
electing to have the Company withhold otherwise deliverable shares, or (2)
delivering to the Company already-owned shares having a value equal to the
amount required to be withheld.
The Company generally will be entitled to a tax deduction for an Award in
an amount equal to the ordinary income realized by the participant at the time
the participant recognizes such income. Internal Revenue Code section 162(m)
contains special rules regarding the federal income tax deductibility of
compensation paid to the Company's Chief Executive Officer and to each of the
other four most highly compensated executive officers. The general rule is that
annual compensation paid to any of these specified executive will be deductible
only to the extent that it does not exceed $1 million. However, the Company can
preserve the deductibility of certain compensation in excess of $1 million if it
complies with conditions imposed by section 162(m), including (1) the
establishment of a maximum number of shares with respect to which Awards may be
granted to any one employee during a specified time period, and (2) for
restricted stock and performance unit/shares, inclusion in the 2000 Plan of
performance goals which must be achieved prior to payment. The 2000 Plan has
been designed to permit the Committee to grant Awards which qualify as
performance-based compensation.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The firm of independent accountants of the Company recommended by the Audit
Committee and selected by the Board of Directors for the current fiscal year is
Grant Thornton LLP. The Board of Directors expects that representatives of Grant
Thornton LLP will be present at the Annual Meeting, will have an opportunity to
make a statement and will be available to respond to appropriate questions.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not
intend to bring any other business before the Annual Meeting and, as far as is
known to the Board of Directors, no matters are to be brought before the Annual
Meeting except as specified in the Notice of Annual Meeting. However, as to any
other business that may properly come before the Annual Meeting, it is intended
that proxies, in the form enclosed, will be voted in respect thereof in
accordance with the judgment of the persons voting such proxies.
STOCKHOLDER PROPOSALS -- 2001 ANNUAL MEETING
Stockholders are entitled to present proposals for action at a forthcoming
stockholders' meeting if they comply with the requirements of the proxy rules.
Any proposals intended to be presented at the 2001 Annual Meeting of
Stockholders of the Company must be received at the Company's offices on or
before December 31, 2000 in order to be considered for inclusion in the
Company's proxy statement and form of proxy relating to such meeting.
The attached proxy card grants the proxy holders discretionary authority to
vote on any matter raised at the Annual Meeting. If a stockholder intends to
submit a proposal at the 2001 Annual Meeting of Stockholders of the Company,
which proposal is not intended to be included in the Company's proxy
13
<PAGE> 16
statement and form of proxy relating to such meeting, the stockholder should
give the Company appropriate notice no later than March 31, 2001. If the Company
fails to receive notice of the proposal by such date, the Company will not be
required to provide any information about the nature of the proposal in its
proxy statement and the proposal will not be submitted to the stockholders for
approval at the 2001 Annual Meeting of Stockholders of the Company as the
Company will not have received proper notice as required by the Company's
Bylaws.
Donald W. Rowley
Secretary
May 18, 2000
Pleasanton, California
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. WHETHER
OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE PREPAID ENVELOPE.
14
<PAGE> 17
APPENDIX
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
2000 LONG-TERM INCENTIVE PLAN
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
2000 LONG-TERM INCENTIVE PLAN
1
<PAGE> 18
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
2000 LONG-TERM INCENTIVE PLAN
<TABLE>
<CAPTION>
SECTION DESCRIPTION
------- -----------
<S> <C>
1 Purpose of the Plan
2 Definitions
3 Types of Awards Covered
4 Administration
5 Eligibility
6 Shares of Stock Subject to the Plan
7 Non-Employee Director Awards
8 Stock Options
9 Stock Appreciation Rights
10 Restricted Stock
11 Performance Awards
12 Other Stock-Based Incentive Awards
13 Exercise of Options
14 Rights in Event of Death or Disability
15 Award Agreements
16 Tax Withholding
17 Change of Control
18 Dilution or Other Adjustment
19 Transferability
20 Amendment or Termination
21 General Provisions
22 Plan Effective Date
23 Plan Termination
</TABLE>
2
<PAGE> 19
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
2000 LONG-TERM INCENTIVE PLAN
(Subject to stockholder approval at the 2000 Annual Meeting of Stockholders)
SECTION 1
PURPOSE OF THE PLAN
1.1 The 2000 Long-term Incentive Plan, maintained by BrightStar Information
Technology Group, Inc., is intended to motivate key employees to enhance
shareholder value by offering incentives to its key employees who are
primarily responsible for the growth of the Company and to attract and
retain qualified employees and non-employee directors.
SECTION 2
DEFINITIONS
2.1 Unless the context indicates otherwise, the following terms, when used in
this Plan, shall have the meanings set forth in this Section:
(a) "AWARD" shall mean grants or awards under this Plan in the form of
Options, SARs, Restricted Stock, Performance Awards or other
stock-based incentive awards.
(b) "BOARD" shall mean the Board of Directors of the Company.
(c) "CHANGE OF CONTROL" shall be deemed to have taken place on an
occurrence of an event as defined in Section 17 of this Plan.
(d) "CODE" shall mean the Internal Revenue Code of 1986 as it may be
amended from time to time and related Treasury Regulations.
(e) "COMMITTEE" shall mean the Board, or any Committee comprised of two or
more Outside Directors, to the extent required to qualify for an
exemption pursuant to Rule 16b-3 under the Exchange Act and to satisfy
the requirements regarding committees of "outside directors" under
Section 162(m) of the Code, that may be designated by the Board to
administer the Plan, in accordance with Section 4 hereof.
(f) "COMMON STOCK" shall mean the common stock, par value $.01, of the
Company.
(g) "COMPANY" shall mean BrightStar Information Technology Group, Inc.
(h) "DEFERRED SHARES" an award made pursuant to Section 12 of the Plan of
the right to receive Common Stock in lieu of cash thereof at the end
of a specified time period.
(i) "DIRECTOR" shall mean any member of the Board.
(j) "DISABILITY" shall mean permanent and total disability within the
meaning of Section 22(e)(3) of the Code.
(k) "EMPLOYEE" shall mean any full-time employee of the Company or its
Subsidiaries (including Directors who are otherwise employed on a
full-time basis by the Company or its Subsidiaries).
(l) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934 as it
may be amended from time to time.
(m) "FAIR MARKET VALUE" of the Common Stock on a given date shall be based
upon either (i) if the Common Stock is listed on a national securities
exchange or quoted in an interdealer
3
<PAGE> 20
quotation system, the last sales price or, if unavailable, the average
of the closing bid and asked prices per share of the Common Stock on
such date (or, if there was no trading or quotation in the Common
Stock on such date, on the next preceding date on which there was
trading or quotation) as provided by one of such organizations or (ii)
if the Common Stock is not listed on a national securities exchange or
quoted in an interdealer quotation system, the price will be equal to
the Company's fair market value, as determined by the Committee in
good faith based upon the best available facts and circumstances at
the time.
(n) "GRANTEE" shall mean a person granted an Award under the Plan.
(o) "IMMEDIATE FAMILY" shall mean with respect to a given Grantee that
Grantee's spouse, children, or grandchildren (including adopted
children or grandchildren).
(p) "IPO DATE" shall mean the date of closing of the initial public
offering of the Company's Common Stock.
(q) "ISO" shall mean an Award granted pursuant to the Plan to purchase
shares of the Stock and is intended to qualify as an incentive stock
option under Section 422 of the Code, as now or hereafter constituted.
(r) "NON-EMPLOYEE DIRECTOR" shall mean a Director of the Company who is
not an Employee nor has been an Employee at any time during the prior
one-year period.
(s) "NQSO" shall mean an Award granted pursuant to the Plan to purchase
shares of stock and is not intended to qualify as an incentive stock
option under Section 422 of the Code, as now or hereafter constituted.
(t) "OPTIONS" shall refer collectively to NQSOs and ISOs issued under and
subject to the Plan.
(u) "OUTSIDE DIRECTOR" shall mean a non-employee Director within the
meaning of Rule 16b-3(b)(3) under the Exchange Act, or any successor
thereto, who are also "outside directors" within the meaning of
Section 162(m) of the Code and the regulations thereunder.
(v) "PERFORMANCE AWARDS" shall mean Awards under the Plan, payable in
cash, Common Stock, other securities or other awards and shall confer
on the holder thereof the right to receive payments, upon the
achievement of such performance goals during such performance periods
as the Committee shall establish.
(w) "PERMITTED TRANSFEREE" shall mean any individual or entity as defined
in Section 19.2 of this Plan.
(x) "PLAN" shall mean this 2000 Long-term Incentive Plan as set forth
herein and as amended from time to time.
(y) "RESTRICTED STOCK" shall mean an Award of Common Stock subject to
restrictions on transfer and/or such other restrictions on incidents
of ownership as the Committee may determine.
(z) "RULES" means Rule 16(b)(3) and any successor provisions promulgated
by the Securities and Exchange Commission under Section 16 of the
Exchange Act.
(aa) "SAR" shall mean an Award constituting the right to receive, upon
surrender of the right, but without payment, an amount payable in
cash.
4
<PAGE> 21
(ab) "SUBSIDIARY or SUBSIDIARIES" shall mean any entity or entities in
which the Company owns a majority of the voting power.
(ac) "TEN PERCENT SHAREHOLDER" shall mean any Grantee who owns more than
10% of the combined voting power of all classes of stock of the
Company, within the meaning of Section 422 of the Code.
SECTION 3
TYPES OF AWARDS COVERED
3.1 Awards granted, under the Plan may be:
(a) stock options ("Options") which may be designated as:
(i) nonqualified stock options ("NQSOs"); or
(ii) incentive stock options ("ISOs");
(b) stock appreciation rights ("SARs");
(c) restricted stock awards ("Restricted Stock");
(d) performance awards ("Performance Awards"); or
(e) other forms of stock-based incentive awards.
SECTION 4
ADMINISTRATION
4.1 The Plan shall be administered by the Committee. Subject to the provisions
of the Plan and applicable law, the Committee shall have full discretion
and the exclusive power to:
(a) select the Employees who will participate in the Plan and to make
Awards to such Employees;
(b) determine the time at which such Awards shall be granted and any terms
and conditions with respect to such Awards as shall not be
inconsistent with the provisions of the Plan; and
(c) resolve all questions relating to the administration of the Plan, and
applicable law.
4.2 The interpretation of and application by the Committee of any provision of
the Plan shall be final and conclusive. The Committee, in its sole
discretion, may establish such rules and guidelines relating to the Plan as
it may deem appropriate.
4.3 The Committee may employ such legal counsel, consultants, and agents as it
may deem desirable for the administration of the Plan and may rely upon any
opinion received from any such counsel or consultant and any computation
received from any such consultant or agent. The Committee shall keep
minutes of its actions under the Plan.
4.4 No member of the Board of Directors or the Committee shall be liable for
any action or determination made in good faith with respect to the Plan or
any Awards granted hereunder. All members of the Committee shall be fully
protected by the Company in respect to any such action, determination or
interpretation.
SECTION 5
ELIGIBILITY
5.1 The individuals who shall be eligible to participate in the Plan shall be
officers, management, and such other key Employees of the Company and
Subsidiaries (including any directors who are also employees) as
5
<PAGE> 22
the Committee may from time to time determine.
5.2 Directors of the Company who are not employees of the Company shall be
eligible to participate in the Plan as provided in Section 7.
5.3 An Employee or Non-Employee Director who has been granted an Award in one
year shall not necessarily be entitled to be granted Awards in subsequent
years.
SECTION 6
SHARES OF STOCK SUBJECT TO THE PLAN
6.1 Awards may be granted with respect to the Common Stock of the Company.
6.2 Shares delivered upon exercise of the Awards, at the election of the Board
of Directors of the Company, may be Common Stock that is authorized but
previously unissued, or stock reacquired by the Company, or both.
6.3 Subject to the provisions of Section 18, the maximum number of shares
available for issuance under the Plan shall be 1,000,000. The number of
shares of Common Stock reserved under the Plan shall not be less than the
total number of shares granted, whether exercised or unexercised for all
Awards under the Plan.
6.4 Notwithstanding any other provision of the Plan to the contrary, in no
event may any Grantee in any calendar year receive more than 200,000
Options under this Plan, whether they be ISOs or NQSOs, subject to
adjustments as provided in Section 18 of the Plan.
6.5 Notwithstanding any other provision of the Plan to the contrary, in no
event may any Grantee in any calendar year receive more than 500,000 SARs
under this Plan, subject to adjustments as provided in Section 18 of the
Plan.
6.6 Notwithstanding any other provision of the Plan to the contrary, in no
event may any Grantee in any calendar year receive an award of Performance
Awards having an aggregate maximum value as of their respective date of
grant in excess of $1,000,000
6.7 Any shares of Common Stock awarded under the Plan, which Award for any
reason expires or is terminated unexercised as to such shares, shall again
be available for the grant of other Awards under the Plan; provided,
however, that forfeited shares or other securities shall not be available
for further Awards if the Grantee has realized any benefits of ownership
from such shares.
SECTION 7
NON-EMPLOYEE DIRECTOR AWARDS
7.1 The Board may grant NQSOs to Non-Employee Directors in such amounts and at
such times as the Board may determine.
7.2 Each option granted to a Non-Employee Director shall be exercisable in full
immediately upon the date of grant.
7.3 Each option granted to a Non-Employee Director may not be exercised more
than 10 years after the date such option is granted and such option shall
expire on such date unless sooner exercised or cancelled due to termination
of service or death.
7.4 Upon the termination of directorship, such Non-Employee Director's option
privileges shall be limited to the shares which were immediately
purchasable at the date of such termination of directorship and shall
expire unless exercised on or before the first annual anniversary of the
date of such termination of directorship.
6
<PAGE> 23
7.5 If a Non-Employee Director dies while a member of the Board, his or her
option shall become fully exercisable and shall remain exercisable by such
Non-Employee Director's estate (or other successor) until the first annual
anniversary date of death, at which time they shall expire.
SECTION 8
STOCK OPTIONS
8.1 The Committee may grant Options, as follows, which shall be evidenced by a
stock option agreement and may be designated as (i) NQSOs or (ii) ISOs:
(a) NQSOS
(i) A NQSO is a right to purchase a specified number of shares of
Common Stock during such time as the Committee may determine, not
to exceed ten years, at a price determined by the Committee that
is not less than 50% of the Fair Market Value of the Common Stock
on the date the option is granted.
(ii) The purchase price of the Common Stock subject to the NQSO may be
paid in cash. At the discretion of the Committee, the purchase
price may also be paid by the tender of Common Stock or through a
combination of Common Stock and cash or through such other means
as the Committee determines are consistent with the Plan's
purpose and applicable law. No fractional shares of Common Stock
will be issued or accepted.
(iii) No NQSO may be exercised more than ten years after the date the
NQSO is granted.
(iv) Without limiting the foregoing, to the extent permitted by law
(including relevant state law):
A. the Committee may agree to accept, as full or partial
payment of the purchase price of Common Stock issued upon
the exercise of the NQSO, a promissory note of the person
exercising the NQSO evidencing the person's obligation to
make future cash payments to the Company, which promissory
note shall be payable as determined by the Company (but in
no event later than five years after the date thereof),
shall be secured by a pledge of the shares of Common Stock
purchased and shall bear interest at a rate established by
the Committee; and
B. the Committee may permit the person exercising the NQSO,
either on a selective or aggregate basis, to simultaneously
exercise the NQSO and sell the shares of Common Stock
acquired, pursuant to a brokerage or similar arrangement
approved in advance by the Committee, and use the proceeds
from sale as payment of the exercise price of the NQSO.
(b) ISOS
(i) No ISO may be granted under the Plan to a Non-Employee Director.
(ii) The aggregate Fair Market Value (determined at the time of the
grant of the Award) of the shares of Common
7
<PAGE> 24
Stock subject to ISOs which are exercisable by a Grantee for the
first time during a particular calendar year shall not exceed
$100,000. To the extent that ISOs granted to a Grantee exceed the
limitation set forth in the preceding sentence, ISOs granted last
shall be treated as NQSOs.
(iii) No ISO may be exercisable more than:
A. in the case of a Grantee who is not a Ten Percent
Shareholder, on the date the ISO is granted, ten years after
the date the ISO is granted; and
B. in the case of a Grantee who is a Ten Percent Shareholder,
on the date the ISO is granted, five years after the date
the ISO is granted.
(iv) The exercise price of any ISO shall be determined by the
Committee and shall not be less than:
A. in the case of a Grantee who is not a Ten Percent
Shareholder on the date the ISO is granted, the Fair Market
Value of the Common Stock subject to the ISO on such date;
and
B. in the case of an employee who is a Ten Percent Shareholder
on the date the ISO is granted, not less than 110 percent of
the Fair Market Value of the Common Stock subject to the ISO
on such date.
(v) The Committee may provide that the option price under an ISO may
be paid by one or more of the methods available for paying the
option price of an NQSO per Section 8.1(a)(iv).
8.2 The Committee shall specify in the stock option agreement the terms upon
which the Options shall become exercisable.
SECTION 9
STOCK APPRECIATION RIGHTS
9.1 The amount payable with respect to each SAR shall be equal in value to the
applicable percentage of the excess, if any, of the Fair Market Value of a
share of Common Stock on the exercise date over the exercise price of the
SAR. The exercise price of the SAR shall be determined by the Committee and
shall not be less than 50% of the Fair Market Value of a share of Common
Stock on the date the SAR is granted. SARs may be granted in tandem with an
Option in which event the Grantee has the right to elect to exercise either
the SAR or the Option. Upon their election to exercise one of these Awards,
the other Award is subsequently terminated. SARs may also be granted as an
independent Award.
9.2 In the case of an SAR granted in tandem with an ISO to an employee who is a
Ten Percent Shareholder on the date of such grant, the amount payable with
respect to each SAR shall be equal in value to the applicable percentage of
the excess, if any, of the Fair Market Value of a share of Common Stock on
the exercise date over the exercise price of the SAR, which exercise price
shall not be less than 110 percent of the Fair Market Value of a share of
Common Stock on the date the SAR is granted.
9.3 The applicable percentage and exercise price shall be established by the
Committee at the time the SAR is granted.
8
<PAGE> 25
SECTION 10
RESTRICTED STOCK
10.1 Restricted Stock is Common Stock of the Company that is issued to a Grantee
at a price determined by the Committee, which price may be zero, and is
subject to restrictions on transfer and/or such other restrictions on
incidents of ownership as the Committee may determine.
10.2 The Committee shall specify in the Award agreement the terms upon which
such shares of Common Stock granted to a Grantee as an Award shall vest;
provided, however that the Grantee continues to be employed by the Company
on such date.
10.3 The Committee may, in its discretion, provide for accelerated vesting of
Restricted Stock upon the achievement of specified performance goals to be
determined by the Committee.
10.4 Grantee may make the election under Section 83(b) of the Code.
SECTION 11
PERFORMANCE AWARDS
11.1 A Performance Award granted under the Plan:
(a) may be denominated or payable in cash, Common Stock, Restricted Stock,
other securities, or other Awards; and
(b) shall confer on the holder thereof the right to receive payments, in
whole or in part, upon the achievement of such performance goals
during such performance periods as the Committee shall establish.
11.2 Subject to the terms of the Plan and any applicable Award agreement, the
performance goals to be achieved during any performance period, the length
of any performance period, the amount of any Performance Award granted and
the amount of any payment or transfer to be made pursuant to any
Performance Award shall be determined by the Committee. Such performance
goals that the Committee may select are earnings before interest and taxes,
net income, gross sales, earnings per share, return on equity, return on
investment, economic value added, divisional performance goals, etc.
SECTION 12
OTHER STOCK-BASED INCENTIVE AWARDS
12.1 The Committee may from time to time grant Awards under this Plan that
provide a Grantee the right to purchase Common Stock or units that are
valued by reference to the Fair Market Value of the Common Stock
(including, but not limited to, phantom securities or dividend equivalents)
or to receive Deferred Shares which are stock-based incentive grants in
lieu of a cash deferral of bonuses. Such Awards shall be in a form
determined by the Committee (and may include terms contingent upon a change
of control of the Company); provided that such Awards shall not be
inconsistent with the terms and purposes of the Plan.
12.2 The Committee shall determine the price of any Award and may accept any
lawful consideration.
SECTION 13
EXERCISE OF OPTIONS
13.1 The Committee may provide for the exercise of Options in installments and
upon such terms, conditions and restrictions as it may determine subject to
applicable law and the other requirements of this Plan.
13.2 The Committee may provide for termination of an Option in the case of
9
<PAGE> 26
termination of employment or directorship or any other reason.
13.3 An Option granted hereunder shall be exercisable, in whole or in part, only
by written notice delivered in person or by mail to the Secretary of the
Company at its principal office, specifying the number of shares of Common
Stock to be purchased and accompanied by payment thereof and otherwise in
accordance with the stock option agreement pursuant to which the Option was
granted.
SECTION 14
RIGHTS IN EVENT OF DEATH OR DISABILITY
14.1 If a Grantee dies or becomes subject to a Disability prior to termination
of his or her right to exercise an Option in accordance with the provisions
of his or her stock option agreement without having totally exercised the
Option, the stock option agreement may provide that the Option may be
exercised, to the extent that the shares with respect to the Option could
have been exercised by the Grantee on the date of his or her death or
Disability, by (i), in the event of the Grantee's death, the Grantee's
estate or by the person who acquired the right to exercise the Option by
bequest or inheritance or (ii), in the event of the Grantee's Disability,
the Grantee or his or her personal representative.
14.2 In the event of the Grantee's death or Disability, the Option shall not be
exercisable after the date of its expiration or more than six months from
the date of the Grantee's death or Disability, whichever first occurs.
14.3 The date of Disability of a Grantee shall be determined by the Committee.
SECTION 15
AWARD AGREEMENTS
15.1 Each Award granted under the Plan shall be evidenced by an award agreement
between the Grantee to whom the Award is granted and the Company, setting
forth the number of shares of Common Stock, SARs, or units subject to the
Award and such other terms and conditions applicable to the Award not
inconsistent with the Plan as the Committee may deem appropriate.
15.2 The award agreement for an Option shall also be referred to as a stock
option agreement.
SECTION 16
TAX WITHHOLDING
16.1 The Committee may establish such rules and procedures as it considers
desirable in order to satisfy any obligation of the Company to withhold
federal income taxes or other taxes with respect to any Award made under
the Plan. Such rules and procedures may provide:
(a) in the case of Awards paid in shares of Common Stock, the Company may
withhold shares of Common Stock otherwise issuable upon exercise of
such Award in order to satisfy withholding obligations, unless
otherwise instructed by the Grantee or unless the Committee determines
otherwise at the time of Grant; and
(b) in the case of an Award paid in cash, that the withholding obligation
shall be satisfied by withholding the applicable amount and paying the
net amount in cash to the Grantee; provided that the requirements of
the Rules, to the extent applicable, must be satisfied with regard to
any withholding pursuant to clause (a).
10
<PAGE> 27
SECTION 17
CHANGE OF CONTROL
17.1 For the purpose of the Plan, a "Change of Control" shall be deemed to have
occurred if:
(a) the Company is merged or consolidated with another corporation and as
a result of such merger or consolidation less than 50% of the
outstanding voting securities of the surviving or resulting
corporation are owned in the aggregate by the former shareholders of
the Company;
(b) the Company sells, leases or exchanges all or substantially all of its
assets to another corporation, which is not a wholly-owned Subsidiary
of the Company;
(c) any person or "group" within the meaning of Section 13(d)(3) of the
Exchange Act acquires (together with voting securities of the Company
held by such person or "group") 50% or more of the outstanding voting
securities of the Company (whether directly, indirectly, beneficially
or of record) pursuant to any transaction or combination of
transactions;
(d) there is a change of control of the Company of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Exchange Act, whether or not the
Company is then subject to such reporting requirements; or
(e) the individuals who, at the beginning of any period of twelve
consecutive months, constituted the Board of Directors cease, for any
reason, to constitute at least a majority thereof, unless the
nomination for election or election by the Company's shareholders of
each new Director of the Company was approved by a vote of at least
two-thirds of the Directors then still in office who either were
Directors at the beginning of such period or whose election or
nomination for election was previously so approved.
17.2 In the event of a Change of Control affecting the Company, except as
provided for by an Award agreement entered into between the Company and any
Grantee, all Awards that have not expired and which are then held by any
Grantee (or the person or persons to whom any deceased Grantee's rights
have been transferred) shall be assumed by the surviving or resulting
corporation, and if not assumed by the surviving or resulting corporation
of such Change of Control, all Awards shall become fully and immediately
vested and exercisable. All such Awards that are not assumed shall
terminate upon the later of (a) the effective date of the Change of
Control; of (b) the end of the notice period established by the Committee
when it notifies the Grantee in writing of the acceleration; provided that
such notice period shall provide the Grantee (or the person or persons to
whom any deceased Grantee's rights have been transferred) a minimum period
of ten (10) days to exercise his or her rights under the Award.
SECTION 18
DILUTION OR OTHER ADJUSTMENT
18.1 If the Company is a party to any merger or consolidation, or undergoes any
merger, consolidation, separation, reorganization, liquidation or the like,
the Committee shall have the power to make arrangements, which shall be
binding upon the holders of unexpired Awards, for the substitution of new
Awards for, or the assumption by another corporation of, any unexpired
Awards then outstanding hereunder.
18.2 In the event of a reclassification, stock split, combination of shares,
separation (including a spin-off), dividend on shares of the Common Stock
payable in stock or other similar change in capitalization or in
11
<PAGE> 28
the corporate structure of shares of the Common Stock, the Committee shall
conclusively determine the appropriate adjustment in the option prices of
outstanding Options, and the number and kind of shares or other securities
as to which outstanding Awards shall be exercisable, and in the aggregate
number of shares with respect to which Awards may be granted.
18.3 The number of shares reserved under the Plan shall adjust as the number of
shares of Common Stock increase as provided in Section 6.3 of this Plan.
SECTION 19
TRANSFERABILITY
19.1 No Award, other than an NQSO, shall be sold, pledged, assigned,
transferred, or encumbered by a Grantee other than by will or by the laws
of descent and distribution.
19.2 Only an NQSO may be pledged, assigned, transferred, or gifted by a Grantee
to another individual provided that the NQSO is pledged, assigned,
transferred or gifted without consideration by a Grantee, subject to such
rules as the Committee may adopt, to (i) a member of the Grantee's
immediate family, (ii) a trust solely for the benefit of the Grantee and
his or her immediate family or (iii) a partnership or limited liability
company whose only partners or members are the Grantee and his or her
Immediate Family (hereinafter referred to as the Permitted Transferee);
provided that the Committee is notified in advance in writing of the terms
and conditions of any proposed pledge, assignment, transfer, or gift and
the Committee determines that such pledge, assignment, transfer or gift
complies with the requirements of the Plan and the applicable Award
agreement.
19.3 Any pledge, assignment or gift of an Award that does not comply with the
provisions of the Plan and the applicable Award agreement shall be void and
unenforceable against the Company.
19.4 All terms and conditions of a pledged, assigned, transferred or gifted
Award shall apply to the beneficiary, executor, administrator, and
Permitted Transferee, whether one or more, of the Grantee (including the
beneficiary, executor and administrator of a permitted transferee),
including the right to amend the applicable Award agreement; provided that
the Permitted Transferee shall not pledge, assign, transfer, or gift an
Award other than by will or by the laws of descent and distribution.
SECTION 20
AMENDMENT OR TERMINATION
20.1 The Committee may at any time amend, suspend or terminate the Plan;
provided, that:
(a) no change in any Awards previously granted may be made without the
consent of the holder thereof; and
(b) no amendment, other than an amendment authorized by Section 18 or
Section 6.3, may be made increasing the aggregate number of shares of
the Common Stock with respect to which ISOs may be granted, or
changing the class of employees eligible to receive ISOs hereunder,
without the approval of the holders of a majority of the outstanding
voting shares of the Company.
SECTION 21
GENERAL PROVISIONS
21.1 No Awards may be exercised by a Grantee if such exercise, and the receipt
of cash or stock thereunder, would be, in the opinion of counsel selected
by the Company, contrary to law or the regulations of
12
<PAGE> 29
any duly constituted authority having jurisdiction over the Plan.
21.2 A bona fide leave of absence approved by a duly constituted officer of the
Company shall not be considered interruption or termination of service of
any Grantee for any purposes of the Plan or Awards granted thereunder,
except that no Awards may be granted to an Employee while he or she is on a
bona fide leave of absence.
21.3 No Grantee shall have any rights as a shareholder with respect to any
shares subject to Awards granted to him or her under the Plan prior to the
date as of which he or she is actually recorded as the holder of such
shares upon the stock records of the Company.
21.4 Nothing contained in the Plan or in an Award agreement granted thereunder
shall confer upon any Grantee any right to (i) continue in the employ of
the Company or any of its Subsidiaries or continue serving on the Board of
Directors of the Company or (ii) interfere in any way with the right of the
Company or any of its Subsidiaries to terminate the Grantee's employment at
any time or service on the Board.
21.5 Any Award agreement may provide that stock issued upon exercise of any
Awards may be subject to such restrictions, including, without limitation,
restrictions as to transferability and restrictions constituting
substantial risks of forfeiture as the Committee may determine at the time
such Award is granted.
SECTION 22
PLAN EFFECTIVE DATE
22.1 The Plan shall become effective on the date of its adoption by the Board of
Directors of the Company subject to approval of the Plan by the holders of
a majority of the outstanding voting shares of the Company within twelve
(12) months after the date of the Plan's adoption by said Board of
Directors. In the event of the failure to obtain such shareholder approval,
the Plan and any Awards granted thereunder, shall be null and void and the
Company shall have no liability thereunder.
22.2 No Award granted under the Plan shall be exercisable until such shareholder
approval has been obtained.
SECTION 23
PLAN TERMINATION
23.1 No Award may be granted under the Plan on or after December 31, 2010, but
Awards previously granted may be exercised in accordance with their terms.
13
<PAGE> 30
o Please Detach and Mail in the Envelope Provided o
Please mark your
A [X] votes as in this
example.
<TABLE>
FOR WITHHOLD
all nominees AUTHORITY
listed at right to vote for all nominees
(except as indicated listed at right.
to the contrary)
<S> <C> <C> <C>
1. ELECTION Nominees: G. Siegel
OF [ ] [ ] J. Barrett
DIRECTORS M. Ober
D. Rowley
J. Wagda
</TABLE>
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEES, WRITE THE NOMINEE'S NAME IN THE
SPACE PROVIDED BELOW.)
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. Adoption of the 2000 Long-Term Incentive
Plan with 1,000,000 shares available for [ ] [ ] [ ]
issuance.
3. To ratify the appointment of Grant Thornton,
LLP as the Company's independent accountants. [ ] [ ] [ ]
THIS PROXY WILL BE VOTED AS SPECIFIED, OR IF NO CHOICE IS SPECIFIED, WILL BE
VOTED FOR THE FIVE NOMINEES FOR ELECTION AND FOR ITEMS 2 AND 3.
STOCKHOLDERS ARE URGED TO MARK, DATE, SIGN AND RETURN THIS PROXY IN THE ENVELOPE
PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<TABLE>
<S> <C> <C>
Signatures(s) DATE , 2000
---------------------------- ------------------------------------- ----------------
SIGNATURE IF HELD JOINTLY
NOTE: (Please sign exactly as your name appears. When shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by president or other authorized officer, if a
partnership please sign in partnership name by authorized person.)
</TABLE>
<PAGE> 31
PROXY PROXY
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS ON JUNE 22, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints George M. Siegel and Michael A. Ober, or
either of them, each with full power of substitution, as proxies of the
undersigned, to attend the Annual Meeting of Stockholders of Brightstar
Information Technology Group, Inc., to be held on Thursday, June 22, 2000, at
10:00 a.m., at the Sheraton Four Points Hotel, Pleasanton, CA and any
adjournment or postponement thereof, and to vote the number of shares the
undersigned would be entitled to vote if personally present on the items set
forth on the reverse side and upon such other business as may properly come
before such meeting and any adjournment or postponement thereof:
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
