<PAGE> 1
As filed with the Securities and Exchange Commission on June 19, 1997.
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
BRIGHTPOINT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<C> <C> <C>
DELAWARE 6402 CORPORATE DRIVE 35-1778566
(State or other jurisdiction of INDIANAPOLIS, IN 46278 (IRS employer identification number)
incorporation or organization) (317) 297-6100
</TABLE>
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
J. MARK HOWELL, PRESIDENT
AND CHIEF OPERATING OFFICER
BRIGHTPOINT, INC.
6402 CORPORATE DRIVE
INDIANAPOLIS, INDIANA 46278
(317) 297-6100
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
ROBERT J. MITTMAN, ESQ. MICHAEL A. CAMPBELL, ESQ.
TENZER GREENBLATT LLP MAYER, BROWN & PLATT
405 LEXINGTON AVENUE 190 SOUTH LASALLE STREET
NEW YORK, NEW YORK 10174 CHICAGO, ILLINOIS 60603
TELEPHONE NO.: (212) 885-5000 TELEPHONE NO.: (312) 782-0600
FACSIMILE NO.: (212) 885-5001 FACSIMILE NO.: (312) 701-7711
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
- ------------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ------------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) PRICE(1) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01
per share(2).................... 4,600,000 $29.375 $135,125,000 $40,947.00
</TABLE>
- --------------------------------------------------------------------------------
(1) Calculated pursuant to Rule 457(c) based on the average of the high and low
prices reported on the Nasdaq National Market on June 13, 1997.
(2) Includes 2,200,000 shares of Common Stock offered hereby by certain
stockholders of the Company and 600,000 shares of Common Stock subject to
the Underwriters' over-allotment options.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
EXPLANATORY NOTE
This registration statement contains two forms of prospectus: one to be
used in connection with an offering in the United States and Canada (the "U.S.
Prospectus") and one to be used in a concurrent international offering outside
the United States and Canada (the "International Prospectus"). The complete U.S.
Prospectus follows immediately. Following the U.S. Prospectus are certain pages
of the International Prospectus, which include an alternate front cover page, an
alternate underwriting section and an alternate back cover page. All other pages
of the U.S. Prospectus and the International Prospectus are identical.
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JUNE 19, 1997
PROSPECTUS
4,000,000 SHARES
BRIGHTPOINT, INC.
COMMON STOCK [LOGO]
------------------------
Of the 4,000,000 shares of Common Stock of Brightpoint, Inc., a Delaware
corporation (the "Company" or "Brightpoint"), being offered hereby, 1,800,000
shares are being offered by the Company and 2,200,000 shares are being offered
by certain stockholders of the Company (the "Selling Stockholders"). The Company
will not receive any of the proceeds from the sale of shares of Common Stock by
the Selling Stockholders. See "Principal and Selling Stockholders."
Of the 4,000,000 shares of Common Stock offered hereby, 3,200,000 are being
offered initially in the United States and Canada by the U.S. Underwriters (the
"U.S. Offering") and 800,000 shares are being offered initially in a concurrent
international offering outside the United States and Canada by the International
Managers (the "International Offering," and together with the U.S. Offering, the
"Offerings"). The public offering price and the underwriting discount per share
are identical for each of the Offerings. See "Underwriting."
The Common Stock is quoted on the Nasdaq National Market under the symbol
"CELL." On June 17, 1997, the last reported sale price of the Common Stock on
the Nasdaq National Market was $31.00 per share. See "Price Range of Common
Stock."
SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
PROCEEDS TO
PRICE UNDERWRITING PROCEEDS TO SELLING
TO PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDERS
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
Per Share............... $ $ $ $
- --------------------------------------------------------------------------------------------------------------------
Total(3)................ $ $ $ $
====================================================================================================================
</TABLE>
(1) The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities, including certain
liabilities under the Securities Act of 1933, as amended. See
"Underwriting."
(2) Before deducting expenses of the Offerings payable by the Company estimated
to be $ . The Selling Stockholders will not be paying any of the
expenses of the Offerings.
(3) The Company has granted an option to the U.S. Underwriters, exercisable
within 30 days of the date hereof, to purchase up to 480,000 additional
shares of Common Stock and an option to the International Managers,
exercisable within 30 days of the date hereof, to purchase up to 120,000
additional shares of Common Stock, solely to cover over-allotments, if any.
If such options are exercised in full, the total Price to Public,
Underwriting Discount and Proceeds to Company will be $ , $ and
$ , respectively. See "Underwriting."
------------------------
The shares of Common Stock are being offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to the approval of certain legal matters by counsel for the Underwriters and to
certain other conditions. The Underwriters reserve the right to withdraw, cancel
or modify such offer and to reject orders in whole or in part. It is expected
that delivery of the shares of Common Stock will be made in New York, New York
on or about , 1997.
------------------------
MERRILL LYNCH & CO.
COWEN & COMPANY
UBS SECURITIES
SANDS BROTHERS & CO., LTD.
------------------------
The date of this Prospectus is , 1997.
<PAGE> 4
[PICTURES]
CERTAIN PERSONS PARTICIPATING IN THE OFFERINGS MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK. SUCH
TRANSACTIONS MAY INCLUDE STABILIZING, THE PURCHASE OF COMMON STOCK TO COVER
SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITING."
------------------------
IN CONNECTION WITH THE OFFERINGS, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON
THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 103 OF REGULATION M. SEE
"UNDERWRITING."
<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and the Consolidated
Financial Statements, including the notes thereto, appearing elsewhere in this
Prospectus or incorporated by reference herein. Unless the context suggests
otherwise, references in this Prospectus to the "Company" or "Brightpoint" mean
Brightpoint, Inc., its predecessors, and its subsidiaries. Except as otherwise
indicated, all information in this Prospectus assumes no exercise of the
Underwriters' over-allotment options. All dollar amounts set forth in this
Prospectus are expressed in United States dollars. See "Underwriting."
THE COMPANY
Brightpoint is a leading provider of distribution and value-added logistics
services to the wireless communications industry. The Company facilitates the
effective and efficient distribution of wireless handsets and related
accessories from leading manufacturers, under brand names such as Nokia,
Ericsson, Philips, Siemens, Motorola and Lucent Technologies, to network
operators, agents, resellers, dealers and retailers in the wireless
communications market. The Company's distribution services include purchasing,
marketing, selling, warehousing, picking, packing, shipping and "just-in-time"
delivery of wireless handsets and accessories. Its value-added logistics
services include, among others, inventory management, product fulfillment,
kitting and customized packaging, light assembly and end-user support services.
The Company is one of the largest dedicated distributors of wireless handsets
and accessories in the world, with operations centers and/or sales offices in
Australia, China, Hong Kong, the Philippines, South Africa, Sweden, the United
Kingdom and the United States, and provides its services to a customer base of
more than 10,000 network operators, manufacturers, agents, resellers, dealers
and retailers in over 75 countries and on six continents. The Company's four
regional divisions, Asia-Pacific; North America; Europe, Middle East and Africa;
and Latin America, accounted for 43%, 35%, 19% and 3%, respectively, of the
Company's net sales in the first quarter of 1997.
The Company's net sales and pro forma net income have each grown at a
compounded annual growth rate of over 50% from 1992 to 1996. During the first
quarter of 1997, the Company's net sales and net income were $199.2 million and
$5.4 million, respectively, representing increases of 76% and 119%,
respectively, when compared to net sales and pro forma net income for the same
quarter of 1996. The Company's growth in net sales has been driven primarily by
increases in worldwide demand for wireless handsets and accessories, the
Company's expansion into new geographic markets, and its increased market share
resulting from strengthening relationships with wireless manufacturers and
network operators. The Company's operating margin has also increased, due
primarily to its introduction of higher-margin value-added logistics services.
In recent years, the markets for wireless communications equipment and
services have expanded significantly. On a worldwide basis, the number of
wireless communications subscribers during the past five years increased by 52
million, or 60%, to approximately 140 million by the end of 1996. Nonetheless,
at the end of 1996, wireless penetration was estimated at a mere 16% of the
population within the United States and was still, on average, less than 2% of
the population outside of the United States, providing both the wireless
communications industry and the Company with significant opportunities for
growth. According to a leading independent industry research group, the global
wireless communications subscriber base is expected to grow by more than 250
million subscribers, to approximately 400 million subscribers, by the end of
2000.
In addition to the dramatic increase in subscribers, there are several
major trends affecting the wireless communications industry. The number of
wireless network operators has increased and is expected to continue to increase
as a result of further deregulation within the wireless communications industry,
the allocation of additional spectrum frequencies and the introduction of new
technological applications such as personal communications services ("PCS").
These new wireless networks are increasingly incorporating digital technologies,
which provide greater network capacity, more functionality, improved voice
quality and better security/privacy than analog technologies. In addition,
incumbent analog cellular network operators are gradually transitioning their
networks toward digital systems. With the opportunities presented by a rapidly
expanding market for wireless communications equipment, the transition from
analog to digital technology,
3
<PAGE> 6
and the further penetration of the mass consumer market, many additional
manufacturers are beginning to produce wireless handsets and related
accessories. The increased complexity of, and competition in, the wireless
communications industry have caused manufacturers, network operators and
resellers to focus available internal resources on their core competencies and
to outsource more of their product management functions, from distribution to
sophisticated wireless logistics services, to specialists such as the Company in
an effort to reduce costs, increase productivity and improve quality.
The Company's primary strategies for building on its position as a global
leader in providing services to the growing wireless communications industry
include: (i) capitalizing on the rapidly growing outsourcing demands of wireless
equipment manufacturers and network operators by offering them a wide variety of
distribution and value-added logistics services; (ii) expanding the Company's
worldwide presence through internal growth at existing locations, mergers and
acquisitions, joint ventures, other strategic alliances, and start-ups in new
locations; (iii) leveraging the Company's experience and expertise with new
wireless communications technologies and applications to assist its customers in
introducing new products to the market in a timely and effective manner; and
(iv) continuously improving and streamlining its systems and processes in terms
of quality, time and cost in order to establish itself as the most effective and
efficient market channel for wireless communications equipment.
THE OFFERINGS
Common Stock offered by:
The Company.................... 1,800,000 shares(1)
The Selling Stockholders....... 2,200,000 shares(2)
Common Stock to be outstanding
after the Offerings(3)............ 24,118,490 shares
Use of Proceeds..................... To repay indebtedness. See "Use of
Proceeds."
Nasdaq National Market symbol....... CELL
- ------------
(1) Of the 1,800,000 shares of Common Stock to be sold in the Offerings by the
Company, 1,440,000 shares are being offered initially in the United States
and Canada by the U.S. Underwriters and 360,000 shares are being offered
initially in a concurrent international offering outside the United States
and Canada by the International Managers. See "Underwriting."
(2) Of the 2,200,000 shares of Common Stock to be sold in the Offerings by the
Selling Stockholders, 1,760,000 shares are being offered initially in the
United States and Canada by the U.S. Underwriters and 440,000 shares are
being offering initially in a concurrent international offering outside the
United States and Canada by the International Managers. See "Underwriting."
(3) Does not include (i) an aggregate of 2,797,270 shares of Common Stock
reserved, as of June 9, 1997, for issuance upon exercise of outstanding
stock options (of which stock options to purchase 359,135 shares were
immediately exercisable), and an aggregate of 2,248,277 shares of Common
Stock reserved, as of June 9, 1997, for issuance upon exercise of stock
options available for future grant, in each case under the Company's 1994
Stock Option Plan, 1996 Stock Option Plan and Non-employee Director Stock
Option Plan (collectively, the "Stock Option Plans"), and (ii) 24,140
shares of Common Stock reserved, as of June 9, 1997, for issuance upon
exercise of outstanding and immediately exercisable warrants. See
"Management -- Stock Option Plans."
The Company was incorporated under the laws of the State of Indiana in
August 1989 under the name Wholesale Cellular USA, Inc. and reincorporated under
the laws of the State of Delaware in March 1994. In September 1995, the Company
changed its name to Brightpoint, Inc. The Company's principal executive offices
are located at 6402 Corporate Drive, Indianapolis, Indiana 46278, and its
telephone number is (317) 297-6100.
4
<PAGE> 7
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
CONSOLIDATED STATEMENT OF INCOME DATA(1):
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
--------------------------------------------------- -------------------
1992 1993 1994 1995 1996 1996 1997
------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales........................ $96,403 $151,315 $309,227 $419,149 $589,718 $112,960 $199,169
Cost of sales.................... 89,580 140,617 290,463 390,950 543,878 105,032 183,167
------- -------- -------- -------- -------- -------- --------
Gross profit..................... 6,823 10,698 18,764 28,199 45,840 7,928 16,002
Selling, general and
administrative expenses........ 4,944 7,418 11,095 14,813 20,849 3,677 8,096
------- -------- -------- -------- -------- -------- --------
Income from operations........... 1,879 3,280 7,669 13,386 24,991 4,251 7,906
Merger expenses.................. -- -- -- -- 2,750 -- --
Net investment gain(2)........... -- -- -- -- -- -- 1,432
Interest expense, net............ 38 103 164 1,383 2,118 184 1,123
------- -------- -------- -------- -------- -------- --------
Income before income taxes and
minority interest.............. 1,841 3,177 7,505 12,003 20,123 4,067 8,215
Income taxes(3).................. -- -- 1,623 3,838 7,328 1,165 2,443
------- -------- -------- -------- -------- -------- --------
Income before minority
interest....................... 1,841 3,177 5,882 8,165 12,795 2,902 5,772
Minority interest in
subsidiaries' earnings......... -- -- -- -- 1,758 -- 356
------- -------- -------- -------- -------- -------- --------
Net income(2).................... $ 1,841 $ 3,177 $ 5,882 $ 8,165 $ 11,037 $ 2,902 $ 5,416
======= ======== ======== ======== ======== ======== ========
Pro forma net income(2)(3)(4).... $ 1,114 $ 1,928 $ 4,555 $ 7,307 $ 12,622 $ 2,477 $ 5,416
======= ======== ======== ======== ======== ======== ========
Pro forma net income per
share(2)....................... $ 0.11 $ 0.19 $ 0.32 $ 0.42 $ 0.58 $ 0.12 $ 0.23
======= ======== ======== ======== ======== ======== ========
Weighted average common shares
outstanding.................... 9,891 9,891 14,276 17,226 21,594 20,595 23,187
</TABLE>
CONSOLIDATED BALANCE SHEET DATA(1):
<TABLE>
<CAPTION>
MARCH 31, 1997
-------------------------
ACTUAL AS ADJUSTED(5)
-------- --------------
<S> <C> <C>
Working capital........................................... $171,773
Total assets.............................................. 276,258
Long-term obligations..................................... 102,637
Stockholders' equity...................................... 100,498
</TABLE>
- ------------
(1) On June 7, 1996, the Company completed a merger (the "Allied Merger") with
Allied Communications, Inc., Allied Communications of Florida, Inc., Allied
Communications of Georgia, Inc., Allied Communications of Illinois, Inc. and
Allied Communications of Puerto Rico, Inc. (collectively, "Allied
Communications"), which were engaged in substantially the same business as
the Company. The transaction was accounted for using the
pooling-of-interests method and, accordingly, the Company's Consolidated
Financial Statements have been restated to reflect the consolidated balance
sheets and consolidated results of operations of both the Company and Allied
Communications as if the Allied Merger had been in effect for all periods
presented. See Note 2 of Notes to Consolidated Financial Statements.
(2) During the first quarter of 1997, the Company realized a gain, net of
transaction costs, including related bonuses to certain key employees, of
approximately $8.3 million on the sale of an equity investment. In addition,
the Company recorded $6.9 million of unrealized losses relating to other
debt and equity investments. Excluding the impact of the resulting net
investment gain of $1.4 million and related income taxes, net income and net
income per share for the quarter ended March 31, 1997 would have been $4.6
million and $0.20, respectively. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and Note 3 of Notes to
Consolidated Financial Statements.
5
<PAGE> 8
(3) Prior to consummation of the Company's initial public offering in April
1994, the stockholders of the Company had elected for the Company to be
treated as an S corporation. Accordingly, the income of the Company was
included in the stockholders' own income for tax purposes, and the Company
was subject to neither federal nor state income taxes, until the Company's
election under Subchapter S was terminated on April 14, 1994. Prior to the
Allied Merger, the stockholders of Allied Communications had also elected
treatment under Subchapter S. Concurrent with the Allied Merger, on June 7,
1996, Allied Communications' election under Subchapter S was also
terminated. Pro forma net income amounts assume that each of the Company and
Allied Communications was subject to federal and state income taxes, and
taxed at the rates then in effect, for all periods presented. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Note 1 of Notes to Consolidated Financial Statements.
(4) Excluding the after-tax effect ($2.1 million) of one-time merger expenses
incurred in connection with the Allied Merger. See Note 2 of Notes to
Consolidated Financial Statements.
(5) As adjusted to give effect to the receipt by the Company of the estimated
net proceeds from the sale of the 1,800,000 shares of Common Stock offered
by the Company in the Offerings and the anticipated application of the
estimated net proceeds therefrom. See "Use of Proceeds."
6
<PAGE> 9
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
CERTAIN STATEMENTS IN THIS PROSPECTUS AND IN THE DOCUMENTS INCORPORATED BY
REFERENCE HEREIN CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH FORWARD-LOOKING
STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS
WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY
TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FACTORS INCLUDE,
AMONG OTHERS, THE FOLLOWING: THE ABILITY TO HIRE AND RETAIN KEY PERSONNEL;
SUCCESSFUL COMPLETION AND INTEGRATION OF FUTURE ACQUISITIONS; RELATIONSHIPS WITH
AND DEPENDENCE ON THIRD-PARTY WIRELESS COMMUNICATIONS EQUIPMENT SUPPLIERS;
UNCERTAINTIES RELATING TO ECONOMIC CONDITIONS IN MARKETS IN WHICH THE COMPANY
OPERATES; UNCERTAINTIES RELATING TO GOVERNMENT AND REGULATORY POLICIES;
UNCERTAINTIES RELATING TO CUSTOMER PLANS AND COMMITMENTS; DEPENDENCE ON THE
WIRELESS COMMUNICATIONS INDUSTRY; PRICING AND AVAILABILITY OF WIRELESS
COMMUNICATIONS EQUIPMENT MATERIALS AND INVENTORIES; RAPID TECHNOLOGICAL
DEVELOPMENTS AND OBSOLESCENCE IN THE WIRELESS COMMUNICATIONS INDUSTRY; POTENTIAL
PERFORMANCE ISSUES WITH SUPPLIERS AND CUSTOMERS; GOVERNMENTAL EXPORT AND IMPORT
POLICIES; GLOBAL TRADE POLICIES; WORLDWIDE POLITICAL STABILITY AND ECONOMIC
GROWTH; THE HIGHLY COMPETITIVE ENVIRONMENT IN WHICH THE COMPANY OPERATES;
POTENTIAL ENTRY OF NEW, WELL-CAPITALIZED COMPETITORS INTO THE COMPANY'S MARKETS;
CHANGES IN THE COMPANY'S CAPITAL STRUCTURE AND COST OF CAPITAL; AND
UNCERTAINTIES INHERENT IN INTERNATIONAL OPERATIONS AND FOREIGN CURRENCY
FLUCTUATIONS. THE WORDS "BELIEVE," "EXPECT," "ANTICIPATE," "INTEND" AND "PLAN"
AND SIMILAR EXPRESSIONS IDENTIFY FORWARD-LOOKING STATEMENTS. READERS ARE
CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH
SPEAK ONLY AS OF THE DATE THE STATEMENT WAS MADE. SEE "RISK FACTORS."
RISK FACTORS
Prospective purchasers of the shares of Common Stock offered hereby should
consider carefully the specific factors set forth below as well as the other
information contained in, or incorporated by reference into, this Prospectus in
evaluating an investment in the Common Stock.
FUTURE OPERATING RESULTS
For the year ended December 31, 1996 and the three months ended March 31,
1997, 88% and 91%, respectively, of the Company's net sales consisted of
wireless handset sales, a segment of its business which operates on a
high-volume, low-margin basis. In addition, the Company's operating expenses
have increased significantly and can be expected to continue to increase
significantly in connection with the Company's expansion activities, including
the increasing provision of value-added logistics services. Accordingly, the
Company's future profitability will depend upon corresponding increases in
sales. The Company also believes that, as the number of wireless networks
increases as a result of deregulation, increased competition and the emergence
of new technologies, a growing industry emphasis on containing costs could
further reduce the gross margins realized by the Company on sales of wireless
handsets. Future events, including unanticipated expenses, increased price
competition, unfavorable general economic conditions, product returns and
recalls and uncollectible accounts receivable, could have an adverse effect on
the Company's operating results. There can be no assurance that the Company's
rate of sales growth will continue in the future or that the Company's future
operations will continue to be profitable. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and Consolidated
Financial Statements.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
Sales in markets outside of North America have accounted for an increasing
portion of the Company's net sales. For the years ended December 31, 1995 and
1996 and the three months ended March 31, 1997, net sales in markets outside of
North America represented approximately 36%, 51% and 65%, respectively, of the
Company's total net sales. The global aspect of the Company's business subjects
it to a number of additional risks, including increased credit risk, customs
duties, import quotas and other trade restrictions, potentially greater
inflationary pressures, fluctuations in foreign currency exchange rates,
shipping delays, failure or material interruption of wireless systems and
services, and international political, regulatory and economic
7
<PAGE> 10
developments, all of which could have a material adverse effect on the Company.
In addition to its facilities in the United States, the Company maintains
operations centers and/or sales offices in numerous territories and countries,
including Australia, China, Hong Kong, the Philippines, South Africa, Sweden and
the United Kingdom. The Company is therefore subject to the risks associated
with changes in the social, political, regulatory and economic conditions
inherent in foreign operations, including changes in the laws and policies that
govern foreign investment and international trade in territories and countries
where the Company currently has operations, as well as, to a lesser extent,
changes in United States laws and regulations relating to foreign investment and
trade. Any such social, political, regulatory or economic changes could expose
the Company to, among other things, the risk of wireless product supply
interruption or significant increases in wireless product prices. Accordingly,
there can be no assurance that any such changes in social, political, regulatory
or economic conditions will not have a material adverse effect on the Company.
In addition, a significant portion of the Company's sales outside the
United States are denominated in foreign currencies. Accordingly, a decrease in
the value of foreign currencies relative to the United States dollar could
result in a significant decrease in United States dollar revenues received by
the Company. Due to the number of currencies involved in the Company's
international sales and the volatility of currency exchange rates, the Company
cannot predict the effect of exchange rate fluctuations on future operating
results. On occasion, the Company enters into forward exchange, futures or
options contracts as a means of hedging its currency translation exposure;
however, the Company's management has had limited prior experience in engaging
in such transactions. Moreover, there can be no assurance that any hedging will
effectively limit the Company's exposure to a decline in operating results due
to foreign currency translation adjustments. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and Note 1 of Notes
to Consolidated Financial Statements.
RISKS RELATING TO OPERATIONS IN HONG KONG
The Company maintains an operations center and sales office in Hong Kong,
and, for the three months ended March 31, 1997, sales through the Company's Hong
Kong operations represented approximately 33% of the Company's net sales. On
July 1, 1997, sovereignty over Hong Kong will be transferred from the United
Kingdom to the People's Republic of China ("China") and Hong Kong will become a
Special Administrative Region ("SAR") of China. As provided in the Sino-British
Joint Declaration on the Question of Hong Kong and the Basic Law of the Hong
Kong SAR of China (the "Basic Law"), the Hong Kong SAR will have a high degree
of autonomy except in foreign affairs and defense. Under the Basic Law, the Hong
Kong SAR is to have its own legislature, legal and judicial systems and economic
autonomy for 50 years. There can be no assurance that there will not be an
adverse change in existing political, economic or commercial conditions in Hong
Kong or that any such change would not have a material adverse effect on the
Company's results of operations or financial condition. Furthermore, the Company
cannot predict the effect that changes in the social, economic, regulatory and
political conditions in China could have on its operations in Hong Kong. For
instance, the Company's operations in Hong Kong could be affected if the
"most-favored nation" status granted to China by the United States government
for trade and tariff purposes was terminated. Such status is currently reviewed
annually by the United States government, and the Company cannot predict whether
China will continue to receive such status in the future. The loss by China of
its "most-favored nation" status or other changes in social, economic,
regulatory or political conditions in China could have a material adverse effect
on the Company.
DEPENDENCE ON TREND TOWARD OUTSOURCING
The Company's growth depends in large part on the growing trend among
wireless equipment manufacturers, network operators and resellers to outsource
some or all of their product management functions, such as marketing,
programming, packaging, end-user fulfillment and returns management, to
specialists such as the Company. Although the Company believes that increasing
competition, deregulation and technological developments within the wireless
communications industry will continue to support this trend, there can be no
assurance that wireless equipment manufacturers and network operators will not
elect to maintain such services internally. A significant change in this trend,
or the onset of a trend in the wireless
8
<PAGE> 11
communications industry not to use, or to reduce the use of, outsourced
value-added logistics services such as those provided by the Company, could have
a material adverse effect on the Company. See "Business -- Wireless
Communications Industry," "-- Growth Strategy" and "-- Services."
DEPENDENCE ON THIRD-PARTY SUPPLIERS
The Company purchases all of the wireless handsets and accessories it sells
from third-party wireless communications equipment manufacturers, dealers and
network operators. For the years ended December 31, 1995 and 1996 and the three
months ended March 31, 1997, the Company's three largest sources of wireless
handsets and accessories, in the aggregate, accounted for approximately 38%, 62%
and 67%, respectively, of the Company's product purchases. For the year ended
December 31, 1995, the Company's three largest suppliers (Nokia, BellSouth
Cellular Corp. and Ericsson) accounted for approximately 20%, 10% and 8%,
respectively, of the Company's product sales. For the year ended December 31,
1996 and the three months ended March 31, 1997, the Company's three largest
suppliers (Nokia, Ericsson and Siemens) accounted for approximately 38%, 17% and
7%, respectively, and approximately 38%, 18% and 11%, respectively, of the
Company's product sales. The Company is dependent on the ability of its
suppliers to provide adequate inventories of currently popular brand name
products on a timely basis and on favorable pricing terms. Other than with some
of its primary suppliers, the Company does not typically maintain agreements
with its suppliers. Moreover, as is typical in the industry, the agreements
which the Company does maintain are generally non-exclusive, require the Company
to satisfy minimum purchase requirements, can be terminated on short notice and
provide for certain territorial restrictions. The Company generally purchases
products pursuant to purchase orders placed from time to time in the ordinary
course of business. Although the Company believes that its relationships with
its suppliers are satisfactory, the loss of certain of the Company's principal
suppliers or substantial price increases imposed by any such supplier, in the
absence of readily available alternative sources of supply, would have a
material adverse effect on the Company. There can be no assurance that suppliers
will continue to offer competitive products to the Company, that the Company
will be able to obtain products on favorable terms or that the Company will not
be subject to the risk of price fluctuations and periodic delays. Failure or
delay by principal suppliers in supplying competitive products to the Company on
favorable terms would materially adversely affect the Company's operating
margins and the Company's ability to obtain and deliver products on a timely and
competitive basis or at all. See "Business -- Purchasing and Supply."
INTENSE INDUSTRY COMPETITION
The markets for wireless handsets and accessories are characterized by
intense price competition and significant price erosion over the life of a
product. In addition, the wireless communications equipment distribution
industry has, in the past, been characterized by low barriers to entry. Although
entry barriers are expected to rise as the market requirement shifts from pure
distribution services to a mix of distribution services and value-added
logistics services (due to the increased infrastructure costs, expanded human
resource requirements and advanced management and information systems
capabilities that the value-added logistics services segment of the business
mandates), the Company competes and expects that it will continue to compete
with numerous well-established distributors and manufacturers of wireless
communications equipment, including the Company's suppliers, and wireless
network operators, certain of which possess greater financial and other
resources than the Company. Certain of these competitors may also market the
same or similar products directly to the Company's customers and have the
financial resources to withstand substantial price competition and to implement
extensive advertising and promotional programs, both generally and in response
to efforts by additional competitors to enter into new markets or introduce new
products. As a provider of value-added logistics services, the Company also
competes with other distributors and with logistics services companies. The
Company's ability to continue to compete successfully will be largely dependent
on its ability to maintain its current industry relationships and anticipate and
respond to various competitive factors affecting the industry, including new or
changing outsourcing requirements, new well-capitalized competitors, new
products which may be introduced, changes in consumer preferences, demographic
trends, international, national, regional and local economic conditions and
discount pricing and promotion strategies by competitors. There can be no
assurance that the Company will be able to continue to
9
<PAGE> 12
compete successfully, particularly as cellular markets mature and the Company
seeks to enter into new markets and market new products. See "Business --
Competition."
ABILITY TO MANAGE AND SUSTAIN GROWTH; RISKS ASSOCIATED WITH FUTURE ACQUISITIONS
The Company has experienced rapid international growth recently through,
among other things, a series of strategic acquisitions and anticipates that
continued growth will be driven in large part by the Company's continuing
ability to successfully acquire additional businesses or establish strategic
alliances with companies which the Company believes are compatible with its
business; secure adequate supplies of competitive products on a timely basis and
on commercially reasonable terms; continually turn its inventories and collect
its accounts receivable; and successfully develop additional, and maintain its
existing, key relationships with leading network operators and manufacturers and
dealers of wireless handsets and accessories. The Company's success in
sustaining growth will also be dependent upon its ability to hire and retain the
additional qualified management, marketing and other personnel that will be
needed to successfully manage continuing growth (including monitoring
operations, controlling costs and maintaining effective management, inventory
and credit controls). The Company's growth prospects could be adversely affected
by a decline in the wireless communications industry generally or in one of its
regional divisions in particular, either of which could result in reduction or
deferral of expenditures by prospective customers. There can be no assurance
that the Company will continue to be able to manage its expanding operations
effectively or that it will be able to maintain or accelerate its growth. In
addition, there can be no assurance that the Company will be able to make
additional acquisitions or that the Company will be able to successfully
integrate into its operations any new businesses which it may acquire. Any
inability to do so, particularly in instances in which the Company has made
significant capital investments, could have a material adverse effect on the
Company. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business."
INVENTORY OBSOLESCENCE AND TECHNOLOGICAL CHANGE
The markets for wireless communications equipment are characterized by
rapidly changing technology and evolving industry standards, often resulting in
product obsolescence or short product life cycles. Accordingly, the Company's
success is dependent upon its ability to anticipate technological changes in the
industry and to continually identify, obtain and successfully market new
products that satisfy evolving industry and customer requirements. The Company
has made increased commitments of capital to purchase product inventories.
Additional concentrations of capital in inventory increase the risk of loss from
possible inventory obsolescence. There can be no assurance that competitors or
manufacturers of wireless equipment will not market products which have
perceived or actual advantages over the Company's products or which render them
obsolete or less marketable. In addition, the use of emerging wireless
communications technologies, including wireless local loop and satellite-based
communications systems, may reduce demand for existing cellular and PCS
products. The Company also expects that companies which have developed or are
developing new technologies or products in related market segments will
commercialize technologies which compete with existing cellular and PCS
technology. Certain of such technologies, upon widespread commercial
introduction, will materially change the types of products sold by the Company
and its suppliers and result in significant price competition. There can be no
assurance that the Company's existing customers or consumers will be willing,
for financial or other reasons, to purchase new equipment necessary to utilize
these new technologies or that product obsolescence will not result in
significantly increased inventories of unsold products. Moreover, complex
hardware and software contained in new wireless handsets could contain defects
which become apparent subsequent to widespread commercial use, resulting in
product recalls and returns.
RISKS RELATING TO STRATEGIC RELATIONSHIPS AND STRATEGIC FINANCING
As part of its expansion strategy, the Company has entered into, and
intends to continue to enter into, strategic relationships and joint ventures
with wireless equipment manufacturers, network operators and other providers of
wireless communications logistics services. In connection with such strategic
relationships, the Company may enter into distribution and/or value-added
logistics services agreements with, and provide equity or debt financing to, its
strategic partners. The Company's ability to achieve profitability through such
strategic relationships will be dependent in part upon its strategic partners'
economic viability, success and motivation, and the amount of time and resources
they devote to such alliances. There can be no assurance
10
<PAGE> 13
that the Company will receive any business from future alliances, that any
business received will be significant or at the level anticipated, or that
profits, if any, received as a result of future alliances will offset any
possible losses on investments made or financing extended by the Company to
enter into its strategic relationships. A loan to, or an investment in, a
strategic partner will be subject to many of the same risks to which the
strategic partner is subject in seeking to operate and grow its businesses, and
there can be no assurance that the Company will be repaid or achieve an
acceptable return on its investment within an acceptable period, if at all. In
December 1996, the Company entered into a distribution agreement with Pocket
Communications, Inc. ("Pocket"), a PCS network operator, pursuant to which the
Company was to distribute custom wireless handsets provided by Pocket.
Simultaneous with its execution of such agreement, the Company purchased $5
million in convertible debentures of Pocket. In March 1997, Pocket filed for
protection under Chapter 11 of the United States Bankruptcy Code. Accordingly,
the Company recorded $5 million of unrealized losses in connection with its
investment in Pocket during the quarter ended March 31, 1997. A decline in the
financial prospects of strategic partners could have a material adverse effect
on the Company. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and Note 3 of Notes to Consolidated Financial
Statements.
SIGNIFICANT OUTSTANDING INDEBTEDNESS; LOAN COVENANTS AND SECURITY INTERESTS
In order to finance the Company's expanded operations, in April 1997 the
Company obtained a commitment for a new senior secured revolving line of credit
facility from The First National Bank of Chicago and Bank One, Indiana, N.A., as
co-agents for a group of banks (collectively, the "Banks"), providing for
borrowings by the Company and its subsidiaries of up to $200 million. It is
anticipated that the definitive loan documents relating to this new credit
facility will be executed in June 1997 and that such facility will replace all
of the Company's current bank credit facilities (under which the Company had
approximately $99.1 million in outstanding borrowings as of June 9, 1997). All
of the Company's assets located in the United States and 65% of the capital
stock of the Company's foreign subsidiaries will be pledged to the Banks as
collateral, and the Company will be substantially prohibited from incurring
additional indebtedness, either of which terms could, under certain
circumstances, limit the Company's ability to implement its expansion plans. In
addition to certain net worth and other financial covenants, the Company's loan
agreement with the Banks will limit or prohibit the Company, subject to certain
exceptions, from declaring or paying cash dividends, making capital
distributions or other payments to stockholders, merging or consolidating with
another corporation or selling all or substantially all of its assets. In the
event of a violation by the Company of any of its loan covenants or other
default by the Company on its obligations, the Company's indebtedness could
become immediately due and payable and the Banks could foreclose on the
Company's assets. Although the Company intends to use the proceeds of the
Offerings received by it to repay a portion of its outstanding borrowings, the
Company expects to utilize the resulting increased borrowing availability under
the new line of credit to fund its operations. There can be no assurance that
the Company will be able to comply with the terms of its pending loan agreement
with the Banks. See "Use of Proceeds" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
ACCOUNTS RECEIVABLE, COLLECTION AND CREDIT RISKS
The Company's accounts receivable, less allowance for doubtful accounts, at
December 31, 1996 and March 31, 1997 was approximately $113 million and $111
million, respectively. At March 31, 1997, the Company's allowance for doubtful
accounts was approximately $1 million, which the Company believes is currently
adequate for the size and nature of its receivables. Nevertheless, delays in
collection or uncollectibility of accounts receivable could have a material
adverse effect on the Company's liquidity and working capital position. For the
year ended December 31, 1996 and the three months ended March 31, 1997,
approximately 55% and 50%, respectively, of the Company's net sales were made on
open account terms. In connection with the Company's continued expansion, the
Company intends to offer open account terms to additional customers, which will
subject the Company to increased credit risk, particularly in the event that any
such receivables represent sales to a limited number of customers or are
concentrated in particular geographic markets, and could require the Company to
continually increase its allowance for doubtful accounts. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources."
11
<PAGE> 14
POSSIBLE FLUCTUATIONS IN OPERATING RESULTS; SEASONALITY
The Company's operating results are influenced by a number of seasonal
factors in the different countries and markets in which it operates. Such
results may vary from period to period as a result of purchasing patterns of
customers in different markets, the timing of introduction of new products by
the Company's suppliers and competitors, variations in sales by distribution
channels, product availability and pricing and other seasonal factors such as
those associated with consumer electronics and retail sales which tend to result
in increased volume in the latter part of the calendar year. While the overall
growth of the Company's business has reduced the impact of such factors on the
Company's operating results, seasonality contributes to the increase in the
Company's sales in the fourth quarter of its fiscal years. Unanticipated events,
including delays in securing adequate inventories of competitive products at the
time of peak sales, or significant decreases in sales during such periods, could
have a material adverse effect on the Company. There can be no assurance that
the foregoing factors will not result in significant fluctuations in operating
results in the future. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Results of Operations."
DEPENDENCE ON KEY PERSONNEL
The success of the Company depends in large part on the abilities and
continued services of its executive officers and other key employees. Although
the Company has entered into employment agreements with several of such officers
and employees, there can be no assurance that the Company will be able to retain
their services. The loss of executive officers or other key personnel could have
a material adverse effect on the Company. The Company also has non-compete
agreements with its executive officers and certain of its existing key
personnel; however, courts are at times reluctant to enforce such agreements. In
addition, in order to support its continued growth, the Company will be required
to effectively recruit, develop and retain additional qualified management. The
inability of the Company to attract and retain such necessary personnel could
also have a material adverse effect on the Company. See "Management."
UNCERTAINTY OF PROTECTION OF PROPRIETARY SOFTWARE
The Company's success is substantially dependent upon its proprietary
software applications relating to its information systems. The Company does not
currently hold any patents relating to its software and relies on trade secret
and copyright laws to protect its proprietary software. In addition, the Company
regularly enters into non-disclosure agreements with its key employees and
limits access to and distribution of its trade secrets and other proprietary
information. There can be no assurance that these measures will be adequate to
prevent misappropriation of its technology or that the Company's competitors
will not independently develop technologies that are substantially equivalent or
superior to the Company's technology, thereby eliminating one of the Company's
perceived competitive advantages. In addition, the laws of some countries do not
protect the Company's proprietary rights to the same extent as do the laws of
the United States. Finally, although the Company believes that its proprietary
software has been developed independently and does not infringe upon the
proprietary rights of others, there can be no assurance that the software does
not and will not so infringe or that third parties will not assert infringement
claims against the Company in the future. See "Business -- Information Systems."
RELIANCE ON TECHNOLOGY; RISK OF BUSINESS INTERRUPTION
The Company has invested significantly in sophisticated and specialized
information systems technology and has focused on the application of this
technology to provide customized distribution and value-added logistics services
to wireless communications equipment manufacturers and network operators. The
Company anticipates that it will be necessary to continue to develop new
logistics services and enhance its information systems in order to maintain its
competitiveness. In addition, the Company's sales and marketing efforts (a large
part of which are telemarketing based) are highly dependent on its computer and
telephone equipment, and the temporary or permanent loss of such equipment or
systems through casualty or operating malfunction, or a significant increase in
the cost of telephone services that is not recoverable through an increase in
the price of the Company's services, could have a material adverse effect on the
Company. The Company's property and business interruption insurance may not
adequately compensate the Company for all
12
<PAGE> 15
losses that it may incur in any such event. See "Business -- Services," "-- Sale
and Marketing" and "-- Information Systems."
DEPENDENCE ON LABOR FORCE
The Company's distribution and value-added logistics services are labor
intensive and the Company experiences high personnel turnover. A significant
number of the Company's employees are employed on a part-time basis. A higher
turnover rate among the Company's employees would increase the Company's
recruiting and training costs and decrease operating efficiencies and
productivity. Growth in the Company's business, together with seasonal increases
in net sales, require the Company to recruit and train personnel at an
accelerated rate from time to time. There can be no assurance that the Company
will be able to continue to hire, train and retain a significant labor force of
qualified employees when needed, or at all. In addition, a significant portion
of the Company's costs consist of wages to hourly workers. An increase in hourly
wages, costs of employee benefits, employment taxes or commission rates could
have a material adverse effect on the Company. See "Business -- Employees."
POTENTIAL VOLATILITY OF PRICE OF THE COMMON STOCK
The market price of the Common Stock has risen substantially and, from time
to time, experienced significant fluctuations since the Company's initial public
offering in April 1994. The Common Stock is quoted on the Nasdaq National
Market, which market has experienced, and is likely to experience in the future,
significant price and volume fluctuations which could adversely affect the
market price of the Common Stock without regard to the operating performance of
the Company. In addition, the trading price of the Common Stock could be subject
to significant fluctuations in response to actual or anticipated variations in
the Company's quarterly operating results and other factors, such as the
introduction of new services or technologies by the Company, its competitors or
its suppliers, changes in other conditions or trends in the wireless
communications industry, changes in governmental regulation, changes in
securities analysts' estimates for the Company's, or its competitors' or
industry's, future performance or general market conditions. General market
price declines or market volatility in the future, or future declines or
volatility in the prices of stocks for companies in the wireless communications
industry or the distribution or value-added logistics services sectors of the
wireless communications industry, could also affect the market price of the
Common Stock.
ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER, BY-LAW AND STOCKHOLDERS RIGHTS PLAN
PROVISIONS
The Company's Certificate of Incorporation, as amended, authorizes the
issuance of "blank check" preferred stock with such designations, rights and
preferences as may be determined from time to time by the Board of Directors.
Accordingly, the Board of Directors is empowered, without stockholder approval,
to issue preferred stock with dividend, liquidation, conversion, voting or other
rights which could adversely affect the voting power or other rights of the
holders of the Company's Common Stock. In addition, the Company's Amended and
Restated By-laws divide the Board of Directors into three classes serving
staggered three-year terms. The Company also has a Stockholders Rights Plan that
may make certain proposed acquisitions of the Company prohibitively expensive.
These charter and by-law provisions and the Stockholders Rights Plan could make
it more difficult for a stockholder to effect certain transactions and make it
more difficult for a third party to acquire, or discourage a third party from
attempting to acquire, control of the Company. As a result, such provisions
could limit the price that certain investors might be willing to pay in the
future for shares of the Company's Common Stock. See "Description of Capital
Stock -- Preferred Stock" and "-- Anti-Takeover Effects of Certain Provisions of
the Company's By-laws, Stockholders Rights Plan and Delaware Corporate Law."
POSSIBLE MEDICAL RISKS ASSOCIATED WITH WIRELESS HANDSETS
Recent lawsuits have been filed against manufacturers of wireless handsets
alleging possible medical risks, including brain cancer, associated with
electromagnetic fields emitted by wireless hand-held cellular telephones. To
date, there has been only limited research in this area, and such research has
not been conclusive as to what effects, if any, exposure to electromagnetic
fields emitted by wireless handsets has on
13
<PAGE> 16
human cells. The Company recognizes, however, that the perception that health
risks may exist could adversely affect the Company's ability to market wireless
handsets. Inasmuch as substantially all of the Company's revenues are derived,
either directly or indirectly, from sales of wireless handsets, future studies
finding possible health risks associated with the use of such products could
have a material adverse effect on the wireless communications industry and the
Company. As a distributor of wireless handsets, the Company may be subject to
lawsuits filed by plaintiffs alleging health risks. A successful claim against
the Company could have a material adverse effect on the Company.
SHARES ELIGIBLE FOR FUTURE SALE
As of June 9, 1997, the Company had stock options and warrants outstanding
for the purchase of an aggregate of 2,821,410 shares of Common Stock, of which
options and warrants outstanding for the purchase of an aggregate of 383,275
shares of Common Stock were immediately exercisable, and had registered an
aggregate of 1,209,922 shares of Common Stock underlying outstanding options and
warrants, and options available for future grant under the Company's Stock
Option Plans, under the Securities Act of 1933, as amended (the "Securities
Act"). In addition, commencing 30 days following the date of this Prospectus, a
stockholder, who is also an employee, of the Company may require the Company to
file a registration statement relating to 375,000 shares of Common Stock owned
by such stockholder and to take such reasonable steps necessary to cause the
registration statement to be declared effective. Such stockholder has agreed
that he will not sell, offer to sell, grant any option for the sale of, or
otherwise dispose of 187,500 of such shares for a period of 120 days following
the consummation of the Offerings; provided, however, that if, subsequent to
exercise of the demand registration right by the stockholder, the registration
statement relating to the stockholder's 375,000 shares of Common Stock is not
declared effective by five days prior to the public announcement of the
Company's financial results for the three months ended September 30, 1997, he
may, subject to applicable securities laws, sell up to 187,500 shares of Common
Stock commencing the day following the public announcement of the Company's
financial results for the three months ended September 30, 1997. No prediction
can be made as to the effect, if any, that future sales of shares or the
registration and/or availability of shares for sale will have on the market
price of the Common Stock prevailing from time to time. Nonetheless, sales of
substantial amounts of Common Stock upon the exercise of stock options or
warrants or otherwise, or the perception that such sales might occur, could
adversely affect prevailing market prices of the Common Stock. See "Management
- -- Stock Option Plans" and "Shares Eligible for Future Sale; Registration
Rights."
14
<PAGE> 17
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the
1,800,000 shares of Common Stock offered by the Company in the Offerings are
estimated to be approximately $ ($ if the Underwriters'
over-allotment options are exercised in full), after deduction of the
underwriting discount and estimated offering expenses payable by the Company.
The Company will not receive any proceeds from the sale of shares of Common
Stock by the Selling Stockholders.
The Company intends to use the net proceeds received by it to repay a
portion of the amounts outstanding under its pending line of credit facility
with the Banks. As of June 9, 1997, approximately $99.1 million was outstanding
under the Company's current lines of credit, which facilities will be replaced
with the Company's pending $200 million revolving line of credit from the Banks
upon its anticipated closing in June 1997. The pending line of credit is
expected to mature in June 2002 and to generally bear interest, at the Company's
option, at the applicable lending bank's corporate base rate or at the rate at
which deposits in United States dollars or Eurocurrencies are offered by banks
in the London interbank market (the "Eurodollar Rate") plus a spread ranging
from 40 to 112.5 basis points (based on a leverage ratio defined in the pending
credit agreement). Following the consummation of the Offerings, the Company
intends to utilize the resulting increased borrowing availability under the
pending line of credit as necessary in the ordinary course of business,
including for increased inventories and receivables and continued enhancement of
the Company's information systems. The Company may use a portion of such
increased borrowing availability to acquire businesses which the Company
believes are compatible with its business. While the Company regularly evaluates
possible acquisition opportunities, as of the date of this Prospectus, the
Company has no material agreements, commitments, understandings or arrangements
with respect to any acquisition. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
Pending use of the net proceeds as set forth above, the Company intends to
invest the net proceeds received by it principally in United States government
securities, short-term certificates of deposit, money market funds or other
interest bearing investments.
PRICE RANGE OF COMMON STOCK
The Common Stock has been quoted on the Nasdaq National Market under the
symbol "CELL" since the Company's initial public offering in 1994. The following
table sets forth, on a per share basis, the high and low sales prices of the
Common Stock for the periods indicated, as reported by the Nasdaq National
Market.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
Year Ended December 31, 1995:
First Quarter.......................................... $ 7.63 $ 5.76
Second Quarter......................................... 9.92 7.09
Third Quarter.......................................... 9.73 8.05
Fourth Quarter......................................... 11.00 6.74
Year Ended December 31, 1996:
First Quarter.......................................... 10.67 7.20
Second Quarter......................................... 16.27 9.07
Third Quarter.......................................... 13.93 10.00
Fourth Quarter......................................... 24.20 12.27
Year Ending December 31, 1997:
First Quarter.......................................... 25.00 16.25
Second Quarter (through June 17, 1997)................. 34.88 16.00
</TABLE>
On June 17, 1997, the last reported sale price of the Common Stock on the
Nasdaq National Market was $31.00 per share. At June 17, 1997, there were
approximately 126 stockholders of record.
15
<PAGE> 18
DIVIDEND POLICY
The Company has not paid cash dividends on its Common Stock other than S
corporation distributions made to its stockholders prior to the Company's
initial public offering in April 1994 and S corporation distributions made to
the stockholders of Allied Communications prior to the Allied Merger. The Board
of Directors intends to continue a policy of retaining earnings to finance the
Company's anticipated growth and development of its business and does not expect
to declare or pay any cash dividends in the foreseeable future. In addition, the
declaration or payment of cash dividends is prohibited under the terms of the
agreements relating to the Company's current lines of credit, as well as under
the terms of its pending revolving line of credit facility with the Banks.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at March 31, 1997 and as adjusted to give effect to the sale of the
1,800,000 shares of Common Stock offered by the Company in the Offerings and the
application of the estimated net proceeds therefrom. This table should be read
in conjunction with the Company's Consolidated Financial Statements and the
notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1997
----------------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS, EXCEPT SHARE
DATA)
<S> <C> <C>
Short-term debt............................................. $ -- $ --
======== ========
Notes payable(1)............................................ $102,307 $
Stockholders' equity:
Preferred Stock, $.01 par value; 1,000,000 shares
authorized; no shares issued or outstanding............ -- --
Common Stock, $.01 par value; 100,000,000 shares
authorized(2); 22,125,596 shares issued and
outstanding; 23,925,596 shares issued and outstanding,
as adjusted(3)......................................... 221
Additional paid-in capital................................ 77,196
Retained earnings......................................... 22,950
Foreign currency translation adjustment................... 131
-------- --------
Total stockholders' equity............................. 100,498
-------- --------
Total capitalization................................... $202,805 $
======== ========
</TABLE>
- ------------
(1) Represents amounts outstanding under the Company's line of credit
facilities, all of which amounts are classified as long-term since they will
be repaid with borrowings under the Company's pending $200 million revolving
line of credit with the Banks, the earliest maturity date for which is
expected to be June 2002.
(2) Gives effect to an amendment to the Company's Certificate of Incorporation,
approved by the stockholders of the Company on April 24, 1997, increasing
the authorized number of shares of Common Stock from 25,000,000 to
100,000,000.
(3) Does not include (i) an aggregate of 57,424 shares of Common Stock issued
during the period commencing as of April 1, 1997 and ending as of June 9,
1997 upon the exercise of warrants and stock options granted under the
Company's Stock Option Plans; (ii) an aggregate of 135,470 shares of Common
Stock issued in April 1997 in connection with the Company's acquisition of
the remaining 20% ownership interests in Brightpoint (UK) Limited and
Brightpoint Australia Pty Ltd.; (iii) an aggregate of 2,797,270 shares of
Common Stock reserved, as of June 9, 1997, for issuance upon exercise of
outstanding stock options (of which stock options to purchase 359,135 shares
were immediately exercisable), and an aggregate of 2,248,277 shares of
Common Stock reserved, as of June 9, 1997, for issuance upon exercise of
stock options available for future grant, in each case under the Company's
Stock Option Plans; and (iv) 24,140 shares of Common Stock reserved, as of
June 9, 1997, for issuance upon exercise of outstanding and immediately
exercisable warrants. See "Management -- Stock Option Plans."
16
<PAGE> 19
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following tables set forth selected consolidated financial data for
each of the years in the five-year period ended December 31, 1996 and for the
three-month periods ended March 31, 1996 and 1997. The consolidated statement of
income data and balance sheet data for and as of the end of each of the years in
the five-year period ended December 31, 1996 are derived from the audited
Consolidated Financial Statements of the Company. The consolidated statement of
income data and balance sheet data for and as of the end of each of the
three-month periods ended March 31, 1996 and 1997 have been derived from the
unaudited Consolidated Financial Statements of the Company and, in the opinion
of management, include all adjustments (consisting of normal recurring accruals)
which are necessary to present fairly the results of operations and financial
position of the Company for the periods and at the dates indicated. The selected
consolidated financial data for the three months ended March 31, 1997 are not
necessarily indicative of the results to be expected for the full year. The
following selected consolidated financial data should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements, including the notes
thereto, appearing elsewhere in this Prospectus.
CONSOLIDATED STATEMENT OF INCOME DATA(1):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------------------------------- -------------------
1992 1993 1994 1995 1996 1996 1997
------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales............................ $96,403 $151,315 $309,227 $419,149 $589,718 $112,960 $199,169
Cost of sales........................ 89,580 140,617 290,463 390,950 543,878 105,032 183,167
------- -------- -------- -------- -------- -------- --------
Gross profit......................... 6,823 10,698 18,764 28,199 45,840 7,928 16,002
Selling, general and administrative
expenses........................... 4,944 7,418 11,095 14,813 20,849 3,677 8,096
------- -------- -------- -------- -------- -------- --------
Income from operations............... 1,879 3,280 7,669 13,386 24,991 4,251 7,906
Merger expenses...................... -- -- -- -- 2,750 -- --
Net investment gain(2)............... -- -- -- -- -- -- 1,432
Interest expense, net................ 38 103 164 1,383 2,118 184 1,123
------- -------- -------- -------- -------- -------- --------
Income before income taxes and
minority interest.................. 1,841 3,177 7,505 12,003 20,123 4,067 8,215
Income taxes(3)...................... -- -- 1,623 3,838 7,328 1,165 2,443
------- -------- -------- -------- -------- -------- --------
Income before minority interest...... 1,841 3,177 5,882 8,165 12,795 2,902 5,772
Minority interest in subsidiaries'
earnings........................... -- -- -- -- 1,758 -- 356
------- -------- -------- -------- -------- -------- --------
Net income(2)........................ $ 1,841 $ 3,177 $ 5,882 $ 8,165 $ 11,037 $ 2,902 $ 5,416
======= ======== ======== ======== ======== ======== ========
Pro forma net income(2)(3)(4)........ $ 1,114 $ 1,928 $ 4,555 $ 7,307 $ 12,622 $ 2,477 $ 5,416
======= ======== ======== ======== ======== ======== ========
Pro forma net income per share(2).... $ 0.11 $ 0.19 $ 0.32 $ 0.42 $ 0.58 $ 0.12 $ 0.23
======= ======== ======== ======== ======== ======== ========
Weighted average common shares
outstanding........................ 9,891 9,891 14,276 17,226 21,594 20,595 23,187
</TABLE>
CONSOLIDATED BALANCE SHEET DATA(1):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------- MARCH 31,
1992 1993 1994 1995 1996 1997
------- ------- ------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Working capital................................. $ 3,072 $ 7,039 $20,960 $ 62,219 $143,481 $171,773
Total assets.................................... 18,365 31,283 82,845 119,787 299,045 276,258
Long-term obligations........................... -- -- 1,346 602 79,894 102,637
Stockholders' equity............................ 2,336 3,485 20,283 64,857 94,982 100,498
</TABLE>
- ------------
(1) On June 7, 1996, the Company completed the Allied Merger. The transaction
was accounted for using the pooling-of-interests method and, accordingly,
the Company's Consolidated Financial Statements have been restated to
reflect the consolidated balance sheets and consolidated results of
operations of
17
<PAGE> 20
both the Company and Allied Communications as if the Allied Merger had been
in effect for all periods presented. See Note 2 of Notes to Consolidated
Financial Statements.
(2) During the first quarter of 1997, the Company realized a gain, net of
transaction costs, including related bonuses to certain key employees, of
approximately $8.3 million on the sale of an equity investment. In addition,
the Company recorded $6.9 million of unrealized losses relating to other
debt and equity investments. Excluding the impact of the resulting net
investment gain of $1.4 million and related income taxes, net income and net
income per share for the quarter ended March 31, 1997 would have been $4.6
million and $0.20, respectively. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and Note 3 of Notes to
Consolidated Financial Statements.
(3) Prior to consummation of the Company's initial public offering in April
1994, the stockholders of the Company had elected for the Company to be
treated as an S corporation. Accordingly, the income of the Company was
included in the stockholders' own income for tax purposes, and the Company
was subject to neither federal nor state income taxes, until the Company's
election under Subchapter S was terminated on April 14, 1994. Prior to the
Allied Merger, the stockholders of Allied Communications had also elected
treatment under Subchapter S. Concurrent with the Allied Merger, on June 7,
1996, Allied Communications's election under Subchapter S was also
terminated. Pro forma net income amounts assume that each of the Company and
Allied Communications was subject to federal and state income taxes, and
taxed at the rates then in effect, for all periods presented. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Note 1 of Notes to Consolidated Financial Statements.
(4) Excluding the after-tax effect ($2.1 million) of one-time merger expenses
incurred in connection with the Allied Merger. See Note 2 of Notes to
Consolidated Financial Statements.
18
<PAGE> 21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
This discussion and analysis should be read in conjunction with the
Consolidated Financial Statements of the Company, and the notes thereto,
included elsewhere in this Prospectus.
Effective June 7, 1996, the Company completed a merger with the Allied
Communications companies (Allied Communications, Inc., Allied Communications of
Florida, Inc., Allied Communications of Georgia, Inc., Allied Communications of
Illinois, Inc. and Allied Communications of Puerto Rico, Inc.), which were
engaged in substantially the same business as the Company. In connection with
the Allied Merger, the Company exchanged 3,796,875 newly issued shares of Common
Stock of the Company for all of the outstanding shares of common stock of Allied
Communications. The Allied Merger was accounted for using the
pooling-of-interests method and, consistent with such accounting treatment,
financial information presented herein for all periods reflects the combined
financial condition and results of operations of the Company and Allied
Communications.
Effective August 1, 1996, the Company completed the formation of
Brightpoint International Ltd. ("BIL"), a joint venture with Technology
Resources International Limited ("TRI"), owned 50% by the Company and 50% by
TRI. Pursuant to the terms of the purchase and shareholders' agreement, TRI
contributed to BIL substantially all of its assets relating to its wireless
communications business, including its interest in TRI (Europe) Limited and its
80% interest in the predecessor to Brightpoint China Limited. The Company agreed
to provide certain funding, sales opportunities and management to BIL. In
connection with the formation of BIL, the assets of TRI (Europe) Limited were
contributed to Brightpoint (UK) Limited, a majority-owned (80%) subsidiary of
BIL. In November 1996, the Company acquired TRI's 50% ownership interest in BIL
in consideration of 750,000 unregistered shares of Common Stock and $5.0 million
in cash.
In October 1996, BIL acquired the business and certain assets of Hatadicorp
Pty Ltd. ("Hatadi") based in Sydney, Australia in consideration of $2.8 million
in cash and a note payable, plus a 20% ownership interest in Brightpoint
Australia Pty Ltd. (a subsidiary of BIL). In March and April of 1997, the
Company acquired the remaining 20% ownership interests in Brightpoint China
Ltd., Brightpoint (UK) Ltd. and Brightpoint Australia Pty Ltd. for an aggregate
consideration of 232,245 unregistered shares of Common Stock and $1.5 million in
cash. In June 1997, the Company, through Brightpoint Sweden AB, a wholly-owned
subsidiary of BIL, acquired the business and net assets of Telnic AB located in
Gothenburg, Sweden in consideration of approximately $2.5 million with an
additional $300,000 payable upon execution of a key contract and up to an
additional $3.6 million depending upon the future financial performance of
Brightpoint Sweden AB.
The Company completed 5-for-4, 3-for-2 and 5-for-4 stock splits in
September 1995, December 1996 and March 1997, respectively, each in the form of
a stock dividend.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the percentage of
net sales represented by certain items reflected in the Company's statements of
income.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------- -------------------
1994 1995 1996 1996 1997
----- ----- ----- ------ ------
<S> <C> <C> <C> <C> <C>
Net sales...................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales.................................. 93.9 93.3 92.2 93.0 92.0
----- ----- ----- ----- -----
Gross profit................................... 6.1 6.7 7.8 7.0 8.0
Selling, general and administrative expenses... 3.6 3.5 3.6 3.2 4.0
----- ----- ----- ----- -----
Income from operations......................... 2.5 3.2 4.2 3.8 4.0
Merger expenses................................ -- -- 0.5 -- --
Net investment gain............................ -- -- -- -- 0.7
Interest expense, net.......................... 0.1 0.3 0.3 0.2 0.6
----- ----- ----- ----- -----
Income before income taxes and minority
interest..................................... 2.4 2.9 3.4 3.6 4.1
Income taxes................................... 0.5 1.0 1.2 1.0 1.2
----- ----- ----- ----- -----
Income before minority interest................ 1.9 1.9 2.2 2.6 2.9
Minority interest in subsidiaries' earnings.... -- -- 0.3 -- 0.2
----- ----- ----- ----- -----
Net income..................................... 1.9% 1.9% 1.9% 2.6% 2.7%
===== ===== ===== ===== =====
Pro forma net income........................... 1.5% 1.7% 2.1% 2.2% 2.7%
===== ===== ===== ===== =====
</TABLE>
19
<PAGE> 22
The Company's net sales are comprised of sales of wireless handsets, sales
of related accessories and fees generated from value-added logistics services.
The Company's value-added logistics services include, among others, inventory
management, procurement, product fulfillment, programming, light assembly,
telemarketing, private labeling, kitting and customized packaging, off-balance
sheet financing, product warranty, repair and refurbishment and end-user support
services. Although fees for these value-added logistics services represent a
relatively small percentage of net sales, their impact on the Company's gross
profit is much greater. Compensation for the Company's distribution services,
which services include purchasing, marketing, selling, warehousing, picking,
packing, shipping and "just-in-time" delivery, is built into the equipment
prices paid or offered by the Company and thus is reflected in sales of wireless
handsets and accessories.
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1997 TO THREE MONTHS ENDED MARCH
31, 1996
NET SALES. Net sales increased by 76% to $199.2 million for the three
months ended March 31, 1997 from $113.0 million for the three months ended March
31, 1996, reflecting continued strong worldwide demand for wireless handsets and
related accessories. The increase in net sales is primarily attributable to a
36% increase in handset volume and a 40% increase in the average selling price
per wireless handset. This increase in average selling price was the result of
significant sales growth in markets where sales are concentrated in higher
priced digital handsets.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
1996 1997
---- ----
<S> <C> <C>
Net sales by division:
Asia-Pacific.............................................. 10% 43%
North America............................................. 69 35
Europe, Middle East and Africa............................ 3 19
Latin America............................................. 18 3
</TABLE>
Net sales in markets outside of North America grew to 65% of total net
sales for the first three months of 1997 from 31% of total net sales for the
same period in 1996. Sales in the Company's Asia-Pacific division continued to
accelerate as the Company furthered its efforts to penetrate this large,
attractive market. Sales in the Latin America division decreased as the Company
continued to reduce its sales to other distributors. The Latin America market
has historically been covered by the Company through a network of other
distributors.
Sales of wireless handsets, sales of related accessories and fees generated
from value-added logistics services were 91%, 7% and 2%, respectively, of net
sales for the three months ended March 31, 1997. Sales of wireless handsets and
related accessories were 84% and 16%, respectively, of net sales for the three
months ended March 31, 1996.
GROSS PROFIT. Gross profit increased by 102% to $16.0 million for the three
months ended March 31, 1997 from $7.9 million for the three months ended March
31, 1996, due to increased sales and increased gross margin (8.0% for the three
months ended March 31, 1997 as compared to 7.0% for the same period in 1996).
The increase in gross margin is primarily due to an increase in the amount of
higher margin value-added logistics services provided by the Company, as well as
increased sales in certain markets, and to certain customers, from which the
Company generated higher margins. In addition, the Company continued its
disciplined effort to reduce sales to other distributors in the North and Latin
America markets as such sales have traditionally been lower margin sales for the
Company.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by 120% to $8.1 million for the three months
ended March 31, 1997 from $3.7 million for the three months ended March 31,
1996. As a percentage of net sales, selling, general and administrative expenses
increased to 4.0% for the three months ended March 31, 1997 as compared to 3.2%
for the same period in the prior year. This increase is attributable to the
Company's expanded level of operations and reflects increases in depreciation
expense relating to investments in information systems, rent expense for
expanded facilities, and compensation expense and travel costs associated with
increased international sales and marketing efforts.
20
<PAGE> 23
INCOME FROM OPERATIONS. Income from operations increased by 86% to $7.9
million for the three months ended March 31, 1997 from $4.3 million for the
three months ended March 31, 1996. This increase is primarily attributable to
increased gross profit offset partially by an increase in selling, general and
administrative expenses.
NET INCOME AND PRO FORMA NET INCOME. Net income increased by 119% to $5.4
million in the three months ended March 31, 1997 from pro forma net income of
$2.5 million in the three months ended March 31, 1996. This increase is the
result of increased income from operations, a $1.4 million net investment gain
(as described below) and a decrease in the effective income tax rate from 39.1%
in the first quarter of 1996 to 29.7% in the first quarter of 1997, partially
offset by an increase in interest expense relating to bank debt obtained for
working capital purposes and by income attributable to minority interests. The
decrease in the effective income tax rate is due primarily to increased earnings
in tax jurisdictions with lower statutory rates. Pro forma amounts for 1996
reflect a provision for income taxes for Allied Communications, which, at the
time, was not subject to income taxes.
During the first quarter of 1997, the Company realized a gain on the sale
of an equity investment it had made in CellStar Corporation. The gain, net of
transaction costs, including related bonuses to certain key employees, was
approximately $8.3 million. In addition, on March 31, 1997, Pocket filed for
protection under Chapter 11 of the U.S. Bankruptcy Code. Accordingly, the
Company recorded $6.9 million of unrealized losses on its investments in Pocket
and two smaller equity investments. Excluding the impact of the resulting net
investment gain of $1.4 million and related income taxes, net income per share
for the first quarter of 1997 would have been $0.20.
Pro forma net income per share increased by 92% to $0.23 for the three
months ended March 31, 1997 from $0.12 for the three months ended March 31,
1996. For the three months ended March 31, 1997, weighted average common shares
outstanding were approximately 23.2 million as compared to approximately 20.6
million shares for the three months ended March 31, 1996. This increase is due
primarily to shares issued in connection with the Company's acquisition of BIL
and of the minority interest in Brightpoint China Limited and the impact of the
exercise of stock options and warrants.
COMPARISON OF YEAR ENDED DECEMBER 31, 1996 TO YEAR ENDED DECEMBER 31, 1995
NET SALES. Net sales increased by 41% to $589.7 million in 1996 from $419.1
million in the prior year, as worldwide demand for wireless handsets and related
accessories continued to accelerate. The increased demand for wireless products
was fueled by increasing penetration of wireless handsets in many world markets
and by increased demand for replacement or upgraded equipment. The Company
completed its merger with Allied Communications in June 1996 and formed its
joint venture relating to BIL in August 1996. This commitment to the Europe,
Middle East and Africa, Asia-Pacific and Latin America markets, resulted in
significant sales growth in markets outside of North America. Wireless handset
volume increased by 52% in 1996 from the prior year.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------
1995 1996
----- -----
<S> <C> <C>
Net sales by division:
North America............................................. 64% 49%
Asia-Pacific.............................................. 2 21
Latin America............................................. 23 17
Europe, Middle East and Africa............................ 11 13
</TABLE>
Historically, period-to-period average selling prices for wireless handsets
have declined significantly; however, in 1996, the average selling price of
wireless handsets sold by the Company increased by approximately 3% due
primarily to an increase in sales of higher-priced digital wireless handsets.
Sales of wireless handsets, sales of related accessories and fees generated
from value-added logistics services were 88%, 11% and 1%, respectively, of net
sales for 1996. Sales of wireless handsets and related accessories were 86% and
14%, respectively, of net sales for 1995.
21
<PAGE> 24
GROSS PROFIT. Gross profit increased by 63% to $45.8 million in 1996 from
$28.2 million in 1995, due to the increase in wireless handset sales and the
increase in the gross margin (7.8% for 1996 as compared to 6.7% for 1995). The
increase in gross margin is due to the execution of the Company's strategy to
provide higher-margin value-added logistics services, as well as increased sales
of units on which the Company earned higher margins. In addition, the Company
made a concerted effort to reduce sales to other distributors in the North and
Latin America markets. Although this disciplined change in the North and Latin
America sales mix accounted for slower growth in those markets, the result was
an enhancement in the Company's gross margin.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by 41% to $20.8 million in 1996 from $14.8
million in 1995, due primarily to the increased business activities of the
Company and acquisitions which opened new markets to the Company. The Company
increased its staff in several areas during the year, including management,
operations, sales and marketing, and information systems. These staff
enhancements were necessary to support the expanded level of business generated
by the Company. This increase is also due to increases in depreciation expense
related to investments in information systems and leasehold improvements, rent
expense due to expanded facilities and various marketing costs including travel,
promotions and commissions. Selling, general and administrative expenses, as a
percentage of net sales, remained constant at 3.5%.
INCOME FROM OPERATIONS. Income from operations increased by 87% to $25.0
million in 1996 from $13.4 million in 1995. This increase is due primarily to
increases in unit sales and the Company's ability to enhance its gross profit
and hold selling, general and administrative expenses relatively constant as a
percent of net sales.
PRO FORMA NET INCOME. Pro forma net income increased by 73% to $12.6
million in 1996 from $7.3 million in 1995. This increase is a result of
increased income from operations partially offset by interest expense relating
primarily to bank debt obtained for working capital purposes and by the income
attributable to minority interests.
Generally accepted accounting principles require that certain charges
related to pooling-of-interests transactions be expensed in the period in which
the transaction is consummated. Such charges related to the Allied Merger, in
the amount of $2.1 million net of applicable taxes, were recognized as expense
in the quarter ended June 30, 1996. Pro forma amounts exclude the effect of this
one-time charge.
Prior to the Allied Merger, Allied Communications had elected to be treated
as a Subchapter S corporation and was, therefore, not subject to federal and
state income taxes. Pro forma amounts provide for income taxes on the income not
previously taxed at the corporate level.
Pro forma net income per share increased by 38% to $0.58 in 1996 from $0.42
in 1995. For 1996, weighted average common shares outstanding were approximately
21.6 million shares as compared to approximately 17.2 million shares for 1995.
This increase is due primarily to shares issued by the Company in connection
with its acquisition of TRI's 50% ownership interest in BIL in the fourth
quarter of 1996 and the impact of the exercise of stock options and warrants.
COMPARISON OF YEAR ENDED DECEMBER 31, 1995 TO YEAR ENDED DECEMBER 31, 1994
NET SALES. Net sales increased by 36% to $419.1 million in 1995 from $309.2
million in 1994 as a result of increased demand primarily in the North and Latin
America markets. Handset volume increased by 119% in 1995 compared to 1994. This
increase was partly offset by a 28% decline in average sales prices from 1994.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------
1994 1995
---- ----
<S> <C> <C>
Net sales by division:
North America............................................. 81% 64%
Latin America............................................. 13 23
Europe, Middle East and Africa............................ 6 11
Asia-Pacific.............................................. -- 2
</TABLE>
22
<PAGE> 25
GROSS PROFIT. Gross profit increased by 50% to $28.2 million in 1995 from
$18.8 million in 1994, due primarily to an increase in wireless handset sales
(6.7% for 1995 as compared to 6.1% for 1994). In addition, an increase in the
volume of higher margin accessory sales helped to enhance the gross margin.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by 34% to $14.8 million in 1995 from $11.1
million in 1994, due primarily to the increased level of business activity
generated by the Company. Expanded operations were supported by increases in
compensation expense, rent expense, travel costs and an increase in the
allowance for doubtful accounts.
INCOME FROM OPERATIONS. Income from operations increased by 75% to $13.4
million in 1995 from $7.7 million in 1994. This increase is due primarily to
increases in unit sales and the Company's ability to enhance its gross profit
and hold selling, general and administrative expenses relatively constant as a
percent of net sales.
PRO FORMA NET INCOME. Pro forma net income increased by 60% to $7.3 million
in 1995 from $4.6 million in 1994. This increase is a result of an increase in
income from operations partially offset by an increase in interest expense and
income taxes.
Pro forma net income per share increased by 31% to $0.42 in 1995 from $0.32
in 1994. For 1995, weighted average common shares outstanding were approximately
17.2 million shares as compared to approximately 14.3 million shares for 1994.
This increase is due primarily to the Company's October 1995 public offering and
the impact of the exercise of stock options and warrants outstanding.
QUARTERLY RESULTS OF OPERATIONS
The following table presents certain unaudited quarterly financial
information for each of the eight quarters in the two-year period ended March
31, 1997. In the opinion of the Company's management, this information has been
prepared on the same basis as the Consolidated Financial Statements appearing
elsewhere in this Prospectus and includes all adjustments (consisting only of
normal recurring accruals) necessary to present fairly the financial results set
forth herein. Results of operations for any previous quarter are not necessarily
indicative of results for any future period.
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------------------------------------------
JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
1995 1995 1995 1996 1996 1996
-------- ------------- ------------ --------- -------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Net sales..................... $91,921 $100,915 $129,132 $112,960 $119,896 $145,290
Cost of sales................. 85,885 94,093 119,996 105,032 111,414 133,036
------- -------- -------- -------- -------- --------
Gross profit.................. 6,036 6,822 9,136 7,928 8,482 12,254
Selling, general and
administrative expenses..... 2,871 3,712 5,147 3,677 4,090 5,105
------- -------- -------- -------- -------- --------
Income from operations........ 3,165 3,110 3,989 4,251 4,392 7,149
Merger expenses............... -- -- -- -- 2,750 --
Net investment gain........... -- -- -- -- -- --
Interest expense, net......... 496 508 97 184 439 549
------- -------- -------- -------- -------- --------
Income before income taxes and
minority interest........... 2,669 2,602 3,892 4,067 1,203 6,600
Income taxes.................. 675 894 1,369 1,165 806 2,349
------- -------- -------- -------- -------- --------
Income before minority
interest.................... 1,994 1,708 2,523 2,902 397 4,251
Minority interest in
subsidiaries' earnings...... -- -- -- -- -- 1,042
------- -------- -------- -------- -------- --------
Net income.................... $ 1,994 $ 1,708 $ 2,523 $ 2,902 $ 397 $ 3,209
======= ======== ======== ======== ======== ========
Pro forma net income.......... $ 1,724 $ 1,583 $ 2,369 $ 2,477 $ 346 $ 3,209
======= ======== ======== ======== ======== ========
As a percentage of net sales:
Net sales................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Gross profit................ 6.6 6.8 7.1 7.0 7.1 8.4
Selling, general and
administrative expenses... 3.2 3.7 4.0 3.2 3.4 3.5
Income from operations...... 3.4 3.1 3.1 3.8 3.7 4.9
Pro forma net income........ 1.9 1.6 1.8 2.2 0.3 2.2
<CAPTION>
QUARTER ENDED
------------------------
DECEMBER 31, MARCH 31,
1996 1997
------------ ---------
<S> <C> <C>
Net sales..................... $211,572 $199,169
Cost of sales................. 194,396 183,167
-------- --------
Gross profit.................. 17,176 16,002
Selling, general and
administrative expenses..... 7,977 8,096
-------- --------
Income from operations........ 9,199 7,906
Merger expenses............... -- --
Net investment gain........... -- 1,432
Interest expense, net......... 946 1,123
-------- --------
Income before income taxes and
minority interest........... 8,253 8,215
Income taxes.................. 3,008 2,443
-------- --------
Income before minority
interest.................... 5,245 5,772
Minority interest in
subsidiaries' earnings...... 716 356
-------- --------
Net income.................... $ 4,529 $ 5,416
======== ========
Pro forma net income.......... $ 4,529 $ 5,416
======== ========
As a percentage of net sales:
Net sales................... 100.0% 100.0%
Gross profit................ 8.1 8.0
Selling, general and
administrative expenses... 3.8 4.0
Income from operations...... 4.3 4.0
Pro forma net income........ 2.1 2.7
</TABLE>
23
<PAGE> 26
The Company's sales are influenced by a number of seasonal factors
associated with consumer electronics and retail sales which tend to result in
increased volume in the latter part of the calendar year. The overall growth of
the Company's business has reduced the impact of such factors on the Company's
operating results. However, seasonality contributes to the increase in the
Company's sales in the fourth quarter of its fiscal years.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary cash requirements have been to fund increased levels
of accounts receivable and inventories and to fund capital expenditures. The
Company has historically satisfied its working capital requirements principally
through cash flow from operations, vendor financing, bank borrowings and the
issuance of equity securities.
In April 1994, the Company consummated an initial public offering of its
Common Stock, pursuant to which the Company received net proceeds of
approximately $12.1 million. The offering provided additional working capital to
fund the Company's growth and to facilitate additional opportunities.
In October 1995, the Company consummated a public offering of Common Stock
pursuant to which the Company received net proceeds of approximately $33.5
million. The net proceeds were utilized to repay amounts outstanding on the
Company's line of credit, fund capital expenditures associated with its
information systems and new corporate headquarters, and provide working capital
for acquisitions and general corporate purposes.
At March 31, 1997, the Company had working capital of approximately $171.8
million compared to working capital of approximately $143.5 million at December
31, 1996. The increase in working capital is primarily attributable to a
decrease in accounts payable. This increase was funded by an increase in bank
borrowings and the sale of the Company's investment in CellStar Corporation. The
Company also generated working capital through the exercise of stock options.
Net cash used by operating activities was approximately $32.5 million for
the three months ended March 31, 1997, as compared to approximately $9.1 million
for the three months ended March 31, 1996. The increase in cash used by
operating activities for the three months ended March 31, 1997 was primarily
attributable to a decrease in accounts payable, partially offset by decreases in
accounts receivable and inventories. Net cash provided by investing activities
was approximately $12.3 million for the three months ended March 31, 1997, as
compared to net cash used by investing activities of approximately $2.7 million
for the three months ended March 31, 1996. The cash provided by investing
activities for the three months ended March 31, 1997 was primarily attributable
to the sale of the Company's investment in CellStar Corporation, partially
offset by capital expenditures relating to the purchase of information systems
equipment and software, the expansion of the Company's operations center in
Indianapolis, Indiana, the opening of its west coast operations center in
Sparks, Nevada and the continued expansion of its international operations. The
cash used by investing activities for the three months ended March 31, 1996 was
primarily attributable to capital expenditures relating to the purchase of
information systems equipment and software. Net cash provided by financing
activities was approximately $25.1 million for the three months ended March 31,
1997, as compared to approximately $11.1 million for the three months ended
March 31, 1996. The net cash provided by financing activities is primarily due
to advances against the Company's line of credit and proceeds from the exercise
of stock options. At March 31, 1997, the Company had cash and cash equivalents
of approximately $19.2 million.
On January 28, 1997, the Company amended its $75 million credit agreement
with Bank One, Indiana, N.A. ("Bank One"), as agent for a group of banks, to
increase available borrowings on the line of credit to $100 million. The amended
line of credit matures in two stages, $25 million on July 31, 1997 and $75
million on May 28, 1999, and does not include provisions for demand repayment.
Borrowings on the amended line of credit bear interest, payable monthly, at Bank
One's prime rate less 100 basis points to plus 25 basis points or at LIBOR plus
75 to 200 basis points depending upon the ratio of the Company's funded debt to
capital. The credit agreement also includes a provision to allow the Company to
guarantee bank debt of BIL in an amount not to exceed $25 million. Under this
line of credit, at March 31, 1997, there was $76.7 million outstanding, $12.2
million in letters of credit and $11.1 million remaining available.
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At March 31, 1997, BIL had a $25 million line of credit agreement with The
First National Bank of Chicago to provide working capital for the Company's
international operations. This credit agreement matures in February 1998.
Borrowings on the credit agreement were $25 million at March 31, 1997.
In April 1997, the Company obtained a commitment for a new $200 million
five-year senior secured revolving line of credit facility from Bank One and The
First National Bank of Chicago, as co-agents for a group of banks (collectively,
the "Banks"). It is anticipated that the definitive loan document relating to
this new credit facility will be executed in June 1997. The new facility is
expected to replace the two credit facilities of up to $125 million in the
aggregate referred to above. Pursuant to the terms of the commitment letter, the
new line of credit is to mature in June 2002 and generally bear interest, at the
Company's option, at the applicable lending bank's corporate base rate or at the
rate at which deposits in United States dollars or Eurocurrencies are offered by
banks in the London interbank market plus a spread ranging from 40 to 112.5
basis points (based on a leverage ratio defined in the pending credit
agreement). Unlike its prior credit facilities, the Company's new facility will
also provide it with the ability to borrow in multiple currencies and thus to
use the facility for its global working capital needs.
Substantially all of the Company's assets located in the United States,
including its inventories and receivables, and 65% of the capital stock of the
Company's foreign subsidiaries will be pledged to the Banks as collateral. In
addition to covenants requiring the maintenance of certain financial ratios, the
Company's agreement with the Banks will limit or prohibit the Company, subject
to certain exceptions, from, among other things, incurring additional
indebtedness, declaring or paying cash dividends, making capital distributions
or other payments to stockholders, merging or consolidating with another
corporation, forming subsidiaries, selling all or substantially all of its
assets, creating liens or security interests on the Company's assets, or
entering into transactions with affiliates. The Company's inability to incur
additional indebtedness could, under certain circumstances, limit the Company's
ability to expand its operations.
The Company has increasingly emphasized the sale of products on open
account terms and has purchased increased levels of inventories to support an
expanding customer base, which has resulted in increased accounts receivable
days outstanding and a decrease in inventory turns. The Company believes that
the ability to offer these credit terms provides it with a competitive
advantage.
The Company seeks to maintain an average of approximately 30 days of
inventory on hand in addition to making opportunistic spot buys. These spot buys
occur frequently at year end and can cause inventories at the end of the year to
be higher on a relative basis than at other times during the year.
At March 31, 1997, the Company's allowance for doubtful accounts was $1.1
million, which the Company believes is currently adequate for the size and
nature of its receivables. Bad debt expense accounted for less than 1.0% of the
Company's net sales for 1995, 1996 and the three months ended March 31, 1997.
Nevertheless, delays in collection or the uncollectibility of accounts
receivable could have an adverse effect on the Company's liquidity and working
capital position. In connection with the Company's expanded operations, the
Company has offered open account terms to additional customers, which subjects
the Company to increased credit risk, particularly in foreign markets. The
Company seeks to minimize losses on credit sales by closely monitoring its
customers' credit worthiness and by seeking to obtain letters of credit or
similar security in connection with certain open account sales to customers
located in foreign markets.
The Company believes that the net proceeds to be received by it from the
Offerings, together with projected cash flow from operations and existing
capital resources, including cash and borrowings available under its line of
credit, will be sufficient to satisfy the Company's anticipated working capital
requirements and expansion plans for at least 12 months following the
consummation of the Offerings. The Company had no material commitments for
capital expenditures as of June 9, 1997.
INFLATION AND FOREIGN CURRENCY
Inflation has historically not had a material effect on the Company's
operations. The Company frequently transacts business in currencies other than
its functional currency and, therefore, experiences some risk to exchange rate
fluctuations. Historically, the Company has not experienced significant exchange
rate gains or losses. Increasing trade activity in foreign markets could subject
the Company to greater inflationary pressures and more significant exchange rate
gains or losses from these arrangements.
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BUSINESS
GENERAL
Brightpoint is a leading provider of distribution and value-added logistics
services to the wireless communications industry. The Company facilitates the
effective and efficient distribution of wireless handsets and related
accessories from leading manufacturers, under brand names such as Nokia,
Ericsson, Philips, Siemens, Motorola and Lucent Technologies, to network
operators, agents, resellers, dealers and retailers in the wireless
communications market. The Company's distribution services include purchasing,
marketing, selling, warehousing, picking, packing, shipping and "just-in-time"
delivery of wireless handsets and accessories. Its value-added logistics
services include, among others, inventory management, product fulfillment,
kitting and customized packaging, light assembly and end-user support services.
The Company is one of the largest dedicated distributors of wireless handsets
and accessories in the world, with operations centers and/or sales offices in
Australia, China, Hong Kong, the Philippines, South Africa, Sweden, the United
Kingdom and the United States, and provides its services to a customer base of
more than 10,000 network operators, manufacturers, agents, resellers, dealers
and retailers, in over 75 countries and on six continents. The Company's four
regional divisions, Asia-Pacific; North America; Europe, Middle East and Africa;
and Latin America, accounted for 43%, 35%, 19% and 3%, respectively, of the
Company's net sales in the first quarter of 1997.
WIRELESS COMMUNICATIONS INDUSTRY
The wireless communications industry provides voice and data communications
primarily through cellular telephone, personal communications services ("PCS"),
personal communications networks ("PCN"), satellite, enhanced specialized mobile
radio ("ESMR") and paging services. Among other factors, economic development,
advances in systems technology and equipment, the proliferation of manufacturers
and the increased number of network operators have increased consumer acceptance
and driven dramatic increases in worldwide demand for wireless communications
equipment and services.
In recent years, the markets for wireless communications equipment and
services have expanded significantly. On a worldwide basis, the number of
wireless subscribers during the past five years increased by 52 million, or 60%,
to approximately 140 million by the end of 1996. Nonetheless, at the end of
1996, wireless penetration was estimated at a mere 16% of the population within
the United States and was still, on average, less than 2% of the population
outside of the United States (with Sweden, Hong Kong and Japan having the
highest penetration rates at about 28%, 22% and 18%, respectively, while
countries such as China and India had penetration rates of only .57% and .03%,
respectively), reflecting significant worldwide opportunities for growth within
the wireless communications industry. According to a leading independent
industry research group, the number of worldwide subscribers is expected to grow
by more than 250 million subscribers, to approximately 400 million subscribers,
by the end of 2000. The Company believes it is well positioned to take advantage
of the following major trends taking place within the industry.
NEW NETWORK OPERATORS. The number of network operators in each market has
increased and is expected to continue to increase as a result of increasing
deregulation within the wireless communications industry and the introduction of
new technological applications such as PCS and satellite-based communications
systems. For example, in the United States, prior to 1995, the United States
Federal Communications Commission (the "FCC") allowed only two network operators
to provide cellular service in any one service area. In connection with the
auctioning of PCS licenses in 1995 and 1996, the FCC permitted the addition of
up to six PCS network operators in every service area. In addition, the FCC has
awarded three mobile satellite licenses to entities that are investing in
satellites, which will enable them to provide wireless phone, data, fax and
paging on a global basis. The emergence of these, and other, new wireless
communications technologies and services is expected to increase both the number
of wireless network operators in each market and the services provided,
including seamless roaming, increased service coverage, improved signal quality
and greater data transmission capacity. This increase in the number of network
operators, together with the increased number of resellers of wireless
communication services in certain markets, is expected to intensify competition
for new and existing subscribers, driving growth in subscribers and the market
for wireless communications equipment.
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INCREASING PENETRATION OF WORLDWIDE MARKETS. The Company expects that
continuing demand for wireless services will drive increased penetration of
markets worldwide. In certain markets, such as certain Asia-Pacific and Latin
American countries, which are currently characterized by relatively low
penetration, such growth is expected to be driven by economic growth, increased
service availability and the lower cost of service compared to conventional
wireline telephony systems. In addition, certain markets such as Sweden,
Australia, Hong Kong, Japan and the United States, which are currently
characterized by higher market penetrations, are also expected to grow,
primarily as a result of increasing deregulation, the availability of additional
spectrum frequencies, the allocation of new network operator licenses, increased
competition and the emergence of new wireless technologies.
TRANSITION FROM ANALOG TO DIGITAL. The wireless communications industry has
historically provided telecommunications services primarily through analog
technology. However, new wireless networks have increasingly been built around
digital technologies, which provide increased network capacity, more
functionality, better voice quality and greater security/privacy than analog
technologies. By the time digital technologies became commercially available in
the United States during the latter part of 1996, cellular systems in the United
States had, for the most part, already been built to full capacity (using analog
technologies). Consequently, the first proponents of the new digital
technologies in the United States were the PCS network operators, as they had
not yet built costly network infrastructures. These PCS providers now compete
with incumbent cellular network operators in the United States for wireless
subscribers. In addition, incumbent analog cellular network operators in the
United States are gradually beginning to shift their subscribers toward digital
coverage, a shift that, to a great degree, has already occurred in many markets
within the Company's Asia-Pacific and Europe, Middle East and Africa divisions.
PROLIFERATION OF MANUFACTURERS. With the opportunities presented by a
rapidly expanding market for wireless communications equipment, the transition
from analog to digital technology, and the penetration of the mass consumer
market, many new manufacturers are expected to produce wireless handsets and
accessories, including certain manufacturers who have historically been
successful in providing consumer electronics to the mass consumer market. The
greater number of manufacturers is expected to heighten competition and most
likely will provide consumers with lower handset prices, broader selection and
more end-market channels, resulting in higher product turnover by end users.
OUTSOURCING. As the variety of handset models expands, digital technology
evolves and distribution migrates from the agent/dealer network to mass
retailers, incumbent cellular network operators are switching from in-house
distribution to independent distribution services in order to lower overall
costs. In order to maintain their resources for marketing, sales and customer
retention, new cellular and PCS network operators are also increasingly
outsourcing their handset distribution, fulfillment and inventory management
functions (as opposed to building distribution infrastructure and committing
limited working capital to inventory maintenance). At the same time, at the
other end of the industry, large incumbent handset manufacturers are starting to
outsource some of their channel management functions and utilize value-added
logistics services as a means of simplifying and reducing the cost of their
worldwide distribution systems. Finally, as competition increases and prices
decrease, vendors and network operators are targeting the growing consumer
segment through mass retail channels, requiring greater levels of fulfillment
services in order to address the logistical challenges of supporting mass
retailers and consumer electronics outlets.
GROWTH STRATEGY
The Company's primary strategies for building on its position as a global
leader in providing services to the growing wireless communications industry
include the following:
CAPTURE GROWING OUTSOURCING MARKET. The Company believes that increasing
government deregulation, competition and technological developments within the
wireless communications industry have caused manufacturers, network operators
and resellers to focus available internal resources on their core competencies,
and to outsource an increasing number of their product management functions to
specialists such as the Company, in an effort to reduce costs, increase
productivity and improve quality. The Company has strategically positioned
itself to capitalize on the growing trend toward outsourcing by offering a wide
variety
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of distribution and value-added logistics services that effectively and
efficiently move wireless handsets and accessories through market channels. See
"-- Services."
EXPAND WORLDWIDE PRESENCE. In the first quarter of 1997, the Company's
sales in markets outside of North America represented approximately 65% of its
total net sales, compared to 51%, 36% and 18% for the years ended December 31,
1996, 1995 and 1994, respectively. These increases are the direct result of the
Company's strategy of focusing on growing markets worldwide. In connection with
its global expansion, the Company has created an in-country presence in certain
key markets throughout the world and intends to continue to expand its
international presence through internal growth at existing locations, mergers
and acquisitions, joint ventures, other strategic alliances, and start-ups in
new locations. In the last 18 months, the Company has been able to significantly
expand its global presence through the acquisition of Allied Communications
(United States and Latin America), the acquisition of the business and net
assets of each of Technology Resources International Limited (China, Hong Kong
and United Kingdom), Hatadicorp Pty Ltd. (Australia) and Telnic AB (Sweden) and
the formation of each of Brightpoint South Africa (Pty) Limited and Brightpoint
Philippines, Inc.
LEVERAGE THE COMPANY'S EXPERIENCE AND EXPERTISE WITH NEW WIRELESS
COMMUNICATIONS TECHNOLOGIES. There are continuously new, often incompatible,
wireless communications technologies and applications being introduced into the
wireless communications market, such as wireless local loop and satellite-based
communications, which are expected to contribute to future subscriber growth.
The Company's value-added logistics capabilities are, as a result of their
versatility, flexibility and broad-based application, virtually indifferent to
changes in telecommunications technologies and should integrate well with the
needs of the manufacturers, network operators and resellers of new wireless
products and services. In addition, the Company already provides distribution
services for, and has established strong relationships with, many of the
wireless communications equipment manufacturers which the Company expects to
produce products utilizing these emerging technologies and applications,
including Nokia Mobile Phones Ltd. ("Nokia"), Ericsson Inc. ("Ericsson"),
Philips Consumer Communications ("Philips") and Siemens Ltd. ("Siemens"). As a
result, the Company believes that it is well-positioned as a provider of
distribution and value-added logistics services to participate in the
proliferation of the new wireless communications technologies and products
currently entering the market or being developed.
MAINTAIN OPERATIONAL EXCELLENCE. The Company continuously seeks to improve
and streamline its distribution and process handling systems in terms of
quality, time and cost in order to establish itself as the most effective and
efficient market channel for wireless communications equipment. The Company's
operational excellence, achieved through its business systems and procedures,
proprietary information systems, state-of-the-art facilities and strong regional
division management teams, allows the Company to develop strong relationships
with both the leading manufacturers of wireless communications equipment and its
other suppliers and customers. The Company has recently designed and implemented
a detailed business system and work flow procedures plan which the Company
believes enhances its ability to perform, and monitor the performance of, its
distribution and value-added logistics services. The Company's comprehensive
information systems, which the Company intends to integrate throughout its
global network, have given the Company the platform to develop many proprietary
solutions for its customers. These systems provide full electronic data
interchange capabilities and include proprietary modules for order fulfillment,
returns administration and a flexible service delivery system in support of the
Company's value-added logistics services. In the first quarter of 1997, the
Company completed an expansion of its state-of-the-art operations center in
Indianapolis, Indiana, increasing the total size of such facility to 182,400
square feet and giving it the capacity necessary to assemble, package and
fulfill approximately 12,000 units per day. In the first quarter of 1997, the
Company also opened an operations center in Sparks, Nevada, which together with
the Company's three other United States operations centers, gives the Company
the ability to serve every customer in the continental United States with
two-day ground rates. The Company has also entered into leases for additional
operations centers in South Africa and the Philippines, bringing to 11 the total
number of operations centers currently operated by the Company.
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SERVICES
The Company has strategically positioned itself to capitalize on the
growing trend toward outsourcing by offering distribution and value-added
logistics services that effectively and efficiently move wireless handsets and
accessories through market channels. The Company has become one of the leading
suppliers of such services due primarily to its thorough understanding of the
needs within each distribution channel and its development of the knowledge and
resources necessary to create successful solutions. The Company currently
provides services for some of the leading manufacturers, network operators (both
cellular and PCS) and resellers in the wireless communications market.
DISTRIBUTION SERVICES. The Company's distribution services include the
purchasing, marketing, selling, warehousing, picking, packing, shipping, and
"just-in-time" delivery of a broad selection of wireless communications products
from leading manufacturers. The Company continually reviews and evaluates
wireless communications products in determining the mix of products purchased
for resale and seeks to acquire distribution rights for products which the
Company believes have the potential for significant market penetration.
The products distributed by the Company include a variety of handsets
designed to work on substantially all operating platforms (including analog
platforms, such as AMPS, TACS and NMT, and digital platforms, such as GSM and
TDMA) and feature prominent brand names such as Nokia, Ericsson, Philips,
Siemens, Motorola and Lucent Technologies. For the years ended December 31, 1995
and 1996 and the three months ended March 31, 1997, approximately 86%, 88% and
91%, respectively, of the Company's net sales were derived from handset sales.
In addition, the Company distributes handset accessories, such as
batteries, battery eliminators, plug-in chargers, cases, antennas and
"hands-free" kits. Among other things, the Company purchases original equipment
manufacturer ("OEM") accessories, either prepackaged or in bulk, and resells
them "as-is"; it purchases OEM accessories in bulk and packages them according
to its customers' specifications; it purchases after-market accessories and
packages them according to its customers' specifications; and it packages and
sells OEM and after-market accessories under its own BrightLinkTM name.
Accessories typically carry higher margins than handsets. For the years ended
December 31, 1995 and 1996 and the three months ended March 31, 1997, sales of
accessories accounted for approximately 14%, 11% and 7%, respectively, of the
Company's net sales.
VALUE-ADDED LOGISTICS SERVICES. The Company's value-added logistics
services include, among others, inventory management, product fulfillment,
programming, private labeling, light assembly, telemarketing, product warranty,
repair and refurbishment and end-user support services. The Company also
procures wireless handsets and accessories for its customers using the Company's
own sources or the customers' specified vendors. In addition, the Company
performs packaging and kitting functions for its customers, whereby it receives
orders, either directly from customers or from customers' end-users, via
electronic data interchange, and then, on a "just-in-time" basis, makes shelf
ready kits in customized packaging prescribed by its customers, in satisfaction
of the orders. For certain of its customers, the Company also finances purchases
of wireless handsets and accessories up to an agreed upon credit limit. When the
Company provides such off-balance sheet financing, it assumes the financial risk
but typically not the risk of obsolescence. When the customer consigns products
to the Company for order fulfillment, the financial risk and the risk of
obsolescence both typically lie completely with the customer. Recently, the
Company has also entered into a contract to provide a network operator with a
wide range of value-added logistics services relating to its new wireless
prepaid program in South Africa, including various inventory management, product
fulfillment and switch management services, and expects to enter into similar
arrangements in the Philippines and other markets in the future.
During the three months ended March 31, 1997, the Company's fees for
value-added logistics services were approximately $4.6 million (2% of net sales)
as compared to approximately $353,000 (1% of net sales) in the second quarter of
1996 (the first quarter that the Company received fees specifically for
value-added logistics services). Because the fees for such services have much
higher margins than those associated with handset and accessory sales, they
represent a higher than proportionate percentage of the Company's operating
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profits. In addition, the Company believes that its value-added logistics
services will both expand the Company's customer base and create new revenue
streams from its existing customers.
CUSTOMERS
The Company provides distribution and value-added logistics services to a
customer base of more than 10,000 network operators, manufacturers, agents,
resellers, dealers and retailers. For the years ended December 31, 1995 and 1996
and the three months ended March 31, 1997, aggregate sales of handsets and
accessories to the Company's five largest customers accounted for approximately
17%, 15% and 20%, respectively, of the Company's net sales. During the year
ended December 31, 1996 and the three months ended March 31, 1997, no single
customer accounted for more than 7% of the Company's net sales.
The Company generally sells its products pursuant to customer purchase
orders and ships product orders received by 4:00 P.M. local time the same day.
Unless otherwise requested, substantially all of the Company's products are
delivered by common carriers within two days of receipt of customer orders.
Because orders are filled shortly after receipt, backlog is not material to the
Company's business. The Company's value-added logistics services are typically
provided pursuant to two-year, renewable agreements.
PURCHASING AND SUPPLY
The Company has established key relationships with leading manufacturers of
wireless communications equipment. The Company generally negotiates directly
with manufacturers and suppliers in order to ensure adequate inventories of
popular brand name products on favorable pricing terms. In 1996, the Company
purchased its products from more than 45 suppliers. Inventory purchases are
based on quality, price, service, customer demand, product availability and
brand name recognition. Certain of the Company's suppliers provide favorable
purchasing terms to the Company, including price protection and cooperative
advertising and marketing allowances. Product manufacturers typically provide
warranties which the Company extends to its customers.
For the years ended December 31, 1995 and 1996 and the three months ended
March 31, 1997, the Company's three largest sources of wireless handsets and
accessories in the aggregate accounted for approximately 38%, 62% and 67%,
respectively, of the Company's product purchases. For the year ended December
31, 1995, the Company's three largest suppliers (Nokia, BellSouth Cellular Corp.
and Ericsson) accounted for approximately 20%, 10% and 8%, respectively, of the
Company's product purchases. For the year ended December 31, 1996 and the three
months ended March 31, 1997, the Company's three largest suppliers (Nokia,
Ericsson and Siemens) accounted for approximately 38%, 17% and 7%, respectively,
and approximately 38%, 18% and 11%, respectively, of the Company's product
sales. For these periods, none of the Company's other suppliers accounted for
more than 10% of product purchases. Failure or delay by these or other suppliers
in supplying competitive products on favorable terms, or at all, would
materially adversely affect the Company's operating margins and the Company's
ability to obtain and deliver products on a timely and competitive basis. See
"-- Competition."
The Company maintains agreements with certain of its significant suppliers,
including Nokia, Ericsson and Philips. These agreements are generally
non-exclusive, require the Company to satisfy minimum purchase requirements and
can be terminated on short notice by either party. The Company purchases
products from other manufacturers and dealers pursuant to purchase orders placed
from time to time in the ordinary course of business. The Company generally
places orders to its suppliers by facsimile on a daily basis. Purchase orders
are typically filled within one to 21 days and products are shipped to the
Company's warehouses by common carrier. The Company believes that its
relationships with its suppliers are good.
SALES AND MARKETING
The Company's sales and marketing efforts are coordinated in each of its
four regional divisions by a Managing Director for that particular division.
Because of the service-oriented nature of the Company's business, these
executives devote a substantial amount of their time to developing and
maintaining
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relationships with the Company's customers in addition to managing the overall
operations of the division. Each division's sales offices are managed by a
Managing Director who reports to the Managing Director of the division and is
responsible for the daily sales and operations of each sales office. Each
division has telemarketers who specialize in or focus on telephone sales to a
particular type of customer (e.g. network operator, dealer, reseller, other
distributor, retailer, etc.). In addition, the Company markets its value-added
logistics services through the Managing Director in each of its four regional
divisions and through dedicated sales personnel. Including support personnel,
the Company had approximately 134 employees involved in sales and marketing at
June 9, 1997, including 30 in its Asia-Pacific division, 75 in its North
American division, 22 in its Europe, Middle East and Africa division and 7 in
its Latin America division.
The Company believes that product recognition by customers and consumers is
an important factor in the marketing of the products sold by the Company.
Accordingly, the Company promotes itself and certain of its product lines
through advertising in trade publications and attendance at international,
national and regional trade shows, as well as through direct mail solicitation,
broadcast faxing and its telemarketing activities. The Company's manufacturers
and dealers use a variety of methods to promote their products directly to
consumers, including print and media advertising based on product features.
COMPETITION
The Company operates in a highly competitive market and believes that such
competition will intensify in the future. The markets for wireless
communications products are characterized by intense price competition and
significant price erosion over the life of a product. The Company competes
principally on the basis of value (in terms of price, time and reliability),
service and product availability. The Company competes with numerous
well-established manufacturers and wholesale distributors of wireless equipment,
including the Company's customers and suppliers, as well as with wireless
network operators, including the Company's customers, and logistics service
providers, some of which possess substantially greater financial, marketing,
personnel and other resources than the Company. Certain of these competitors
have the financial resources necessary to withstand substantial price
competition and implement extensive advertising and promotional campaigns, both
generally and in response to efforts by additional competitors to enter into new
markets or introduce new products.
The wireless communications equipment distribution industry has, in the
past, been characterized by low barriers to entry. However, as the market
requirement shifts from pure distribution services to a mix of distribution
services and value-added logistics services, entry barriers are expected to rise
due to the increased cost of infrastructure, the expanded human resource
requirement and the advanced management and information systems capabilities
that the value-added logistics services segment of the business mandates. The
Company's ability to continue to compete successfully will be largely dependent
on its ability to anticipate and respond to various competitive factors
affecting the industry, including new or changing outsourcing requirements, new
products which may be introduced, changes in consumer preferences, demographic
trends, international, national, regional and local economic conditions
(particularly recessionary conditions adversely affecting consumer spending) and
discount pricing strategies and promotional activities by competitors.
In the Asia-Pacific wireless product distributor market, the Company's
primary competitors are national carriers that have retail outlets with direct
end-user access and United States and foreign-based exporters and distributors,
including CellStar Corporation ("CellStar"), Techglory International Ltd. (in
Hong Kong) and Telepacific Pty Limited (in Australia). In addition, the Company
competes for logistics fees with agents and subagents of the network operators.
Competitors of the Company in its North America division include network
operators and other dedicated wireless distributors such as CellStar and Pana
Pacific, Inc. The Company also competes with logistics service providers in its
North American operations, such as United Parcel Service of America, Inc. and
TESSCO Technologies Incorporated. In the Company's Europe, Middle East and
Africa division its competitors include wireless equipment manufacturers who
sell directly to the region's network operators and retailers, as well as the
network operators themselves and other distributors, such as 20/20 Logistics
Ltd. (formerly Caudwell Communications), European Telecom plc and Banner Twin
Choice plc. In the Latin America division the Company competes primarily with
CellStar and various other distributors.
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The markets for wireless communications products are characterized by
rapidly changing technology and evolving industry standards, often resulting in
product obsolescence or short product life cycles. Accordingly, the Company's
success is dependent upon its ability to anticipate technological changes in the
industry and to continually identify, obtain and successfully market new
products that satisfy evolving industry and customer requirements. The use of
alternative wireless technologies, including wireless local loop and
satellite-based communications systems, may reduce demand for existing cellular
and PCS products. Upon widespread commercial introduction, new wireless
technologies could materially change the types of products sold by the Company
and its suppliers and result in significant price competition. In addition,
products that reach the market outside of normal distribution channels, such as
"gray market" resales (e.g., unauthorized or illegal resales, which may avoid
applicable duties and taxes), may also have an adverse impact on the Company's
operations.
Although the Company believes that the scope and efficiency of its
value-added logistics services will provide it with a competitive advantage in
the distribution sector of the industry as well, there can be no assurance that
the Company will be able to continue to compete successfully in the future.
INFORMATION SYSTEMS
The Company's continued operational excellence will be partially dependent
on the functionality, performance and utilization of its information systems. In
the first quarter of 1996, the Company successfully implemented a comprehensive
Informix-based information system which currently maintains financial and
management controls for its operations through the use of a centralized
accounting system and a computerized management information system for its North
and Latin America divisions. Since the implementation of the system, the Company
has invested approximately $8.8 million in continued development and enhancement
of the system to provide electronic data interchange capabilities, create
proprietary solutions for its customers and provide a flexible service delivery
system in support of its value-added logistics services and intends to use
additional funds to integrate this information system throughout its four
divisions. The Company's information systems department has grown substantially
in resources, both through increased software and hardware and additional
employees. At June 9, 1997, there were 28 employees in the Company's information
systems department.
EMPLOYEES
As of June 9, 1997, the Company had 526 employees, 87 in its Asia-Pacific
division, 343 in its North America division, 75 in its Europe, Middle East and
Africa division and 21 in its Latin America division. Of these employees,
approximately 23 were in executive positions, 134 were engaged in sales and
marketing, 255 were in service operations and 114 were in administration. None
of the Company's employees are covered by a collective bargaining agreement. The
Company believes that its relations with its employees are good.
FACILITIES
The Company provides its distribution and value-added logistics services
from its operations centers. The Company's headquarters and largest operations
center are located in a 182,400 square foot facility in Indianapolis, Indiana.
This facility includes approximately 142,400 square feet of operations center
space.
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<PAGE> 35
Including this Indianapolis facility, the Company leases the following
operations centers and/or sales office facilities (for an aggregate monthly rent
of approximately $178,000):
<TABLE>
<CAPTION>
INITIAL LEASE
REGIONAL DIVISION FACILITY TYPE SQUARE FOOTAGE EXPIRATION DATE
- ----------------- ----------------- -------------- ----------------
<S> <C> <C> <C>
ASIA-PACIFIC:
Sydney, Australia........................ Operations/Sales 16,038 May 2001
Manilla, Philippines..................... Operations/Sales 11,410 May 2000
Hong Kong................................ Operations Center 1,800 August 1997
Hong Kong................................ Sales Office 1,625 April 1998
Beijing, China........................... Sales Office 1,472 December 1997
NORTH AMERICA:
Indianapolis, Indiana(1)................. Operations/Sales 182,400 December 2006
Indianapolis, Indiana.................... Operations Center 18,000 December 1998
Sparks, Nevada........................... Operations Center 65,000 February 2002
Philadelphia, Pennsylvania............... Operations Center 22,000 December 1999
EUROPE, MIDDLE EAST AND AFRICA:
Newcastle-Under-Lyme, England............ Operations/Sales 16,589 December 2001
Johannesburg, South Africa............... Operations/Sales 16,214 April 2000
Gothenburg, Sweden....................... Operations/Sales 8,123 September 1999
LATIN AMERICA:
Miami, Florida(2)........................ Operations/Sales 14,415 August 1998
</TABLE>
- ------------
(1) The lease term for approximately 92,400 square feet of this facility
expires on December 31, 2006 and for approximately 90,000 square feet
expires on January 31, 2006, each of which terms may be renewed for two
five-year periods. At the end of the initial lease term, the Company has
an option to purchase the leased premises for approximately $11.5 million.
(2) The Company's Miami, Florida office also services its North America
operations.
The Company believes that its existing facilities are adequate for its
current requirements and that suitable additional space will be available as
needed to accommodate future expansion of its operations.
33
<PAGE> 36
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors is divided into three classes serving staggered
three-year terms. Executive officers are elected by, and serve at the discretion
of, the Board of Directors. The directors and executive officers of the Company
are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Robert J. Laikin(1).................... 34 Chairman of the Board and Chief Executive Officer
J. Mark Howell(2)...................... 32 President, Chief Operating Officer and Director
T. Scott Housefield(3)................. 39 Executive Vice President, President -- Brightpoint
International Ltd. and Director
Phillip A. Bounsall.................... 36 Executive Vice President, Chief Financial Officer
and Treasurer
Steven E. Fivel........................ 36 Executive Vice President, General Counsel and
Secretary
Robert Picow(1)(4)..................... 42 Vice Chairman of the Board
Joseph Forer(2)(4)..................... 47 Director
Stephen H. Simon(2).................... 31 Director
John W. Adams(3)....................... 48 Director
Robert F. Wagner(1).................... 62 Director
Rollin M. Dick(1)...................... 65 Director
Steven B. Sands(3)..................... 38 Director
</TABLE>
- ---------------
(1) Class II director, term expires in 1999
(2) Class I director, term expires in 1998
(3) Class III director, term expires in 2000
(4) Messrs. Picow and Forer, the Selling Stockholders, will be resigning as
directors effective as of the consummation of the Offerings. The Company has
not yet identified replacement directors to fill these pending vacancies.
Mr. Forer will continue as the Company's Director of International Business
Development following the Offerings.
Robert J. Laikin, a founder of the Company, has been a director of the
Company since its inception in August 1989. Mr. Laikin has been Chairman of the
Board and Chief Executive Officer of the Company since January 1994. Mr. Laikin
was President of the Company from June 1992 until September 1996 and Vice
President and Treasurer of the Company from August 1989 until May 1992. From
July 1986 to December 1987, Mr. Laikin was Vice President and, from January 1988
to February 1993, President of Century Cellular Network, Inc., a company engaged
in the retail sale of cellular telephones and accessories.
J. Mark Howell has been a director of the Company since October 1994. Mr.
Howell has been President of the Company since September 1996, Chief Operating
Officer of the Company from September 1995 and was Executive Vice President,
Finance, Chief Financial Officer, Treasurer and Secretary of the Company from
July 1994 until September 1996. From July 1992 until joining the Company, Mr.
Howell was Corporate Controller for ADESA Corporation, a company which owns and
operates automobile auctions in the United States and Canada. Prior thereto, Mr.
Howell was a Manager with Ernst & Young LLP.
T. Scott Housefield has been a director of the Company since January 1993
and Executive Vice President since July 1994. Mr. Housefield has been President
of Brightpoint International Ltd. since its inception in August 1996. From
January 1993 to June 1994, Mr. Housefield was Chief Financial Officer of the
Company and, from January 1994 to July 1994, was Chief Operating Officer of the
Company. Prior thereto, Mr. Housefield owned and operated Housefield Marketing
Corp., a company engaged in the wholesale distribution of textiles.
Phillip A. Bounsall has been Executive Vice President, Chief Financial
Officer and Treasurer of the Company since October 1996. From March 1994 until
September 1996, Mr. Bounsall was Chief Financial Officer of Walker Information,
Inc., a provider of customer satisfaction measurement and other information
34
<PAGE> 37
services. Previously, Mr. Bounsall was a senior manager with Ernst & Young LLP,
where he worked for 12 years.
Steven E. Fivel 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 SDG Administrative Services Partnership,
L.P., an affiliate of Simon DeBartolo Group and 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.
Robert Picow has been a director of the Company and Vice Chairman of the
Board of Directors of the Company since June 1996. Mr. Picow was President of
the Company's North America division from June 1996 until October 1996. He is
currently a private investor. Prior to their merger with the Company, Mr. Picow
was a founder of Allied Communications, Inc., Allied Communications of Georgia,
Inc. and Allied Communications of Illinois, Inc. and co-founder of Allied
Communications of Florida, Inc. and Allied Communications of Puerto Rico, Inc.
Mr. Picow served as Chairman and Chief Executive Officer of Allied
Communications, Inc., Allied Communications of Illinois, Inc. and Allied
Communications of Georgia, Inc. from their inception in 1984, 1993 and 1992,
respectively.
Joseph Forer has been a director of the Company since June 1996 and the
Company's Director of International Business Development since June 1997. From
June 1996 to June 1997, Mr. Forer was the Managing Director of the Company's
Latin America division. Prior to their merger with the Company, Mr. Forer was a
co-founder of Allied Communications of Florida, Inc. and Allied Communications
of Puerto Rico, Inc., as well as President and a director of such companies from
1992 and 1994, respectively. From 1989 until joining Allied Communications, Mr.
Forer served as Executive Vice President of Cellular World, Inc., a distributor
of cellular telephone and paging equipment.
John W. Adams has been a director of the Company since April 1994. Since
October 1983, Mr. Adams has been Vice President of Browning Investments, Inc., a
commercial real estate development company. Mr. Adams is a trustee of Century
Realty Trust, a publicly-held real estate investment trust.
Robert F. Wagner has been a director of the Company since April 1994. Mr.
Wagner has been engaged in the practice of law with the firm of Lewis & Wagner
since 1973.
Stephen H. Simon has been a director of the Company since April 1994. Mr.
Simon has been President and Chief Executive Officer of Melvin Simon &
Associates, Inc., a privately-held shopping center development company, since
February 1997. From December 1993 until February 1997, Mr. Simon was Director of
Development for SDG Administrative Services Partnership, L.P., an affiliate of
Simon DeBartolo Group and a publicly held real estate investment trust. From
November 1991 to December 1993, Mr. Simon was Development Manager of Melvin
Simon & Associates, Inc.
Rollin M. Dick has been a director of the Company since April 1994. Since
February 1986, Mr. Dick has been Executive Vice President and Chief Financial
Officer of Conseco, Inc., a publicly-held life insurance holding company. Mr.
Dick is also a director of Conseco, Inc., American Life Holdings, Inc., a
publicly traded life insurance holding company, and General Acceptance
Corporation, a publicly-held automotive finance company.
Steven B. Sands has been a director of the Company since May 1994. Since
1990, Mr. Sands has been Co-Chairman and Chief Executive Officer of Sands
Brothers & Co., Ltd., an investment banking firm and one of the Representatives
for the Offerings. Mr. Sands is a director of Semiconductor Packaging Materials
Co., Inc., a semiconductor components manufacturer; Command Security Corp., a
provider of security guards; and The Village Green Bookstore, Inc., a bookstore
owner and operator, each a publicly-held company. See "Underwriting."
BOARD COMMITTEES
During the fiscal year ended December 31, 1996, the Board of Directors held
nine meetings. Six of the meetings were attended by all of the directors, either
in person or by telephone and three meetings were attended by all directors with
the exception of one meeting missed by each of Messrs. Simon, Wagner and Adams.
In addition, the Board took other action by unanimous written consent in lieu of
a meeting. The
35
<PAGE> 38
Company has a Compensation Committee of the Board of Directors comprised of
Messrs. Wagner and Adams. The Compensation Committee held three meetings during
the fiscal year ended December 31, 1996. The Company has an Audit Committee
which supervises the audit and financial procedures of the Company. The Audit
Committee is comprised of Messrs. Dick and Simon. The Audit Committee of the
Board of Directors held two meetings during the fiscal year ended December 31,
1996. The Company does not have a nominating committee.
DIRECTOR COMPENSATION
For the fiscal year ended December 31, 1996, each non-employee director
received cash compensation of $5,000 per annum and $1,500 for each meeting of
the Board of Directors attended. For the fiscal year ending December 31, 1997,
each non-employee director will receive $10,000 per annum, $2,500 for each
meeting of the Board of Directors attended, and $1,000 for each meeting of a
committee of the Board of Directors attended. The Company has adopted a
Non-employee Director Stock Option Plan (the "Director Plan") pursuant to which
non-employee directors are eligible to receive options to purchase an aggregate
of 468,750 shares. The Director Plan provides that eligible directors
automatically receive a grant of options to purchase 10,000 shares of Common
Stock upon first becoming a director and, thereafter, an annual grant, in
January of each year, of options to purchase 4,000 shares. All of such options
are granted at fair market value on the date of grant and are exercisable as to
all of the shares covered thereby commencing one year from the date of grant. To
date, the Company has granted to each of Messrs. Adams, Wagner, Simon, Dick and
Sands options to purchase 45,312 shares of Common Stock, and has granted to Mr.
Picow options to purchase 5,000 shares of Common Stock, pursuant to the Director
Plan. During the year ended December 31, 1996, the Company granted options to
purchase 7,500 shares at an exercise price of $7.94 per share (after all stock
splits) to each of Messrs. Adams, Wagner, Simon, Dick and Sands. See "-- Stock
Option Plans."
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table discloses for the periods presented the compensation
for the person who served as the Company's Chief Executive Officer and for each
of the other executive officers of the Company whose total compensation exceeded
$100,000 for the Company's fiscal year ended December 31, 1996 (the "Named
Executives"):
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION SECURITIES
---------------------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#)
- --------------------------- ---- --------------- --------------- -------------
<S> <C> <C> <C> <C>
Robert J. Laikin............................... 1996 $ 180,000 $ 200,000 375,000
Chief Executive Officer 1995 120,000 105,000 292,968
1994 67,500 100,000 117,188
J. Mark Howell................................. 1996 150,000 175,000 375,000
President and Chief Operating Officer 1995 90,000 85,000 175,780
1994 31,250 75,000 117,187
T. Scott Housefield............................ 1996 150,000 175,000 375,000
Executive Vice President 1995 90,000 60,000 58,593
1994 50,000 45,000 58,593
Phillip A. Bounsall............................ 1996 26,042(1) 125,000(2) 93,750
Executive Vice President and Chief Financial 1995 -- -- --
Officer 1994 -- -- --
</TABLE>
- ---------------
(1) Mr. Bounsall's employment with the Company commenced on October 14, 1996.
(2) Includes a signing bonus of $100,000.
36
<PAGE> 39
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information with respect to individual stock
options granted during fiscal 1996 to each of the Named Executives:
<TABLE>
<CAPTION>
% OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATES OF
SHARES GRANTED TO STOCK PRICE APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERM(2)
OPTIONS IN FISCAL PRICE EXPIRATION -------------------------
NAME GRANTED(1) YEAR ($/SH) DATE 5% 10%
---- ---------- ---------- ------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Laikin.......... 375,000 23.2% $ 12.46 10/04/01 $1,290,926 $2,852,608
J. Mark Howell............ 375,000 23.2% 12.46 10/04/01 1,290,926 2,852,608
T. Scott Housefield....... 375,000 23.2% 12.46 10/04/01 1,290,926 2,852,608
Phillip A. Bounsall....... 93,750 5.8% 12.46 10/04/01 322,731 713,152
</TABLE>
- ---------------
(1) Options were granted under the Company's 1996 Stock Option Plan and are
exercisable as to one-third of the shares covered thereby on the first,
second and third anniversaries of the date of grant. See "-- Stock Option
Plans."
(2) The potential realizable value columns of the table illustrate values that
might be realized upon exercise of the options immediately prior to their
expiration, assuming the Company's Common Stock appreciates at the
compounded rates specified over the term of the options. These numbers do
not take into account provisions of options providing for termination of
the option following termination of employment or nontransferability of the
options and do not make any provision for taxes associated with exercise.
Because actual gains will depend upon, among other things, future
performance of the Common Stock, there can be no assurance that the amounts
reflected in this table will be achieved.
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, 1996 and the value of unexercised stock options held by the Named
Executives as of December 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES DECEMBER 31, 1996 AT DECEMBER 31, 1996(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Laikin.............. -- -- 332,032 453,125 $6,067,000 $5,512,000
J. Mark Howell................ 117,188 $968,606 39,063 453,125 630,000 5,512,000
T. Scott Housefield........... -- -- 58,594 375,000 1,016,000 4,253,000
Phillip A. Bounsall........... -- -- -- 93,750 -- 1,063,000
</TABLE>
- ------------
(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.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
Section 145 of the Delaware General Corporation Law ("DGCL") contains
provisions entitling the Company's directors and officers to indemnification
from judgments, fines, amounts paid in settlement and expenses (including
attorneys' fees) actually and reasonably incurred as the result of an action,
suit or proceeding in which they may be involved by reason of having been a
director or officer of the Company. In its Certificate of Incorporation, the
Company has included a provision that limits the personal liability of its
directors to the Company or its stockholders for monetary damages arising from a
breach of their fiduciary
37
<PAGE> 40
duties as directors. This provision limits a director's liability except where
such director (i) breaches his duty of loyalty to the Company or its
stockholders, (ii) fails to act in good faith or engages in intentional
misconduct or a knowing violation of laws, (iii) authorizes payment of an
unlawful dividend or stock purchase or redemption as provided in Section 174 of
the DGCL or (iv) obtains an improper personal benefit. This provision does not
prevent the Company or its stockholders from seeking equitable remedies, such as
injunctive relief or rescission. If equitable remedies are found not to be
available to stockholders in any particular case, stockholders may not have any
effective remedy against actions taken by directors that constitute negligence
or gross negligence.
The Company's Certificate of Incorporation, as amended, also includes
provisions to the effect that (subject to certain exceptions) the Company shall,
to the maximum extent permitted from time to time under the law of the State of
Delaware, indemnify, and upon request shall reimburse expenses to, any director
or officer to the extent that such indemnification and reimbursement of expenses
is permitted under such law, as it may from time to time be in effect. In
addition, the Amended and Restated Bylaws of the Company require the Company to
indemnify, to the fullest extent permitted by law, any director, officer,
employee or agent of the Company. At present, the DGCL provides that, in order
to be entitled to indemnification, an individual must have acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
Company's best interests and, with respect to a criminal action or proceeding,
had no reasonable cause to believe that his or her conduct was unlawful.
EMPLOYMENT AGREEMENTS
The Company has entered into five-year evergreen employment agreements with
each of Messrs. Laikin, Howell and Housefield which are automatically renewable
for successive one-year periods and provide for an annual base compensation of
$200,000 and such bonuses as the Compensation Committee of the Board of
Directors may from time to time determine. If the Company provides the employee
with notice that it desires to terminate the agreement, there is a final
five-year term commencing on the date of such notice. The employment agreements
provide for employment on a full-time basis and contain a provision that the
employee will not compete or engage in a business competitive with the current
or anticipated business of the Company during the term of the employment
agreement and for a period of two years thereafter. The employment agreements
also provide that if the employee's employment is terminated under certain
circumstances, including as a result of a change of control, 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 received or earned by the employee) received from the Company
during the twelve months prior to the date of termination. 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) the actual
acquisition, or the execution of an agreement to acquire, 20% or more of the
voting securities of the Company by any person or entity not affiliated with the
respective employee (other than pursuant to a bona fide underwriting agreement
relating to a public distribution of securities of the Company), (ii) the
commencement of a tender or exchange offer for more than 20% of the voting
securities of the Company by any person or entity not affiliated with the
respective employee, (iii) the commencement of a proxy contest against
management for the election of a majority of the Board of Directors of the
Company if the group conducting the proxy contest owns, has or gains the power
to vote at least 20% of the voting securities of the Company, (iv) a vote by the
Board of Directors to merge, consolidate or sell all or substantially all of the
assets of the Company to any person or entity not affiliated with the respective
employee, or (v) the election of directors constituting a majority of the Board
of Directors who have not been nominated or approved by the respective employee.
In addition, the Company has entered into three-year evergreen employment
agreements with each of Messrs. Bounsall and Fivel which provide for an annual
base compensation of $125,000 and provide otherwise for substantially the same
terms as the employment agreements described above, except that if the
employee's employment is terminated under certain circumstances, including as a
result of a change of control, the employee will be entitled to receive
severance pay equal to three times the compensation received from the Company
during the twelve months prior to the date of termination.
38
<PAGE> 41
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company has a Compensation Committee of the Board of Directors
currently consisting of Messrs. Wagner and Adams. Decisions as to executive
compensation are made by the Board of Directors, primarily upon the
recommendation of such committee. The Board of Directors has not modified or
rejected any recommendations of the Compensation Committee as to the
compensation of the Company's executive officers. During the fiscal year ended
December 31, 1996, none of the executive officers of the Company has served on
the board of directors or the compensation committee of any other entity, any of
whose officers serves on the Company's Board of Directors or Compensation
Committee.
STOCK OPTION PLANS
In March 1994, the Company adopted the 1994 Stock Option Plan, effective
April 7, 1994, as amended in May 1995 and April 1997 (the "1994 Plan"), pursuant
to which 4,100,000 shares of Common Stock were reserved for issuance upon the
exercise of options designated as either (i) options intended to constitute
incentive stock options ("ISOs") under the Internal Revenue Code of 1986, as
amended (the "Code"), or (ii) nonqualified options. ISOs may be granted under
the 1994 Plan to employees and officers of the Company. Non-qualified options
may be granted to consultants, directors (whether or not they are employees),
employees or officers of the Company.
The 1994 Plan is intended to qualify under Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and is administered by a
committee (the "Committee") of the Board of Directors (the "Stock Option
Committee"), which currently consists of Messrs. Wagner and Adams. The Stock
Option Committee, within the limitations of the 1994 Plan, determines the
persons to whom options will be granted, the number of shares to be covered by
each option, whether the options granted are intended to be ISOs, the duration
and rate of exercise of each option, the exercise price per share and the manner
of exercise and the time, manner and form of payment upon exercise of an option.
Unless sooner terminated, the 1994 Plan will expire on April 7, 2004.
ISOs granted under the 1994 Plan may not be granted at a price less than
the fair market value of the Common Stock on the date of grant (or 110% of fair
market value in the case of persons holding 10% or more of the voting stock of
the Company). The aggregate fair market value of shares for which ISOs granted
to any employee are exercisable for the first time by such employee during any
calendar year (under all stock option plans of the Company) may not exceed
$100,000. Non-qualified options granted under the 1994 Plan may not be granted
at a price less than the fair market value of the Common Stock on the date of
grant. However, the Stock Option Committee may, in the future, adjust the
original exercise price of up to 10% of the total options available for grant
without stockholder approval. Options granted under the 1994 Plan will expire
not more than ten years from the date of grant (five years in the case of ISOs
granted to persons holding 10% or more of the voting stock of the Company). All
options granted under the 1994 Plan are not transferable during an optionee's
lifetime but are transferable at death by will or by the laws of descent and
distribution. In general, upon termination of employment of an optionee, all
options granted to such person which are not exercisable on the date of such
termination immediately terminate, and any options that are exercisable
terminate 90 days following termination of employment.
Under the 1994 Plan, the maximum number of shares that may be covered by
stock options granted to any employee of the Company shall be a maximum of 50%
of the aggregate number of shares reserved for issuance under the 1994 Plan.
Such requirement is intended to meet the exception from Section 162(m) of the
Code for performance-based compensation.
The 1994 Plan contains anti-dilution provisions authorizing appropriate
adjustments in certain circumstances. Shares of Common Stock subject to options
which expire without being exercised or which are cancelled as a result of the
cessation of employment are available for further grants. No shares of Common
Stock may be issued to any optionee until the full exercise price has been paid.
The Committee may grant individual options under the 1994 Plan with more
stringent provisions than those specified in the 1994 Plan.
39
<PAGE> 42
As of June 9, 1997, the Company has granted options to purchase an
aggregate of 2,143,285 shares under the 1994 Plan (net of forfeitures), of which
options to purchase 1,309,140 shares have been exercised. During the fiscal year
ended December 31, 1996, the Company granted five-year options to purchase an
aggregate of 217,500 (net of forfeitures) shares under the 1994 Plan, none of
which were granted to executive officers or directors of the Company.
As of July 1996, the Company adopted the 1996 Stock Option Plan (the "1996
Plan") pursuant to which employees of the Company and others are eligible to be
granted non-qualified stock options to purchase up to an aggregate of 1,875,000
shares of Common Stock. The 1996 Plan is administered by the Stock Option
Committee in the same manner in which the Committee administers the 1994 Plan.
The terms of the 1996 Plan are identical to those contained in the 1994 Plan
except that no ISOs may be granted under the 1996 Plan. As of June 9, 1997, the
Company has granted options (net of cancellations) to purchase an aggregate of
1,820,625 shares under the 1996 Plan, none of which has been exercised. During
the fiscal year ended December 31, 1996, the Company granted five and ten-year
options to purchase an aggregate of 1,403,125 shares under the 1996 Plan. Of
such options, options to purchase 375,000, 375,000, 375,000 and 93,750 shares,
respectively, were granted to Messrs. Laikin, Howell, Housefield and Bounsall at
an exercise price of $12.46 per share. During the three months ended March 31,
1997, the Company granted options to purchase 46,875 shares to Mr. Fivel under
the 1996 Plan, which options are exercisable at a price of $19.40 per share. All
of such options are exercisable as to one-third of the shares covered thereby on
the first, second and third anniversaries of the date of grant.
The Company has also adopted the Non-employee Directors Stock Option Plan
(the "Directors Plan" and, together with the 1994 Plan and the 1996 Plan, the
"Stock Option Plans"), as amended, pursuant to which non-employee directors are
eligible to receive options to purchase an aggregate of 468,750 shares. The
Director Plan provides that eligible directors automatically receive a grant of
options to purchase 10,000 shares of Common Stock at fair market value upon
first becoming a director and, thereafter, an annual grant, in January of each
year, of 4,000 options at fair market value. Each option expires five years from
the date of grant and is exercisable in full commencing one year from the date
of grant. As of June 9, 1997, the Company has granted options to purchase an
aggregate of 231,562 shares of Common Stock under the Directors Plan, of which
options to purchase 89,062 shares have been exercised.
40
<PAGE> 43
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of June 9, 1997 and as adjusted to give effect
to the sale of Common Stock offered by the Company and the Selling Stockholders
in the Offerings: (i) by each person who is known by the Company to own
beneficially more than 5% of the Company's Common Stock; (ii) by each director;
(iii) by each of the Named Executives; (iv) by all executive officers and
directors of the Company as a group; and (v) by each Selling Stockholder.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR OWNED AFTER
TO OFFERINGS(2) SHARES TO OFFERINGS(2)
-------------------- BE SOLD IN --------------------
NAME(1) NUMBER PERCENT OFFERINGS NUMBER PERCENT
------- --------- ------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C>
Robert J. Laikin............................. 500,469(3) 2.2% -- 500,469 2.1%
J. Mark Howell............................... 78,125(4) * -- 78,125 *
T. Scott Housefield.......................... 58,594(5) * -- 58,594 *
Phillip A. Bounsall.......................... --(6) * -- -- *
Robert Picow(7).............................. 2,418,999(8) 10.8% 2,000,000 418,999 1.7%
Joseph Forer(9).............................. 342,188 1.5% 200,000 142,188 *
Rollin M. Dick............................... 532,500(10) 2.4% -- 532,500 2.2%
John W. Adams................................ 16,875(11) * -- 16,875 *
Robert F. Wagner............................. 7,500(12) * -- 7,500 *
Stephen H. Simon............................. 7,500(13) * -- 7,500 *
Steven B. Sands.............................. 45,233(14) * -- 45,233 *
American Century Companies, Inc. ............ 1,282,250(15) 5.8% -- 1,282,250 5.3%
The Capital Group Companies, Inc. ........... 1,331,250(16) 6.0% -- 1,331,250 5.5%
The TCW Group, Inc. ......................... 1,196,813(17) 5.4% -- 1,196,813 5.0%
AIM Management Group, Inc. .................. 1,124,906(18) 5.0% -- 1,124,906 4.7%
All executive officers and directors as a
group (twelve persons)(19)................. 4,007,983 17.7% 2,200,000 1,807,983 7.4%
</TABLE>
- ------------
* Less than 1%.
(1) The address for each of such individuals, unless specified otherwise in a
subsequent footnote, is in care of the Company, 6402 Corporate Drive,
Indianapolis, Indiana 46278.
(2) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date hereof 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 date hereof have been exercised. Unless otherwise
indicated, the Company believes 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, subject to community property laws where
applicable.
(3) Includes: (i) 461,406 shares held by Robert J. Laikin and (ii) 39,063
shares underlying options which are exercisable within 60 days of the date
hereof. Does not include options to purchase 414,063 shares.
(4) Represents shares underlying options which are exercisable within 60 days
of the date hereof. Does not include options to purchase 414,063 shares.
(5) Does not include options to purchase 375,000 shares.
(6) Does not include options to purchase 93,750 shares.
(7) The address for Robert Picow is 2 Cartagena Drive, Boca Raton, Florida
33428.
(8) Does not include options to purchase 5,000 shares.
(9) The address for Joseph Forer is 12370 SW 64th Avenue, Miami, Florida 33156.
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<PAGE> 44
(10) Includes: (i) 492,188 shares held in the name of Rollin M. Dick and Helen
E. Dick Grantor Retained Annuity Trust II, and (ii) 40,312 shares
underlying options which are exercisable within 60 days of the date hereof.
Does not include options to purchase 5,000 shares.
(11) Represents shares underlying options which are exercisable within 60 days
of the date hereof. Does not include options to purchase 5,000 shares.
(12) Represents shares underlying options which are exercisable within 60 days
of the date hereof. Does not include options to purchase 5,000 shares.
(13) Represents shares underlying options which are exercisable within 60 days
of the date hereof. Does not include options to purchase 5,000 shares.
(14) Consists of (i) 3,750 shares held by Ponderosa Partners, L.P., of which Mr.
Sands is a controlling stockholder, officer and director of the corporate
general partner and (ii) 41,483 shares underlying options and warrants
which are exercisable within 60 days of the date hereof. Does not include
options to purchase 5,000 shares.
(15) Based on Form 13-G filed with the Commission, American Century Companies,
Inc. has sole voting and dispositive power over the shares. The address for
American Century Companies, Inc. is Twentieth Century Tower, 4500 Main
Street, Kansas City, Missouri 64111.
(16) Based on Form 13-G filed with the Commission, Capital Research and
Management Company, a wholly-owned subsidiary of the Capital Group
Companies, Inc. ("CGC"), and the SMALLCAP World Fund, Inc. have sole voting
and dispositive power over the shares. The address for CGC is 333 South
Hope Street, 52nd Floor, Los Angeles, California 90071.
(17) Based on Form 13-G filed with the Commission, Robert Day and TCW Group,
Inc. have sole voting and dispositive power over the shares. The address
for The TCW Group, Inc. is 865 South Figueroa Street, Los Angeles,
California 90017.
(18) Based on Form 13-G filed with the Commission, AIM Management Group, Inc.,
on behalf of itself and its wholly-owned subsidiaries, AIM Advisors, Inc.
and AIM Capital Management, Inc., has sole voting and dispositive power
over the shares. The address for AIM Management Group, Inc. is 11 Greenway
Plaza, Suite 1919, Houston, Texas 77046.
(19) Includes an aggregate of 272,266 shares underlying options and warrants
which are exercisable within 60 days of the date hereof, including those
listed in notes (3) through (6), (8) and (12) through (16) above.
CERTAIN TRANSACTIONS
Century Cellular Network, Inc. ("Century"), a company 50% owned by Robert
J. Laikin, Chairman of the Board of the Company, was a customer and supplier to
the Company until December 1996. For the year ended December 31, 1996, the
Company sold approximately $2.6 million of cellular telephone products to
Century and made purchases of inventory from Century of approximately $500,000.
The Company believes that sales to Century and purchases made from Century
during 1996 were made on terms no less favorable than could have been made to or
from unaffiliated third parties. At March 31, 1997, accounts receivable from
Century were approximately $572,707. Mr. Laikin has personally guaranteed the
payment of receivables due from Century.
In May 1997, in connection with the assignment from Century to the Company
of certain leasehold premises located in Indianapolis which were previously
guaranteed by Mr. Laikin, the third-party landlord under such lease released Mr.
Laikin from his personal guaranty.
In connection with the Allied Merger, the Company issued an aggregate of
3,796,875 shares of Common Stock to Messrs. Robert Picow and Joseph Forer in
exchange for all of the outstanding shares of Allied Communications' common
stock and appointed each of them as a director of the Company. Each of Messrs.
Picow and Forer is a Selling Stockholder in connection with the Offerings,
offering 2,000,000 shares and 200,000 shares, respectively, and each will resign
as a director upon the consummation of the Offerings. Mr. Forer will continue as
the Company's Director of International Business Development. The Company has
agreed to indemnify the Selling Stockholders against certain liabilities,
including certain liabilities under the
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<PAGE> 45
Securities Act, or to contribute to payments the Selling Stockholders may be
required to make in respect thereof.
In October 1996, the Company terminated an employment agreement with Robert
Picow and entered into an agreement with Mr. Picow, pursuant to which Mr. Picow
serves as Vice Chairman of the Board of Directors of the Company and receives
$10,000 per month. The term of the agreement is from October 9, 1996 until June
7, 1999. Under the agreement, Mr. Picow may not have an interest in, or render
any services to, any business competitive with the business activities of the
Company, either in any state of the United States or any country where the
Company has a subsidiary, joint venture or other entity controlled by the
Company, prior to June 7, 2001. Mr. Picow and the Company have agreed that,
effective upon the consummation of the Offerings, the foregoing agreement (other
than such non-compete and certain other provisions thereof) will be terminated,
in consideration for which Mr. Picow will receive approximately $106,000.
The Company's Philadelphia, Pennsylvania operations center is leased from
Robert Picow and his wife at a monthly rental of $7,500. The Company believes
that the terms of such leases are no less favorable to the Company than the
terms of similar transactions available from an unrelated party.
The Company utilizes the services of a third party for the purchase of
corporate gifts, promotional items and standard and personalized corporate
stationery. Mrs. Judy Laikin, the mother of Robert J. Laikin, owns this
advertising specialty company. For the year ended December 31, 1996 and the
three months ended March 31, 1997, the Company purchased approximately $245,384
and $156,885, respectively, of services and products from this party. The
Company believes these purchases by the Company were made on terms no less
favorable than could be made from an unrelated party.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 100 million shares
of Common Stock, par value $.01 per share, and one million shares of preferred
stock, par value $.01 per share (the "Preferred Stock"). At June 9, 1997, the
Company had 22,318,490 shares of Common Stock issued and outstanding, held of
record by 126 stockholders, and no shares of Preferred Stock issued and
outstanding.
The following description of the capital stock of the Company and certain
provisions of the Company's Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), and its Amended and Restated By-laws (the
"By-laws") is a summary and is qualified in it entirety by the Certificate of
Incorporation and By-laws, copies of which are exhibits to the Registration
Statement of which this Prospectus is a part.
COMMON STOCK
Except as required by law, holders of Common Stock are entitled to one vote
for each share held of record on all matters submitted to a vote of the holders
of Common Stock. The holders of Common Stock are not entitled to cumulative
voting rights with respect to the election of directors. Subject to preferences
that may be applicable to any then outstanding Preferred Stock, holders of
Common Stock are entitled to receive ratably such dividends as may be declared
by the Board of Directors out of funds legally available therefor. In the event
of a liquidation, dissolution, or winding up of the Company, holders of the
Common Stock are entitled to share ratably in all assets remaining after payment
of liabilities and the liquidation preference of any then outstanding Preferred
Stock. Holders of Common Stock have no preemptive rights and have no right to
convert their Common Stock into any other securities. There are no redemption or
sinking fund provisions applicable to the Common Stock. All outstanding shares
of Common Stock are, and the Common Stock to be outstanding upon consummation of
the Offerings will be, fully paid and nonassessable. The Board of Directors may
issue additional authorized shares of Common Stock without further action by the
stockholders.
PREFERRED STOCK
The Board of Directors has the authority, without further action by the
stockholders, to issue up to one million shares of Preferred Stock in one or
more series and to fix the rights, preferences, privileges and
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<PAGE> 46
restrictions thereof, including dividend rights, conversion rights, voting
rights, terms of redemption, liquidation preferences, and the number of shares
constituting any series or the designation of such series. The issuance of
Preferred Stock could adversely affect the voting power of holders of Common
Stock and could have the effect of delaying, deferring, or preventing a change
in control of the Company. The Company has no present plan to issue any shares
of Preferred Stock other than as it may be issued in connection with the
Stockholders Rights Plan described below. See "-- Anti-takeover Effects of
Certain Provisions of the Company's By-laws, Stockholders Rights Plan and
Delaware Corporate Law."
ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF THE COMPANY'S
BY-LAWS, STOCKHOLDERS RIGHTS PLAN AND DELAWARE CORPORATE LAW
CERTAIN BY-LAW PROVISIONS. The Company's By-laws contain provisions that
could make more difficult the acquisition of control of the Company by various
means, such as a tender offer, open market purchases, a proxy contest or
otherwise. For instance, the Company's Board of Directors is divided into three
classes, as nearly equal in number as is reasonably possible, serving staggered
terms. One class of directors is elected at each annual meeting to serve a term
of three years. At least two annual meetings of stockholders, instead of one,
will be required to effect a change in a majority of the Company's Board of
Directors. In addition, special meetings of the stockholders may only be called
by a majority of the Board of Directors or the President of the Company, and the
Company's By-laws establish advance notice procedures with regard to stockholder
proposals for annual or special meetings. Amendments to the staggered board
provision require a two-thirds vote of stockholders. The purposes of these
provisions are to discourage certain types of transactions which may involve an
actual or threatened change of control of the Company and encourage persons
seeking to acquire control of the Company to consult first with the Board of
Directors to negotiate the terms of any proposed business combination or offer.
The provisions are designed to reduce the vulnerability of the Company to an
unsolicited proposal for a takeover that does not contemplate the acquisition of
all outstanding shares or is otherwise unfair to stockholders of the Company, or
an unsolicited proposal for the restructuring or sale of all or part of the
Company.
STOCKHOLDERS RIGHTS PLAN. In February 1997, the Company adopted a
Stockholders Rights Plan and declared a dividend of one preferred share purchase
right (a "Right") for each outstanding share of Common Stock. The dividend was
paid to holders of record of Common Stock as of the close of business on
February 20, 1997 (the "Record Date"). Each Right entitles the registered holder
to purchase from the Company one one-thousandth of a share of Series A Junior
Participating Preferred Stock, par value $.01 per share (the "Preferred
Shares"), of the Company at a price of $115 per one one-thousandth of a
Preferred Share (the "Purchase Price"), subject to adjustment in certain
circumstances. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and Continental Stock
Transfer & Trust Company, as Rights Agent (the "Rights Agent"). A copy of the
Rights Agreement, which includes as Exhibit B the form of Rights Certificate,
and as Exhibit C the Summary of Rights to Purchase Preferred Shares, is an
exhibit to the Registration Statement of which this Prospectus is a part.
Rights are evidenced by and are transferable only in connection with the
Common Stock certificates outstanding prior to the Distribution Date (as defined
below). As soon as practical following the earlier to occur of (i) ten days
after a public announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") have acquired beneficial ownership of 15% or
more of the outstanding Common Stock or (ii) ten business days (or such later
date as may be determined by action of the Board of Directors prior to such time
as any person or group becomes an Acquiring Person) after the commencement of,
or announcement of an intention to commence, a tender or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 15% or more of the outstanding Common Stock (the "Distribution Date"),
separate certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of the Common Stock as of the close of business on
the Distribution Date and such separate Right Certificates alone will evidence
the Rights.
The Rights are not exercisable until the Distribution Date and will expire
on February 20, 2007, unless extended or unless the Rights are earlier redeemed
or exchanged by the Company, as described below. The
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<PAGE> 47
Rights, the Purchase Price, and the number of Preferred Shares or other
securities or property issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution.
Preferred Shares will not be redeemable. Each Preferred Share will be
entitled to a minimum preferential quarterly dividend payment of $1.00 per share
but will be entitled to an aggregate dividend of 1,000 times the dividend
declared per share of Common Stock. In the event of liquidation, the holders of
the Preferred Shares will be entitled to a minimum preferential liquidation
payment of $1.00 per share but will be entitled to an aggregate payment of 1,000
times the payment made per share of Common Stock. Each Preferred Share will have
1,000 votes, voting together with the Common Stock. Finally, in the event of any
merger, consolidation or other transaction in which shares of Common Stock are
exchanged, each Preferred Share will be entitled to receive 1,000 times the
amount received per share of Common Stock.
In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person or its affiliate, associate or
transferee (which will thereafter be void), will thereafter have the right to
receive that number of shares of Common Stock having a market value of two times
the exercise price of the Right. In the event that the Company is acquired in a
merger or other business combination transaction or 50% or more of its
consolidated assets or earning power are sold after a person or group has become
an Acquiring Person in a transaction with such Acquiring Person or group, each
holder of a Right will thereafter have the right to receive that number of
shares of common stock of the acquiring company having a market value of two
times the exercise price of the Right. In each case, there are exceptions for
transactions that have received the prior approval of the Board of Directors.
At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of 50% or more of the outstanding
shares of Common Stock, the Board of Directors of the Company may exchange the
Rights (other than Rights owned by such person or group which will have become
void), in whole or in part, at an exchange ratio of one share of Common Stock
per Right (subject to adjustment). At any time prior to any person or group
becoming an Acquiring Person, the Board of Directors of the Company may redeem
all of the outstanding Rights at a price of $.01 per Right, payable in cash or
Common Stock (the "Redemption Price").
All of the provisions of the Rights Agreement may be amended by the Company
prior to the Distribution Date. After the Distribution Date, the provisions of
the Rights Agreement may not be amended in any manner which would adversely
affect the interests of the holders of the Rights (excluding the interests of an
Acquiring Person).
DELAWARE ANTI-TAKEOVER LAW. The Company is subject to certain
anti-takeover provisions under Section 203 of the Delaware General Corporation
Law. In general, under Section 203, a Delaware corporation may not engage in any
business combination with any interested stockholder (a person that owns,
directly or indirectly, 15% or more of the outstanding voting stock of a
corporation or is an affiliate or associate of a corporation and was the owner
of 15% or more of the outstanding voting stock of the corporation at any time
within the prior three years), for a period of three years following the date
such stockholder became an interested stockholder, unless (i) prior to such date
the board of directors of the corporation approved either the business
combination or the transaction which resulted in the stockholder becoming an
interested stockholder, or (ii) upon consummation of the transaction which
resulted in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, or (iii) on or subsequent to
such date, the business combination is approved by the board of directors and
authorized at an annual or special meeting of stockholders, and not by written
consent, by at least 66 2/3% of the outstanding voting stock which is not owned
by the interested stockholder. The restrictions imposed by Section 203 will not
apply to a corporation if the corporation's original certificate of
incorporation contains a provision expressly electing not to be governed by this
section or the corporation by action of its stockholders adopts an amendment to
its certificate of incorporation or by-laws expressly electing not to be
governed by Section 203. The Company has not elected out of Section 203, and
thus the restrictions imposed by Section 203 apply to the Company. Such
provision could have the effect of discouraging, delaying or preventing a
takeover of the Company, which could
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<PAGE> 48
otherwise be in the best interest of the Company's stockholders, and have an
adverse effect on the market price for the Company's Common Stock.
TRANSFER AGENT
The transfer agent and registrar for the Common Stock is Continental Stock
Transfer & Trust Company, New York, New York.
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
Sales of substantial amounts of Common Stock in the public market, or the
perception that such sales could occur, could depress the prevailing market
price of the Common Stock.
Upon completion of the Offerings, 22,113,652 shares of Common Stock will be
freely tradeable. All other outstanding shares of Common Stock were issued by
the Company in private transactions not involving a public offering, are treated
as "restricted securities" for purposes of Rule 144, and may not be resold
unless they are registered under the Securities Act or are resold pursuant to an
exemption from registration, including the exemption provided under Rule 144 of
the Securities Act.
In general, Rule 144, as currently in effect, provides that a person (or
persons whose sales are aggregated) who is an affiliate of the Company or who
has beneficially owned shares which are issued and sold in reliance upon
exemptions from registration under the Securities Act ("Restricted Shares") for
at least one year is entitled to sell within any three-month period a number of
shares that does not exceed the greater of 1% of the then outstanding shares of
Common Stock or the average weekly trading volume in the shares of Common Stock
during the four calendar weeks preceding the filing of a notice of the sale is
filed with the Securities and Exchange Commission (the "Commission"). Sales
under Rule 144 are also subject to certain manner of sale provisions, notice
requirements and the availability of current public information about the
Company. However, a person who is not deemed to have been an "affiliate" of the
Company at any time during the three months preceding a sale, and who has
beneficially owned Restricted Shares for at least two years, would be entitled
to sell such shares under Rule 144 without regard to volume limitations, manner
of sale provisions, notice requirements or the availability of current public
information about the Company.
The Company, the executive officers and directors of the Company, and the
Selling Stockholders have, subject to certain exceptions, agreed that they will
not, directly or indirectly, sell, offer to sell, grant any option for the sale
of, or otherwise dispose of, any capital stock of the Company or any security
convertible or exchangeable into or exercisable for, such capital stock, or, in
the case of the Company, file any registration statement with respect to the
foregoing, for a period of 120 days after the date of this Prospectus, without
the prior written consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated
and Merrill Lynch International. The Company has filed registration statements
under the Securities Act registering an aggregate of 1,179,923 shares of Common
Stock reserved for issuance in connection with outstanding options and options
available for future grant under the 1994 Plan and the Directors Plan and 24,140
shares of Common Stock reserved for issuance in connection with outstanding
warrants, thus permitting the resale of such shares by non-affiliates in the
public market without restriction under the Securities Act. In addition, the
Company intends to file registration statements under the Securities Act
registering shares of Common Stock reserved for issuance in connection with the
balance of the options outstanding and available for future grant under the
Company's Stock Option Plans. Options to acquire an aggregate of 976,644 shares
of Common Stock under the 1994 Plan and the Directors Plan and warrants to
acquire 24,140 shares of Common Stock remained outstanding as of June 9, 1997.
In addition, commencing 30 days following the date of this Prospectus, a
stockholder, who is also an employee, of the Company may require the Company to
file a registration statement relating to 375,000 shares of Common Stock owned
by such stockholder and to take such reasonable steps necessary to cause the
registration statement to be declared effective. Such stockholder has agreed
that he will not sell, offer to sell, grant any option for the sale of, or
otherwise dispose of 187,500 of such shares for a period of 120 days following
the consummation of the Offerings; provided, however, that if, subsequent to
exercise of the demand registration right by the stockholder, the registration
statement relating to the stockholder's 375,000 shares of
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<PAGE> 49
Common Stock is not declared effective by five days prior to the public
announcement of the Company's financial results for the three months ended
September 30, 1997, he may, subject to applicable securities laws, sell up to
187,500 shares of Common Stock commencing the day following the public
announcement of the Company's financial results for the three months ended
September 30, 1997.
CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
TO NON-UNITED STATES HOLDERS
The following is a general discussion of certain United States Federal tax
consequences of the acquisition, ownership, and disposition of Common Stock by a
holder that, for United States Federal income tax purposes, is not a "United
States person" (a "Non-United States Holder"). This discussion is based upon the
United States Federal tax law now in effect, which is subject to change,
possibly retroactively. For purposes of this discussion, a "United States
person" means a citizen or resident of the United States; a corporation,
partnership, or other entity created or organized in the United States or under
the laws of the United States or of any political subdivision thereof; an estate
whose income is includible in gross income for United States Federal income tax
purposes regardless of its source; or a "United States Trust". A United States
Trust is (a) for taxable years beginning after December 31, 1996, or if the
trustee of a trust elects to apply the following definition to an earlier
taxable year, any trust if, and only if, (i) a court within the United States is
able to exercise primary supervision over the administration of the trust and
(ii) one or more United States trustees have the authority to control all
substantial decisions of the trust, and (b) for all other taxable years, any
trust whose income is includible in gross income for United States Federal
income tax purposes regardless of its source. This discussion does not consider
any specific facts or circumstances that may apply to a particular Non-United
States Holder. Prospective investors are urged to consult their tax advisors
regarding the United States Federal tax consequences of acquiring, holding, and
disposing of Common Stock, as well as any tax consequences that may arise under
the laws of any foreign, state, local, or other taxing jurisdiction.
DIVIDENDS
Dividends paid to a Non-United States Holder will generally be subject to
withholding of United States Federal income tax at the rate of 30% unless the
dividend is effectively connected with the conduct of a trade or business within
the United States by the Non-United States Holder (or if certain tax treaties
apply, is attributable to a United States permanent establishment maintained by
such Non-United States Holder), in which case the dividend will be subject to
the United States Federal income tax on net income on the same basis that
applies to United States persons generally. In the case of a Non-United States
Holder which is a corporation, such effectively connected income also may be
subject to the branch profits tax (which is generally imposed on a foreign
corporation on the repatriation from the United States of effectively connected
earnings and profits). Non-United States Holders should consult any applicable
income tax treaties that may provide for a lower rate of withholding or other
rules different from those described above. A Non-United States Holder may be
required to satisfy certain certification requirements in order to claim treaty
benefits or otherwise claim a reduction of or exemption from withholding under
the foregoing rules.
GAIN ON DISPOSITION
A Non-United States Holder will generally not be subject to United States
Federal income tax on gain recognized on a sale or other disposition of Common
Stock unless (i) the gain is effectively connected with the conduct of a trade
or business within the United States by the Non-United States Holder or, if tax
treaties apply, is attributable to a United States permanent establishment
maintained by the Non-United States Holder, (ii) in the case of a Non-United
States Holder who is a nonresident alien individual and holds the Common Stock
as a capital asset, such holder is present in the United States for 183 or more
days in the taxable year of disposition or either such individual has a "tax
home" in the United States or the gain is attributable to an office or other
fixed place of business maintained by such individual in the United States,
(iii) the Company is or has been a "United States real property holding
corporation" for United States Federal income tax purposes (which the Company
does not believe that it is or likely to become) and the Non-United States
Holder holds or has held, directly or indirectly, at any time during the
five-year period
47
<PAGE> 50
ending on the date of disposition, more than 5% of the Common Stock or (iv) the
Non-United States Holder is subject to tax pursuant to the Internal Revenue Code
of 1986, as amended, provisions applicable to certain United States expatriates.
Gain that is effectively connected with the conduct of a trade or business
within the United States by the Non-United States Holder will be subject to the
United States Federal income tax on net income on the same basis that applies to
United States persons generally (and, with respect to corporate holders, under
certain circumstances, the branch profits tax) but will not be subject to
withholding. Non-United States Holders should consult any applicable treaties
that may provide for different rules.
FEDERAL ESTATE TAXES
Common Stock owned or treated as owned by an individual who is not a
citizen or resident of the United States at the date of death will be included
in such individual's estate for United States Federal estate tax purposes,
unless an applicable estate tax treaty provides otherwise.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Company must report annually to the Internal Revenue Service and to
each Non-United States Holder the amount of dividends paid to, and the tax
withheld with respect to, such holder, regardless of whether any tax was
actually withheld. This information may also be made available to the tax
authorities of a country in which the Non-United States Holder resides.
Under the temporary United States Treasury regulations, United States
information reporting requirements and backup withholding tax will generally not
apply to dividends paid on the Common Stock to a Non-United States Holder.
Payments by a United States office of a broker of the proceeds of a sale of
Common Stock are subject to both backup withholding at a rate of 31% and
information reporting unless the holder certifies its Non-United States Holder
status under penalties of perjury or otherwise establishes an exemption.
Information reporting requirements (but not backup withholding) will also apply
to payments of the proceeds of sales of Common Stock by foreign offices of
United States brokers, or foreign brokers with certain types of relationships to
the United States, unless the broker has documentary evidence in its records
that the holder is a Non-United States Holder and certain other conditions are
met, or the holder otherwise establishes an exemption.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules will be refunded or credited against the Non-United
States Holder's United States Federal income tax liability, provided that the
required information is furnished to the Internal Revenue Service.
These information reporting and backup withholding rules are under review
by the United States Treasury and their application to the Common Stock could be
changed by future regulations. On April 22, 1996, proposed Treasury Regulations
were published in the Federal Register concerning the withholding of tax and
reporting for certain amounts paid to non-resident individuals and foreign
corporations. The proposed Treasury Regulations, if adopted in their present
form, would be effective for payments made after December 31, 1997. Prospective
investors should consult their tax advisors concerning the potential adoption of
such proposed Treasury Regulations and the potential effect on their ownership
of Common Stock.
48
<PAGE> 51
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"U.S. Purchase Agreement") among the Company, each of the Selling Stockholders
and each of the underwriters named below (the "U.S. Underwriters"), and
concurrently with the sale of 800,000 shares of Common Stock to the
International Managers (as defined below), the Company and the Selling
Stockholders have agreed to sell to the U.S. Underwriters, and each of the U.S.
Underwriters severally has agreed to purchase from the Company and the Selling
Stockholders, the number of shares of Common Stock set forth opposite its name
below.
<TABLE>
<CAPTION>
NUMBER
U.S. UNDERWRITERS OF SHARES
----------------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................
Cowen & Company.............................................
UBS Securities LLC..........................................
Sands Brothers & Co., Ltd...................................
----------
Total.......................................... 3,200,000
==========
</TABLE>
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Cowen
& Company, UBS Securities LLC and Sands Brothers & Co., Ltd. are acting as
representatives (the "U.S. Representatives") of the U.S. Underwriters.
The Company and the Selling Stockholders have also entered into a purchase
agreement (the "International Purchase Agreement" and, together with the U.S.
Purchase Agreement, (the "Purchase Agreements") with certain underwriters
outside the United States and Canada (collectively, the "International
Managers," and together with the U.S. Underwriters, the "Underwriters"), for
whom Merrill Lynch International, Cowen International L.P., UBS Limited and
Sands Brothers & Co., Ltd. are acting as representatives (the "International
Representatives" and, together with the U.S. Representatives, the
"Representatives"). Subject to the terms and conditions set forth in the
International Purchase Agreement, and concurrently with the sale of 3,200,000
shares of Common Stock to the U.S. Underwriters pursuant to the U.S. Purchase
Agreement, the Company and the Selling Stockholders have agreed to sell to the
International Managers, and the International Managers have severally agreed to
purchase from the Company and the Selling Stockholders, an aggregate of 800,000
shares of Common Stock. The public offering price per share of Common Stock and
the underwriting discount per share of Common Stock are identical under the U.S.
Purchase Agreement and the International Purchase Agreement. The respective
percentages of the Common Stock to be sold by each of the Company and the
Selling Stockholders will be identical in the U.S. Offering and the
International Offering.
In the U.S. Purchase Agreement and the International Purchase Agreement,
the several U.S. Underwriters and the several International Managers,
respectively, have agreed, subject to the terms and conditions set forth
therein, to purchase all of the shares of Common Stock being sold pursuant to
each such agreement if any of the shares of Common Stock being sold pursuant to
such agreement are purchased. Under certain circumstances involving a default by
an Underwriter, the commitments of non-defaulting U.S. Underwriters or
International Managers (as the case may be) may be increased or the U.S.
Purchase Agreement or the International Purchase Agreement (as the case may be)
may be terminated. The sale of Common Stock to the U.S. Underwriters is
conditioned upon the sale of Common Stock to the International Managers and vice
versa.
The U.S. Underwriters and the International Managers have entered into an
intersyndicate agreement (the "Intersyndicate Agreement") providing for the
coordination of their activities. The Underwriters are
49
<PAGE> 52
permitted to sell shares of Common Stock to each other for purposes of resale at
the initial public offering price, less an amount not greater than the selling
concession. Under the terms of the Intersyndicate Agreement, the U.S.
Underwriters and any dealer to whom they sell shares of Common Stock will not
offer to sell or sell shares of Common Stock to persons who are non-United
States or non-Canadian persons or to persons they believe intend to resell to
persons who are non-United States or non-Canadian persons, and the International
Managers and any dealer to whom they sell shares of Common Stock will not offer
to sell or sell shares of Common Stock to U.S. persons or to Canadian persons or
to persons they believe intend to resell to United States persons or Canadian
persons, except in the case of transactions pursuant to the Intersyndicate
Agreement.
The U.S. Representatives have advised the Company and the Selling
Stockholders that the U.S. Underwriters propose initially to offer the shares of
Common Stock to the public at the public offering price set forth on the cover
page of this Prospectus, and to certain selected dealers at such price less a
concession not in excess of $ per share. The U.S. Underwriters may
allow, and such dealers may reallow, a discount not in excess of $ per
share on sales to certain other dealers. After the initial public offering, the
public offering price, concession and discount may be changed.
The Company has granted an option to the U.S. Underwriters, exercisable
within 30 days after the date of this Prospectus, to purchase up to an aggregate
of 480,000 additional shares of Common Stock at the public offering price set
forth on the cover page of this Prospectus, less the underwriting discount. The
U.S. Underwriters may exercise this option only to cover over-allotments, if
any, made on the sale of the shares of Common Stock offered hereby. To the
extent that the U.S. Underwriters exercise this option, each U.S. Underwriter
will be obligated, subject to certain conditions, to purchase a number of
additional shares of Common Stock proportionate to such U.S. Underwriter's
initial amount reflected in the foregoing table. The Company has also granted an
option to the International Managers, exercisable within 30 days after the date
of this Prospectus, to purchase up to an aggregate of 120,000 additional shares
of Common Stock to cover over-allotments, if any, on terms similar to those
granted to the U.S. Underwriters. If purchased, the Underwriters will offer such
additional shares on the same terms as those on which the 4,000,000 shares are
being offered.
The Company, its executive officers and directors, and the Selling
Stockholders have, subject to certain exceptions, agreed that they will not for
a period of 120 days from the date of this Prospectus, without the prior written
consent of Merrill Lynch and Merrill Lynch International, directly or
indirectly, sell, offer to sell, grant any option for the sale of, or otherwise
dispose of, any capital stock of the Company or any security convertible or
exchangeable into, or exercisable for, such capital stock, or, in the case of
the Company, file any registration statement (other than registration statements
on Form S-8 relating to employee stock option plans and the registration
statement relating to 375,000 shares of Common Stock owned by a stockholder and
an employee of the Company pursuant to the terms of his outstanding registration
rights) with respect to any of the foregoing, except that the Company may,
without such consent, issue options pursuant to the Stock Options Plans and
shares of Common Stock upon exercise of options issued pursuant to the Stock
Option Plans. See "Shares Eligible for Future Sale; Registration Rights."
In connection with the Offerings, certain Underwriters or their respective
affiliates and selling group members (if any) who are qualified market makers on
the Nasdaq National Market may engage in "passive market making" in the Common
Stock on the Nasdaq National Market in accordance with Rule 103 under Regulation
M. Rule 103 permits, upon the satisfaction of certain conditions, underwriters
and selling group members participating in a distribution that are also Nasdaq
National Market market makers in the security being distributed to engage in
limited market making transactions during the period when Rule 103 under
Regulation M would otherwise prohibit such activity. Rule 103 prohibits
underwriters and selling group members engaged in passive market making
generally from entering a bid or effecting a purchase at a price that exceeds
the highest bid for those securities displayed on the Nasdaq National Market by
a market maker that is not participating in the distribution. Under Rule 103,
each underwriter or selling group member engaged in passive market making is
subject to a daily net purchase limitation equal to 30% of such entity's average
daily trading volume during the two full consecutive calendar months immediately
preceding the date of the filing of the registration statement under the
Securities Act pertaining to the security to be distributed.
50
<PAGE> 53
The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including certain liabilities under
the Securities Act, or to contribute to payments the Underwriters may be
required to make in respect thereof.
In connection with the Offerings, the Underwriters may engage in certain
transactions which stabilize, maintain or otherwise affect the price of the
Common Stock. Such transactions may include the purchase of shares of Common
Stock in the open market to cover short positions created by over-allotments or
to stabilize the price of the Common Stock. In general, purchases of a security
for the purpose of stabilization or to reduce a short position could cause the
price of the security to be higher than it might be in the absence of such
purchases. Neither the Company nor any of the Underwriters make any
representation or prediction as to the direction or magnitude of any effect that
the transactions described above may have on the price of the Common Stock. In
addition, neither the Company nor any of the Underwriters make any
representation that the Underwriters will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.
Steven B. Sands, the Co-Chairman and Chief Executive Officer of Sands
Brothers & Co., Ltd., one of the Representatives, has been a member of the
Company's Board of Directors since the Company's initial public offering in
April 1994. In addition, in connection with the Company's initial public
offering, Sands Brothers & Co., Ltd. received warrants to purchase an aggregate
of 468,750 shares of Common Stock at an exercise price of $3.30 per share, of
which warrants to purchase 467,579 shares have been exercised.
LEGAL MATTERS
Certain legal matters with respect to the validity of the shares of Common
Stock offered hereby are being passed upon for the Company by Tenzer Greenblatt
LLP, New York, New York. A partner of Tenzer Greenblatt LLP holds options to
purchase 9,375 shares of Common Stock at an exercise price of $19.40 per share.
Mayer, Brown & Platt, Chicago, Illinois, is acting as counsel for the
Underwriters in connection with certain legal matters relating to the sale of
the shares of Common Stock offered hereby.
EXPERTS
The Consolidated Financial Statements and schedule of the Company as of
December 31, 1996 and 1995 and for each of the three years in the period ended
December 31, 1996 appearing in this Prospectus and elsewhere in the Registration
Statement (as defined herein), have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon appearing elsewhere
herein, which, as to the years 1995 and 1994, is based in part on the reports of
Coopers & Lybrand L.L.P., independent auditors. The financial statements and
schedule referred to above are included in reliance upon such reports given upon
the authority of said firms as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act with respect to the
Common Stock registered hereunder. As used herein, the term "Registration
Statement" means the initial Registration Statement and any and all amendments
thereto. This Prospectus omits certain information contained in said
Registration Statement as permitted by the rules and regulations of the
Commission. For further information with respect to the Company and the Common
Stock registered hereunder, reference is made to the Registration Statement,
including the exhibits thereto. Statements herein concerning the contents of any
contract or other document are not necessarily complete and in each instance
reference is made to such contract or other documents filed with the Commission
as an exhibit to the Registration Statement, or otherwise, each such statement
being qualified by and subject to such reference in all respects.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the
51
<PAGE> 54
Commission. Reports, registration statements, proxy statements, and other
information filed by the Company with the Commission can be inspected and copied
at the public reference facilities maintained by the Commission at Judiciary
Plaza, 450 Fifth Street, N.W. Room 1024, Washington, D.C. 20549, and at the
Commission's Regional Offices: 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and 7 World Trade Center, New York, New York 10048. Copies of
such materials can be obtained at prescribed rates from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549. Such reports and other information, including the Registration Statement
and the exhibits and schedules thereto, are also available on the Commission's
Web Site at http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(a) Annual Report on Form 10-K for the fiscal year ended December 31, 1996;
and
(b) Amendment No. 1 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996;
(c) Quarterly Report on Form 10-Q for the three-month period ended March
31, 1997; and
(d) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8A declared effective April 7, 1994 and
any amendments thereto.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the Offerings shall be deemed to be incorporated by reference
herein and to be a part hereof on the date of filing of such documents.
The Company will furnish without charge to each person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the documents incorporated herein by reference, except for the
exhibits to such documents. Requests should be directed to Mr. Phillip A.
Bounsall, Brightpoint, Inc., 6402 Corporate Drive, Indianapolis, Indiana 46278,
telephone: (317) 297-6100.
52
<PAGE> 55
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors.............................. F-2
Consolidated Balance Sheets as of December 31, 1995 and
1996, and as of March 31, 1997 (unaudited)................ F-3
Consolidated Statements of Income for the years ended
December 31, 1994, 1995 and 1996, and for the three-month
periods ended March 31, 1996 and 1997 (unaudited)......... F-4
Consolidated Statements of Stockholders' Equity for the
years ended December 31, 1994, 1995 and 1996, and for the
three-month period ended March 31, 1997 (unaudited)....... F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1995 and 1996, and for the three-month
periods ended March 31, 1996 and 1997 (unaudited)......... F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>
F-1
<PAGE> 56
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Brightpoint, Inc.
We have audited the accompanying consolidated balance sheets of
Brightpoint, Inc. as of December 31, 1996 and 1995, and the related consolidated
statements of income, stockholders' equity and cash flows for each of the three
years in the period ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We did not audit the
1995 and 1994 financial statements of Allied Communications, which are included
in the consolidated financial statements, which statements reflect total assets
constituting 33% in 1995, and net sales constituting 36% in 1995 and 45% in 1994
of the related consolidated totals. Those statements were audited by other
auditors whose report has been furnished to us, and our opinion, insofar as it
relates to data included for Allied Communications, is based solely on the
report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material respects,
the consolidated financial position of Brightpoint, Inc. at December 31, 1996
and 1995, and the consolidated results of its operations and its cash flows for
each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
Indianapolis, Indiana
January 28, 1997
F-2
<PAGE> 57
BRIGHTPOINT, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- MARCH 31,
1995 1996 1997
---- ---- ---------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 726 $ 14,255 $ 19,153
Marketable securities..................................... -- 18,000 --
Accounts receivable (less allowance for doubtful accounts
of $691 in 1995, $1,115 in 1996 and $1,063 in 1997).... 57,288 113,119 110,922
Inventories............................................... 56,313 112,916 105,790
Other current assets...................................... 2,220 8,422 8,208
-------- -------- --------
Total current assets........................................ 116,547 266,712 244,073
Property and equipment, net................................. 2,934 8,207 12,397
Goodwill, net............................................... -- 15,232 16,975
Other assets................................................ 306 8,894 2,813
-------- -------- --------
Total assets................................................ $119,787 $299,045 $276,258
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses..................... $ 48,665 $123,231 $ 72,300
Notes payable............................................. 5,663 -- --
-------- -------- --------
Total current liabilities................................... 54,328 123,231 72,300
Notes payable............................................... -- 79,564 102,307
Deferred taxes.............................................. 48 330 330
Stockholder loans........................................... 554 -- --
Minority interest........................................... -- 938 823
Stockholders' equity:
Preferred stock, $.01 par value:
Authorized shares -- 1,000
No shares issued or outstanding........................ -- -- --
Common stock, $.01 par value:
Authorized shares -- 25,000
Issued and outstanding shares -- 19,894 in 1995, 21,636
in 1996 and 22,125 in 1997........................... 199 216 221
Additional paid-in capital................................ 50,757 73,206 77,196
Foreign currency translation adjustment................... -- 97 131
Unrealized gain on marketable securities, net of tax...... -- 3,929 --
Retained earnings......................................... 13,901 17,534 22,950
-------- -------- --------
Total stockholders' equity.................................. 64,857 94,982 100,498
-------- -------- --------
Total liabilities and stockholders' equity.................. $119,787 $299,045 $276,258
======== ======== ========
</TABLE>
See accompanying notes.
F-3
<PAGE> 58
BRIGHTPOINT, INC.
CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------ -------------------------
1994 1995 1996 1996 1997
---- ---- ---- ---- ----
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales............................... $309,227 $419,149 $589,718 $112,960 $199,169
Cost of sales........................... 290,463 390,950 543,878 105,032 183,167
-------- -------- -------- -------- --------
Gross profit............................ 18,764 28,199 45,840 7,928 16,002
Selling, general and administrative
expenses.............................. 11,095 14,813 20,849 3,677 8,096
-------- -------- -------- -------- --------
Income from operations.................. 7,669 13,386 24,991 4,251 7,906
Merger expenses......................... -- -- 2,750 -- --
Net investment gain..................... -- -- -- -- 1,432
Interest expense, net................... 164 1,383 2,118 184 1,123
-------- -------- -------- -------- --------
Income before income taxes and minority
interest.............................. 7,505 12,003 20,123 4,067 8,215
Income taxes............................ 1,623 3,838 7,328 1,165 2,443
-------- -------- -------- -------- --------
Income before minority interest......... 5,882 8,165 12,795 2,902 5,772
Minority interest in subsidiaries'
earnings.............................. -- -- 1,758 -- 356
-------- -------- -------- -------- --------
Net income.............................. $ 5,882 $ 8,165 $ 11,037 $ 2,902 $ 5,416
======== ======== ======== ======== ========
Pro forma data (unaudited):
Historical income before income
taxes.............................. $ 7,505 $ 12,003 $ 20,123 $ 4,067
Pro forma income taxes................ 2,950 4,696 7,804 1,590
Minority interest in subsidiaries'
earnings........................... -- -- 1,758 --
-------- -------- -------- --------
Pro forma net income.................. $ 4,555 $ 7,307 $ 10,561 $ 2,477
======== ======== ======== ========
Pro forma net income excluding the
after-tax effect of one-time merger
expenses........................... $ 4,555 $ 7,307 $ 12,622 $ 2,477
======== ======== ======== ========
Net income per share:
Historical............................ $ 0.23
========
Pro forma............................. $ 0.32 $ 0.42 $ 0.49 $ 0.12
======== ======== ======== ========
Pro forma excluding the after-tax
effect of one-time merger
expenses........................... $ 0.32 $ 0.42 $ 0.58 $ 0.12 $ 0.23
======== ======== ======== ======== ========
Weighted average common shares
outstanding........................ 14,276 17,226 21,594 20,595 23,187
======== ======== ======== ======== ========
</TABLE>
See accompanying notes.
F-4
<PAGE> 59
BRIGHTPOINT, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
--------------- PAID-IN RETAINED
SHARES AMOUNT CAPITAL OTHER EARNINGS TOTAL
------ ------ ---------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1994.............. 9,891 $ 99 $ -- $ -- $ 3,386 $ 3,485
S corporation dividends............... -- -- -- -- (1,161) (1,161)
Transfer of Brightpoint, Inc.
undistributed S corporation
earnings........................... -- -- 1,006 -- (1,006) --
Issuance of common stock.............. 5,390 54 12,023 -- -- 12,077
Net income............................ -- -- -- -- 5,882 5,882
------ ---- ------- ------- ------- --------
Balance at December 31, 1994............ 15,281 153 13,029 -- 7,101 20,283
S corporation dividends............... -- -- -- -- (1,365) (1,365)
Issuance of common stock.............. 3,615 36 33,510 -- -- 33,546
Exercise of stock options and
warrants........................... 998 10 2,942 -- -- 2,952
Tax benefit of exercise of stock
options............................ -- -- 1,276 -- -- 1,276
Net income............................ -- -- -- -- 8,165 8,165
------ ---- ------- ------- ------- --------
Balance at December 31, 1995............ 19,894 199 50,757 -- 13,901 64,857
S corporation dividends............... -- -- -- -- (289) (289)
Transfer of Allied Communications
undistributed S corporation
earnings........................... -- -- 7,115 -- (7,115) --
Exercise of stock options and
warrants........................... 992 10 5,939 -- -- 5,949
Tax benefit of exercise of stock
options............................ -- -- 1,302 -- -- 1,302
Common stock issued in connection with
the purchase of Brightpoint
International Ltd. ................ 750 7 8,093 -- -- 8,100
Foreign currency translation
adjustment......................... -- -- -- 97 -- 97
Unrealized gain on marketable
securities, net of tax............. -- -- -- 3,929 -- 3,929
Net income............................ -- -- -- -- 11,037 11,037
------ ---- ------- ------- ------- --------
Balance at December 31, 1996............ 21,636 216 73,206 4,026 17,534 94,982
Exercise of stock options............. 392 4 2,394 -- -- 2,398
Common stock issued in connection with
the purchase of a 20% interest in
Brightpoint China Limited.......... 97 1 1,596 -- -- 1,597
Foreign currency translation
adjustment......................... -- -- -- 34 -- 34
Change in unrealized gain on
marketable securities, net of
tax................................ -- -- -- (3,929) -- (3,929)
Net income............................ -- -- -- -- 5,416 5,416
------ ---- ------- ------- ------- --------
Balance at March 31, 1997 (unaudited)... 22,125 $221 $77,196 $ 131 $22,950 $100,498
====== ==== ======= ======= ======= ========
</TABLE>
See accompanying notes.
F-5
<PAGE> 60
BRIGHTPOINT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------- -------------------------
1994 1995 1996 1996 1997
---- ---- ---- ---- ----
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income................................ $ 5,882 $ 8,165 $ 11,037 $ 2,902 $ 5,416
Adjustments to reconcile net income to net
cash used by operating activities:
Minority interest.................... -- -- 1,758 -- 356
Depreciation and amortization........ 151 217 1,069 126 660
Merger expenses...................... -- -- 2,750 -- --
Net investment gain.................. -- -- -- -- (1,432)
Deferred taxes....................... -- -- 282 -- --
Changes in operating assets and
liabilities, net of effects from
acquisitions:
Accounts receivable............. (21,648) (15,776) (43,989) (20,974) 2,117
Inventories..................... (28,993) (17,094) (45,771) 7,913 7,199
Other current assets............ (867) (1,176) (5,180) 75 176
Accounts payable and accrued
expenses...................... 34,497 (7,536) 46,519 856 (47,018)
-------- -------- -------- -------- --------
Net cash used by operating activities..... (10,978) (33,200) (31,525) (9,102) (32,526)
INVESTING ACTIVITIES
Capital expenditures...................... (468) (2,521) (5,965) (1,470) (4,655)
Sales (purchases) of marketable
securities.............................. -- -- (11,431) -- 18,528
Acquisition of Brightpoint International
Ltd. ................................... -- -- (5,000) -- --
Acquisition of Hatadicorp Pty Ltd. ....... -- -- (912) -- --
Acquisition of minority interest.......... -- -- -- -- (750)
Cash acquired in formation of Brightpoint
International Ltd. ..................... -- -- 352 -- --
Increase in other assets.................. -- (259) (7,678) (1,223) (860)
-------- -------- -------- -------- --------
Net cash provided (used) by investing
activities.............................. (468) (2,780) (30,634) (2,693) 12,263
FINANCING ACTIVITIES
Net proceeds from notes payable........... 3,448 648 71,740 11,380 22,732
Proceeds from stock offering.............. 12,189 33,546 -- -- --
Proceeds and tax benefit from exercise of
stock options and warrants.............. -- 4,228 7,255 34 2,398
Payments on long-term debt................ (4,015) -- -- -- --
Proceeds from (payments on) stockholder
loans................................... 842 (792) (554) (214) --
Merger expenses........................... -- -- (2,168) -- --
S corporation distributions............... (1,169) (1,365) (289) (128) --
-------- -------- -------- -------- --------
Net cash provided by financing
activities.............................. 11,295 36,265 75,984 11,072 25,130
Effect of exchange rate changes on cash
and cash equivalents.................... -- -- (296) -- 31
-------- -------- -------- -------- --------
Net increase (decrease) in cash and cash
equivalents............................. (151) 285 13,529 (723) 4,898
Cash and cash equivalents at beginning of
period.................................. 592 441 726 726 14,255
-------- -------- -------- -------- --------
Cash and cash equivalents at end of
period.................................. $ 441 $ 726 $ 14,255 $ 3 $ 19,153
======== ======== ======== ======== ========
</TABLE>
See accompanying notes.
F-6
<PAGE> 61
BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED WITH RESPECT TO INFORMATION AS OF MARCH 31, 1997
AND FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 1996 AND 1997)
1. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
Brightpoint, Inc. (the Company) is a leading provider of distribution and
value-added logistics services to the wireless communications industry. The
Company provides its services to its customers, which include network operators,
manufacturers, agents, resellers, dealers and retailers, throughout the world.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company,
its wholly owned subsidiary, Brightpoint International Ltd. (see Note 2 --
Merger and Acquisitions), and Brightpoint International Ltd.'s majority-owned
foreign subsidiaries. Significant intercompany accounts and transactions have
been eliminated in consolidation.
On June 7, 1996, the Company completed a merger with Allied Communications,
Inc., Allied Communications of Florida, Inc., Allied Communications of Georgia,
Inc., Allied Communications of Illinois, Inc., and Allied Communications of
Puerto Rico, Inc. (Allied Communications), which were engaged in substantially
the same business as the Company. The transaction was accounted for using the
pooling-of-interests method and accordingly, the Company's financial statements
have been restated to reflect the consolidated balance sheets and consolidated
results of operations of both entities as if the merger had been in effect for
all periods presented.
Pro forma net income per share for all periods presented is computed after
taking into consideration the 3,796,875 shares of the Company's common stock
that was exchanged for all of the outstanding common stock of Allied
Communications. Further information pertaining to the merger is presented in
Note 2 -- Merger and Acquisitions.
There were no material differences between the accounting policies of the
Company and Allied Communications. Certain amounts in Allied Communications'
historical combined financial statements were reclassified to conform with the
presentation used by the Company.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
REVENUE RECOGNITION
Revenue is recognized when wireless communications equipment is shipped and
sold or when services have been rendered to customers.
CASH AND CASH EQUIVALENTS
All highly liquid investments with maturities of three months or less when
purchased are considered to be cash equivalents. The carrying amount of cash and
cash equivalents approximates fair value because of the short maturity of those
investments.
CONCENTRATIONS OF RISK
Financial instruments which potentially expose the Company to
concentrations of credit risk consist primarily of trade accounts receivable.
The accounts receivable balance, reflecting the Company's sources of revenue
from wireless network operators, mass retailers and agent dealers, is dispersed
throughout the world, including Asia and the Pacific Rim, North America, Europe,
the Middle East, Africa and Latin America. The Company has no customer which
exceeded 10% of the Company's accounts receivable balance at
F-7
<PAGE> 62
BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CONCENTRATIONS OF RISK (CONTINUED)
December 31, 1996 or March 31, 1997. The Company performs ongoing credit
evaluations of its customers and provides credit in the normal course of
business to a large number of its customers. However, consistent with industry
practice, the Company generally requires no collateral from its customers. The
Company maintains allowances for potential credit losses; such losses have not
been significant and have been within management's expectations.
The Company is dependent on third-party equipment manufacturers,
distributors and dealers for all of its supply of wireless communications
equipment. For the year ended December 31, 1996 and the three months ended March
31, 1997, the Company's three largest suppliers accounted for 62% and 67% of
product sales, respectively. The Company is dependent on the ability of its
suppliers to provide adequate products on a timely basis and on favorable
pricing terms. Although the Company believes that its relationships with its
suppliers are good, the loss of certain principal suppliers could have a
material adverse effect on the Company.
INVENTORIES
Inventories consist of wireless telephones and accessories and are stated
at the lower of cost (first-in, first-out method) or market.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost and depreciation is computed by
the straight-line method using the estimated useful lives of the assets,
generally five to fifteen years. Leasehold improvements are stated at cost and
amortized over the lease term of the associated property. Maintenance and
repairs are charged to expense as incurred.
GOODWILL
Goodwill represents the unamortized cost in excess of the fair value of the
net assets acquired in business combinations, and is amortized on a
straight-line basis over 30 years. The Company continually reviews the valuation
and amortization of goodwill.
IMPAIRMENT OF LONG-LIVED ASSETS
The FASB issued Statement of Financial Accounting Standards No. 121,
Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of, which the Company adopted effective January 1, 1996. SFAS No. 121
requires that long-lived assets and certain identifiable intangibles held and
used by the Company be reviewed for possible impairment whenever events or
changes in circumstances indicate the carrying amount of an asset may not be
recoverable. SFAS No. 121 also requires that long-lived assets and certain
identifiable intangibles held for sale, other than those related to discontinued
operations, be reported at the lower of carrying amount or fair value less cost
of disposal. Adoption of the Statement and its application during 1996 did not
have an impact on the Company's financial position or results of operations.
INCOME TAXES
Prior to April 14, 1994, the stockholders of the Company had elected under
Subchapter S of the Internal Revenue Code to include the income of the Company
in their own income for tax purposes. Accordingly, the Company was not subject
to federal and state income taxes until that date.
Effective April 14, 1994, the Company's election under Subchapter S was
terminated. Concurrent with the termination, the Company adopted Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes, which
requires recognition of deferred tax assets and liabilities based on the
difference between
F-8
<PAGE> 63
BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES (CONTINUED)
the financial statement and tax bases of assets and liabilities. These deferred
taxes are measured by applying current tax laws. The effect on 1994 net income
of adopting the Statement was not material.
Prior to June 7, 1996, the stockholders of Allied Communications had also
elected treatment under Subchapter S of the Internal Revenue Code. Concurrent
with the merger with Allied Communications on June 7, 1996, Allied
Communications' election under Subchapter S was terminated. At that time, the
Company adopted Statement of Financial Accounting Standards No. 109, Accounting
for Income Taxes, for the Allied Communications' accounts. The effect on 1996
net income of adopting the Statement was not material.
FOREIGN CURRENCY TRANSLATION
Financial statements of Brightpoint International Ltd.'s subsidiaries are
translated into U.S. dollars using the exchange rate at each balance sheet date
for assets and liabilities and an average exchange rate for each period for
revenues, expenses, gains and losses. Translation adjustments are recorded as a
separate component of stockholders' equity since the local currency for each
subsidiary is, in all cases, its functional currency. Translation adjustments
have not been significant.
PRO FORMA INCOME TAXES
The pro forma income tax amounts presented in the statements of income
represent an estimate of the income taxes that the Company and Allied
Communications would have incurred had they been tax paying entities for all
periods presented.
NET INCOME PER SHARE AMOUNTS
Pro forma net income per share amounts are based on the weighted average
number of common shares and dilutive common share equivalents outstanding during
each period. Common share equivalents consist of shares of common stock issuable
upon exercise of outstanding stock options and stock warrants (see Note 7 --
Stockholders' Equity). Historical net income per share amounts are not presented
because such information is not meaningful.
RECENTLY ISSUED ACCOUNTING STANDARD
In February 1997, the FASB issued Statement of Financial Accounting
Standards No. 128, Earnings per Share, which replaces the presentation of
primary earnings per share (EPS) with basic EPS and replaces fully diluted EPS
with diluted EPS. It also requires dual presentation of basic and diluted EPS on
the face of the income statement for all entities with complex capital
structures and requires a reconciliation of the components of the basic EPS
computation to the components of the diluted EPS computation. SFAS No. 128 is
effective for both interim and annual periods ending after December 15, 1997.
Earlier adoption is not permitted. Upon adoption, all prior-period EPS data
presented will be restated. The Company does not anticipate the adoption of SFAS
No. 128 to have a significant effect on EPS.
STOCK OPTIONS
In 1996, the Company adopted Statement of Financial Accounting Standards
No. 123, Accounting for Stock-Based Compensation. In accordance with SFAS No.
123, the Company uses the intrinsic value method to account for stock options,
consistent with the existing rules established by Accounting Principles Board
No. 25, Accounting for Stock Issued to Employees. Accordingly, no compensation
expense has been recognized for stock options granted to employees.
F-9
<PAGE> 64
BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
UNAUDITED INTERIM FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Article 10 of Regulation S-X
of the Securities Exchange Act of 1934. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements.
In the opinion of the Company, all adjustments (consisting of only normal
recurring accruals) considered necessary to present fairly the consolidated
financial position as of March 31, 1997 and the consolidated statements of
income, stockholders' equity and cash flows for the three-month periods ended
March 31, 1996 and 1997 have been included.
2. MERGER AND ACQUISITIONS
On June 7, 1996, the Company completed a merger with Allied Communications
through the exchange of 3,796,875 shares of newly-issued Company common stock in
exchange for all of the outstanding shares of Allied Communications' common
stock. The merger was structured as a tax-free reorganization and was accounted
for using the pooling-of-interests method of accounting. In connection with the
merger, the Company recorded a nonrecurring charge of $2.75 million ($2.1
million net of tax) in the quarter ended June 30, 1996, for transaction costs,
including investment banking, legal, and accounting fees, and for estimated
costs associated with the merger. Net sales and net income for the Company and
Allied Communications prior to the combination are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED THREE
DECEMBER 31, MONTHS ENDED
-------------------- MARCH 31,
1994 1995 1996
---- ---- ------------
<S> <C> <C> <C>
Net sales
Brightpoint, Inc.......................................... $169,268 $269,359 $ 87,662
Allied Communications..................................... 139,959 149,790 25,298
-------- -------- --------
Combined............................................... $309,227 $419,149 $112,960
======== ======== ========
Net income, giving effect to pro forma income taxes
Brightpoint, Inc. ........................................ $ 2,843 $ 5,706 $ 2,023
Allied Communications..................................... 1,712 1,601 454
-------- -------- --------
Combined............................................... $ 4,555 $ 7,307 $ 2,477
======== ======== ========
</TABLE>
On August 1, 1996, the Company completed the formation of Brightpoint
International Ltd., a joint venture with Technology Resources International
Limited. The Company maintained effective controlling interest in Brightpoint
International Ltd., and therefore the operations were consolidated for financial
reporting purposes.
The Company owned 50% of Brightpoint International Ltd. until November
1996, when the Company acquired the remaining 50% of the subsidiary. The
combination was accounted for using the purchase method. The purchase price for
the remaining equity interest consisted of 750,000 unregistered shares of the
Company's common stock, valued at $8.1 million, and $5.0 million of cash. The
resulting goodwill of $12.6 million is being amortized over 30 years.
On October 18, 1996, Brightpoint International Ltd. acquired the business
and operations of Hatadicorp Pty Ltd. (Hatadi) based in Sydney, Australia. The
newly-formed Brightpoint Australia Pty Ltd. is owned 80 percent by Brightpoint
International Ltd. and 20 percent by the former shareholders of Hatadi. The
F-10
<PAGE> 65
BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. MERGER AND ACQUISITIONS (CONTINUED)
combination was accounted for using the purchase method and the operations of
Brightpoint Australia Pty Ltd. are consolidated for financial reporting
purposes. The purchase price of $2.8 million was allocated principally to
goodwill which is being amortized over 30 years.
In February 1997, the Company acquired the balance of ownership of its
majority-owned subsidiary, Brightpoint China Limited. The 20 percent minority
interest was owned by members of management of that subsidiary. The purchase
price for the remaining equity interest consisted of 96,775 of unregistered
shares of the Company's common stock, valued at $1.3 million, and $750,000 in
cash. The acquisition was accounted for using the purchase method. The resulting
goodwill of $1.6 million is being amortized over 30 years.
The impact of these acquisitions was not material in relation to the
Company's results of operations. Consequently, pro forma information is not
presented.
3. INVESTMENTS
During the fourth quarter of 1996, the Company acquired 1,000,000 shares of
common stock of CellStar Corporation for investment purposes. CellStar
Corporation is engaged in substantially the same business as the Company. The
cost basis of this investment was $11.4 million and the fair value at December
31, 1996 (based on quoted market price) was $18.0 million. In accordance with
Statement of Financial Accounting Standards No. 115, Accounting for Certain Debt
and Equity Securities, the Company classified the available-for-sale investment
as a current asset and reported it at fair value with the unrealized gain, net
of tax, classified as a separate component of stockholders' equity at December
31, 1996.
In December 1996, the Company acquired 25 Series E convertible debentures
of Pocket Communications, Inc. (Pocket). Pocket is a privately-held company
offering wireless telecommunications services, specifically in the area of
Personal Communications Services (PCS). The price of each debenture was $200,000
resulting in a total investment of $5.0 million. Each debenture is convertible
into 25,000 shares of common stock of Pocket, resulting in 625,000 total
convertible shares. The debentures earn interest at a rate of 2.5% above Prime
Rate (10.75% at December 31, 1996) and have a maturity date of December 12,
1998, at which time the Company can demand repayment or exercise its conversion
rights. Assuming conversion, the Company's ownership interest in Pocket would
approximate 1%. This investment was carried at cost and classified in other
assets at December 31, 1996. There is no quoted market price for this
investment. However, because the instrument was acquired in late 1996 and no
events had occurred that would significantly impact the value of the instrument,
the cost of the investment at December 31, 1996 was assumed to approximate fair
value.
During the first quarter of 1997, the Company realized a gain on the sale
of its investment it had made in CellStar Corporation. The gain, net of
transaction costs, including related bonuses to certain key employees, was
approximately $8.3 million. In addition, on March 31, 1997, Pocket filed for
protection under Chapter 11 of the U.S. Bankruptcy Code. Accordingly, the
Company recorded $6.9 million of unrealized losses on its investments in Pocket
and two smaller equity investments. Excluding the impact of the resulting net
investment gain of $1.4 million and related income taxes, net income per share
for the first quarter of 1997 would have been $0.20.
F-11
<PAGE> 66
BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. PROPERTY AND EQUIPMENT
The components of property and equipment are as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------- MARCH 31,
1995 1996 1997
---- ---- ---------
(UNAUDITED)
<S> <C> <C> <C>
Furniture and equipment..................................... $ 964 $2,065 $ 3,237
Information systems equipment and software.................. 1,985 5,917 8,879
Leasehold improvements...................................... 495 1,450 2,069
------ ------ -------
3,444 9,432 14,185
Less accumulated depreciation............................... 510 1,225 1,788
------ ------ -------
Net property and equipment.................................. $2,934 $8,207 $12,397
====== ====== =======
</TABLE>
5. NOTES PAYABLE
At December 31, 1996, the Company had a $75 million credit agreement (line
of credit) with Bank One, Indiana, N.A., as agent bank for a group of banks
(bank). Borrowings on the line of credit ($56 million at December 31, 1996) bear
interest at the bank's prime rate (8.25% at December 31, 1996) less up to 100
basis points or at LIBOR (5.60% at December 31, 1996) plus 75 to 175 basis
points dependent upon the ratio of the Company's funded debt to capital. The
agreement also includes a provision to allow the Company to guarantee bank debt
of Brightpoint International Ltd. in an amount not to exceed $25 million. The
line of credit agreement matures on May 28, 1999.
Substantially all of the Company's assets, including its inventories and
receivables, are pledged to the bank as collateral. In addition to covenants
requiring the maintenance of certain financial ratios, the Company's agreement
with the bank limits or prohibits the Company, subject to certain exceptions,
from among other things, incurring additional indebtedness, declaring or paying
cash dividends, making capital distributions or other payments to stockholders,
merging or consolidating with another corporation, forming subsidiaries, selling
all or substantially all of its assets, creating liens or security interests on
the Company's assets and entering into transactions with affiliates.
During the fourth quarter of 1996, Brightpoint International Ltd. entered
into a $25 million line of credit agreement with The First National Bank of
Chicago to provide capital for the Company's international operating divisions.
Borrowings on the credit agreement were $21.6 million and $25 million at
December 31, 1996 and March 31, 1997, respectively, and bear interest consistent
with rates charged on the Company's line of credit agreement. The credit
agreement matures in February 1998.
At December 31, 1995, outstanding debt of $5.7 million was classified as a
current liability and consisted primarily of a note payable with Bank One that
had a current maturity schedule.
At December 31, 1996, the Company was in compliance with the covenants in
its credit agreements. Interest payments for 1994, 1995 and 1996 were
approximately $277,000, $1,525,000 and $1,556,000, respectively. The carrying
amount of the Company's borrowings under its variable-rate lines of credit
approximates fair value.
On January 28, 1997, the Company amended its $75 million credit agreement
(line of credit) with Bank One, Indiana, N.A., as agent for a group of banks, to
increase available borrowings on the line of credit to $100 million. Borrowings
on the amended line of credit bear interest, payable monthly, at the bank's
prime rate less 100 basis points to plus 25 basis points or at LIBOR plus 75 to
200 basis points depending upon the ratio of the Company's funded debt to
capital. The $100 million line of credit matures in two stages, $25 million on
July 31, 1997 and $75 million on May 28, 1999 and does not include provisions
for demand repayment. Under the line of credit at March 31, 1997, there was
$76.7 million outstanding, $12.2 million in letters of credit and $11.1 million
remaining available.
F-12
<PAGE> 67
BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. INCOME TAXES
For financial reporting purposes, income before income taxes and minority
interest, by tax jurisdiction, is comprised of the following (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------- -------------------------
1994 1995 1996 1996 1997
---- ---- ---- ---- ----
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
United States............................... $7,505 $12,003 $13,706 $4,067 $2,876
Foreign..................................... -- -- 6,417 -- 5,339
------ ------- ------- ------ ------
$7,505 $12,003 $20,123 $4,067 $8,215
====== ======= ======= ====== ======
</TABLE>
The pro forma provision for income taxes represents the estimated income
taxes that would have been reported had the Company been subject to income taxes
for each of the periods presented. In 1994 and 1995, the pro forma income tax
expense is comprised of a provision for federal income taxes at the statutory
rate plus a state income tax provision, net of federal income tax benefit. No
other items materially impact the pro forma income tax expense during those two
years. Due to the significance of the Subchapter S earnings (of both the Company
and Allied Communications) during 1994 and 1995, a reconciliation of historical
income tax expense is not presented as it would not be meaningful.
The reconciliation of income tax expense for 1996 computed at the U.S.
federal statutory tax rate to the Company's effective income tax rate is as
follows:
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
---------- ---------
<S> <C> <C>
Tax at U.S. federal statutory rate...................... 35.0% 35.0%
State and local income taxes, net of U.S. federal
benefit............................................... 3.7 3.7
Allied Communications' Subchapter S earnings............ (2.5) --
Non-deductible merger expenses.......................... 1.7 1.7
Foreign sales corporation and foreign rates............. (1.5) (1.6)
---- ----
36.4% 38.8%
==== ====
</TABLE>
For the three months ended March 31, 1997, the difference between the U.S.
Federal statutory rate and the Company's effective income tax rate is primarily
attributable to lower foreign sales corporation and foreign tax rates.
Significant components of the historical and pro forma provision for income
taxes are as follows (in thousands):
<TABLE>
<CAPTION>
PRO FORMA (UNAUDITED) HISTORICAL
-------------------------------- --------------------------------
1994 1995 1996 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Current:
Federal....................... $2,590 $3,763 $4,758 $1,357 $3,028 $4,340
State......................... 642 1,017 1,131 410 978 1,035
Foreign....................... -- -- 2,184 -- -- 2,184
------ ------ ------ ------ ------ ------
3,232 4,780 8,073 1,767 4,006 7,559
Deferred:
Federal....................... (227) (73) (237) (116) (146) (203)
State......................... (55) (11) (32) (28) (22) (28)
------ ------ ------ ------ ------ ------
(282) (84) (269) (144) (168) (231)
------ ------ ------ ------ ------ ------
$2,950 $4,696 $7,804 $1,623 $3,838 $7,328
====== ====== ====== ====== ====== ======
</TABLE>
F-13
<PAGE> 68
BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. INCOME TAXES (CONTINUED)
Components of the Company's deferred taxes are as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------
1995 1996
---- ----
<S> <C> <C>
Deferred tax assets:
Capitalization of inventory costs......................... $204 $ 612
Allowance for doubtful accounts........................... 156 372
---- -------
360 984
Deferred tax liabilities:
Depreciation.............................................. (48) (330)
Unrealized gain on marketable securities.................. -- (2,640)
---- -------
(48) (2,970)
---- -------
$312 $(1,986)
==== =======
</TABLE>
Income tax payments were $1,976,000, $1,931,000 and $6,199,000 for 1994,
1995 and 1996, respectively.
Undistributed earnings of the Company's foreign operations were
approximately $6.0 million at December 31, 1996. Those earnings are considered
to be indefinitely reinvested and accordingly, no provision for U.S. federal and
state income taxes or foreign withholding taxes has been made. Upon distribution
of those earnings, the Company would be subject to U.S. income taxes (subject to
a reduction for foreign tax credits) and withholding taxes payable to the
various foreign countries. Determination of the amount of unrecognized deferred
U.S. income tax liability is not practicable; however, unrecognized foreign tax
credit carryovers would be available to reduce some portion of the U.S.
liability.
7. STOCKHOLDERS' EQUITY
The Company has declared the following stock splits which were effected in
the form of stock dividends:
<TABLE>
<CAPTION>
DECLARATION DATE DIVIDEND PAYMENT DATE SPLIT RATIO
- ---------------- --------------------- -----------
<S> <C> <C>
August 31, 1995 September 20, 1995 5 for 4
November 12, 1996 December 17, 1996 3 for 2
January 28, 1997 March 3, 1997 5 for 4
</TABLE>
Accordingly, all references in the financial statements related to share
amounts, per share amounts, average shares outstanding and information
concerning stock option plans have been adjusted retroactively to reflect these
stock splits.
In April 1994, the Company consummated the sale of 5.4 million shares
(including the underwriters' over-allotment option) of common stock for $2.67
per share in an initial public offering. In connection with the initial public
offering and the conversion of the Company from an S corporation to a C
corporation, the undistributed retained earnings generated while an S
corporation were transferred to additional paid-in capital.
In October 1995, the Company consummated the sale of 3.6 million shares of
common stock (including the sale of 520,000 shares pursuant to the underwriters'
over-allotment option) at a price of $10.14 per share in a public offering. The
net proceeds were used to repay $10.3 million outstanding under its line of
credit and for working capital and general corporate purposes.
In connection with the Allied merger completed in June 1996, Allied
Communications' Subchapter S election was terminated. Accordingly, the
undistributed retained earnings generated while Allied Communications were
Subchapter S corporations were transferred to additional paid-in capital.
F-14
<PAGE> 69
BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. STOCKHOLDERS' EQUITY (CONTINUED)
The Company has authorized 1,000,000 shares of preferred stock which remain
unissued. The Board of Directors has not yet determined the preferences,
qualifications, relative voting or other rights of the authorized shares of
preferred stock.
STOCK OPTION PLANS
The Company has three fixed stock option plans which reserve shares of
common stock for issuance to executives, key employees and directors.
In March 1994, the Company adopted the 1994 Stock Option Plan whereby
employees of the Company and others are eligible to be granted incentive stock
options or non-qualified stock options. A total of 937,500 common shares were
originally reserved for grant under the Plan. During 1995, an amendment was
approved which authorized an increase in shares reserved for issuance to
2,109,375 shares. In October 1996, the Company adopted the 1996 Stock Option
Plan whereby employees of the Company and others are eligible to be granted
non-qualified stock options. A total of 1,875,000 common shares were reserved
for grant under the Plan. For both Plans, a committee of the Board of Directors
determines the time or times at which the options will be granted, selects the
employees or others to whom options will be granted and determines the number of
shares covered by each option, purchase price, time of exercise (not to exceed
ten years from the date of the grant) and other terms.
In March 1994, the Company adopted the Non-employee Directors Stock Option
Plan whereby non-employee directors are eligible to be granted non-qualified
stock options. A total of 234,375 shares were reserved for grant under the plan.
During 1995, an amendment was approved which authorized an increase in shares
reserved for issuance under the plan to 468,750 shares. Options to purchase
10,000 shares of common stock are granted to each newly elected non-employee
director and, on the first day of each year, each individual elected and
continuing as a non-employee director receives an option to purchase 4,000
shares of common stock.
The exercise price of stock options granted may not be less than the fair
market value of a share of common stock on the date of the grant. Options become
exercisable in periods ranging from one to three years. Information regarding
these option plans for 1995 and 1996 is as follows:
<TABLE>
<CAPTION>
1995 1996
----------- -------------------------------
WEIGHTED AVERAGE
SHARES SHARES EXERCISE PRICE
------ ------ ----------------
<S> <C> <C> <C>
Options outstanding, beginning of year.............. 1,034,767 1,247,179 $ 5.71
Options granted..................................... 814,454 1,705,366 12.31
Options exercised................................... 594,228 344,183 4.76
Options canceled.................................... 7,814 32,422 11.30
----------- ------------
Options outstanding, end of year.................... 1,247,179 2,575,940 10.13
=========== ============
Option price range at end of year................... $2.67-$8.90 $2.67-$19.20
Option price range for exercised shares............. $2.67-$5.28 $2.67-$ 8.90
Options available for grant at year end............. 927,028
Weighted average fair value of options granted
during the year................................... $ 4.23
</TABLE>
F-15
<PAGE> 70
BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. STOCKHOLDERS' EQUITY (CONTINUED)
STOCK OPTION PLANS (CONTINUED)
The following table summarizes information about the fixed price stock
options outstanding at December 31, 1996.
<TABLE>
<CAPTION>
WEIGHTED
NUMBER AVERAGE NUMBER
RANGE OF OUTSTANDING AT REMAINING WEIGHTED AVERAGE EXERCISABLE AT WEIGHTED AVERAGE
EXERCISE PRICES DECEMBER 31, 1996 CONTRACTUAL LIFE EXERCISE PRICE DECEMBER 31, 1996 EXERCISE PRICE
--------------- ----------------- ---------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
$ 2.67-$ 6.02........ 270,937 3 years $ 3.15 194,565 $2.67
$ 6.46-$ 8.90........ 656,253 3 years $ 7.37 375,002 $7.10
$10.00-$12.46........ 1,565,625 5 years $12.23 -- --
$14.66-$19.20........ 83,125 5 years $15.27 -- --
</TABLE>
Pro forma information regarding net income and earnings per share is
required by SFAS No. 123, which also requires that the information be determined
as if the Company has accounted for its employee stock options granted
subsequent to December 31, 1994, under the fair value method as defined by that
Statement. The fair value for these options was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted-average
assumptions for 1995 and 1996: risk-free interest rate of 5.5%; a dividend yield
of 0.0%; volatility factor of the expected market price of the Company's common
stock of .51; and an expected life of the options of 1.99 years.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.
For purposes of pro forma disclosures, the estimated fair value of the
options and stock warrants, discussed below, are amortized to expense over the
related vesting period. Because compensation expense is recognized over the
vesting period, the initial impact on pro forma net income may not be
representative of compensation expense in future years, when the effect of
amortization of multiple awards would be reflected in the consolidated
statements of income. The Company's pro forma information giving effect to the
estimated compensation expense related to stock options and warrants is as
follows (in thousands, except per share data):
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Pro forma net income(1)..................................... $6,336 $11,638
Pro forma earnings per share................................ $ 0.37 $ 0.55
</TABLE>
- ------------
(1) Excluding the after-tax effect of one-time merger expenses.
STOCK WARRANTS
In connection with the initial public offering, the Company issued warrants
to purchase up to 468,750 shares of common stock initially exercisable at $3.30
per share. During 1995 and 1996, substantially all of the warrants were
exercised.
In January 1995, the Company issued warrants to purchase up to 596,430
shares of common stock at $6.96 per share in connection with an agreement with
HSN Direct, Inc. During 1996, 573,461 of the warrants
F-16
<PAGE> 71
BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. STOCKHOLDERS' EQUITY (CONTINUED)
STOCK WARRANTS (CONTINUED)
were exercised. The remaining outstanding warrants are exercisable by the
holders at any time until January 16, 2000.
8. LEASE ARRANGEMENTS
The Company leases certain furniture and equipment as well as its office
and warehouse/distribution space under operating leases.
Total rent expense under all operating leases was $446,000, $540,000 and
$1,469,000 for 1994, 1995 and 1996, respectively.
The aggregate future minimum payments on the above leases are as follows
(in thousands):
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------
<S> <C>
1997................................................. $ 1,828
1998................................................. 1,693
1999................................................. 1,628
2000................................................. 1,506
2001................................................. 1,448
Thereafter........................................... 7,075
-------
$15,178
=======
</TABLE>
9. GEOGRAPHIC OPERATIONS
The Company operates in worldwide markets. Its business activities are
conducted in four divisions: Asia-Pacific; North America; Europe, Middle East
and Africa; and Latin America. A summary of the Company's operations by division
is presented below (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------- --------------------------
1994 1995 1996 1996 1997
---- ---- ---- ---- ----
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET SALES:
Asia-Pacific............................ $ -- $ 7,533 $127,629 $ 11,608 $ 85,643
North America........................... 252,262 269,730 287,377 78,050 70,772
Europe, Middle East and Africa.......... 16,927 46,284 76,292 3,245 37,621
Latin America........................... 40,038 95,602 98,420 20,057 5,133
-------- -------- -------- -------- --------
$309,227 $419,149 $589,718 $112,960 $199,169
======== ======== ======== ======== ========
INCOME BEFORE INCOME TAXES AND MINORITY
INTERESTS:
Asia-Pacific............................ $ -- $ -- $ 5,135 $ 1,218 $ 4,177
North America........................... 6,533 9,265 7,113 2,076 2,771
Europe, Middle East and Africa.......... -- -- 3,607 343 1,162
Latin America........................... 972 2,738 4,268 430 105
-------- -------- -------- -------- --------
$ 7,505 $ 12,003 $ 20,123 $ 4,067 $ 8,215
======== ======== ======== ======== ========
</TABLE>
F-17
<PAGE> 72
BRIGHTPOINT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. GEOGRAPHIC OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------- MARCH 31,
1994 1995 1996 1997
---- ---- ---- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
IDENTIFIABLE ASSETS:
Asia-Pacific....................................... $ -- $ -- $ 54,958 $ 65,713
North America...................................... 72,118 92,465 126,003 137,917
Europe, Middle East and Africa..................... -- -- 44,451 40,651
Latin America...................................... 10,727 27,322 73,633 31,977
-------- -------- -------- --------
$ 82,845 $119,787 $299,045 $276,258
======== ======== ======== ========
</TABLE>
For geographic reporting purposes only, net sales are recorded in the
region in which the customer is located. In 1994 and 1995, sales in the
Asia-Pacific and Europe, Middle East and Africa divisions were export sales from
North America operations. As a result, the Company has not allocated income
before income taxes and minority interest and identifiable assets to those
divisions in 1994 and 1995.
10. EMPLOYEE BENEFIT PLAN
On January 1, 1996, the Company adopted an employee savings plan which
permits employees with at least one year of service to make contributions by
salary reduction pursuant to section 401(k) of the Internal Revenue Code. The
Company matches 25% of employee contributions, up to 6%, in Company common
stock. In connection with the required match, the Company's contribution to the
Plan was $56,400 in 1996.
11. SUBSEQUENT EVENTS (UNAUDITED)
On April 17, 1997, the Company obtained a commitment for a $200 million
five-year global credit facility from Bank One, Indiana, N.A. and The First
National Bank of Chicago, as co-agents for a group of banks. The new facility,
upon closing, will replace the existing $125 million of credit facilities. As a
result of this commitment, all amounts outstanding under the Company's credit
facilities at March 31, 1997 have been classified as long-term.
On April 22, 1997, the Company announced that it had acquired the balance
of ownership of two of its majority-owned subsidiaries, Brightpoint (UK) Limited
and Brightpoint Australia Pty Ltd. The 20 percent minority interests were owned
by members of management of each of the respective subsidiaries. The purchase
price of the minority ownership interests consisted of approximately 135,470 of
unregistered shares of the Company's common stock, valued at $1.8 million, and
approximately $765,000 in cash. The acquisitions were accounted for using the
purchase method. The purchase price of approximately $2.6 million was allocated
principally to goodwill which is being amortized over 30 years.
On April 24, 1997, the stockholders of the Company approved an amendment to
the Company's Certificate of Incorporation to increase the authorized number of
shares of common stock from 25,000,000 to 100,000,000 and an amendment to the
1994 Stock Option Plan to increase the number of shares reserved for issuance
from 2,109,375 to 4,100,000.
On June 13, 1997, the Company's wholly-owned subsidiary, Brightpoint Sweden
AB, acquired the business and certain net assets of Telnic AB, a distributor of
wireless communications equipment located in Sweden. The purchase price
consisted of approximately $2.5 million with an additional $300,000 payable upon
execution of a key contract and up to an additional $3.6 million depending upon
the future financial performance of Brightpoint Sweden AB. This acquisition is
being accounted for using the purchase method and the resulting goodwill was
approximately $600,000 which is being amortized over 30 years.
F-18
<PAGE> 73
======================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING STOCKHOLDERS OR THE UNDERWRITERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON WHOM, IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary..................... 3
Special Note Regarding Forward-Looking
Statements........................... 7
Risk Factors........................... 7
Use of Proceeds........................ 15
Price Range of Common Stock............ 15
Dividend Policy........................ 16
Capitalization......................... 16
Selected Consolidated Financial Data... 17
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 19
Business............................... 26
Management............................. 34
Principal and Selling Stockholders..... 41
Certain Transactions................... 42
Description of Capital Stock........... 43
Shares Eligible for Future Sale;
Registration Rights.................. 46
Certain United States Federal Tax
Consequences to Non-United States
Holders.............................. 47
Underwriting........................... 49
Legal Matters.......................... 51
Experts................................ 51
Available Information.................. 51
Incorporation of Certain Documents by
Reference............................ 52
Index to Consolidated Financial
Statements........................... F-1
</TABLE>
======================================================
======================================================
4,000,000 SHARES
[LOGO]
BRIGHTPOINT, INC.
COMMON STOCK
---------------------------
PROSPECTUS
---------------------------
MERRILL LYNCH & CO.
COWEN & COMPANY
UBS SECURITIES
SANDS BROTHERS & CO., LTD.
, 1997
======================================================
<PAGE> 74
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
[ALTERNATE INTERNATIONAL PROSPECTUS PAGE]
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JUNE 19, 1997
PROSPECTUS
4,000,000 SHARES
BRIGHTPOINT, INC.
COMMON STOCK [LOGO]
------------------------
Of the 4,000,000 shares of Common Stock of Brightpoint, Inc., a Delaware
corporation (the "Company" or "Brightpoint"), being offered hereby, 1,800,000
shares are being offered by the Company and 2,200,000 shares are being offered
by certain stockholders of the Company (the "Selling Stockholders"). The Company
will not receive any of the proceeds from the sale of shares of Common Stock by
the Selling Stockholders. See "Principal and Selling Stockholders."
Of the 4,000,000 shares of Common Stock offered hereby, 800,000 are being
offered initially outside the United States and Canada by the International
Managers (the "International Offering") and 3,200,000 shares are being offered
initially in a concurrent offering inside the United States and Canada by the
U.S. Underwriters (the "U.S. Offering," and together with the International
Offering, the "Offerings"). The public offering price and the underwriting
discount per share are identical for each of the Offerings. See "Underwriting."
The Common Stock is quoted on the Nasdaq National Market under the symbol
"CELL." On June 17, 1997, the last reported sale price of the Common Stock on
the Nasdaq National Market was $31.00 per share. See "Price Range of Common
Stock."
SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
====================================================================================================================
PROCEEDS TO
PRICE UNDERWRITING PROCEEDS TO SELLING
TO PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDERS
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
Per Share............... $ $ $ $
- --------------------------------------------------------------------------------------------------------------------
Total(3)................ $ $ $ $
====================================================================================================================
</TABLE>
(1) The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities, including certain
liabilities under the Securities Act of 1933, as amended. See
"Underwriting."
(2) Before deducting expenses of the Offerings payable by the Company estimated
to be $ . The Selling Stockholders will not be paying any expenses of
the Offerings.
(3) The Company has granted an option to the International Managers, exercisable
within 30 days of the date hereof, to purchase up to 120,000 additional
shares of Common Stock and an option to the U.S. Underwriters, exercisable
within 30 days of the date hereof, to purchase up to 480,000 additional
shares of Common Stock solely to cover over-allotments, if any. If such
options are exercised in full, the total Price to Public, Underwriting
Discount and Proceeds to Company will be $ , $ and $ ,
respectively. See "Underwriting."
------------------------
The shares of Common Stock are being offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to the approval of certain legal matters by counsel for the Underwriters and
certain other conditions. The Underwriters reserve the right to withdraw, cancel
or modify such offer and to reject orders in whole or in part. It is expected
that delivery of the shares of Common Stock will be made in New York, New York
on or about , 1997.
------------------------
MERRILL LYNCH INTERNATIONAL
COWEN INTERNATIONAL L.P.
UBS LIMITED
SANDS BROTHERS & CO., LTD.
------------------------
The date of this Prospectus is , 1997.
<PAGE> 75
[ALTERNATE INTERNATIONAL PROSPECTUS PAGE]
UNDERWRITING
Subject to the terms and conditions set forth in an international purchase
agreement (the "International Purchase Agreement") among the Company, each of
the Selling Stockholders and each of the underwriters named below (the
"International Managers"), and concurrently with the sale of 3,200,000 shares of
Common Stock to the U.S. Underwriters (as defined below), the Company and the
Selling Stockholders have agreed to sell to the International Managers, and each
of the International Managers severally has agreed to purchase from the Company
and the Selling Stockholders, the number of shares of Common Stock set forth
opposite its name below.
<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL MANAGERS SHARES
---------------------- ---------
<S> <C>
Merrill Lynch International.................................
Cowen International L.P.....................................
UBS Limited.................................................
Sands Brothers & Co., Ltd...................................
---------
Total........................................... 800,000
=========
</TABLE>
Merrill Lynch International, Cowen International L.P., UBS Limited and
Sands Brothers & Co., Ltd. are acting as representatives (the "International
Representatives") of the International Managers.
The Company and the Selling Stockholders have also entered into a purchase
agreement (the "U.S. Purchase Agreement") and, together with the International
Purchase Agreement, the "Purchase Agreements") with certain underwriters in the
United States and Canada (collectively, the "U.S. Underwriters," and together
with the International Managers, the "Underwriters"), for whom Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Cowen & Company, UBS
Securities LLC and Sands Brothers & Co., Ltd. are acting as representatives (the
"U.S. Representatives" and, together with the International Representatives, the
"Representatives"). Subject to the terms and conditions set forth in the U.S.
Purchase Agreement, and concurrently with the sale of 800,000 shares of Common
Stock to the International Managers pursuant to the International Purchase
Agreement, the Company and the Selling Stockholders have agreed to sell to the
U.S. Underwriters, and the U.S. Underwriters have severally agreed to purchase
from the Company and the Selling Stockholders, an aggregate of 3,200,000 shares
of Common Stock. The public offering price per share of Common Stock and the
underwriting discount per share of Common Stock are identical under the
International Purchase Agreement and the U.S. Purchase Agreement. The respective
percentages of the Common Stock to be sold by each of the Company and the
Selling Stockholders will be identical in the U.S. Offering and the
International Offering.
In the International Purchase Agreement and the U.S. Purchase Agreement,
the several International Managers and the several U.S. Underwriters,
respectively, have agreed, subject to the terms and conditions set forth
therein, to purchase all of the shares of Common Stock being sold pursuant to
each such agreement if any of the shares of Common Stock being sold pursuant to
such agreement are purchased. Under certain circumstances involving a default by
an Underwriter, the commitments of non-defaulting International Managers or U.S.
Underwriters (as the case may be) may be increased or the International Purchase
Agreement or the U.S. Purchase Agreement (as the case may be) may be terminated.
The sale of Common Stock to the International Managers is conditioned upon the
sale of Common Stock to the U.S. Underwriters and vice versa.
The International Managers and the U.S. Underwriters have entered into an
intersyndicate agreement (the "Intersyndicate Agreement") providing for the
coordination of their activities. The Underwriters are
49
<PAGE> 76
[ALTERNATE INTERNATIONAL PROSPECTUS PAGE]
permitted to sell shares of Common Stock to each other for purposes of resale at
the initial public offering price, less an amount not greater than the selling
concession. Under the terms of the Intersyndicate Agreement, the International
Managers and any dealer to whom they sell shares of Common Stock will not offer
to sell or sell shares of Common Stock to persons who are United States or
Canadian persons or to persons they believe intend to resell to persons who are
United States or Canadian persons, and the U.S. Underwriters and any dealer to
whom they sell shares of Common Stock will not offer to sell or sell shares of
Common Stock to non-United States persons or to non-Canadian persons or to
persons they believe intend to resell to non-United States persons or
non-Canadian persons, except in the case of transactions pursuant to the
Intersyndicate Agreement.
The International Representatives have advised the Company and the Selling
Stockholders that the International Managers propose initially to offer the
shares of Common Stock to the public at the public offering price set forth on
the cover page of this Prospectus, and to certain selected dealers at such price
less a concession not in excess of $ per share. The International Managers
may allow, and such dealers may reallow, a discount not in excess of $ per
share on sales to certain other dealers. After the initial public offering, the
public offering price, concession and discount may be changed.
Each International Manager has agreed that (i) it has not offered or sold,
and will not for a period of six months following consummation of the Offerings
offer or sell, in the United Kingdom by means of any document, any shares of
Common Stock offered hereby, other than to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances that do not constitute an offer to the public within the meaning
of the Public Offers of Securities Regulations of 1995; (ii) it has complied
with and will comply with all applicable provisions of the Financial Services
Act of 1986 with respect to anything done by it in relation to the Common Stock
in, from or otherwise involving the United Kingdom and (iii) it has only issued
or passed on and will only issue or pass on to any person in the United Kingdom
any document received by it in connection with the issue of the Common Stock if
that person is of a kind described in Article 11(3) of the Financial Services
Act of 1986 (Investment Advertisements)(Exemptions) Order 1996, as amended, or
is a person to whom the document may otherwise lawfully be issued or passed on.
Purchasers of the shares of Common Stock offered hereby may be required to
pay stamp taxes and other charges in accordance with the laws and practices of
the country of purchase, in addition to the offering price set forth on the
cover page hereof.
The Company has granted to the International Managers an option,
exercisable within 30 days after the date of this Prospectus, to purchase up to
an aggregate of 120,000 additional shares of Common Stock at the public offering
price set forth on the cover page of this Prospectus, less the underwriting
discount. The International Managers may exercise this option only to cover
over-allotments, if any, made on the sale of the shares of Common Stock offered
hereby. To the extent that the International Managers exercise this option, each
International Manager will be obligated, subject to certain conditions, to
purchase a number of additional shares of Common Stock proportionate to such
International Manager's initial amount reflected in the foregoing table. The
Company has also granted an option to the U.S. Underwriters, exercisable within
30 days after the date of this Prospectus, to purchase up to an aggregate of
480,000 additional shares of Common Stock to cover over-allotments, if any, on
terms similar to those granted to the International Managers. If purchased, the
Underwriters will offer such additional shares on the same terms as those on
which the 4,000,000 shares are being offered.
The Company, its executive officers and directors, and the Selling
Stockholders have, subject to certain exceptions, agreed that they will not for
a period of 120 days from the date of this Prospectus, without the prior written
consent of Merrill Lynch and Merrill Lynch International, directly or
indirectly, sell, offer to sell, grant any option for the sale of, or otherwise
dispose of, any capital stock of the Company or any security convertible or
exchangeable into, or exercisable for, such capital stock, or, in the case of
the Company, file any registration statement (other than registration statements
on Form S-8 relating to employee stock option plans and the
50
<PAGE> 77
[ALTERNATE INTERNATIONAL PROSPECTUS PAGE]
registration statement relating to 375,000 shares of Common Stock owned by a
stockholder and an employee of the Company pursuant to the terms of his
outstanding registration rights) with respect to any of the foregoing, except
that the Company may, without such consent, issue options pursuant to the Stock
Options Plans and shares of Common Stock upon exercise of options issued
pursuant to the Stock Option Plans. See "Shares Eligible for Future Sale;
Registration Rights."
In connection with the Offerings, certain Underwriters or their respective
affiliates and selling group members (if any) who are qualified market makers on
the Nasdaq National Market may engage in "passive market making" in the Common
Stock on the Nasdaq National Market in accordance with Rule 103 under Regulation
M. Rule 103 permits, upon the satisfaction of certain conditions, underwriters
and selling group members participating in a distribution that are also Nasdaq
National Market makers in the security being distributed to engage in limited
market making transactions during the period when Rule 103 under Regulation M
would otherwise prohibit such activity. Rule 103 prohibits underwriters and
selling group members engaged in passive market making generally from entering a
bid or effecting a purchase at a price that exceeds the highest bid for those
securities displayed on the Nasdaq National Market by a market maker that is not
participating in the distribution. Under Rule 103, each underwriter or selling
group member engaged in passive market making is subject to a daily net purchase
limitation equal to 30% of such entity's average daily trading volume during the
two full consecutive calendar months immediately preceding the date of the
filing of the registration statement under the Securities Act pertaining to the
security to be distributed.
The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including certain liabilities under
the Securities Act, or to contribute to payments the Underwriters may be
required to make in respect thereof.
In connection with the Offerings, the Underwriters may engage in certain
transactions which stabilize, maintain or otherwise affect the price of the
Common Stock. Such transactions may include the purchase of shares of Common
Stock in the open market to cover short positions created by over-allotments or
to stabilize the price of the Common Stock. In general, purchases of a security
for the purpose of stabilization or to reduce a short position could cause the
price of the security to be higher than it might be in the absence of such
purchases. Neither the Company nor any of the Underwriters make any
representation or prediction as to the direction or magnitude of any effect that
the transactions described above may have on the price of the Common Stock. In
addition, neither the Company nor any of the Underwriters make any
representation that the Underwriters will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.
Steven B. Sands, the Co-Chairman and Chief Executive Officer of Sands
Brothers & Co., Ltd., one of the Representatives, has been a member of the
Company's Board of Directors since the Company's initial public offering in
April 1994. In addition, in connection with the Company's initial public
offering, Sands Brothers & Co., Ltd. received warrants to purchase an aggregate
of 468,750 shares of Common Stock at an exercise price of $3.30 per share, of
which warrants to purchase 467,579 shares have been exercised.
51
<PAGE> 78
[ALTERNATE INTERNATIONAL PROSPECTUS PAGE]
======================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING STOCKHOLDERS OR THE UNDERWRITERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON WHOM, IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary..................... 3
Special Note Regarding Forward-Looking
Statements........................... 7
Risk Factors........................... 7
Use of Proceeds........................ 15
Price Range of Common Stock............ 15
Dividend Policy........................ 16
Capitalization......................... 16
Selected Consolidated Financial Data... 17
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 19
Business............................... 26
Management............................. 34
Principal and Selling Stockholders..... 41
Certain Transactions................... 42
Description of Capital Stock........... 43
Shares Eligible for Future Sale;
Registration Rights.................. 46
Certain United States Federal Tax
Consequences to Non-United States
Holders.............................. 47
Underwriting........................... 49
Legal Matters.......................... 51
Experts................................ 51
Available Information.................. 51
Incorporation of Certain Documents by
Reference............................ 52
Index to Consolidated Financial
Statements........................... F-1
</TABLE>
======================================================
======================================================
4,000,000 SHARES
[LOGO]
BRIGHTPOINT, INC.
COMMON STOCK
---------------------------
PROSPECTUS
---------------------------
MERRILL LYNCH INTERNATIONAL
COWEN INTERNATIONAL L.P.
UBS LIMITED
SANDS BROTHERS & CO., LTD.
, 1997
======================================================
<PAGE> 79
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses of the Offerings payable by the registrant to be
incurred in connection with the distribution of the shares of Common Stock
registered hereby (less the underwriting discount) are as follows:
<TABLE>
<S> <C>
SEC registration............................................ $40,947.00
NASD fee.................................................... 14,012.50
Nasdaq listing fee.......................................... 17,500.00
Printing and engraving costs................................ *
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Blue Sky fees and expenses.................................. *
Transfer agent and registrar fees and expenses.............. *
Miscellaneous............................................... *
----------
Total.................................................. $
==========
</TABLE>
- ---------------
* To be completed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
provides for the indemnification of officers and directors under certain
circumstances against expenses incurred in successfully defending against a
claim and authorizes Delaware corporations to indemnify their officers and
directors under certain circumstances against expenses and liabilities incurred
in legal proceedings involving such persons because of their being or having
been an officer or director.
Section 102(b) of the Delaware General Corporation Law permits a
corporation, by so providing in its certificate of incorporation, to eliminate
or limit director's liability to the corporation and its stockholders for
monetary damages arising out of certain alleged breaches of their fiduciary
duty. Section 102(b)(7) provides that no such limitation of liability may affect
a director's liability with respect to any of the following: (i) breaches 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 of knowing
violations of law;(iii) liability for dividends paid or stock repurchased or
redeemed in violation of the Delaware General Corporation law; or (iv) any
transaction from which the director derived an improper personal benefit.
Section 102(b)(7) does not authorize any limitation on the ability of the
corporation or its stockholders to obtain injunction relief, specific
performance or other equitable relief against directors.
Article Ninth of the Company's Certificate of Incorporation and the
Company's By-laws provide that all persons who the Company is empowered to
indemnify pursuant to the provisions of Section 145 of the General Corporation
law of the State of Delaware (or any similar provision or provisions of
applicable law at the time in effect), shall be indemnified by the Company to
the full extent permitted thereby. The foregoing right of indemnification shall
not be deemed to be exclusive of any other rights to which those seeking
indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors, or otherwise.
Article Tenth of the Company's Certificate of Incorporation provides that
no director of the Company shall be personally liable to the Company or its
stockholders for any monetary damages for breaches of fiduciary duty as a
director, provided that such provision does not eliminate or limit the liability
of a director (i) for breaches of fiduciary duty of loyalty to the Company or
its stockholders' (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing-violation of law; (iii) under Section 174 of
II-1
<PAGE> 80
the General Corporation of Law of the State of Delaware; or (iv) for any
transaction from which the director derived an improper personal benefit.
Insofar as indemnification for liabilities under the Act may be permitted
to directors, officers or persons controlling the Company pursuant to the
foregoing provisions, the Company has been informed that in the opinion of the
Commission, such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
Reference is made to the Purchase Agreements, the proposed form of which
are filed as Exhibits 1.1 and 1.2, pursuant to which the Underwriters agree to
indemnify the directors and certain officers of the Registrant and certain other
persons against certain civil liabilities.
ITEM 16. EXHIBITS
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
<C> <S>
1.1 Form of U.S. Purchase Agreement. (10)
1.2 Form of International Purchase Agreement.*
3.1 Certificate of Incorporation of the Company, as Amended (10)
3.2 Amended and Restated By-Laws of the Company *
3.3 Certificate of Merger of Brightpoint, Inc. into Wholesale
Cellular USA, Inc., effective September 15, 1995. (2)
4.1 Form of Common Stock Certificate (1)
5.1 Opinion of Tenzer Greenblatt LLP as to the legality of the
shares to be issued.*
10.1 1994 Stock Option Plan (1)
10.2 1996 Stock Option Plan (8)
10.3 Non-Employee Directors Stock Option Plan (1)
10.4 Form of Employment Agreement between the Company and Robert
J. Laikin, J. Mark Howell and T. Scott Housefield (8)
10.5 Form of Employment Agreement between the Company and its
Executive Vice Presidents (8)
10.6 Lease Agreement between the Company and WRC Properties,
Inc., as amended and Unconditional Guaranty of Lease by
Century Cellular Network, Inc. (1)
10.7 Lease Agreement between the Company and Park 100 Properties,
Inc. (2)
10.8 Lease Agreement between the Company and Industrial
Affiliates, Ltd. (2)
10.9 Credit Agreement and First and Second Amendments to Credit
Agreement among the Company and Bank One, Indiana, N.A., The
First National Bank of Chicago and Bank One, Indiana, N.A.
as Agent, dated June 13, 1995, September 15, 1995 and
January 19, 1996, respectively (3)
10.10 Third, Fourth, Fifth and Sixth Amendments to Credit
Agreement among the Company and Bank One, Indiana, N.A., as
Agent for a group of banks. (8)
10.11 Lease Agreement between the Company and Airport Key
Corporation, dated November 30, 1995 (3)
10.12 Lease Agreement between the Company and Corporate Drive
Associates, LLC, dated June 6, 1995 (3)
10.13 Amendment to Lease Agreement between the Company and
Corporate Drive Associates, LLC, dated October 3, 1995 (3)
</TABLE>
II-2
<PAGE> 81
<TABLE>
<C> <S>
10.14 Agreement and Plan of Merger, as amended on April 29, 1996, by and among the Company, Brightpoint
Acquisition, Inc., a wholly-owned subsidiary of the Company, Allied Communications, Inc., Allied
Communications of Florida, Inc., Allied Communications of Georgia, Inc., Allied Communications of
Illinois, Inc., Allied Communications of Puerto Rico, Inc., Robert Picow and Joseph Forer. (5)
10.15 Stock Purchase Agreement, dated as of October 1, 1996, among the Company, Brightpoint
International Ltd., Technology Resources International Ltd., Safkong Holdings Limited, Marriott
Invest & Trade Inc., John MacLean-Arnott and Dana Marlin. (6)
10.16 Rights Agreement, dated as of February 20, 1997, between the Company and Continental Stock
Transfer Trust Company, as Rights Agent. (7)
10.17 Seventh Amendment to Credit Agreement among the Company and Bank One, Indiana, N.A., as Agent for
a group of banks. (9)
11.1 Statement re: computation of per share earnings (9)
13.1 1996 Annual Report to Stockholders. With the exception of the information incorporated by
reference in Items 5, 6, 7 and 8, the 1996 Annual Report to Stockholders is not deemed filed as
part of this report. (8)
21.1 Subsidiaries (10)
23.1 Consent of Ernst & Young LLP (10)
23.2 Report of Coopers & Lybrand LLP (8)
23.3 Consent of Coopers & Lybrand LLP (10)
23.4 Consent of Tenzer Greenblatt LLP, included in opinion filed as Exhibit 5.1.*
24.1 Power of Attorney, included in the signature page of this Registration Statement
27.1 Financial Data Schedule (9)
</TABLE>
- ---------------
* To be filed by amendment.
(1) Incorporated by reference to Registration Statement (33-75148) effective
April 7, 1994.
(2) Incorporated by reference to Annual Report on Form 10-K for the fiscal year
ended December 31, 1994.
(3) Incorporated by reference to Annual Report on Form 10-K for the fiscal year
ended December 31, 1995.
(4) Incorporated by reference to Registration Statement on Form S-3 (33-97084)
effective October 24, 1995.
(5) Incorporated by reference to Current Report on Form 8-K, dated June 12,
1996.
(6) Incorporated by reference to Current Report on Form 8-K, dated December 3,
1996.
(7) Incorporated by reference to Current Report on Form 8-K, dated March 28,
1997.
(8) Incorporated by reference to Annual Report on Form 10-K for the fiscal year
ended December 31, 1996.
(9) Incorporated by reference to Quarterly Report on Form 10-Q for the three
months ended March 31, 1997
(10) Filed herewith.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof;
II-3
<PAGE> 82
(2) (i) for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective; and
(ii) for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof; and
(3) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
II-4
<PAGE> 83
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, in the City of
Indianapolis, State of Indiana, on the 17th day of June 1997.
BRIGHTPOINT, INC.
By: /s/ ROBERT J. LAIKIN
------------------------------------
Robert J. Laikin
Chief Executive Officer
Each person whose signature appears below hereby authorizes each of Robert
J. Laikin and J. Mark Howell or either of them as his true and lawful
attorney-in-fact with full power of substitution to execute in the name and on
behalf of each person, individually and in each capacity stated below, and to
file, any and all amendments to this Registration Statement, including any and
all post-effective amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 was signed by the following persons in the
capacities and on the dates stated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ROBERT J. LAIKIN Chairman of the Board and Chief June 17, 1997
- --------------------------------------------- Executive Officer (Principal Executive
Robert J. Laikin Officer)
/s/ J. MARK HOWELL President, Chief Operating Officer and June 17, 1997
- --------------------------------------------- Director
J. Mark Howell
/s/ T. SCOTT HOUSEFIELD Executive Vice President and Director June 17, 1997
- ---------------------------------------------
T. Scott Housefield
/s/ PHILLIP A. BOUNSALL Executive Vice President; Chief June 17, 1997
- --------------------------------------------- Financial Officer (Principal Financial
Phillip A. Bounsall and Accounting Officer); and Treasurer
/s/ STEVEN E. FIVEL Executive Vice President; General June 17, 1997
- --------------------------------------------- Counsel; and Secretary
Steven E. Fivel
/s/ JOHN P. DELANEY Vice President, Corporate Controller June 17, 1997
- --------------------------------------------- (Principal Accounting Officer)
John P. Delaney
/s/ ROBERT PICOW Vice Chairman of the Board June 17, 1997
- ---------------------------------------------
Robert Picow
/s/ JOSEPH FORER Director June 17, 1997
- ---------------------------------------------
Joseph Forer
</TABLE>
<PAGE> 84
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JOHN W. ADAMS Director June 17, 1997
- ---------------------------------------------
John W. Adams
/s/ ROBERT F. WAGNER Director June 17, 1997
- ---------------------------------------------
Robert F. Wagner
/s/ STEPHEN H. SIMON Director June 17, 1997
- ---------------------------------------------
Stephen H. Simon
/s/ ROLLIN M. DICK Director June 17, 1997
- ---------------------------------------------
Rollin M. Dick
/s/ STEVEN B. SANDS Director June 17, 1997
- ---------------------------------------------
Steven B. Sands
</TABLE>
<PAGE> 85
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
<C> <S>
1.1 Form of U.S. Purchase Agreement. (10)
1.2 Form of International Purchase Agreement.*
3.1 Certificate of Incorporation of the Company, as Amended (10)
3.2 Amended and Restated By-Laws of the Company *
3.3 Certificate of Merger of Brightpoint, Inc. into Wholesale
Cellular USA, Inc., effective September 15, 1995. (2)
4.1 Form of Common Stock Certificate (1)
5.1 Opinion of Tenzer Greenblatt LLP as to the legality of the
shares to be issued.*
10.1 1994 Stock Option Plan (1)
10.2 1996 Stock Option Plan (8)
10.3 Non-Employee Directors Stock Option Plan (1)
10.4 Form of Employment Agreement between the Company and Robert
J. Laikin, J. Mark Howell and T. Scott Housefield (8)
10.5 Form of Employment Agreement between the Company and its
Executive Vice Presidents (8)
10.6 Lease Agreement between the Company and WRC Properties,
Inc., as amended and Unconditional Guaranty of Lease by
Century Cellular Network, Inc. (1)
10.7 Lease Agreement between the Company and Park 100 Properties,
Inc. (2)
10.8 Lease Agreement between the Company and Industrial
Affiliates, Ltd. (2)
10.9 Credit Agreement and First and Second Amendments to Credit
Agreement among the Company and Bank One, Indiana, N.A., The
First National Bank of Chicago and Bank One, Indiana, N.A.
as Agent, dated June 13, 1995, September 15, 1995 and
January 19, 1996, respectively (3)
10.10 Third, Fourth, Fifth and Sixth Amendments to Credit
Agreement among the Company and Bank One, Indiana, N.A., as
Agent for a group of banks. (8)
10.11 Lease Agreement between the Company and Airport Key
Corporation, dated November 30, 1995 (3)
10.12 Lease Agreement between the Company and Corporate Drive
Associates, LLC, dated June 6, 1995 (3)
10.13 Amendment to Lease Agreement between the Company and
Corporate Drive Associates, LLC, dated October 3, 1995 (3)
10.14 Agreement and Plan of Merger, as amended on April 29, 1996,
by and among the Company, Brightpoint Acquisition, Inc., a
wholly-owned subsidiary of the Company, Allied
Communications, Inc., Allied Communications of Florida,
Inc., Allied Communications of Georgia, Inc., Allied
Communications of Illinois, Inc., Allied Communications of
Puerto Rico, Inc., Robert Picow and Joseph Forer. (5)
10.15 Stock Purchase Agreement, dated as of October 1, 1996, among
the Company, Brightpoint International Ltd., Technology
Resources International Ltd., Safkong Holdings Limited,
Marriott Invest & Trade Inc., John MacLean-Arnott and Dana
Marlin. (6)
10.16 Rights Agreement, dated as of February 20, 1997, between the
Company and Continental Stock Transfer Trust Company, as
Rights Agent. (7)
10.17 Seventh Amendment to Credit Agreement among the Company and
Bank One, Indiana, N.A., as Agent for a group of banks. (9)
11.1 Statement re: computation of per share earnings (9)
</TABLE>
<PAGE> 86
<TABLE>
<C> <S>
13.1 1996 Annual Report to Stockholders. With the exception of the information incorporated by reference
in Items 5, 6, 7 and 8, the 1996 Annual Report to Stockholders is not deemed filed as part of this
report. (8)
21.1 Subsidiaries (10)
23.1 Consent of Ernst & Young LLP (10)
23.2 Report of Coopers & Lybrand LLP (8)
23.3 Consent of Coopers & Lybrand LLP (10)
23.4 Consent of Tenzer Greenblatt LLP, included in opinion filed as Exhibit 5.1.*
24.1 Power of Attorney, included in the signature page of this Registration Statement
27.1 Financial Data Schedule (9)
</TABLE>
- ---------------
* To be filed by amendment.
(1) Incorporated by reference to Registration Statement (33-75148) effective
April 7, 1994.
(2) Incorporated by reference to Annual Report on Form 10-K for the fiscal year
ended December 31, 1994.
(3) Incorporated by reference to Annual Report on Form 10-K for the fiscal year
ended December 31, 1995.
(4) Incorporated by reference to Registration Statement on Form S-3 (33-97084)
effective October 24, 1995.
(5) Incorporated by reference to Current Report on Form 8-K, dated June 12,
1996.
(6) Incorporated by reference to Current Report on Form 8-K, dated December 3,
1996.
(7) Incorporated by reference to Current Report on Form 8-K, dated March 28,
1997.
(8) Incorporated by reference to Annual Report on Form 10-K for the fiscal year
ended December 31, 1996.
(9) Incorporated by reference to Quarterly Report on Form 10-Q for the three
months ended March 31, 1997
(10) Filed herewith.
<PAGE> 1
EXHIBIT 1.1
_______________________________________________________________________________
_______________________________________________________________________________
BRIGHTPOINT, INC.
(a Delaware corporation)
3,200,000 Shares of Common Stock
U.S. PURCHASE AGREEMENT
Dated: ___________________, 1997
_______________________________________________________________________________
_______________________________________________________________________________
<PAGE> 2
<TABLE>
Table of Contents
<S> <C>
SECTION 1. Representations and Warranties.............................................4
(a) Representations and Warranties by the Company.......................4
(i) Compliance with Registration Requirements.....................4
(ii) Incorporated Documents........................................5
(iii) Independent Accountants......................................5
(iv) Financial Statements..........................................5
(v) No Material Adverse Change in Business........................5
(vi) Good Standing of the Company..................................6
(vii) Good Standing of Subsidiaries................................6
(viii) Capitalization..............................................6
(ix) Authorization of Agreement....................................7
(x) Authorization and Description of Securities...................7
(xi) Absence of Defaults and Conflicts.............................7
(xii) Absence of Labor Dispute.....................................8
(xiii) Absence of Proceedings......................................8
(xiv) Accuracy of Exhibits.........................................8
(xv) Absence of Price Stabilization................................8
(xvi) Possession of Intellectual Property..........................8
(xvii) Absence of Further Requirements.............................9
(xviii) Possession of Licenses and Permits..........................9
(xix) Title to Property............................................9
(xx) Taxes........................................................10
(xxi) Maintenance of Adequate Insurance...........................10
(xxii) Maintenance of Sufficient Internal Controls................10
(xxiii) Compliance with Laws.......................................10
(xxiv) Imports/Exports............................................10
(xxv) Compliance with Cuba Act....................................10
(xxvi) Investment Company Act.....................................11
(xxvii) Environmental Laws.........................................11
(xxviii) Registration Rights.......................................11
(b) Representations and Warranties by the Selling Shareholders.........11
(i) Accurate Disclosure..........................................11
(ii) Authorization of Agreements..................................12
(iii) Good and Marketable Title...................................12
(iv) Due Execution of Power of Attorney and
Custody Agreement............................................12
(v) Absence of Manipulation......................................13
(vi) Absence of Further Requirements..............................13
(vii) Restriction on Sale of Securities...........................13
(viii) Certificates Suitable for Transfer.........................14
(ix) No Association with NASD.....................................14
(c) Officer's Certificates.............................................14
</TABLE>
<PAGE> 3
SECTION 2. Sale and Delivery to Underwriters; Closing.......................14
(a) Initial Securities........................................14
(b) U.S. Option Securities....................................14
(c) Payment...................................................15
(d) Denominations; Registration...............................16
SECTION 3. Covenants of the Company.........................................16
(a) Compliance with Securities Regulations and
Commission Requests.......................................16
(b) Filing of Amendments......................................16
(c) Delivery of Registration Statements.......................16
(d) Delivery of Prospectuses..................................17
(e) Continued Compliance with Securities Laws.................17
(f) Blue Sky Qualifications...................................17
(g) Rule 158..................................................18
(h) Use of Proceeds...........................................18
(i) Listing...................................................18
(j) Restriction on Sale of Securities.........................18
(k) Reporting Requirements....................................18
SECTION 4. Payment of Expenses..............................................18
(a) Expenses..................................................18
(b) Expenses of the Selling Shareholders......................19
(c) Termination of Agreement..................................19
(d) Allocation of Expense.....................................19
SECTION 5. Conditions of U.S. Underwriters' Obligations.....................19
(a) Effectiveness of Registration Statement...................19
(b) Opinion of Counsel for Company............................20
(c) Opinion of Counsel for the Selling Shareholders...........20
(d) Opinion of Counsel for U.S. Underwriters..................20
(e) Officers' Certificate.....................................20
(f) Certificate of Selling Shareholders.......................21
(g) Accountant's Comfort Letter...............................21
(h) Bring-down Comfort Letter.................................21
(i) Approval of Listing.......................................21
(j) No Objection..............................................21
(k) Lock-up Agreements........................................21
(l) Purchase of Initial International Securities..............21
(m) Conditions to Purchase of U.S. Option Securities..........21
(i) Officers' Certificate...............................22
(ii) Certificate of Selling Shareholders.................22
(iii) Opinion of Counsel for Company.....................22
(iv) Opinion of Counsel for the Selling Shareholders.....22
(v) Opinion of Counsel for U.S. Underwriters............22
(vi) Bring-down Comfort Letter...........................22
(n) Additional Documents......................................22
(o) Termination of Agreement..................................23
<PAGE> 4
<TABLE>
<S><C>
SECTION 6. Indemnification ...................................................................................... 23
(a) Indemnification of U.S. Underwriters......................................................... 23
(b) Indemnification of Company, Directors and Officers and Selling Shareholders.................. 24
(c) Actions against Parties; Notification ....................................................... 24
(d) Settlement without Consent if Failure to Reimburse........................................... 25
(e) Other Agreements with Respect to Indemnification ............................................ 25
SECTION 7. Contribution.......................................................................................... 25
SECTION 8. Representations, Warranties and Agreements to Survive Delivery........................................ 26
SECTION 9. Termination of Agreement.............................................................................. 26
(a) Termination; General......................................................................... 26
(b) Liabilities.................................................................................. 27
SECTION 10. Default by One or More of the U.S. Underwriters....................................................... 27
SECTION 11. Default by One or More of the Selling Shareholders or the Company.................................... 28
SECTION 12. Notices............................................................................................... 28
SECTION 13. Parties............................................................................................... 29
SECTION 14. GOVERNING LAW AND TIME................................................................................ 29
SECTION 15. Effect of Headings.................................................................................... 29
</TABLE>
<PAGE> 5
BRIGHTPOINT, INC.
(a Delaware corporation)
3,200,000 Shares of Common Stock
(Par Value $.01 Per Share)
U.S. PURCHASE AGREEMENT
______________________, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Cowen & Company
UBS Securities LLC
Sands Brothers & Co., Ltd.
as U.S. Representatives of the several U.S. Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Brightpoint, Inc., a Delaware corporation (the "Company"), and the
persons listed in Schedule B hereto (the "Selling Shareholders"),
confirm their respective agreements with Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and each of
the other U.S. Underwriters named in Schedule A hereto (collectively,
the "U.S. Underwriters," which term shall also include any underwriter
substituted as hereinafter provided in Section 10 hereof), for whom
Merrill Lynch, Cowen & Company, UBS Securities LLC and Sands Brothers &
Co., Ltd. are acting as representatives (in such capacity, the "U.S.
Representatives"), with respect to (i) the sale by the Company and the
Selling Shareholders, acting severally and not jointly, and the
purchase by the U.S. Underwriters, acting severally and not jointly, of
the respective numbers of shares of Common Stock, par value $.01 per share,
of the Company ("Common Stock") set forth in Schedules A and B hereto and
(ii) the grant by the Company to the U.S. Underwriters, acting severally and
not jointly, of the option described in Section 2(b) hereof to
purchase all or any part
<PAGE> 6
of 480,000 additional shares of Common Stock to cover
over-allotments, if any. The aforesaid 3,200,000 shares of Common
Stock (the "Initial U.S. Securities") to be purchased by the U.S.
Underwriters and all or any part of the 480,000 shares of Common Stock
subject to the option described in Section 2(b) hereof (the "U.S. Option
Securities") are hereinafter called, collectively, the "U.S. Securities."
It is understood that the Company and the Selling
Shareholders are concurrently entering into an agreement dated the date
hereof (the "International Purchase Agreement") providing for the
offering by the Company and the Selling Shareholders of an aggregate
of 800,000 shares of Common Stock (the "Initial International
Securities") through arrangements with certain underwriters outside the
United States and Canada (the "International Managers") for which
Merrill Lynch International, Cowen International L.P., UBS Limited and
Sands Brothers & Co., Ltd. are acting as lead managers (the "Lead
Managers") and the grant by the Company to the International Managers,
acting severally and not jointly, of an option to purchase all or any
part of the International Managers' pro rata portion of up to 120,000
additional shares of Common Stock solely to cover over allotments, if any
(the "International Option Securities" and, together with the U.S.
Option Securities, the "Option Securities"). The Initial International
Securities and the International Option Securities are hereinafter
called the "International Securities." It is understood that neither the
Company nor the Selling Shareholders are obligated to sell and the U.S.
Underwriters are not obligated to purchase, any Initial U.S. Securities
unless all of the Initial International Securities are
contemporaneously purchased by the International Managers.
The U.S. Underwriters and the International Managers are
hereinafter collectively called the "Underwriters," the Initial U.S.
Securities and the Initial International Securities are hereinafter
collectively called the "Initial Securities," and the U.S. Securities, and
the International Securities are hereinafter collectively called the
"Securities."
The Underwriters will concurrently enter into an
Intersyndicate Agreement of even date herewith (the
"Intersyndicate Agreement") providing for the coordination of certain
transactions among the Underwriters under the direction of Merrill Lynch
& Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated (in such
capacity, the "Global Coordinator").
The Company and the Selling Shareholders understand that the U.S.
Underwriters propose to make a public offering of the U.S. Securities as
soon as the U.S. Representatives deem advisable after this Agreement has
been executed and delivered.
The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (No.
333-___________) covering the registration of the Securities under the
Securities Act of 1933, as amended (the "1933 Act"), including the
related preliminary prospectuses. Promptly after execution and
delivery of this Agreement, the Company will either (i) prepare and
file a prospectus in accordance with the provisions of Rule 430A ("Rule
430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule
424(b)") of the 1933 Act Regulations or (ii) if the Company has elected
to rely upon Rule 434 ("Rule 434") of the 1933 Act Regulations,
prepare and file a term sheet (a "Term Sheet") in accordance with the
provisions of Rule 434 and Rule
2
<PAGE> 7
424(b). Two forms of prospectus are to be used in connection with the
offering and sale of the Securities: one relating to the U.S. Securities
(the "Form of U.S. Prospectus") and one relating to the International
Securities (the "Form of International Prospectus"). The Form of
International Prospectus is identical to the Form of U.S. Prospectus,
except for the front cover and back cover pages and the information
under the caption "Underwriting" and the inclusion in the Form of
International Prospectus of a section under the caption "Certain United
States Tax Considerations for Non-United States Holders." The
information included in any such prospectus or in any such Term Sheet, as
the case may be, that was omitted from such registration
statement at the time it became effective but that is deemed to be part of
such registration statement at the time it became effective (a) pursuant to
paragraph (b) of Rule 430A is referred to as "Rule 430A Information" or
(b) pursuant to paragraph (d) of Rule 434 is referred to as
"Rule 434 Information." Each Form of U.S. Prospectus and Form of
International Prospectus used before such registration statement became
effective, and any prospectus that omitted, as applicable, the rule 430A
Information or the Rule 434 Information, that was used after such
effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such
registration statement, including the exhibits thereto, schedules
thereto, if any, and the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the 1933 Act, at the time it became
effective and including the Rule 430A Information and the Rule 434
Information, as applicable, is herein called the "Registration Statement."
Any registration statement filed pursuant to rule 462(b) of the 1933 Act
Regulations is herein referred to as the "Rule 462(b) Registration
Statement," and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement.
The final Form of U.S. Prospectus and the final Form of International
Prospectus, including the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the 1933 Act, in the forms first
furnished to the Underwriters for use in connection with the offering of
the Securities are herein called the "U.S. Prospectus" and the
"International Prospectus," respectively, and collectively, the
"Prospectus." If Rule 434 is relied on, the terms "U.S.
Prospectus" and "International Prospectus" shall refer to the
preliminary U.S. Prospectus dated _________, 1997 and preliminary
International Prospectus dated _________, 1997, respectively, each
together with the applicable Term Sheet and all references in this
Agreement to the date of such Prospectuses shall mean the date of the
applicable Term Sheet. For purposes of this Agreement, all
references to the Registration Statement, any preliminary prospectus,
the U.S. Prospectus, the International Prospectus or any Term Sheet or
any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval system ("EDGAR").
All references in this Agreement to financial statements and schedules
and other information which is "contained", "included", or "stated" in
the Registration Statement, any preliminary prospectus or the
Prospectuses (or other references of like import) shall be deemed to
mean and include all such financial statements and schedules and other
information which is incorporated by reference in the Registration
Statement, any preliminary prospectus or the Prospectuses, as the case may
be; and all references in this Agreement to amendments or supplements to the
Registration Statement, any preliminary prospectus or the Prospectuses
shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934, as amended (the "1934 Act")
which is or is deemed to be incorporated by reference in the
Registration Statement, such preliminary prospectus or the Prospectuses, as
the case may be.
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SECTION 1. Representations and Warranties.
(A) Representations and Warranties by the Company. The Company
represents and warrants to each U.S. Underwriter as of the date hereof,
as of the Closing Time referred to in Section 2(c) hereof, and as of each
Date of Delivery (if any) referred to in Section 2(b) hereof, and agrees
with each U.S. Underwriter, as follows:
(i) Compliance with Registration Requirements. The Company
meets the requirements for use of Form S-3 under the 1933 Act. Each
of the Registration Statement and any Rule 462(b) Registration
Statement has become effective under the 1933 Act and no stop order
suspending the effectiveness of the Registration Statement or any Rule
462(b) Registration Statement has been issued under the 1933 Act
and no proceedings for that purpose have been instituted or are
pending or, to the knowledge of the Company, are
contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments
thereto became effective and at the Closing Time (and, if any U.S.
Option Securities are purchased, at the Date of Delivery), the
Registration Statement, the Rule 462(b) Registration Statement
and any amendments and supplements thereto complied and will comply
in all material respects with the requirements of the 1933 Act and the
1933 Act Regulations and did not and will not contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading. Neither of the Prospectuses nor any
amendments or supplements thereto, at the time the Prospectuses or
any amendments or supplements thereto were issued and at the Closing
Time (and, if any U.S. Option Securities are purchased, at the
Date of Delivery), included or will include an untrue statement of a
material fact or omitted or will omit to state a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. If
Rule 434 is used, the Company will comply with the requirements
of Rule 434. The representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement or the U.S. Prospectus made in reliance upon
and in conformity with information furnished to the Company in
writing by any U.S. Underwriter through the U.S.
Representatives expressly for use in the Registration Statement
or the U.S. Prospectus.
Each preliminary prospectus and the prospectuses filed as part of
the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933
Act Regulations and each preliminary prospectus and the Prospectuses
delivered to the Underwriters for use in connection with this
offering were identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the
extent permitted by Regulation S-T.
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<PAGE> 9
(ii) Incorporated Documents The documents incorporated or
deemed to be incorporated by reference in the Prospectuses,
at the time they were or hereafter are filed with the Commission,
complied and will comply in all material respects with the
requirements of the 1934 Act and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations") and, when read
together with the other information in the Prospectuses, at the
time the Registration Statement become effective, at the time the
Prospectuses were issued and at the Closing Time (and, if any
Option Securities are purchased, at the Date of Delivery), did
not and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(iii) Independent Accountants. The accountants who certified
the financial statements and supporting schedules included in the
Registration Statement are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.
(iv) Financial Statements. The financial statements included
in the Registration Statement and the Prospectuses, together with the
related schedules and notes, present fairly the financial
position of the Company and its consolidated subsidiaries at the
dates indicated and the statement of operations, stockholders' equity
and cash flows of the Company and its consolidated subsidiaries for
the periods specified; said financial statements have been
prepared in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved.
The supporting schedules included in the Registration Statement present
fairly in accordance with GAAP the information required to be stated
therein. The selected financial data and the summary
financial information included in the Prospectuses present fairly the
information shown therein and have been compiled on a basis consistent
with that of the audited financial statements included in the
Registration Statement. The pro forma financial statements and the
related notes thereto included in the Registration Statement and the
Prospectuses present fairly the information shown therein, have been
prepared in accordance with the Commission's rules and guidelines
with respect to pro forma financial statements and have been
properly compiled on the bases described therein, and the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the
transactions and circumstances referred to therein.
(v) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration
Statement and the Prospectuses, except as otherwise stated
therein, (A) there has been no material adverse change in the
condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business (a "Material Adverse Effect"), (B) there have been
no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business,
which are material with respect to the Company and its subsidiaries
considered as one enterprise, and (C) there has been no dividend or
distribution of any kind declared, paid or made by the Company on
any class of its capital stock.
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<PAGE> 10
(vi) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectuses and to enter into and perform its
obligations under this Agreement and the International Purchase
Agreement; and the Company is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure so
to qualify or to be in good standing would not result in a Material Adverse
Effect.
(vii) Good Standing of Subsidiaries. Each "significant subsidiary"
of the Company (as such term is defined in Rule 1-02 of Regulation S-X)
(each a "Subsidiary" and, collectively, the "Subsidiaries") has been duly
organized and is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectuses and is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not result
in a Material Adverse Effect; except as otherwise disclosed in the
Registration Statement, all of the issued and outstanding capital stock of
each such Subsidiary has been duly authorized and validly issued, is fully
paid and non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity; none of the outstanding shares of
capital stock of any Subsidiary was issued in violation of the preemptive
or similar rights of any security holder of such Subsidiary. The only
subsidiaries of the Company are the subsidiaries listed on Exhibit 21 to
the Registration Statement. Except as described in the Registration
Statement, the Company does not own or control, directly or indirectly, any
interest in any corporation, partnership, limited liability company,
association or other entity.
(viii) Capitalization. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectuses in the
column entitled "Actual" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement and the
International Purchase Agreement, pursuant to reservations, agreements or
employee benefit plans referred to in the Prospectuses or pursuant to the
exercise of convertible securities or options referred to in the
Prospectuses). The description of the Company's stock option and other
stock plans or arrangements, and the options or other rights granted or
exercised thereunder, as set forth in the Prospectuses, accurately and
fairly presents the information required to be shown with respect to such
plans, arrangements, options and rights. The shares of issued and
outstanding capital stock, including the Securities to be purchased by the
Underwriters from the Selling Shareholders, have been duly authorized and
validly issued and are fully paid and non-assessable; none of the
outstanding shares of capital stock, including the Securities to be
purchased by the Underwriters from the Selling Shareholders, was issued in
violation of the preemptive or other similar rights of any security holder
of the Company.
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<PAGE> 11
(ix) Authorization of Agreement. This Agreement and the International
Purchase Agreement have been duly authorized, executed and delivered
by the Company.
(x) Authorization and Description of Securities. The Securities to
be purchased by the U.S. Underwriters and the International Managers
from the Company have been duly authorized for issuance and sale to
the U.S. Underwriters pursuant to this Agreement and the International
Managers pursuant to the International Purchase Agreement,
respectively, and, when issued and delivered by the Company pursuant
to this Agreement and the International Purchase Agreement against
payment of the consideration set forth herein and therein, will be
validly issued and fully paid and non-assessable; the Common Stock
conforms to all statements relating thereto contained in the
Prospectuses and such description conforms to the rights set forth in
the instruments defining the same; no holder of the Securities will be
subject to personal liability by reason of being such a holder; and
the issuance of the Securities is not subject to the preemptive or
other similar rights of any security holder of the Company.
(xi) Absence of Defaults and Conflicts. Neither the Company nor any
of its subsidiaries is in violation of its charter or by-laws or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them may be bound, or
to which any of the property or assets of the Company or any
subsidiary is subject (collectively, "Agreements and Instruments")
except for such defaults that would not result in a Material Adverse
Effect; and the execution, delivery and performance of this Agreement
and the International Purchase Agreement and the consummation of the
transactions contemplated in this Agreement, the International
Purchase Agreement and in the Registration Statement (including the
issuance and sale of the Securities and the use of the proceeds from
the sale of the Securities as described in the Prospectuses under the
caption "Use of Proceeds") and compliance by the Company with its
obligations under this Agreement and the International Purchase
Agreement have been duly authorized by all necessary corporate action
and do not and will not, whether with or without the giving of notice
or passage of time or both, conflict with or constitute a breach of,
or default or Repayment Event (as defined below) under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any subsidiary pursuant to, the
Agreements and Instruments (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not result in a
Material Adverse Effect), nor will such action result in any violation
of the provisions of the charter or by-laws of the Company or any
subsidiary or any applicable law, statute, rule, regulation, judgment,
order, writ or decree of any government, government instrumentality
or court, domestic or foreign, having jurisdiction over the Company or
any subsidiary or any of their assets, properties or operations. As
used herein, a "Repayment Event" means any event or condition which
gives the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder's behalf) the right
to require the repurchase, redemption or repayment of all or a portion
of such indebtedness by the Company or any subsidiary.
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<PAGE> 12
EXHIBIT 1.1
(xii) Absence of Labor Dispute. No labor dispute with the employees
of the Company or any subsidiary exists or, to the knowledge of the
Company, is imminent, and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its or any
subsidiary's principal suppliers, manufacturers, customers or contractors,
which, in either case, may reasonably be expected to result in a Material
Adverse Effect.
(xiii) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Company, threatened, against or affecting the Company or any
subsidiary, which is required to be disclosed in the Registration Statement
(other than as disclosed therein), or which might reasonably be expected to
result in a Material Adverse Effect, or which might reasonably be expected
to materially and adversely affect the properties or assets thereof or the
consummation of the transactions contemplated in this Agreement and the
International Purchase Agreement or the performance by the Company of its
obligations hereunder or thereunder; the aggregate of all pending legal or
governmental proceedings to which the Company or any subsidiary is a party
or of which any of their respective property or assets is the subject which
are not described in the Registration Statement, including ordinary
routine litigation incidental to the business, could not reasonably be
expected to result in a Material Adverse Effect.
(xiv) Accuracy of Exhibits. All of the descriptions of contracts or
other documents contained in the Registration Statement are accurate and
complete descriptions of such contracts or other documents. There are no
contracts or documents which are required to be described in the
Registration Statement, the Prospectuses or the documents incorporated by
reference therein or to be filed as exhibits thereto which have not been so
described and filed as required.
(xv) Absence of Price Stabilization. Neither the Company nor any of
its officers, directors or affiliates has taken or will take, directly or
indirectly, any action designed or intended to stabilize or manipulate the
price of any security of the Company, or which caused or resulted in, or
which might in the future reasonably be expected to cause or result in,
stabilization or manipulation of the price of any security of the Company.
(xvi) Possession of Intellectual Property. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, (including "Brightpoint" and "Brightlink," which are owned by
the Company), service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the business
now operated by them, and neither the Company nor any of its subsidiaries
has received any notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of the
Company or any of its subsidiaries therein, and which infringement or
conflict (if the subject of any unfavorable decision, ruling or finding) or
invalidity or
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inadequacy, singly or in the aggregate, would result in a Material Adverse
Effect. The Company's business as now conducted and as proposed to be
conducted does not and, to the best of the Company's knowledge, will not
infringe or conflict with in any material respect patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses or other
intellectual property or franchise right of any person. To the best of the
Company's knowledge, no claim has been made against the Company alleging
the infringement by the Company of any patent, trademark, service mark,
tradename, copyright, trade secret, license in or other intellectual
property right or franchise right of any person.
(xvii) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company of its
obligations hereunder or under the International Purchase Agreement, in
connection with the offering, issuance or sale of the Securities under this
Agreement and the International Purchase Agreement or the consummation of
the transactions contemplated by this Agreement and the International
Purchase Agreement, except such as have been already obtained or as may be
required under the 1933 Act or the 1933 Act Regulations or state securities
laws.
(xviii) Possession of Licenses and Permits. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and
other authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them; the Company and its
subsidiaries are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not,
singly or in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except when
the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect.
(xix) Title to Property. The Company and its subsidiaries have
good and marketable title to all real property owned by the Company and its
subsidiaries and good title to all other properties owned by them, in each
case, free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind except such as (a) are
described in the Prospectuses or (b) do not, singly or in the aggregate,
materially affect the value of such property and do not interfere with the
use made and proposed to be made of such property by the Company or any of
its subsidiaries; and all of the leases and subleases material to the
business of the Company and its subsidiaries, considered as one enterprise,
and under which the Company or any of its subsidiaries holds properties
described in the Prospectuses, are in full force and effect, and neither
the Company nor any subsidiary has any notice of any material claim of any
sort that has been asserted by anyone adverse to the rights of the Company
or any subsidiary under any of the leases or subleases
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<PAGE> 14
mentioned above, or affecting or questioning the rights of the Company or
such subsidiary to the continued possession of the leased or subleased
premises under any such lease or sublease.
(xx) Taxes. The Company has filed all necessary federal, state,
local and foreign income, payroll, franchise and other tax returns and has
paid all taxes shown as due thereon or with respect to any of its
properties, and there is no tax deficiency that has been, or to the
knowledge of the Company is likely to be, asserted against the Company or
any of its properties or assets that would result in a Material Adverse
Effect.
(xxi) Maintenance of Adequate Insurance. The Company is insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as is reasonably prudent in the business in which
it is engaged or proposed to engage after giving effect to the transactions
described in the Prospectuses; and the Company does not have any reason to
believe that it will not be able to renew its existing insurance coverage
as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost
that would not result in a Material Adverse Effect.
(xxii) Maintenance of Sufficient Internal Controls. The Company
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance
with management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xxiii) Compliance with Laws. To the best of the Company's
knowledge, neither the Company nor any employee or agent of the Company has
made any payment of funds of the Company or received or retained any funds
in violation of any law, rule or regulation, including, without limitation,
the Foreign Corrupt Practices Act.
(xxiv) Imports/Exports. To the best of the Company's knowledge, the
Company has paid all tariff, custom, import, export and other duties
required to be paid by it (if any) in connection with the exportation of
products from the country of manufacture, the importation of products into
the United States, the exportation of products from the United States and
the importation of products into another country and has provided all
appropriate authorities with the requisite information, all of which, to
the best of the Company's knowledge, is true and correct, necessary for the
proper determination of the foregoing.
(xvv) Compliance with Cuba Act. The Company has complied with, and
is and will be in compliance with, the provisions of that certain Florida
act relating to disclosure of
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doing business with Cuba, codified as Section 517.075 of the Florida
statutes, and the rules and regulations thereunder (collectively, the "Cuba
Act") or is exempt therefrom.
(xxvi) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectuses
will not be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "1940 Act").
(xxvii) Environmental Laws. Except as described in the Registration
Statement and except as would not, singly or in the aggregate, result in a
Material Adverse Effect, (A) neither the Company nor any of its
subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common
law or any judicial or administrative interpretation thereof, including any
judicial or administrative order, consent, decree or judgment, relating to
pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface
or subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials
(collectively, "Environmental Laws"), (B) the Company and its subsidiaries
have all permits, authorizations and approvals required under any
applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or threatened administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
liens, notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company or any of its
subsidiaries and (D) there are no events or circumstances that might
reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any of its
subsidiaries relating to Hazardous Materials or any Environmental Laws.
(xxviii) Registration Rights. Except as described in the
Registration Statement, there are no persons with registration
rights or other similar rights to have any securities registered pursuant
to the Registration Statement or otherwise registered by the Company under
the 1933 Act.
(h) Representations and Warranties by the Selling Shareholders. Each
Selling Shareholder severally represents and warrants to each U.S. Underwriter
as of the date hereof and as of the Closing Time, and agrees with each U.S.
Underwriter, as follows:
(i) Accurate Disclosure. To the best knowledge of such Selling
Shareholder, the representations and warranties of the Company
contained in Section 1(a) hereof are true and correct; such Selling
Shareholder has reviewed and is familiar with the Registration
Statement and the Prospectuses and neither the Prospectuses nor any
amendments or
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supplements thereto includes any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; such
Selling Shareholder is not prompted to sell the Securities to be sold by such
Selling Shareholder hereunder or under the International Purchase Agreement by
any information concerning the Company or any subsidiary of the Company which is
not set forth in the Prospectuses.
(ii) Authorization of Agreements. Each Selling Shareholder has the full
right, power and authority to enter into this Agreement, the International
Purchase Agreement and a Power of Attorney and Custody Agreement (the "Power of
Attorney and Custody Agreement") and to sell, transfer and deliver the
Securities to be sold by such Selling Shareholder hereunder and under the
International Purchase Agreement. The execution and delivery of this Agreement,
the International Purchase Agreement and the Power of Attorney and Custody
Agreement and the sale and delivery of the Securities to be sold by such Selling
Shareholder and the consummation of the transactions contemplated under this
Agreement and the International Purchase Agreement and compliance by such
Selling Shareholder with its obligations hereunder and thereunder have been duly
authorized by such Selling Shareholder and do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any tax, lien, charge or encumbrance upon the Securities to be
sold by such Selling Shareholder or any property or assets of such Selling
Shareholder pursuant to any contract, indenture, mortgage, deed of trust, loan
or credit agreement, note, license, lease or other agreement or instrument to
which such Selling Shareholder is a party or by which such Selling Shareholder
may be bound, or to which any of the property or assets of such Selling
Shareholder is subject, nor will such action result in any violation of the
provisions of the charter or by-laws or other organizational instrument of such
Selling Shareholder, if applicable, or any applicable treaty, law, statute,
rule, regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over such
Selling Shareholder or any of its properties.
(iii) Good and Marketable Title. Such Selling Shareholder has and will at
the Closing Time have good and marketable title to the Securities to be sold by
such Selling Shareholder under this Agreement and the International Purchase
Agreement, free and clear of any security interest, mortgage, pledge, lien,
charge, claim, equity or encumbrance of any kind, other than pursuant to this
Agreement and the International Purchase Agreement; and upon delivery of such
Securities and payment of the purchase price therefor as contemplated herein and
therein, assuming each such Underwriter has no notice of any adverse claim, each
of the Underwriters will receive good and marketable title to the Securities
purchased by it from such Selling Shareholder, free and clear of any security
interest, mortgage, pledge, lien, charge, claim, equity or encumbrance of any
kind.
(iv) Due Execution of Power of Attorney and Custody Agreement. Such
Selling Shareholder has duly executed and delivered, in the form heretofore
furnished to the U.S. Representatives, the Power of Attorney and Custody
Agreement with _______________ as
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attorneys-in-fact (the "Attorneys-in-Fact") and _________________, as custodian
(the "Custodian"); the Custodian is authorized to deliver the Securities to be
sold by such Selling Shareholder under this Agreement and the International
Purchase Agreement and to accept payment therefor; and the Attorney-in-Fact is
authorized to execute and deliver this Agreement and the International Purchase
Agreement and the certificate referred to in Section 5(f) or that may be
required pursuant to Section 5(n) on behalf of such Selling Shareholder,
to sell, assign and transfer to the U.S. Underwriters and the International
Managers the Securities to be sold by such Selling Shareholder under
this Agreement and the International Purchase Agreement, respectively, to
determine the purchase price to be paid by the U.S. Underwriters and the
International Managers to such Selling Shareholder, as provided in Section 2(a)
of this Agreement and the International Purchase Agreement, to authorize the
delivery of the Securities to be sold by such Selling Shareholder under this
Agreement and the International Purchase Agreement, to accept payment therefor,
and otherwise to act on behalf of such Selling Shareholder in connection with
this Agreement and the International Purchase Agreement.
(v) Absence of Manipulation. Such Selling Shareholder has not taken, and
will not take, directly or indirectly, any action which is designed to or which
has constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities.
(vi) Absence of Further Requirements. No filing with, or consent,
approval, authorization, order, registration, qualification or decree of, any
court or governmental authority or agency, domestic or foreign, is necessary or
required for the performance by each Selling Shareholder of its obligations
under this Agreement and the International Purchase Agreement or in the Power of
Attorney and Custody Agreement, or in connection with the sale and delivery of
the Securities under this Agreement and the International Purchase Agreement or
the consummation of the transactions contemplated hereunder or thereunder,
except under the 1933 Act or the 1933 Act Regulations or state securities laws.
(vii) Restriction on Sale of Securities. During a period of 120 days from
the date of the U.S. Prospectus, such Selling Shareholder will not, without the
prior written consent of Merrill Lynch, (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase or otherwise transfer or
dispose of, directly or indirectly, any share of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or file any
registration statement under the 1933 Act with respect to any of the foregoing
or (ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence
of ownership of the Common Stock, whether any such swap or transaction described
in clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to the sale of the Securities hereunder or under the International Purchase
Agreement.
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(viii) Certificates Suitable for Transfer. Certificates for all of
the Securities to be sold by such Selling Shareholder pursuant to this
Agreement and the International Purchase Agreement, in suitable form for
transfer by delivery or accompanied by duly executed instruments of
transfer or assignment in blank with signatures guaranteed, have been
placed in custody with the Custodian with irrevocable conditional
instructions to deliver such Securities to the U.S. Underwriters and
the International Managers pursuant to this Agreement and the
International Purchase Agreement, respectively.
(ix) No Association with NASD. Neither such Selling Stockholder
nor any of his affiliates directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with, or has any other association with (within the meaning of Article I,
Section 1(m) of the By-laws of the National Association of Securities
Dealers, Inc.), any member firm of the National Association of Securities
Dealers, Inc.
(c) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the U.S. Representatives or to
counsel for the U.S. Underwriters and the International Managers shall be
deemed a representation and warranty by the Company to each U.S. Underwriter
and each International Manager as to the matters covered thereby; and any
certificate signed by or on behalf of the Selling Shareholders as such and
delivered to the U.S. Representatives or to counsel for the U.S. Underwriters
and the International Managers pursuant to the terms of this Agreement and
the International Purchase Agreement shall be deemed a representation and
warranty by such Selling Shareholder to the U.S. Underwriters and the
International Managers as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company and each Selling Shareholder, severally and not jointly,
agree to sell to each U.S. Underwriter, severally and not jointly, and each
U.S. Underwriter, severally and not jointly, agrees to purchase from the
Company and each Selling Shareholder, at the price per share set forth in
Schedule C, that proportion of the number of Initial U.S. Securities set forth
in Schedule B opposite the name of the Company or such Selling Shareholder,
as the case may be, which number of Initial U.S. Securities set forth in
Schedule A opposite the name of such U.S. Underwriter, plus any additional
number of Initial U.S. Securities which such U.S. Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof, bears
to the total number of Initial U.S. Securities, subject, in each case, to
such adjustments among the U.S. Underwriters as the U.S. Representatives
in their sole discretion shall make to eliminate any sales or purchases of
fractional securities.
(b) U.S. Option Securities. In addition, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company hereby grants an option to the U.S.
Underwriters, severally and not jointly, to purchase up to an additional
480,000 shares of Common Stock at the price per share set forth in Schedule
C, less an amount per share equal to any dividends or distributions declared
by the Company and payable on the Initial U.S. Securities but not payable on
the U.S. Option Securities. The option
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hereby granted will expire 30 days after the date hereof and may be exercised in
whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial U.S. Securities upon notice by the Global
Coordinator to the Company setting forth the number of U.S. Option Securities as
to which the several U.S. Underwriters are then exercising the option and the
time and date of payment and delivery for such U.S. Option Securities. Any such
time and date of delivery (a "Date of Delivery") shall be determined by the
Global Coordinator, but shall not be later than seven full business days after
the exercise of said option, nor in any event prior to the Closing Time, as
hereinafter defined. If the option is exercised as to all or any portion of the
U.S. Option Securities, each of the U.S. Underwriters, acting severally and not
jointly, will purchase that proportion of the total number of U.S. Option
Securities then being purchased which the number of Initial U.S. Securities set
forth in Schedule A opposite the name of such U.S. Underwriter bears to the
total number of Initial U.S. Securities, subject in each case to such
adjustments as the U.S. Representatives in their discretion shall make to
eliminate any sales or purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial U.S. Securities shall be made at the offices of
Mayer, Brown & Platt, 190 South LaSalle Street, Chicago, Illinois, or at such
other place as shall be agreed upon by the Global Coordinator, the Company and
the Selling Shareholders, at 9:00 A.M. (Eastern time) on the third (fourth, if
the pricing occurs after 4:30 P.M. (Eastern time) on any given day) business day
after the date hereof (unless postponed in accordance with the provisions of
Section 10), or such other time not later than ten business days after such date
as shall be agreed upon by the Global Coordinator, the Company and the Selling
Shareholders (such time and date of payment and delivery being herein called
"Closing Time").
In addition, in the event that any or all of the U.S. Option Securities are
purchased by the U.S. Underwriters, payment of the purchase price for, and
delivery of certificates for, such U.S. Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Global Coordinator and the Company, on each Date of Delivery as specified in the
notice from the Global Coordinator to the Company.
Payment shall be made to the Company and the Selling Shareholders by wire
transfer of immediately available funds to bank accounts designated by the
Company and the Custodian pursuant to each Selling Shareholder's Power of
Attorney and Custody Agreement, as the case may be, against delivery to the U.S.
Representatives for the respective accounts of the U.S. Underwriters of
certificates for the Securities to be purchased by them. It is understood that
each U.S. Underwriter has authorized the U.S. Representatives, for its account,
to accept delivery of, receipt for, and make payment of the purchase price for,
the Initial U.S. Securities and the U.S. Option Securities, if any, which it has
agreed to purchase. Merrill Lynch, individually and not as representative of
the U.S. Underwriters, may (but shall not be obligated to) make payment of the
purchase price for the Initial U.S. Securities or the U.S. Option Securities, if
any, to be purchased by any U.S. Underwriter whose funds have not been received
by the Closing Time or the relevant Date of Delivery, as the case may be, but
such payment shall not relieve such U.S. Underwriter from its obligations
hereunder.
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(d) Denominations; Registration. Certificates for the Initial U.S.
Securities and the U.S. Option Securities, if any, shall be in such
denominations and registered in such names as the U.S. Representatives may
request in writing at least one full business day before the Closing Time or
the relevant Date of Delivery, as the case may be. The certificates for the
Initial U.S. Securities and the U.S. Option Securities, if any, will be made
available for examination and packaging by the U.S. Representatives in
the City of New York not later than 10:00 A.M. (Eastern time) on the business
day prior to the Closing Time or the relevant Date of Delivery, as the case may
be.
SECTION 3. Covenants of the Company. The Company covenants with each
U.S. Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b), will comply with the requirements of Rule 430A
or Rule 434, as applicable, and will notify the Global Coordinator
immediately, and confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement shall become effective, or any
supplement to the Prospectuses or any amended Prospectuses shall have been
filed, (ii) of the receipt of any comments from the Commission, (iii) of any
request by the Commission for any amendment to the Registration Statement or
any amendment or supplement to the Prospectuses or for additional
information, and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of any
order preventing or suspending the use of any preliminary prospectus, or of
the suspension of the qualification of the Securities for offering or sale in
any jurisdiction, or of the initiation or threatening of any proceedings for
any of such purposes. The Company will promptly effect the filings
necessary pursuant to Rule 424(b) and will take such steps as it deems
necessary to ascertain promptly whether the forms of prospectus transmitted
for filing under Rule 424(b) was received for filing by the Commission
and, in the event that it was not, it will promptly file such prospectuses.
The Company will make every reasonable effort to prevent the issuance of any
stop order and, if any stop order is issued, to obtain the lifting thereof at
the earliest possible moment.
(b) Filing of Amendments. The Company will give the Global Coordinator
notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), any Term
Sheet or any amendment, supplement or revision to either the prospectuses
included in the Registration Statement at the time it became effective or to
the Prospectuses, will furnish the Global Coordinator with copies of any such
documents a reasonable amount of time prior to such proposed filing or use,
as the case may be, and will not file or use any such document to which the
Global Coordinator or counsel for the U.S. Underwriters shall object.
(c) Delivery of Registration Statements. The Company has furnished or
will deliver to the U.S. Representatives and counsel for the U.S. Underwriters,
without charge, signed copies of the Registration Statement as originally
filed and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein and documents incorporated or deemed to
be incorporated by reference therein) and signed copies of all consents and
certificates of experts, and will also deliver to the U.S. Representatives,
without charge, a conformed copy of the Registration Statement as originally
filed and of each amendment thereto (without exhibits) for each of the U.S.
Underwriters. The copies of the Registration Statement and each amendment
thereto furnished to
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<PAGE> 21
the U.S. Underwriters will be identical to the electronically transmitted
copies thereof filed with the Commission pursuant to EDGAR, except to the
extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each U.S.
Underwriter, without charge, as many copies of each preliminary prospectus
as such U.S. Underwriter reasonably requested, and the Company hereby
consents to the use of such copies for purposes permitted by the 1933
Act. The Company will furnish to each U.S. Underwriter, without charge,
during the period when the U.S. Prospectus is required to be delivered
under the 1933 Act or the 1934 Act, such number of copies of the U.S.
Prospectus (as amended or supplemented) as such U.S. Underwriter may
reasonably request. The U.S. Prospectus and any amendments or supplements
thereto furnished to the U.S. Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will
comply with the 1933 Act and the 1933 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement, the International Purchase Agreement and in the
Prospectuses. If at any time when a prospectus is required by the
1933 Act to be delivered in connection with sales of the Securities, any
event shall occur or condition shall exist as a result of which it is
necessary, in the opinion of counsel for the U.S. Underwriters or for
the Company, to amend the Registration Statement or amend or supplement the
Prospectuses in order that the Prospectuses will not include any untrue
statements of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if
it shall be necessary, in the opinion of such counsel, at any such time
to amend the Registration Statement or amend or supplement the
Prospectuses in order to comply with the requirements of the 1933 Act or
the 1933 Act Regulations, the Company will promptly prepare and file
with the Commission, subject to Section 3(b), such amendment or
supplement as may be necessary to correct such statement or omission or to
make the Registration Statement or the Prospectuses comply with such
requirements, and the Company will furnish to the U.S. Underwriters such
number of copies of such amendment or supplement as the U.S. Underwriters
may reasonably request.
(f) Blue Sky Qualifications. The Company will use its best efforts,
in cooperation with the U.S. Underwriters, to qualify the Securities
for offering and sale under the applicable securities laws of such
states and other jurisdictions (domestic or foreign) as the Global
Coordinator may designate and to maintain such qualifications in effect
for a period of not less than one year from the later of the effective
date of the Registration Statement and any Rule 462(b) Registration
Statement; provided, however, that the Company shall not be obligated
to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction
in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise
so subject. In each jurisdiction in which the Securities have been so
qualified, the Company will file such statements and reports as may be
required by the laws of such jurisdiction to continue such qualification
in effect for a period of not less than one year from the effective
date of the Registration Statement and any Rule 462(b) Registration
Statement.
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(g) Rule 158. The Company will timely file such reports pursuant
to the 1934 Act as are necessary in order to make generally
available to its security holders as soon as practicable an
earnings statement for the purposes of, and to provide the benefits
contemplated by, the last paragraph of Section 11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received
by it from the sale of the Securities in the manner specified in the
Prospectuses under "Use of Proceeds".
(i) Listing. The Company will use its best efforts to effect the
listing of the Securities on the Nasdaq National Market.
(j) Restriction on Sale of Securities. During a period of 120 days
from the date of the Prospectuses, the Company will not, without the prior
written consent of Merrill Lynch, (i) directly or indirectly, offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or
warrant to purchase or otherwise transfer or dispose of any share of
Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or file any registration statement under
the 1933 Act with respect to any of the foregoing or (ii) enter into any
swap or any other agreement or any transaction that transfers, in whole or
in part, directly or indirectly, the economic consequence of
ownership of the Common Stock, whether any such swap or transaction
described in clause (i) or (ii) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the sale of the Securities
hereunder or under the International Purchase Agreement, (B) any shares
of Common Stock issued by the Company upon the exercise of an option or
warrant outstanding on the date hereof and referred to in the
Prospectuses or (C) any shares of Common Stock issued or options to
purchase Common Stock granted pursuant to existing employee benefit plans
of the Company referred to in the Prospectuses.
(k) Reporting Requirements. The Company, during the period when the
Prospectuses are required to be delivered under the 1933 Act or the 1934
Act, will file all documents required to be filed with the Commission
pursuant to the 1934 Act within the time periods required by the 1934 Act
and the 1934 Act Regulations.
SECTION 4. Payment of Expenses. (a) Expenses. The Company will pay
or cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including (i) the preparation,
printing and filing of the Registration Statement (including financial
statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the U.S.
Underwriters of this Agreement, any Agreement among U.S. Underwriters and
such other documents as may be required in connection with the offering,
purchase, sale, issuance or delivery of the Securities, (iii) the
preparation, issuance and delivery of the certificates for the
Securities to the U.S. Underwriters, including any stock or other
transfer taxes and any stamp or other duties payable upon the sale,
issuance or delivery of the Securities to the U.S. Underwriters and the
transfer of the Securities between the U.S. Underwriters and the
International Managers, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisors, (v) the qualification of the
Securities under securities laws in accordance with the provisions of
Section 3(f) hereof, including filing fees and the
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reasonable fees and disbursements of counsel for the U.S. Underwriters
in connection therewith and in connection with the preparation of the Blue
Sky Survey and any supplement thereto, (vi) the printing and delivery to
the U.S. Underwriters of copies of each preliminary prospectus, any Term
Sheets and of the Prospectuses and any amendments or supplements thereto,
(vii) the preparation, printing and delivery to the U.S. Underwriters of
copies of the Blue Sky Survey and any supplement thereto, (viii) the fees
and expenses of any transfer agent or registrar for the Securities, (ix)
the filing fees incident to, and the reasonable fees and disbursements of
counsel to the U.S. Underwriters in connection with, the review by the
National Association of Securities Dealers, Inc. (the "NASD") of the terms
of the sale of the Securities and (x) the fees and expenses incurred in
connection with the inclusion of the Securities in the Nasdaq National
Market.
(b) Expenses of the Selling Shareholders. The Selling Shareholders,
jointly and severally, will pay all expenses incident to the performance
of their respective obligations under, and the consummation of the
transactions contemplated by this Agreement, including (i) any stamp duties,
capital duties and stock transfer taxes, if any, payable upon the sale of
the Securities to the U.S. Underwriters, their transfer between the U.S.
Underwriters pursuant to an agreement between such U.S. Underwriters and
their transfer between the U.S. Underwriters and the International Managers
and (ii) the fees and disbursements of their respective counsel and
accountants.
(c) Termination of Agreement. If this Agreement is terminated
by the U.S. Representatives in accordance with the provisions of Section
5, Section 9(a)(i) or Section 11 hereof, the Company shall reimburse the
U.S. Underwriters for all of their out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the U.S. Underwriters.
SECTION 5. Conditions of U.S. Underwriters' Obligations. The
obligations of the several U.S. Underwriters hereunder are subject to
the accuracy of the representations and warranties of the Company and the
Selling Shareholders contained in Section 1 hereof or in certificates of
any officer of the Company or any subsidiary of the Company or on behalf
of any Selling Shareholder delivered pursuant to the provisions hereof, to
the performance by the Company of its covenants and other obligations
hereunder, and to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission, and any
request on the part of the Commission for additional information shall
have been complied with to the reasonable satisfaction of counsel to the
U.S. Underwriters. A prospectus containing the Rule 430A Information
shall have been filed with the Commission in accordance with Rule 424(b)
(or a post-effective amendment providing such information shall have
been filed and declared effective in accordance
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with the requirements of Rule 430A) or, if the Company has elected to rely
upon Rule 434, a Term Sheet shall have been filed with the Commission
in accordance with Rule 424(b).
(b) Opinion of Counsel for Company. At Closing Time, the U.S.
Representatives shall have received the favorable opinion, dated as of
Closing Time, of Tenzer Greenblatt LLP, counsel for the Company, in form
and substance satisfactory to counsel for the U.S. Underwriters, together
with signed or reproduced copies of such letter for each of the other
U.S. Underwriters to the effect set forth in Exhibit A hereto and to such
further effect as counsel to the U.S. Underwriters may reasonably request.
(c) Opinion of Counsel for the Selling Shareholders. At Closing
Time, the U.S. Representatives shall have received the favorable opinion,
dated as of Closing Time, of Strook & Strook & Lavan and Klehr, Harrison,
Harvey, Branzburg & Ellers, counsel for the Selling Shareholders, in form
and substance satisfactory to counsel for the U.S. Underwriters, together
with signed or reproduced copies of such letter for each of the other U.S.
Underwriters to the effect set forth in Exhibit B hereto and to such
further effect as counsel to the U.S. Underwriters may reasonably request.
(d) Opinion of Counsel for U.S. Underwriters. At Closing Time, the
U.S. Representatives shall have received the favorable opinion, dated as
of Closing Time, of Mayer, Brown & Platt, counsel for the U.S. Underwriters,
together with signed or reproduced copies of such letter for each of the
other U.S. Underwriters with respect to the matters set forth in clauses (i)
(solely as to existence and good standing), (ii), (v), (vi) (solely as to
preemptive or other similar rights arising by operation of law or under the
charter or by-laws of the Company), (viii) through (x), inclusive, (xii),
(xiv) (solely as to the information in the Prospectus under "Description of
Capital Stock--Common Stock") and the penultimate paragraph of Exhibit A
hereto. In giving such opinion such counsel may rely, as to all matters
governed by the laws of jurisdictions other than the law of the State of
New York, the federal law of the United States and the General Corporation
Law of the State of Delaware, upon the opinions of counsel satisfactory to
the U.S. Representatives. Such counsel may also state that, insofar as such
opinion involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers of the Company and its subsidiaries,
certificates on behalf of the Selling Shareholders and certificates of
public officials.
(e) Officers' Certificate. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectuses, any material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business,
and the U.S. Representatives shall have received a certificate of the
President or a Vice President of the Company and of the chief financial or
chief accounting officer of the Company, dated as of Closing Time, to the
effect that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1(a) hereof are true and correct
with the same force and effect as though expressly made at and as of
Closing Time, (iii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or
prior to Closing Time, and (iv) no stop order suspending the
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<PAGE> 25
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or are
contemplated by the Commission.
(f) Certificate of Selling Shareholders. At Closing Time, the U.S.
Representatives shall have received a certificate of an Attorney-in-Fact on
behalf of each Selling Shareholder, dated as of Closing Time, to the
effect that (i) the representations and warranties of each Selling
Shareholder contained in Section 1(b) hereof are true and correct in all
respects with the same force and effect as though expressly made at and as
of Closing Time and (ii) each Selling Shareholder has complied in all
material respects with all agreements and all conditions on its part to be
performed under this Agreement at or prior to Closing Time.
(g) Accountant's Comfort Letter. At the time of the execution
of this Agreement, the U.S. Representatives shall have received from Ernst
& Young a letter dated such date, in form and substance satisfactory to the
U.S. Representatives, together with signed or reproduced copies of such
letter for each of the other U.S. Underwriters containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to U.S. Underwriters with respect to the financial statements
and certain financial information contained in the Registration
Statement and the Prospectuses.
(h) Bring-down Comfort Letter. At Closing Time, the U.S.
Representatives shall have received from Ernst & Young a letter, dated as
of Closing Time, to the effect that they reaffirm the statements made in
the letter furnished pursuant to subsection (g) of this Section, except
that the specified date referred to shall be a date not more than
three business days prior to Closing Time.
(i) Approval of Listing. At Closing Time, the Securities shall
have been approved for inclusion in the Nasdaq National Market, subject
only to official notice of issuance.
(j) No Objection. The NASD has confirmed that it has not raised
any objection with respect to the fairness and reasonableness of
the underwriting terms and arrangements.
(k) Lock-up Agreements. At the date of this Agreement, the U.S.
Representatives shall have received an agreement substantially in
the form of Exhibit C hereto signed by the persons listed on Schedule D
hereto.
(l) Purchase of Initial International Securities.
Contemporaneously with the purchase by the U.S. Underwriters of the
Initial U.S. Securities under this Agreement, the International
Managers shall have purchased the Initial International
Securities under the International Purchase Agreement.
(m) Conditions to Purchase of U.S. Option Securities. In the event
that the U.S. Underwriters exercise their option provided in Section
2(b) hereof to purchase all or any portion of the U.S. Option Securities,
the representations and warranties of the Company contained herein and
the statements in any certificates furnished by the Company or any
subsidiary of the Company hereunder shall be true and correct as of
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each Date of Delivery and, at the relevant Date of Delivery, the U.S.
Representative(s) shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company and of
the chief financial or chief accounting officer of the Company
confirming that the certificate delivered at the Closing Time
pursuant to Section 5(e) hereof remains true and correct as of such
Date of Delivery.
(ii) Opinion of Counsel for Company. The favorable opinion of
Tenzer Greenblatt, counsel for the Company, in form and substance
satisfactory to counsel for the U.S. Underwriters, dated such Date
of Delivery, relating to the U.S. Option Securities to be
purchased on such Date of Delivery and otherwise to the same
effect as the opinion required by Section 5(b) hereof.
(iii) Opinion of Counsel for U.S. Underwriters. The favorable
opinion of Mayer, Brown & Platt, counsel for the U.S. Underwriters,
dated such Date of Delivery, relating to the U.S. Option Securities
to be purchased on such Date of Delivery and otherwise to the same
effect as the opinion required by Section 5(d) hereof.
(iv) Bring-down Comfort Letter. A letter from Ernst & Young, in
form and substance satisfactory to the U.S. Representatives and
dated such Date of Delivery, substantially in the same form
and substance as the letter furnished to the U.S. Representatives
pursuant to Section 5(g) hereof, except that the "specified date" in
the letter furnished pursuant to this paragraph shall be a date not
more than five days prior to such Date of Delivery.
(n) Additional Documents. At Closing Time and at each Date of
Delivery, counsel for the U.S. Underwriters shall have been furnished
with such documents and opinions as they may require for the purpose of
enabling them to pass upon the issuance and sale of the Securities as
herein contemplated, or in order to evidence the accuracy of any of
the representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company
and the Selling Shareholders in connection with the issuance and sale of
the Securities as
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herein contemplated shall be satisfactory in form and substance to the U.S.
Representatives and counsel for the U.S. Underwriters.
(o) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be
fulfilled, this Agreement, or, in the case of any condition to the
purchase of U.S. Option Securities on a Date of Delivery which is after the
Closing Time, the obligations of the several U.S. Underwriters to purchase
the relevant U.S. Option Securities, may be terminated by the U.S.
Representatives by notice to the Company and the Selling Shareholders at
any time at or prior to Closing Time or such Date of Delivery, as the
case may be, and such termination shall be without liability of any party
to any other party except as provided in Section 4 and except that
Sections 1, 6, 7 and 8 shall survive any such termination and remain
in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of U.S. Underwriters. The Company and the
Selling Shareholders, jointly and severally, agree to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
U.S. Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act to the extent and in the manner set forth in
clauses (i), (ii) and (iii) below.
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained
in the Registration Statement (or any amendment thereto),
including the Rule 430A Information and the Rule 434 Information, if
applicable, or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact included in
any preliminary prospectus or the Prospectuses (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of
a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission; provided that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Company and
the Selling Shareholders; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by
Merrill Lynch), reasonably incurred in investigating,
preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
23
<PAGE> 28
provided, however, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with written information furnished
to the Company by any U.S. Underwriter through the U.S. Representatives
expressly for use in the Registration Statement (or any amendment thereto),
including the Rule 430A Information and the Rule 434 Information, if
applicable, or any preliminary prospectus or the Prospectuses (or any
amendment or supplement thereto).
(b) Indemnification of Company, Directors and Officers and Selling
Shareholders. Each U.S. Underwriter severally agrees to indemnify and hold
harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act, and each Selling Shareholder against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) of this Section, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto),
including the Rule 430A Information and the Rule 434 Information, if
applicable, or any preliminary prospectus or the Prospectuses (or any
amendment or supplement thereto) in reliance upon and in conformity
with written information furnished to the Company by such U.S.
Underwriter through the U.S. Representatives expressly for use in
the Registration Statement (or any amendment thereto) or such
preliminary prospectus or the Prospectuses (or any amendment or supplement
thereto).
(c) Actions against Parties; Notification. Each
indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it
in respect of which indemnity may be sought hereunder, but failure to so
notify an indemnifying party shall not relieve such indemnifying party
from any liability hereunder to the extent it is not materially
prejudiced as a result thereof and in any event shall not relieve it from
any liability which it may have otherwise than on account of this
indemnity agreement. In the case of parties indemnified pursuant to
Section 6(a) above, counsel to the indemnified parties shall be selected
by Merrill Lynch, and, in the case of parties indemnified pursuant to
Section 6(b) above, counsel to the indemnified parties shall be selected
by the Company or the Selling Shareholders. An indemnifying party
may participate at its own expense in the defense of any such action;
provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable
for fees and expenses of more than one counsel (in addition to any
local counsel) separate from their own counsel for all indemnified
parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the
prior written consent of the indemnified parties, settle or compromise
or consent to the entry of any judgment with respect to any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever in respect of
which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement,
compromise or consent (i) includes an unconditional release of each
indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim
24
<PAGE> 29
and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified
party.
(d) Settlement without Consent if Failure to Reimburse. If at any
time an indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of
the nature contemplated by Section 6(a)(ii) effected without its written
consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into
and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
(e) Other Agreements with Respect to Indemnification. The provisions
of this Section shall not affect any agreement among the Company and
the Selling Shareholders with respect to indemnification.
SECTION 7. Contribution. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient
to hold harmless an indemnified party in respect of any losses,
liabilities, claims, damages or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount of such
losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and
the Selling Shareholders on the one hand and the U.S. Underwriters on the
other hand from the offering of the Securities pursuant to this Agreement
or (ii) if the allocation provided by clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (i) above but also the
relative fault of the Company and the Selling Shareholders on the one
hand and of the U.S. Underwriters on the other hand in connection with the
statements or omissions which resulted in such losses, liabilities,
claims, damages or expenses, as well as any other relevant equitable
considerations.
The relative benefits received by the Company and the Selling
Shareholders on the one hand and the U.S. Underwriters on the other hand in
connection with the offering of the Securities pursuant to this Agreement
shall be deemed to be in the same respective proportions as the total
net proceeds from the offering of the Securities pursuant to this
Agreement (before deducting expenses) received by the Company and the
Selling Shareholders and the total underwriting discount received by the
U.S. Underwriters, in each case as set forth on the cover of the U.S.
Prospectus, or, if Rule 434 is used, the corresponding location on the
Term Sheet bear to the aggregate initial public offering price of the
Securities as set forth on such cover.
The relative fault of the Company and the Selling
Shareholders on the one hand and the U.S. Underwriters on the other
hand shall be determined by reference to, among other things, whether
any such untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact relates to information
supplied by the Company or the Selling Shareholders or by the U.S.
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
25
<PAGE> 30
The Company, the Selling Shareholders and the U.S.
Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the U.S. Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above in this
Section 7. The aggregate amount of losses, liabilities, claims, damages
and expenses incurred by an indemnified party and referred to above in this
Section 7 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in investigating, preparing or
defending against any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission.
Notwithstanding the provisions of this Section 7, no U.S.
Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the U.S. Securities
underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such U.S. Underwriter
has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls a
U.S. Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution
as such U.S. Underwriter, and each director of the Company, each
officer of the Company who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act shall have the same
rights to contribution as the Company. The U.S. Underwriters' respective
obligations to contribute pursuant to this Section 7 are several in
proportion to the number of Initial U.S. Securities set forth opposite
their respective names in Schedule A hereto and not joint.
The provisions of this Section shall not affect any agreement
among the Company and the Selling Shareholders with respect to
contribution.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries or the Selling Shareholders submitted pursuant hereto, shall
remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any U.S. Underwriter or controlling
person, or by or on behalf of the Company or the Selling Shareholders,
and shall survive delivery of the Securities to the U.S. Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The U.S. Representatives may terminate
this Agreement, by notice to the Company and the Selling Shareholders,
at any time at or prior to Closing Time (i) if
26
<PAGE> 31
there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the U.S. Prospectus,
any material adverse change in the condition, financial or otherwise, or
in the earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material
adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or
economic conditions, in each case the effect of which is such as to make it,
in the judgment of the U.S. Representatives, impracticable to market the
Securities or to enforce contracts for the sale of the Securities, or (iii) if
trading in any securities of the Company has been suspended or materially
limited by the Commission or the Nasdaq National Market, or if trading
generally on the American Stock Exchange or the New York Stock Exchange or in
the Nasdaq National Market has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the National Association of Securities Dealers,
Inc. or any other governmental authority, or (iv) if a banking moratorium has
been declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any
other party except as provided in Section 4 hereof, and provided further
that Sections 1, 6, 7 and 8 shall survive such termination and remain in full
force and effect.
SECTION 10. Default by One or More of the U.S. Underwriters. If one or
more of the U.S. Underwriters shall fail at Closing Time or a Date of Delivery
to purchase the Securities which it or they are obligated to purchase under
this Agreement (the "Defaulted Securities"), the U.S. Representatives shall
have the right, within 24-hours thereafter, to make arrangements for one or
more of the non-defaulting U.S. Underwriters, or any other U.S. Underwriters,
to purchase all, but not less than all, of the Defaulted Securities in such
amounts as may be agreed upon and upon the terms herein set forth; if, however,
the U.S. Representatives shall not have completed such arrangements within such
24-hour period, then:
(a) if the number of Defaulted Securities does not exceed 10% of the
number of U.S. Securities to be purchased on such date, each of the
non-defaulting U.S. Underwriters shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting U.S. Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the number of
U.S. Securities to be purchased on such date, this Agreement or, with respect
to any Date of Delivery which occurs after the Closing Time, the obligation of
the U.S. Underwriters to purchase and of the Company to sell the U.S. Option
Securities to be purchased and sold on such Date of Delivery shall terminate
without liability on the part of any non-defaulting Underwriter.
27
<PAGE> 32
No action taken pursuant to this Section shall relieve any defaulting
U.S. Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a termination of the obligation of
the U.S. Underwriters to purchase and the Company to sell the relevant U.S.
Option Securities, as the case may be, either (i) the U.S. Representatives or
(ii) the Company and any Selling Shareholder shall have the right to postpone
Closing Time or the relevant Date of Delivery, as the case may be, for a period
not exceeding seven days in order to effect any required changes in the
Registration Statement or the Prospectuses or in any other documents or
arrangements. As used herein, the term "U.S. Underwriter" includes any
person substituted for a U.S. Underwriter under this Section 10.
SECTION 11. Default by One or More of the Selling Shareholders or the
Company. (a) If a Selling Shareholder shall fail at Closing Time or at a Date
of Delivery to sell and deliver the number of U.S. Securities which such Selling
Shareholder is obligated to sell hereunder, and the remaining Selling
Shareholders do not exercise the right hereby granted to increase, pro rata or
otherwise, the number of U.S. Securities to be sold by them hereunder to the
total number to be sold by all Selling Shareholders as set forth in Schedule B
hereto, then the U.S. Underwriters may, at option of the U. S. Representatives,
by notice from the U.S. Representatives to the Company and the non-defaulting
Selling Shareholders, either (a) terminate this Agreement without any liability
on the part of any non-defaulting party except that the provisions of Sections
1, 4, 6, 7 and 8 shall remain in full force and effect or (b) elect to purchase
the U.S. Securities which the non-defaulting Selling Shareholders and the
Company have agreed to sell hereunder. No action taken pursuant to this Section
11 shall relieve any Selling Shareholder so defaulting from liability, if any,
in respect of such default.
In the event of a default by any Selling Shareholder as referred to in this
Section 11, each of (i) the U.S. Representatives, and (ii) the Company and the
non-defaulting Selling Shareholders shall have the right to postpone Closing
Time or Date of Delivery for a period not exceeding seven days in order to
effect any required change in the Registration Statement or the Prospectuses or
in any other documents or arrangements.
(b) If the Company shall fail at Closing Time or at the Date of Delivery
to sell the number of U.S. Securities that it is obligated to sell hereunder,
then this Agreement shall terminate without any liability on the part of any
nondefaulting party; provided, however, that the provisions of Sections 1, 4, 6,
7 and 8 shall remain in full force and effect. No action taken pursuant to this
Section shall relieve the Company from liability, if any, in respect of such
default.
SECTION 12. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the U.S.
Underwriters shall be directed to the U.S. Representatives at North Tower, World
Financial Center, New York, New York 10281-1201, attention of ____________;
notices to the Company shall be directed to it at 6402 Corporate Drive,
Indianapolis,
28
<PAGE> 33
Indiana 46728, attention of ____________; notices to the Selling Shareholders
shall be directed to _________, attention of ______________.
SECTION 13. Parties. This Agreement shall each inure to the benefit of and
be binding upon the U.S. Underwriters, the Company and the Selling Shareholders
and their respective successors. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person, firm or
corporation, other than the U.S. Underwriters, the Company and the Selling
Shareholders and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the U.S. Underwriters, the Company and the Selling
Shareholders and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities
from any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
29
<PAGE> 34
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company and the Attorney-in-Fact for the Selling
Shareholders a counterpart hereof, whereupon this instrument, along with all
counterparts, will become a binding agreement among the U.S. Underwriters, the
Company and the Selling Shareholders in accordance with its terms.
Very truly yours,
BRIGHTPOINT, INC.
By:
Title:
_________________________
By:
Title:
As Attorney-in-Fact acting on behalf
of the Selling Shareholders named in
Schedule B hereto
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
COWEN & COMPANY
UBS SECURITIES LLC
SANDS BROTHERS & CO., LTD.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By
Authorized Signatory
For themselves and as U.S. Representatives of the other U.S. Underwriters named
in Schedule A hereto.
30
<PAGE> 35
SCHEDULE A
Number of
Initial
Name of Underwriter Securities
------------------- ----------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . .
Cowen & Company . . . . . . . . . . . . . . . . .
UBS Securities LLC . . . . . . . . . . . . . . .
Sands Brothers & Co., Ltd. . . . . . . . . . . .
---------
Total . . . . . . . . . . . . . . . . . . . . . . 3,200,000
=========
Sch A - 1
<PAGE> 36
SCHEDULE B
Number of Initial
Securities to be Sold
---------------------
Brightpoint, Inc. 1,440,000
Selling Shareholders
Robert Picow 1,600,000
Joseph Forer 160,000
---------
Total ................... 3,200,000
=========
Sch B - 1
<PAGE> 37
SCHEDULE C
BRIGHTPOINT, INC.
3,200,000 Shares of Common Stock
(Par Value $.01 Per Share)
1. The initial public offering price per share for the
Securities, determined as provided in said Section 2, shall be $_____________.
2. The purchase price per share for the Securities to be paid by
the several U.S. Underwriters shall be $___________, being an amount equal to
the initial public offering price set forth above less $_________ per share;
provided that the purchase price per share for any U.S. Option Securities
purchased upon the exercise of the over-allotment option described in
Section 2(b) shall be reduced by an amount per share equal to any dividends
or distributions declared by the Company and payable on the Initial U.S.
Securities but not payable on the U.S. Option Securities.
Sch C - 1
<PAGE> 38
[SCHEDULE D]
[List of persons and entities
subject to lock-up]
Sch D - 1
<PAGE> 39
Exhibit A
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware.
(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectuses and to enter into and perform its obligations under the U.S.
Purchase Agreement and the International Purchase Agreement.
(iii) The Company is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing
of property or the conduct of business, except where the failure so to
qualify or to be in good standing would not result in a Material Adverse
Effect.
(iv) The authorized, issued and outstanding capital stock of the Company
is as set forth in the Prospectuses in the column entitled "Actual" under the
caption "Capitalization" (except for subsequent issuances, if any, pursuant to
the U.S. Purchase Agreement and the International Purchase Agreement or pursuant
to reservations, agreements or employee benefit plans referred to in the
Prospectuses or pursuant to the exercise of convertible securities or options
referred to in the Prospectuses); the shares of issued and outstanding capital
stock of the Company, including the Securities to be purchased by the U.S.
Underwriters and the International Managers from the Selling Shareholders, have
been duly authorized and validly issued and are fully paid and non-assessable;
and none of the outstanding shares of capital stock of the Company was issued in
violation of the preemptive or other similar rights of any security holder of
the Company. Except as disclosed in and/or contemplated by the Prospectuses and
the financial statements of the Company and related notes thereto included in
the Prospectuses, to the best of such counsel's knowledge, the Company does not
have outstanding any options or warrants to purchase, or any preemptive rights
or other rights to subscribe for or to purchase any securities or obligations
convertible into, or any contracts or commitments to issue or sell, shares of
its capital stock or any such options, rights, convertible securities or
obligations, except for options granted subsequent to the date of information
provided in the Prospectuses pursuant to the Company's employee and director
stock option plans as disclosed in the Prospectuses. The description of the
Company's stock option plans, and, to the best of such counsel's knowledge,
options granted or exercised thereunder, as set forth in the Prospectuses,
accurately presents in all material respects the information presented with
respect to such plans and options.
(v) The Securities to be purchased by the U.S. Underwriters and the
International Managers from the Company have been duly authorized for issuance
and sale to the U.S. Underwriters and the International Managers pursuant to the
U.S. Purchase Agreement and the International Purchase Agreement, respectively,
and, when issued and delivered by the Company pursuant to the U.S. Purchase
A-1
<PAGE> 40
Agreement and the International Purchase Agreement against payment of the
consideration set forth in the U.S. Purchase Agreement and the International
Purchase Agreement, will be validly issued and fully paid and non-assessable and
no holder of the Securities is or will be subject to personal liability by
reason of being such a holder.
(vi) The issuance and sale of the Securities by the Company and the sale
of the Securities by the Selling Shareholders is not subject to the preemptive
or other similar rights of any security holder of the Company.
(vii) Each Subsidiary has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectuses and is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect; except as otherwise disclosed in the
Registration Statement, all of the issued and outstanding capital stock of each
Subsidiary has been duly authorized and validly issued, is fully paid and
non-assessable and, to the best of such counsel's knowledge, is owned by the
Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; none of the
outstanding shares of capital stock of any Subsidiary was issued in violation
of the preemptive or similar rights of any security holder of such Subsidiary.
(vii) The U.S. Purchase Agreement and the International Purchase
Agreement have been duly authorized, executed and delivered by the Company.
(ix) The Registration Statement, including any Rule 462(b) Registration
Statement, has been declared effective under the 1933 Act; any required filing
of the Prospectuses pursuant to Rule 424(b) has been made in the manner and
within the time period required by Rule 424(b); and, to the best of such
counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement has been issued
under the 1933 Act and no proceedings for that purpose have been instituted or
are pending or threatened by the Commission.
(x) The Company has complied with the conditions and meets the
requirements for the use of Form S-3 under the 1933 Act. The Registration
Statement, including any Rule 462(b) Registration Statement, the Rule 430A
Information and the Rule 434 Information, as applicable, the Prospectuses, and
each amendment or supplement to the Registration Statement and Prospectuses, as
of their respective effective or issue dates (other than the financial
statements and supporting schedules included therein or omitted therefrom, as to
which such counsel need express no opinion) complied as to form in all material
respects with the requirements of the 1933 Act and the 1933 Act Regulations.
(xi) The documents incorporated by reference in the Prospectuses (other
than the financial statements and supporting schedules included therein or
omitted therefrom, as to which such counsel need express no opinion), when they
were filed with the Commission complied as to form in all material respects
with the requirements of the 1934 Act and the 1934 Act Regulations.
A-2
<PAGE> 41
(xii) The form of certificate used to evidence the Common Stock complies
in all material respects with all applicable statutory requirements, with any
applicable requirements of the charter and by-laws of the Company and the
requirements of the Nasdaq National Market.
(xiii) To the best of such counsel's knowledge, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation, to which the
Company or any subsidiary is a party, or to which the property of the Company or
any subsidiary is subject, before or brought by any court or governmental agency
or body, domestic or foreign, which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to materially
and adversely affect the properties or assets thereof or the consummation of the
transactions contemplated in the U.S. Purchase Agreement and the International
Purchase Agreement or the performance by the Company of its obligations under
such agreements.
(xiv) The information in the Prospectuses under "Description of Capital
Stock--Common Stock", "Business--Property", "Business--Regulatory Matters", and
"Business--Litigation" and in the Registration Statement under Item 15, to the
extent that it constitutes matters of law, summaries of legal matters, the
Company's charter and bylaws or legal proceedings, or legal conclusions, has
been reviewed by us and is correct in all material respects.
(xv) To the best of such counsel's knowledge, there are no statutes
or regulations that are required to be described in the Prospectuses that
are not described as required.
(xvi) All descriptions in the Registration Statement of contracts and
other documents to which the Company or its subsidiaries are a party are
accurate in all material respects; to the best of such counsel's knowledge,
there are no franchises, contracts, indentures, mortgages, loan agreements,
notes, leases or other instruments required to be described or referred to in
the Registration Statement or to be filed as exhibits thereto other than those
described or referred to therein or filed or incorporated by reference as
exhibits thereto, and the descriptions thereof or references thereto are correct
in all material respects.
(xvii) To the best of such counsel's knowledge, neither the Company nor
any subsidiary is in violation of its charter or by-laws and no default by the
Company or any subsidiary exists in the due performance or observance of any
material obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument that is describe or referred to in the Registration Statement or the
Prospectuses or filed or incorporated by reference as an exhibit to the
Registration Statement.
(xviii) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign (other than under the 1933 Act and the
1933 Act Regulations, which have been obtained, or as may be required under
the securities or blue sky laws of the various states, as to which such counsel
need express no opinion) is necessary or required in connection with the due
authorization, execution and delivery of the U.S. Purchase Agreement and the
International Purchase Agreement or for the offering, issuance, sale or delivery
of the Securities.
(xix) The execution, delivery and performance of the U.S. Purchase
Agreement and the International Purchase Agreement and the consummation of the
transactions contemplated in the U.S. Purchase Agreement, the International
Purchase Agreement and in the Registration Statement (including the
A-3
<PAGE> 42
issuance and sale of the Securities and the use of the proceeds from the sale of
the Securities as described in the Prospectuses under the caption "Use Of
Proceeds") and compliance by the Company with its obligations under the U.S.
Purchase Agreement and the International Purchase Agreement do not and will not,
whether with or without the giving of notice or lapse of time or both, conflict
with or constitute a breach of, or default or Repayment Event (as defined in
Section 1(a)(x) of the Purchase Agreements) under or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any subsidiary pursuant to any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or any other agreement or
instrument, known to us, to which the Company or any subsidiary is a party or by
which it or any of them may be bound, or to which any of the property or assets
of the Company or any subsidiary is subject (except for such conflicts, breaches
or defaults or liens, charges or encumbrances that would not have a Material
Adverse Effect), nor will such action result in any violation of the provisions
of the charter or by-laws of the Company or any subsidiary, or any applicable
law, statute, rule, regulation, judgment, order, writ or decree, known to us, of
any government, government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any subsidiary or any of their respective
properties, assets or operations.
(xx) To the best of such counsel's knowledge, there are no persons with
registration rights or other similar rights to have any securities registered
pursuant to the Registration Statement or otherwise registered by the Company
under the 1933 Act.
(xxi) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the 1940
Act.
(xxii) The Rights under the Company's Shareholder Rights Plan to which
holders of the Securities will be entitled have been duly authorized and validly
issued.
(xxiii)To the best of such counsel's knowledge, no claim has been made
against the Company alleging the infringement by the Company of any material
patent, trademark, service mark, tradename, corporate, trade secret, license in
or other intellectual property right or franchise right of any person.
Nothing has come to such counsel's attention that has led such counsel to
believe that the Registration Statement or any amendment thereto, including the
Rule 430A Information and Rule 434 Information (if applicable), (except for
financial statements and schedules and other financial data included therein or
omitted therefrom, as to which such counsel need make no statement), at the time
such Registration Statement or any such amendment became effective, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
or that the Prospectuses or any amendment or supplement thereto (except for
financial statements and schedules and other financial data included therein or
omitted therefrom, as to which such counsel need make no statement), at the time
the Prospectuses were issued, at the time any such amended or supplemented
prospectuses were issued or at the Closing Time, included or include an untrue
statement of a material fact or omitted or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely as to matters of fact (but
not as to legal conclusions), to the extent they deem proper, on certificates of
responsible officers of the Company and public officials. Such opinion shall not
state that it is to be governed or qualified by, or that it is otherwise subject
to, any treatise, written policy or other document relating to legal opinions,
including, without limitation, the Legal Opinion Accord of the ABA Section of
Business Law (1991).
A-4
<PAGE> 43
Exhibit B
FORM OF OPINION OF COUNSEL FOR THE SELLING SHAREHOLDER(S) TO BE
DELIVERED PURSUANT TO SECTION 5(c)
(i) No filing with, or consent, approval, authorization, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign, (other than the issuance of the
order of the Commission declaring the Registration Statement effective and
such authorizations, approvals or consents as may be necessary under state
securities laws, as to which such counsel need express no opinion) is
necessary or required to be obtained by the Selling Shareholders for the
performance by each Selling Shareholder of its obligations under the U.S.
Purchase Agreement and the International Purchase Agreement or in the Power of
Attorney and Custody Agreement, or in connection with the offer, sale or
delivery of the Securities.
(ii) Each Power of Attorney and Custody Agreement has been duly
executed and delivered by the respective Selling Shareholders named therein
and constitutes the legal, valid and binding agreement of such Selling
Shareholder.
(iii) The U.S. Purchase Agreement and the International Purchase
Agreement have been duly authorized, executed and delivered by or on behalf
of each Selling Shareholder.
(iv) The Attorney-in-Fact has been duly authorized by the Selling
Shareholders to deliver the Securities on behalf of the Selling
Shareholders in accordance with the terms of the U.S. Purchase
Agreement and the International Purchase Agreement.
(v) The execution, delivery and performance of the U.S. Purchase
Agreement, the International Purchase Agreement and the Power of Attorney
and Custody Agreement and the sale and delivery of the Securities and
the consummation of the transactions contemplated in the U.S. Purchase
Agreement, the International Purchase Agreement and in the Registration
Statement and compliance by the Selling Shareholders with its
obligations under the U.S. Purchase Agreement and the International Purchase
Agreement have been duly authorized by all necessary action on the part of
the Selling Shareholders and do not and will not, whether with or without
the giving of notice or passage of time or both, conflict with or constitute
a breach of, or default under or result in the creation or imposition of
any tax, lien, charge or encumbrance upon the Securities or any property
or assets of the Selling Shareholders pursuant to, any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, license,
lease or other instrument or agreement to which any Selling Shareholder is a
party or by which they may be bound, or to which any of the property or
assets of the Selling Shareholders may be subject nor will such action result
in any violation of the provisions of the charter or by-laws of the Selling
Shareholders, if applicable, or any law, administrative regulation, judgment
or order of any governmental agency or body or any administrative or
court decree having jurisdiction over such Selling Shareholder or any of its
properties.
(vi) To the best of such counsel's knowledge, each Selling
Shareholder has valid and marketable title to the Securities to be sold by
such Selling Shareholder pursuant to the U.S. Purchase Agreement and the
International Purchase Agreement, free and clear of any pledge, lien, security
interest, charge, claim,
B-1
<PAGE> 44
equity or encumbrance of any kind, and has full right, power and
authority to sell, transfer and deliver such Securities pursuant to the U.S.
Purchase Agreement and the International Purchase Agreement. By delivery of
a certificate or certificates therefor such Selling Shareholder will
transfer to the U.S. Underwriters and the International Managers who
have purchased such Securities pursuant to the U.S. Purchase Agreement and the
International Purchase Agreement, respectively (without notice of any
defect in the title of such Selling Shareholder and who are otherwise
bona fide purchasers for purposes of the Uniform Commercial Code), valid and
marketable title to such Securities, free and clear of any pledge, lien,
security interest, charge, claim, equity or encumbrance of any kind.
Nothing has come to such counsel's attention that has led such counsel
to believe that the Registration Statement or any amendment thereto,
including the Rule 430A Information and Rule 434 Information (if applicable),
(except for financial statements and schedules and other financial data
included therein or omitted therefrom, as to which such counsel need
make no statement), at the time such Registration Statement or any
such amendment became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Prospectuses or any amendment or supplement thereto (except for financial
statements and schedules and other financial data included therein or
omitted therefrom, as to which such counsel need make no statement), at the
time the Prospectuses were issued, at the time any such amended or
supplemented prospectuses were issued or at the Closing Time, included or
include an untrue statement of a material fact or omitted or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
B-2
<PAGE> 45
[FORM OF LOCK-UP FROM DIRECTORS, OFFICERS AND SELLING STOCKHOLDERS PURSUANT
TO SECTION 5(k)]
Exhibit C
______________, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
Cowen & Company
UBS Securities LLC
Sands Brothers & Co., Ltd.
as U.S. Representatives of the several
U.S. Underwriters to be named in the
within-mentioned Purchase Agreement
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Re: Proposed Public Offering by Brightpoint, Inc.
Dear Sirs:
The undersigned, a stockholder [and an officer and/or director] of
Brightpoint, Inc., a Delaware corporation (the "Company"), understands
that Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch"), Cowen & Company, UBS Securities LLC and Sands Brothers &
Co., Ltd., propose to enter into a U.S. Purchase Agreement (the "U.S.
Purchase Agreement") with the Company and the Selling Shareholders
providing for the public offering of shares (the "Securities") of the
Company's common stock, par value $.01 per share (the "Common Stock"). In
recognition of the benefit that such an offering will confer upon the
undersigned as a stockholder [and an officer and/or director] of the
Company, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agrees with
each underwriter to be named in the U.S. Purchase Agreement that, during a
period of 120 days from the date of the U.S. Purchase Agreement, the
undersigned will not, without the prior written consent of Merrill Lynch,
directly or indirectly, (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant for the sale of, or otherwise dispose of or
transfer any shares of the Company's Common Stock or any securities
convertible into or exchangeable or exercisable for Common Stock, whether
now owned or hereafter acquired by the undersigned or with respect to which
the undersigned has or hereafter acquires the power of disposition, or file
any registration statement under the Securities Act of 1933, as amended,
with respect to any of the foregoing or (ii) enter into any swap or any
other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of the Common
Stock,
C-1
<PAGE> 46
whether any such swap or transaction is to be settled by delivery of Common
Stock or other securities, in cash or otherwise.
Very truly yours,
Signature:
-----------------------
Print Name:
-----------------------
C-2
<PAGE> 1
EXHIBIT 3.1
State of Delaware
PAGE 1
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "WHOLESALE CELLULAR USA, INC.", FILED IN THIS OFFICE ON THE
SECOND DAY OF FEBRUARY, A.D. 1994, AT 9 O'CLOCK A.M.
[GREAT SEAL OF THE STATE OF DELAWARE]
/s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
2374964 8100 AUTHENTICATION: 8511710
971195396
DATE: 06-13-97
<PAGE> 2
CERTIFICATE OF INCORPORATION
OF
WHOLESALE CELLULAR USA, INC.
FIRST: The name of the Corporation is:
WHOLESALE CELLULAR USA, INC.
SECOND: The address of the Corporation's registered office in the State
of Delaware is 32 Loockerman Square, Suite L-100, in the City of Dover, County
of Kent, 19901. The name of its registered agent at such address is The
Prentice-Hall Corporation System, Inc.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the laws of the General
Corporation Law of the State of Delaware.
FOURTH: The total number of shares of capital stock which the Corporation
shall have authority to issue is eleven million (11,000,000) shares, of which
ten million (10,000,000) shares shall be Common Stock, par value $.01 per
share, and one million (1,000,000) shares shall be Preferred Stock, par value
$.01 per share.
The Preferred Stock may be issued from time to time in one or more series.
The Board of Directors of the Corporation is hereby expressly authorized to
provide, by resolution or resolutions duly adopted by it prior to issuance, for
the creation of each such series and to fix the designation and the powers,
preferences, rights, qualifications, limitations and restrictions relating to
the shares of each such series. The authority of the
<PAGE> 3
Board of Directors with respect to each series of Preferred Stock shall
include, but not be limited to, determining the following:
(a) the designation of such series, the number of shares to
constitute such series and the stated value if different from
the par value thereof,
(b) whether the shares of such series shall have voting rights, in
addition to any voting rights provided by law, and, if so, the terms of
such voting rights, which may be general or limited;
(c) the dividends, if any, payable on such series, whether any such
dividends shall be cumulative, and, if so, from what dates, the conditions
and dates upon which such dividends shall be payable, and the preference or
relation which such dividends shall bear to the dividends payable on any
shares of stock of any other class or any other series of Preferred Stock;
(d) whether the shares of such series shall be subject to redemption
by the Corporation, and, if so, the times, prices and other conditions of
such redemption,
(e) the amount or amounts payable upon shares of such series upon,
and the rights of the holders of such series in, the voluntary or
involuntary liquidation, dissolution or winding up, or upon any
distribution of the assets, of the Corporation;
(f) whether the shares of such series shall be subject to the
operation of a retirement or sinking fund and, if so, the extent to
and manner in which any such retirement or
-2-
<PAGE> 4
sinking fund shall be applied to the purchase or redemption of the shares of
such series for retirement or other corporate purposes and the terms and
provisions relating to the operation thereof;
(g) whether the shares of such series shall be convertible into, or
exchangeable for, shares of stock of any other class or any other series of
Preferred Stock or any other securities and, if so, the price or prices or the
rate or rates of conversion or exchange and the method, if any, of adjusting
the same, and any other terms and conditions of conversion or exchange;
(h) the limitations and restrictions, if any, to be effective while any
shares of such series are outstanding upon the payment of dividends or the
making of other distributions on, and upon the purchase, redemption or other
acquisition by the Corporation of, the Common Stock or shares of stock of any
other class or any other series of Preferred Stock;
(i) the conditions or restrictions, if any, upon the creation of
indebtedness of the Corporation or upon the issue of any additional stock,
including additional shares of such series or of any other series of Preferred
Stock or of any other class; and
(j) any other powers, preferences and relative, participating, optional
and other special rights, and any qualifications, limitations and restrictions,
thereof.
-3-
<PAGE> 5
The powers, preferences and relative, participating, optional and other
special rights of each series of Preferred Stock, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of any and
all other series at any time outstanding. All shares of any one series of
Preferred Stock shall be identical in all respects with all other shares of
such series, except that shares of any one series issued at different times may
differ as to the dates from which dividends thereof shall be cumulative.
FIFTH: The name and address of the sole incorporator are as follows:
Name Address
---- -------
Ralph D. Mosley, Jr. 405 Lexington Avenue
New York, New York 10174
SIXTH: Unless required by law or determined by the chairman of the
meeting to be advisable, the vote by stockholders on any matter, including the
election of directors, need not be by written ballot.
SEVENTH: The Corporation reserves the right to increase or decrease its
authorized capital stock, or any class or series thereof, and to reclassify the
same, and to amend, alter, change or repeal any provision contained in the
Certificate of Incorporation under which the Corporation is organized or in any
amendment thereto, in the manner now or hereafter prescribed by law, and all
rights conferred upon stockholders in said Certificate of Incorporation or any
amendment thereto are granted subject to the aforementioned reservation.
-4-
<PAGE> 6
EIGHTH: The Board of Directors shall have the power at any time, and
from time to time, to adopt, amend and repeal any and all By-laws of the
Corporation.
NINTH: All persons who the Corporation is empowered to indemnify
pursuant to the provisions of Section 145 of the General Corporation Law of the
State of Delaware (or any similar provision or provisions of applicable law at
the time in effect), shall be indemnified by the Corporation to the full extent
permitted thereby. The foregoing right of indemnification shall not be deemed
to be exclusive of any other rights to which those seeking indemnification may
be entitled under any by-law, agreement, vote of stockholders or disinterested
directors, or otherwise. No repeal or amendment of this Article NINTH shall
adversely affect any rights of any person pursuant to this Article NINTH which
existed at the time of such repeal or amendment with respect to acts or
omissions occurring prior to such repeal or amendment.
TENTH: No director of the Corporation shall be personally liable to
the Corporation or its stockholders for any monetary damages for breaches of
fiduciary duty as a director, provided that this provision shall not eliminate
or limit the liability of a director (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders; (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law; (iii) under Section 174 of the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which the director derived
an improper
-5-
<PAGE> 7
personal benefit. No repeal or amendment of this Article TENTH shall adversely
affect any rights of any person pursuant to this Article TENTH which existed at
the time of such repeal or amendment with respect to acts or omissions
occurring prior to such repeal or amendment.
The undersigned incorporator hereby affirms that the statements made
herein are true under penalties of perjury, and is hereby executing this
Certificate of Incorporation this 1st day of February, 1994.
/s/ Ralph D. Mosley, Jr. (L.S.)
----------------------------
Ralph D. Mosley, Jr.
-6-
<PAGE> 8
State of Delaware
PAGE 1
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
MERGER, WHICH MERGES:
"WHOLESALE CELLULAR USA, INC.", A INDIANA CORPORATION,
WITH AND INTO "WHOLESALE CELLULAR USA, INC." UNDER THE NAME OF "WHOLESALE
CELLULAR USA, INC.", A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE
STATE OF DELAWARE, AS RECEIVED AND FILED IN THIS OFFICE THE FOURTEENTH DAY OF
MARCH, A.D. 1994, AT 9 O'CLOCK A.M.
[GREAT SEAL OF THE STATE OF DELAWARE]
/s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
2374964 8100M
971195396 AUTHENTICATION: 8511711
DATE: 06-13-97
<PAGE> 9
CERTIFICATE OF MERGER
OF
WHOLESALE CELLULAR USA, INC.
INTO
WHOLESALE CELLULAR USA, INC.
-------------------------------------------
Pursuant to Section 252(c) of
the Delaware General Corporation Law
-------------------------------------------
Wholesale Cellular USA, Inc., a corporation formed under the laws of the
State of Delaware, desiring to merge with Wholesale Cellular USA, Inc., a
corporation formed under the laws of the State of Indiana, pursuant to the
provisions of Section 252(c) of the General Corporation Law of the State of
Delaware, does hereby certify as follows:
FIRST: The names and states of incorporation and the authorized capital
stock of each constituent corporation are:
State of Authorized
Name Incorporation Capital Stock
- ---- ------------- -------------
Wholesale Cellular Delaware 10,000,000 common shares,
USA, Inc. $.01 par value
1,000,000 preferred shares,
$.01 par value
Wholesale Cellular Indiana 1,000 common shares,
USA, Inc. no par value
SECOND: An Agreement and Plan of Merger has been approved, adopted,
certified, executed and acknowledged by each constituent corporation in
accordance with Section 252(c) of the Delaware General Corporation Law.
THIRD: The name of the surviving corporation is Wholesale Cellular USA,
Inc., a Delaware corporation.
<PAGE> 10
FOURTH: The Certificate of Incorporation of Wholesale Cellular USA,
Inc., a Delaware corporation, shall be the Certificate of Incorporation of the
surviving corporation.
FIFTH: An executed copy of the Agreement and Plan of Merger is on file
at the principal place of business of Wholesale Cellular USA, Inc., a Delaware
corporation, 5720 West 71st Street, Indianapolis, IN 46278, and a copy of the
Agreement and Plan of Merger will be furnished by the surviving corporation, on
request and without cost to any stockholder of any constituent corporation.
IN WITNESS WHEREOF, Wholesale Cellular USA, Inc., a Delaware corporation,
has caused this Certificate to be executed by its officers hereunto duly
authorised this 14th day of March, 1994.
WHOLESALE CELLULAR USA, INC.
a Delaware corporation
By: /s/ Robert Laikin, President
------------------------------
Robert Laikin, President
ATTEST:
/s/ [signature]
- ----------------------
Secretary
<PAGE> 11
State of Delaware
PAGE 1
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
OWNERSHIP, WHICH MERGES:
"BRIGHTPOINT, INC.", A DELAWARE CORPORATION,
WITH AND INTO "WHOLESALE CELLULAR USA, INC." UNDER THE NAME OF
"BRIGHTPOINT, INC.", A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE
STATE OF DELAWARE, AS RECEIVED AND FILED IN THIS OFFICE THE SEVENTH DAY OF
SEPTEMBER, A.D. 1995, AT 9 O'CLOCK A.M.
[GREAT SEAL OF THE STATE OF DELAWARE]
/s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
2374964 8100M
971195396 AUTHENTICATION: 8511712
DATE: 06-13-97
<PAGE> 12
CERTIFICATE OF OWNERSHIP AND MERGER
OF
BRIGHTPOINT, INC.,
a Delaware Corporation,
INTO
WHOLESALE CELLULAR USA, INC.,
a Delaware Corporation
-----------------------------------
It is hereby certified that:
1. Wholesale Cellular USA, Inc. (hereinafter sometimes referred to as
the "Corporation") is a business corporation of the State of Delaware.
2. The Corporation is the owner of all of the outstanding shares of the
no par value common stock of, which constitutes all of the capital stock of,
Brightpoint, Inc., which is also a business corporation of the State of
Delaware.
3. On July 27, 1995, the Board of Directors of the Corporation adopted
the following resolutions to merge Brightpoint, Inc., into the Corporation:
RESOLVED, that Brightpoint, Inc., be merged
into this Corporation, and that all of the
estate, property, rights, privileges, powers
and franchises of Brightpoint, Inc., be vested
in and held and enjoyed by this Corporation as
fully and entirely and without change or
diminution as the same were before held and
enjoyed by Brightpoint, Inc., in its name; and
FURTHER RESOLVED, that this Corporation shall
assume all of the obligations of Brightpoint,
Inc.; and
FURTHER RESOLVED, that this Corporation shall
cause to be executed and filed and/or recorded
the documents prescribed by the laws of the
State of Delaware and by the laws of any other
appropriate jurisdiction and will cause to be
performed all necessary acts within the State
of Delaware and within any other appropriate
jurisdiction; and
<PAGE> 13
FURTHER RESOLVED, that this Corporation shall
change its corporate name to Brightpoint,
Inc.; and
FURTHER RESOLVED, that the effective time of
the Certificate of Ownership and Merger
setting forth a copy of these resolutions, and
the time when the merger therein provided for,
shall become effective shall be Sept. 15, 1995.
Executed on July 27, 1995.
WHOLESALE CELLULAR USA, INC.
By: /s/ J. Mark Howell
---------------------------
J. Mark Howell,
Executive Vice President
-2-
<PAGE> 14
State of Delaware
PAGE 1
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "BRIGHTPOINT, INC.", FILED IN THIS OFFICE ON THE TWENTY-NINTH DAY
OF MAY, A.D. 1996, AT 9 O'CLOCK A.M.
[GREAT SEAL OF THE STATE OF DELAWARE]
/s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
2374964 8100
971195396 AUTHENTICATION: 8511713
DATE: 06-13-97
<PAGE> 15
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
BRIGHTPOINT, INC.
-----------------------------------------
Adopted in accordance with the provisions
of Section 242 of the General Corporation
Law of the State of Delaware
-----------------------------------------
The undersigned, being the Executive Vice President of BRIGHTPOINT, INC.
(the "Corporation"), a corporation existing under the laws of the State of
Delaware, does hereby certify as follows:
FIRST: That the Certificate of Incorporation of the Corporation has
been amended as follows by striking out the first paragraph of Article FOURTH
thereof as it now exists and inserting in lieu and instead thereof a new first
paragraph of Article FOURTH, reading as follows:
"FOURTH: The total number of shares of capital stock which the
Corporation shall have authority to issue is Twenty-Six Million
(26,000,000) shares, of which Twenty-Five Million (25,000,000) shares shall
be Common stock, par value $.01 per share, and One Million (1,000,000)
shares of Preferred Stock, par value $.01 per share."
SECOND: That such amendment has been duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of the State of
Delaware.
<PAGE> 16
IN WITNESS WHEREOF, I have signed this Certificate this 29th day of
May, 1996.
BRIGHTPOINT, INC.
By: /s/ J. Mark Howell
-------------------------
Name: J. Mark Howell
Title: Executive Vice
President
-2-
<PAGE> 17
State of Delaware
PAGE 1
Office of the Secretary of State
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "BRIGHTPOINT, INC.", FILED IN THIS OFFICE ON THE FOURTEENTH DAY
OF MAY, A.D. 1997, AT 9 O'CLOCK A.M.
[GREAT SEAL OF THE STATE OF DELAWARE]
/s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
2374964 8100
971195396 AUTHENTICATION: 8511714
DATE: 06-13-97
<PAGE> 18
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
BRIGHTPOINT, INC.
- --------------------------------------------------------------------------------
Adopted in accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware
- --------------------------------------------------------------------------------
The undersigned being an Executive Vice President of BRIGHTPOINT, INC.
(the "Corporation"), a corporation existing under the laws of the State of
Delaware, does hereby certify as follows:
FIRST: That the Certificate of Incorporation of the Corporation
has been amended as follows by striking out the first paragraph of Article
FOURTH thereof as it now exists and inserting in lieu and instead thereof a new
first paragraph of Article FOURTH, reading as follows:
"FOURTH: The total number of shares of capital stock which the
Corporation shall have authority to issue is One Hundred One Million
(101,000,000) shares, of which One Hundred Million (100,000,000) shares shall
be Common Stock, par value $.01 per share and One Million (1,000,000) shares
shall be Preferred Stock, par value $.01 per share."
SECOND: That such amendment has been duly adopted by the
affirmative vote of the holders of a majority of the stock entitled to vote at
a meeting of stockholders in accordance with the provisions of the General
Corporation law of the State of Delaware.
IN WITNESS WHEREOF, I have signed this Certificate this 25th day of
April, 1997.
BRIGHTPOINT, INC.
By: /s/ Steven E. Fivel
----------------------------
Steven E. Fivel
Executive Vice President
<PAGE> 1
EXHIBIT 21.1
BRIGHTPOINT, INC. SUBSIDIARIES
Jurisdiction
of
Name Incorporation
---- -------------
Brightpoint FSC, Inc. Barbados
Brightpoint International Ltd. Delaware
Brightpoint EMA Limited United Kingdom
RPS Industries Company Limited Hong Kong
Brightpoint Australasia Pty Limited Australia
Brightpoint International (Asia Pacific) Pte Ltd. Singapore
Brightpoint (UK) Limited United Kingdom
Brightpoint South Africa (Proprietary) Limited South Africa
Brightpoint Australia Pty Ltd. Australia
Brightpoint China Limited Hong Kong
Brightpoint Sweden AB Sweden
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP
We consent to the reference to our firm under caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Brightpoint, Inc.
for the registration of 4,600,000 shares of its common stock and to the
inclusion of and incorporation by reference therein of our report dated January
28, 1997, with respect to the financial statements of Brightpoint, Inc. included
therein and incorporated by referenced in its Annual Report (Form 10-K) for the
year ended December 31, 1996 and the related financial statement schedule
included therein, filed with the Securities and Exchange Commission.
Ernst & Young LLP
Indianapolis, Indiana
June 17, 1997
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Registration Statement on Form S-3 of
Brightpoint, Inc. of our report on Allied Communications, Inc. and Affiliates
dated February 23, 1996 on our audits of the financial statements of Allied
Communications, Inc. and Affiliates. We also consent to the reference to our
Firm under the caption "Experts."
COOPERS & LYBRAND LLP
Philadelphia, Pennsylvania
June 17, 1997
