-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OE/7aOjA2XtCEs9VyUerrOdjeVEAk+9aqkv3/ATaVY8QsW756NJ0xesZSgX3J7pA iwmLQBGbbJ62/KlTfj4J+g== 0001019171-97-000003.txt : 19970415 0001019171-97-000003.hdr.sgml : 19970415 ACCESSION NUMBER: 0001019171-97-000003 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970520 FILED AS OF DATE: 19970414 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRISTOL TECHNOLOGY SYSTEMS INC CENTRAL INDEX KEY: 0001016657 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PROFESSIONAL & COMMERCIAL EQUIPMENT & SUPPLIES [5040] IRS NUMBER: 582235556 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-21633 FILM NUMBER: 97579545 BUSINESS ADDRESS: STREET 1: 18201 VON KARMAN STREET 2: STE 305 CITY: IRVINE STATE: CA ZIP: 92612 BUSINESS PHONE: 7144750800 MAIL ADDRESS: STREET 1: 18201 VON KARMAN AVE STREET 2: SUITE 305 CITY: IRVINE STATE: CA ZIP: 92612 DEF 14A 1 NOTICE/PROXY STATEMENT SCHEDULE 14A (Rule 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the registrant [X] Filed by party other than the registrant [_] Check the appropriate box: [ ] Preliminary proxy statement [X] Definitive proxy statement [ ] Definitive additional materials [ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12 BRISTOL TECHNOLOGY SYSTEMS, INC. (Name of Registrant as Specified in Its Charter) BRISTOL TECHNOLOGY SYSTEMS, INC. (Name of Person(s) Filing Proxy Statement) Payment of filing fee (Check the appropriate box): [ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a- 6j(2) [ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3) [ ] Fee computed on table below per Exchange Act Rules 14a- 6(i)(45) and 0-11 (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transactions applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11: (4) Proposed maximum aggregate value of transaction: [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. (1) Amount previously paid:___________________________________________ (2) Form, schedule or registration statement no.:_____________________ (3) Filing party:_____________________________________________________ (4) Date filed:_______________________________________________________ BRISTOL TECHNOLOGY SYSTEMS, INC. 18201 Von Karman Avenue, Suite 305 Irvine, California 92612 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Bristol Technology Systems, Inc., a Delaware corporation (the "Company"), will be held at 18201 Von Karman Avenue, Suite 305, Irvine, California 92612 at 10:00 a.m. on Tuesday, May 20, 1997, for the following purposes: Proposal 1. To elect six (6) directors to the Board of Directors until the next annual meeting of stockholders of the Company and until their successors have been elected and qualified; Proposal 2. To ratify the appointment of Ernst & Young LLP as auditors of the Company's financial statements for the fiscal year ending December 31, 1997; Proposal 3. To consider and act upon a proposal to approve an increase in the number of shares which may be granted under the Company's 1996 Equity Participation Plan from 450,000 to 2,450,000; Proposal 4. To consider and act upon a proposal to approve the Company's 1997 Employee Stock Purchase Plan; and to transact such other business as may properly come before the Meeting or any adjournments thereof. The close of business on April 9, 1997 has been fixed as the record date for the determination of stockholders entitled to notice of and to vote at the Meeting. PLEASE SIGN, DATE AND MAIL YOUR PROXY IN THE ENVELOPE PROVIDED FOR YOUR CONVENIENCE. YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO THE MEETING AND, IF YOU ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON. BY ORDER OF THE BOARD OF DIRECTORS Paul Spindler, Secretary Dated: April 14, 1997 BRISTOL TECHNOLOGY SYSTEMS, INC. 18201 Von Karman Avenue, Suite 305 Irvine, California 92612 PROXY STATEMENT ------------------------------------------ GENERAL INFORMATION This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of Bristol Technology Systems, Inc. (the "Company") for use at the Annual Meeting of Stockholders to be held at 10:00 A.M. on May 20, 1997 at 18201 Von Karman Avenue, Suite 305, Irvine, California 92612, or at any adjournments thereof (the "Annual Meeting"), for the purposes set forth herein and in the foregoing Notice. This Proxy Statement and the accompanying Proxy are being mailed to the Company's stockholders on or about April 14, 1997. At the close of business on April 9, 1997, the record date fixed by the Board of Directors of the Company for determining those stockholders entitled to vote at the Annual Meeting (the "Record Date"), the outstanding shares of the Company entitled to vote consisted of 4,745,654 shares of Common Stock. Each stockholder of record at the close of business on the Record Date is entitled to one vote for each share then held on each matter submitted to a vote of the stockholders. The enclosed proxy is solicited on behalf of the Company's Board of Directors. The giving of a proxy does not preclude the right to vote in person should any stockholder giving the proxy so desire. Stockholders have an unconditional right to revoke their proxy at any time prior to the exercise thereof, either in person at the Annual Meeting or by filing with the Company's Secretary at the Company's headquarters a written revocation or duly executed proxy bearing a later date; however, no such revocation will be effective until written notice of the revocation is received by the Company at or prior to the Annual Meeting. The attendance, in person or by proxy, of the holders of a majority of the outstanding shares of Common Stock entitled to vote at the Annual Meeting is necessary to constitute a quorum. Directors will be elected (Proposal 1) by a plurality of the votes cast by the shares of Common Stock represented in person or by proxy at the Annual Meeting. Under applicable Delaware state law, if a quorum exists, action on a matter other than the election of directors is approved if a majority of shares voting at the Annual Meeting in person or proxy favor the proposed action. If less than a majority of outstanding shares entitled to vote are represented at the Annual Meeting, a majority of the shares so represented may adjourn the Annual Meeting to another date, time or place, and notice need not be given of the new date, time or place if the new date, time or place is announced at the meeting before an adjournment is taken. Abstentions and "broker non-votes" are counted as shares eligible to vote at the Annual Meeting in determining whether a quorum is present, but do not represent votes cast with respect to any Proposal. "Broker non-votes" are shares held by a broker or nominee as to which instructions have not been received from the beneficial owners or persons entitled to vote and the broker or nominee does not have discretionary voting power. A form of proxy is enclosed for use at the Annual Meeting. The proxy may be revoked by a stockholder at any time prior to the exercise thereof, and any stockholder present at the Annual Meeting may revoke his proxy thereat and vote in person if he or she so desires. When such proxy is properly executed and returned, the shares it represents will be voted at the Annual Meeting in accordance with any instructions noted thereon. If no direction is indicated, all shares represented by valid proxies received pursuant to this solicitation (and not revoked prior to exercise) will be voted for the election of the nominees for directors named herein (unless authority to vote is withheld) and in favor of all other proposals stated in the Notice of Annual Meeting and described in this Proxy Statement. The Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1996 is enclosed with this Proxy Statement. PROPOSAL 1: ELECTION OF DIRECTORS Nominees Six (6) of the current members of the Board of Directors are to be elected at the Annual Meeting, each to hold office until the next Annual Meeting and until their successors are elected and qualified. The Board of Directors has nominated for election as directors the six (6) persons indicated in the following table. In the election of directors, the proxy holders intend, unless directed otherwise, to vote for the election of the nominees named below, all of whom are now members of the Board of Directors. It is not anticipated that any of the nominees will decline or be unable to serve as director. If, however, that should occur, the proxy holders will vote the proxies in their discretion for any nominee designated by the present Board of Directors to fill the vacancy. The following table gives certain information as to each person nominated for election as a director:
Director Name Age Since Positions Richard H. Walker 53 1996 President, Chief Executive Officer and Director Paul Spindler 66 1996 Chairman of the Board, Executive Vice President, Secretary Lawrence Cohen 53 1996 Vice Chairman of the Board, Executive Vice President, Treasurer Maurice R. Johnson 55 1996 Vice President, Director Dr. Jack Borsting 67 1996 Director Dr. Thomas Lutri 41 1996 Director
3 RICHARD H. WALKER is a founder of the Company and has served as President, Chief Executive Officer and a director of the Company since its inception in April 1996. Prior to joining the Company, Mr. Walker served as Chairman of the Board and Chief Executive Officer for Castle Office Systems, Inc., a privately owned company that acquires and operates office machine dealerships in the mid-Atlantic region of the United States, from April 1994 to March 1996. Previous to that, Mr. Walker served as Vice President of Toshiba America Information Systems, Inc. ("Toshiba") and General Manager of Toshiba's Electronic Imaging Division from November 1989 to March 1994. Mr. Walker also served as an executive of Matsushita Electric Corporation of America's office automation group from March 1981 to November 1989, most recently as Vice President, Marketing. PAUL SPINDLER is a founder of the Company and has served as Chairman of the Board, Executive Vice President and Secretary of the Company since its inception in April 1996. Prior to joining the Company, Mr. Spindler served as President of GCI Spindler, a corporate/investor relations and marketing communications firm, from May 1987 to December 1996. LAWRENCE COHEN is a founder of the Company and has served as Vice Chairman of the Board, Executive Vice President and Treasurer of the Company since its inception in April 1996. From November 1990 to September 1996, Mr. Cohen served as Chairman of the Board of BioTime, Inc., a biotechnology company engaged in the artificial plasma business. Mr. Cohen has also served as a director of ASHA Corporation, a publicly traded supplier of traction control systems, from April 1995 to present; a director of Apollo Genetics Inc., a company founded by Mr. Cohen which is engaged in the genetic pharmaceutical business, from January 1993 to the present; a director of Registry Magic Inc., a company founded by Mr. Cohen which develops voice recognition equipment, from November 1995 to present; and a director of Kaye Kotts Associates, Inc. from April 1995 to the present. MAURICE R. JOHNSON has served as Vice President and a director of the Company since July 1996. From March 1, 1993 to present, Mr. Johnson has served as President and a director of CRI. From June 1992 to March 1993, Mr. Johnson was a consultant to CRI. Prior to that time, Mr. Johnson served as Vice President of Omron Systems, a manufacturer of electronic components and POS systems, from August 1980 to February 1992. DR. JACK BORSTING has served as a director of the Company since November 1996. From August 1988 to present, Dr. Borsting has been an E. Morgan Stanley Professor of Business Administration at the University of Southern California ("USC"). Since January 1995, Dr. Borsting has served as Executive Director of the Center of Telecommunications at USC. Dr. Borsting served as the Dean of the USC School of Business Administration from August 1988 to January 1994. From January 1994 to January 1995, Dr. Borsting was on sabbatical. A former Assistant Secretary of Defense, Dr. Borsting is also a director of Northrop Grumman Corporation, Whitman Medical and TRO Learning, Inc. DR. THOMAS LUTRI has served as a director of the Company since November 1996. Dr. Lutri was a founder of Gentle Care, Inc., a home health care company in New York City, and has served as President and Chief Executive Officer from October 1991 to present. Dr. Lutri has served as President and Chief Executive Officer of Family Care, P.C., a New York walk-in medical clinic, from September 1987 to present. Remuneration of Non-Employee Directors Non-Employee Directors are not compensated for their services as Directors of the Company. 4 Board Committees and Annual Meetings During the fiscal year ending December 31, 1996, there were 12 meetings of the Company's Board of Directors. Each Board member attended all of the meetings of the Board of Directors and the meetings of all Committees of the Board of Directors on which he served. Additionally, there were approximately 10 separate actions of the Board of Directors which were taken by unanimous written consent. The Audit Committee was established on January 10, 1997. The members of the Audit Committee are Dr. Jack Borsting and Dr. Thomas Lutri, neither of whom are employees of the Company. The functions of the Audit Committee are to define the scope of the audit, review the auditor's reports and comments and monitor the internal auditing procedures of the Company. To date, there have been no meetings of the Audit Committee, however, the Audit Committee is scheduled to meet on a quarterly basis. The Compensation Committee was established on December 9, 1996. The members of the Compensation Committee are Dr. Jack Borsting and Dr. Thomas Lutri, neither of whom are employed by the Company. The functions of the Compensation Committee are to review, discuss and make recommendations to the Board of Directors with respect to all compensation issues requiring Board approval, including, but not limited to, executive compensation and the issuance of stock. In addition, the Compensation Committee is acting Plan Administrator for the Company's 1997 Employee Stock Purchase Plan. The Compensation Committee met on December 9, 1996. The Executive Committee was established on December 9, 1996. The members of the Executive Committee are Richard H. Walker, Paul Spindler and Lawrence Cohen. The functions of the Executive Committee include exercising all of the powers and authority of the Board of Directors in the management of the business and affairs of the Company, but do not include the power and authority to amend the Company's Certificate of Incorporation, adopt agreements of merger, consolidation or acquisition, recommend to stockholders the sale, lease or exchange of all or substantially all of the Company's property and assets, recommended to stockholders a dissolution of the Company or a revocation of dissolution, amend the Company's bylaws, declare a dividend or authorize the issuance of stock of the Company. The Executive Committee meets from time to time as necessary. There is no Nominating Committee of the Board of Directors. MANAGEMENT RECOMMENDS A VOTE IN FAVOR OF EACH NAMED NOMINEE. PROPOSAL 2: RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS The Board of Directors has selected Ernst & Young LLP as the Company's independent auditors for the fiscal year ending December 31, 1997 and has further directed that management submit the selection of auditors for ratification by the stockholders at the Annual Meeting. Ernst & Young LLP was first appointed independent auditors of the Company in June 1996. Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting, will have an opportunity to make a statement if they so desire, and will be available to respond to appropriate questions. 5 Stockholder ratification of the selection of Ernst & Young LLP as the Company's independent auditors is not required by the Company's Bylaws or otherwise. However, the Board is submitting the selection of Ernst & Young LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Board will reconsider whether to retain that firm. Even if the selection is ratified, the Board in its discretion may direct the appointment of a different independent accounting firm at any time during the year if the Board determines that such a change would be in the best interests of the Company and its stockholders. MANAGEMENT RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 2. PROPOSAL 3: APPROVE AMENDMENT OF THE COMPANY'S 1996 EQUITY PARTICIPATION PLAN INCREASING THE NUMBER OF SHARES AUTHORIZED TO BE ISSUED UNDER THE PLAN TO 2,450,000 SHARES FROM 450,000 SHARES On July 31, 1996, in order to attract and retain personnel who possess a high degree of competence, experience and motivation, the Company's Board of Directors adopted and the stockholders of the Company approved the Company's 1996 Equity Participation Plan (the "Stock Option Plan"). A copy of the Amendment to the Stock Option Plan is attached hereto as Exhibit A. At present, the Stock Option Plan, as approved by the Board of Directors of the Company, authorizes the Company to grant both incentive and nonqualified stock options to purchase 450,000 shares of the Company's Common Stock. On April 3, 1997, the Board of Directors approved an increase to 2,450,000 shares under the Stock Option Plan, and the Company is seeking ratification and authorization from the stockholders for such increase. The Company has at the present time 450,000 options outstanding under the Stock Option Plan. Since the adoption of the Stock Option Plan on July 31, 1996, the Company has completed its initial public offering of its securities, has consummated certain acquisitions of additional companies in furtherance of its corporate strategy and is in the process of negotiating additional potential acquisitions and will likely complete the acquisitions of other companies in the future in fulfillment of its strategic acquisition program. As a result of such acquisitions and expansion of its operations, the Company will need to retain significant additional key employees. It will be critical for the Company in order to complete such acquisitions, to be able to offer various forms of equity compensation to future key employees in order to attract such key personnel. Accordingly, in order to continue to offer incentive compensation in the form of stock ownership in the Company and for the Company to be able to continue to issue stock options and other forms of stock-based incentive compensation under the Stock Option Plan, the Compensation Committee and the Board have deemed it advisable to amend the Stock Option Plan to increase the number of shares authorized to be issued under the Stock Option Plan to 2,450,000 from 450,000 shares. In the opinion of the Compensation Committee and the Board, the authorization to issue additional shares would provide the necessary flexibility to motivate and reward the employees of the Company in a manner that would improve the Company's financial performance. The affirmative vote of the holders of a majority of the shares of the Company's Common Stock voting at the Annual Meeting is necessary to approve the amendment to the Stock Option Plan. 6 Description of Stock Option Plan On July 31, 1996, the Company adopted its Stock Option Plan under which, as approved by the stockholders, 450,000 shares of Common Stock have been reserved for issuance to executive officers, independent directors, other key employees and consultants of the Company upon exercise of options designated as "incentive stock options" within the meaning of Section 422 of the Internal Revenue Code of 1986 or upon exercise of nonstatutory options. The Stock Option Plan is administered by the Compensation Committee consisting of outside members of the Board of Directors which will determine, among other things, the persons to be granted options, the number of shares subject to each option and the option price. The exercise price of the shares subject to the options shall be set by the Compensation Committee; provided, however, that such price shall be no less than the par value of a share of Common Stock, unless otherwise permitted by applicable state law, and (i) in the case of incentive stock options and options intended to qualify as performance-based compensation, such price shall not be less than 100% of the fair market value of a share of Common Stock, on the date the option is granted; (ii) in the case of incentive stock options granted to an individual then owning more than 10% of the total combined voting power of all classes of stock of the Company or any subsidiary thereof, such price shall not be less than 110% of the fair market value of a share of common stock on the date the option is granted; and (iii) in the case of options granted to independent directors, such price shall equal 100% of the fair market value of a share of Common Stock on the date the option is granted; provided, however, that the price of each share subject to each option granted to independent directors on the date of the initial public offering of Common Stock shall equal the initial public offering price (net of underwriting discounts and commissions) per share of Common Stock. In consideration of the granting of an option, the optionee shall remain in the employ of (or to consult for or to serve as an independent director of, as applicable) the Company or any subsidiary of the Company for a period of at least six (6) months (or such shorter period as may be fixed in the Stock Option Agreement or by action of the Compensation Committee following grant of the option) after the option is granted (or until the next annual meeting of stockholders of the Company, in the case of an independent director). The term of an option shall be set by the Compensation Committee in its discretion; provided, however, that, (i) in the case of options granted to independent directors, the term shall be ten (10) years from the date the option is granted, without variation or acceleration, and (ii) in the case of incentive stock options, the term shall not be more than ten (10) years from the date the incentive stock option is granted, or five (5) years from such date if the incentive stock option is granted to an individual then owning more than 10% of the total combined voting power of all classes of stock of the Company or any subsidiary thereof. Except as limited by requirements of Section 422 of the Code and regulations and rulings thereunder applicable to incentive stock options, the Compensation Committee may extend the terms of any outstanding option in connection with any termination of employment or termination of consultancy of the optionee, or amend any other term or condition of such option relating to such a termination. Under the terms of the grant, the period during which the right to exercise an option in whole or in part vests in the optionee shall be set by the Compensation Committee and the Compensation Committee may determine that an option may not be exercised in whole or in part for a specific period after it is granted; provided, however, that unless the Compensation Committee otherwise provides in the terms of the option or otherwise, no option shall be exercisable by any optionee within the period ending six (6) months and one (1) day after the date the option is granted; and provided, further, that options granted to independent directors shall become exercisable in cumulative annual installments of 25% on 7 each of the first, second, third and fourth anniversaries of the date of option grant. At any time after grant of an option, the Compensation Committee may, in its sole discretion accelerate the period during which an option (except an option granted to an independent director) vests. No portion of an option which is unexercisable at termination of employment (for any reason, with or without cause, including, a termination by resignation, discharge, death, disability or retirement), termination of directorship or termination of consultancy, shall thereafter become exercisable, except as may be otherwise provided by the Compensation Committee in the case of options granted to employees or consultants either in the stock option agreement or by action of the Compensation Committee following the grant of the option. No option granted to an independent director may be exercised to any extent by anyone after the first to occur of the following events: (a) the expiration of twelve (12) months from the date of the optionee's death; (b) the expiration of twelve (12) months from the date of the optionee's termination of directorship by reason of permanent and total disability; (c) the expiration of three (3) months from the date of the optionee's termination of directorship for any reason other than such optionee's death or permanent and total disability, unless the optionee dies within said three-month period; or (d) the expiration of ten (10) years from the date the option was granted. MANAGEMENT RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 3. PROPOSAL 4: APPROVAL OF THE COMPANY'S 1997 EMPLOYEE STOCK PURCHASE PLAN The Company has completed its initial public offering of its securities, has consummated certain acquisitions of additional companies in furtherance of its corporate strategy and is in the process of negotiating additional potential acquisitions and will likely complete the acquisitions of other companies in the future in fulfillment of its strategic acquisition program. As a result of such acquisitions and expansion of its operations, the Company will need to retain significant additional key employees. It will be critical for the Company in order to complete such acquisitions, to be able to offer various forms of equity compensation to future key employees in order to attract such key personnel. Therefore the Board of Directors of the Company and the Plan Administrator propose the establishment of a 1997 Employee Stock Purchase Plan (the "1997 Employees Plan"), a copy of which is attached hereto as Exhibit B providing eligible employees of the Company and its wholly-owned subsidiaries with the opportunity to acquire a proprietary interest in the Company through participation in a payroll-deduction based employee stock purchase plan. A total of 200,000 shares of Common Stock will be reserved for issuance pursuant to the 1997 Employees Plan. Unless terminated earlier pursuant to the 1997 Employees Plan, the Plan shall terminate on June 30, 2005. Pursuant to the 1997 Employees Plan, shares of Common Stock shall be offered for purchase under the 1997 Employees Plan through a series of successive offering periods until such time as (i) the maximum number of shares of Common Stock available for issuance under the Plan shall have been purchased; or (ii) the Plan shall have been terminated. Each offering period shall have a maximum duration of twenty-four (24) months; provided, however, that the Plan Administrator may designate any duration of an offering period prior to the start date of the offering period and in the absence of any expressed determination otherwise, each offering period shall have a duration of six (6) months and be the same as a single semi-annual period of participation. The initial offering period shall run from July 1, 1997 until the last business day in December 1997. The next offering period shall commence on the 8 first business day in January 1998, and subsequent offering periods shall commence as designated by the Plan Administrator. The participant shall be granted a separate purchase rate for each offering period for which he/she participates. The purchase right shall be granted on the date the employee first joins an offering period (which such time shall not be earlier than July 1, 1997) and shall be automatically exercised on the last business day of June and December occurring within the offering period. No purchase rights granted under the Plan will be exercised and no shares of Common Stock will be issued thereunder until the Company has complied with all applicable requirements of the Securities Act of 1933, as amended (including the registration of the shares of Common Stock issuable under the Plan on a Form S-8 Registration Statement filed with the Securities and Exchange Commission), all applicable listing requirements of any securities exchange on which the Common Stock is listed for trading and all other applicable requirements established by law or regulation. The payroll deduction authorized by the participant for purposes of acquiring shares of Common Stock under the 1997 Employees Plan may be any multiple of one (1%) percent of the base salary paid to the participant during each semi-annual period of participation, up to a maximum of ten (10%) percent. The deduction rate so authorized shall continue in effect for the remainder of the offering period, except to the extent such rate is changed in accordance with the following: (i) the participant may, at any time during a semi-annual period of participation, reduce his/her rate of payroll deduction to become effective as soon as possible after filing of the requisite reduction form with the Plan Administrator; and (ii) the participant may, prior to the commencement of any new semi-annual period of participation within the offering period, increase the rate of his/her payroll deduction by filing the appropriate form with the Plan Administrator. The new rate (which may not exceed the ten (10%) percent maximum) shall become effective as of the first day of the first semi-annual period of participation following the filing of such form. Payroll deductions will automatically cease upon the termination of the participant's purchase rate. The Common Stock purchasable under the Plan shall, solely in the discretion of the Plan Administrator, be made available for either authorized unissued shares of Common Stock or from shares of Common Stock reacquired by the Company, including shares of Common Stock purchased on the open market. The total number of shares which may be issued under the 1997 Employees Plan shall not exceed 200,000 shares, subject to adjustment in the event of a change in the Company's outstanding Common Stock as stated below. Common Stock shall be purchasable on each semi-annual purchase date within the Offering period at a purchase price equal to eighty-five (85%) percent of the lower of (i) the fair market value per share of Common Stock on the purchaser's entry date into that Offering period; or (ii) the fair market value per share on that semi-annual purchase date. However, for each participant whose entry date is other than the start date of the Offering period, the clause (i) amount shall in no event be less than the fair market value of the Common Stock on the start date of that Offering period. The number of shares purchasable per participant on each semi-annual purchase date shall be the number of whole shares obtained by dividing the amount collected from the participant through payroll deductions during the semi-annual period of participation ending with that semi-annual purchase date (together with any carryover deductions from the proceeding semi-annual period of participation) by the purchase price in effect for the semi-annual purchase date; provided, however, that the maximum number of shares of Common Stock purchasable per participant on any semi-annual purchase date shall not exceed 1,000 shares, subject to periodic adjustment. Purchase rights shall not be granted under the 1997 Employee's Plan to any eligible employee if such individual would, immediately after the grant, own or hold outstanding options or other rights to purchase stock possessing five (5%) percent or more of the total combined voting power of all classes of stock of the Company or any of its corporate affiliates. 9 Payment for the Common Stock purchased under the Plan shall be effected by means of the participant's authorized payroll deductions. In the event the total number of shares of Common Stock which are to be purchased pursuant to outstanding purchase rights on any particular semi-annual purchase date exceeds the number of shares then available for issuance under the 1997 Employee's Plan, the Plan Administrator shall make a pro-rata allocation of the available shares on a uniform and non-discriminatory basis, and the payroll deductions of each participant, to the extent in excess of the aggregate purchase price payable for the Common Stock pro-rated to such individual, shall be promptly refunded to the participant. A participant shall have no stockholder rights with respect to the shares subject to his/her outstanding purchase rights until the shares are actual purchased on the participant's behalf in accordance with the 1997 Employee's Plan. No adjustments shall be made for dividends, distributions or other rights for which the record date is prior to the date of such purchase. No purchase right granted under the 1997 Employee's Plan shall be assignable or transferable by the participant other than by will or by the laws of descent and distribution following the participant's death, and during the participant's lifetime the purchase right shall be exercisable only by the participant. In the event of any of the following transactions (a "Change in Ownership") occurring during the Offering period: (i) a merger or consolidation in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the state in which the Company is incorporated; (ii) the sale, transfer, or other disposition of all or substantially all of the assets of the Company; (iii) a complete liquidation or dissolution of the Company; or (iv) any reverse merger in which the Company is the surviving entity but in which securities possessing more than fifty (50%) percent of the total combined voting power of the Company's outstanding securities are transferred to a person or persons different from the person holding those securities immediately prior to the merger, all outstanding purchase rights under the 1997 Employee's Plan shall automatically be exercised immediately prior to the effective date of such Change in Ownership by applying the payroll deductions of each participant for the semi-annual period of participation in which such Change in Ownership occurs to the purchase of the whole shares of Common Stock at eighty-five (85%) percent of the lower of (a) the fair market value of the Common Stock on the purchaser's entry date into the Offering period in which such Change in Ownership occurs; or (b) the fair market value of the Common Stock immediately prior to the effective date of such Change in Ownership. However, the applicable share limitations as stated above shall continue to apply to any such purchase, and the clause (a) amount above shall not, for any participant whose entry date for the Offering period is other than the start date of that Offering period, be less than the fair market value of the Common Stock on such start date. The Company shall use its best efforts to provide at least ten days prior written notice of the occurrence of any Change in Ownership, and participants shall, following the receipt of such notice, have the right to terminate their outstanding purchase rights. No participant in the 1997 Employee's Plan shall be entitled to accrue rights to acquire Common Stock pursuant to any purchase right outstanding under the 1997 Employee's Plan if and to the extent such accrual, when aggregated with (i) rights to purchase Common Stock accrued under any other purchase right outstanding under the 1997 Employee's Plan and (ii) similar rights accrued under other employee stock purchase plans of the Company or its corporate affiliate, would otherwise permit such participant to purchase more than Twenty-Five Thousand ($25,000.00) Dollars worth of stock of the Company or any corporate affiliate (determined on the basis of the fair market value of such stocks on the date or dates such rights are granted) for each calendar year such rights are at any time outstanding. For purposes of 10 applying such accrual limitations, the right to acquire Common Stock shall accrue as follows: (a) no right to acquire Common Stock under any outstanding purchase right shall accrue to the extent the participant has already accrued in the same calendar year the right to acquire Common Stock under one or more other purchase rights at a rate equal to Twenty-Five Thousand ($25,000.00) Dollars worth of Common Stock (determined on the basis of the fair market value on the date or dates of grant) for each calendar year during which one or more of those purchases were at any time outstanding; and (b) if by reason of such accrual limitations, any purchase right of a participant does not accrue for a particular semi-annual period of participation, then the payroll deductions which the participant made during that semi-annual period of participation in excess of such accrual limitations shall be promptly refunded. The Board of Directors of the Company may alter, amend, suspend or discontinue the 1997 Employee's Plan following the close of any semi-annual period of participation; provided, however, that the Board may not, without the approval of the Company's stockholders: (i) increase the number of shares issuable under the Plan or the maximum number of shares purchasable per participant on any one semi-annual purchase date, except that the Plan Administrator shall have the authority, exercisable without such stockholder approval, to effect adjustments to the extent necessary to reflect changes in the Company's capital structure; (ii) alter the purchase price formula so as to reduce the purchase price payable for the shares purchasable under the 1997 Employee's Plan; or (iii) materially increase the benefits accruing to participants under the Plan or materially modify the requirements for eligibility to participate in the Plan. The Company shall have the right, exercisable in the sole discretion of the Plan Administrator, to terminate all outstanding purchase rights under the Plan immediately following the close of any semi-annual period of participation. Should the Company elect to exercise such right, the Plan shall terminate in its entirety. No further purchase rights shall thereafter be granted or exercised, and no further payroll deductions shall thereafter be collected under the 1997 Employee's Plan. MANAGEMENT RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information regarding the beneficial ownership of the Company's Common Stock as of February 28, 1997 (i) by each person who is known to the Company to be the owner of more than five percent (5%) of the Company's Common Stock, (ii) by each of the Company's Directors, (iii) by each of the Company's executive officers, and (iv) by all Directors and executive officers of the Company as a group. As of February 28, 1997, there were issued and outstanding 4,745,654 shares of Common Stock of the Company. 11
Numbers of Percentage Name and Address Shares of Stock of Shares of Beneficial Owner(1)(2) Beneficially Owned Outstanding - ------------------------- ------------------ ----------- Walker Trust(3) 748,477 15.8% The Spindler Family Trust(4) 750,478 15.8% East Ocean Limited Partnership (5) 740,478 15.6% Dr. Jack Borsting 10,595 * Dr. Thomas Lutri 105,950 2.2% Mr. Maurice R. Johnson 13,243 * All directors and officers as a group (7 persons) 2,369,221 49.9% - ---------- *Less than one percent
(1) Unless otherwise indicated below, the persons in the table above have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to community property laws where applicable. (2) Unless otherwise indicated below, the address of each person is c/o the Company at 18201 Von Karman Avenue, Suite 305, Irvine, California 92612. (3) All of the 748,477 shares held of record by the Walker Trust are beneficially owned by Mr. Walker, the President, Chief Executive Officer and a director of the Company. Mr. Walker has direct or indirect voting or investment power for the Walker Trust. (4) All of the 750,478 shares held of record by The Spindler Family Trust are beneficially owned by Mr. Spindler, the Chairman of the Board, Executive Vice President and Secretary of the Company. Mr. Spindler has direct or indirect voting or investment power for the Spindler Trust. (5) All of the 740,478 shares held of record by East Ocean Limited Partnership are beneficially owned by Mr. Cohen, the Vice Chairman of the Board, Executive Vice President and Treasurer of the Company. Mr. Cohen has direct or indirect voting or investment power for East Ocean. Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires the Company's directors and executive officers, and persons who own more than ten percent (10%) of a registered class of the Company's equity securities, to file with the Commission initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Officers, directors and greater than ten percent (10%) stockholders are required by Commission regulation to furnish the Company with copies of all Section 16(a) forms they file. To the Company's knowledge, based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the fiscal year ended December 31, 1996, all Section 16(a) filing requirements applicable to its officers, directors and greater than ten percent (10%) beneficial owners were completed. 12 EXECUTIVE COMPENSATION The following tables present information concerning the cash compensation and stock options provided to the Company's Chief Executive Officer and each additional executive officer whose total annualized compensation exceeded $100,000 for the period from inception (April 3, 1996) to December 31, 1996. The notes to these tables provide more specific information regarding compensation. SUMMARY COMPENSATION TABLE
Long-Term Annual Compensation Compensation Awards Securities Underlying Other Annual Options All Other Name and Fiscal Salary Bonus Compensation /SARs Compensation Principal Position Year ($) ($) ($) (#) ($) - ------------------------------------------------------------------------------------------------------------------------------------ Richard H. Walker 1996 $74,293 -- -- 100,000 -- President, Chief Executive Officer & Director Maurice R. Johnson(a) 1996 $50,000 $37,500(b) -- 37,500 $1,495(c) Vice President, Director (also President of CRI)
(a) Amounts disclosed for Mr. Johnson represent compensation earned subsequent to the commencement of his employment with the Company on July 1, 1996. (b) Under the terms of Mr. Johnson's employment agreement, subject to the sole discretion of the Board of Directors as to whether he has performed his duties satisfactorily, the Company will pay him a guaranteed minimum bonus of $50,000 per annum; such bonus of $25,000 was paid to Mr. Johnson in 1996 for the period from July 1, 1996 to December 31, 1996. In addition, Mr. Johnson was paid a bonus of $12,500 by the Company upon the Company's completion of its acquisition of Cash Registers, Inc. ("CRI"), a wholly-owned subsidiary of the Company. (c) Amount represents the Company's matching contribution to the CRI 401(k) plan. Employment Agreements The Company has entered into employment agreements Richard H. Walker and Maurice Johnson. Mr. Walker's employment agreement provides that he will receive a salary of $225,000 per year, subject to upward revision during the term of the agreement. Beginning April 3, 1997, Mr. Walker's salary increased to $247,500 per year. Mr. Walker's employment agreement terminates on December 31, 2001. Mr. Johnson's employment agreement provides that he will receive a salary of $100,000, plus a minimum guaranteed bonus of $50,000 per year, subject to the sole discretion of the Board of Directors. Mr. 13 Johnson's agreement has an initial term of five years, which terminates on June 30, 2001. Both employment agreements contain confidentiality provisions and covenants not to compete. OPTION/SAR GRANTS IN LAST FISCAL YEAR The following tables set forth certain information concerning options granted as of December 31, 1996. The Company has not granted any SARs to date.
Number of % of Total Securities Options/SARs Underlying Granted to Options/SARs Employees in Base Price Expiration Name Granted(a)(#) Fiscal Year ($/Share) Date - ---------------------------------------------------------------------------------------------------------- Richard H. Walker 39,400 10.02% $6.00 7/31/01 60,600 15.41% $6.60 7/31/01 Maurice R. Johnson 37,500 9.54% $6.00 7/31/06
(a) All options vest and become exercisable at the rate of 25% per year commencing on the first anniversary of the date of grant. AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
Number of Securities Underlying Unexercised Value of Unexercised in-the- Options/SARs at Money Options/SARs at Fiscal Year-End (#) Fiscal Year-End($)(1) ------------------------------ --------------------------- Shares Value Acquired on Realized Name Exercise(#) ($) Exercisable Unexercisable Exercisable Unexercisable - ----------------------------------------------------------------------------------------------------------------------------------- Richard H. Walker -- -- -- 100,000 -- $526,140 Maurice R. Johnson -- -- -- 37,500 -- $210,938 - -----------------------
(1) The average of the high ask and low bid quotations for the Company's Common Stock as reported by NASDAQ on December 31, 1996 was 11 11/16 and the closing bid quotation for the Company's Common Stock as reported by The Wall Street Journal on April 1, 1997 was 11 1/4. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Company was incorporated on April 3, 1996, and in connection with its initial capitalization issued an aggregate of 2,648,745 shares of Common Stock for $.007 per share in the following manner: (i) 785,794 shares were issued to East Ocean Limited Partnership ("East Ocean"), an investor affiliated 14 with Lawrence Cohen; (ii) 732,819 shares were issued to the Walker Family Trust, an investor affiliated with Richard H. Walker; (iii) 732,820 shares were issued to the Spindler Family Trust dated February 1, 1994, an investor affiliated with Paul Spindler; and (iv) the remaining 397,312 shares were issued to two other stockholders of the Company. In August 1996, East Ocean transferred 17,658 shares to each of the Walker Trust and the Spindler Trust for $.007 per share. CRI presently leases office space in London, Kentucky on a month-to-month basis from Coye D. King, a director of CRI. Rent paid to Coye D. King for the period from inception (April 3, 1996) to December 31, 1996 was $15,000. In connection with its proposed move from its current location in London, Kentucky, CRI has agreed to negotiate in good faith a definitive lease agreement with Stephen King and Andrew King, Vice Presidents of CRI, as lessors, whereby the latter will lease to CRI up to 12,000 square feet of office and warehouse space in a new, yet to be constructed, office complex in London, Kentucky. Certain terms of the lease have already been agreed to, and it is expected that when signed, the lease will be for ten years and the base rental rate will be $6.00, $8.00 and $10.00 per square feet for years one, two and three through ten, respectively. Management believes that the aforementioned base rental rates are as favorable to the Company as those that could be obtained from unrelated third parties. Upon commencement of the lease for the new office complex, the monthly lease for CRI's current space in London, Kentucky will be terminated without penalty. The Company purchases insurance coverage for its corporate office and its CRI subsidiary through an insurance broker who is the brother-in-law of Mr. Walker. The Company paid premiums totaling $121,634 during the period from inception (April 3, 1996) to December 31, 1996 for insurance coverage expiring at various dates through November 1997. Maurice Johnson, a director and officer of the Company and an officer of CRI, has made two identical loans to CRI. Each loan is in the principal amount of $20,000 and bears interest at a rate of prime plus 1%. Both principal and interest are due on demand. The Company expects the loans to be paid off in April 1997. At December 31, 1996, the Company had an outstanding receivable balance from Michael J. Pollastro in the amount of $60,028. This receivable originated through transactions entered into by ARS in the normal course of business with affiliated companies owned by Mr. Pollastro. The Company also has a receivable balance from a company owned by Mr. Pollastro in the amount of $7,000 at December 31, 1996. On June 3, 1996 and in connection with a private placement of the Company's Common Stock, the Company issued 105,950 shares to Dr. Thomas Lutri, a director of the Company, at a price of $0.94 per share. On June 28, 1996, the Company issued 13,243 shares to Mr. Maurice Johnson, Vice President of the Company, and on July 1, 1996 the Company issued 10,595 shares to Dr. Jack Borsting, a director of the Company, in each case at a price of $0.94 per share. The Board of Directors of the Company determined the price of the shares issued to Messrs. Lutri, Johnson and Borsting based on the then current financial condition of the Company and the per share price for such shares equaled the price per share of Common Stock issued on June 28, 1996 to third parties in connection with the private placement of the Company's Common Stock. 15 OTHER MATTERS Expenses of Solicitation The accompanying proxy is solicited by and on behalf of the Board of Directors of the Company, and the entire cost of such solicitation will be borne by the Company. In addition to the use of the mails, proxies may be solicited by directors, officers and employees of the Company, by personal interview, telephone and telegraph. Arrangements will be made with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation material and annual reports to the beneficial owners of stock held of record by such persons, and the Company will reimburse them for reasonable out-of-pocket and clerical expenses incurred by them in connection therewith. Financial and Other Information All financial information is incorporated by reference to the information contained in the Financial Statements included in the Company's Annual Report on Form 10-KSB enclosed herewith. Stockholder Proposals Proposals of stockholders that are intended to be presented at the Company's 1998 Annual Meeting of Stockholders must be received by the Company no later than January 20, 1998, in order to be included in the proxy statement and proxy relating to that Annual Meeting. Discretionary Authority The Annual Meeting is called for the specific purposes set forth in the Notice of Annual Meeting as discussed above, and also for the purpose of transacting such other business as may properly come before the Annual Meeting. At the date of this Proxy Statement the only matters which management intends to present, or is informed or expects that others will present for action at the Annual Meeting, are those matters specifically referred to in such Notice. As to any matters which may come before the Annual Meeting other than those specified above, the proxy holder will be entitled to exercise discretionary authority. BY ORDER OF THE BOARD OF DIRECTORS Paul Spindler, Secretary Dated: April 14, 1997 Irvine, California 16 [PROXY] BRISTOL TECHNOLOGY SYSTEMS, INC. 18201 Von Karman Avenue, Suite 305, Irvine CA 92612 This Proxy is Solicited on Behalf of the Board of Directors The undersigned hereby appoints Richard H. Walker and Paul Spindler as Proxies, each with the power to appoint his substitute, and hereby authorizes them, to represent and vote, as designated on the reverse, all shares of Common Stock of BRISTOL TECHNOLOGY SYSTEMS, INC. (the "Company") held of record by the undersigned on April 9, 1997, at the Annual Meeting of Stockholders to be held on May 20, 1997 or any adjournment thereof. (To Be Signed on Reverse Side.) Please date, sign and mail your proxy card back as soon as possible! Annual Meeting of Stockholders BRISTOL TECHNOLOGY SYSTEMS, INC. May 20, 1997
A |X| Please mark your votes as in this example. WITHHOLD FOR AUTHORITY 1. ELECTION NOMINEES: Richard H. Walker OF Paul Spindler DIRECTORS [ ] [ ] Lawrence Cohen Maurice R. Johnson Dr. Jack Borsting Dr. Thomas Lutri FOR, except vote withheld from the following nominees _____________________________________________________ FOR AGAINST ABSTAIN Proposal 2: To ratify the appointment of Ernst & Young LLP as auditors of the Company's financial statementsfor the fiscal year ending December 31, 1997. [ ] [ ] [ ] Proposal 3: To approve an increase in the number of shares which may be granted under the Company's 1996 Equity Participation Plan from 450,000 to 2,450,000. [ ] [ ] [ ] Proposal 4: To approve the Company's 1997 Employee Stock Purchase Plan. [ ] [ ] [ ] SIGNATURE ______________________ DATE ___________1997 SIGNATURE __________________________ DATE ___________1997 (IF HELD JOINTLY) NOTE: Please sign exactly as name appears on stock certificate. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee, or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partner, please sign in Partnership name by authorized person.
EX-99 2 AMENDMENT TO THE 1996 EQUITY PARTICIPATION PLAN EXHIBIT A AMENDMENT TO THE 1996 EQUITY PARTICIPATION PLAN OF BRISTOL TECHNOLOGY SYSTEMS, INC. This Amendment to The 1996 Equity Participation Plan of Bristol Technology Systems, Inc. (the "Corporation") is effective as of April 7, 1997 for the benefit of the Corporation's eligible employees, consultants and directors. W I T N E S S E T H: WHEREAS, the Corporation has provided certain employees, consultants and directors the opportunity to participate in the Corporation's 1996 Equity Participation Plan (the "Plan"); WHEREAS, the Board of Directors of the Corporation believe it is in the best interest of the Corporation to amend the Plan by the amendment provided below; WHEREAS, the remaining terms and conditions of the Plan shall remain in full force and effect; and NOW, THEREFORE, in consideration of the mutual promises made herein and in consideration of the benefit to be received from the mutual observance of the covenants made herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged the parties agree as follows: Article II, Section 2.1(a) shall be amended in its entirety as follows: 2.1 Shares Subject to Plan. (a) The shares of stock subject to the Options, awards of Restricted Stock, Performance Awards, Dividend Equivalents, awards of Deferred Stock, Stock Payments or Stock Appreciation Rights shall be Common Stock, initially shares of the Company's Common Stock, par value $.001 per share. The aggregate number of such shares which may be issued upon exercise of such options or rights or upon any such awards under the Plan shall not exceed Two Million Four Hundred Fifty Thousand (2,450,000). The shares of Common Stock issuable upon exercise of such options or rights or upon any such awards may be either previously authorized but unissued shares or treasury shares. IN WITNESS WHEREOF, the Board of Directors of the Corporation has adopted this Amendment as of the day and year first above-written. BRISTOL TECHNOLOGY SYSTEMS,INC. By: /s/Paul Spindler ------------------------ Paul Spindler, Secretary EX-99 3 1997 EMPLOYEE STOCK PURCHASE PLAN BRISTOL TECHNOLOGY SYSTEMS, INC. 1997 EMPLOYEE STOCK PURCHASE PLAN I. PURPOSE A. The Bristol Technology Systems, Inc. 1997 Employee Stock Purchase Plan (the "Plan") is intended to provide Eligible Employees of the Corporation and its Corporate Affiliates who become Participating Corporations with the opportunity to acquire a proprietary interest in the Corporation through participation in a payroll-deduction based employee stock purchase plan designed to qualify under Section 423 of the Code. B. The Plan shall become effective upon its adoption by the Board of Directors of the Corporation. II. CERTAIN DEFINITIONS For purposes of administration of the Plan, the following terms shall have the meanings indicated: "Base Salary" means the regular base salary paid to a Participant by one or more Participating Corporations during such individualis period of participation in the Plan including any pre-tax contributions made by the Participant to any Code Section 401(k) salary deferral plan or any Code Section 125 cafeteria benefit program now or hereafter established by the Corporation or any Corporate Affiliate. The following items of compensation shall not be included in Base Salary: (i) all over-time payments, bonuses, commissions (other than those commissions functioning as base salary equivalents), profit-sharing distributions and other incentive-type payments; and (ii) any and all contributions made on the Participantis behalf by the Corporation or one or more Corporate Affiliates under any employee benefit or welfare plan now or hereafter established. "Board" means the Board of Directors of the Corporation. "Code" means the Internal Revenue Code of 1986, as amended from time-to-time. "Common Stock" means shares of the Corporationis common stock, par value $0.001 per share. "Corporate Affiliate" means any parent or subsidiary corporation of the Corporation (as determined in accordance with Code Section 424), including any parent or subsidiary corporation which becomes such after the Effective Time. "Corporation" means Bristol Technology Systems, Inc., a Delaware corporation, and any corporate successor to all or substantially all of the assets or voting stock of the Corporation which shall by appropriate action adopt the Plan. "Effective Time" means [March 1, 1997]. "Eligible Employee" means any person who is customarily engaged, on a regularly-scheduled basis of more than twenty (20) hours per week for more than five (5) months per calendar year and who has been employed for at least 90 days, in the rendition of personal services to the Corporation or any other Participating Corporation as an employee for earnings considered wages under Section 3401(a) of the Code. "Entry Date" means the date an Eligible Employee first joins an offering period in effect under the Plan. The earliest Entry Date under the Plan shall be the Effective Time. "Fair Market Value" means the closing selling price per share of the Common Stock on the relevant date, as officially quoted on the principal securities exchange on which the Common Stock is at the time traded or, if not traded on any securities exchange, the closing selling price per share of the Common Stock on such date, as reported on the NASDAQ National Market. If there are no sales of the Common Stock on such date, then the closing selling price per share on the next preceding day for which such closing selling price is quoted shall be determinative of Fair Market Value. "1933 Act" means the Securities Act of 1933, as amended. "1934 Act" means the Securities Exchange Act of 1934, as amended. "Participant" means any Eligible Employee of a Participating Corporation who is actively participating in the Plan. "Participating Corporation" means the Corporation and such Corporate Affiliate or Affiliates as may be authorized from time-to-time by the Board to extend the benefits of the Plan to their Eligible Employees. The Corporation, Cash Registers, Inc., a Kentucky corporation, and Automated Retail Systems, Inc., a Delaware corporation, are the only Participating Corporations in the Plan as of the Effective Time. "Plan Administrator" shall have the meaning given such term in Article III. "Semi-Annual Entry Date" means the first business day of March and September of each calendar year within which an offering period is in effect under the Plan. The earliest Semi-Annual Entry Date under the Plan shall be the Effective Time. "Semi Annual Period of Participation" means each semiannual period for which the Participant actually participates in an offering period in effect under the Plan. There shall be a maximum of four (4) semi-annual periods of participation within each offering period. The first such semi-annual period shall extend from the Effective Time through the last business day in August 1997. Subsequent semi-annual periods shall be measured from the first business day of September to the last business day of February each calendar year and from the first business day of March to the last business day of August in the succeeding calendar year. "Semi-Annual Purchase Date" means the last business day of February and August of each calendar year on which shares of Common Stock are automatically purchased for Participants under the Plan. The initial Semi-Annual Purchase Date shall be August 31, 1997. III. ADMINISTRATION The Plan Administrator shall have sole and exclusive authority to administer the Plan and shall consist of a committee (the "Plan Administrator") of two (2) or more non-employee Board members appointed by the Board. The Plan Administrator shall have full authority to interpret and construe any provisions of the Plan and to adopt such rules and 2 regulations for administering the Plan as it may deem necessary or appropriate as long as such rules are not inconsistent with this Plan or the requirements of Code Section 423. Decisions of the Plan Administrator shall be final and binding on all parties who have an interest in the Plan. IV. OFFERING PERIODS A. Shares of Common Stock shall be offered for purchase under the Plan through a series of successive offering periods until such time as (i) the maximum number of shares of Common Stock available for issuance under the Plan shall have been purchased; or (ii) the Plan shall have been sooner terminated in accordance with Subsection I of Article VII, Subsection A of Article IX, or Subsection B of Article X. B. Each offering period shall have a maximum duration of twenty-four months; provided, however, that the Plan administrator may designate any duration of an offering period prior to the start date of the offering period and in the absence of any express determination otherwise, each offering period shall have a duration of six months and be the same as a single Semi-Annual Period of Participation. The initial offering period shall run from the Effective Time to the last business day in August 1997. The next offering period shall commence on the first business day in September 1997, and subsequent offering periods shall commence as designated by the Plan Administrator. C. The Participant shall be granted a separate purchase right for each offering period in which he or she participates. The purchase right shall be granted on the Entry Date on which such Participant first joins the offering period in effect under the Plan and shall be automatically exercised on the last business day of February and August occurring within the offering period. D. No purchase rights granted under the Plan shall be exercised, and no shares of Common Stock shall be issued thereunder, until such time as (i) the Plan shall have been approved by the stockholders of the Corporation and (ii) the Corporation shall have complied with all applicable requirements of the 1933 Act (including the registration of the shares of Common Stock issueable under the Plan on a Form S-8 registration statement filed with the Securities and Exchange Commission), all applicable listing requirements of any securities exchange on which the Common Stock is listed for trading and all other applicable requirements established by law or regulation. E. Except as otherwise provided in this Plan, the Participantis acquisition of Common Stock under the Plan on any Semi-Annual Purchase Date shall neither limit nor require the Participantis acquisition of Common Stock on any subsequent Semi-Annual Purchase Date. V. ELIGIBILITY AND PARTICIPATION A. Each Eligible Employee of a Participating Corporation shall be eligible to participate in the Plan in accordance with the following provisions: 1. An individual who is an Eligible Employee on the start date of any offering period under the Plan shall be eligible to commence participation in that offering period on such start date. That start date shall become such individualis Entry Date for the offering period, and on that date such individual shall be granted his/her purchase right for the offering period. Should any Eligible Employee not enter the offering period on the start date, then he/she may not subsequently join that particular offering period on any later date. 3 2. If an offering period has a duration of more than six months, the provisions of this Section V.A.2 shall apply. An individual who first becomes an Eligible Employee after the start date of any offering period under the Plan may enter that offering period on the first Semi-Annual Entry Date on which he/she is an Eligible Employee. Such Semi-Annual Entry date shall become such individualis Entry Date for the offering period, and on that date such individual shall be granted his/her purchase right for the offering period. Should such an Eligible Employee not enter the offering period on the first Semi-Annual Entry Date on which he/she is eligible to join the offering period, then he/she may not subsequently join that particular offering period on any later date. B. To participate in the Plan for a particular offering period, the Eligible Employee must complete the enrollment forms prescribed by the Plan Administrator (including a payroll deduction authorization) and file such forms with the Plan Administrator (or its designate) on or before his/her scheduled Entry Date. C. The payroll deduction authorized by the Participant for purposes of acquiring shares of Common Stock under the Plan may be any multiple of one percent (1%) of the Base Salary paid to the Participant during each Semi-Annual Period of Participation, up to a maximum of ten percent (10%). The deduction rate so authorized shall continue in effect for the remainder of the offering period, except to the extent such rate is changed in accordance with the following guidelines: 1. The Participant may, at any time during a Semi-Annual Period of Participation, reduce his/her rate of payroll deduction to become effective as soon as possible after filing of the requisite reduction form with the Plan Administrator; and 2. The Participant may, prior to the commencement of any new Semi-Annual Period of Participation within the offering period, increase the rate of his/her payroll deduction by filing the appropriate form with the Plan Administrator. The new rate (which may not exceed the ten percent (10%) maximum) shall become effective as of the first day of the first Semi-Annual Period of Participation following the filing of such form. D. Payroll deductions will automatically cease upon the termination of the Participantis purchase right in accordance with the applicable provisions of Section VII below. VI. STOCK SUBJECT TO PLAN A. The common stock purchasable under the Plan shall, solely in the discretion of the Plan Administrator, be made available for either authorized but unissued shares of Common Stock or from shares of Common Stock reacquired by the Corporation, including shares of Common Stock purchased on the open market. The total number of shares which may be issued under the Plan shall not exceed [200,000] shares (subject to adjustment under Section VI.B below). B. In the event any change is made to the Corporationis outstanding Common Stock by reason of any stock dividend, stock split, exchange or combination of shares, recapitalization or any other change affecting the Common Stock as a class without the Corporationis receipt of consideration, appropriate adjustments shall be made by the Plan Administrator to (i) the class and maximum number of securities issuable over the term of the Plan; (ii) the class and maximum number of securities purchasable per Participant on any one Semi-Annual Purchase Date; and (iii) the class and number of securities and the price per share in effect under each purchase right at the time outstanding under the Plan. Such adjustments shall be designed to preclude the dilution or enlargement of rights and benefits under the Plan. 4 VII. PURCHASE RIGHTS An Eligible Employee who participates in the Plan for a particular offering period shall have the right to purchase shares of Common Stock, upon the terms and conditions set forth below and shall execute a purchase agreement embodying such terms and conditions and such other provisions (not inconsistent with the Plan) as the Plan Administrator may deem advisable. A. Purchase Price. Common Stock shall be purchasable on each Semi-Annual Purchase Date within the offering period at a purchase price equal to [eighty-five percent (85%)] of the lower of (i) the Fair Market Value per share of Common Stock on the Participantis Entry Date into that offering period; or (ii) the Fair Market Value per share on that Semi-Annual Purchase Date. However, for each Participant whose Entry Date is other than the start date of the offering period, the clause (i) amount shall in no event be less than the Fair Market Value of the Common Stock on the start date of that offering period. B. Number of Purchasable Shares. The number of shares purchasable per Participant on each Semi-Annual Purchase Date shall be the number of whole shares obtained by dividing the amount collected from the Participant through payroll deductions during the Semi-Annual Period of Participation ending with that Semi-Annual Purchase Date (together with any carry over deductions from the preceding Semi-Annual Period of Participation) by the purchase price in effect for the Semi-Annual Purchase Date; provided, however, that the maximum number of shares of Common Stock purchasable per Participant on any Semi-Annual Purchase Date shall not exceed [1,000 shares], subject to periodic adjustment under Section VI.B, above. Under no circumstances shall purchase rights be granted under the Plan to any Eligible Employee if such individual would, immediately after the grant, own (within the meaning of Code Section 424(d)) or hold outstanding options or other rights to purchase, stock possessing five percent (5%) or more of the total combined voting power of value of all classes of stock of the Corporation or any of its Corporate Affiliates. C. Payment. Payment for the Common Stock purchased under the Plan shall be effected by means of the Participantis authorized payroll deductions. Such deductions shall begin on the first pay day following the Participantis Entry Date into the offering period and shall (unless sooner terminated by the Participant) continue through the pay date ending with or immediately prior to the last day of the offering period. The amounts so collected shall be credited to the Participantis book account under the Plan, but no interest shall be paid on the balance from time-to-time outstanding in such account. The amounts collected from the Participant shall not be held in any separate account or trust fund and may be commingled with the general assets of the Corporation and used for general corporate purposes. D. Termination of Purchase Right. The following provisions shall govern the term of outstanding purchase rights: 1. A Participant may, at any time prior to the next Semi-Annual Purchase Date, terminate his/her outstanding purchase right under the Plan by filing the prescribed notification form with the Plan Administrator (or its designate), and no further payroll deductions shall be collected from the Participant with respect to the terminated purchase right. Any payroll deductions collected for the Semi-Annual Period of Participation in which such termination occurs shall, at the Participantis election, be immediately refunded or held for the purchase of shares on the Semi-Annual Purchase Date immediately following such termination. If no such election is made at the time such purchase right is terminated, then the payroll deductions collected with respect to the terminated right shall be promptly refunded; 5 2. The termination of such purchase right shall be irrevocable, and the Participant may not subsequently rejoin the offering period for which the terminated purchase right was granted. In order to resume participation in any subsequent offering period, which individual must re-enroll in the Plan (by making a timely filing of a new stock purchase agreement and enrollment form) on or before the date he or she is first eligible to join the new offering period; and 3. Should the Participant cease to remain an Eligible Employee for any reason including death, disability or change in status while his/her purchase right remains outstanding, then that purchase right shall immediately terminate and all of the Participantis payroll deductions for the Semi-Annual period of Participation in which such cessation of Eligible Employee status occurs shall be promptly refunded. E. Stock Purchase. Shares of Common Stock shall automatically be purchased on behalf of each Participant (other than Participants whose payroll deductions have previously been refunded in accordance with the Termination of Purchase Right provisions above) on each Semi Annual Purchase Date. The purchase shall be effected by applying each Participantis payroll deductions for the Semi-Annual Period of Participation ending on such Semi-Annual Purchase Date together with any carryover deductions from the preceding Semi-Annual Period of Participation) to the purchase of whole shares of Common Stock (subject to the limitation on the maximum number of purchasable shares imposed under subsection B of this Article VII) at the purchase price in effect for that Semi-Annual Purchase Date. Any payroll deductions for each Participant not applied to such purchase because they are not sufficient to purchase a whole share shall be held for the purchase of Common Stock on the next Semi-Annual Purchase Date if such Participant has enrolled for participation in the next succeeding Semi-Annual Period of Participation that includes such Semi-Annual Purchase Date. Any payroll deductions not applied to the purchase of Common Stock by reason of the limitation on the maximum number of shares purchasable by the Participant on the Semi-Annual Purchase Date shall be promptly refunded to the Participant. F. Proration of Purchase Rights. Should the total number of shares of Common Stock which are to be purchased pursuant to outstanding purchase rights on any particular Semi-Annual Purchase Date exceed the number of shares then available for issuance under the Plan, the Plan Administrator shall make a pro-rata allocation of the available shares on a uniform and nondiscriminatory basis, and the payroll deductions of each Participant to the extent in excess of the aggregate purchase price payable for the Common Stock pro-rated to such individual, shall be promptly refunded to such Participant. G. Rights as Stockholder. A Participant shall have no stockholder rights with respect to the shares subject to his/her outstanding purchase right until the shares are actually purchased on the Participantis behalf in accordance with applicable provisions of the Plan. No adjustments shall be made for dividends, distributions, or other rights for which the record date is prior to the date of such purchase. A Participant shall be entitled to receive, as soon as practicable after each Semi-Annual Purchase Date, a stock certificate for the number of shares purchased on the Participantis behalf. Such certificate may, upon the Participantis request, be issued in the names of the Participant and his/her spouse as community property or as joint tenants with right of survivorship. Alternatively, the Participant may request the issuance of such certificate in istreet namei for immediate deposit in a Corporation-designated brokerage account. H. Assignability. No purchase right granted under the Plan shall be assignable or transferable by the Participant other than by will or by the laws of descent and 6 distribution following the Participantis death, and during the Participantis lifetime the purchase right shall be exercisable only by the Participant. I. Change in Ownership. If any of the following transactions (a iChange in Ownershipi) occur during the offering period: 1. A merger or consolidation in which the Corporation is not the surviving entity, except for a transaction the principal purpose of which is to change the state in which the Corporation is incorporated; 2. The sale, transfer, or other disposition of all or substantially all of the assets of the Corporation; 3. A complete liquidation or dissolution of the Corporation; or 4. Any reverse merger in which the Corporation is the surviving entity but in which securities possessing more than fifty percent (50%) of the total combined voting power of the Corporationis outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to the merger; then all outstanding purchase rights under the Plan shall automatically be exercised immediately prior to the effective date of such Change in Ownership by applying the payroll deductions of each Participant for the Semi-Annual Period of Participation in which such Change in Ownership occurs to the purchase of whole shares of Common Stock at eighty-five percent (85%) of the lower of (i) the Fair Market Value of the common Stock on the Participantis Entry Date into the offering period in which such Change in Ownership occurs; or (ii) the Fair Market Value of the Common Stock immediately prior to the effective date of such Change in Ownership. However, the applicable share limitations of Articles VII and VIII shall continue to apply to any such purchase, and the clause (i) amount above shall not, for any Participant whose Entry Date for the offering prior is other than the start date of that offering period, be less than the Fair Market Value of the Common Stock on such start date. The Corporation shall use its best efforts to provide at least ten (10) days prior written notice of the occurrence of any Change in Ownership, and Participants shall, following the receipt of such notice, have the right to terminate their outstanding purchase rights in accordance with the applicable provisions of this Article VII. VIII. ACCRUAL LIMITATIONS A. No Participant shall be entitled to accrue rights to acquire Common Stock pursuant to any purchase right outstanding under this Plan if and to the extent such accrual, when aggregated with (i) rights to purchase Common Stock accrued under any other purchase right outstanding under this Plan; and (ii) similar rights accrued under other employee stock purchase plans within the meaning of Code Section 423 of the Corporation or its Corporate Affiliates, would otherwise permit such Participant to purchase more than $25,000 worth of stock of the Corporation or any Corporate Affiliate (determined on the basis of the Fair Market Value of such stock on the date or dates such rights are granted) for each calendar year such rights are at any time outstanding. B. For purposes of applying such accrual limitations, the right to acquire Common Stock pursuant to each purchase right outstanding under the Plan shall accrue as follows: 7 1. No right to acquire Common Stock under any outstanding purchase right shall accrue to the extent the Participant has already accrued in the same calendar year the right to acquire Common Stock under one or more other purchase rights at a rate equal to $25,000 worth of Common Stock (determined on the basis of the Fair Market Value on the date or dates of grant) for each calendar year during which one or more of those purchase rights were at any time outstanding; and 2. If by reason of such accrual limitations, any purchase right of a Participant does not accrue for a particular Semi-Annual Period of Participation, then the payroll deductions which the Participant made during that Semi-Annual Period of Participation in excess of such accrual limitations shall be promptly refunded. C. In the event there is any conflict between the provisions of this Article VIII and one or more provisions of the Plan or any instrument issued thereunder, the provisions of this Article VIII shall be controlling. IX. AMENDMENT AND TERMINATION A. The Board may alter, amend, suspend or discontinue the Plan following the close of any Semi-Annual Period of Participation; provided, however, that the Board may not, without the approval of the Corporationis stockholders: 1. Increase the number of shares issuable under the Plan or the maximum number of shares purchasable per Participant on any one Semi-Annual Purchase Date, except that the Plan Administrator shall have the authority, exercisable without such stockholder approval, to effect adjustments to the extent necessary to reflect changes in the Corporationis capital structure pursuant to Subsection B of Article VI; 2. Alter the purchase price formula so as to reduce the purchase price payable for the shares purchasable under the Plan; or 3. Materially increase the benefits accruing to Participants under the Plan or materially modify the requirements for eligibility to participate in the Plan. B. The Corporation shall have the right, exercisable in the sole discretion of the Plan Administrator, to terminate all outstanding purchase rights under the Plan immediately following the close of any Semi-Annual Period of Participation. Should the Corporation elect to exercise such right, the Plan shall terminate in its entirety. No further purchase rights shall thereafter be granted or exercised, and no further payroll deductions shall thereafter be collected, under the Plan. X. GENERAL PROVISIONS A. The Plan shall become effective upon its adoption by the Board; provided, however, that no purchase rights granted under the Plan shall be exercised and no shares of Common Stock shall be issued hereunder, until (i) the Plan is approved by the stockholders of the Corporation and (ii) the Corporation complies with all applicable requirements of the 1933 Act, all applicable listing requirements of any securities exchange on which the Common Stock is listed for trading and all other applicable legal and regulatory requirements. In the event such stockholder approval is not obtained, or such Corporation compliance is not effected, within twelve (12) months after the date on which the Plan is adopted by the Board, the Plan shall terminate and have no further force or effect and all sums collected from Participants during the initial offering period hereunder shall be refunded. 8 B. Unless terminated earlier pursuant to the provisions of the Plan, the Plan shall terminate on [February 28, 2005], but such termination shall not affect purchase rights then outstanding under the Plan. C. All costs and expenses incurred in the administration of the Plan shall be paid by the Corporation. D. Neither the action of the Corporation in establishing the Plan, nor any action taken under the Plan by the Board or the Plan Administrator, nor any provision of the Plan itself shall be construed so as to grant any person the right to remain in the employ of the Corporation or any of its Corporate Affiliates for any period of specific duration, and such personis employment may be terminated at any time, with or without cause. E. This Plan is intended to qualify under Section 423 of the Code and shall be interpreted in a manner consistent therewith. -----END PRIVACY-ENHANCED MESSAGE-----