<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 31, 1996
Bristol Technology Systems, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-21633 58-2235556
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
18201 Von Karman Avenue, Suite 305, Irvine, California 92612
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (714) 475-0800
Not Applicable
(Former name or former address, if changed since last report)
<PAGE> 2
The undersigned Registrant hereby amends the following item of its Current
Report on Form 8-K, filed on January 15, 1997. The Registrant is amending Item 7
to include certain required financial statements and pro forma financial
information.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
Audited financial statements of the business acquired
(Automated Register Systems, Inc.) as of December 31, 1996 and
1995 and for the two years ended December 31, 1996, together
with the auditors' report thereon.
(b) PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
Unaudited pro forma condensed consolidated financial
statements of Bristol Technology Systems, Inc. and
Automated Register Systems, Inc.:
Pro forma condensed consolidated balance sheet as of
December 31, 1996
Pro forma condensed consolidated statement of operations
for the period from inception (April 3, 1996) to
December 31, 1996
Notes to Pro forma condensed consolidated financial
statements
The pro forma condensed consolidated financial information has been prepared
giving effect to the acquisition of Automated Register Systems, Inc. ("ARS") as
if the transaction had taken place at April 3, 1996 (inception of Bristol) and
therefore includes the operations of ARS from that date. The pro forma
information has been based on historical financial statements of Automated
Register Systems, Inc. after giving effect to the acquisition using the purchase
method of accounting and the adjustments as described in the accompanying notes
to the pro forma financial statements. The carrying values of the acquired
tangible assets and assumed liabilities are believed to approximate fair values.
The allocation of the purchase price is subject to final determination based on
the valuations of the assets acquired. Any purchase price adjustments will be
made within one year from the acquisition date and are not expected to be
material to the pro forma financial information taken as a whole.
The pro forma financial information is not necessarily indicative of the results
of operations or the financial position which would have been attained had the
acquisition been consummated on the dates indicated or which may be achieved in
the future. The pro forma financial statements should be read in conjunction
with the audited historical consolidated financial statements and related notes
thereto of Bristol Technology Systems, Inc. as of June 30, 1996 previously filed
and the audited historical financial statements and related notes thereto of
Automated Register Systems, Inc. included herein.
2
<PAGE> 3
(c) EXHIBITS
10.27 Employment Agreement between Michael Pollastro and Automated Register
Systems, Inc., dated January 1, 1997.
10.28 Employment Agreement between Gary Pollastro and Automated Register
Systems, Inc., dated January 1, 1997.
10.29 Employment Agreement between John Pollastro and Automated Register
Systems, Inc., dated January 1, 1997.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Bristol Technology Systems, Inc.
(Registrant)
Dated: March 14, 1997 By: /s/ Kelly Kaufman
-------------------------------------
Kelly Kaufman
Vice President of Finance
(Principal financial and accounting
officer)
3
<PAGE> 4
Financial Statements
Automated Register Systems, Inc.
Years ended December 31, 1995 and 1996
with Report of Independent Auditors
4
<PAGE> 5
Automated Register Systems, Inc.
Financial Statements
Years ended December 31, 1995 and 1996
CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . 1
Audited Financial Statements
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Statements of Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . 4
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 6
</TABLE>
5
<PAGE> 6
Report of Independent Auditors
The Board of Directors
Automated Register Systems, Inc.
We have audited the accompanying balance sheets of Automated Register Systems,
Inc. (the Company) as of December 31, 1996 and 1995, and the related statements
of income, stockholders' equity, and cash flows for the years then ended.
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 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 provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Automated Register Systems,
Inc. at December 31, 1996 and 1995, and the results of its operations and its
cash flows for the years then ended, in conformity with generally accepted
accounting principles.
Ernst & Young LLP
Orange County, California
March 5, 1997
6
<PAGE> 7
Automated Register Systems, Inc.
Balance Sheets
<TABLE>
<CAPTION>
DECEMBER 31
1995 1996
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash $ -- $ 16,745
Accounts receivable, less allowance for doubtful accounts of
$15,273 in 1995; $15,946 in 1996 442,817 545,363
Inventories 825,179 727,503
Deferred income taxes 39,870 25,907
Prepaid expenses and other current assets 1,962 22,185
Amounts due from related parties - 67,028
---------- ----------
Total current assets 1,309,828 1,404,731
Property and equipment, net 53,051 70,358
Prepaid license fees 102,750 102,750
Other assets 14,000 14,000
---------- ----------
Total assets $1,479,629 $1,591,839
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of credit $ 235,000 $ 152,812
Accounts payable 424,436 221,420
Accrued wages and expenses 213,266 273,045
Deferred revenue 165,605 183,741
Customer advances 34,845 96,485
Amounts payable to related parties 1,247 -
---------- ----------
Total current liabilities 1,074,399 927,503
---------- ----------
Capital lease obligation, less current portion -- 6,564
Commitments and contingencies
Stockholders' equity
Common stock, authorized 500 shares, $100 par value; 37 shares
issued and outstanding in 1995 and 1996 3,700 3,700
Retained earnings 401,530 654,072
---------- ----------
Total stockholders' equity 405,230 657,772
---------- ----------
Total liabilities and stockholders' equity $1,479,629 $1,591,839
========== ==========
</TABLE>
See accompanying notes.
7
<PAGE> 8
Automated Register Systems, Inc.
Statements of Income
<TABLE>
<CAPTION>
DECEMBER 31
1995 1996
---------- ----------
<S> <C> <C>
Revenue:
System sales and installation $4,287,200 $2,988,479
Service and supplies sales 1,146,549 1,389,708
---------- ----------
Net revenue 5,433,749 4,378,187
Costs and expenses:
Cost of system sales and installation 3,760,981 2,472,779
Cost of service and supplies sales 878,805 943,072
Selling, general and administrative 652,293 532,560
---------- ----------
Total costs and expenses 5,292,079 3,948,411
---------- ----------
Operating income 141,670 429,776
Interest expense 36,769 32,982
---------- ----------
Income before income taxes 104,901 396,794
Income tax provision 36,409 144,252
---------- ----------
Net income $68,492 $252,542
========== ==========
Earnings per share (37 shares in 1995 and 1996) $1,851 $6,825
========== ==========
</TABLE>
See accompanying notes.
8
<PAGE> 9
Automated Register Systems, Inc.
Statements of Stockholders' Equity
<TABLE>
<CAPTION>
COMMON STOCK
-----------------------
RETAINED
SHARES AMOUNT EARNINGS TOTAL
------ ------ -------- --------
<S> <C> <C> <C> <C>
Balance at December 31, 1994 37 $3,700 $333,038 $336,738
Net income - - 68,492 68,492
-- ------ -------- --------
Balance at December 31, 1995 37 3,700 401,530 405,230
Net income - - 252,542 252,542
-- ------ -------- --------
Balance at December 31, 1996 37 $3,700 $654,072 $657,772
== ====== ======== ========
</TABLE>
See accompanying notes.
9
<PAGE> 10
Automated Register Systems, Inc.
Statements of Cash Flows
<TABLE>
<CAPTION>
DECEMBER 31
1995 1996
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 68,492 $252,542
Adjustments to reconcile net income to net cash provided by (used
for) operations:
Depreciation and amortization 27,289 27,385
Deferred income taxes (21,131) 13,963
Changes in operating assets and liabilities:
Accounts receivable 163,499 (102,546)
Inventories (201,274) 97,676
Prepaid expenses and other current assets 1,227 (20,223)
Amounts due from related parties (4,931) (68,275)
Prepaid license fees (22,150) -
Other assets (14,000) -
Accounts payable (176,804) (203,016)
Accrued wages and expenses 128,605 56,968
Deferred revenue 35,959 18,136
Customer advances (39,201) 61,640
--------- ---------
Net cash provided by (used for) operations (54,420) 134,250
INVESTING ACTIVITIES
Purchases of property and equipment (26,435) (35,317)
FINANCING ACTIVITIES
Net borrowings (payments) on line of credit 80,855 (82,188)
--------- ---------
Net cash provided by (used for) investing activities 80,855 (82,188)
--------- ---------
Net increase (decrease) in cash - 16,745
Cash at beginning of year - -
--------- ---------
Cash at end of year $ - $ 16,745
========= =========
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid for interest $ 37,341 $ 33,256
========= =========
Cash paid for income taxes $ 6,150 $ 19,080
========= =========
</TABLE>
See accompanying notes.
10
<PAGE> 11
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Automated Register Systems, Inc. (Company) is a Washington corporation. On
December 31, 1996, all of the outstanding stock of the Company was exchanged
for cash and shares of non-registered restricted common stock of Bristol
Technology Systems, Inc. (Bristol) and the Company became a wholly-owned
subsidiary of Bristol.
Concurrent with the acquisition, effective December 31, 1996, the Company
purchased the assets of Pacific Retail Systems, Inc. The total consideration
was $8,000 cash and the transaction was accounted for as a purchase.
NATURE OF BUSINESS
The Company sells, installs, and services point of sale (POS) systems and cash
registers primarily in the Northwest United States. The Company sells its
products primarily to quick service and fine dining food establishments,
specialty retail and supermarkets. Credit is extended based on an evaluation of
the customer's financial condition. Collateral is generally not required,
however, advances from customers to cover a portion of the hardware costs
generally are required.
USE OF ESTIMATES
The preparation of the 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
The Company recognizes revenue for system sales upon delivery of the system to
the customer. The Company sells product service contracts for hardware and
peripheral support which generally cover a period of twelve months. Revenues
from such service contracts are deferred and amortized on a straight-line basis
over the life of the contracts. Deferred revenue represents the unrealized
portion of deferred product service contract revenue.
PREPAID LICENSE FEES
The Company has prepaid amounts to a related party for certain software license
agreements. These amounts will be amortized as the licenses are sold.
11
<PAGE> 12
Automated Register Systems, Inc.
Notes to Financial Statements (continued)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CUSTOMER ADVANCES
Customer advances represent deposits made in advance of equipment installation
and are applied against invoices when revenue is recorded.
INVENTORIES
Inventories are stated at the lower of cost or market using the specific
identification method for inventories with identifying serial numbers and the
average cost method for all other inventories.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost. Depreciation and amortization is
computed principally by accelerated methods for income tax and financial
reporting purposes over the estimated useful lives of the assets which range
from three to five years.
INCOME TAXES
The Company uses the liability method of accounting for income taxes as set
forth in Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes. Under the liability method, deferred taxes are determined based
on the difference between the financial statement and tax bases of assets and
liabilities using the enacted tax rates in effect in the years in which the
differences are expected to reverse. Deferred tax assets are recognized and
measured based on the likelihood of realization of the related tax benefit in
the future.
EARNINGS PER SHARE
Earnings per share is based on the average number of shares of common stock
outstanding during each year.
12
<PAGE> 13
Automated Register Systems, Inc.
Notes to Financial Statements (continued)
2. CONCENTRATION OF CREDIT RISK
During 1995 and 1996 the Company had sales to several customers; those
representing over 10% of total revenues were as follows:
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Customer A 39% -
Customer B 19% 18%
Customer C - 16%
</TABLE>
At December 31, 1995 and 1996, accounts receivable due from these customers
totaled $128,771 and $46,379; and $95,297 and $43,601, respectively.
3. INVENTORIES
Inventories consist primarily of POS terminals, peripherals, paper and other
supplies for resale to customers, as well as items to support maintenance
contracts. Inventories held by revenue type at December 31, were as follows:
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Systems and installation inventories $662,588 $553,616
Service and supplies inventories 162,591 173,887
-------- --------
$825,179 $727,503
======== ========
</TABLE>
Included in inventories at December 31, 1996 is approximately $166,884 of
refurbished parts and components which the Company has on hand to fulfill
maintenance contract requirements. Due to the nature of the systems installed
and the longevity of the systems in general, service may be provided for
several years after sale, causing much of the refurbished inventory on hand to
be of older items.
4. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at December 31:
<TABLE>
<CAPTION>
1995 1996
--------- --------
<S> <C> <C>
Furniture and fixtures $116,343 $133,683
Leasehold improvements 78,770 78,770
Equipment 63,863 90,605
Automobiles 13,771 12,871
-------- -------
272,747 315,929
Less accumulated depreciation and amortization 219,696 245,571
-------- -------
Property and equipment, net $ 53,051 $70,358
========= =======
</TABLE>
13
<PAGE> 14
Automated Register Systems, Inc.
Notes to Financial Statements (continued)
5. CREDIT ARRANGEMENT
The Company has a line of credit arrangement with a bank which provides for
aggregate borrowings of $600,000, bears interest at the bank's prime rate, plus
2.25%, matures on January 2, 1997 and is collateralized by accounts receivable
and inventories. At December 31, 1996, outstanding borrowings under the line of
credit were $152,812 bearing interest at 10.5%. The weighted average interest
rates on short-term borrowings for the years ended December 31, 1995 and 1996
were 11.5% and 10.8%, respectively. The line of credit requires the Company to
maintain certain financial covenants. The Company was in compliance with all
covenants at December 31, 1996.
In 1996, the Company entered into capital lease obligations totaling $9,375.
6. COMMITMENTS AND CONTINGENCIES
The Company leases certain facilities and vehicles under noncancellable lease
arrangements expiring in various years through 2003. These leases may be
renewed for periods of one year. Future annual minimum lease payments for
noncancellable operating leases, all of which all are to related parties, and
capital lease obligations at December 31, 1996 were:
<TABLE>
<CAPTION>
OPERATING LEASES CAPITAL LEASES
---------------- --------------
<S> <C> <C>
1997 $194,877 $ 3,643
1998 189,593 3,643
1999 184,355 3,643
2000 180,756 -
2001 180,756 -
Thereafter 361,512 -
---------- -------
$1,291,849 10,929
Less amounts representing interest ========== 1,553
-------
9,376
Less: current portion 2,812
-------
$6,564
=======
</TABLE>
Rent expense was $139,898 and $106,869 for 1995 and 1996, respectively. Of
those amounts, $123,219 and $99,219 was paid to related parties in 1995 and
1996, respectively.
14
<PAGE> 15
Automated Register Systems, Inc.
Notes to Financial Statements (continued)
6. COMMITMENTS AND CONTINGENCIES (CONTINUED)
EMPLOYMENT AGREEMENTS
On January 1, 1997, the Company entered into employment agreements with certain
executive officers and employees, the terms of which expire December 31, 1999
and provide for minimum salary levels and incentive bonuses based on the
attainment of certain management goals. The aggregate commitment for future
salaries was $885,000 at January 1, 1997.
7. INCOME TAXES
Significant components of the provision (benefit) for income taxes are as
follows:
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Federal:
Current $57,540 $130,289
Deferred (21,131) 13,963
------- --------
Provision for income taxes $36,409 $144,252
======= ========
</TABLE>
Deferred income taxes reflect the net tax effect of temporary differences
between carrying amounts of assets and liabilities for financial reporting
purposes and the amount used for income tax purposes.
Significant components of the Company's deferred tax assets at December 31 are
as follows:
<TABLE>
<CAPTION>
1995 1996
------- -------
<S> <C> <C>
Deferred tax assets:
Inventory reserves $25,968 $8,500
Accounts receivable reserves 5,193 5,421
Accrued compensation 5,797 8,357
Depreciation and amortization 2,912 3,629
------- -------
Total deferred tax assets $39,870 $25,907
======= =======
</TABLE>
15
<PAGE> 16
Automated Register Systems, Inc.
Notes to Financial Statements (continued)
7. INCOME TAXES (CONTINUED)
The Company has not recorded any valuation allowance against deferred tax
assets as management believes all of the temporary differences, listed above,
will be realized against taxable income in future fiscal years.
The reconciliation of income tax computed at the U.S. federal statutory tax
rates to income tax expense is:
<TABLE>
<CAPTION>
1995 1996
--------------------- ---------------------
AMOUNT PERCENT AMOUNT PERCENT
--------- ------- --------- -------
<S> <C> <C> <C> <C>
Tax at U.S. statutory rates $35,666 34.0% $134,909 34.0%
Non-deductible meals and entertainment 743 .7% 742 .2%
Other - - 8,601 2.2%
------- ----- -------- -----
$36,409 34.7% $144,252 36.4%
======= ===== ======== =====
</TABLE>
8. EMPLOYEE BENEFIT PLAN
The Company sponsors a Section 401(K) employees savings plan, covering
substantially all full-time employees who have worked for the Company for more
than one year. The Company made no contributions in 1995 or 1996.
9. RELATED PARTY TRANSACTIONS
The Company had various transactions with the former owners and affiliated
companies. Transactions with the related parties are made in the normal course
of business. A summary of these transactions is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------
1995 1996
-------- ---------
<S> <C> <C>
Rent paid to Pollastro Properties, Inc., Pacific Retail Systems and
ARS Leasing, affiliates owned by a stockholder of the Company $123,219 $ 99,219
Software licenses purchased from Advanced Computer Automations,
owned by a stockholder of the Company 22,150 -
Inventories transferred at cost to Pacific Retail Systems, Inc.,
owned by a stockholder of the Company 193,000 248,000
</TABLE>
16
<PAGE> 17
Automated Register Systems, Inc.
Notes to Financial Statements (continued)
9. RELATED PARTY TRANSACTIONS (CONTINUED)
The mortgage on the building leased from Pollastro Properties, Inc. is
guaranteed by the Company. The mortgage balance outstanding at December 31,
1996 was $343,000.
<TABLE>
<CAPTION>
1995 1996
------- ---------
<S> <C> <C>
Amounts due from and payable to related parties
consisted of the following at December 31:
Pollastro Properties $7,000 $ 7,000
Pacific Retail Systems (8,247) -
Company stockholder - 60,028
------- -------
$(1,247) $67,028
======= =======
</TABLE>
17
<PAGE> 18
BRISTOL TECHNOLOGY SYSTEMS, INC. & SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
Unaudited Unaudited Unaudited
Company Pro Forma Consolidated
Historical ARS Adjustments Pro Forma
---------- --- ----------- -----------
<S> <C> <C> <C> <C>
Cash and cash equivalents $5,458,929 $16,745 $5,475,674
Accounts receivable, net 751,593 545,363 1,296,956
Inventories 1,442,028 727,503 2,169,531
Prepaid expenses and other current assets 66,443 115,120 (25,907) (A) 155,656
----------- ---------- ----------- -----------
Total current assets 7,718,993 1,404,731 (25,907) 9,097,817
Property and equipment, net 180,468 70,358 250,826
Intangible assets, net 540,847 1,154,655 (A) 1,695,502
Investment in ARS 1,786,520 (1,786,520) (A) --
Other long term assets 8,804 116,750 125,554
----------- ---------- ----------- -----------
Total assets $10,235,632 $1,591,839 ($657,772) $11,169,699
=========== ========== =========== ===========
Line of credit $285,629 $152,812 $438,441
Accounts payable 743,205 221,420 964,625
Accrued expenses 347,411 273,045 620,456
Deferred revenue 243,318 183,741 427,059
Customer advances 329,232 96,485 425,717
Current portion of long term debt &
capital lease obligations 57,029 0 57,029
----------- ---------- ----------- -----------
Total current liabilities 2,005,824 927,503 2,933,327
Capital lease obligations - non-current portion 30,315 6,564 36,879
Other long term liabilities 24,500 0 24,500
----------- ---------- ----------- -----------
Total liabilities 2,060,639 934,067 2,994,706
Common Stock 4,746 3,700 (3,700) (A) 4,746
Additional paid-in-capital 8,276,872 8,276,872
Retained earnings (deficit) (106,625) 654,072 (654,072) (A) (106,625)
----------- ---------- ----------- -----------
Total stockholders' equity 8,174,993 657,772 (657,772) 8,174,993
----------- ---------- ----------- -----------
Total liabilities and stockholders' equity $10,235,632 $1,591,839 ($657,772) $11,169,699
=========== ========== =========== ===========
</TABLE>
18
<PAGE> 19
BRISTOL TECHNOLOGY SYSTEMS, INC. & SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE PERIOD FROM INCEPTION (APRIL 3, 1996) TO DECEMBER 31, 1996
<TABLE>
<CAPTION>
Unaudited
ARS from
Unaudited April 3, 1996 Unaudited Unaudited
Company to December Pro forma Company
Historical 31, 1996 Adjustments Pro forma
---------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Net revenue $4,196,230 $3,637,910 $7,834,140
Cost of sales 2,845,995 2,838,289 5,684,284
---------- ---------- --------- ----------
Gross margin 1,350,235 799,621 2,149,856
Selling, general & administrative expenses 1,454,015 399,196 111,300 (B),(C) 1,964,511
---------- ---------- --------- ----------
Operating income (loss) (103,780) 400,425 (111,300) 185,345
Interest income (43,280) (43,280)
Interest expense 46,125 22,090 68,215
---------- ---------- --------- ----------
Income (loss) before income tax provision
(benefit) (106,625) 378,335 (111,300) 160,410
Income tax provision (benefit) 0 144,252 (20,424) (D) 123,828
---------- ---------- --------- ----------
Net income (loss) ($106,625) $234,083 ($90,876) $36,582
========== ========== ========= ==========
Net income (loss) per common share (0.03) 0.01
========== ==========
Weighted average common shares outstanding 3,483,012 58,154 (A) 3,541,166
========== ======== ==========
</TABLE>
19
<PAGE> 20
BRISTOL TECHNOLOGY SYSTEMS, INC. & SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Explanation of Pro Forma Adjustments
(A)
On December 31, 1996, Automated Register Systems, Inc. (ARS) merged into
Bristol Merger Corporation (the "Purchaser"), a wholly-owned subsidiary of
Bristol Technology Systems, Inc. (the "Company). The aggregate purchase price,
including acquisition costs of $78,148, was $1,786,520, of which $1,103,171
was paid in cash funded out of the Company's proceeds from its initial public
offering of securities consummated on November 20, 1996 and $683,349 was paid
by the issuance of 58,154 shares of non-registered, restricted Common Stock of
the Company.
The net assets acquired from ARS consists primarily of accounts receivable and
inventory. The acquisition of ARS is estimated to create approximately
$1,154,655 of goodwill calculated as follows:
<TABLE>
<S> <C>
Cash purchase price $1,025,023
Stock purchase price 683,349
Acquisition costs 78,148
----------
Total purchase price 1,786,520
Less: Net assets acquired (657,772)
Valuation allowance for deferred tax assets acquired 25,907
----------
Total goodwill to be amortized over 15 years $1,154,655
</TABLE>
(B)
Represents the amortization of goodwill over an estimated useful life of 15
years, as if the ARS acquisition had been consummated on April 3, 1996.
(C)
Represents incremental rent expense that would have been incurred had the ARS
acquisition been consummated on April 3, 1996.
(D)
Represents the adjustment to record the income tax effect of the pro forma
adjustments.
20
<PAGE> 1
EXHIBIT 10.27
EMPLOYMENT AGREEMENT
(MICHAEL J. POLLASTRO)
This Employment Agreement (the "Agreement") is made to be effective as of
the 1st day of January, 1997 and is by and between Michael Pollastro, whose
address is 8505 Skiview Lane SW, Tumwater, Washington 98502 ("You" or the
"Executive") and Automated Register Systems, Inc., a Delaware corporation with
its principal office at 1437 South Jackson Street, Seattle, Washington 98144
(the "Company" or "ARS"). Where appropriate in the context, the term "Company"
shall also mean and include the Company and its parents, subsidiaries and
affiliates.
In consideration of the mutual agreements and promises hereinafter set
forth and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company agrees to employ you and you agree
to serve as an employee of the Company upon the following terms and conditions:
1. Condition Precedent.
This Agreement and the parties' respective rights and
obligations set forth herein are conditioned in their entirety on
the filing of Certificates of Merger in the States of Delaware and
Washington by Company and Bristol Merger Corporation ("BMC"),
pursuant to which Company shall merge into BMC in a tax free
reorganization pursuant to Section 368(a)(2)(D) of the Internal
Revenue Code of 1986, as amended.
2. Term.
Subject to the other terms and conditions of this Agreement,
the initial term of your employment hereunder (the "Term") will be
for the three (3) year period commencing January 1, 1997 and ending
December 31, 1999, unless earlier terminated in accordance with this
Agreement. Notwithstanding the foregoing, your obligations under
Section 8(b) and 9 below shall survive the expiration or termination
of this Agreement.
3. Position; Duties; etc.
(a) Your title shall be President and it shall be your
responsibility to perform all functions generally appropriate to
such a position at all times in a lawful and professional manner
which reflects positively upon the Company and serves its best
interests, and such other reasonable duties as may be assigned by
the Company's Board of Directors. In this capacity, you shall report
to the
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<PAGE> 2
Company's Board of Directors. The Company shall also recommend to
the shareholder of the Company that you be elected as a member of
the Company's Board of Directors for a one-year term commencing at
the next annual meeting of the Company's shareholders. You shall
perform substantially all of your duties, at the Company's sole and
exclusive discretion, at the ARS office located as set forth above.
The Company reserves the right to change your duties and your
position from time to time, and to require you to relocate, as may
be necessary or appropriate and in the best interests of the
Company.
(b) You will, to the best of your abilities, effectively,
diligently, in good faith and with integrity, devote your full time,
attention, energy and skill to the fulfillment of your duties
hereunder and shall at all times be promotive and supportive of the
Company, its products, services, management and other employees, at
a level of competence and effectiveness consistent with the position
occupied.
(c) You will be subject to and will comply with such policies and
procedures as are from time to time established for employees of the
Company generally, except to the extent that such policies or
procedures are inconsistent with the express terms of this
Agreement, and in those instances, the terms of this Agreement shall
control.
(d) You shall carefully monitor all aspects of the business,
properties and affairs of ARS. Without limiting the generality of
the foregoing, it shall be your duty to notify the Company promptly
upon becoming aware of any matter which constitutes or which might
constitute a breach of any representation, warranty or covenant of
Company and/or Shareholders (as such terms are defined in the Merger
Agreement) under that certain Agreement and Plan of Merger, dated
December 12, 1996 by and among Bristol Technology Systems, Inc., a
Delaware corporation ("Bristol"), BMC, Company and Shareholders (the
"Merger Agreement"). Nothing herein shall in any manner be construed
to limit the duties and obligations that you have as a director and
an officer of ARS or the Company under applicable State law or the
applicable articles of incorporation or bylaws of ARS or the
Company.
4. Compensation and Benefits
(a) Salary. As remuneration for your services and provided you
remain employed and are fulfilling your duties hereunder, during the
Term the Company will pay you, in accordance with Company policies,
a gross salary calculated at the rate of One Hundred Thirty Thousand
Dollars ($130,000) per year, payable in arrears in substantially
equal installments on the Company's regular pay days, less any
withholding of tax or any amounts required by law to be withheld and
less any payments for fringe benefits or payments and contributions
as may otherwise be
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authorized by you or required under employee benefit plans
maintained from time to time by the Company.
(b) Bonus. With respect to each year of the Term, and provided you
have been employed during the entire year, you shall be eligible to
earn an annual bonus, payable in arrears, determined as of the end
of ARS's fiscal year, in an amount equal to Ten percent (10%) of
ARS's(1) pretax profits for each year which are in excess of Three
Hundred Eighty-Four Thousand Six Hundred Six Dollars and Seventy-Two
Cents ($384,606.72) (the "Baseline"). For this purpose, pre-tax
profits shall be calculated in accordance with generally accepted
accounting principles and reduced for (i) no interest expense paid
by ARS with respect to any loans or advances, including any
inter-company interest expense, other than (A) interest expense on
indebtedness incurred by ARS in the ordinary course of business, and
(B) interest expense on indebtedness incurred by ARS in connection
with acquisitions by ARS, which acquisitions are approved by
Executive; and (ii) any management fees paid to or charged by
Bristol (not to exceed 5% of ARS's annual net revenues), but shall
not be reduced by bonuses paid pursuant to this Agreement or the
Employment Agreements with any of the other Shareholders (as defined
in the Merger Agreement) and shall not be reduced by any lease rate
escalations paid to the lessors under the lease referenced in
Section 6.2 of the Merger Agreement.
5. Expenses.
The Company will reimburse you for all reasonable, ordinary
and necessary travel (except normal travel between home and office)
and other out-of-pocket expenses incurred by you for the purpose of
and in connection with performing your duties, subject to proper
submission of substantiating documentation, and subject further to
all Company policies respecting expense reimbursement, as the same
may vary from time to time.
6. Employee Benefit Programs.
(a) Benefit Programs. You shall be entitled to participate in or
receive benefits under all benefit programs, arrangements or
perquisites which the Company maintains generally from time to time
for its executive employees.
(b) Vacation. You shall be entitled to four (4) weeks of paid
vacation per year during the Term.
- --------
(1) See Attachment 1
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7. Consequences of Termination of Employment.
(a) Death/Disability. In the event of your death during the Term,
your employment hereunder shall be terminated as of the date of your
death and your designated beneficiary, or, in the absence of such
designation, your estate or other legal representative
(collectively, the "Estate") shall be paid your unpaid salary
through the date occurring on the earlier of three (3) months from
the date of death or the expiration of the Term of this Agreement.
Other death benefits that do not overlap the foregoing will be
determined in accordance with the terms of the Company's benefits
programs and plans maintained from time to time by the Company for
its executive employees. In the event you are mentally or physically
disabled for a period of four or more consecutive months
("disability" being defined as a mental or physical impairment or
condition which substantially and effectively prevents you from
performing your duties hereunder), or for any 120 days during any
twelve month period during the Term, your employment may be
terminated on written notice to you. In such event, your salary
shall be continued for a period of two (2) months following the
effective date of termination. Other than the salary set forth in
this subsection (a), you or your estate shall not be entitled to any
other payment or benefit by reason of your death or disability.
(b) Termination of Employment by the Company for Cause. The Company
shall have the right to terminate your employment and this Agreement
for Cause and nothing herein, or in any other agreement between you
and the Company or ARS shall prevent the Company from terminating
your employment for Cause. In the event you are terminated for
Cause, you shall be paid your salary through the date of termination
and shall be entitled to those rights and benefits you may have
earned through the date of termination in respect of benefits under
any employee benefit plans or programs of the Company maintained
from time to time by the Company for its executive employees as
determined in accordance with the terms of such plans or programs,
as the case may be.
(c) Cause Defined. The Company shall have "cause" to terminate your
employment hereunder prior to the end of the original Term hereof
for:
(i) gross negligence, willful misconduct, or breach of
fiduciary duty to the Company,
(ii) failure by the Company to achieve one-half (1/2) of the
Baseline for any two (2) consecutive quarters during the Term,
(iii) drug or alcohol use or addiction which materially
interferes with the performance of your duties at any time,
(iv) illegal, immoral or dishonest conduct,
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<PAGE> 5
(v) your breach or failure to perform any of the provisions of
this Agreement, the Merger Agreement, ancillary or related
agreements thereto, or any present or future agreement between
you and the Company respecting non-competition or the
ownership or protection of confidential information,
inventions, patents, trademarks, copy-rights or other
intellectual properties,
(vi) your voluntary termination of employment prior to
expiration of the Term.
8. Covenants Regarding Confidential Information and Proprietary Rights.
(a) Confidential Information Defined. As used herein, "Confidential
Information" means all proprietary information, trade secrets and
any non-public information, oral and written, and any document or
media containing such information, concerning the Company or used by
the Company in the operation of its business, including, without
limitation, any of the Company's actual or prospective customers,
suppliers, contractors and co-venturers or concerning any actual or
planned discoveries, inventions, developments, improvements,
technology, know-how, processes, products, services, businesses,
business opportunities, operations, activities or plans of or
belonging to the Company (including, without limitation, technical
formulae and designs, computer hardware and software, databases,
original works of authorship, customer lists, bills of material,
business plans, financial information, trade secrets and other
proprietary information) provided that Confidential Information
shall not include such portion of the aforesaid information which
has become of hereafter becomes public knowledge within the business
equipment industry through no fault of your own.
(b) Confidentiality. It is understood and agreed that prior to and
during the Term you have, and will become aware of, Confidential
Information, the unauthorized disclosure of which may harm the
Company. Accordingly, you agree that, except as expressly authorized
by the Company or as reasonably necessary in order to fulfill your
duties under this Agreement, both during and after the Term, you
will never communicate, divulge or use for the benefit of yourself
or any other person or entity, directly or indirectly, any
Confidential Information discovered, conceived of, or disclosed,
communicated or in any manner obtained by you or coming into your
possession prior to or during the Term. Upon termination of this
Agreement for whatever reason or whenever requested by the Company,
you will promptly deliver to the Company, and shall retain no copies
of, all documents, media, records or other materials containing
Confidential Information which are in your possession or under your
control. Further, you agree that you will not, during your
employment with the Company, improperly use or disclose any
proprietary information or trade secret of any former or concurrent
employer, and that you will not bring onto the premises of the
Company any unpublished
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<PAGE> 6
document or any property belonging to any such former or concurrent
employer unless consented to in writing by such former or concurrent
employer.
(c) The Company. For purposes of this Section 7, the term "Company"
shall include any parent, subsidiary, affiliated company or business
predecessor to the Company.
9. Covenant Not to Compete.
For a period of three (3) years from and after the expiration or
earlier termination of this Agreement, within the states of
Washington, Idaho, Oregon or Northern California (the "Territory")
the Executive will not: (i) directly or indirectly enter into the
employ of, or render any service to, or act in concert with, any
person, partnership, corporation or other business entity (other
than the Company or its Affiliates) engaged in any business or in
the rendering of any service of the type being conducted or rendered
by the Company at any time during the Term (a "Competitive
Business"); or (ii) directly or indirectly engage in any such
Competitive Business on his own account; or (iii) become interested
in any such Competitive Business, directly or indirectly, as an
individual, partner, shareholder, director, officer, principal,
agent, employee or in any other relationship or capacity; provided,
that the purchase of a publicly traded security of a corporation,
partnership or other entity engaged, or which becomes engaged, in
such business or service shall not in itself be deemed violative of
this Agreement so long as Executive does not own, directly or
indirectly, more than 1% of the securities of such corporation,
partnership or other entity. If the final judgment of a court of
competent jurisdiction declares that any term or provision of this
Section 9 is invalid or unenforceable, the parties agree that the
court making the determination of invalidity or unenforceability
shall have the power to reduce the scope, duration, or area of the
term or provision, to delete specific words or phrases, or to place
any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified
after the expiration of the time within which the judgment may be
appealed. Executive agrees that the running of restricted period of
competition shall be tolled for any period during which Executive is
in breach of the covenants set forth in this Section 9.
10. Equitable Relief.
Executive agrees that the Company may not be adequately
compensated by damages for a breach by Executive of any of the
covenants contained in Sections 8 and 9, and agrees that, in the
event of a breach or threatened breach by Executive of any provision
of Section 8 or 9 below, the Company shall be entitled to enforce
the covenants contained in Section 8 or 9 by specific performance
and to enjoin or restrain any such breach or threatened breach
(without the necessity of
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posting a bond or other security in any action initiated for such
relief), but nothing herein shall be construed as prohibiting the
Company from pursuing any remedy available to the Company for such
breach or threatened breach.
11. Notices.
Any notice to be given under this Agreement by either party
shall be in writing and hand delivered (by courier or otherwise) or
mailed via first class mail and by certified or registered mail with
return receipt requested, and addressed to the other party at its
address at the head of this Agreement or at such other address as
such other party shall have given notice to the first party in
accordance with the provisions of this Section.
12. Non-Waiver of Rights.
The failure to enforce, at any time, any of the provisions of
this Agreement or to require, at any time, performance by the other
party of any of the provisions hereof shall in no way be construed
to be a waiver of such provisions or to affect either the validity
of this Agreement, or any part hereof, or the right of either party
thereafter to enforce each and every provision in accordance with
the terms of this Agreement. Any waiver of any provision of this
Agreement shall be valid only if in writing signed by the party so
waiving, and no waiver of a provision hereof in any given instance
shall operate as a waiver of such provision in any other instance or
the waiver of any other provision of this Agreement.
13. Severability.
The invalidity or inability to enforce any particular
provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if
such invalid or unenforceable provision were omitted.
14. Assignment.
This Agreement shall be binding upon, and shall inure to the
benefit of, you and the Company and their respective executors,
administrators, heirs, successors and permitted assigns. This
Agreement shall not be assignable by you, in whole, or in part,
without the written consent of the Company.
15. Governing Law.
The validity, interpretation and construction hereof shall be
governed by and construed and enforced in accordance with the laws
of the State of Washington, excepting any rule thereof which would
refer such matters to the law of any other jurisdiction.
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16. Miscellaneous.
This Agreement embodies the entire agreement of the parties
with respect to the matters within its scope and supersedes any
prior oral or written agreements and understandings of the parties
respecting same. This Agreement shall not be modifiable except in
writing signed by both parties hereto, and the provisions hereof
shall override any contrary or conflicting provisions in any
acknowledgment, invoice or other document unilaterally issued by
either party. The headings contained in this Agreement have been
inserted solely for convenience of reference and shall be of no
force or effect in the construction or interpretation of the
provisions of this Agreement. This Agreement may be executed in
several counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
The remedies available to the Company for breach of this Agreement
shall be cumulative, and nothing herein shall prevent the Company
from pursuing any such remedies, whether inconsistent or otherwise.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
on its behalf by its duly authorized representative, and you have signed this
Agreement, as of the day and year first above written.
------------------------------------------
Michael J. Pollastro
Automated Register Systems, Inc., a
Delaware corporation
By:
--------------------------------------
Its:
--------------------------------------
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ATTACHMENT 1
In addition to the specified percentage bonus to be paid to You pursuant
to Subsection 4(b) hereunder, You shall be entitled to receive each year, in the
discretion of President of ARS, an addition bonus payment; provided, however,
that the sum of all bonuses (both fixed and discretionary) to be paid to You and
the other Shareholders, as defined in the Merger Agreement, shall not exceed
Twenty-Five Percent (25%) of ARS's pretax profits (as calculated pursuant to
Subsection 4(b) hereof) in excess of the Baseline.
<PAGE> 1
EXHIBIT 10.28
EMPLOYMENT AGREEMENT
(GARY T. POLLASTRO)
This Employment Agreement (the "Agreement') is made to be effective as of
the 1st day of January, 1997 and is by and between Gary Pollastro, whose address
is 5047 84th Avenue SE, Mercer Island, Washington 98040 ("You" or the
"Executive") and Automated Register Systems, Inc., a Delaware corporation with
its principal office at 1437 South Jackson Street, Seattle, Washington 98144
(the "Company" or "ARS"). Where appropriate in the context, the term "Company"
shall also mean and include the Company and its parents, subsidiaries and
affiliates.
In consideration of the mutual agreements and promises hereinafter set
forth and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company agrees to employ you and you agree
to serve as an employee of the Company upon the following terms and conditions:
1. Condition Precedent.
This Agreement and the parties' respective rights and
obligations set forth herein are conditioned in their entirety on
the filing of Certificates of Merger in the States of Delaware and
Washington by Company and Bristol Merger Corporation ("BMC"),
pursuant to which Company shall merge into BMC in a tax free
reorganization pursuant to Section 368(a)(2)(D) of the Internal
Revenue Code of 1986, as amended.
2. Term.
Subject to the other terms and conditions of this Agreement,
the initial term of your employment hereunder (the "Term") will be
for the three (3) year period commencing January 1, 1997 and ending
December 31, 1999 unless earlier terminated in accordance with this
Agreement. Notwithstanding the foregoing, your obligations under
Section 8(b) and 9 below shall survive the expiration or termination
of this Agreement.
3. Position; Duties; etc.
(a) Your title shall be Vice President and it shall be your
responsibility to perform all functions generally appropriate to
such a position at all times in a lawful and professional manner
which reflects positively upon the Company and serves its best
interests, and such other reasonable duties as may be assigned by
the Company's Board of Directors or the Company's President. In this
capacity, you shall report to the Company's President. You shall
perform substantially all of your
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duties, at the Company's sole and exclusive discretion, at the ARS
office located as set forth above. The Company reserves the right to
change your duties and your position from time to time, and to
require you to relocate, as may be necessary or appropriate and in
the best interests of the Company.
(b) You will, to the best of your abilities, effectively,
diligently, in good faith and with integrity, devote your full time,
attention, energy and skill to the fulfillment of your duties
hereunder and shall at all times be promotive and supportive of the
Company, its products, services, management and other employees, at
a level of competence and effectiveness consistent with the position
occupied.
(c) You will be subject to and will comply with such policies and
procedures as are from time to time established for employees of the
Company generally, except to the extent that such policies or
procedures are inconsistent with the express terms of this
Agreement, and in those instances, the terms of this Agreement shall
control.
(d) You shall carefully monitor all aspects of the business,
properties and affairs of ARS. Without limiting the generality of
the foregoing, it shall be your duty to notify the Company promptly
upon becoming aware of any matter which constitutes or which might
constitute a breach of any representation, warranty or covenant of
Company and/or Shareholders (as such terms are defined in the Merger
Agreement) under that certain Agreement and Plan of Merger, dated
December 12, 1996 by and among Bristol Technology Systems, Inc., a
Delaware corporation ("Bristol"), BMC, Company and Shareholders (the
"Merger Agreement"). Nothing herein shall in any manner be construed
to limit the duties and obligations that you have as an officer of
ARS or the Company under applicable State law or the applicable
articles of incorporation or bylaws of ARS or the Company.
4. Compensation and Benefits
(a) Salary. As remuneration for your services and provided you
remain employed and are fulfilling your duties hereunder, during the
Term the Company will pay you, in accordance with Company policies,
a gross salary calculated at the rate of Eighty-Five Thousand
Dollars ($85,000) per year, payable in arrears in substantially
equal installments on the Company's regular pay days, less any
withholding of tax or any amounts required by law to be withheld and
less any payments for fringe benefits or payments and contributions
as may otherwise be authorized by you or required under employee
benefit plans maintained from time to time by the Company.
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<PAGE> 3
(b) Bonus. With respect to each year of the Term, and provided you
have been employed during the entire year, you shall be eligible to
earn an annual bonus, payable in arrears, determined as of the end
of ARS's fiscal year, in an amount equal to Six and 25/100 percent
(6 1/4%) of ARS's pretax(1) profits for each year which are in
excess of Three Hundred Eighty-Four Thousand Six Hundred Six Dollars
and Seventy-Two Cents ($384,606.72) (the "Baseline"). For this
purpose, pre-tax profits shall be calculated in accordance with
generally accepted accounting principles and reduced for (i) no
interest expense paid by ARS with respect to any loans or advances,
including any inter-company interest expense, other than (A)
interest expense on indebtedness incurred by ARS in the ordinary
course of business, and (B) interest expense on indebtedness
incurred by ARS in connection with acquisitions by ARS, which
acquisitions are approved by the President of ARS; and (ii) any
management fees paid to or charged by Bristol (not to exceed 5% of
ARS's annual net revenues), but shall not be reduced by bonuses paid
pursuant to this Agreement or the Employment Agreements with any of
the other Shareholders (as defined in the Merger Agreement) and
shall not be reduced by any lease rate escalations paid to the
lessors under the lease referenced in Section 6.2 of the Merger
Agreement.
(c) Sales Incentive Plan.
You shall be entitled to commissions in accordance with the
terms of the Sales Incentive Plan attached hereto as Exhibit "A."
5. Expenses.
The Company will reimburse you for all reasonable, ordinary
and necessary travel (except normal travel between home and office)
and other out-of-pocket expenses incurred by you for the purpose of
and in connection with performing your duties, subject to proper
submission of substantiating documentation, and subject further to
all Company policies respecting expense reimbursement, as the same
may vary from time to time.
6. Employee Benefit Programs.
(a) Benefit Programs. You shall be entitled to participate in or
receive benefits under all benefit programs, arrangements or
perquisites which the Company maintains generally from time to time
for its executive employees.
(b) Vacation. You shall be entitled to four (4) weeks of paid
vacation per year during the Term.
- --------
(1) See Attachment 1
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<PAGE> 4
7. Consequences of Termination of Employment.
(a) Death/Disability. In the event of your death during the Term,
your employment hereunder shall be terminated as of the date of your
death and your designated beneficiary, or, in the absence of such
designation, your estate or other legal representative
(collectively, the "Estate") shall be paid your unpaid salary
through the date occurring on the earlier of three (3) months from
the date of death or the expiration of the Term of this Agreement.
Other death benefits that do not overlap the foregoing will be
determined in accordance with the terms of the Company's benefits
programs and plans maintained from time to time by the Company for
its executive employees. In the event you are mentally or physically
disabled for a period of four or more consecutive months
("disability" being defined as a mental or physical impairment or
condition which substantially and effectively prevents you from
performing your duties hereunder), or for any 120 days during any
twelve month period during the Term, your employment may be
terminated on written notice to you. In such event, your salary
shall be continued for a period of two (2) months following the
effective date of termination. Other than the salary set forth in
this subsection (a), you or your estate shall not be entitled to any
other payment or benefit by reason of your death or disability.
(b) Termination of Employment by the Company for Cause. The Company
shall have the right to terminate your employment and this Agreement
for Cause and nothing herein, or in any other agreement between you
and the Company or ARS shall prevent the Company from terminating
your employment for Cause. In the event you are terminated for
Cause, you shall be paid your salary through the date of termination
and shall be entitled to those rights and benefits you may have
earned through the date of termination in respect of benefits under
any employee benefit plans or programs of the Company maintained
from time to time by the Company for its executive employees as
determined in accordance with the terms of such plans or programs,
as the case may be.
(c) Cause Defined. The Company shall have "cause" to terminate your
employment hereunder prior to the end of the original Term hereof
for:
(i) gross negligence, willful misconduct, or breach of
fiduciary duty to the Company,
(ii) failure by the Company to achieve one-half (1/2) of the
Baseline for any two (2) consecutive quarters during the Term,
(iii) drug or alcohol use or addiction which materially
interferes with the performance of your duties at any time,
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<PAGE> 5
(iv) illegal, immoral or dishonest conduct,
(v) your breach or failure to perform any of the provisions of
this Agreement, the Merger Agreement, ancillary or related
agreements thereto, or any present or future agreement between
you and the Company respecting non-competition or the
ownership or protection of confidential information,
inventions, patents, trademarks, copy-rights or other
intellectual properties,
(vi) your voluntary termination of employment prior to
expiration of the Term.
8. Covenants Regarding Confidential Information and Proprietary Rights.
(a) Confidential Information Defined. As used herein, "Confidential
Information" means all proprietary information, trade secrets and
any non-public information, oral and written, and any document or
media containing such information, concerning the Company or used by
the Company in the operation of its business, including, without
limitation, any of the Company's actual or prospective customers,
suppliers, contractors and co-venturers or concerning any actual or
planned discoveries, inventions, developments, improvements,
technology, know-how, processes, products, services, businesses,
business opportunities, operations, activities or plans of or
belonging to the Company (including, without limitation, technical
formulae and designs, computer hardware and software, databases,
original works of authorship, customer lists, bills of material,
business plans, financial information, trade secrets and other
proprietary information) provided that Confidential Information
shall not include such portion of the aforesaid information which
has become of hereafter becomes public knowledge within the business
equipment industry through no fault of your own.
(b) Confidentiality. It is understood and agreed that prior to and
during the Term you have, and will become aware of, Confidential
Information, the unauthorized disclosure of which may harm the
Company. Accordingly, you agree that, except as expressly authorized
by the Company or as reasonably necessary in order to fulfill your
duties under this Agreement, both during and after the Term, you
will never communicate, divulge or use for the benefit of yourself
or any other person or entity, directly or indirectly, any
Confidential Information discovered, conceived of, or disclosed,
communicated or in any manner obtained by you or coming into your
possession prior to or during the Term. Upon termination of this
Agreement for whatever reason or whenever requested by the Company,
you will promptly deliver to the Company, and shall retain no copies
of, all documents, media, records or other materials containing
Confidential Information which are in your possession or under your
control. Further, you agree that you will not, during your
employment with the Company, improperly use or disclose any
proprietary information or trade secret of any former or concurrent
employer, and
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<PAGE> 6
that you will not bring onto the premises of the Company any
unpublished document or any property belonging to any such former or
concurrent employer unless consented to in writing by such former or
concurrent employer.
(c) The Company. For purposes of this Section 8, the term "Company"
shall include any parent, subsidiary, affiliated company or business
predecessor to the Company.
9. Covenant Not to Compete.
For a period of one (1) year from and after the expiration or
earlier termination of this Agreement, within the states of
Washington, Idaho, Oregon or Northern California (the "Territory")
the Executive will not: (i) directly or indirectly enter into the
employ of, or render any service to, or act in concert with, any
person, partnership, corporation or other business entity (other
than the Company or its Affiliates) engaged in any business or in
the rendering of any service of the type being conducted or rendered
by the Company at any time during the Term (a "Competitive
Business"); or (ii) directly or indirectly engage in any such
Competitive Business on his own account; or (iii) become interested
in any such Competitive Business, directly or indirectly, as an
individual, partner, shareholder, director, officer, principal,
agent, employee or in any other relationship or capacity; provided,
that the purchase of a publicly traded security of a corporation,
partnership or other entity engaged, or which becomes engaged, in
such business or service shall not in itself be deemed violative of
this Agreement so long as Executive does not own, directly or
indirectly, more than 1% of the securities of such corporation,
partnership or other entity. If the final judgment of a court of
competent jurisdiction declares that any term or provision of this
Section 9 is invalid or unenforceable, the parties agree that the
court making the determination of invalidity or unenforceability
shall have the power to reduce the scope, duration, or area of the
term or provision, to delete specific words or phrases, or to place
any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified
after the expiration of the time within which the judgment may be
appealed. Executive agrees that the running of restricted period of
competition shall be tolled for any period during which Executive is
in breach of the covenants set forth in this Section 9.
10. Equitable Relief.
Executive agrees that the Company may not be adequately
compensated by damages for a breach by Executive of any of the
covenants contained in Sections 8 and 9, and agrees that, in the
event of a breach or threatened breach by Executive of any provision
of Section 8 or 9 below, the Company shall be entitled to enforce
the covenants contained in Section 8 or 9 by specific performance
and
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to enjoin or restrain any such breach or threatened breach (without
the necessity of posting a bond or other security in any action
initiated for such relief), but nothing herein shall be construed as
prohibiting the Company from pursuing any remedy available to the
Company for such breach or threatened breach.
11. Notices.
Any notice to be given under this Agreement by either party
shall be in writing and hand delivered (by courier or otherwise) or
mailed via first class mail and by certified or registered mail with
return receipt requested, and addressed to the other party at its
address at the head of this Agreement or at such other address as
such other party shall have given notice to the first party in
accordance with the provisions of this Section.
12. Non-Waiver of Rights.
The failure to enforce, at any time, any of the provisions of
this Agreement or to require, at any time, performance by the other
party of any of the provisions hereof shall in no way be construed
to be a waiver of such provisions or to affect either the validity
of this Agreement, or any part hereof, or the right of either party
thereafter to enforce each and every provision in accordance with
the terms of this Agreement. Any waiver of any provision of this
Agreement shall be valid only if in writing signed by the party so
waiving, and no waiver of a provision hereof in any given instance
shall operate as a waiver of such provision in any other instance or
the waiver of any other provision of this Agreement.
13. Severability.
The invalidity or inability to enforce any particular
provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if
such invalid or unenforceable provision were omitted.
14. Assignment.
This Agreement shall be binding upon, and shall inure to the
benefit of, you and the Company and their respective executors,
administrators, heirs, successors and permitted assigns. This
Agreement shall not be assignable by you, in whole, or in part,
without the written consent of the Company.
15. Governing Law.
The validity, interpretation and construction hereof shall be
governed by and construed and enforced in accordance with the laws
of the State of Washington, excepting any rule thereof which would
refer such matters to the law of any other jurisdiction.
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<PAGE> 8
16. Miscellaneous.
This Agreement embodies the entire agreement of the parties
with respect to the matters within its scope and supersedes any
prior oral or written agreements and understandings of the parties
respecting same. This Agreement shall not be modifiable except in
writing signed by both parties hereto, and the provisions hereof
shall override any contrary or conflicting provisions in any
acknowledgment, invoice or other document unilaterally issued by
either party. The headings contained in this Agreement have been
inserted solely for convenience of reference and shall be of no
force or effect in the construction or interpretation of the
provisions of this Agreement. This Agreement may be executed in
several counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
The remedies available to the Company for breach of this Agreement
shall be cumulative, and nothing herein shall prevent the Company
from pursuing any such remedies, whether inconsistent or otherwise.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
on its behalf by its duly authorized representative, and you have signed this
Agreement, as of the day and year first above written.
------------------------------------------
Gary T. Pollastro
Automated Register Systems, Inc., a
Delaware corporation
By:
--------------------------------------
Its:
--------------------------------------
8
<PAGE> 9
EXHIBIT "A"
SALES INCENTIVE PLAN
This Sales Incentive Plan is for fiscal year 1997 only. The terms and
conditions of such plan for fiscal years 1998 and 1999 shall be negotiated by
You and ARS Board of Directors in good faith and agreed to by December 31 of the
preceding year.
1. Sales Commission. You shall be entitled to Five Thousand Dollars
($5,000), adjusted for Over/Under Achievement as set forth in paragraph 2 below
for each quarter in 1997 in which you achieve your assigned Targeted Sales. Such
Targeted Sales shall be assigned by ARS' Board of Directors by not later than
January 31, 1997. Payment to be made by ARS within thirty (30) days following
the completion of such quarter.
2. Over/Under Achievement.
(a) You shall be entitled to a sales commission for each quarter of
1997, equal to Five Thousand Dollars ($5,000) times a fraction, the numerator of
which is your actual sales achievement for such quarter, and the denominator for
which is your Targeted Sales for such quarter.
(b) At the end of fiscal year 1997, Your actual sales achievement
for the year will be compared to Your Targeted Sales for that year. You shall be
entitled to an additional sales commission equal to Twenty Thousand Dollars
($20,000) times a fraction, the numerator of which is your actual sales
achievement for fiscal year 1997, and the denominator of which is your Targeted
Sales for fiscal year 1997, which amount shall then be reduced by all
commissions previously paid to you pursuant to subsection (a), above.
<PAGE> 10
ATTACHMENT 1
In addition to the specified percentage bonus to be paid to You pursuant
to Subsection 4(b) hereunder, You shall be entitled to receive each year, in the
discretion of President of ARS, an addition bonus payment; provided, however,
that the sum of all bonuses (both fixed and discretionary) to be paid to You and
the other Shareholders, as defined in the Merger Agreement, shall not exceed
Twenty-Five Percent (25%) of ARS's pretax profits (as calculated pursuant to
Subsection 4(b) hereof) in excess of the Baseline.
<PAGE> 1
EXHIBIT 10.29
EMPLOYMENT AGREEMENT
(JOHN E. POLLASTRO)
This Employment Agreement (the "Agreement") is made to be effective as of
the 1st day of January , 1997 and is by and between John Pollastro, whose
address is 4213 Lakeridge Drive East, Sumner, Washington 98390 ("You" or the
"Executive") and Automated Register Systems, Inc., a Delaware corporation with
its principal office at 1437 South Jackson Street, Seattle, Washington 98144
(the "Company" or "ARS"). Where appropriate in the context, the term "Company"
shall also mean and include the Company and its parents, subsidiaries and
affiliates.
In consideration of the mutual agreements and promises hereinafter set
forth and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company agrees to employ you and you agree
to serve as an employee of the Company upon the following terms and conditions:
1. Condition Precedent.
This Agreement and the parties' respective rights and
obligations set forth herein are conditioned in their entirety on
the filing of Certificates of Merger in the States of Delaware and
Washington by Company and Bristol Merger Corporation ("BMC"),
pursuant to which Company shall merge into BMC in a tax free
reorganization pursuant to Section 368(a)(2)(D) of the Internal
Revenue Code of 1986, as amended.
2. Term.
Subject to the other terms and conditions of this Agreement,
the initial term of your employment hereunder (the "Term") will be
for the three (3) year period commencing January 1, 1997 and ending
December 31, 1999, unless earlier terminated in accordance with this
Agreement. Notwithstanding the foregoing, your obligations under
Section 8(b) and 9 below shall survive the expiration or termination
of this Agreement.
3. Position; Duties; etc.
(a) Your title shall be Vice President and it shall be your
responsibility to perform all functions generally appropriate to
such a position at all times in a lawful and professional manner
which reflects positively upon the Company and serves its best
interests, and such other reasonable duties as may be assigned by
the Company's Board of Directors or the Company's President. In this
capacity, you shall report to the Company's President. You shall
perform substantially all of your
1
<PAGE> 2
duties, at the Company's sole and exclusive discretion, at the ARS
office located as set forth above. The Company reserves the right to
change your duties and your position from time to time, and to
require you to relocate, as may be necessary or appropriate and in
the best interests of the Company.
(b) You will, to the best of your abilities, effectively,
diligently, in good faith and with integrity, devote your full time,
attention, energy and skill to the fulfillment of your duties
hereunder and shall at all times be promotive and supportive of the
Company, its products, services, management and other employees, at
a level of competence and effectiveness consistent with the position
occupied.
(c) You will be subject to and will comply with such policies and
procedures as are from time to time established for employees of the
Company generally, except to the extent that such policies or
procedures are inconsistent with the express terms of this
Agreement, and in those instances, the terms of this Agreement shall
control.
(d) You shall carefully monitor all aspects of the business,
properties and affairs of ARS. Without limiting the generality of
the foregoing, it shall be your duty to notify the Company promptly
upon becoming aware of any matter which constitutes or which might
constitute a breach of any representation, warranty or covenant of
Company and/or Shareholders (as such terms are defined in the Merger
Agreement) under that certain Agreement and Plan of Merger, dated
December 12, 1996 by and among Bristol Technology Systems, Inc., a
Delaware corporation ("Bristol"), BMC, Company and Shareholders (the
"Merger Agreement"). Nothing herein shall in any manner be construed
to limit the duties and obligations that you have as an officer of
ARS or the Company under applicable State law or the applicable
articles of incorporation or bylaws of ARS or the Company.
4. Compensation and Benefits
(a) Salary. As remuneration for your services and provided you
remain employed and are fulfilling your duties hereunder, during the
Term the Company will pay you, in accordance with Company policies,
a gross salary calculated at the rate of Eighty Thousand Dollars
($80,000) per year, payable in arrears in substantially equal
installments on the Company's regular pay days, less any withholding
of tax or any amounts required by law to be withheld and less any
payments for fringe benefits or payments and contributions as may
otherwise be authorized by you or required under employee benefit
plans maintained from time to time by the Company.
(b) Bonus. With respect to each year of the Term, and provided you
have been employed during the entire year, you shall be eligible to
earn an annual bonus,
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<PAGE> 3
payable in arrears, determined as of the end of ARS's fiscal year,
in an amount equal to Three and 75/100 percent (3.75%) of ARS's(1)
pretax profits for each year which are in excess of Three Hundred
Eighty-Four Thousand Six Hundred Six Dollars and Seventy-Two Cents
($384.606.72) (the "Baseline"). For this purpose, pre-tax profits
shall be calculated in accordance with generally accepted accounting
principles and reduced for (i) no interest expense paid by ARS with
respect to any loans or advances, including any inter-company
interest expense, other than (A) interest expense on indebtedness
incurred by ARS in the ordinary course of business, and (B) interest
expense on indebtedness incurred by ARS in connection with
acquisitions by ARS, which acquisitions are approved by the
President of ARS; and (ii) any management fees paid to or charged by
Bristol (not to exceed 5% of ARS's annual net revenues), but shall
not be reduced by bonuses paid pursuant to this Agreement or the
Employment Agreements with any of the other Shareholders (as defined
in the Merger Agreement) and shall not be reduced by any lease rate
escalations paid to the lessors under the lease referenced in
Section 6.2 of the Merger Agreement.
(c) Sales and Incentive Plan. You shall be entitled to commissions
in accordance with the Sales Incentive Plan attached hereto as
Exhibit "A."
5. Expenses.
The Company will reimburse you for all reasonable, ordinary
and necessary travel (except normal travel between home and office)
and other out-of-pocket expenses incurred by you for the purpose of
and in connection with performing your duties, subject to proper
submission of substantiating documentation, and subject further to
all Company policies respecting expense reimbursement, as the same
may vary from time to time.
6. Employee Benefit Programs.
(a) Benefit Programs. You shall be entitled to participate in or
receive benefits under all benefit programs, arrangements or
perquisites which the Company maintains generally from time to time
for its executive employees.
(b) Vacation. You shall be entitled to four (4) weeks of paid
vacation per year during the Term.
7. Consequences of Termination of Employment.
(a) Death/Disability. In the event of your death during the Term,
your employment hereunder shall be terminated as of the date of your
death and your designated beneficiary, or, in the absence of such
designation, your estate or other
- --------
(1) See Attachment 1
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<PAGE> 4
legal representative (collectively, the "Estate") shall be paid your
unpaid salary through the date occurring on the earlier of three (3)
months from the date of death or the expiration of the Term of this
Agreement. Other death benefits that do not overlap the foregoing
will be determined in accordance with the terms of the Company's
benefits programs and plans maintained from time to time by the
Company for its executive employees. In the event you are mentally
or physically disabled for a period of four or more consecutive
months ("disability" being defined as a mental or physical
impairment or condition which substantially and effectively prevents
you from performing your duties hereunder), or for any 120 days
during any twelve month period during the Term, your employment may
be terminated on written notice to you. In such event, your salary
shall be continued for a period of two (2) months following the
effective date of termination. Other than the salary set forth in
this subsection (a), you or your estate shall not be entitled to any
other payment or benefit by reason of your death or disability.
(b) Termination of Employment by the Company for Cause. The Company
shall have the right to terminate your employment and this Agreement
for Cause and nothing herein, or in any other agreement between you
and the Company or ARS shall prevent the Company from terminating
your employment for Cause. In the event you are terminated for
Cause, you shall be paid your salary through the date of termination
and shall be entitled to those rights and benefits you may have
earned through the date of termination in respect of benefits under
any employee benefit plans or programs of the Company maintained
from time to time by the Company for its executive employees as
determined in accordance with the terms of such plans or programs,
as the case may be.
(c) Cause Defined. The Company shall have "cause" to terminate
your employment hereunder prior to the end of the original Term
hereof for:
(i) gross negligence, willful misconduct, or breach of
fiduciary duty to the Company,
(ii) failure by the Company to achieve one-half (1/2) of the
Baseline for any two (2) consecutive quarters during the Term,
(iii) drug or alcohol use or addiction which materially
interferes with the performance of your duties at any time,
(iv) illegal, immoral or dishonest conduct,
(v) your breach or failure to perform any of the provisions of
this Agreement, the Merger Agreement, ancillary or related
agreements thereto, or any present or future agreement between
you and the Company respecting non-competition or the
ownership or protection of confidential
4
<PAGE> 5
information, inventions, patents, trademarks, copy-rights or
other intellectual properties,
(vi) your voluntary termination of employment prior to
expiration of the Term.
8. Covenants Regarding Confidential Information and Proprietary Rights.
(a) Confidential Information Defined. As used herein, "Confidential
Information" means all proprietary information, trade secrets and
any non-public information, oral and written, and any document or
media containing such information, concerning the Company or used by
the Company in the operation of its business, including, without
limitation, any of the Company's actual or prospective customers,
suppliers, contractors and co-venturers or concerning any actual or
planned discoveries, inventions, developments, improvements,
technology, know-how, processes, products, services, businesses,
business opportunities, operations, activities or plans of or
belonging to the Company (including, without limitation, technical
formulae and designs, computer hardware and software, databases,
original works of authorship, customer lists, bills of material,
business plans, financial information, trade secrets and other
proprietary information) provided that Confidential Information
shall not include such portion of the aforesaid information which
has become of hereafter becomes public knowledge within the business
equipment industry through no fault of your own.
(b) Confidentiality. It is understood and agreed that prior to and
during the Term you have, and will become aware of, Confidential
Information, the unauthorized disclosure of which may harm the
Company. Accordingly, you agree that, except as expressly authorized
by the Company or as reasonably necessary in order to fulfill your
duties under this Agreement, both during and after the Term, you
will never communicate, divulge or use for the benefit of yourself
or any other person or entity, directly or indirectly, any
Confidential Information discovered, conceived of, or disclosed,
communicated or in any manner obtained by you or coming into your
possession prior to or during the Term. Upon termination of this
Agreement for whatever reason or whenever requested by the Company,
you will promptly deliver to the Company, and shall retain no copies
of, all documents, media, records or other materials containing
Confidential Information which are in your possession or under your
control. Further, you agree that you will not, during your
employment with the Company, improperly use or disclose any
proprietary information or trade secret of any former or concurrent
employer, and that you will not bring onto the premises of the
Company any unpublished document or any property belonging to any
such former or concurrent employer unless consented to in writing by
such former or concurrent employer.
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<PAGE> 6
(c) The Company. For purposes of this Section 8, the term "Company"
shall include any parent, subsidiary, affiliated company or business
predecessor to the Company.
9. Covenant Not to Compete.
For a period of one (1) year from and after the expiration or
earlier termination of this Agreement, within the states of
Washington, Idaho, Oregon or Northern California (the "Territory")
the Executive will not: (i) directly or indirectly enter into the
employ of, or render any service to, or act in concert with, any
person, partnership, corporation or other business entity (other
than the Company or its Affiliates) engaged in any business or in
the rendering of any service of the type being conducted or rendered
by the Company at any time during the Term (a "Competitive
Business"); or (ii) directly or indirectly engage in any such
Competitive Business on his own account; or (iii) become interested
in any such Competitive Business, directly or indirectly, as an
individual, partner, shareholder, director, officer, principal,
agent, employee or in any other relationship or capacity; provided,
that the purchase of a publicly traded security of a corporation,
partnership or other entity engaged, or which becomes engaged, in
such business or service shall not in itself be deemed violative of
this Agreement so long as Executive does not own, directly or
indirectly, more than 1% of the securities of such corporation,
partnership or other entity. If the final judgment of a court of
competent jurisdiction declares that any term or provision of this
Section 9 is invalid or unenforceable, the parties agree that the
court making the determination of invalidity or unenforceability
shall have the power to reduce the scope, duration, or area of the
term or provision, to delete specific words or phrases, or to place
any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified
after the expiration of the time within which the judgment may be
appealed. Executive agrees that the running of restricted period of
competition shall be tolled for any period during which Executive is
in breach of the covenants set forth in this Section 9.
10. Equitable Relief.
Executive agrees that the Company may not be adequately
compensated by damages for a breach by Executive of any of the
covenants contained in Sections 8 and 9, and agrees that, in the
event of a breach or threatened breach by Executive of any provision
of Section 8 or 9 below, the Company shall be entitled to enforce
the covenants contained in Section 8 or 9 by specific performance
and to enjoin or restrain any such breach or threatened breach
(without the necessity of posting a bond or other security in any
action initiated for such relief), but nothing herein shall be
construed as prohibiting the Company from pursuing any remedy
available to the Company for such breach or threatened breach.
6
<PAGE> 7
11. Notices.
Any notice to be given under this Agreement by either party
shall be in writing and hand delivered (by courier or otherwise) or
mailed via first class mail and by certified or registered mail with
return receipt requested, and addressed to the other party at its
address at the head of this Agreement or at such other address as
such other party shall have given notice to the first party in
accordance with the provisions of this Section.
12. Non-Waiver of Rights.
The failure to enforce, at any time, any of the provisions of
this Agreement or to require, at any time, performance by the other
party of any of the provisions hereof shall in no way be construed
to be a waiver of such provisions or to affect either the validity
of this Agreement, or any part hereof, or the right of either party
thereafter to enforce each and every provision in accordance with
the terms of this Agreement. Any waiver of any provision of this
Agreement shall be valid only if in writing signed by the party so
waiving, and no waiver of a provision hereof in any given instance
shall operate as a waiver of such provision in any other instance or
the waiver of any other provision of this Agreement.
13. Severability.
The invalidity or inability to enforce any particular
provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if
such invalid or unenforceable provision were omitted.
14. Assignment.
This Agreement shall be binding upon, and shall inure to the
benefit of, you and the Company and their respective executors,
administrators, heirs, successors and permitted assigns. This
Agreement shall not be assignable by you, in whole, or in part,
without the written consent of the Company.
15. Governing Law.
The validity, interpretation and construction hereof shall be
governed by and construed and enforced in accordance with the laws
of the State of Washington, excepting any rule thereof which would
refer such matters to the law of any other jurisdiction.
7
<PAGE> 8
16. Miscellaneous.
This Agreement embodies the entire agreement of the parties
with respect to the matters within its scope and supersedes any
prior oral or written agreements and understandings of the parties
respecting same. This Agreement shall not be modifiable except in
writing signed by both parties hereto, and the provisions hereof
shall override any contrary or conflicting provisions in any
acknowledgment, invoice or other document unilaterally issued by
either party. The headings contained in this Agreement have been
inserted solely for convenience of reference and shall be of no
force or effect in the construction or interpretation of the
provisions of this Agreement. This Agreement may be executed in
several counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
The remedies available to the Company for breach of this Agreement
shall be cumulative, and nothing herein shall prevent the Company
from pursuing any such remedies, whether inconsistent or otherwise.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
on its behalf by its duly authorized representative, and you have signed this
Agreement, as of the day and year first above written.
------------------------------------------
John E. Pollastro
Automated Register Systems, Inc., a
Delaware corporation
By:
--------------------------------------
Its:
--------------------------------------
8
<PAGE> 9
EXHIBIT "A"
SALES INCENTIVE PLAN
This Sales Incentive Plan is for fiscal year 1997 only. The terms and
conditions of such plan for fiscal years 1998 and 1999 shall be negotiated by
You and ARS Board of Directors in good faith and agreed to by December 31 of the
preceding year.
1. Sales Commission. You shall be entitled to Five Thousand Dollars
($5,000), adjusted for Over/Under Achievement as set forth in paragraph 2 below
for each quarter in 1997 in which you achieve your assigned Targeted Sales. Such
Targeted Sales shall be assigned by ARS' Board of Directors by not later than
January 31, 1997. Payment to be made by ARS within thirty (30) days following
the completion of such quarter.
2. Over/Under Achievement.
(a) You shall be entitled to a sales commission for each quarter of
1997, equal to Five Thousand Dollars ($5,000) times a fraction, the numerator of
which is your actual sales achievement for such quarter, and the denominator for
which is your Targeted Sales for such quarter.
(b) At the end of fiscal year 1997, Your actual sales achievement
for the year will be compared to Your Targeted Sales for that year. You shall be
entitled to an additional sales commission equal to Twenty Thousand Dollars
($20,000) times a fraction, the numerator of which is your actual sales
achievement for fiscal year 1997, and the denominator of which is your Targeted
Sales for fiscal year 1997, which amount shall then be reduced by all
commissions previously paid to you pursuant to subsection (a), above.
<PAGE> 10
ATTACHMENT 1
In addition to the specified percentage bonus to be paid to You pursuant
to Subsection 4(b) hereunder, You shall be entitled to receive each year, in the
discretion of President of ARS, an addition bonus payment; provided, however,
that the sum of all bonuses (both fixed and discretionary) to be paid to You and
the other Shareholders, as defined in the Merger Agreement, shall not exceed
Twenty-Five Percent (25%) of ARS's pretax profits (as calculated pursuant to
Subsection 4(b) hereof) in excess of the Baseline.
