BRISTOL RETAIL SOLUTIONS, INC.
5000 BIRCH STREET, SUITE 205
NEWPORT BEACH, CALIFORNIA 92660
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 15, 1998
To the Stockholders of Bristol Retail Solutions, Inc.:
The Annual Meeting of Stockholders of Bristol Retail Solutions, Inc., a
Delaware corporation (the "Company"), will be held at the Irvine Marriott Hotel,
18000 Von Karman Avenue, Irvine, California 92616, at 9:00 a.m. Pacific Time,
for the following purposes as more fully described in the accompanying Proxy
Statement:
(1) To elect five (5) directors to serve until the next Annual
Meeting of Stockholders or until their successors are elected and duly qualified
(Proposal 1);
(2) To approve an Amendment to the Company's 1996 Equity
Participation Plan to increase the authorized number of shares of Common Stock
issuable thereunder from 2,450,000 to 3,450,000 (Proposal 2);
(3) To ratify the appointment of Deloitte & Touche LLP as the
Company's independent auditors for the fiscal year ending December 31, 1998
(Proposal 3); and
(4) To transact such other business as may properly come before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 1, 1998
as the record date for the determination of stockholders entitled to notice of
and to vote at the meeting or any postponement and adjournment thereof. The
stock transfer books will not be closed.
The Board of Directors welcomes the personal attendance of stockholders
at the meeting. HOWEVER, PLEASE SIGN AND RETURN THE ENCLOSED PROXY, which you
may revoke at any time prior to its use, WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING. A self-addressed, postage prepaid envelope is enclosed for your
convenience. Your proxy will not be used if you attend the meeting and choose to
vote in person.
By Order of the Board of Directors
Paul Spindler
Secretary
Newport Beach, California
April 27, 1998
<PAGE>
BRISTOL RETAIL SOLUTIONS, INC.
5000 BIRCH STREET, SUITE 205
NEWPORT BEACH, CALIFORNIA 92660
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 15, 1998
9:00 a.m.
SOLICITATION AND REVOCATION OF PROXIES
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Bristol Retail Solutions, Inc., a Delaware corporation (the
"Company"), and the Company will bear the cost of such solicitation.
Solicitation of proxies will be primarily by mail, although some of the
officers, directors and employees of the Company may solicit proxies personally
or by telephone. The Company will also reimburse brokerage houses and other
custodians, nominees or fiduciaries for their expenses in sending proxy
materials to their principals.
The persons named as proxies were designated by the Board of Directors
and are directors of the Company. All properly executed proxies will be voted
(except to the extent that authority to vote has been withheld) and where a
choice has been specified by the stockholder as provided in the proxy it will be
voted in accordance with the specification so made. Proxies submitted without
specification will be voted FOR the election as directors of the nominees
proposed by the Board of Directors, FOR the amendment to the Company's 1996
Equity Participation Plan to increase the authorized number of shares of common
stock of the Company ("Common Stock") issuable thereunder from 2,450,000 to
3,450,000, and FOR the ratification of Deloitte and Touche LLP as the Company's
independent auditors.
Any stockholder may revoke a proxy at any time before it is voted at
the meeting by a proxy bearing a later date. A proxy may also be revoked by any
stockholder by delivering written notice of revocation to the Secretary of the
Company or by voting in person at the meeting.
This Proxy Statement and proxy are being mailed to stockholders of the
Company on or about April 27, 1998. The mailing address of the executive offices
of the Company is 5000 Birch Street, Suite 205, Newport Beach, California 92660.
VOTING AT THE MEETING
Only record holders of Common Stock of the Company at the close of
business on April 1, 1998 will be entitled to notice of, and to vote at, the
meeting. As of the record date, there were 5,556,746 shares of the Company's
Common Stock outstanding. Each share is entitled to one vote at the meeting. The
presence at the Annual Meeting, in person or by proxy, of the holders of a
majority of the shares of Common Stock outstanding on the record date will
constitute a quorum, and abstentions and broker non-votes are counted for
purposes of determining the presence or absence of a quorum.
A proxy may indicate that all or a portion of the shares represented by
such proxy are not being voted with respect to a specific proposal. This could
occur, for example, when a broker is not permitted to vote shares held in street
name on a proposal in the absence of instructions form the beneficial owner.
Abstentions and broker non-votes will not be counted for purposes of determining
whether any proposal has been approved by the Company's stockholders at the
meeting.
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
The persons named in the enclosed proxy will vote to elect the five (5)
proposed nominees named below unless contrary instructions are given in the
proxy. The election of directors shall be by the affirmative vote of the holders
of a plurality of the shares voting in person or by proxy at the meeting. Each
director is to hold office until the next annual meeting and until his successor
is elected and qualified.
The names and certain information concerning the persons nominated by
the Board of Directors to become directors at the meeting are set forth below.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF
EACH OF THE NOMINEES NAMED BELOW. It is intended that shares represented by the
proxies will be voted FOR the election to the Board of Directors of the persons
named below unless authority to vote for nominees has been withheld in the
proxy. Although each of the persons named below has consented to serve as a
director if elected and the Board of Directors has no reason to believe that any
of the nominees named below will be unable to serve as a director, if any
nominee withdraws or otherwise becomes unavailable to serve, the persons named
as proxies will vote for any substitute nominee designated by the Board of
Directors. The following information regarding the nominees is relevant to your
consideration of the slate proposed by the Board of Directors:
NOMINEES FOR DIRECTOR
RICHARD H. WALKER, age 54, 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. From April 1994 to March 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. Prior 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 Panasonic Corporation of America (Matsushita Electric)
in the Office Automation Group from March 1981 to November 1989, most recently
as Vice President of Marketing. Mr. Walker was previously an executive with
several Fortune 500 companies where he held management positions in a range of
operations.
PAUL SPINDLER, age 66, 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. For the prior ten years, he was President and
Chief Executive Officer of CGI Spindler, a corporate/investor and marketing
communications subsidiary of Grey Advertising, Inc. Prior to that, he was a
principal executive for more than ten years with Manning Selvage & Lee, Inc., a
public relations firm. Mr. Spindler formerly held the position of Director of
Corporate Communications at International Industries, Inc. from 1963 to 1968. He
is a former editor and staff reporter for Knight-Ridder and Hearst newspapers.
LAWRENCE COHEN, age 53, is a founder of the Company and has served as
Vice Chairman of the Board since its inception in April 1996. From November 1990
to September 1996, Mr. Cohen served as Chairman of the Board of BioTime, Inc.
("BioTime"), 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.
-2-
<PAGE>
DR. JACK BORSTING, age 69, has served as a director of the Company
since November 1996. From August 1988 to the 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 Northrup Grumman Corporation, Whitman Medical and TRO Learning, Inc.
PETER STRANGER, age 48, has been President of the Los Angeles office of
J. Walter Thompson & Company, a worldwide advertising agency and a subsidiary of
the WWP Group, London since December 1997. He was a managing partner of Bozell
Worldwide, a communications firm, from August 1995 to December 1997. Mr.
Stranger was president of the Los Angeles office of Euro RSCG, an international
communications holding company, from September 1989 until November 1994, and he
was an officer of Della Famina, Travisano & Partners, an advertising agency, for
the prior 15 years.
OTHER EXECUTIVE OFFICERS
N. DOUGLAS MAZZA, age 51, has served as Senior Vice President and Chief
Operating Officer of the Company since November 1997. Prior to joining Bristol,
from 1992 to 1997, Mr. Mazza was Executive Vice President and Chief Operating
Officer of Hyundai Motor America, Hyundai's $1.4 billion national automotive
distributor. From 1985 to 1989, Mr. Mazza also held the position of Vice
President of Sales and Marketing, and later Vice President and General Manager
of American Suzuki Motor Corporation, where he authored the marketing plan for
the company's launch that became a Harvard case study. From 1981 to 1985, Mr.
Mazza was in charge of national distribution at Mitsubishi Motor Sales of
America and part of that company's launch team in the United States. Mr. Mazza
began his career from 1974 to 1981 with United States Suzuki Motor Company,
Suzuki's national motorcycle distributor where he rose to the position of
National Sales Manager.
MICHAEL S. SHIMADA, age 48, has served as Vice President and Chief
Financial Officer of the Company since February 1998. Before he joined the
Company, Mr. Shimada was Chief Financial Officer of Spectrum Laboratories, Inc.,
a medical products company. Prior to that, he served as Chief Financial Officer
of Elexsys International from 1993 to 1997. From 1981 to 1993, at Elexsys, he
served as Controller, Corporate Controller and Vice President of Finance of this
multi-division manufacturer of circuit boards and back panels.
BOARD COMMITTEES
The Board of Directors of the Company has a standing Compensation
Committee, Audit Committee, Executive Committee and Nominating Committee. The
functions of the Compensation Committee include advising the Board of Directors
on officer compensation and on employee compensation generally. The Compensation
Committee held one (1) meeting during the year ended December 31, 1997, and
currently consists of Dr. Jack R. Borsting. In addition, the Compensation
Committee is the acting Plan Administrator for the Company's 1996 Equity
Participation Plan and 1997 Employee Stock Purchase Plan.
The Audit Committee has the responsibility of recommending to the Board
of Directors the appointment of the Company's outside auditors, examining the
results of audits and reviewing internal accounting controls. The Audit
Committee held no meetings during the year ended December 31, 1997. The Audit
Committee currently consists of Dr. Jack R. Borsting and Dr. Thomas Lutri.
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. The Executive Committee held four (4) meetings during the
year ended December 31, 1997, and currently consists of Richard H. Walker, Paul
Spindler and Lawrence Cohen.
-3-
<PAGE>
The function of the Nominating Committee is to nominate persons to
serve as members of the Company's Board of Directors. The Nominating Committee
held one (1) meeting during the year ended December 31, 1997, and currently
consists of Richard H Walker and Paul Spindler. Nominations of persons for
election to the Board of Directors of the Company may be made at a meeting of
stockholders by or at the direction of the Board of Directors, by any Nominating
Committee member or person appointed by the Board, or by any stockholder of the
Company entitled to vote for the election of directors at the meeting who
complies with the notice procedures set forth in the bylaws of the Company. Such
nominations, other than those made by or at the direction of the Board or by any
Nominating Committee member or person appointed by the Board, shall be made
pursuant to timely notice in writing to the Secretary of the Company. To be
timely, a stockholder's notice must be delivered to, or mailed and received at,
the principal executive offices of the Company not less than 60 days prior to
the scheduled annual meeting, regardless of any postponements, deferrals or
adjournments of that meeting to a later date; provided, however, that if less
than 70 days' notice or prior public disclosure of the date of the scheduled
annual meeting is given or made, notice by the stockholder, to be timely, must
be so delivered or received not later than the close of business on the tenth
day following the earlier of the day on which such notice of the date of the
scheduled annual meeting was mailed or the day on which such public disclosure
was made. A stockholder's notice to the Secretary shall set forth (a) as to each
person whom the stockholder proposes to nominate for election or reelection as a
director, (i) the name, age, business address and residence address of the
person, (ii) the principal number of shares of capital stock of the Company
which are beneficially owned by the person and (iii) any other information
relating to the person that is required to be disclosed in solicitations for
proxies for election of directors pursuant to Rule 14a under the Securities
Exchange Act of 1934, as amended; and (b) as to the stockholder giving the
notice (i) the name and address, as they appear on the Company's books, of the
stockholder and (ii) the class and number of shares of the Company's stock which
are beneficially owned by the stockholder on the date of such stockholder
notice. The Company may require any proposed nominee to furnish such other
information as may reasonably be required by the Company to determine the
eligibility of such proposed nominee to serve as director of the Company.
The presiding officer of the annual meeting shall determine and declare
at the annual meeting whether the nomination was made in accordance with the
terms of the bylaws of the Company. If the presiding officer determines that a
nomination was not made in accordance with the terms of the bylaws of the
Company, he shall so declare at the annual meeting and any such defective
nomination shall be disregarded.
ATTENDANCE AT MEETINGS
During the year ended December 31, 1997, the Board of Directors held a
total of four (4) meetings. One (1) member of the Board of Directors, Dr. Thomas
Lutri, attended fewer than 75% of the meetings of the Board and of the
committees of which he was a member. Additionally, there were approximately four
(4) separate actions of the Board of Directors which were taken by unanimous
written consent. There are no family relationships among any of the directors or
executive officers of the Company.
EXECUTIVE COMPENSATION
The following tables present information concerning the cash
compensation paid and stock options granted to the Company's Chief Executive
Officer and each additional executive officer of the Company whose total
compensation exceeded $100,000 for the year ended December 31, 1997 ("1997") and
for the period from inception (April 3, 1996) to December 31, 1996 ("1996"). The
notes to these tables provide more specific information regarding compensation.
-4-
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Year Securities
Ended Underlying Other Annual
December 31, Salary Bonus Options (#) Compensation
------------- ------------ -------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Richard H. Walker
President, Chief Executive 1997 $ 244,803(a) -- 200,000 --
Officer and Director 1996 $ 74,293 -- 100,000 --
Paul Spindler(b)
Executive Vice President, 1997 $ 162,550(a) -- 200,000 --
Chairman of the Board of 1996 $ -- -- 100,000 --
Directors and Secretary
- ---------------------------
</TABLE>
(a) Includes compensation reported to the Internal Revenue Service as
compensation for the use of automobiles leased by the Company for Mr.
Walker and Mr. Spindler.
(b) Mr. Spindler did not start receiving a salary from the Company until
January 1, 1997.
OPTION MATTERS
OPTION GRANTS. The following table sets forth certain information
concerning grants of stock options to each of the Company's executive officers
named in the Summary Compensation Table during the year ended December 31, 1997.
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
Number of Securities % of Total
Underlying Options/SARs Granted Exercise
Options/SARs to Employees in Price Expiration
Name Granted (#)(a) Fiscal Year ($/Share)(b) Date
- ------------------- --------------------- --------------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Richard H. Walker 100,250 9.39% 3.163 5/20/02
99,750 9.34% 2.875 5/20/07
Paul Spindler 100,250 9.39% 3.163 5/20/02
99,750 9.34% 2.875 5/20/07
- -------------------------
</TABLE>
(a) All options vest and become exercisable at the rate of 25% per year
commencing on the first anniversary of the date of grant.
(b) On September 11, 1997, the Board of Directors approved a repricing of all
outstanding stock options held by employees, officers, board members and
non-employees with a new exercise price of $2.875, the closing market price
on that date, as reported on the Nasdaq SmallCap Market. Incentive stock
options granted to employees who own more than 10% of the total combined
voting power of all classes of stock of the Company are priced 110% of the
fair market price and expire five years from the date of grant.
OPTION EXERCISES. No options were exercised by any of the Company's
executive officers named in the Summary Compensation Table during the year ended
December 31, 1997.
The following table includes the number of shares covered by both
exercisable and unexercisable stock options as of December 31, 1997.
-5-
<PAGE>
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<CAPTION>
Number of Unexercised Securities Value of Unexercised
Underlying Options/SARs at In-the-Money Options/SARs
Fiscal Year-End (#) at Fiscal Year-End ($)
--------------------------------- ---------------------------
Shares
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- --------------------- ------------- ------------ --------------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard H. Walker -- -- 15,150 145,700 -- --
-- -- 9,850 129,300 2,463 32,325
Paul Spindler -- -- 15,150 145,700 -- --
-- -- 9,850 129,300 2,463 32,325
</TABLE>
REPRICING OF OPTIONS
On September 11, 1997, the Board of Directors approved a repricing of
all outstanding stock options held by employees, officers, board members and
non-employee service providers with a new exercise price of $2.875, the closing
market price on that date, as reported on the Nasdaq SmallCap Market. The Board
of Directors approved the repricing because it believes that equity interests
are a significant factor in the company's ability to retain directors, executive
officers and employees, by providing an incentive to all such personnel to
devote their utmost effort and skill to the advancement and betterment of the
company through their participation in the success and increased value of the
Company. Following the grant of such options, however, the price per share of
the Company's Common Stock declined to an amount less than the exercise price of
the options. The Board of Directors believed that, as a result of this decline,
the options granted would not have the desired motivational effect on the
optionees. Accordingly, the Board of Directors approved the repricing as a means
of ensuring that such optionees have a meaningful equity interest in the
Company.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT, AND CHANGE-IN-CONTROL
ARRANGEMENTS.
The Company has entered into employment agreements with its Chief
Executive Officer, Richard H. Walker, and its Executive Vice President, Paul
Spindler, each containing confidentiality provisions and covenants not to
compete. In addition, both employment agreements have clauses providing for
payment of the amount of unpaid salary that would have been due through the
expiration of the term of the agreement in the event that the agreement is
terminated due to death or disability. In the event of termination of either
agreement for cause, salary shall be paid through the date of termination. Mr.
Walker's employment agreement provides for a salary of Two Hundred Twenty-Five
Thousand Dollars ($225,000) per year. Mr. Spindler's employment agreement
provides for a salary of One Hundred Fifty Thousand Dollars ($150,000) per year.
Both employment agreements are subject to upward adjustments during the terms of
the agreements. On April 3, 1997, the salaries of Mr. Walker and Mr. Spindler
increased to Two Hundred Forty-Seven Thousand Five Hundred Dollars ($247,500)
and One Hundred Sixty-Five Thousand Dollars ($165,000) per year, respectively.
Mr. Spindler's employment agreement terminates on December 31, 2001. On February
28, 1998, the Company's Board of Directors approved a resolution to extend the
term of Mr. Walker's employment agreement for an additional three year period
until December 31, 2004 unless terminated earlier in accordance with the
agreement.
-6-
<PAGE>
On October 30, 1997, the Company entered into an employment agreement
with N. Douglas Mazza, Senior Vice President and Chief Operating Officer of the
Company, whereby the Company agrees to pay Mr. Mazza a salary of One Hundred
Eighty-Two Thousand Dollars ($182,000) per year beginning January 1, 1998. In
addition, Mr. Mazza was awarded incentive and nonqualified stock options to
purchase one hundred thousand (100,000) shares of Common Stock of the Company.
The agreement contains a clause guaranteeing a severance payment provided that
Mr. Mazza has been employed for at least ninety (90) days and is terminated for
reason other than cause. Such severance payment shall be equal to four (4)
weeks' salary for each year of Mr. Mazza's employment prior to termination, but
not less than twenty-six (26) weeks' salary. In the event the Company merges
with or is acquired by another organization and such event causes Mr. Mazza to
be terminated, he would receive severance compensation equal to one year's
salary.
On January 18, 1998, the Company entered into an employment agreement
with Michael S. Shimada, Vice President and Chief Financial Officer of the
Company, whereby the Company agrees to pay Mr. Shimada a salary of One Hundred
Twenty-Five Thousand Dollars ($125,000) per year beginning February 2, 1998. In
addition, Mr. Shimada was awarded incentive stock options to purchase one
hundred thousand (100,000) shares of Common Stock of the Company and additional
incentive and non-qualified stock options to purchase one hundred thousand
(100,000) shares of Common Stock of the Company if Mr. Shimada meets mutually
agreed upon goals during 1998. The agreement contains a clause guaranteeing a
severance payment provided that Mr. Shimada has been employed for one (1) year
and is terminated for reason other than cause, which severance payment shall be
equal to eighteen (18) weeks' salary.
COMPENSATION OF DIRECTORS
The Company's directors do not receive any cash compensation for
service on the Board of Directors or any committee thereof, but the Company has
and will continue to pay the expenses of its directors incurred in attending
Board and committee meetings. In addition, pursuant to the terms of the
Company's Equity Participation Plan (the "Stock Option Plan"), each non-employee
director of the Company will be granted options to purchase shares of the
Company's Common Stock, at an exercise price equal to the fair market value of a
share of Common Stock as of the date of the option grant. Persons who were
non-employee directors as of the date of the initial public offering of the
Company's Common Stock November 13, 1996 received an option to purchase ten
thousand (10,000) shares of Common Stock on each of the following dates: (i) the
date of the initial public offering, (ii) the date of the second annual meeting
of the Company's stockholders following the initial public offering, at which
the director was reelected to the Board and (iii) the date that the director is
reelected to the Board at each subsequent annual meeting of stockholders.
Persons who are elected as non-employee directors after the date of the initial
public offering of the Company receive an option to purchase ten thousand
(10,000) shares of Common Stock on the following dates: (i) the date of such
election to the Board, (ii) the date of the second annual meeting following such
meeting at which the director was reelected to the Board and (iii) the date that
the director is reelected to the Board at each subsequent annual meeting of
stockholders. All options granted to non-employee directors under the Stock
Option Plan become exercisable in annual installments of twenty-five percent
(25%) on each of the first, second third and fourth anniversaries of the option
grant.
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
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.
-7-
<PAGE>
The Company purchases insurance coverage through an insurance broker
who is the brother-in-law of Mr. Walker. The Company paid premiums totaling
$73,845 for the year ended December 31, 1997 for insurance coverage expiring at
various dates through November 1998.
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 the time of the issuance, 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 at the time of the issuance, 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.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 28, 1998, certain
information with respect to the beneficial ownership of the Company's Common
Stock by (i) each person known by the Company to own beneficially more than 5%
of the outstanding Common Stock; (ii) each director and nominee of the Company;
(iii) each of the Company's executive officers named in the Summary Compensation
Table; and (iv) all directors and executive officers of the Company as a group.
The Company had 5,556,746 shares outstanding at February 28, 1998.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF TOTAL NUMBERS OF SHARES PERCENTAGE OF SHARES
BENEFICIAL OWNER(1)(2) OF BENEFICIALLY OWNED OUTSTANDING
- --------------------------------------- ----------------------- --------------------
<S> <C> <C>
Richard H. Walker(3) 745,477 13.3%
Paul Spindler(4) 765,478 13.7%
Larry Cohen(5) 803,678 14.4%
Dr. Jack Borsting(6) 15,095 *
Peter Stranger 3,000 *
Dr. Thomas Lutri (6) 108,450 2.0%
All directors and executive officers as a
group (8 persons)(7) 2,441,178 43.2%
- ---------------------------
</TABLE>
* 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 5000 Birch Street, Suite 205, Newport Beach, California 92660.
(3) Amount includes: (i) 710,477 shares held of record by the Walker Trust,
which are beneficially owned by Mr. Walker, the President, Chief Executive
Officer and a director of the Company and (ii) 35,000 shares subject to
options and warrants exercisable within 60 days of February 28, 1998.
(4) Amount includes: (i) 740,478 shares held of record by the Spindler Trust,
which are beneficially owned by Mr. Spindler, the Chairman of the Board,
Executive Vice President and Secretary of the Company and (ii) 25,000 shares
subject to options exercisable within 60 days of February 28, 1998.
(5) Amount includes (i) 740,478 shares held of record by East Ocean, which are
beneficially owned by Mr. Cohen, the Vice Chairman of the Board, Executive
Vice President and Treasurer of the Company; (ii) 33,200 shares and 5,000
shares underlying warrants which are exercisable within 60 days of February
28, 1998, and which are held by Donna Cohen, wife of Mr. Cohen; and (iii)
25,000 shares subject to options and warrants exercisable within 60 days of
February 28, 1998.
(6) Includes 2,500 shares subject to options exercisable within 60 days of
February 28, 1998.
(7) Includes 95,000 shares subject to options and warrants exercisable within 60
days of February 28, 1998.
-8-
<PAGE>
PROPOSAL TWO
AMENDMENT TO THE 1996 EQUITY PARTICIPATION PLAN,
TO INCREASE THE TOTAL NUMBER OF SHARES
ISSUABLE THEREUNDER
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"). Subject to approval by
the Company's stockholders, the Board of Directors has amended the Stock Option
Plan to increase the number of shares of Common Stock issuable under the Stock
Option Plan by 1,000,000 shares of Common Stock, and to reserve such additional
shares for issuance under the Stock Option Plan, bringing the total number of
shares of Common Stock subject to the Stock Option Plan to 3,450,000. The
additional shares available for issuance under the Stock Option Plan will enable
the Company to continue to use equity incentives to attract and retain employees
and to increase employee morale. The last reported sale price for the Company's
Common Stock on April 1, 1998 as reported by the Nasdaq SmallCap Market, was
$3.25. The Company has at the present time 1,565,000 options outstanding under
the Stock Option Plan. 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.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
PROPOSAL TO AMEND THE STOCK OPTION PLAN TO INCREASE THE TOTAL NUMBER OF SHARES
OF COMMON STOCK ISSUABLE THEREUNDER FROM 2,450,000 TO 3,450,000.
The essential features of the Stock Option Plan are summarized below.
The summary does not purport to be a complete description of the Stock Option
Plan. The Company's stockholders may obtain a copy of the Stock Option Plan upon
written request to the Secretary of the Company.
GENERAL NATURE AND PURPOSE
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, 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
3,450,000 from 2,450,000 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.
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 were
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 number of
shares reserved under the Stock Option Plan was increased to 2,450,000 by the
Board of Directors on April 3, 1997 and approved by the stockholders at the
Annual Meeting of Stockholders on May 20, 1997.
-9-
<PAGE>
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 exercise 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.
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 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.
-10-
<PAGE>
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche LLP as the
Company's independent auditors for the year ending December 31, 1998 and has
further directed that management submit the selection of auditors for
ratification by the stockholders at the Annual Meeting. Representatives of
Deloitte & Touche 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.
Stockholder ratification of the selection of Deloitte & Touche 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 Deloitte & Touche
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.
On September 30, 1997, the Board of Directors of the Company approved
the dismissal of its former independent auditors, Ernst & Young LLP, and
appointed the accounting firm of Deloitte & Touche LLP as its new independent
auditors.
During the period from inception (April 3, 1996) to December 31, 1996
and each subsequent interim period preceding September 30, 1997, there were no
disagreements with Ernst & Young LLP on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Ernst & Young LLP, would
have caused it to make reference to the subject matter of the disagreements in
connection with its report. The Ernst & Young LLP report on the financial
statements of the Company for the period from inception (April 3, 1996) to
December 31, 1996 contained no adverse opinion or disclaimer of opinion, nor was
either qualified or modified as to uncertainty, audit scope, or accounting
principles.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT
AUDITORS OF THE COMPANY.
STOCKHOLDER PROPOSALS
Stockholder proposals for the 1999 Annual Meeting of Stockholders of
the Company must be received at the Company's offices, 5000 Birch Street, Suite
205, Newport Beach, California, addressed to the Secretary, no later than
December 28, 1998.
-11-
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers and persons who own more than ten
percent of a registered class of the Company's equity securities to file with
the Securities and Exchange Commission (the "SEC") initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. Officers, directors and ten-percent stockholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file. To the Company's knowledge, based solely on the review of copies of
such reports furnished to the Company and written representations that no other
reports were required, during the year ended December 31, 1997 the Company's
officers, directors and ten-percent stockholders complied with all applicable
Section 16(a) filing requirements.
TRANSACTION OF OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors is not
aware of any matters other than those set forth herein and in the Notice of
Annual Meeting of Stockholders that will come before the meeting. Should any
other matters arise requiring the vote of stockholders, it is intended that
proxies will be voted in respect thereto in accordance with the best judgment of
the person or persons voting the proxies.
Please return your proxy as soon as possible. Unless a quorum
consisting of a majority of the outstanding shares entitled to vote is
represented at the meeting, no business can be transacted. Therefore, PLEASE BE
SURE TO DATE AND SIGN YOUR PROXY EXACTLY AS YOUR NAME APPEARS ON YOUR STOCK
CERTIFICATE AND RETURN IT IN THE ENCLOSED POSTAGE PREPAID RETURN ENVELOPE.
PLEASE ACT PROMPTLY TO ENSURE THAT YOU WILL BE REPRESENTED AT THIS IMPORTANT
MEETING.
A COPY (WITHOUT EXHIBITS) OF THE COMPANY'S ANNUAL REPORT ON FORM
10-KSB, INCLUDING FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES, AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR ENDED DECEMBER
31, 1997 IS BEING MAILED TO STOCKHOLDERS TOGETHER WITH THIS PROXY STATEMENT.
COPIES OF THE EXHIBITS TO THE ANNUAL REPORT ON FORM 10-KSB WILL BE PROVIDED
WITHOUT CHARGE, AT THE WRITTEN REQUEST OF ANY BENEFICIAL OWNER OF SHARES
ENTITLED TO VOTE AT THE ANNUAL MEETING OF STOCKHOLDERS. REQUESTS SHOULD BE
MAILED TO THE SECRETARY, BRISTOL RETAIL SOLUTIONS, INC., 5000 BIRCH STREET,
SUITE 205, NEWPORT BEACH, CALIFORNIA 92660.
By Order of the Board of Directors
Paul Spindler
Secretary
April 27, 1998
<PAGE>
BRISTOL RETAIL SOLUTIONS, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
Richard H. Walker and Paul Spindler, and each or either of them, with
full power of substitution, are hereby appointed proxies to vote the stock of
the undersigned in Bristol Retail Solutions, Inc. at the Annual Meeting of
Stockholders on May 15, 1998, and at any postponement and adjournment thereof,
to be held at the Irvine Marriott Hotel, 18000 Von Karman Avenue, Irvine,
California 92616 at 9:00 a.m. Pacific Time.
Management recommends that you vote FOR Proposal 1, FOR Proposal 2
and FOR Proposal 3.
------------------------------------------------------------------
1. ELECTION OF DIRECTORS.
----------------------
.. FOR all Nominees listed below .. WITHHOLD AUTHORITY to
(except as indicated to the vote for all Nominees
contrary below) listed below
FOR AGAINST ABSTAIN
/ / / / / /
Richard H. Walker, Paul Spindler, Lawrence Cohen, Jack Borsting and Peter
Stranger.
INSTRUCTION: To withhold authority to vote for any individual Nominee,
write that Nominee's name in the space provided below.
2. AMENDMENT TO THE 1996 EQUITY PARTICIPATION PLAN.
------------------------------------------------
FOR AGAINST ABSTAIN
/ / / / / /
3. RATIFICATION OF APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS.
-----------------------------------------------------------------------------
FOR AGAINST ABSTAIN
/ / / / / /
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting or any adjournment thereof, including
procedural and other matters relating to the conduct of the meeting.
[Front of Proxy Card]
A-1
<PAGE>
THIS PROXY WILL BE VOTED AS DIRECTED. UNLESS OTHERWISE DIRECTED, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF THE FIVE DIRECTOR NOMINEES LISTED ABOVE AND FOR
PROPOSAL 2 AND PROPOSAL 3.
Please sign exactly as name appears hereon.
Date:_________________________, 199__
When shares are held by joint tenants, both should sign. When signing
as attorney, executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by President
or other authorized officer. If a partnership, please sign in partnership name
by authorized person.
PLEASE IMMEDIATELY DATE, SIGN AND RETURN THIS CARD IN THE ENCLOSED ENVELOPE.
THANK YOU FOR YOUR PROMPT ATTENTION TO THIS IMPORTANT MATTER.
[Back of Proxy Card]
A-2
