<PAGE>
BRISTOL RETAIL SOLUTIONS, INC.
5000 BIRCH STREET, SUITE 205
NEWPORT BEACH, CALIFORNIA 92660
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 21, 1999
9:00 A.M.
TO THE STOCKHOLDERS OF BRISTOL RETAIL SOLUTIONS, INC.
PLEASE TAKE NOTICE that the Annual Meeting of Stockholders of Bristol Retail
Solutions, Inc., a Delaware corporation (the "Company"), will be held at the
Company's corporate office located at 5000 Birch Street, Suite 205, Newport
Beach , California, on July 21, 1999 at 9 A.M., Local Time, or at any and all
adjournments thereof, for the following purposes:
1. To elect four (4) directors to the Board of Directors to serve
until the next Annual Meeting or until their successors have
been duly elected and qualified;
2. To authorize the Board of Directors to effect up to a 1-for-3
reverse stock split of the Company's outstanding common stock;
3. To ratify the appointment of the Company's independent
auditors; and
4. To transact such other business as may properly come before
the meeting or any adjournment thereof.
The Proxy Statement dated June 28, 1999 is attached.
The Board of Directors fixed the close of business on June 8, 1999, as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the meeting. The financial statements of the Company for the year
ended December 31, 1998, are contained in the accompanying Annual Report on Form
10-KSB and the Quarterly Report for the quarter ended March 31, 1999, on Form
10-QSB. Neither the Annual Report nor the Quarterly Report form any part of the
material for the solicitation of proxies. Stockholders who do not expect to be
present at the meeting are urged to complete, date, sign and return the enclosed
proxy. No postage is required if the enclosed envelope is used and mailed in the
United States.
BY ORDER OF THE BOARD OF DIRECTORS,
Newport Beach, California Michael Shimada
June 28, 1999 SECRETARY
THIS IS AN IMPORTANT MEETING, AND ALL STOCKHOLDERS ARE INVITED TO
ATTEND THE MEETING IN PERSON. THOSE STOCKHOLDERS WHO ARE UNABLE TO ATTEND IN
PERSON ARE RESPECTFULLY URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY CARD AT
THEIR EARLIEST CONVENIENCE. PROMPTNESS IN RETURNING THE EXECUTED PROXY CARD WILL
BE APPRECIATED. STOCKHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND
THE MEETING, REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON.
<PAGE>
BRISTOL RETAIL SOLUTIONS, INC.
5000 BIRCH STREET, SUITE 205
NEWPORT BEACH, CALIFORNIA 92660
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of BRISTOL RETAIL SOLUTIONS, INC., a Delaware
corporation (the "Company"), of proxies for use at the 1999 Annual Meeting of
Stockholders ("Annual Meeting") to be held at the Company's corporate office
located at 5000 Birch Street, Suite 205, Newport Beach, California, on July 21,
1999 at 9 A.M., Local Time, or at any and all adjournments thereof. The cost of
this solicitation will be borne by the Company. Directors, officers and
employees of the Company may solicit proxies by telephone, telegraph or personal
interview. The Company's Annual Report on Form 10-KSB for the year ended
December 31, 1998 and Quarterly Report on Form 10-QSB for the quarter ended
March 31 1999, are being mailed together with this Proxy Statement and form of
Proxy. This Proxy Statement and form of Proxy are being mailed to stockholders
of the Company on or about June 28, 1999.
OUTSTANDING STOCK AND VOTING RIGHTS
The Board of Directors fixed the close of business on June 8, 1999, as
the record date for determining the stockholders entitled to notice of, and to
vote at, the Annual Meeting. Only stockholders of record on that date will be
entitled to vote. A stockholder who submits a proxy on the accompanying form has
the power to revoke it by notice of revocation directed to the proxy holder of
the Company at any time before it is voted. Also, although a stockholder may
have given a proxy, such stockholder may nevertheless attend the meeting, revoke
the proxy and vote in person. Unless authority is withheld in writing, proxies
which are properly executed will be voted for the proposals thereon. The
election of the directors nominated requires the affirmative vote of a plurality
of the shares of the Company's common stock voting at the Annual Meeting in
person or by proxy. The ratification of the appointment of the Company's
auditors will require the affirmative vote of a majority of the shares of the
Company's common stock voting at the Annual Meeting in person or by proxy. The
amendment to the Company's Certificate of Incorporation to implement up to a 1
to 3 reverse stock split of the outstanding shares of the Company's common stock
will require the affirmative vote of a majority of the shares of the Company's
common stock outstanding on the record date.
As of June 8, 1999, the record date for determining the stockholders of
the Company entitled to vote at the Annual Meeting, approximately 6,963,282
(excluding 5,000 shares held as treasury shares) shares of the Company's common
stock, $.001 par value ("Common Stock"), were issued and outstanding. Each share
of Common Stock outstanding entitles the holder to one vote on all matters
brought before the Annual Meeting. The quorum necessary to conduct business at
the Annual Meeting consists of a majority of the shares of Common Stock
outstanding (3,551,274 shares) as of the record date. Abstentions and broker
non-votes are counted for purposes of determining the presence or absence of a
quorum and have the effect of a negative vote on the approval of the reverse
stock split. Abstentions and broker non-votes will have no effect for the
election of directors or the ratification of the Company's auditors.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
Company's Common Stock beneficially owned at June 8, 1999 (i) by each person who
is known by the Company to beneficially own, or exercise voting or dispositive
control, 5% or more the Company's Common Stock on the record date based upon
certain reports regarding ownership filed with the Securities and Exchange
Commission (the "Commission") in accordance with the Securities Exchange Act of
1934, as amended (the "Exchange Act"), (ii) by each of the Company's directors,
nominees for directors and certain executive officers, and (iii) by all officers
and directors as a group. A person is deemed to be a beneficial owner of any
securities of which the person has the right to acquire beneficial ownership
within 60 days. At June 8, 1999, there were 6,963,282 shares of Common Stock of
the Company outstanding.
Name and Address Beneficial Percent of
of Beneficial Owner (1) Ownership (2) Class
- ----------------------- ------------- -----
Larry Cohen (3) 974,753 13.6%
Michael S. Shimada (4) 60,000 *
Michael Pollastro (5) 57,275 *
Dr. Jack Borsting (6) 57,595 *
Peter Stranger (7) 35,000 *
N. Douglas Mazza (8) -- *
Richard H. Walker (9) 720,477 10.3%
Paul Spindler (10) 695,478 10.0%
All directors and executive officers as 1,184,623 16.3%
a group (8 persons)(11)
* Less than one percent of the outstanding shares of Common Stock.
(1) Unless otherwise indicated below, the address of each person is c/o the
Company at 5000 Birch Street, Suite 205, Newport Beach, California, 92660.
(2) 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.
(3) Mr. Cohen is President, Director and Chairman of the Board of the Company.
Amount includes (i) 740,478 shares of common stock held of record by East Ocean
Limited Partners, which are beneficially owned by Mr. Cohen; (ii) 31,775 shares
of common stock and 5,000 shares of underlying common stock warrants which are
exercisable within 60 days of June 8, 1999, and which are held by Donna Cohen,
wife of Mr. Cohen; (iii) 22,500 shares of common stock held in an IRA account,
which are beneficially owned by Mr. Cohen; and (iv) 155,000 shares of common
stock subject to options and 20,000 shares of underlying common stock warrants
which are exercisable within 60 days of June 8, 1999.
(4) Mr. Shimada is a Vice President and Chief Financial Officer of the Company.
Includes 50,000 shares of common stock subject to options exercisable within 60
days of June 8, 1999.
(5) Mr. Pollastro is Interim Chief Executive Officer and Chief Operating Officer
of the Company. Includes 10,750 shares of common stock subject to options
exercisable within 60 days of June 8, 1999.
(6) Mr. Borsting is a Director of the Company. Includes 45,000 shares of common
stock subject to options exercisable within 60 days of June 8, 1999.
2
<PAGE>
(7) Mr. Stranger is a Director of the Company. Includes 30,000 shares of common
stock subject to options exercisable within 60 days of June 8, 1999.
(8) Mr. Mazza resigned as Senior Vice President and Chief Operating Officer of
the Company on January 15, 1999.
(9) Amount includes: (i) 710,477 shares of common stock held of record by the
Walker Family Trust, which are beneficially owned by Mr. Walker, the former
President, Chief Executive Officer and Director of the Company and (ii)10,000
common stock warrants. Address: 30872 Hunt Club Drive, San Juan Capistrano,
California 92675.
(10) Amount includes: (i) 695,478 shares of common stock held of record by the
Spindler Family Trust, which are beneficially owned by Mr. Spindler, the former
Chairman of the Board, Executive Vice President and Secretary of the Company.
Address: 10126 Empyrean Way, #104, Los Angeles, California 90067.
(11) Includes 290,750 shares of common stock subject to options exercisable
within 60 days of June 8, 1999. The term of the options are 10 years from date
of grant.
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent (10%) of a
registered class of the Company's equity securities, to file with the
"Commission" initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors and
greater than ten percent (10%) stockholders are required by Commission
regulation to furnish the Company with copies of all Section 16(a) forms they
file. To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representation that no other
reports were required, during the fiscal year ended December 31, 1998, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent (10%) beneficial owners were timely filed.
3
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
The Board of Directors is responsible for the overall affairs of the
Company.
The person named in the enclosed proxy will vote to elect the four (4)
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 Nominating Committee for election at the Annual 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.
The following table sets forth the names of the nominees, their
positions with the Company, the year, if applicable, in which they became
Directors and other related information. Executive officers are appointed
annually and, except to the extent governed by employment contracts, serve at
the discretion of the Board of Directors.
NOMINEES FOR ELECTION
---------------------
Position with
Name Age the Company
- ---- --- -----------
Michael S. Shimada 49 Vice President, Chief Financial
Officer
Lawrence Cohen 54 President, Chairman of the Board,
Director
Dr. Jack Borsting 70 Director
Peter Stranger 49 Director
MICHAEL S. SHIMADA has served as Vice President and Chief Financial
Officer of the Company since February 1998. Mr. Shimada served as Chief
Operating Officer between January 18, 1999 and June 15, 1999. Before he joined
the Company, Mr. Shimada served in 1997 as 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.
4
<PAGE>
LAWRENCE COHEN is a founder of the Company and has served as Director
and Vice Chairman of the Board of Directors since its inception in April 1996.
On January 18, 1999, the Board of Directors elected Mr. Cohen as Chairman of the
Board and named him as President of the Company. Mr. Cohen served as interim
Chief Executive Officer between January 18, 1999 and June 15, 1999. From
November 1990 to September 1996, Mr. Cohen served as Chairman of the Board of
BioTime, Inc., a biotechnology company engaged in the artificial plasma
business. Mr. Cohen has also served as a director of ASHA Corporation, a
publicly traded supplier of traction control systems, from April 1995 to
present; a director of Apollo Genetics Inc., a company founded by Mr. Cohen
which is engaged in the genetic pharmaceutical business, from January 1993 to
the present; a director of Registry Magic Inc., a company founded by Mr. Cohen
which develops voice recognition equipment, from November 1995 to present; and a
director of Kaye Kotts Associates, Inc. from April 1995 to the present.
PETER STRANGER has served as director of the Company since May 15,
1998. Mr. Stranger has also 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.
DR. JACK BORSTING 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.
All directors hold office until the next meeting of stockholders and
the election and qualification of their successors. Officers are elected by the
Board of Directors and serve at the discretion of the Board.
There is no family relationship between any of the Company's officers
or directors.
OTHER EXECUTIVE OFFICERS
MICHAEL POLLASTRO is currently serving as Interim Chief Executive
Officer and Chief Operating Officer for the Company. Mr. Pollastro acquired
Automated Register Systems, Inc. (ARS) in 1984 where he has been serving as
President and Chief Executive Officer. Automated Register Systems, Inc. was
acquired by the Company on December 31, 1996 and is a wholly-owned subsidiary.
Mr. Pollastro has been in the Point-of-Sale (POS) business for over 15 years.
Prior to that he served approximately three (3) years as Director of Management
Information Services for the University of Washington Hospitals.
BOARD COMMITTEES
The Company's Board of Directors 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 two (2) meetings during the year ended December 31, 1998, 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 is responsibile for 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 three (3) meetings during the year ended December 31, 1998. The
Audit Committee currently consists of Dr. Jack R. Borsting and Peter Stranger.
5
<PAGE>
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 does 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 two (2) meetings during the year
ended December 31, 1998, and currently consists of Lawrence Cohen.
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, 1998, and currently
consists of Larry Cohen. 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 must 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, 1998, the Board of Directors held a
total of twelve (12) meetings. Additionally, there were approximately six (6)
separate actions of the Board of Directors which were taken by unanimous written
consent. All members of the Company's Board of Directors attended all of the
meetings held during the year ended December 31, 1998, with the exception of one
meeting missed by both Thomas Lutri and Jack Borsting.
6
<PAGE>
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 $100,000 for the year ended December 31, 1998 ("1998") and
for the year ended December 31, 1997 ("1997"). The notes to these tables provide
more specific information regarding compensation.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
SECURITIES
UNDERLYING ALL OTHER
FISCAL OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) SARS(#) ($)
- --------------------------- ---- --------- -------- ------- ---
<S> <C> <C> <C> <C> <C>
Richard H. Walker (2) 1998 244,528(1) _ _ _
President, Chief Executive 1997 244,803(1) _ 200,000 _
Officer & Director
Paul Spindler (3) 1998 135,475(1) _ _ _
Executive Vice President, 1997 162,550(1) _ 200,000 _
Chairman of the Board of
Director and Secretary
N. Douglas Mazza (4) 1998 175,000 _ _ _
Senior Vice President and 1997 7,400 _ 100,000 _
Chief Operating Officer
Michael S. Shimada (5) 1998 103,365 _ 200,000 _
Vice President and Chief 1997 _ _ _ _
Financial Officer
- -----------------
</TABLE>
(1) 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.
(2) Mr. Walker was terminated as President and Chief Executive Officer on
January 18, 1999.
(3) Mr. Spindler resigned November 1, 1998 as Executive Vice President and
signed a one year consulting contract with the Company. Pursuant to the
consulting contract, Mr. Spindler was paid $15,980 for investor relations
consulting services.
(4) Mr. Mazza resigned from the Company on January 15, 1999.
(5) Mr. Shimada joined the Company in February 1998.
7
<PAGE>
The following table sets forth certain information concerning grants of
stock options to each of the Company's executive officers named in the Summary
Compensation Table during the year ended December 31, 1998.
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<CAPTION>
% OF TOTAL
NUMBER OF SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED(#)(1) FISCAL YEAR ($/SH)(2) DATE
---- ------------- ----------- --------- ----
<S> <C> <C> <C> <C>
Richard H. Walker _ _ _ _
Paul Spindler _ _ _ _
N. Douglas Mazza _ _ _ _
Michael S. Shimada 200,000 40.83% 3.1875 02/27/08
- -----------------
</TABLE>
(1) All options vest and become exercisable at the rate of 25% per year
commencing on the first anniversary of 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, 1998.
The following table includes the number of shares covered by both
exercisable and unexercisable stock options as of December 31, 1998.
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED IN-THE-
UNEXERCISED MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END(#) FY-END($)
SHARE ACQUIRED ON EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) VALUE REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- ----------- ----------------- ------------- -------------
<S> <C> <C> <C> <C>
Richard H. Walker _ _ 55,363/105,487 _/_
_ _ 44,638/94,512 _/_
Paul Spindler _ _ 55,363/105,487 _/_
_ _ 44,638/94,512 _/_
N. Douglas Mazza _ _ 25,000/75,000 _/_
Michael S. Shimada _ _ -/200,000 _/_
</TABLE>
8
<PAGE>
COMPENSATION OF DIRECTORS
The Company's directors do not receive any cash compensation for
serving on the Board of Directors or any committee thereof, but the Company has
paid, 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 on November 13, 1996 received an option to purchase ten
thousand (10,000) shares of Common Stock on the date of the initial public
offering, (ii) and twenty thousand (20,000) shares the date of the second annual
meeting of the Company's stockholders following the initial public offering, at
which the director was re-elected to the Board and (iii) thirty thousand
(30,000) shares the date that the director is re-elected 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 thirty thousand (30,000) 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 re-elected to the Board and (iii) the date that the director is
re-elected to the Board at each subsequent annual meeting of stockholders.
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. Options
granted to non-employee directors subsequent to the second annual meeting of
stockholders become exercisable at one hundred percent (100%) on the date of
grant.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company previously 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 was terminated for cause by the Board of Directors on
January 18, 1999, and was paid through the date of termination. On February 17,
1999, Mr. Walker resigned from the Board of Directors. Mr. Spindler resigned as
Executive Vice President on November 1, 1998, at which time the Company,
approved by the Board of Directors entered into a one year $100,000 consulting
contract for investor relation services. For the first year, the fee is
guaranteed and renewable with the approval of the Company's Board of Directors.
In addition to the fee, the Company pays one-half of a monthly car lease and
reimbursement of reasonable business expenses. In March 1999, the Company and
Mr. Spindler entered into a settlement agreement regarding sales of Mr.
Spindler's shares of Common Stock and options for the amount of $83,366.92 and
final payment of his consulting agreement for $40,000.00. Disputes between the
parties arose regarding the terms of the settlement agreement. The Company and
Mr. Spindler are currently negotiating the terms of the agreement.
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 agreed to pay Mr. Mazza a salary of One Hundred
Eighty-Two Thousand Dollars ($182,000) per year beginning January 1, 1998. On
January 15, 1999, Mr. Mazza resigned from the Company to accept a similar
position at a non-profit organization.
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 nonqualified stock options to purchase one hundred thousand
(100,000) shares of Common Stock of the Company if Mr. Shimada meets mutually
agreed upon goals which were met 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, the severance
payment shall be equal to eighteen (18) weeks' salary.
9
<PAGE>
On January 1, 1997, the Company entered into an employment agreement
with Micheal Pollastro, President of Automated Retail Systems, Inc. a
wholly-owned subsidiary of the Company, whereby the Company agreed to pay Mr.
Pollastro One Hundred Thirty Thousand Dollars ($130,000) per year ending
December 31, 1999. The agreement contains confidentiality provisions and
covenants not to compete. In addition, the employment agreement has a clause
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 voluntary
resignation or termination for cause, salary shall be paid through the date of
termination. The employment agreement does not have severance or
change-in-control provisions.
The Company has employment agreements with certain executive officers
and employees, the terms of which expire at various times through 2002 and
provide for minimum salary levels. In addition, certain officers of the acquired
companies receive a portion of the acquired company's pre-tax profits greater
than the amount defined in the officer's employment agreement. At December 31,
1998, no provision for bonus payments were made for these certain employment
agreements due to the fact that the acquired companies incurred pre-tax losses.
The aggregate commitment for future salaries and the guaranteed bonus amounts
was $2,019,455 at December 31, 1998 excluding bonus contingent on achieving
certain pre-tax profits. The Company believes payment of these contingent
bonuses will not have a material adverse effect on results of operations,
financial condition or cash flows. In addition, the Company has entered into an
employment contract with a former owner of a subsidiary, expiring in 2009, that
provides for a minimum salary that is payable even in the event of termination
for cause or upon death. The aggregate commitment for future salaries and
guaranteed bonus amounts under this contract at December 31, 1998, as amended in
March 1999 was $246,573. At December 31, 1998, the Company has accrued $103,754
for future payment under this contract.
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.
Up to April 1998, the Company purchased 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.
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THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE "FOR" THE ELECTION OF THE NOMINEES FOR
DIRECTORS SET FORTH ABOVE.
AUTHORIZE THE BOARD OF DIRECTORS TO EFFECT UP TO A 1-FOR-3 REVERSE STOCK
SPLIT OF OUR OUTSTANDING COMMON STOCK PURSUANT TO NASDAQ'S REQUEST
AND UPON A DETERMINATION BY THE BOARD THAT A REVERSE STOCK SPLIT IS
IN THE BEST INTEREST OF OUR STOCKHOLDERS.
On June 7, 1999, the Company was notified by Nasdaq that it must effect
a reverse stock split sufficient to substain a closing bid price of $1.00 per
share for a minimum of 10 consecutive trading days. In our effort to comply with
Nasdaq's request, on June 15, 1999, the Board of Directors voted unanimously to
authorize and recommend that our stockholders approve a proposal to effect up to
a 1-for-3 reverse stock split (the "Reverse Stock Split") of the Company's
Common Stock that may be effected in one or more increments by our Board
depending on market conditions at any time or from time to time until the next
annual stockholders' meeting. Pursuant to the Reverse Stock Split, each 3 shares
(or such lesser number of as the Board of Directors deems appropriate) of the
outstanding shares of our Common Stock on the date of the Reverse Stock Split
(the "Old Shares") will be automatically converted into one share of our Common
Stock (the "New Shares"). The Reverse Stock Split, if authorized by our
stockholders, will be effected only as required by Nasdaq and upon a
determination by our Board of Directors to such effect that the Reverse Stock
Split will result in the greatest marketability and liquidity of our Common
Stock, based upon the prevailing market conditions, the likely effect on the
market price of our Common Stock and other relevant factors. The Reverse Stock
Split and Reduction will become effective upon filing of a Certificate of
Amendment (the "Certificate of Amendment") to our Certificate of Incorporation
with the Delaware Secretary of State.
PURPOSE AND EFFECT OF PROPOSED REVERSE STOCK SPLIT
One of the key requirements for continued listing on Nasdaq SmallCap
Market is that our Common Stock must maintain a minimum bid price above $1.00
per share. We were notified by Nasdaq that we must effect a reverse stock split
of outstanding common stock sufficient to allow us to sustain compliance with
the $1.00 minimum bid price requirement for a period of ten days. Accordingly,
the Company believes that the Reverse Stock Split will improve the price level
of our Common Stock so that we are able to maintain compliance with the Nasdaq
listing standards. Our Board also believes that the higher share price which
should result from the Reverse Stock Split will help generate interest in the
Company among investors.
Despite our Board's belief and Nasdaq's request, the effect of the
Reverse Stock Split upon the market price for our Common Stock cannot be
predicted. There can be no assurance that the market price per New Share of our
Common Stock after the Reverse Stock Split will rise in proportion to the
reduction in the number of Old Shares of our Common Stock outstanding resulting
from the Reverse Stock Split, or that such price will either exceed or remain in
excess of the $1.00 minimum bid price as required by Nasdaq. The market price of
our Common Stock may also be based on our performance and other factors, some of
which may be unrelated to the number of shares outstanding.
The Reverse Stock Split will effect all of our stockholders uniformly
and will not affect any stockholder's percentage ownership interests in us or
proportionate voting power, except to the extent that the Reverse Stock Split
results in any of our stockholders owning a fractional share. In lieu of issuing
fractional shares, we will issue any stockholder who otherwise would have been
entitled to receive a fractional share as a result of the Reverse Stock Split
one share of our Common Stock.
The Reverse Stock Split would have the following effects upon the
number of shares of our Common Stock outstanding and the number of authorized
and unissued shares of our Common Stock. Upon the effectiveness of the Reverse
Stock Split, the number of shares owned by each stockholder will be reduced by
the ratio of up to 1 to 3 (or such lesser ratio as the Board of Directors deems
appropriate) shares of Common Stock he, she or it owned immediately prior to the
Reverse Stock Split. The per share loss and net book value of our Common Stock
will be increased because there will be fewer shares of our Common Stock
outstanding.
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Assuming a 1-for-3 Reverse Stock Split, the principal effect of the
Reverse Stock Split will be that (i) the number of shares of Common Stock issued
and outstanding (including those issued pursuant to the Company's 1996 Equity
Participation plan, as amended) will be reduced from 6,963,282 shares to
approximately 2,321,094 shares, (ii) all outstanding options and warrants
entitling the holders thereof to purchase shares of Common Stock will enable
such holders to purchase, upon exercise of their options, one-third of the
number of shares of Common Stock which such holders would have been able to
purchase upon exercise of their options immediately preceding the Reverse Stock
Split at the same aggregate price required to be paid therefor upon exercise
thereof immediately preceding the Reverse Stock Split, and (iii) the number of
shares included in the our 1997 Employee Stock Purchase Plan will be reduced to
1/3 of the number of shares currently included in such Plan.
The Reverse Stock Split will not effect the par value of our Common
Stock. As a result, on the effective date of the Reverse Stock Split, the stated
capital on our balance sheet attributable to the Common Stock will be reduced to
1/3rdth of its present amount (assuming a 1 for 3 Reverse Stock Split), and the
additional paid-in capital account shall be credited with the amount by which
the stated capital is reduced.
MANNER OF EFFECTING THE REVERSE STOCK SPLIT AND THE EXCHANGE STOCK CERTIFICATES
In the event our stockholders approve the Reverse Stock Split and
following the determination by our Board of whether or not the Reverse Stock
Split must be effected in accordance with Nasdaq's request, the Reverse Stock
Split will be effected by the filing of the Certificate of Amendment with the
Secretary of the State of Delaware. The Reverse Stock Split will become
effective on the date of filing the Certificate of Amendment unless we specify
otherwise (the "Effective Date"). As soon as practicable after the Effective
Date, we will send a letter of transmittal to each holder of record of Old
Shares outstanding on the Effective Date. The letter of transmittal will contain
instructions for the surrender of certificates representing the Old Shares. Upon
proper completion and execution of the letter of transmittal and return thereof,
together with certificates representing Old Shares, a stockholder will be
entitled to receive a certificate representing the number of New Shares into
which his Old Shares have been reclassified as a result of the Reverse Stock
Split. Stockholders should not submit any certificates until requested to do so.
No new certificate will be issued to a stockholder until such stockholder has
surrendered his outstanding certificates together with the properly completed
and executed letter of transmittal. Until surrendered, each outstanding
certificate representing Old Shares will be deemed for all corporate purposes
after the Effective Date to evidence ownership of New Shares in the
appropriately reduced number.
NO RIGHTS OF APPRAISAL
Under the Delaware General Corporation Law, our stockholders
are not entitled to appraisal rights with respect to our proposed amendment to
our charter to effect the Reverse Stock Split and we will not independently
provide our stockholders with any such right.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
We believe that the federal income tax consequences of the Reverse
Stock Split to holders of Old Shares and holders of New Shares will be as
follows:
1. Except as set forth in (5) below, no gain or loss will be
recognized by a stockholder on the surrender of the Old Shares or receipt of a
certificate representing New Shares.
2. Except as set forth in (5) below, the aggregate tax basis
of the New Shares will equal the aggregate tax basis of the Old Shares exchanged
therefor.
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3. Except as set forth in (5) below, the holding period of the
New Share will include the holding period of the Old Shares if such Old Shares
were held as capital assets.
4. The conversion of the Old Shares into the New Shares will
produce no gain or loss to us.
5. The federal income tax consequences of the receipt of an
additional share in lieu of a fractional interest is not clear but may result in
tax liabilities which should not be material in amount in view of the low value
of the fractional interest.
Our beliefs regarding the tax consequence of the Reverse Split are not
binding upon the Internal Revenue Service or the courts, and there can be no
assurance that the Internal Revenue Service or the courts will accept the
positions expressed above.
This summary does not purport to be complete and does not address the
tax consequences to holders that are subject to special tax rules, such as bank,
insurance companies, regulated investment companies, personal holding companies,
foreign entities, nonresident foreign individuals, broker-dealers and tax exempt
entities.
The state and local tax consequences of the Reverse Stock Split may
vary significantly as to each stockholder, depending upon the state in which he
resides.
The foregoing summary is included for general information only.
Accordingly, stockholders are urged to consult their own tax advisors with
respect to the Federal, State and local tax consequences of the Reverse Stock
Split.
Approval of the Reverse Stock Split and Reduction will require the
affirmative vote of a majority of the outstanding shares of our Common Stock.
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF THE REVERSE
STOCK SPLIT
APPOINTMENT OF THE COMPANY'S AUDITORS
The appointment of Deloitte & Touche LLP as independent auditors of the
Company for the fiscal year ended December 31, 1999, will be submitted for
ratification by the stockholders.
Although the Board of Directors of the Company is submitting the
appointment of Deloitte & Touche LLP for stockholder approval, it reserves the
right to change the selection of Deloitte & Touche LLP as auditors, at any time
during the fiscal year, if it deems such change to be in the best interest of
the Company, even after stockholder approval. Representatives of Deloitte &
Touche LLP are expected to be present at the Annual Meeting.
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THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS
VOTE "FOR" THE RATIFICATION OF DELOITTE & TOUCHE LLP
AS INDEPENDENT AUDITORS FOR THE COMPANY FOR THE FISCAL YEAR
ENDING DECEMBER 31, 1999.
INTEREST OF CERTAIN PERSONS IN
OPPOSITION TO MATTERS TO BE ACTED UPON
The Company is not aware of any substantial interest, direct or
indirect, by securities holdings or otherwise of any officer, director, or
associate of the foregoing persons in any matter to be acted on, as described
herein, other than elections to offices.
OTHER MATTERS
Management is not aware of any other business which may come before the
meeting. However, if additional matters properly come before the meeting,
proxies will be voted at the discretion of the proxy holders.
STOCKHOLDERS' PROPOSALS TO BE PRESENTED AT THE
COMPANY'S NEXT ANNUAL MEETING OF STOCKHOLDERS
Stockholder proposals intended to be presented for the next annual
meeting of stockholders of the Company must be received by the Company, at its
principal executive offices not later than March 1, 2000. Any such proposal will
be subject to the Company's Bylaws, as amended and applicable law.
In addition, the proxies solicited by the Board of Directors for the
next annual meeting of the Company's stockholders will confer discretionary
authority to vote on any stockholder proposal presented at that meeting, unless
the Company is provided with notice of such proposal no later than May 19, 2000.
AVAILABILITY OF FORM 10-KSB ANNUAL REPORT
A copy of the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1998 and the Company's Quarterly Report in Form 10-QSB for the
quarter ended March 31, 1999 have been included with this Proxy Statement, but
is exclusive of certain exhibits filed therewith, including related exhibits as
filed with the Securities and Exchange Commission. These exhibits are available
without charge to stockholders upon request to Bristol Retail Solutions, Inc,
Attn: Michael Shimada, 5000 Birch Street, Suite 205, Newport Beach, California
92660.
BY ORDER OF THE BOARD OF DIRECTORS
Michael Shimada
Newport Beach, California SECRETARY
June 28, 1999
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THIS PROXY IS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS
BRISTOL RETAIL SOLUTIONS, INC.
PROXY -- ANNUAL MEETING OF STOCKHOLDERS -- JULY 21 , 1999
The undersigned, revoking all previous proxies, hereby appoint(s) Larry
Cohen as Proxy, with full power of substitution, to represent and to vote all
Common Stock of Bristol Retail Solutions, Inc. owned by the undersigned at the
Annual Meeting of Stockholders to be held in Newport Beach, California on July
21, 1999, including any original or subsequent adjournment thereof, with respect
to the proposals set forth in the Notice of Annual Meeting and Proxy Statement.
No business other than matters described below is expected to come before the
meeting, but should any other matter requiring a vote of stockholders arise, the
person named herein will vote thereon in accordance with his best judgment. All
powers may be exercised by said Proxy. Receipt of the Notice of Annual Meeting
and Proxy Statement is hereby acknowledged.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING.
1. To elect the following individuals to the Board of Directors to
serve for the term of their designated class and until their
successors have been elected and qualified. Nominees:
Lawrence Cohen Michael Shimada Peter Stranger Dr. Jack Borsting
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE PLEASE DRAW A LINE THROUGH THAT NOMINEE'S NAME)
[ ] WITHHOLDING AUTHORITY to vote for all nominees listed above
2. To authorize the Board of Directors to effect up to a 1-for-3
reverse stock split of the Company's outstanding Common Stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To ratify the appointment of the Company's independent auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED. IF NO SPECIFIC
DIRECTION IS GIVEN, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE
NOMINEES NAMED IN PROPOSAL 1 AND FOR PROPOSAL 2 AND PROPOSAL 3.
This proxy may be revoked at any time prior to the Annual Meeting. If
you received more than one proxy card, please date, sign and return all cards in
the accompanying envelope.
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Please sign exactly as name appears below. When shares are held by joint
tenants, both tenants should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation or other entity, please sign in the corporate name by President or
other authorized officer or person. If a partnership, please sign in partnership
name by authorized person.
--------------------------------------------
Signature
--------------------------------------------
Signature If Held Jointly
--------------------------------------------
(Please Print Name)
--------------------------------------------
Number of Shares Subject to Proxy
Dated: ________________________, 1999
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
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