As Filed with the Securities and Exchange Commission on May 1, 1996
Registration No. 333-719
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
AMENDMENT NO. 3 TO
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
BASE TEN SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
New Jersey 22-1804206
(State or other jurisdiction (I.R.S. employer Identification no.)
or incorporation or organization)
One Electronics Drive 08619
Trenton, New Jersey
(Address of Registrant's principal executive offices) (Zip Code)
Myles M. Kranzler
Base Ten Systems, Inc.
One Electronic Drive
Trenton, NJ 08619
(609-586-7010)
(Name and address of agent for service)
Approximate Date of Commencement of Proposed Sale to the Public:
From time to time following the effective date of this Registration Statement
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans please check the following
box: / /
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: /x/
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its Effective Date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such dates as the Commission, acting pursuant to said
Section 8(a), may determine.
================================================================================
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 2, 1996
PROSPECTUS
451,000 Shares
BASE TEN SYSTEMS, INC.
Class A Common Stock
All 451,000 shares (the "Shares") of Class A Common Stock ("Class A Common
Stock"), of Base Ten Systems, Inc., a New Jersey corporation (the "Company" or
"Base Ten"), offered hereby are being offered by certain stockholders of the
Company (the "Selling Stockholders"). The Shares may be offered by the Selling
Stockholders from time to time in open market transactions, negotiated
transactions, principal transactions or by a combination of these methods of
sale. See "Plan of Distribution."
The Shares offered for sale hereby are issuable to the Selling Stockholders
upon exercise of outstanding warrants and options. The Company has agreed to
provide certain registration rights to the Selling Stockholders. See "Selling
Stockholders."
None of the proceeds from the sale of the Shares by the Selling
Stockholders will be received by the Company. Base Ten has agreed to bear all
expenses in connection with the registration and sales of the Shares, other
than underwriting discounts and selling commissions. The Company has also
agreed to indemnify the Selling Stockholders against certain liabilities,
including liabilities under the Securities Act of 1933, as amended.
On April 26, 1996, the last reported sale price of the Class A Common Stock
on the Nasdaq National Market was $ 10 7/8. The Class A Common Stock is traded
under the Nasdaq symbol "BASEA."
See "Risk Factors" on page 2 for a discussion of certain factors that
should be considered in evaluating an investment in the Common Stock.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
May 2, 1996
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "SEC"). Reports, proxy material and other information filed by
the Company can be inspected and copied at prescribed rates at the public
reference facilities maintained by the SEC at 450 5th Street, N.W. Judiciary
Plaza, Washington, D.C. 20549 and the following Regional Offices of the SEC: 7
World Trade Center, Suite 1300, New York, New York 10048 and 500 West Madison
Street, 14th Floor, Chicago, Illinois 60661-2511. Copies of these material can
also be obtained from the Public Reference Section of the SEC at 450 5th Street,
N.W., Judiciary Plaza, Washington, D.C. 20549.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the SEC under the
Exchange Act are incorporated by reference in this Prospectus:
1. Annual Report on Form 10-K for the fiscal year ended October 31, 1995.
2. Quarterly Report on Form 10-Q for the fiscal quarter ended January 31,
1996.
3. Proxy Statement dated February 24, 1995 for the Company's Annual
Meeting of Stockholders.
4. All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the
termination of this offering will be deemed to be incorporated herein
by reference and to be a part hereof from their respective filing
dates.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes that statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a Prospectus
Supplement is delivered, upon request, a copy of the documents incorporated by
reference in this Prospectus. Requests should be directed to Base Ten Systems,
Inc., One Electronic Drive, Trenton, New Jersey 08169, Attention: Edward J.
Klinsport (609) 586-7010. Additional copies of the Prospectus are also
available from the Company or the Transfer Agent upon request.
SUMMARY INFORMATION
The following summary is qualified in its entirety by the detailed
information and consolidated financial statements included elsewhere or
incorporated by reference in this Prospectus.
Base Ten is engaged in the design and manufacture of electronic systems
employing safety critical software for defense markets and the development of
commercial applications focused on batch processing control, medical screening
and image processing software. The Company also manufactures defense products
to specifications for prime government contractors and designs and builds
proprietary electronic systems for use in secure communications by various U.S.
government agencies.
Specialization in extreme reliability defense products has enabled the
Company to develop expertise in the field of safety critical technology
dedicated to the prevention of performance errors. Operations in this
environment during the last two decades have also provided experience in
developing advanced quality control procedures for products meeting stringent
government standards as well as familiarity with complex government regulations
and
1
<PAGE>
agency procedures. Over the last several years, Base Ten has redirected
resources to decrease its historical dependence on defense contracting and has
concentrated on commercial products for highly regulated industries, relying on
the same safety critical techniques developed in its traditional businesses.
While the Company's nondefense programs involve major potential markets, the
resulting products are still primarily developmental and may not succeed in
reaching their potential.
RISK FACTORS
Risk of Recurring Losses. The Company recognized a net loss of $875,000 or
$.13 per share in fiscal 1995 and could continue to incur losses in subsequent
periods if revenues from its nondefense software products fail to offset
declining revenues form its defense operations. The 1995 losses resulted from
reduction in defense related sales and an increase in expenses associated with
the development and introduction of nondefense products by Base Ten's Medical
Technology Division. The Company's commercial development of its manufacturing
execution, medical screening and ultrasound image archiving software products
have been internally funded and could be adversely affected by delays in the
development cycle, competition and changing technology.
Risks Associated with Dependence on Major Contracts. Base Ten's defense
operations have historically been dependent on a limited number of customers or
contracts. The Company primary revenue sources during fiscal 1995, 1994 and
1993 were defense related programs with the United States military and other
agencies or contractors, accounting for 40%, 28% and 68% of revenues,
respectively. The Company has also remained dependent on the sale of weapons
control systems for the West German and Italian versions of the Tornado
aircraft, accounting for 36% of revenues in fiscal 1995 and 1994 and 17% of
fiscal 1993 revenues. Profit margins for these programs are limited by strict
government procedures, and all aspects of the Company's participation in these
markets are characterized by intense competition. Base Ten's investment of
funds in product development has not always resulted in sales. Any termination
of the Company's major contracts or loss of its primary customers in this market
would have a material adverse impact on its financial condition.
Risks Associated with Change In Business Direction. In response to sharp
declines in sales and profitability resulting from significant reductions in
military defense expenditures beginning in 1990, Base Ten implemented a plan for
reducing fixed costs and redeploying its resources to development projects that
are subject to all of the risks inherent in the commercialization of new
products for nondefense markets in which the Company is not an established
participant. The Company has been required to significantly increase its
technical and marketing staffs to accommodate anticipated growth in these fields
without any assurance of achieving that growth. The developmental nature of
these products makes their ultimate success in the marketplace uncertain.
Risks of Delays in Obtaining Regulatory Approvals for New Products.
Because the Company has concentrated on products that draw upon its electronic,
software and systems engineering capabilities in safety critical, highly
regulated environments, many of its new products are subject to regulatory
approval procedures that increase development costs and can substantially delay
commercialization efforts. Base Ten's medical screening programs involve
noninvasive testing procedures but are nevertheless treated by the Food and Drug
Administration (the FDA) as a medical device under guidelines introduced in
1991, requiring FDA clearance prior to sales in the United States. The Company
s first medical screening software program was submitted to the FDA in August
1992 and was initially subjected to review under a premarket approval
application supported by prospective clinical data before an Advisory Panel
convened by the FDA denied approval on the grounds that the product should not
be classified as a medical device. The FDA subsequently reclassified the
software as a Class 1 Tier 3 medical device requiring only a 510(k) premarket
notification and granted Base Ten permission to market the device beginning in
September 1995. Although the basic software used in this device can be applied
to a wide variety of medical screening programs, the Company has postponed
further development efforts for this product line pending implementation of a
more favorable regulatory environment. Uncertainties in the domestic regulatory
structure and delays inherent in approval procedures could deter or postpone
other commercial development efforts by the Company.
Risk of Inadequate Financial Resources. The Company has financed its
development efforts to date from equity capital and retained earnings, depleting
its cash and cash equivalents to $3.6 million at the end of fiscal 1995.
2
<PAGE>
In view of its limited financial resources, Base Ten will be unable to continue
pursuing its development objectives at the desired pace and scope without
additional financing or increased sales of its new products. Funds generated
from operations of the Medical Technology Division to date have been
substantially less than the development and marketing costs for these products.
In the absence of accelerated sales by the Medical Technology Division, the
Company could be required to raise additional equity capital or incur debt to
finance future development activities. The issuance of additional equity could
be dilutive to existing stockholders, and the alternative of financing
development through borrowings could weaken the Company's financial condition.
Risk of Inadequate Marketing Resources. Success in the technological
development and refinement of the Company s new products will not guarantee
profitable sales without substantial marketing resources that may be unavailable
to Base Ten. The Company's limited exposure to healthcare, pharmaceutical
manufacturing and other relevant commercial markets along with financial
constraints could impair its ability to penetrate those markets with sufficient
speed to fully capitalize on its technological lead time. The Company is
dependent on strategic alliances and OEM relationships to facilitate marketing
arrangements for its new products in the EEC and is primarily dependent on its
own limited marketing resources for penetrating domestic markets.
Intensely Competitive Nature of the Company's Business. Base Ten competes
in both defense and commercial sectors with a number of businesses that have
substantially greater financial, technical, manufacturing and marketing
resources. In the defense sector, the Company competes with established U.S.
and foreign manufacturers of weapons control and similar equipment, many of whom
are able to offer a broader product base. In the secure communications market,
competitors include established manufacturers that have greater experience as
well as product diversification. In the markets for its manufacturing
execution, medical screening and ultrasound image archiving software, Base Ten
believes it competes with many small and several large established firms with
assets and resources substantially greater than those available to the Company.
Risk of Technological Obsolescence. The industries in which the Company
competes are characterized by rapid technological changes. Accordingly,
products using different technologies could be introduced before market
acceptance is achieved for any of Base Ten s new products. Historically, Base
Ten has experienced time lags of up to three years between commencement of
marketing activities through the completion of field trials and ultimate sales
of its military products. A similar time lag was experienced in securing
regulatory approval from the FDA for the Company's first medical screening
product. Similar or longer delays could be experienced for other products,
during the course of which Base Ten could face the risk of the products
technological obsolescence.
Risks from Dependence on Subcontractors. The Company s manufacturing
operations primarily involve the assembly of final products from components and
sub-assemblies supplied by other manufacturers. Base Ten has single sources of
supply for certain sub-assemblies and integrated circuits manufactured to its
specifications. The Company's efforts to maintain an inventory of material and
components to cover foreseeable production requirements would not protect it
against production delays and increased costs if a single source were unable to
support its needs. Delays in the Company's manufacturing output could adversely
affect its contractual performance and cash flow.
Risks Associated with Dependence on Key Personnel. The Company's success
will continue to be dependent to a large extent upon its ability to retain the
services of its executive officers and technical staff. To reduce costs, Base
Ten has curtailed salary increases from time to time and suspended contributions
to its 401(k) plan. Current compensation and benefit levels could contribute to
the loss of any key personnel or reduced productivity, either of which could
have a materially adverse affect on the Company.
Foreign Trade and Currency Exchange Related Risks. A portion of the
Company's revenues is derived from foreign customers and is subject to
disruption by political and economic conditions abroad. Currency exchange
fluctuations could also affect the Company by increasing the price of its
products to foreign customers or decreasing the cost of competing products
abroad.
No Dividends. Base Ten has not paid dividends on its Common Stock since
1985 and presently intends to retain any future earnings for reinvestment in
its business. Accordingly, the Company does not anticipate paying any
dividends in the foreseeable future.
3
<PAGE>
Control by Holders of Class B Common Stock. Holders of the Company's Class
B Common Stock, of which 48.91% is owned on a fully diluted basis by management,
are entitled to elect 75% of the members of Base Ten's board of directors (the
Board ). In addition, holders of Class B Common Stock receive one vote per
share held, compared to one-tenth (1/10th) of one vote per share held for Class
A Common Stock, on all matters other than the election of directors submitted to
the Company's shareholders, entitling holders of Class B Common Stock to 39% of
the Company's combined voting power on those matters. Accordingly, holders of
the Class B Common Stock are able to control the election of a majority of the
members of the Board and to substantially influence all other aspects of
corporate governance.
Dependence on Continuation of Security Clearances. The Company relies on
the continuance of its security clearances from agencies of the United States
government and from NATO for its defense products. If Base Ten experienced any
material deficiencies in the manner or method of complying with prescribed
security regulations, any resulting loss of its security clearances would have
an immediate and adverse affect on the Company's business.
DESCRIPTION OF CAPITAL STOCK
General.
The authorized capital stock of Base Ten consists of 22,000,000 shares of
Class A Common Stock, 2,000,000 shares of Class B Common Stock and 1,000,000
shares of Preferred Stock, all of which have a par value of $1.00 per share.
Common Stock
Dividends. Both classes of Base Ten's Common Stock have identical cash and
property dividend rights except that no cash or property dividend may be paid on
the Class B Common Stock unless a dividend at least equal in amount is paid
concurrently on the Class A Common Stock. Cash or property dividends can be
declared and paid on the Class A Common Stock without being declared and paid on
the Class B Common Stock.
If a distribution is paid in shares of Class A Common Stock or Class B
Common Stock, the distribution may be paid only as follows: (i) shares of
Class A Common Stock may be paid to holders of shares of Class A Common Stock
and shares of Class B Common Stock may be paid to holders of shares of Class B
Common Stock, and (ii) the same number of shares shall be paid in respect of
each outstanding share of Class A Common Stock or Class B Common Stock. Base
Ten may not subdivide or combine shares of either class without at the same
time proportionately subdividing or combining shares of the other class.
Voting Rights. Holders of Class A Common Stock are entitled to elect 25%
of the members of the Board of Directors (rounded to the next highest whole
number) so long as the number of outstanding shares of Class A Common Stock is
at least 10% of the number of outstanding shares of both classes. Currently,
the holders of Class A Common Stock are entitled, as a class, to elect two
directors of Base Ten, and the holders of the Class B Common Stock are entitled,
as a class, toelect the remaining three directors. As a result of this
provision, the holders of a majority of the Class B Common Stock can and will
continue to be able to elect a majority of the directors and thereby control
Base Ten, regardless of the number of shares of Class B Common Stock outstanding
from time to time. Directors may be removed, only for cause, by the holders of
the class of common stock which elected them.
Except for the election or removal of directors as described above and
except for class votes as required by law or Base Ten's Restated Certificate of
Incorporation, holders of both classes of common stock vote or consent as a
single class on all matters, with each share of Class A Common Stock having one-
tenth vote per share and each share of Class B Common Stock having one vote per
share.
The outstanding shares of the Class A Common Stock currently represents
approximately 92% of the total number of shares of both classes outstanding. If
the number of outstanding shares of Class A Common Stock should becomes less
than 10% of the total number of shares of both classes of common stock
outstanding, the holders of Class A Common Stock would not have the right to
elect 25% of the Board of Directors, but would have one-tenth vote per share for
all directors, and the holders of Class B Common Stock would have one vote per
share for all directors.
4
<PAGE>
Conversion. At the option of the holder of record, each share of Class B
Common Stock is convertible at any time into one share of Class A Common Stock.
Conversion of a significant number of shares of Class B Common Stock into Class
A Common Stock could put control of the Board of Directors into the hands of the
holders of a relatively small equity interest in Base Ten who would continue to
hold the Class B Common Stock. The Class A Common Stock is not convertible.
Other Rights. Shareholders of the Base Ten have no preemptive or other
rights to subscribe for additional shares. On liquidation, dissolution or
winding up of Base Ten, all shareholders, regardless of class, are entitled to
share ratably in any assets available for distribution. No shares of either
class are subject to redemption. All outstanding shares are fully paid and non-
assessable.
Transfer Agent. The transfer agent and registrar for shares of the Class A
Common Stock and Class B Common Stock is American Stock Transfer & Trust
Company, 40 Wall Street, New York, New York 10005.
Preferred Stock
No shares of Preferred Stock have been issued. Base Ten's Board of
Directors is empowered to fix the designations, powers, preferences and
relative, participating, optional or other special rights of the Preferred
Stock and the qualifications, limitations or restrictions of those preferences
or rights. The voting rights of the Class B Common Stock described above are
subject to voting rights that may be granted in connection with the creation of
any series of Preferred Stock. However, no issue of Preferred Stock may change
the ratio of one-tenth of a vote for each share of Class A Common Stock to one
vote for each share of Class B Common Stock described above.
SELLING STOCKHOLDERS
The following table sets forth (i) the name of each Selling Stockholder,
(ii) to the best of the Company's knowledge, the total number of shares of
Class A Common Stock owned beneficially by each Selling Stockholder as of the
date of this Prospectus, (iii) the number of Shares to be offered for the
account of each Selling Stockholder in this offering and (iv) to the best of
the Company's knowledge, the number of shares of Class A Common Stock to be
owned by each Selling Stockholder after giving effect to this offering.
<TABLE><CAPTION>
Number of
Shares of
Number of Number of Stock to be
Shares of Shares to be Owned after
Name Stock Owned Offered the Offering
---- ------------- -------------- --------------
<S> <C> <C> <C>
Alexander M. Adelson 369,416 161,000 208,416
Bruce D. Cowen 606,250 175,000 431,250
Donald M. Daniels 10,000 10,000 0
Alan S. Poole 10,000 10,000 0
Daniel Tierney 15,000 15,000 0
Pharma Overseas, Ltd. 30,000 30,000 0
Strategic Growth International, Inc. 150,000 50,000 100,000
---------- ---------- ---------
Total 1,190,666 451,000 739,666
========== ========== =========
</TABLE>
The information set forth in the foregoing table was provided to the
Company by the Selling Stockholders. None of the Selling Stockholders has had
any position or other material relationship with the Company or its affiliates
during the past three years, except that Messrs. Adelson and Daniels have served
as directors of Base Ten since 1992, Mr. Poole has served as a director of Base
Ten since 1994, Mr. Cowen has served as a consultant to the Company since 1991,
Mr. Tierney is an officer of Clonmel Health Care, Ltd., an Irish pharmaceutical
manufacturer that has been a customer of Base Ten during the last three years,
and Strategic Growth International, Inc. has provided public relations services
to the Company during that period.
5
<PAGE>
All of the Shares being offered hereunder by the Selling Stockholders are
issuable upon exercise of warrants or options issued by Base Ten to the Selling
Stockholders. The Company agreed to register the Shares for the accounts of the
Selling Stockholders and has filed with the Securities and Exchange Commission
under the Securities Act a Registration Statement on Form S-3 of which this
Prospectus is a part, covering the resale of the Shares from time to time.
PLAN OF DISTRIBUTION
The Shares being offered hereunder by the Selling Stockholders will be
offered from time to time in open market transactions, negotiated transactions,
principal transactions or by a combination of these methods of sale. The Shares
may be offered at market prices prevailing at the time of sale, at prices
related to the prevailing market prices or at negotiated prices. The Selling
Stockholders may effect these transactions by selling Shares to or through
broker-dealers. Broker-dealers may receive compensation in the form of
discounts, concessions or commissions from Selling Stockholders or purchasers
for whom the broker-dealers may act as agent or to whom they sell as principal
or both. Compensation paid to a particular broker-dealer might be in excess of
customary commissions. Selling Stockholders and broker-dealers participating in
the sale of Shares may be deemed to be underwriters, and any profit on the sale
of Shares or compensation received by them may be deemed to be underwriting
compensation under the Securities Act.
The Company has agreed with the Selling Stockholders, among other things,
(i) to bear all expenses (other than underwriting discounts and selling
commissions, and fees and expenses of counsel and other advisers to the
Selling Stockholders) in connection with the registration and sale of the
Shares being offered by them and (ii) to indemnify the Selling Stockholders
against certain liabilities, including liabilities under the Securities Act,
as underwriters or otherwise.
6
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
SEC registration fee . . . . . . . $
Blue sky fees and expenses . . . . 250.00*
Transfer Agent's fees . . . . . . . 50.00*
Printing and engraving costs . . . 100.00*
Legal fees . . . . . . . . . . . . 2,500.00*
Accounting fees . . . . . . . . . . 1,000.00*
Miscellaneous . . . . . . . . . . . *
-------------
Total . . . . . . . . . . .
$ 5,000.00*
=============
----------------
* Estimated
Item 15. Indemnification of Officers and Directors
Article 9 of Base Ten's Restated Certificate of Incorporation, as
amended, provides as follows:
Any present or future Director or Officer of the Corporation, and any
present or future director or officer of any other corporation serving
as such at the request of the Corporation, or the legal representative
of any such Director or Officer, shall be indemnified by the
Corporation against reasonable costs, expenses (exclusive of any
amount paid to the Corporation in settlement) and counsel fees paid or
incurred in connection with any action, suit or proceeding to which any
such Director or Officer or his legal representative may be made a
party by reason of his being or having been such Director or Officer;
provided that, (1) said action, suit or proceeding shall be prosecuted
against such Director or Officer or against his legal representative
to final determination, and it shall not be finally adjudged in said
action, suit or proceeding that he had been derelict in the
performance of his duties as such Director or Officer, or (2) said
action, suit or proceeding shall be settled or otherwise terminated as
against such Director or Officer or his legal representative without a
final determination on the merits and it shall be determined by a
majority of the members of the Board of Directors who are not parties
to said action, suit or proceeding, or by a person or persons
specially appointed by the Board of Directors to determine the same
that said Director or Officer has not in any substantial way been
derelict in the performance of his duties as charged in such action,
suit or proceeding. The foregoing right of indemnification shall not
be exclusive of other rights to which such Director or Officer or legal
representative may be entitled by law, and shall inure to the benefit
of the heirs, executors or administrators of such Director or Officer.
Article 10 of Base Ten's Restated Certificate of Incorporation, as
amended, provides as follows:
No director or officer of the corporation shall be personally liable
to the corporation or its shareholders for damages for breach of any
duty owed to the corporation or its shareholders, except for liability
for any breach of duty based upon an act or omission (a) in breach of
such director's or officer's duty of loyalty to the corporation or its
shareholders, (b) not in good faith or involving a knowing violation
of law, or (c) resulting in receipt by such director or officer of an
improper personal benefit. As used in this Article, an act or
omission in breach of a director's or officer's duty of loyalty means
an act or omission which such director or officer knows or believes to
be contrary to the best interests of the corporation or its
shareholders in connection with a matter in which such director or
officer has a material conflict of interest.
The provisions of this Article shall be effective as and to the fullest
extent that, in whole or in part, they shall be authorized or permitted
by the laws of the State of New Jersey. No repeal or modification of
the provisions of this Article nor, to the fullest extent permitted by
law, any modification of law shall
II-1
<PAGE>
adversely affect any right or protection of a director or officer of
the corporation which exists at the time of such repeal or
modification.
Article X of Base Ten's By-Laws, as amended, entitled "Indemnification:
Insurance," provides as follows:
Section 1. The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (including an action by or in the
right of the Corporation) by reason of the fact that he is or was a
director or officer of the Corporation against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement to
the maximum extent, according to the standards and in the manner
provided by applicable law.
Section 2. To the extent, according to standards and in such manner as
the Board of Directors may direct pursuant to and in accordance with
applicable law in the particular case, the Corporation shall indemnify
any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (including
an action by or in the right of the Corporation) by reason of the
fact that he is or was an employee or agent of the Corporation, or is
or was serving at the request of the Corporation, as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement.
Section 3. The indemnification provided by this Article X shall not
be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any agreement, vote of
stockholders or disinterested directors or otherwise, both as to
action in his official capacity and as to action in another capacity
while holding such office and shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure
to the benefit of the heirs, executors and administrators of such
a person.
Section 4. The Corporation, acting by its Board of Directors, shall
have power to purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such
liability under the provisions of this Article X. Nothing in this
Section 4 shall obligate the Corporation to indemnify any person to
any extent other than as provided in Sections 1, 2, 3 and 4 of this
Article X.
Statutory authority for indemnification of and insurance for Base Ten's
directors and officers is contained in the New Jersey Business Corporation Act
("the Act"), in particular, Section 14A:3-5 of the Act, the material provisions
of which may be summarized as follows:
Directors and officers may be indemnified in non-derivative proceedings
against settlements, judgments, fines and penalties and against reasonable
expenses (including counsel fees) where the person acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation and also, in a criminal proceeding, he must have had no
reasonable cause to believe that his conduct was unlawful. In derivative
proceedings such persons may be indemnified against reasonable expenses
(including counsel fees) where the person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, but not against settlements, judgments, fines or penalties except
that, without a court determination as to entitlement to indemnity, no indemnity
may be provided to a person who has been adjudged liable to the corporation. In
all cases, the Act provides that indemnification may only be made by the
corporation (unless ordered by a court) only as authorized in a specific case
upon a determination that indemnification is proper in the circumstances because
the person has met the applicable standard of conduct required of the person,
requires a person to be indemnified for reasonable expenses (including counsel
fees) to the extent he has been successful in any proceeding and permits a
corporation to advance expenses upon an undertaking for repayment if it shall be
ultimately determined that the director or officer is not entitled to
indemnification. The indemnification and advancement of expenses provided by or
granted pursuant to the Act is
II-2
<PAGE>
not exclusive of other rights of indemnification to which a corporate agent may
be entitled under a certificate of incorporation, by-law, agreement, vote of
shareholders or otherwise. However, no indemnification may be made to or on
behalf of a director or officer if a final adjudication adverse to the director
or officer establishes that the director's or officer's acts or omissions were
in breach of his duty of loyalty to the corporation or its shareholders, were
not in good faith or involved a knowing violation of law, or resulted in
receipt by the director or officer of an improper personal benefit. A
corporation may purchase and maintain insurance on behalf of any directors and
officers against expenses incurred in any proceeding and liabilities asserted
against them by reason of being or having been a director of officer, whether or
not the corporation would have the power to indemnify the directors or officers
against such expenses and liabilities under the statute.
Each of the officers and directors of Base Ten is insured against
certain liabilities which he might incur in his capacity as an officer or
director of Base Ten or its subsidiaries pursuant to a Directors and Officers
Insurance and Company Reimbursement Policy issued by National Union Fire
Insurance Company of Pittsburgh, PA., and Home Insurance Company of
Philadelphia, PA. The general effect of the policy is that if any claims are
made against officers or directors of Base Ten or its subsidiaries or any of
them for a Wrongful Act (as defined in the policy) while acting in their
individual or collective capacities as directors or officers, to the extent
Base Ten or its subsidiary has properly indemnified such officers and
directors, the insurer will, subject to the retention amount, reimburse Base
Ten or its subsidiary for 100% of any Loss (as defined in the policy).
In addition, to the extent that Base Ten or its subsidiary has not indemnified
an officer or director, the insurer will, subject to the retention amount, pay
on behalf of such officer or director 100% of the Loss. Defense Costs (as
defined in the Policy) are part of Loss and are subject to the limits of the
policy.
The retention amount under the policy is $250,000. The retention
amount is first applied to Base Ten or its subsidiary. The retention amount
is not applicable to officers or directors if Base Ten or its subsidiary is not
permitted or required to indemnify the officers or directors. If, however,
Base Ten or its subsidiary is permitted or required to indemnify the officers
or directors, then the retention amount does apply to them.
Under the policy, the term "Wrongful Act" means any actual or alleged
error, or misstatement, or misleading statement, or act, or omission, or
neglect or breach of duty by the directors or officers in their capacities as
such, individually or collectively, or any matter claimed against them solely by
reason of their being directors or officers of Base Ten or its subsidiaries,
except that certain claims are excluded by the terms and conditions of the
policy. The term "Loss" means damages, judgments, settlements and Defense
Costs. The term "Defense Costs" means reasonable and necessary fees, costs and
expenses consented to by the insurer resulting solely from the investigation,
adjustment, defense and appeal of any claim against any director or officer, but
excluding salaries of officers or employees of Base Ten or its subsidiaries.
II-3
<PAGE>
Item 16. Exhibits.
The following documents are filed as Exhibits to this Registration Statement:
EXHIBIT INDEX
-------------
Exhibit
Number Exhibit Page
- ------ ------- ----
3. (a) Restated Certificate of Incorporation, as amended, of *
Registrant (incorporated by reference to Exhibit 4(a) to
Amendment No. 1 to Registrant's Registration Statement
on Form S-8 (File No. 2-84451) filed on July 31, 1990).
(b) Certificate of Amendment of the Restated Certificate of *
Incorporation dated September 1, 1992 (incorporated by
reference to Exhibit 4(b)(2) to Amendment No. 3 to
Registrant's Registration Statement on Form S-1 (File
No. 33-48404) filed on September 3, 1992).
(c) Amended By-Laws of the Registrant (incorporated by *
reference to Exhibit 4(d)(2) to Registrant's
Registration Statement on Form S-8 (File No. 33-60454)
filed on April 1, 1993).
5. Opinion of Stahl & Zelmanovitz, counsel to Base Ten
Systems, Inc. (previously filed)
10. (a) 1980 Deferred Compensation Agreement between the * (A)
Registrant and certain executive officers (incorporated
by reference to Exhibit 10.3 to Registrant's
Registration Statement on Form S-1 File No. 2-70259
filed on December 16, 1980).
(b) 1981 Incentive Stock Option Plan of Registrant, as * (A)
amended and restated on January 12, 1990 (incorporated
by reference to Exhibit 4(c) to Amendment No. 1 to
Registrant's Registration Statement on Form S-8 (File
No. 2-84451) filed on July 31, 1990).
(c) 1992 Stock Option Plan of Registrant (incorporated by * (A)
reference to Exhibit 10(ai) to Amendment No. 3 to
Registrant's Registration Statement on Form S-1 (File
No. 33-48404) filed on September 3, 1992).
(d) Change in Control Agreement dated October 23, 1991 * (A)
between Registrant and Myles M. Kranzler (incorporated
by reference to Exhibit 10(e) to Registrant's Annual
Report on Form 10-K (File No. 0-7100) for the fiscal
year ended October 31, 1991).
(e) Change in Control Agreement dated October 23, 1991 * (A)
between Registrant and James A. Eby (incorporated by
reference to Exhibit 10(f) to Registrant's Annual Report
on Form 10-K (File No. 0-7100) for the fiscal year ended
October 31, 1991).
(f) Change in Control Agreement dated October 23, 1991 * (A)
between Registrant and Edward J. Klinsport (incorporated
by reference to Exhibit 10(h) to Registrant's Annual
Report on Form 10-K (File No. 0-7100) for the fiscal
year ended October 31, 1991).
(g) Employment Agreement dated as of March 26, 1992 between * (A)
the Registrant and Myles M. Kranzler (incorporated by
reference to Exhibit 28(b) to Registrant's Current
Report on Form 8-K (File No. 0-7100) filed on April 10,
1992).
II-4
<PAGE>
Exhibit
Number Exhibit Page
- ------ ------- ----
(h) Employment Agreement dated as of March 26, 1992 * (A)
between the Registrant and James A. Eby (incorporated
by reference to Exhibit 28(c) to Registrant's Current
Report on Form 8-K (File No. 0-7100) filed on April
10, 1992).
(i) Employment Agreement dated as of March 26, 1992 * (A)
between the Registrant and Edward J. Klinsport
(incorporated by reference to Exhibit 28(d) to
Registrant's Current Report on Form 8-K (File No. 0-
7100) filed on April 10, 1992).
(j) Employment Agreement dated as of March 26, 1992 * (A)
between the Registrant and Alan J. Eisenberg
(incorporated by reference to Exhibit 28(e) to
Registrant's Current Report on Form 8-K (File No. 0-
7100) filed on April 10, 1992).
(k) Amended Agreement dated July 28, 1992 between the * (A)
Registrant and Alexander Adelson (incorporated by
reference to Exhibit 10(ar) to the Registrant's
Registration Statement on Amendment No. 3. to Form S-2
on Form S-1 (Registration No. 33-48404) filed on
September 3, 1992).
(l) Modification of Amended Agreement dated January 11, *
1993 between the Registrant and Alexander M. Adelson
(incorporated by reference to Registrant's Annual
Report on Form 10-K (File No. 0-7100) for the fiscal
year ended October 31, 1994).
(m) Amended Modification of Amended Agreement dated *
January 28, 1994 between the Registrant and Alexander
M. Adelson (incorporated by reference to Registrant's
Annual Report on Form 10-K (File No. 0-7100) for the
fiscal year ended October 31, 1994).
(n) Amended Consulting Agreement made as of February 24, * (A)
1992 between the Registrant and Bruce D. Cowen
(incorporated by reference to Exhibit 10(as) to the
Registrant's Registration Statement on Amendment No.
3. to Form S-2 on Form S-1 (Registration No. 33-48404)
filed on September 3, 1992).
(o) Modification of Amended Agreement dated January 11, *
1993 between the Registrant and Bruce D. Cowen
(incorporated by reference to Registrant's Annual
Report on Form 10-K (File No. 0-7100) for the fiscal
year ended October 31, 1994).
(p) Consulting Agreement dated March 1, 1994 between the *
Registrant and Bruce D. Cowen (incorporated by
reference to Registrant's Annual Report on Form 10-K
(File No. 0-7100) for the fiscal year ended October
31, 1994).
(q) Option Agreement dated as of November 9, 1992 between * (A)
the Registrant and Donald M. Daniels (incorporated by
reference to Exhibit 10(as) to the Registrant's Annual
Report on Form 10-K (File No. 0-7100) for the fiscal
year ended October 31, 1992).
(r) Option Agreement dated as of June 5, 1992 between the *
Registrant and Strategic Growth International, Inc.
(incorporated by reference to Exhibit 10(at) to the
Registrant's Annual Report on Form 10-K (File No. 0-
7100) for the fiscal year ended October 31, 1992).
(s) Acquisition Agreement dated October 28, 1994 between *
the Registrant and CKR Partners, L.L.C.
(incorporated by reference to Exhibit 2(a) to
Registrant's Current Report on Form 8-K (File
No. 0-7100) dated November 11, 1994).
II-5
<PAGE>
Exhibit
Number Exhibit Page
- ------ ------- ----
(t) Lease dated October 28, 1994 between the Registrant and *
CKR Partners, L.L.C. (incorporated by reference to
Exhibit 2(b) to Registrant's Current Report on Form 8-K
(File No. 0-7100) dated November 11, 1994).
21. Subsidiaries of the Registrant (incorporated by *
reference to Exhibit 21 to Registrant's Annual Report on
Form 10K (File No. 0-7100) for the fiscal year ended
October 31, 1995.)
23. (a) Consent of Deloitte & Touche LLP
(b) Consent of Stahl & Zelmanovitz (included as part of *
Exhibit 5 (a) above).
24. Powers of Attorney of Directors and certain Officers
(previously filed).
- -----------------------------------
* Incorporated by reference.
(A) A management contract or compensatory plan or arrangement.
Item 17. Undertakings.
1. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
Provided, however, that paragraphs (i) and (ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
II-6
<PAGE>
2. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
3. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions discussed in Item 6 of this
Registration Statement, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in such Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or a controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in such Act and will be governed by the final adjudication of such
issue.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, this 2nd day of May, 1996.
BASE TEN SYSTEMS, INC.
<TABLE>
<S> <C> <C>
By: /s/ Myles M. Kranzler By: /s/ Edward J. Klinsport By: /s/ Susan M. Klinsport
------------------------------ ---------------------------------- ------------------------------
Myles M. Kranzler Edward J. Klinsport Susan M. Klinsport
Chief Executive Officer Chief Financial Officer Principal Accounting Officer
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the date indicated.
Title Date
----- ----
Myles M. Kranzler, James A. Eby, Directors
Edward J. Klinsport, Alan J. Eisenberg,
Alexander M. Adelson, Donald M. Daniels,
Alan S. Poole*
By: /s/ Edward J. Klinsport May 2, 1996
-------------------------------------------
*Edward J. Klinsport, as attorney-in-fact
II-8
<PAGE>
<TABLE><CAPTION>
EXHIBIT INDEX
-------------
Exhibit
Number Exhibit Page
- ------ ------- ----
<C> <C> <S> <C>
3. (a) Restated Certificate of Incorporation, as amended, of *
Registrant (incorporated by reference to Exhibit 4(a) to
Amendment No. 1 to Registrant's Registration Statement on
Form S-8 (File No. 2-84451) filed on July 31, 1990).
(b) Certificate of Amendment of the Restated Certificate of *
Incorporation dated September 1, 1992 (incorporated by
reference to Exhibit 4(b)(2) to Amendment No. 3 to
Registrant's Registration Statement on Form S-1 (File No.
33-48404) filed on September 3, 1992).
(c) Amended By-Laws of the Registrant (incorporated by reference *
to Exhibit 4(d)(2) to Registrant's Registration Statement on
Form S-8 (File No. 33-60454) filed on April 1, 1993).
5. Opinion of Stahl and Zelmanovitz, counsel to Base Ten
Systems, Inc. (previously filed).
10. (a) 1980 Deferred Compensation Agreement between the Registrant * (A)
and certain executive officers (incorporated by reference to
Exhibit 10.3 to Registrant's Registration Statement on Form
S-1 File No. 2-70259 filed on December 16, 1980).
(b) 1981 Incentive Stock Option Plan of Registrant, as amended * (A)
and restated on January 12, 1990 (incorporated by reference
to Exhibit 4(c) to Amendment No. 1 to Registrant's
Registration Statement on Form S-8 (File No. 2-84451) filed
on July 31, 1990).
(c) 1992 Stock Option Plan of Registrant (incorporated by * (A)
reference to Exhibit 10(ai) to Amendment No. 3 to
Registrant's Registration Statement on Form S-1 (File No.
33-48404) filed on September 3, 1992).
(d) Change in Control Agreement dated October 23, 1991 between * (A)
Registrant and Myles M. Kranzler (incorporated by reference
to Exhibit 10(e) to Registrant's Annual Report on Form 10-K
(File No. 0-7100) for the fiscal year ended October 31,
1991).
(e) Change in Control Agreement dated October 23, 1991 between * (A)
Registrant and James A. Eby (incorporated by reference to
Exhibit 10(f) to Registrant's Annual Report on Form 10-K
(File No. 0-7100) for the fiscal year ended October 31,
1991).
(f) Change in Control Agreement dated October 23, 1991 between * (A)
Registrant and Edward J. Klinsport (incorporated by
reference to Exhibit 10(h) to Registrant's Annual Report on
Form 10-K (File No. 0-7100) for the fiscal year ended
October 31, 1991).
(g) Employment Agreement dated as of March 26, 1992 between the * (A)
Registrant and Myles M. Kranzler (incorporated by reference
to Exhibit 28(b) to Registrant's Current Report on Form 8-K
(File No. 0-7100) filed on April 10, 1992).
(h) Employment Agreement dated as of March 26, 1992 between the * (A)
Registrant and James A. Eby (incorporated by reference to
Exhibit 28(c) to Registrant's Current Report on Form 8-K
(File No. 0-7100) filed on April 10, 1992).
</TABLE>
II-9
<PAGE>
Exhibit
Number Exhibit Page
- ------ ------- ----
(i) Employment Agreement dated as of March 26, 1992 between the * (A)
Registrant and Edward J. Klinsport (incorporated by
reference to Exhibit 28(d) to Registrant's Current Report
on Form 8-K (File No. 0-7100) filed on April 10, 1992).
(j) Employment Agreement dated as of March 26, 1992 between the * (A)
Registrant and Alan J. Eisenberg (incorporated by reference
to Exhibit 28(e) to Registrant's Current Report on Form 8-K
(File No. 0-7100) filed on April 10, 1992).
(k) Amended Agreement dated July 28, 1992 between the * (A)
Registrant and Alexander Adelson (incorporated by reference
to Exhibit 10(ar) to the Registrant's Registration
Statement on Amendment No. 3. to Form S-2 on Form S-1
(Registration No. 33-48404) filed on September 3, 1992).
(l) Modification of Amended Agreement dated January 11, 1993 *
between the Registrant and Alexander M. Adelson
(incorporated by reference to Registrant's Annual Report on
Form 10-K (File No. 0-7100) for the fiscal year ended
October 31, 1994).
(m) Amended Modification of Amended Agreement dated January 28, *
1994 between the Registrant and Alexander M. Adelson
(incorporated by reference to Registrant's Annual Report on
Form 10-K (File No. 0-7100) for the fiscal year ended
October 31, 1994).
(n) Amended Consulting Agreement made as of February 24, 1992 * (A)
between the Registrant and Bruce D. Cowen (incorporated by
reference to Exhibit 10(as) to the Registrant's
Registration Statement on Amendment No. 3. to Form S-2 on
Form S-1 (Registration No. 33-48404) filed on September 3,
1992).
(o) Modification of Amendment Agreement dated January 11, 1993 *
between the Registrant and Bruce D. Cowen (incorporated by
reference to Registrant's Annual Report on Form 10-K (File
No. 0-7100) for the fiscal year ended October 31, 1994).
(p) Consulting Agreement dated March 1, 1994 between the *
Registrant and Bruce D. Cowen (incorporated by reference to
Registrant's Annual Report on Form 10-K (File No. 0-7100)
for the fiscal year ended October 31, 1994).
(q) Option Agreement dated as of November 9, 1992 between the * (A)
Registrant and Donald M. Daniels (incorporated by reference
to Exhibit 10(as) to the Registrant's Annual Report on Form
10-K (File No. 0-7100) for the fiscal year ended October
31, 1992).
(r) Option Agreement dated as of June 5, 1992 between the *
Registrant and Strategic Growth International, Inc.
(incorporated by reference to Exhibit 10(at) to the
Registrant's Annual Report on Form 10-K (File No. 0-7100)
for the fiscal year ended October 31, 1992).
(s) Acquisition Agreement dated October 28, 1994 between the *
Registrant and CKR Partners, L.L.C. (incorporated by
reference to Exhibit 2(a) to Registrant's Current Report
on Form 8-K (File No. 0-7100) dated November 11, 1994).
(t) Lease dated October 28, 1994 between the Registrant and *
CKR Partners, L.L.C. (incorporated by reference to
Exhibit 2(b) to Registrant's Current Report on Form 8-K
(File No. 0-7100) dated November 11, 1994).
II-10
<PAGE>
Exhibit
Number Exhibit Page
- ------ ------- ----
21. Subsidiaries of the Registrant (incorporated by reference to *
Exhibit 21 to Registrant's Annual Report on Form 10K (File
No. 0-7100) for the fiscal year ended October 31, 1995.)
23. (a) Independent Auditors' Consent. *
(b) Consists of Stahl & Zelmanovitz (included as part of
Exhibit 5(a) above).
24. Power of Attorney of Directors and certain Officers (previously
filed).
_______________
* Incorporated by reference.
(A) A management contract or compensatory plan or arrangement.
II-11
EXHIBIT 23(a)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statement of
Base Ten Systems, Inc. on Amendment No. 3 to Form S-3 of our report dated
December 15, 1995, appearing in the Annual Report on Form 10-K of Base Ten
Systems, Inc. for the year ended October 31, 1995.
DELOITTE & TOUCHE LLP
Parsippany, New Jersey
May 2, 1996
