BASE TEN SYSTEMS INC, DEF 14A, 1997-02-07

BASE TEN SYSTEMS INC
DEF 14A, 1997-02-07
SEARCH, DETECTION, NAVAGATION, GUIDANCE, AERONAUTICAL SYS

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30-Jan-97

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PROXY STATEMENT

PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]

Check the Appropriate Box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12

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BASE TEN SYSTEMS, INC.
(Name of Registrant as Specified in its Charter)
and
(Name of Person Filing Proxy Statement)

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Payment of Filing Fee (Check the appropriate box):

[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3)
[ ] Fee computed per Exchange Act Rules 14a-6(i)(4) and 0-11

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

Amount Previously Paid: N/A
Form or Registration No.:
Filing Party:
Date Filed:

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30-Jan-97

BASE TEN SYSTEMS, INC.
One Electronics Drive
P.O. Box 3151
Trenton, New Jersey 08619

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To the Shareholders:

The Annual Meeting of Shareholders of Base Ten Systems, Inc. will be held at the
Four Seasons Hotel, 57 East 57th Street, New York City, New York 10022 on March
20, 1997 at 4:00 p.m. for the following purposes:

(1) The election by the holders of Class B Common Stock of three
directors to the Board of Directors, of which two directors are to be
elected for a three year term and one director is to be elected for a
one year term.

(2) The election by the holders of Class A Common Stock of one director
for a two year term.

(3) Approval of the Adoption of Amendments to the Company's Discretionary
Deferred Compensation Plan.

(4) To act upon any other business as may properly come before the meeting.

Shareholders at the close of business on January 31, 1997 will be entitled to
vote at the meeting or any adjournment thereof.

By Order of the Board of Directors,

EDWARD J. KLINSPORT
Executive Vice President and Secretary

February 7, 1997

YOUR VOTE IS IMPORTANT,
REGARDLESS OF HOW MANY SHARES YOU OWN.

TO VOTE YOUR SHARES, PLEASE MARK, SIGN AND DATE
THE ACCOMPANYING PROXY CARD AND MAIL IT PROMPTLY
IN THE ENCLOSED RETURN ENVELOPE.

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30-Jan-97

BASE TEN SYSTEMS, INC.
PROXY STATEMENT

GENERAL

This Proxy Statement is furnished in connection with the solicitation of proxies
on behalf of the Board of Directors (the "Board") of Base Ten Systems, Inc.
("Base Ten" or the "Company"), to be voted at the Company's Annual Meeting of
Shareholders on March 20, 1997. This Proxy Statement and the enclosed form of
proxy are first being mailed to shareholders on or about February 7, 1997. Upon
request, additional copies of the proxy materials will be furnished without cost
to brokers and other nominees for forwarding to beneficial owners of shares held
in their names.

There are three matters to be considered at the meeting. The first matter is
the election of three directors of the Company by the holders of Class B Common
Stock, the second matter is the election of one director by the holders of Class
A Common Stock and the third matter is the approval of amendments to the
Company's Discretionary Deferred Compensation Plan.

Shareholders of record as of the close of business on January 31, 1997 are
entitled to notice of and to vote at the meeting. As of that date, 7,365,317
shares of the Company's Class A Common Stock and 445,121 shares of its Class B
Common Stock were issued and outstanding. The holders of Class A Common Stock
are entitled to elect 25% of Base Ten's directors (rounded to the next highest
whole number), and the holders of Class B Common Stock are entitled to elect the
remaining directors. Each share of Class A Common Stock is entitled to one vote
in the election of Class A directors and one-tenth of a vote on any other matter
properly presented at the meeting other than the election of directors. Each
share of Class B Common Stock is entitled to one vote in the election of the
Class B directors and all other matters other than the election of Class A
directors. Cumulative voting is not allowed in the election of directors or for
any other purpose. A majority of the outstanding shares of the Company entitled
to vote, represented in person or by proxy, will constitute a quorum at the
meeting, and a majority of the outstanding shares of Class B Common Stock and
Class A Common Stock, represented in person or by proxy, will constitute a
quorum for the election of the three directors and the election of one director,
respectively. To be elected, nominees must receive a plurality of the votes
cast, in person or by proxy, by shareholders entitled to vote on such matter.

At the 1996 Annual Meeting of Shareholders, James A. Eby did not stand for
reelection as a Class A director and the Board was reduced in number from seven
to six. In May 1996, Donald M. Daniels, a director with a term expiring in
1998, resigned from the Board and the Board appointed Bruce D. Cowen as a
successor director and Vice Chairman of the Board. In accordance with the New
Jersey Business Corporation Act, a successor director's term expires as of the
immediately following Annual Meeting of Shareholders and as a result Mr. Cowen
has been nominated for election as a director at this Annual Meeting.

Pursuant to the Company's Restated Certificate of Incorporation, the Board is
divided into three classes, to be as nearly equal in number as possible, with
each class to have a three year term. Consistent with such classified Board and
consistent with the right of the holders of the Class A Common Stock to elect
25% of the entire Board (rounded to the next highest number), the Board has
nominated Edward J. Klinsport and Alexander M. Adelson, whose terms are expiring
at this Annual Meeting, to three year terms as Class B directors, and Mr. Poole,
whose term is also expiring at this Annual Meeting, to a one year term as a
Class B director. Mr. Cowen, who was appointed to the Board in May 1996, has
been nominated as a Class A director for a two year term.

All properly executed proxies received prior to the meeting will be voted in
accordance with the instructions marked on the proxy cards. If no instructions
are provided, shares of Class B Common Stock will be voted "for" election of the
three Class B nominees to the Board and shares of Class A Common Stock will be
voted "for" election of the one Class A nominee to the Board. If any other
matter is properly presented, it is the intention of the persons named in the
enclosed proxy to vote in accordance with their best judgment. A shareholder
giving a proxy may revoke it at any time by giving written notice to the
Secretary of the Company before it is voted, by executing a proxy bearing a
later date and delivering it to the Secretary of the Company prior to the
earlier proxy being voted, or by attending the meeting and voting in person.

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30-Jan-97

Shares which abstain from voting on a matter and shares for which votes are
withheld on a matter are considered shares entitled to vote on such matters and
are included for purposes of determining whether a quorum is present at the
meeting, but are not counted as votes cast "for" or "against" such matter.

The cost of soliciting of proxies will be borne by the Company. Base Ten
expects to reimburse brokerage firms and other persons representing beneficial
owners of shares for their expenses in forwarding proxy materials to beneficial
owners. Proxies may be solicited by the Company's directors, officers and
regular employees, without additional compensation, in person or by telephone or
telecopier.

PROPOSAL ONE
ELECTION OF CLASS B DIRECTORS

NOMINEES FOR CLASS B DIRECTORS. The following persons have been nominated to
serve as Class B directors.

Mr. Klinsport has been the Chief Financial Officer of the Company since 1978.
He became President of the Company's Government Technology Division in 1994 and
has served as Executive Vice President of the Company since 1992. He was
elected a director of the Company in 1985.

Mr. Adelson has served as a director of Base Ten since 1992. Since 1974 he has
been the Chief Executive Officer of RTS Research Labs Inc., a consulting company
concentrating in high technology fields. From 1977 to 1989 Mr. Adelson was
Chief Technical Consultant with Symbol Technologies, Inc. Since 1992 Mr.
Adelson has been providing consulting services to Base Ten under a consulting
agreement with the Company. See "Directors' Compensation."

Mr. Poole has served as a director of Base Ten since 1994. Since 1960, he has
held executive positions with Johnson & Johnson, including Vice President of
Ortho Diagnostics, Inc. from 1975 through 1982 and International Vice President
of Johnson & Johnson Pharmaceutica in Belgium for the last ten years, where he
was responsible for the Janssen Companies in various countries. Mr. Poole, now
retired, is a member of the California Bar.

If any one of the Class B nominees becomes unavailable for election, proxies
will be voted for a substitute nominee selected by the Board. The Company has no
reason to believe that any of the Class B nominees will be unavailable for
election.

THE BOARD RECOMMENDS THAT THE HOLDERS OF CLASS B COMMON STOCK VOTE FOR THE
REELECTION OF MESSRS. KLINSPORT, ADELSON AND POOLE TO THE BOARD.

PROPOSAL TWO
ELECTION OF CLASS A DIRECTOR

NOMINEE FOR CLASS A DIRECTOR. Bruce D. Cowen has been nominated to serve as a
Class A director.

Mr. Cowen was appointed by the Board as a director of the Company and Vice
Chairman of the Board in May 1996 and is Chairman of the Finance Committee.
Mr. Cowen does not participate in management policy decisions other than as a
director. He has been employed by TRC Companies, Inc., a publically held
environmental engineering and consulting firm, since 1979 and has been its
President since 1991 and a director on its board since 1987. From 1974 through
1979, he was employed by Price Waterhouse & Co. as a Audit Manager, and from
1982 through 1985, Mr. Cowen was a member of the Information Committee of the
Board of Governors of the National Association of Securities Dealers Inc.
Since 1992, he has also served as a director of the U.S. Chamber of Commerce.
Since 1992, Mr. Cowen has been providing consulting services to the Company
under a consulting agreement. See "Director Compensation."

If Mr. Cowen becomes unavailable for election as a Class A director for any
reason, which is not expected, proxies will be voted for a substitute nominee
selected by the Board.

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30-Jan-97

THE BOARD RECOMMENDS THAT THE HOLDERS OF CLASS A COMMON STOCK VOTE FOR THE
ELECTION OF MR. COWEN.

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30-Jan-97

INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS

Stock Ownership

The following table sets forth information as of January 2, 1997 with respect to
the Company's Class A and Class B Common Stock beneficially owned, directly or
indirectly, by each of the Company's directors, executive officers and all of
its directors and executive officers as a group.

PERCENT OF
VOTING POWER
REPRESENTED
SHARES BY CLASS A EXPIRATION OF
BENEFICIALLY PERCENT AND CLASS B CURRENT TERM
NAME AGE OWNED (1) OF CLASS COMBINED (2) AS A DIRECTOR
- ---- --- ------------------- -------- ------------ -------------

<S> <C> <C> <C> <C> <C>
Myles M. Kranzler (3)(4) 68 Class A - 510,423 6.55% 15.92% 1999
Class B - 160,144 35.98

Bruce D. Cowen (4) 43 Class A - 786,250 9.82 12.08 1997
Class B - 78,800 17.51

Edward J. Klinsport (3)(4) 49 Class A - 205,886 2.72 1.95 1997
Class B - 7,136 1.59

Alan J. Eisenberg (3)(4) 55 Class A - 185,145 2.45 1.29 1998
Class B - 282 0.06

Frank W. Newdeck (4) 51 Class A - 36,480 0.49 0.31 N/A
Class B - -- --

Richard G. Kandrac 55 Class A - 86,895 1.17 0.87 N/A
Class B - 2,395 0.53

Richard J. Farrelly (4) 65 Class A - 56,520 0.76 0.42 N/A
Class B - -- --

Alexander M. Adelson (4) 62 Class A - 395,416 5.14 3.16 1997
Class B - -- --

Alan S. Poole 69 Class A - 10,000 0.14 0.08 1997
Class B - -- --

Directors and executive officers Class A - 2,273,015 24.36 33.21

as a group (9 persons) (3)(4) Class B - 248,757 55.27
</TABLE>

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(1) Ownership of shares of Class A Common Stock reflected in the
above table includes shares issuable upon (a) conversion of Class
B Common Stock, (b) exercise of outstanding options and warrants
to purchase Class A Common Stock, (c) conversion of Class B
Common Stock issuable upon exercise of outstanding options to
purchase Class B Common Stock, and (d) grants of options subject
to being rescinded if the proposed amendements to the
Discretionary Deferred Compensation Plan is not approved by the
shareholders at the Annual Meeting. Ownership of Class B Common
Stock included in the above table includes shares issuable upon
exercise of outstanding options to purchase Class B Common
Stock.

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30-Jan-97

(continued)

(2) Assumes (a) exercises of options and warrants exercisable as of
January 2, 1997, but not the conversion of Class B Common Stock
to Class A Common Stock, and (b) exercisable options subject to
being rescinded if the proposed amendments to the Discretionary
Deferred Compensation Plan is not approved by the shareholders at
the Annual Meeting.
(3) Includes (a) as to Mr. Kranzler, 45,300 shares of Class A Common
Stock and 62,823 shares of Class B Common Stock owned by his
wife, (b) as to Mr. Klinsport, 10 shares of Class A Common Stock
owned by his wife and 9,000 shares of Class A Common Stock
issuable upon exercise of options held by his wife and (c) as to
Mr. Eisenberg, 1,700 shares of Class A Common Stock and 282
shares of Class B Common Stock owned by his wife and children.
(4) Includes as to (a) Mr. Kranzler, 271,893 shares; (b) Mr. Cowen,
565,000 shares; (c) Mr. Klinsport, 189,740 and 4,946 shares, (d)
Mr. Eisenberg, 183,163 shares; (e) Mr. Farrelly, 55,520 shares;
(f) Mr. Newdeck, 36,480 shares; (g) Mr. Adelson, 323,000 shares;
and (h) all directors and executive officers as a group,
1,710,766 and 4,946 shares, of Class A Common Stock and Class B
Common Stock, respectively, issuable upon the exercise of
outstanding options or warrants.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Based on a review of reporting forms filed with the Securities and Exchange
Commission by officers and directors of the Company, and persons beneficially
owning more than 10% of any class of capital stock of the Company, none of such
officers, directors or 10% holders failed to file any such required reports on a
timely basis during fiscal 1996, other than Mr. Adelson who filed one late form
which described one transaction.

BIOGRAPHICAL INFORMATION

Biographical information about the Company's executive officers and directors
other than the current nominees to the Board is set forth below.

MR. KRANZLER has been Chairman of the Board, President, Chief Executive Officer
and a director since the Company's inception in 1966.

MR. EISENBERG has been employed by the Company since 1980 and became President
of the Company's Medical Technology Division in 1994. He has been a Vice
President of the Company since 1983 and is responsible for the Company's
software activities. Mr. Eisenberg has been a director of the Company since
1992.

MR. NEWDECK has been employed by the Company since 1990 and became a Vice
President in 1991, with responsibilities in the Company's Government Technology
Division. Prior to joining the Company, Mr. Newdeck was General Manager of the
Network and Information Security Division of Unisys Corporation.

MR. KANDRAC has been employed by the Company since 1969 and became a Vice
President in 1983, responsible for manufacturing and purchasing.

MR. FARRELLY has been employed by the Company since 1988 and became a Vice
President in 1992, responsible for corporate development. Mr. Farrelly was
formerly General Manager of the Reentry Systems Division of General Electric
Aerospace Company.

COMMITTEES OF THE BOARD

The Company has an advisory Audit Committee consisting of Messrs. Adelson and
Poole, who are directors of the Company, and Owen B. Freeman, Chairman of the
Board of Commonwealth State Bank and Penncore Financial Services Corp. This
Committee had one meeting in fiscal 1996. The Committee's purpose is to confer
with the Company's independent auditors, Deloitte & Touche LLP, and its Chief
Financial Officer to evaluate the financial controls and practices of Base Ten
and the plans for and results of the audit engagement.

The Company has a Compensation Committee presently consisting of all the members
of the Board except Mr. Kranzler. This Committee had two meetings in fiscal
1996. The function of the Compensation

6
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30-Jan-97

Committee is to establish the compensation and benefits of all employees of the
Company, including its officers.

The Company has a Stock Option Committee comprised of Messrs. Adelson and Poole.
This Committee met four times in fiscal 1996. This Committee's purpose is to
administer the Company's equity incentive plans.

The Company has a Finance Committee consisting of Messrs. Kranzler, Klinsport,
Adelson and Cowen. The purpose of the Committee is to explore various financial
alternatives relating to improving fiscal performance. The Committee met four
times during the 1996 fiscal year.

The Board held 8 meetings during the 1996 fiscal year. Each member of the Board
participated in at least 92% of all board and applicable committee meetings
held during the period for which he was a director or committee member. The
Company does not have a nominating committee.

Directors' Compensation

Directors who are not also officers, with the exception of Mr. Adelson and
Cowen, are paid a per meeting fee for services as a member of the Board. Mr.
Poole received $500 per meeting as nonmanagement director fees during fiscal
1996. Messrs. Adelson and Cowen are not paid for their services as a director,
and directors who are also officers do not receive separate remuneration for
their services as a director.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. The Company's
Compensation Committee consisted in fiscal year 1996 of all of the members of
the board except Mr. Kranzler. Of these members, Messrs. Klinsport and
Eisenberg are officers of the Company, and Messrs. Adelson and Cowen rendered
consulting services to the Company pursuant to consulting agreements described
below.

The Company has a consulting arrangement with Mr. Adelson providing for Mr.
Adelson's transfer to the Company of intellectual property relating to radio tag
technology and for various advisory services, including consulting on the
Company's business, technical, marketing and related strategies, preparation of
business plans and other specialized services that the Company may request. For
his services under the agreement, Mr. Adelson has received specified fees,
expense reimbursements and a five-year nontransferable option to purchase 36,000
shares of Common Stock at $4.00 per share, representing the market price on the
date of grant. In April 1995, the agreement was renewed for three years. In
connection with the renewal, the Company granted Mr. Adelson an additional
five-year nontransferable option to purchase 36,000 shares of Class A Common
Stock at $7 5/8 per share, representing the market price on the date of grant,
and agreed to pay annual consulting fees of $50,000 plus monthly consulting fees
of $10,000 in August 1995 and $15,000 from September 1995 through May 1997. Mr.
Adelson is also entitled to 2 1/2% of the Company's net proceeds from sales of
radio tag devices incorporating technology supplied by him. The total fees paid
to Mr. Adelson under his consulting agreement in fiscal 1996 were $192,154.

The Company had a consulting agreement with Bruce D. Cowen, for a one-year term
through March 1996, providing for financial consulting and other specialized
services requested by the Company. Mr. Cowen received payments under the
agreement aggregating $100,000 plus expense reimbursements and a five-year
nontransferable option to purchase 20,000 shares of Class A Common Stock at $7
7/8 per share, representing the market price on the date of grant. The
agreement was extended for an additional one-year term, entitling Mr. Cowen to a
warrant to purchase 30,000 shares of Class A Common Stock at an exercise price
of $10 1/4 per share and to quarterly fees of $6,250 plus expense
reimbursements. The total fees earned by Mr. Cowen under his consulting
agreement in fiscal 1996 were $19,100.

The Company has a financial advisory agreement with Messrs. Adelson and Cowen
for consulting services on strategic opportunities, providing for success fees
on any introduced acquisition or equity financing completed during the term of
the agreement, subject to Board approval. The agreement provides for a cash fee
equal to 2% of gross proceeds in a equity financing or, for an acquisition, 3%
of pretax profits earned by the acquired operations over the three years after
the transaction plus 1% of the consideration paid by the Company for the
acquired operations. For either an equity financing or an acquisition, the
agreement also

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30-Jan-97

provides for the issuance of warrants based on the terms of the particular
transaction. In connection with the Private Placement in August 1996, Messrs.
Adelson and Cowen each received an option to purchase 50,000 shares of Class A
Common Stock at an exercise price of $10 per share, representing the market
price on the date of grant, and a cash payment of $100,000 each.

As an incentive to serve on the Board of Directors, Mr. Cowen was granted a
five-year warrant in May 1996 to purchase 100,000 shares of Class A Common Stock
at an exercise price of $10 1/4 per share, representing the market price on the
date of the grant.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE. The Summary Compensation Table set forth below shows
certain compensation information for the Company's Chief Executive Officer and
the four other most highly compensated executive officers for services rendered
in all capacities during the three fiscal years ended October 31, 1996, 1995 and
1994. This information includes base salaries, bonus awards and long-term
incentive plan payouts, the number of stock options and stock appreciation
rights ("SARs") granted, and certain other compensation, if any, whether paid or
deferred.
SUMMARY COMPENSATION TABLE

ANNUAL LONG-TERM
COMPENSATION COMPENSATION

Awards
---------
Name and Options/ All Other (1)
Principal Position Year Salary Bonus SARs Compensation
- ------------------ ---- ------ ----- --------- --------------

Myles M. Kranzler, 1996 $220,000 $ -- 50,000 $ --
President and 1995 123,310 -- 25,000 42,308
Chief Executive
Officer 1994 52,000 9,000 21,000 --

Edward J. Klinsport, 1996 195,061 10,000 50,000 29,012
Executive Vice 1995 105,002 -- 30,000 39,363
President 1994 164,000 3,310 44,740 4,523

Alan J. Eisenberg, 1996 185,261 -- 50,000 26,042
Vice President 1995 103,386 -- 30,000 33,183
1994 148,000 6,670 43,280 --

Richard J. Farrelly 1996 135,431 -- -- 8,067
Vice President 1995 79,982 -- 30,000 37,181
1994 117,000 7,284 10,520 --

Frank W. Newdeck, 1996 135,700 3,080 2,000 9,233
Vice President 1995 101,993 4,620 15,000 --
1994 128,000 7,120 19,480 --

- ----------------------

(1) Includes interest paid on balance on individuals' deferred
compensation, vacation entitlement payout, commissions and in 1996
amortization of employee loans.

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30-Jan-97

OPTION/SAR GRANTS IN LAST FISCAL YEAR. The following table shows information
regarding grants of stock options made to the named executive officers during
the fiscal year ended October 31, 1996, including grants under equity incentive
plans, and in the case of Messrs. Kranzler, Klinsport and Eisenberg including
grants of options subject to being rescinded if the proposed amendments to the
Discretionary Deferred Compensation Plan is not approved by the shareholders at
the Annual Meeting.. The amounts shown as potential realizable values are based
on assumed annualized rates of stock price appreciation of five percent and ten
percent over the full ten-year term of the options. These potential realizable
values are based solely on arbitrarily assumed rates of appreciation required by
applicable SEC regulations. Actual gains, if any, on option exercises and common
stockholdings are dependent on the future performance of the Company's Class A
Common Stock and overall stock market conditions.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
NUMBER OF % OF TOTAL APPRECIATION FOR
SECURITIES OPTIONS/SARS OPTION TERM
UNDERLYING GRANTED TO -----------
OPTIONS/SARS EMPLOYEES IN EXERCISE OR BASE EXPIRATION
NAME GRANTED (1) FISCAL YEAR PRICE ($/SH) DATE 5% 10%
- ---- ------------ ----------- ------------ ------- -- ---

<S> <C> <C> <C> <C> <C> <C>
MYLES M. KRANZLER 50,000(2) 16.3% 101/4 4/17/2006 834,808 1,329,293

EDWARD J. KLINSPORT 50,000(2) 16.3% 101/4 4/17/2006 834,808 1,329,293

ALAN J. EISENBERG 50,000(2) 16.3% 101/4 4/17/2006 834,808 1,329,293

RICHARD J. FARRELLY -- -- -- -- -- --

FRANK W. NEWDECK 2,000 0.6% 11 1/8 2/23/2006 36,243 57,711
</TABLE>

- -----------------------------

(1) CLASS A COMMON STOCK.
(2) SUBJECT TO BEING RESCINDED IF THE PROPOSED AMENDMENTS TO THE
DISCRETIONARY DEFERRED COMPENSATION PLAN IS NOT APPROVED BY THE
SHAREHOLDERS AT THE ANNUAL MEETING.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES. The following table summarizes for each of the named
executive officers the number of stock options, if any, exercised during the
fiscal year ended October 31, 1996, the aggregate dollar value realized upon
exercise, the total number of securities underlying unexercised options, if any,
held at October 31, 1996 (including options granted under the Discretionary
Deferred Compensation Plan which are subject to being rescinded if the
amendments to the plan are not approved by the shareholders at the Annual
Meeting) and the aggregate dollar value of in-the-money, unexercised options, if
any, held at October 31, 1996. Value realized upon exercise is the difference
between the fair market value of the underlying stock on the exercise date and
the exercise or base price of the option. Value of unexercised, in-the-money
options at fiscal year end is the difference between the exercise or base price
and the fair market value of the underlying stock on October 31, 1996. On that
date, the last sale prices of the Class A Common Stock and Class B Common Stock
were $10 5/8 and $13 3/8, respectively. The values in the column Value of
Unexercised In-The-Money Options/SARs at Fiscal Year End have not been, and may
never be, realized. The underlying options have not been, and may not be,
exercised, and actual gains, if any, on exercise will depend upon the value of
the underlying stock on the date of exercise.

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30-Jan-97

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES

NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES FY-END FY-END
ACQUIRED ON VALUE ------ ------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------- --------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Myles M. Kranzler
Class A Common -- $ -- 221,893(1) 50,000(1) $ 635,089 $ 9,375
Class B Common -- -- -- -- -- --

Edward J. Klinsport
Class A Common -- -- 139,740(1) 50,000(1) 547,505 9,375
Class B Common -- -- 4,946 -- 51,315 --

Alan J. Eisenberg
Class A Common 500 4,375 133,163(1) 50,000(1) 530,840 9,375
Class B Common -- -- -- -- -- --

Richard J. Farrelly
Class A Common -- -- 30,520 25,000 66,946 --
Class B Common -- -- -- -- -- --

Frank W. Newdeck
Class A Common -- -- 24,480 12,000 55,354 --
Class B Common -- -- -- -- -- --
</TABLE>

(1) Includes grants of options subject to being rescinded if the proposed
amendments to the Discretionary Deferred Compensation Plan is not
approved by the shareholders at the Annual Meeting.

EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS. Under their respective 1992 employment agreements, Messrs.
Kranzler, Klinsport, and Eisenberg (the "Key Employees") are entitled to their
respective salaries and benefits to the date of their termination if they are
terminated for cause or if they voluntarily terminate their employment prior to
the expiration of the term of their agreement, which is twelve months,
automatically extended one month at the end of each month thereafter and
terminable (unless otherwise terminated) by either party on twelve months'
notice. If terminated without cause, the Key Employee is entitled to his salary
and benefits to the date of termination and a termination payment equal to the
highest annual combination of his base salary plus any bonus paid to the Key
Employee during the five fiscal years ending before the date of termination. If
the Key Employee is also entitled to payment upon termination pursuant to the
change in control agreement described below, the termination provisions of the
change in control agreement prevail.

The Company has entered into change in control agreements with Messrs. Kranzler,
Eisenberg and Klinsport. The agreements provide that if, within three years
after certain "changes of control" of the Company, the executive's employment
with the Company is terminated by the Company other than for "cause," "death" or
"disability" or by the executive for "good reason" (as defined in the change in
control agreements), the executive will be entitled to receive, subject to
certain limitations, a lump sum cash payment and hospital, medical and dental
insurance benefits for three years following termination of employment, having
an aggregate value equal to 2.99 times the total of average annual compensation
and cost of employee benefits for the executive for the five years prior to the
"change of control," subject to a maximum equal to the amount of the Company's
permitted deduction under Section 280G of the Code. Each

<PAGE>
30-Jan-97

agreement is extended automatically from year to year unless the Company gives
at least fifteen months' prior notice of its election not to extend the term.

REPORT OF COMMITTEES ON EXECUTIVE COMPENSATION. The Company's executive
compensation program is designed to retain and fairly compensate its executives
and to motivate them to maximize Base Ten's profitability. The compensation
program consists of three key elements: a base salary, an annual incentive bonus
and periodic grants of stock options.

Base Ten's compensation policies for its executive officers are administered by
two committees of the Board. The Compensation Committee determines base salary
and annual incentive bonuses, and the Stock Option Committee administers the
Company's stock option plans.

BASE SALARY. Base salaries paid to executive officers, including the Chief
Executive Officer (the "CEO"), are established at the beginning of each fiscal
year based upon the Compensation Committee's assessment of (i) the
recommendations of the CEO on officers, other then himself, (ii) the nature of
the position and responsibilities of the individual, (iii) the contribution,
experience and relative importance of the executive officer to the Company, (iv)
executive salaries at comparable public and private manufacturing companies
(without survey or similar data, and because the Company's most direct
competitors for executive talent are not the companies included in the industry
index used to compare the Company's shareholder returns, without reference to
salaries at those companies), and (v) the Company's financial performance and
success in meeting its strategic plans. In making its determinations, the
Compensation Committee does not assign any specific weight to any of the
foregoing factors, but rather considers the entire mix of factors in the
aggregate and makes a subjective determination of what it considers to be
appropriate salary level.

In order to improve financial performance, the Company implemented a cost
reduction plan in 1995. Under the plan, each officer of the Company and its
divisions worked for the minimum wage during a three month period beginning May
15, 1995. Each of these employees other than the CEO received three year loans
equal to their relinquished salary, with interest at 6.5% annually. The
Chairman and each of the Presidents of the Company's two divisions continued to
work for the minimum wage for the balance of the fiscal year, and the division
Presidents received three year loans for the additional relinquished salary. At
October 31, 1996, the aggregate outstanding balance of the employee loans was
$276,619. The Company expects that repayment of the loans will be effected over
the course of their remaining terms by means of offsets against employee
compensation in the form of bonuses.

ANNUAL BONUS. The annual incentive bonus portion of the Company's executive
compensation program has been in effect in its present form since the beginning
of fiscal 1992. Each executive officer, including the CEO, is eligible for an
annual incentive bonus equal to a specified percentage of the Company's pre-tax
profit, subject to minimum payments. The Committee believes that this favorably
aligns the interests of management with the Company's shareholders by linking
this portion of executive compensation directly with performance.

The particular percentage and minimum bonus awarded each executive officer,
including the CEO, are established by the Compensation Committee at the
beginning of each fiscal year based upon the Committee's assessment of (i) the
factors employed to determine base salaries and (ii) the Compensation
Committee s general view (determined without survey data) of the competitiveness
of the executive officer's total compensation, including both base salary and
stock options. In making its determination, the Compensation Committee does not
assign any specific weight to any of the foregoing factors, but rather
subjectively considers the entire mix of factors in the aggregate. Accordingly,
the annual incentive bonus awarded to an executive officer may vary from year to
year. Annual incentive bonuses for fiscal 1996 were awarded to only two
executive officers, as set forth in the Summary Compensation Table under the
heading "Bonus."

STOCK OPTIONS. Like annual incentive bonuses, awards of stock options to
executive officers, including the CEO, are intended to align an officer's
interests with shareholder returns and the Company's stock market performance.
Options are granted from time to time, but not necessarily annually, by the
Stock Option

11
<PAGE>

30-Jan-97

Committee and the Board of Directors based on its assessment of (i) the factors
employed to determine annual incentive bonuses but without regard to cost
containment considerations and (ii) the amount and terms of stock options
already held by the executive officer. In making awards, the Stock Option
Committee does not assign any specific weight to any of the foregoing factors,
but rather considers the entire mix of factors in the aggregate. In fiscal
1996, for services rendered to the Company, Messrs. Kranzler, Klinsport and
Eisenberg each received options to purchase 50,000 shares of Class A Common
Stock at an exercise price of $10 1/4 per share which are subject to being
rescinded if the amendments to the Discretionary Deferred Compensation Plan are
not approved by the shareholders at the Annual Meeting. Stock Options granted
to executive officers during fiscal 1996 are set forth in the Summary
Compensation Table under the heading "Awards - Securities Underlying
Options/SARs" and in the above table captioned "Option/SARs Granted in Fiscal
1996."
COMPENSATION COMMITTEE STOCK OPTION COMMITTEE
Bruce D. Cowen Alan S. Poole
Edward J. Klinsport Alexander M. Adelson
Alan J. Eisenberg
Alexander M. Adelson
Alan S. Poole

PERFORMANCE GRAPH. The following graph shows changes over the past five years in
the value of $100 invested on November 1, 1991 in the Company's Class A Common
Stock, the NASDAQ National Market System Index and MG Industry Group 403. MG
Industry Group 403, Electronic Controls and Instruments, is published by Media
General Financial Services, P.O. Box 85333, Richmond, Virginia 23293 and is
accessible through publications such as Industriscope and computer data bases
such as Dialog and Dow Jones News Retrieval. MG Industry Group 403 includes both
the Company's Class A Common Stock and Class B Common Stock.

COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG BASE TEN SYSTEMS, INC. CLASS A COMMON STOCK
NASDAQ MARKET INDEX AND MG GROUP INDEX

DOLLARS
500
450
400
350
300
250 GRAPH
200
150
100
50
0
1992 1993 1994 1995 1996

- -------------------------------------------------------------------------------

--- BASE TEN SYSTEMS A --|-- MG GROUP INDEX

-O- NASDAQ MARKET INDEX

<TABLE>
<CAPTION>
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET

Company 1991 1992 1993 1994 1995 1996
- ------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Base Ten Systems Cl A 100 129.55 340.91 288.64 422.73 386.36
Industry Index 100 108.05 136.25 154.02 217.44 180.67
Broad Market 100 96.87 127.13 135.16 160.32 188.27
</TABLE>

ASSUMES $100 INVESTED ON NOV. 1, 1991
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING OCT. 31, 1996

<PAGE>

30-Jan-97

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

As of December 31, 1996, the following shareholders were, to the knowledge of
the Company, the only beneficial owners other than directors of more than five
percent of the outstanding shares of the Company's stock.

NAME AND ADDRESS OF AMOUNT OF AND NATURE OF PERCENTAGE
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) OF CLASS
- -------------- ---------------- ------------------------ --------

<S> <C> <C> <C>
Class B Common Stock Mildred Kranzler 62,823 (2) 14.1%
173 Rolling Hill Rd.
Skillman, NJ 08558

Class A Common Stock Mildred Kranzler 45,300 (2) 0.6%
173 Rolling Hill Rd.
Skillman, NJ 08558

Class B Common Stock Herzog, Heine, Geduld, Inc. 28,895 6.5%
26 Broadway
New York, NY 10004

Class A Common Stock Jesse L. Upchurch 1,196,500 (3) 16.2%
Upchurch Corporation
500 Main Street
Fort Worth, TX 76102

Class B Common Stock Jesse L. Upchurch 53,900 (3) 12.1%
Upchurch Corporation
500 Main Street
Fort Worth, TX 76102
</TABLE>

- ----------------

(1) Information in this table is based on Statements on Schedule 13D or
13G filed with the Securities and Exchange Commission.
(2) Mrs. Kranzler is the spouse of Myles M. Kranzler, Chairman of the
Board, President and Chief Executive Officer of the Company. Excludes
shares owned directly by Mr. Kranzler.
(3) Based on a Statement on Schedule 13D and a Statement of Changes in
Beneficial Ownership on Form 4 filed with the SEC, represents (I)
968,200 shares of Class A Common Stock held directly by the Estate of
Constance Upchurch, of which Mr. Upchurch is the executor and
beneficiary (the Estate ), (ii) 209,900 shares of Class A Common
Stock held by a corporation of which Mr. Upchurch is the sole
stockholder, (iii) 18,400 shares of Class A Common Stock held directly
by Mr. Upchurch, and (iv) 53,900 shares of Class A Common Stock
issuable upon conversion of the same number of shares of Class B
Common Stock held directly by the Estate.

CERTAIN TRANSACTIONS

In October 1994, the Company completed a sale and leaseback of its headquarters
and related real estate in Trenton, New Jersey with CKR Partners, L.L.C., an
investment concern ("CKR"). The principals of CKR include Myles M. Kranzler,
the Chairman of the Board, President and CEO of Base Ten, and Bruce D. Cowen,
Vice Chairman of the Board and chairman of the Company's Finance Committee. The
Company received $3.6 million for the property, of which $550,000 was retained
by CKR as a security deposit due at the end of the 15-year lease term. The
lease provides for annual rent of $560,000 for the first five years, $615,00 for
the second five years and $690,00 for the last five years, with the Company
retaining a repurchase option which may be exercised at any time at amounts
declining to $3.5 million during the last five years of the lease. The Company
received an opinion from The Talman Realty Group, independent

<PAGE>

30-Jan-97

financial advisors, that the terms of the transaction were fair to the Company
and its stockholders from a financial point of view. Proceeds from the
transaction were applied by Base Ten primarily to prepay its mortgage debt of
approximately $2.8 million on the property.

Base Ten maintains a consulting arrangement and success fee arrangement with
Messrs. Adelson and Cowen, directors of Base Ten. See "Compensation Committee
Interlocks and Insider Participation" above.

Messrs. Klinsport and Eisenberg, the Presidents of the Company's two divisions,
each have loans outstanding from the Company in the amount of $54,632.00 and
$52,094.00, respectively. The loans are for three years equal to relinquished
salary during the 1995 fiscal year, with interest at 6.5% annually. See "Report
of Committee on Executive Compensation" above.

PROPOSAL THREE
APPROVAL OF THE ADOPTION OF AMENDMENTS
TO THE DISCRETIONARY DEFERRED COMPENSATION PLAN

GENERAL. The Board of Directors is recommending for shareholder approval
amendments to the Company's Discretionary Deferred Compensation Plan (the
Deferred Plan) (i) to increase from 400,000 to 1,150,000 the number of shares of
Class A Common Stock available for issuance pursuant to options granted under
the Deferred Plan, and (ii) to change the definition of Committee to mean either
the Board of Directors or a committee of non-employee directors selected by the
Board of Directors. The amendments to the Deferred Plan were approved by the
Board of Directors on January 22, 1997 and awards were granted on April 18, 1996
which, by their terms, will be rescinded if these amendments are not approved by
the shareholders at the Annual Meeting. The purpose of the Deferred Plan is to
encourage selected key employees of the Company to acquire a proprietary
interest in the performance of the Company in order to promote long-term
shareholder value by generating an increased incentive to contribute to the
Company's future success, and enhancing the Company's ability to attract and
retain individuals of exceptional managerial talent.

The following description of the Deferred Plan and the proposed amendments is
qualified in its entirety by reference to Exhibit A, which is a copy of the
Deferred Plan, marked to show the proposed amendments.

ELIGIBILITY FOR PARTICIPATION. Any employee of the Company with base annual
earnings of more than $100,000, who by reason of job responsibilities is in a
position to make a measurable contribution to the achievement of the Company's
objectives as established from time to time, including employee directors and
officers, and who is designated as a key employee by either the Board of
Directors or a committee of non-employee directors selected by the Board of
Directors, will be eligible for selection for awards under the Deferred Plan.
The selection of key employees and award recipients will be entirely within the
discretion of either the Board of Directors or a committee of non-employee
directors selected by the Board of Directors.

In light of the flexibility in identifying key employees under the Deferred
Plan, it is not possible to indicate the number, names and positions of
employees who may from time to time be selected for participation in the
Deferred Plan, or the extent of their participation. However, as of the date
of this Proxy Statement, there are approximately 21 employees eligible to
participate in the Deferred Plan. In addition, the Board of Directors has
approved, subject to shareholder approval of the amendments to the Deferred
Plan, the award of options to key employees as set forth in the following
table:

<PAGE>
30-Jan-97

NEW PLAN BENEFITS(1)
BASE TEN SYSTEMS, INC.
DISCRETIONARY DEFERRED COMPENSATION PLAN

Name and Position Dollar Value(3) Number of Units(1)
- ----------------- ------------ ---------------

Myles M. Kranzler, President $ 6.691 50,000 (2)

Edward J. Klinsport, Executive
Vice President 6.691 50,000 (2)

Alan J. Eisenberg, Senior Vice
President 6.691 50,000 (2)

Richard J. Farrelly, Vice President N/A N/A

Frank W. Newdeck, Vice President N/A N/A

Executive Group 6.691 150,000 (2)

Non-Executive Director Group N/A N/A

Non-Executive Officer Employee Group N/A N/A

(1) Because the Deferred Plan has been in existence since 1993, awards
were made prior to the date of this proxy statement. See the table on
page 9 of this proxy statement entitled "Option/SAR Grants in Last
Fiscal Year" for a summary of the option grants that were made to the
above-listed officers of the Company under the Deferred Plan during
the Company's last fiscal year. See the table on page 10 of this
proxy statement entitled "Aggregated Option/SAR Exercised in the Last
Fiscal Year and Year-End Option/SAR Values" for a summary of the
options held by the above-named officers under the Deferred Plan and
other plans established by the Company.

(2) Awards made on April 18, 1996, which are subject to recision if the
amendments to the Deferred Plan is not approved by the shareholders at
the Annual Meeting.

(3) Dollar value is shown on a per-share basis, calculated using the
Black-Scholes option pricing model adapted for use in valuing
executive stock options. The options were granted April 18, 1996 and
the valuation thereof assumes a risk-free rate of 6.3% based on
treasury issue with ten-year term on date of grant. All options were
valued using volatility calculated based on daily closing prices for
the year's worth of trading days prior to date of grant, without
discount for vesting and without shortening the expected life of the
option. There is no assurance that the value realized will be at or
near the values estimated by the Black-Scholes model, which are based
on a number of arbitrary assumptions. The actual value, if any, an
individual may realize will depend on the excess of the market price
over the exercise price on the date the option is exercised.

ADMINISTRATION AND AMENDMENT OF DEFERRED PLAN. The Deferred Plan is
administered by either the Board of Directors or a committee of non-employee
directors selected by the Board of Directors, which has the right to interpret
the Plans' provisions, to determine key employees who are to receive options and
the terms thereof, and to adopt rules and regulations necessary or advisable for
the administration of the Deferred Plan. The determination of either the Board
of Directors or a committee of non-employee directors selected by the Board of
Directors concerning any matter arising under or with respect to the Deferred
Plan is final, binding and conclusive on all interested persons.

The Board of Directors is authorized to amend the Deferred Plan so long as the
amendment does not impair the rights of award recipients under outstanding
options, but shareholder approval is required to (i) decrease the minimum
exercise price or extend the maximum exercise period of an option, (ii) add to
the persons eligible to receive options under the Deferred Plan an additional
class of persons subject to the insider reporting requirements of Section 16 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") or (iii)
increase the number of shares issuable to such reporting persons under the Plan
by more than 40,000 shares.

<PAGE>

30-Jan-97

TERM OF THE DEFERRED PLAN. Options granted under the Deferred Plan prior to the
Plans approval by the shareholders at the 1994 Annual Meeting of the
shareholders became effective on the date of shareholder approval. No options
may be granted under the Deferred Plan after May 31, 2003.

SHARES SUBJECT TO THE DEFERRED PLAN. The number of shares of Class A Common
Stock authorized to be issued prior to the amendments is 400,000 shares. If
the amendments are approved by the shareholders at the Annual Meeting the number
of shares of Class A Common Stock that may be issued under the Deferred Plan
will increase to 1,150,000 shares. The number of shares that may be issued
under the Plan is subject to adjustment in the case of merger, consolidation,
reorganization, recapitalization, stock dividend, stock split or combination to
prevent dilution or enlargement of shares of Class A Common Stock subject to the
Deferred Plan. All options which were awarded on April 18, 1996 were made at
the exercise price of $10.25 per share which was the closing price of the
Company's Class A Common Stock as reported on the NASDAQ National Market System
on April 18, 1996.

OPTIONS UNDER THE DEFERRED PLAN. Options granted under the Deferred Plan
include only nonqualified stock options and are subject to all the terms and
conditions determined by either the Board of Directors or a committee of
non-employee directors selected by the Board of Directors, except that the
option price cannot be less than one hundred percent (100%) of the fair market
value of shares of Class A Common Stock on the option grant date and no option
shall be exercisable more than ten (10) years after it is granted.

Option holders seeking to exercise their options shall deliver to the Company a
written exercise notice along with payment of the exercise price. Payment of
the exercise price of an option shall be in cash, shares of the Company's Class
A Common Stock or Class B Common Stock or other consideration in accordance with
the terms of the Deferred Plan and any rules thereunder, valued at the time of
exercise. Upon the exercise of an option under the Deferred Plan, the Board of
Directors or the committee selected by the Board or Directors may, at its
discretion, waive payment of the purchase price and in lieu of issuing shares of
Class A Common Stock to the exercising optionee, direct the Company to pay to
the exercising optionee in cash the difference between the purchase price under
the option and the then fair market value of the shares of Class A Common Stock
being purchased, less the amount of any federal or state income taxes owed by
the exercising optionee or refund to be withheld in connection with such
exercise.

BENEFITS UNDER THE DEFERRED PLAN. Benefits under the Deferred Plan are not
transferable other than by will or by the law of descent and distribution, and
are not subject to pledge or lien or levy of execution or attachment. If a
person to whom benefits are due under the Deferred Plan is incompetent in the
judgment of either the Board of Directors or a committee of non-employee
directors selected by the Board of Directors, then the Board of Directors or
such committee shall have the right to determine to whom such benefits shall be
paid for the benefit of such person.

PRINCIPAL FEDERAL INCOME TAX CONSEQUENCES. Options granted under the Deferred
Plan are nonqualified options within the meaning of the Internal Revenue Code of
1986, as amended (the Code). The following brief summary reflects current
interpretations of applicable federal income tax law relating to options issued
under the Deferred Plan. The law is highly technical and complex; the following
represents only a general summary of the applicable provisions.

A holder of nonqualified stock options under the Deferred Plan generally
realizes no taxable income for federal income tax purposes at the time the
option is granted. Ordinary income generally will be recognized by an optionee
at the time shares of Class A Common Stock are transferred pursuant to the
exercise of a nonqualified stock option. The amount of such income will
generally be equal to the excess of the fair market value of the shares on the
date of exercise over the exercise price.

The Company will be entitled to a deduction for federal income tax purposes at
the same time and in the same amount as the optionee is deemed to have
recognized ordinary income in connection with the exercise of an option,
provided the Company deducts and withholds the amount of federal income tax
required.

<PAGE>

30-Jan-97

ADJUSTMENT. If there is a change in the Class A Common Stock or options granted
under the Deferred Plan through merger, consolidation, reorganization,
recapitalization, stock dividend or stock split or combination, the number of
shares of Class A Common Stock and price per share subject to such options shall
be adjusted to prevent dilution or enlargement of such shares and options. Upon
dissolution or liquidation of the Company or a merger, consolidation, sale of
all or substantially all of the Company's assets, or other corporate
reorganization in which the Company is not the surviving corporation, or any
merger in which the Company is the surviving corporation but the holders of
Class A Common Stock receive securities of another corporation, outstanding
options under the Deferred Plan shall terminate, but if no provision has been
made for the substitution of new options for such outstanding options, the
optionee shall have the right immediately before such significant corporate
event to exercise his options in whole or in part, without regard to the date on
which the options would be first exercisable.

CANCELLATION OF OPTIONS. Unless the terms of an option provide to the contrary,
options granted under the Deferred Plan are subject to cancellation by the
Company at the election of either the Board of Directors or a committee of
non-employee directors selected by the Board of Directors at any time upon
payment to the optionee of the excess of the then fair market value of the Class
A Common Stock subject to the option over the exercise price of such option (or
if the exercise price of the option exceeds the fair market value of the shares
of Class A Common Stock subject thereto, without payment therefore).

INTEREST PRIOR TO ISSUANCE OF SHARES. No optionee under the Deferred Plan shall
have any rights as a stockholder of the Company with respect to the shares
subject to the option before the exercise of the optionees option.

NO CONTINUED EMPLOYMENT. Nothing contained in the Deferred Plan is intended to
give any person the right to remain an employee of the Company.

REQUIRED VOTE. Approval of Proposal 3 will require the affirmative vote of a
majority of the votes cast on Proposal 3 by the holders of Class A Common Stock
and Class B Common Stock represented in person or by proxy voting as a single
class, with each share of Class A Common Stock being entitled to one-tenth vote
and each share of Class B Common Stock being entitled to one vote. Under New
Jersey law, shareholders of the Company will not have dissenters or appraisal
rights in connection with the approval of the Deferred Plan.

THE BOARD RECOMMENDS THAT THE HOLDERS OF THE CLASS A COMMON STOCK AND THE
HOLDERS OF THE CLASS B COMMON STOCK VOTE FOR THE APPROVAL OF THE AMENDMENTS TO
THE DISCRETIONARY DEFERRED COMPENSATION PLAN.

RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors has designated Deloitte & Touche LLP, independent
certified public accountants, as the Company's auditors for the 1997 fiscal
year. This firm will be represented at the shareholders' meeting, may make a
statement if it desires to do so, and is expected to respond to appropriate
questions.

OTHER MATTERS

The Board of Directors does not know of any matters to be presented for action
at the Annual Meeting other than those listed in the Notice of Meeting and
referred to herein. If any other matters properly come before the Meeting, it
is intended that the proxy solicited hereby will be voted in accordance with the
recommendation of the Board of Directors.

<PAGE>

30-Jan-97

SHAREHOLDER PROPOSALS

SHAREHOLDERS, UPON WRITTEN REQUEST TO THE SECRETARY OF BASE TEN SYSTEMS, INC.,
ONE ELECTRONICS DRIVE, P.O. BOX 3151, TRENTON, NJ 08619, MAY RECEIVE, WITHOUT
CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT AND FORM 10-K INCLUDING THE
FINANCIAL STATEMENTS AND SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION FOR THE COMPANY S FISCAL YEAR ENDED OCTOBER
31, 1996.

Any shareholder proposals which meet the requirements of the Securities and
Exchange Commission Proxy Rules and intended to be included in proxy material
for consideration at the Company's 1998 Annual Meeting of Shareholders, must be
received by the Secretary of the Company not later than October 10, 1997.

By order of the Board of Directors,

EDWARD J. KLINSPORT,
Executive Vice President and
Secretary

<PAGE>

30-Jan-97

Exhibit A
BASE TEN SYSTEMS, INC.
AMENDED DISCRETIONARY DEFERRED COMPENSATION PLAN

PREAMBLE

The purpose of the Base Ten Systems, Inc. Discretionary Deferred
Compensation Plan is to attract and retain certain highly qualified managerial
employees of Base Ten Systems, Inc. (the "Company") by providing that the
COMMITTEE OR THE BOARD OF DIRECTORS of the Company may grant to certain key
employees non-qualified options to purchase the Company's Class A Common Stock
upon such terms and conditions as the COMMITTEE OR THE BOARD OF DIRECTORS deems
prudent.

1. DEFINITIONS. Except where the context otherwise requires, as used
herein:

Board of Directors means the Board of Directors of the Company;

"Committee" means EITHER THE BOARD OF DIRECTORS OR the Stock Option
Committee of the Board of Directors, which shall be composed of not fewer than
two members of the Board of Directors to be appointed from time to time by such
Board, which Committee members shall be NON-EMPLOYEE DIRECTORS within the
meaning of Rule 16b under the Securities Exchange Act of 1934 (the 1934 Act);

"Common Stock" means the Company's Class A Common Stock, par value $1.00
per share.

"Company" means Base Ten Systems, Inc.;

"Key Employee" means any employee of the Company with base annual earnings
of more than $100,000, who by reason of job responsibilities is in a position to
make a measurable contribution to the achievement of the Company's objectives as
established from time to time pursuant to the Plan, and who has been designated
as a Key Employee by the Committee;

"Option" means a non-qualified option to purchase Common Stock;

"Plan" means the Base Ten Systems, Inc. Discretionary Deferred Compensation
Plan;

2. ADMINISTRATION. The Committee shall have full power and authority,
subject to the terms and conditions of the Plan, to administer the Plan,
including the power to determine the Key Employees who are to receive Options
and the terms thereof. In addition to such other authority which is granted to
the Committee under the Plan, the Committee shall have the authority to approve
the form of instrument by which each Option is granted, to waive or accelerate
the vesting requirements under any Option granted pursuant to the Plan and to
adopt rules and regulations necessary or advisable for the administration of the
Plan. The determination of the Committee concerning any matter arising under or
with respect to the Plan shall be final, binding and conclusive on all
interested persons.

3. PERIOD OF THE PLAN. The Plan has been adopted by the Board of
Directors as of June 1, 1993. The Plan shall expire on May 31, 2003, after
which time no Options may be granted under the Plan; provided, however, any
Option granted under the Plan prior to such date may continue to be exercised by
the holder thereof after such date until such time as the Option expires by its
terms.

4. SHARES OF STOCK SUBJECT TO THE PLAN.

(a) The stock that may be issued and sold pursuant to Options granted
under the Plan shall not exceed, in the aggregate, 1,150,000 shares of Common
Stock, provided that the number of shares of Common Stock that may be issued and
sold pursuant to the Options under the Plan shall be subject to

<PAGE>

30-Jan-97

adjustment as provided in Section 4(b). Any shares of Common Stock subject to
an Option which for any reason expires or is terminated unexercised, or which is
cancelled by the Company under Section 7 of the Plan without payment therefor to
the holder of the Option, may again be subject to an Option under the Plan.

(b) In the event that there is any change in the Common Stock subject
to the Plan or to Options granted under the Plan, through merger, consolidation,
reorganization, recapitalization, stock dividend, stock split or combination,
the Board of Directors shall make such adjustments in the aggregate number of
shares of Common Stock subject to the Plan and the number of shares of Common
Stock and price per share subject to outstanding Options in order to prevent
dilution or enlargement of shares of Common Stock subject to the Plan and of
Options. In the event of a dissolution or liquidation of the Company or a
merger, consolidation, sale of all or substantially all of the Company's assets,
or other corporate reorganization in which the Company is not the surviving
corporation, or any merger in which the Company is the surviving corporation but
the holders of its Common Stock receive securities of another corporation (each
of the foregoing, a "Trigger Event"), outstanding Options shall terminate,
provided that the holder of each Option shall, in such event, if no provision
has been made for the substitution of a new option for such outstanding option,
have the right immediately prior to such Trigger Event, to exercise the holders
Options in whole or in part without regard to the date on which the Options
would be first exercisable.

(c) Upon any adjustment in the number or exercise price of shares
subject to an Option, a new Option may be granted in place of such Option which
has been so adjusted.

5. PRICE; PERIOD; NUMBER.

(a) The exercise price of each Option granted under the Plan shall
not be less than the fair market value of shares of Common Stock subject to the
Option at the time of the grant thereof.

(b) The period during which each Option shall be exercisable by the
holder thereof shall be fixed in each case by the Committee in its discretion,
subject only to the limitation that, by its terms, no Option shall be
exercisable after the expiration of 10 years from the date it is granted.

(c) The number of shares of Common Stock subject to each Option under
the Plan shall be determined in each case by the Committee in its discretion.

6. MANNER OF EXERCISE OF OPTION. Any Option granted pursuant to the Plan
may be exercised only in the following manner:

(a) the holder of such Option shall deliver to the Company written
notice of exercise, accompanied, if then required by the Committee, by a
representation that at the time of such exercise it is the holder's then
intention to acquire the shares then being purchased for investment and not for
resale; and

(b) accompanying such notice of exercise shall be either (i) payment
of the full purchase price under the Option of the shares of Common Stock then
being purchased PLUS the amount of Federal income taxes owed by the exercising
holder in connection with such exercise or (ii) certificates representing such
number of shares of the Class A Common Stock or Class B Common Stock of the
Company as shall have, at the time of exercise, a fair market value equal to the
full purchase price under the Option of the shares of Common Stock then being
purchased PLUS the amount of Federal income taxes owed by the exercising holder
in connection with such exercise, which certificates shall be duly endorsed or
accompanied by duly executed stock powers transferring such shares to the
Company.

(c) Upon exercise of an Option, the Committee may, at its election,
waive the payment of the purchase price and, in lieu of issuing shares of Common
Stock to the exercising holder of the Option, direct the Company to pay the
exercising holder in cash the difference between the purchase price under the

<PAGE>

30-Jan-97

Option and the then fair market value of the shares of Common Stock then being
purchased less the amount of any Federal income taxes owed by the exercising
holder in connection with such exercise.

7. REACQUISITION AND REISSUANCE OF OPTIONS. Unless the terms of any
Option expressly provide to the contrary, the Committee, with or without the
consent of the holder of the Option, may at any time cause the Company to cancel
any outstanding and unexercised Option, or any portion thereof, upon payment to
such holder of the excess of the then fair market value of the Common Stock
subject to such Option over the exercise price thereof set forth in such Option.
The Company may withhold from such payment any applicable taxes and other
amounts. The shares of Common Stock subject to such Option so canceled in
consideration for a cash payment to the holder, shall not again be available for
an Option under the Plan. In the event that the exercisable price of a
reacquired Option exceeds the fair market value of the shares of Common Stock
subject thereto, such Option may be canceled by the Company without payment
therefor. Shares of Common Stock subject to such Option which are reacquired
without payment therefor to the holder, may again be subject to an Option under
the Plan.

8. INTEREST PRIOR TO ISSUANCE OF SHARES. No holder of an Option will
have any rights as a stockholder of the Company until the exercise of the
Option.

9. GRANT OF OPTIONS. Options may be granted under the Plan at any time,
or from time to time, as long as the total number of shares of Common Stock
optioned or purchased under this Plan does not exceed 1,150,000 shares, subject
to adjustment as provided in Section 4(b) of the Plan.

10. AMENDMENT OF THE PLAN. The Board of Directors of the Company may
amend the Plan at any time in such manner as it deems to be in the best interest
of the Company; provided, however, that no such amendment shall impair the
rights of any Key Employee under any outstanding Options, without the consent of
such Key Employee, and provided further that, without such approval of the
shareholders of the Company as may be required under applicable law for the
approval of a plan pursuant to which stock options may be granted: (1) the
total number of shares of Common Stock issuable to persons subject to Section 16
of the 1934 Act pursuant to the Plan shall not be increased by more than 40,000
shares except as provided in Section 4(b) of the Plan; (2) the exercise price of
any Option shall not be reduced below the limits set forth in Section 5(a) of
the Plan; (3) the period during which any Option may be exercised shall not be
extended beyond the maximum period permitted by Section 5(b) of the Plan; and
(4) the class of employees eligible to receive Options under the Plan shall not
be varied to add an additional class of persons subject to Section 16 of the
1934 Act.

11. MISCELLANEOUS.

(a) Nothing contained in the Plan shall be deemed to give any Key
Employee or other person the right to be retained in the service of the Company.

(b) Except as specifically provided in the Plan, no person shall have
the right to assign, transfer, alienate, pledge, encumber or subject to lien the
benefits to which such person may be entitled hereunder, otherwise than by will
or by the laws of descent and distribution. Benefits under the Plan shall not
be subject to levy of any execution, attachment or similar process. If a person
to whom benefits shall be due under the Plan shall be or become incompetent in
the judgment of the Committee, then the Committee shall have the right to
determine to whom such benefits shall be paid for the benefit of such person.

(c) To the extent any provision of the Plan or Option granted
hereunder or any action by the Committee fails to comply with all applicable
conditions of Rule 16b-3 under the 1934 Act, such provision or action shall be
deemed null and void to the extent permitted by law and advisable by the
Committee.

(d) Except to the extent preempted by federal law, this Plan shall be
governed by the laws of the State of New Jersey.

<PAGE>

A [X] Please mark your
votes as in this
example.
<TABLE>
<CAPTION>

This proxy when properly executed will be voted in the manner directed herein. If no direction is made, this proxy will be voted
FOR the election of directors and FOR proposal 3. In their discretion, the proxies are authorized to vote
on such other business as may come before the meeting.

FOR WITHHELD FOR AGAINST ABSTAIN
<S> <C> <C>
1. Election NOMINEES: Edward J. Klinsport 3. APPROVAL OF THE ADOPTION OF AN
of [ ] [ ] For a 3-year term AMENDMENT TO THE COMPANY'S [ ] [ ] [ ]
Directors Alexander M. Adelson DISCRETIONARY DEFERRED COMPENSATION
For a 3-year term PLAN TO INCREASE THE NUMBER OF AUTHORIZED SHARES AND TO
For, except vote withheld from the Alan S. Poole CHANGE THE DEFINITION OF "COMMITTEE" CONTAINED IN THE PLAN.
following nominee. For a one-year term
THE SIGNER HEREBY REVOKES ALL PROXIES HERETOFORE GIVEN BY
THE SIGNER TO VOTE AT SAID MEETING OR ANY ADJOURNMENTS
THEREOF.
_________________________

SIGNATURE(s) ____________________________________________________________________________________________________ DATE _____________
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
</TABLE>
<PAGE>

CLASS B BASE TEN SYSTEMS, INC. CLASS B

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
FOR THE ANNUAL MEETING OF SHAREHOLDERS MARCH 20, 1997

The undersigned hereby constitutes and appoints MYLES M. KRANZLER and ALAN J.
EISENBERG, and each of them, his or her true and lawful agents and proxies, with
full power of substitution in each, to represent the undersigned at the Annual
Meeting of Shareholders of Base Ten Systems, Inc. to be held at Four Seasons
Hotel, 57 East 57th St., New York City, NY 10022 on Thursday March 20, 1997, and
at any adjournments thereof, on all matters coming before said meeting.

YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE BOXES, SEE
REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. YOUR SHARES CANNOT BE VOTED BY
THE PERSONS NAMED ABOVE AS PROXIES UNLESS YOU SIGN AND RETURN THIS CARD.

(continued, and to be signed on other side) [SEE REVERSE
SIDE]

<PAGE>

CLASS A BASE TEN SYSTEMS, INC. CLASS A

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
FOR THE ANNUAL MEETING OF SHAREHOLDERS MARCH 20, 1997

(continued, and to be signed on other side) [SEE REVERSE
SIDE]

<PAGE>

A [X] Please mark your
votes as in this
example.
<TABLE>
<CAPTION>

This proxy when properly executed will be voted in the manner directed herein. If no direction is made, this proxy will be voted
FOR the election of director and FOR proposal 3. In their discretion, the proxies are authorized to vote
on such other business as may come before the meeting.

FOR WITHHELD FOR AGAINST ABSTAIN
<S> <C> <C>
2. Election NOMINEES: Bruce D. Cowan 3. APPROVAL OF THE ADOPTION OF AN
of [ ] [ ] For a 2-year term AMENDMENT TO THE COMPANY'S [ ] [ ] [ ]
Director DISCRETIONARY DEFERRED COMPENSATION
PLAN TO INCREASE THE NUMBER OF AUTHORIZED SHARES AND TO
For, except vote withheld from the CHANGE THE DEFINITION OF "COMMITTEE" CONTAINED IN THE PLAN.
following nominee.
THE SIGNER HEREBY REVOKES ALL PROXIES HERETOFORE GIVEN BY THE
SIGNER TO VOTE AT SAID MEETING OR ANY ADJOURNMENT THEREOF.
_________________________