<PAGE> 1
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SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
BARRISTER INFORMATION SYSTEMS
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
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<PAGE> 2
BARRISTER INFORMATION SYSTEMS CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 4, 1997
The Annual Meeting of Shareholders of Barrister Information Systems Corporation
(the "Company") will be held at the Buffalo and Erie County Public Library
Auditorium, Clinton and Ellicott Streets, Buffalo, New York, on September 4,
1997 at 10:00 a.m., local time, for the following purposes:
1. To elect four (4) Class II directors to hold office
until the 1999 annual meeting and until their
successors have been elected and qualified.
2. To approve an amendment to the Company's 1989 Stock
Incentive Plan to increase the number of shares of
the Company's Common Stock available for options and
awards under the Plan by 300,000 shares to a total of
900,000 shares of Common Stock available for options
and awards under the Plan.
3. To ratify the appointment of KPMG Peat Marwick LLP as
the Company's independent auditors for the current
fiscal year.
4. To transact such other business as may properly come
before the meeting.
The close of business on July 23, 1997 has been fixed as the record date for
determining the shareholders entitled to notice of, and to vote at, the Annual
Meeting.
By order of the Board of Directors,
Mark C. Donadio
Secretary
July 24, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES.
<PAGE> 3
BARRISTER INFORMATION SYSTEMS CORPORATION
465 MAIN STREET
BUFFALO, NEW YORK 14203
(716) 845-5010
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
SEPTEMBER 4, 1997
GENERAL
This Proxy Statement and accompanying form of proxy have been mailed on or about
July 28, 1997, to all holders of record on July 23, 1997 of Common Stock, par
value $.24 per share ("Common Stock") of Barrister Information Systems
Corporation, a New York corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
Annual Meeting of Shareholders to be held on September 4, 1997 and at any
adjournment or postponements thereof.
Shares represented by an effective proxy in the accompanying form, unless
contrary instructions are specified in the proxy, will be voted FOR each of the
proposals set forth in the accompanying Notice of Annual Meeting of
Shareholders. Any proxy may be revoked at any time before it is voted. A
shareholder may revoke his/her proxy by executing another proxy at a later date,
by notifying the Secretary of the Company in writing of his/her revocation, or
by attending and voting at the Annual Meeting. Revocation is effective only upon
receipt of notice by the Secretary.
The Company will bear the cost of soliciting proxies by the Board of Directors.
The Board of Directors may use the services of the Company's executive officers
and certain directors to solicit proxies from shareholders in person and by
mail, telegram and telephone, and the Company may reimburse them for reasonable
out-of-pocket expenses incurred by them in so doing. In addition, the Company
will request brokers, nominees and others to forward proxy materials to their
principals and to obtain authority to execute proxies. The Company will
reimburse such brokers, nominees and others for their reasonable out-of-pocket
and clerical expenses incurred by them in so doing.
The securities entitled to vote at the Annual Meeting are shares of Common
Stock. Each share of Common Stock is entitled to one vote. The close of business
on July 23, 1997 has been fixed as the record date for the determination of
shareholders entitled to notice of and to vote at the Annual Meeting and any
adjournment or postponement thereof. At that date 8,201,300 shares of Common
Stock were outstanding.
2
<PAGE> 4
PRINCIPAL SHAREHOLDERS
CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as of June 20, 1997 with
respect to the beneficial ownership of the Company's Common Stock by all persons
or groups (as such terms are used in Section 13(d)(3) of the Securities Exchange
Act of 1934) known by the Company to be beneficial owners of more than 5% of its
outstanding common stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS COMMON PERCENT
OF STOCK OF
BENEFICIAL OWNER(1) COMMON STOCK(2)
<S> <C> <C>
Brebar Investments Ltd. 3,500,000(3) 36.08
Henry P. Semmelhack 2,024,679(4) 23.80
761 Willardshire Blvd.
Orchard Park, NY 14127
James D. Morgan 898,163(5) 10.82
34 Ironwood Court
East Amherst, NY 14051
Richard E. McPherson 875,352(6) 10.56
304 Burroughs Drive
Amherst, NY 14226
</TABLE>
(1) The beneficial ownership information presented is based upon
information furnished by each person or contained in filings with the
Securities and Exchange Commission. Pursuant to Rule 13d-3 of the
Regulations under the Securities Exchange Act of 1934, as amended,
beneficial ownership of a security consists of sole or shared voting
power (including the power to vote or direct the vote) and/or sole or
shared investment power (including the power to dispose or to direct
the disposition) with respect to a security whether through any
contract, arrangement, understanding, relationship or otherwise. Except
as otherwise indicated, the named person has sole voting and investment
power with respect to the Common Stock set forth opposite his name.
Percentages have been calculated on the basis of 8,201,300 Common Stock
shares outstanding, plus, as appropriate, shares deemed outstanding
pursuant to Rule 13d-3(d)(1).
3
<PAGE> 5
(2) The percent of Common Stock beneficially owned is equivalent to each
person's or group's percentage of the aggregate number of votes
attributable to outstanding Common Stock.
(3) On March 29, 1996, the Company completed a Regulation S Offering with
Brebar Investments Ltd. whereby 2,000,000 shares of Common Stock were
sold to Brebar Investments Ltd. Also includes Warrants to purchase
1,500,000 shares of Common Stock.
(4) Includes 376,790 shares of Common Stock and Warrants to purchase 45,000
shares of Common Stock owned by Mr. Semmelhack's wife and children. Mr.
Semmelhack disclaims any beneficial ownership of such shares. Includes
options to purchase 91,000 shares of Common Stock and Warrants to
purchase 168,750 shares of Common Stock.
(5) Includes 207 shares held in trust by Mr. Morgan for the benefit of his
children. Mr. Morgan disclaims any beneficial ownership of such shares
held in trust. Includes non-qualified options to purchase 10,000 shares
of Common Stock and Warrants to purchase 90,000 shares of Common Stock.
(6) Includes Warrants to purchase 90,000 shares of Common Stock.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of Common Stock of the
Company as of June 20, 1997 by each director and by all directors and officers
as a group.
<TABLE>
<CAPTION>
NAME OF COMMON PERCENT OF
BENEFICIAL OWNER(1) STOCK COMMON STOCK
- ------------------- ------- ------------
<S> <C> <C>
Henry P. Semmelhack 2,024,679(2) 23.80
James D. Morgan 898,163(3) 10.82
Richard E. McPherson 875,352(4) 10.56
Richard P. Beyer 227,813(5) 2.76
Jose Rivero 138,910(6) 1.68
All officers and directors
as a group (10 persons) 4,261,042(7) 48.05
</TABLE>
(1) The beneficial ownership information presented is based upon
information furnished by each person or contained in filings with the
Securities and Exchange Commission. Pursuant to Rule 13d-3 of the
Regulations under the Securities Exchange Act of 1934, as amended,
beneficial ownership of a security consists of sole or shared voting
power (including the power to vote or direct the vote) and/or sole or
shared investment power (including the power to dispose or to direct
the disposition) with respect to a security whether through any
contract, arrangement, understanding, relationship or otherwise.
Except as otherwise indicated, the named person has sole voting and
investment power with respect to the Common Stock set forth opposite
his name. Percentages have been calculated on the basis of 8,201,300
Common Stock shares outstanding, plus, as appropriate, shares deemed
outstanding pursuant to Rule 13d-3(d)(1).
4
<PAGE> 6
(2) Includes 376,790 shares of Common Stock and Warrants to purchase 45,000
shares of Common Stock owned by Mr. Semmelhack's wife and children. Mr.
Semmelhack disclaims any beneficial ownership of such shares. Includes
options to purchase 91,000 shares of Common Stock and Warrants to
purchase 168,750 shares of Common Stock.
(3) Includes 207 shares held in trust by Mr. Morgan for the benefit of his
children. Mr. Morgan disclaims any beneficial ownership of such shares
held in trust. Includes non-qualified options to purchase 10,000 shares
of Common Stock and Warrants to purchase 90,000 shares of Common Stock.
(4) Amount includes Warrants to purchase 90,000 shares of Common Stock.
(5) Amount includes options to purchase 49,000 shares of Common Stock and
Warrants to purchase 11,250 shares of Common Stock.
(6) Amount includes options to purchase 57,000 shares of Common Stock.
(7) Amount includes options to purchase 262,000 shares of Common Stock and
Warrants to purchase 405,000 shares of Common Stock. Except as
indicated in Footnotes 2 & 3 above, members of the group have sole
voting and investment power with respect to all shares indicated.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
TERM OF OFFICE
The Company's Certificate of Incorporation and By-Laws provide that the Company
shall have not less than 6 and not more than 15 directors, and that the Board of
Directors shall be divided into two classes, as nearly equal in number as
possible (but with not less than three directors in each class or such lesser
number as may be permitted by law), as determined by the Board of Directors. If,
prior to election, the size of the Board of Directors has been increased to nine
or a greater number, or the Board may be otherwise divided into three classes
under applicable law, at the next succeeding annual meeting of shareholders, the
Board of Directors will be divided into three classes, as equal in number as
possible with the following staggered terms: the class of directors whose term
under the two-class board was not to expire until the annual meeting next
succeeding the creation of the three-class board shall complete the term for
which such class of directors was originally elected; one class of directors
shall be elected to serve a two-year term; and one class of directors shall be
elected to serve a three-year term. Each year the directors in one class will be
elected to serve terms of three years.
At the annual meeting of shareholders, in accordance with the amendments to the
Company's Certificate of Incorporation and By-laws which relate to corporate
governance, at least three persons are to be elected to the Board of Directors
of the Company as Class II directors to hold office until the 1999 annual
meeting of shareholders and until their successors are elected and qualified.
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<PAGE> 7
Four directors are proposed for election at the annual meeting, and it is
intended that shares represented by properly executed proxies will be voted, in
the absence of contrary instructions, in favor of the election of the following
named nominees: Class II directors: Henry P. Semmelhack, James D. Morgan,
Richard P. Beyer, and Warren E. Emblidge, Jr. The Directors approved the
nominations by Resolution of the Board of Directors on June 25, 1997.
The persons named in the enclosed proxy intend to vote the shares represented by
proxies for the Board of Directors nominees unless authority to vote for such
persons is withheld. If any of those nominated should not continue to be
available for election, it is intended that the shares represented by the
proxies will be voted for such other person or persons as the Board shall
designate. No circumstances are presently known which would render any nominee
named herein unavailable for election.
NOMINEES FOR DIRECTOR
DIRECTORS TO HOLD OFFICE UNTIL 1999 (CLASS II)
Henry P. Semmelhack - Age 60 Director since 1982
Mr. Semmelhack has served as the Company's Chairman of the Board of Directors,
Chief Executive Officer and President since its incorporation in 1982. He was
one of the founders of Comptek Research, Inc. ("Comptek") (a manufacturer and
marketer of computer systems for the defense industry) and currently serves as a
Director of Comptek. Previously he served as Comptek's Chairman of the Board,
Chief Executive Officer and President. Mr. Semmelhack is also a Director of
Merchants Group, Inc.
James D. Morgan - Age 60 Director since 1982
Mr. Morgan is currently Vice President and Chief Scientist of Comptek. He served
as Vice President of Product Engineering of the Company from 1982 to 1990. He
was one of the founders of Comptek and currently serves as a Director of that
company.
Richard P. Beyer - Age 50 Director since 1982
Mr. Beyer became Vice President Finance and Treasurer of the Company in 1982
following its incorporation. He previously was Vice President Finance and
Treasurer of Comptek.
Warren E. Emblidge, Jr. - Age 53 Director since 1993
Mr. Emblidge has been President of S.J. McCullagh, Inc., an importer, roaster
and distributor of coffee and related products, from 1986 to present. From 1987
to 1988 he was Chairman of Joseph Malecki Corporation, a meat processor for the
retail trade. Between 1989 - 1992, he was President and founder of Juiceables,
Inc., a bag-in-box distributor and President and co-founder of GR8 Nutrition,
Inc., a producer of specialty powdered foods for the geriatric and dental
markets. Previously Mr. Emblidge served in various executive positions at
Goldome FSB/Buffalo Savings Bank, including Executive Vice President of Goldome
Realty Credit Corporation, President of Goldome Corporation and Group Vice
President of Buffalo Savings Bank.
6
<PAGE> 8
DIRECTORS CONTINUING IN OFFICE UNTIL 1998 (CLASS I)
Franklyn S. Barry, Jr. - Age 57 Director since 1991
Mr. Barry is an owner and operator of privately held consumer products companies
which distribute infant products, housewares, and furniture. He was President of
Ingram Software, Inc. (a distributor of microcomputer software and supplies)
from 1985 to 1987, and a founder and Chief Executive Officer of its predecessor,
Software Distribution Services, Inc. from 1983 to 1985. He has been a Director
of Merchants Mutual Insurance Company (a property and casualty underwriter)
since 1981, and was a Director of Merchants Insurance Group, Inc. from 1986 to
1994.
Richard E. McPherson - Age 64 Director since 1982
Mr. McPherson served as a Vice President of the Company since its incorporation
in 1982 until 1995 when he retired. He was one of the founders of Comptek and
served as Vice President of that company prior to April 1982.
Jose Rivero - Age 48 Director since 1991
Mr. Rivero is currently Vice President of the Services Division of the Company.
He has been with the Company since 1982. He served as Vice President in charge
of Hardware Operations, Manufacturing, Processing and Inventory from 1989 to
1991. Prior to that Mr. Rivero was Vice President of Customer Operations in
charge of Hardware and Software Installation and Maintenance from 1987 to 1989.
James Page - Age 28 Director since 1996
Mr. Page is a Director of Enlightened TV, Ltd., a European media holding company
with interests in terrestrial television stations in Germany. He was formerly
Chief Analyst with Boxall Asset Management of Great Britain, a venture capital
and proprietary trading firm, and formerly a strategic consultant for Eidos,
P.L.C., the largest computer games publisher in Europe.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES OF THE COMMON
STOCK OF THE COMPANY PRESENT OR REPRESENTED AT THE MEETING IS REQUIRED TO ELECT
DIRECTORS. AN AFFIRMATIVE VOTE IS RECOMMENDED BY MANAGEMENT.
7
<PAGE> 9
INFORMATION ABOUT MANAGEMENT
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of four meetings during the
fiscal year ended March 31, 1997. The Company has two committees: the Audit
Committee and the Compensation Committee.
The Audit Committee consisted of directors Morgan, Barry and Emblidge and met
one time during the fiscal year ended March 31, 1997. The Audit Committee's
functions include recommending to the Board of Directors the engagement of the
Company's independent certified public accountants, reviewing with such
accountants the plan for and results of their auditing engagement and the
independence of such accountants.
The Compensation Committee consisted of directors Barry, Morgan and Emblidge and
met two times during the fiscal year ended March 31, 1997. The Compensation
Committee reviews and makes recommendations with respect to compensation of
officers and key employees and administers the Company's Stock Incentive Plan.
Mr. Morgan was appointed by the Board of Directors to both the Audit and
Compensation Committees on June 27, 1991. Mr. Barry was appointed by the Board
of Directors to both the Audit and Compensation Committees on October 9, 1991.
Mr. Emblidge was appointed by the Board of Directors to both the Audit and
Compensation Committee on September 1, 1993. Mr. Page was appointed by the Board
of Directors to be a director of the Company on May 2, 1996. Mr. Morgan, Mr.
Barry, Mr. Emblidge and Mr. Page are not officers or employees of the Company.
During the fiscal year ended March 31, 1997, no director attended fewer than
100% of the aggregate of all meetings of the Board of Directors and the
committees, if any, on which the director served for the fiscal year.
COMPENSATION AND RELATED MATTERS
COMPENSATION OF DIRECTORS
Employee directors receive no additional compensation for service on the Board
of Directors or its Committees. Directors who are not employees receive a $4,000
annual retainer, payable semiannually plus a fee of $500 for each Board and
Committee meeting attended with a $500 maximum per day.
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<PAGE> 10
EXECUTIVE COMPENSATION
The following table sets forth all cash compensation paid to the Chief Executive
Officer for services rendered to the Company in all capacities during the fiscal
years ended March 31, 1997, 1996 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
------------------- ------ -------
Other Securities
Name and Annual Restricted Underlying LTIP All Other
Principal Salary Bonus Compen- Stock Options/ Payouts Compen-
Position Year ($) ($) sation ($) Award (s)($) SARs (#) ($) sation
- ------------ ---- --- --- ---------- ---------- -------- --- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Henry P. Semmelhack 1997 105,019 - - - - - -
Chief Executive 1996 74,024 - - - - - -
Officer 1995 56,627 - - - 72,000 - -
</TABLE>
AGGREGATED OPTION EXERCISE TABLE
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options/SARs at FY-End (#) at FY-End ($)
-------------------------- -------------
Shares Acquired Value
Name On Exercise Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Henry P. Semmelhack 0 0 91,000 26,000 $125,700 $36,075
Chief Executive
Officer
</TABLE>
The amount reported in the compensation table above does not include
expenditures made by the Company for an automobile and insurance benefits. These
benefits did not exceed the lesser of $25,000 or 10% of the compensation
reported in the table above. No other officer of the Company earned more than
$100,000 during the fiscal year ended March 31, 1997.
RETIREMENT SAVINGS PLAN
The Company established a defined contribution plan effective April 1, 1986 to
be known as the Barrister Information Systems Corporation Retirement Savings
Plan (the "Savings Plan"). The Savings Plan is intended to meet the requirements
of Section 401(k) of the Code. All employees who are at least twenty-one years
of age and who complete one year of service in which they are credited with at
least 1,000 hours of service are eligible to join the Savings Plan. Under the
Savings Plan employees are permitted to contribute up to the lesser of 15% of
their compensation or $9,500.
Contributions under the Savings Plan are made by the Company only with respect
to those participants who agree to contribute a portion of their compensation
from the Company. Initial contributions under the Savings Plan commenced on
April 1, 1986.
A participant at all times is 100% vested in the total contributions made by the
participant and the Company. Distributions are made under the Savings Plan only
upon retirement, death, disability, termination of employment or in the case of
certain hardships.
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<PAGE> 11
All contributions under the Savings Plan are placed into individual accounts for
each participant. Each year the Company contributes, on behalf of each
participant, an amount equal to 20% of the first 4% of compensation contributed
by each participant.
1989 STOCK INCENTIVE PLAN
The Company's qualified Incentive Stock Option Plan as approved by its sole
shareholder in April 1982, (the "Prior Plan") provides for the grant of options
to key employees of the Company, including officers to purchase shares of Common
Stock of the Company.
At the direction of the Board, a new 1989 Stock Incentive Plan (the "Plan") was
proposed to give to the Company greater flexibility in providing to key
employees and directors compensation other than cash compensation through grants
of non-qualified stock options ("Non-Qualified Stock Options"), restricted stock
("Restricted Stock"), incentive stock options ("Incentive Stock Options"), stock
bonuses, and cash bonuses or loans, the latter two features being limited to
sums needed (and as limited in the Plan) to assist an eligible grantee in
meeting the tax payment obligations associated with the issuance or exercise of
a Non-Qualified Stock Option, Restricted Stock or stock bonus. The Compensation
Committee of the Board of Directors administers the Plan, subject to the
approval of the Board of Directors. The Plan is designed to qualify as an
"incentive stock option plan" under Section 422A of the Code.
The Plan carried over in full effect all of the incentive stock options granted
under the Company's Prior Plan. The Plan also presently authorizes 600,000
shares of Common Stock to be available for the grant of options and/or
restricted stock and/or a stock bonus under the Plan. The Plan was approved by
the shareholders on August 14, 1990, and, as amended, on October 9, 1991, and,
as amended, in October 4, 1994.
The option exercise price must be at least 100% of the fair market value per
share of the Company's Common Stock, as determined by the Board of Directors on
the date of grant. The exercise price may be paid in cash or with previously
owned shares of Common Stock or both. The options are exercisable commencing
after a minimum period determined by the Board of Directors and not more than
ten years after the date of grant. The exercise price of options granted to
employees possessing more than 10% of the combined voting power of all classes
of capital stock on the effective date of the grant must be not less than 110%
of fair market value on the date of grant, and the options may not be exercised
more than five years after the date of grant.
The Plan provides for the issuance of Restricted Stock which enables
non-employee directors (who do not administer the Plan) as well as otherwise
eligible employees and directors to receive Restricted Stock partially or
entirely in lieu of or in addition to cash compensation.
The Plan also provides for a Tandem Award which contemplates the granting of
shares of both Restricted Stock and a Non-Qualified Stock Option. Under this
feature, a recipient would elect to either exercise the Non-Qualified Stock
Option or allow the Restricted Stock to vest depending on which form of
incentive provided the best return. Exercise of a Non-Qualified Stock Option
cancels the related Restricted Stock and vesting of the Restricted Stock cancels
the related Non-Qualified Stock Option.
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<PAGE> 12
The Plan also includes a "reload" feature, under which an optionee who uses
shares of the Company's Common Stock to pay the purchase price upon an exercise
of Options, as permitted by the Plan, may be awarded an equal number of new
options upon tendering of the stock of the same type as the stock which is
surrendered in connection with such payment. This feature, which facilitates
cash-less exercises, also can encourage share ownership and retention by
optionees. There are no minimum or maximum amounts of stock that can be used
under the reload feature except that the amount is limited to the aggregate
number of shares of Common Stock of the Plan. The reload right may be exercised
at any time during the life of the grant of the option. The Committee of the
Board of Directors that administers the Plan has the authority to determine that
if payment of the exercise price with Common Stock is approved, an additional
number of Options of the same nature may be granted at such price and upon such
terms as the Committee shall establish.
The Plan also includes provisions permitting brokers to assist holders of
options in exercising options on behalf of the optionee subject to certain
restrictions as provided in the Plan.
At March 31, 1997, options covering an aggregate of 524,769 shares were
outstanding and 41,399 shares were available for issuance in connection with
further options and awards. 342,430 options were exercisable. No options were
granted and 3,332 options were exercised during the last fiscal year.
CERTAIN TRANSACTIONS
Prior to March 31, 1997, the Company had a term note in the amount of $2,500,000
with BIS Partners, L.P. ("BIS Partners"), a limited partnership composed of
private investors. BIS Partners had also provided the Company with a working
capital loan of $500,000, which has been paid off. The term note is secured by
Company assets and receivables. Partners in BIS Partners, L.P. include Company
officers Semmelhack and Beyer and Company directors McPherson and Morgan. On
March 31, 1997, the Company renegotiated the terms of its loan agreement with
BIS Partners, L.P., extending the repayment schedule through the year 2004 and
agreeing to an interest rate of prime plus 3.5%. On March 31, 1997, the balance
of the term note was $1,425,000.
On August 31, 1995, BIS Partners forgave $450,000 of the term debt owed by the
Company. At the same time, 450,000 Warrants were issued to BIS Partners to
purchase up to 450,000 shares of Company Common Stock. The price per share for
purchase of the Common Stock upon exercise of the Warrant is $1-15/16, the
closing price of the Common Stock on August 31, 1995. The Warrants expire on
August 31, 2005. No Warrants have been exercised.
11
<PAGE> 13
PROPOSAL NO. 2
APPROVAL OF AMENDMENT TO INCREASE THE NUMBER OF SHARES
OF COMMON STOCK AVAILABLE UNDER THE COMPANY'S
1989 STOCK INCENTIVE PLAN
The Plan was adopted by the shareholders of the Company at their annual meeting
on August 14, 1990. The number of shares of Common Stock reserved for issuance
pursuant to the granting of options (the "Options") was increased to 300,000 by
a majority vote of shareholders at their annual meeting on October 9, 1991 and
then increased to 600,000 by a majority vote of shareholders at their annual
meeting on October 4, 1994. To date, options to purchase an aggregate of 560,769
shares of common stock have been granted to 30 employees, and 33,832 stock
options have been exercised with the Company receiving $121,716.
To adequately accommodate the need of the Company to grant additional Options to
attract and retain key employees, the directors recommend that the shareholders
amend the Plan to increase to 900,000 the number of shares of Common Stock
available as to which Options may be granted pursuant to the Plan.
PURPOSE
The Plan is designed to help the Company in retaining and attracting personnel
of outstanding competence by rewarding them for their achievements. The Plan
also is intended to encourage a sense of proprietary interest by such personnel
by providing them with a means to acquire, or increase an interest in the
Company as a shareholder. The Plan also is intended to provide a means of
compensating non-employee directors of the Company by compensation in a form
other than cash. A copy of the Plan is set forth in Exhibit A and the following
summary of its principal provisions is subject in all respects to the full text
of the Plan.
TYPES OF INCENTIVE AWARDS PERMITTED TO BE GRANTED UNDER THE PLAN
Under the Plan, the Company may grant stock options, including incentive stock
options ("Incentive Stock Options") and non-qualified stock options
("Non-Qualified Stock Options"), ("Options"), restricted stock ("Restricted
Stock"), tandem awards consisting of a combination of Restricted Stock and
Non-Qualified Stock Options ("Tandem Award"), a stock bonus, a cash bonus for
not more than the anticipated tax liability associated with the grant, exercise
or vesting of an Option or share of Restricted Stock, or a loan for the purpose
of exercising an option granted under the Plan or the payment of any taxes as
aforesaid (any of the foregoing being an "Incentive Award").
ADMINISTRATION OF THE PLAN
The Plan is administered by a Committee of the Board of Directors (the
"Committee") consisting of not less than two directors who are disinterested,
within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The Committee will determine the persons to be
granted Incentive Awards, the number of shares of the Company's Common Stock
relating to such Incentive Award and any other terms and conditions of an
Incentive Award not otherwise specifically prescribed by the Plan.
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<PAGE> 14
The Board of Directors may add members to the Committee and will fill all
vacancies. The Committee will select one of its members as chairperson, and will
hold meetings at such times and places as it may determine. The acts of a
majority of the Committee at which a quorum is present, or acts reduced to or
approved in writing by a majority of the members of the Committee, will be the
valid acts of the Committee. The Committee shall determine those employees,
officers and directors to be granted incentive Awards and the number of shares
of Common Stock and other terms and conditions relating to each such incentive
Award. All such recommendations require approval by the Board.
ELIGIBILITY
Key employees (as defined in the Plan) and directors of the Company (other than
members of the Committee) or any of its subsidiaries are eligible to receive
incentive Awards under the Plan (such persons being "Participants") except that
non-employee directors are not eligible to be granted awards of Incentive Stock
Options. A Participant may hold more than one Incentive Award subject to
restrictions as set forth in the Plan or as may be provided in an Incentive
Award granted pursuant to the Plan.
EXERCISE PRICE AND AMOUNT OF OPTIONS
Each Option granted under the Plan is, and will be, evidenced by an agreement in
a form approved by the Committee. Each Option shall be identified in the
agreement as either an Incentive Stock Option or as a Non-Qualified Stock
Option.
Each Incentive Stock Option will state the option price, which may not be less
than 100% of the fair market value of the shares of Common Stock subject to such
Option on the date such Option was granted; provided, however, that if such
Option on the date such Option is granted to an optionee who then owns (within
the meaning of the Internal Revenue Code ("the Code")) Common Stock possessing
more than ten percent (10%) of the total combined voting power of the Company or
of its subsidiaries or parent, the option price may not be less than 110% of the
fair market value of the shares of Common Stock subject to such Option on the
date such Option is granted. Subject to the foregoing, the Committee has full
authority and discretion and will be fully protected in fixing the option price.
Notwithstanding the foregoing, the aggregate fair market value (determined as of
the time such Option is granted) of the Common Stock for which an employee may
exercise Incentive Stock Options in any calendar year under all plans of the
Company and its subsidiaries pursuant to which Incentive Stock Options have been
awarded shall not exceed $100,000. Any Incentive Stock Options granted in excess
of the aforesaid $100,000 aggregate fair market value limitation shall be deemed
to be a Non-Qualified Stock Option. The option price is payable upon the
exercise of the Option and may be paid in cash or by check, or, if so authorized
upon the grant of the Options by delivering of shares of Common Stock, which, at
the time of such payment have a fair market value equal to the option price of
the shares to be acquired pursuant to such Option, or by any combination of the
foregoing.
DURATION AND EXERCISE OF OPTIONS
Each Option is exercisable, either in whole or in part, at a date or during a
period and for a number of shares as the Board, upon recommendation of the
Committee, may determine. Any Option may be exercised in whole at any time or in
part at any time, in accordance with certain restrictions described in the Plan
and as determined by the Board at the time the Option is
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<PAGE> 15
granted, by giving written notice to the Company to that effect; provided,
however, that the Committee may require that any Option granted is exercisable
only after a minimum period from the date of such grant. In the case of an
Option granted as part of a Tandem Award the unvested shares of Restricted Stock
affected by the exercise of the Option, will be cancelled. Notwithstanding the
foregoing, no Option will be exercisable more than ten years after its date of
grant.
RESTRICTED STOCK
Each share of Restricted Stock granted under the Plan shall be in accordance
with an agreement in a form approved by the Committee which shall state the date
the Restricted Stock is issued and the date the grantee's ownership of the
shares of Restricted Stock shall vest ("Vesting Date") subject to restrictions
and conditions to such vesting determined by the Board at the date of grant.
Among other things, the Committee may require that the Participant or the
Company achieve certain performance criteria as specified at the time of the
grant of such shares or that the Participant remain in the Company's employ,
subject to certain exceptions as stated in the Plan, at the Vesting Date. Any
attempt by a Participant to transfer such shares prior to the Vesting Date will
cause such Restricted Stock to be forfeited. Each share issued under the Plan
will carry a restrictive legend and be held by a custodian designated by the
Company who may be an officer or employee of the Company.
TANDEM AWARDS
A Tandem Award, consisting of a combination of such shares of Restricted Stock
and Non-Qualified Stock Options as recommended by the Committee, may be granted
pursuant to the Plan; provided, however, that no Tandem Award shall include any
Incentive Stock Options. A Tandem Award shall provide that upon vesting of a
specified number of shares of Restricted Stock, a specified number of
unexercised Non-Qualified Stock Options to which the Restricted Stock relates,
shall terminate, and that upon exercise of a specified number of such Options, a
specified number of unvested shares of Restricted Stock shall be forfeited. The
Tandem Award may alternatively require as a condition to the vesting of any
shares of Restricted Stock subject to the Award that a specified number of
related Non-Qualified Stock Options shall have been exercised and that any
shares of the Common Stock of the Company issuable upon such exercise be held by
the Participant for a specified period.
ADDITIONAL OPTIONS
In the case where payment of the exercise price of an Option with shares of
Common Stock is approved, an additional number of Options of the same nature
(I.E. Incentive Stock Options or Non-Qualified Stock Options) may be granted in
an amount not exceeding the number of common shares surrendered in payment,
which additional Options are exercisable at such price and such time and on such
terms as are established by the Committee and is otherwise in compliance with
the Plan.
STOCK BONUS, BONUSES AND LOANS
The Plan also authorizes the Committee to grant a Stock Bonus under which a
Participant may, subject to meeting of such conditions the Committee may
determine, receive shares of Common Stock. A Participant may also be granted a
right to receive a cash bonus, subject to the Plan, payable not later than 120
days after the last day of the calendar year for which the
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<PAGE> 16
participant may be required to recognize federal income tax in connection with
the grant of Restricted Stock or Stock Bonus or the issuance or exercise of a
Non-Qualified Stock Option; or a Participant may be granted a loan under the
Plan for any of the foregoing purposes in such amounts as the Committee may
recommend and upon such terms, including interest and repayment, as the
Committee may determine. The amount of any bonus or loan will in no event exceed
the lessee of the Participant's estimated federal tax purposes, determined
according to a formula as described in the Plan, accruing to the Company as a
result of such grant, issuance or exercise.
TERMINATION OF EMPLOYMENT
If a Participant resigns or his employment with the Company or any of its
subsidiaries ceases for any reason other than death, retirement, disability or
discharge without cause, the option period of any unexercised Option granted to
such optionee thereupon will terminate.
If a Participant's employment ceases because of retirement, he may exercise such
Option, if otherwise exercisable and to the extent then unexercised, within
three months after such termination of employment.
If a Participant's employment ceases because of disability (within the meaning
of the Code), he may exercise such Option, if otherwise exercisable and to the
extent then unexercised, within one year after such termination of employment.
If a Participant's employment ceases because of death, or if he dies within
three months after his employment terminates, his executors or administrators
may exercise such Option, if otherwise exercisable and to the extent then
unexercised, within six months after such death.
If a Participant's employment ceases because of discharge without cause, as
defined in the Plan, he may exercise such Option, if otherwise exercisable and
to the extent then unexercised, within three months after such termination of
employment.
Any right of a Participant to exercise unexpired, exercisable Options upon
termination of employment or within a specified period thereafter as set forth
above shall be subject to the requirement that the Participant shall have been
employed by the Company for a period of two years immediately preceding such
termination in the case of Incentive Stock Options or, in the case of
Non-Qualified Stock Options, for such period as the Committee may have
specified. In the case of a Non-Qualified Stock Option, the Committee may
provide for survival of such Options beyond any of the periods as described
above.
Any Options that are not otherwise exercisable at the time of termination of
employment shall terminate at such time.
If a Participant's employment ceases for any reason other than by Participant's
voluntary quit or resignation prior to the vesting of shares of Restricted Stock
granted to such Participant, such Restricted Stock will, if not previously
cancelled or forfeited pursuant to the Plan, vest in such proportion, including
zero proportion, as the Committee has determined at the time of grant based on
the circumstances of termination and achievement of any conditions related to
the vesting of such Restricted Stock. In the case of a Participant's termination
for cause as defined in the Plan, voluntary quit or resignation, all shares of
Restricted Stock not then vested are forfeited. All unexercised Options issued
in connection with a Tandem Grant will expire and
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<PAGE> 17
any unvested Restricted Stock will be forfeited to the same extent as would
apply to Non-Qualified Stock Options in the case of a termination of employment
as provided in the Plan except that the Committee may, in the case of a
termination by virtue of disability, retirement, discharge without cause, or
death advance to the date of termination of employment or to the last day of
exercise for an Option provided in each such circumstance of termination the
Vesting Date for the Participant's shares of Restricted Stock previously granted
and not otherwise forfeited.
ASSIGNABILITY OF OPTIONS
During the lifetime of the Participant, an Option may be exercised only by him
and no other person may acquire the rights therein. No Option is transferable by
the Optionee otherwise than by will or the laws of descent and distributions.
LIMITATION ON TRANSFER OF CERTAIN SHARES
Any shares of Common Stock received under the Plan by persons subject to Section
16(b) of the Securities Exchange Act of 1934 may not be sold or transferred for
a period of six months from the date of grant of the respective Option in the
case of Option Shares, or six months from the date of grant or award in the case
of Restricted Stock and Stock Bonuses.
AMENDMENT AND TERMINATION OF THE PLAN
Insofar as permitted by law, the Committee may, with respect to shares of Common
Stock at the time not subject to Options, suspend or discontinue the Plan or
revise or amend it in any respect whatsoever (except that, without approval of
the shareholders of the Company, no such revision or amendment to the Plan shall
increase the number of shares of Common Stock that may be issued under the Plan
otherwise than in connection with certain corporate changes as defined in the
Plan, or materially increase the benefits accruing to holders of Incentive
Awards granted pursuant to the Plan or materially modify the requirements for
eligibility for participation in the Plan) or remove the administration of the
Plan from the Committee. No revision or amendment shall adversely affect any
Incentive Award previously granted. No grants will be made under the Plan after
December 31, 1999.
ADJUSTMENTS UPON CHANGES IN COMMON STOCK
Subject to any required action by the Company's shareholders, the aggregate
number of shares of Common Stock for which Options, Restricted Stock and stock
bonuses that may be granted under the Plan and the number of shares of Common
Stock may be covered by each outstanding Incentive Award, and the price per
share thereof as provided in each such Incentive Award, will be proportionately
adjusted for any increase or decrease in the Common Stock issued and
outstanding, including treasury shares, resulting from a consolidation or
subdivision of shares or payment of a stock dividend (but only on the shares of
Common Stock) or a stock split, recapitalization, merger, combination or
exchange of shares or similar corporate change. Any such adjustment shall also
include an adjustment in the number of shares of Common Stock subject to an
Option, including Options related to Restricted Stock granted under Tandem
Awards. In the event of a change in the Common Stock of the Company as presently
constituted,, which is limited to a change of all of its authorized shares with
par value, the shares resulting from any such change will be deemed to be the
Common Stock within the meaning of the Plan.
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<PAGE> 18
MERGER, CONSOLIDATION OR CHANGE IN CONTROL
Subject to any required action by the Company's shareholders, if the Company is
the surviving corporation in any merger or consolidation (except a merger or
consolidation as a result of which the holders of shares of Common Stock receive
securities of another corporation) each outstanding Option will pertain to the
securities which a holder of the number of shares of Common Stock subject to
such Option would have received in such merger or consolidation. A dissolution
or liquidation of the Company, a sale of substantially all of the assets of the
Company, or a merger or consolidation in which the Company is not the surviving
corporation may result, at the election of the Committee, in the cancellation,
prior to such event, of each Option (including each of the shares of Restricted
Stock under a Tandem Award) then outstanding. In the event of such cancellation,
the holder of such Option or Award shall receive an amount in cash equal to the
excess of the value, as determined by the Committee, of the property received by
a holder of a share of Common Stock as a result of such event over the exercise
price of such option. Alternatively, the Committee may provide for the exchange
of each such Option (and related shares of Restricted Stock under a Tandem
Award) then outstanding prior to such event for an Option on some or all of the
property for which such Option could if fully exercisable be exchanged and,
incident thereto, make an equitable adjustment in the exercise price of the
option or the number of shares or amount of property subject to the option, as
determined by the Committee. In the event of any other change in the
capitalization of the Company or other corporate change as specified in the
Plan, the Committee may make adjustments in the number of shares subject to
Options outstanding on the date in which such change occurs and in the per share
exercise price of each such Option as is considered by the Committee appropriate
to prevent dilution or enlargement of rights. FEDERAL INCOME TAX CONSEQUENCES
INCENTIVE STOCK OPTIONS
- -----------------------
No tax consequences result to the Participant or the Company from the grant or
the exercise of an Incentive Stock Option. Instead, the Participant recognizes
gain or loss when the shares acquired by exercising the Incentive Stock Option
are sold. For purposes of determining any gain or loss, the Participant's basis
in the shares is the option price. If the date of sale is at least two years
after the date of the grant of the incentive Stock Option and at least one year
after acquiring the shares by exercising the Incentive Stock Option, the
Participant will realize long-term capital gain or loss. Capital losses are used
to offset capital gains and are deducted against ordinary income to the extent
of three thousand dollars ($3,000) a year.
Generally, the Company is not allowed a deduction with respect to an Incentive
Stock Option. However, if a Participant fails to meet the holding period
requirements, any gain realized by the Participant upon selling the shares
acquired by exercising an Incentive Stock Option is treated as ordinary income
rather than capital gain, to the extent of the excess, if any, of the fair
market value of the shares at the time of exercise (or, if less, in certain
cases the amount realized on the sale) over the option price. In that case, the
Company is allowed a corresponding deduction.
The bargain purchase element of an Incentive Stock Option (the difference
between the amount paid for the stock and the fair market value of the stock on
the date of exercise) is includible in the year of exercise as part of
alternative minimum tax income, unless there is a disqualifying disposition. In
the case of a Participant who fails to meet the holding period requirements (a
disqualifying disposition) and is treated as realizing ordinary income in the
year of exercise of
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<PAGE> 19
the Incentive Stock Option, the maximum amount included in the alternative
minimum taxable income is the gain on disposition. If the disqualifying
disposition occurs in a year other than the year of exercise, the income on the
disqualifying disposition is not included in alternative minimum taxable income.
The basis for gain or loss in the stock for alternative minimum tax is the
exercise price for the stock increased by the amount that the alternative
minimum taxable income was increased due to the earlier exercise of the
Incentive Stock Option.
NON-QUALIFIED STOCK OPTIONS
- ---------------------------
A Participant does not recognize income and the Company does not receive a
deduction at the time a Non-Qualified Stock Option is granted.
Except as described in the following paragraph, a Participant exercising a
Non-Qualified Stock Option recognizes ordinary income, and the Company is
entitled to a deduction equal to the excess of the fair market value of the
stock purchased (determined at the time of exercise) over the amount paid for
the stock. However, a Participant who is subject to suit for recovery of profits
on purchases or sales of shares under the "short swing" trading rules of Section
16(b) of the Securities Exchange Act of 1934, as amended, will not recognize
taxable income generally until six months after exercise of the Non-Qualified
Stock Option unless the Participant makes an election, within thirty days after
acquisition of the shares, to recognize income immediately. The Company is
entitled to a deduction at the time and in the amount the Participant recognizes
income.
Generally, a Participant selling shares acquired by exercising a Non-Qualified
Stock Option, recognizes capital gain or loss (assuming the shares are held as a
capital asset). The amount of gain or less is the difference between the amount
realized upon the sale and the sum of the option price and the amount of
ordinary income recognized in connection with exercising the Non-Qualified Stock
Option. If the shares are held for more than a year, any gain or loss is
long-term capital gain or loss.
EFFECT OF PAYMENT OF EXERCISE PRICE OF OPTIONS BY DELIVERY OF SHARES
- --------------------------------------------------------------------
Payment for shares acquired by exercising an option with other shares of stock
of the Company owned by the Participant is in part a tax-free exchange which
does not result in recognition of income and in part a transaction taxable as
compensation income. Nonrecognition applies only to the receipt of that number
of shares having a value (i.e., fair market value) equal to the value of the
shares surrendered. The receipt of additional shares having a value in excess of
the value of the shares surrendered requires recognition of ordinary income in
an amount equal to the excess. The date the Participant recognizes income
depends upon whether the Participant is subject to the "short Swing" trading
rules of Section 16(b). Also, the holding period of the number of newly-acquired
shares having a value equal to the value of the shares surrendered includes the
holding period of the exchanged shares (assuming the shares surrendered were
held as capital assets on the date of the exchange), and the tax basis of the
shares acquired by the Participant is the tax basis of the shares surrendered.
The tax basis of any additional shares is equal to the amount of ordinary income
recognized by the Participant under the Code, and the holding period of these
shares begins on the date of transfer.
RESTRICTED STOCK
- ----------------
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Unless an election is made as described below, a Participant who receives a
Restricted Stock Award will recognize income, taxable as ordinary income for
federal income tax purposes, at the time the restrictions on the awarded shares
lapse, in an amount equal to the fair market value of the stock at such time.
The Company will be entitled to a federal income tax deduction in the year in
which the restrictions lapse in an amount equal to the taxable income recognized
by the Participant.
Under Section 83(b) of the Code, a Participant may elect within 30 days after
the date of the Award of Restricted Stock to include in the Participant's
taxable income an amount equal to the fair market value of the Restricted Stock
(without regard to the restrictions) at the time of the transfer. No additional
taxable income will be recognized to the Participant at the time the
restrictions lapse. The Company will be entitled to a federal income tax
deduction in an amount equal to the taxable income recognized by the
Participant, in the taxable year of the Company in which the Participant's year
of inclusion ends.
Unless the election has been made, dividends received during the period prior to
the end of the restriction must be treated by the employee and the Company as
additional compensation (and not dividend income) received from the Company.
Upon subsequent sale or exchange of Restricted Stock, the recipient will realize
as capital gain the amount by which the exchange or sale price for such shares
exceeds the fair market value of the shares on the date of the lapse of all
restrictions on their transfer (or the date of grant if a Section 83(b) election
has been made). Whether such capital gains (or losses) will be treated as
"long-term capital gains" (or "long-term capital losses") will depend on the
length of time the shares are considered to have been held by the recipient. The
holding period begins just after all restrictions lapse, except in the case of a
recipient who has made a Section 83(b) election, for whom the holding period
begins just after the date the stock is transferred. The minimum ownership
period for long-term capital gain or loss treatment is one year.
If the Section 83(b) election with respect to Restricted Stock is made and the
employee subsequently forfeits the shares, the income tax law will not permit
the employee to receive any deduction for income previously recognized.
Therefore, although by making the election the recipient will have the
opportunity to have capital gain rather than ordinary income on any increase in
the value of Restricted Stock during the restricted period, there will be a risk
that he or she will have a nondeductible loss (equal to the amount previously
included in income when the election was made) if the Restricted Stock is
forfeited.
The foregoing constitutes a brief summary of the applicable federal income tax
laws and should not be relied upon as being a complete statement of the federal
income tax aspects of the Plan.
THE EMPLOYEE RETIREMENT INCOME SECURITY INCOME ACT OF 1974
The Plan is not subject to any provisions of the Employee Retirement Income
Security Act of 1974, as amended, and is not qualified under Section 401(a) of
the Code. THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES OF THE
COMMON STOCK OF THE COMPANY PRESENT OR REPRESENTED AT THE MEETING IS REQUIRED TO
APPROVE THE PROPOSED AMENDMENT TO THE INCENTIVE STOCK OPTION PLAN AS DETAILED IN
EXHIBIT A. AN AFFIRMATIVE VOTE IS RECOMMENDED BY MANAGEMENT.
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PROPOSAL NO. 3
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
Subject to approval of the shareholders, the Board of Directors, upon the
recommendation of the Audit Committee, has selected KPMG Peat Marwick LLP ("Peat
Marwick"), independent public accountants, to audit the financial statements of
the Company for the fiscal year ending March 31, 1998. Peat Marwick has audited
the Company's financial statements for each of the Company's fiscal years since
the Company's formation in 1982. One or more representatives of Peat Marwick
will be present at the Annual Meeting and will have the opportunity to make a
statement and/or respond to appropriate questions that may be raised by
shareholders.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES OF THE COMMON
STOCK OF THE COMPANY PRESENT OR REPRESENTED AT THE MEETING IS REQUIRED TO
APPROVE THE RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS. AN
AFFIRMATIVE VOTE IS RECOMMENDED BY MANAGEMENT.
OTHER INFORMATION
DIRECTORS AND OFFICERS LIABILITY INSURANCE
The Company, pursuant to its by-laws, indemnifies its directors and officers as
permitted by law in connection with proceedings which might be instituted
against them by reason of their service for or on behalf of the Company. The
Company has purchased directors' and officers' liability insurance which
provides insurance and indemnification for the Company and its directors and
officers. Coverage is provided by the National Union Fire Insurance Company of
Pittsburgh, Pennsylvania, and expires August 1, 1997. It is anticipated that the
Company will seek to renew coverage for directors' and officers' liability
insurance.
SHAREHOLDERS' PROPOSALS FOR FISCAL 1999 ANNUAL MEETING
Shareholders may submit proposals appropriate for shareholder action at the
Company's Annual Meeting consistent with regulations adopted by the Securities
and Exchange Commission. For such proposals to be considered for inclusion in
the proxy statement and formal proxy for the 1998 Annual Meeting, they must be
received by the Company no later than February 22, 1998. Proposals should be
directed to Mark C. Donadio, Secretary, Barrister Information Systems
Corporation, 465 Main Street, Suite 700, Buffalo, New York 14203.
OTHER BUSINESS
As of the date of this Proxy Statement, the only business which the Board of
Directors intends to present or knows that others will present at the Annual
Meeting is that hereinabove set forth. If any other matter or matters are
properly brought before the Annual Meeting, or any adjournment or postponement
thereof, it is the intention of the persons named in the
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<PAGE> 22
accompanying form of proxy to vote the proxy on such matters in accordance with
their judgment.
A COPY OF THE COMPANY'S FISCAL 1997 ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K WILL BE AVAILABLE AFTER JUNE 30, 1997, AND PROVIDED
WITHOUT CHARGE TO SHAREHOLDERS UPON WRITTEN REQUEST DIRECTED TO THE SECRETARY,
BARRISTER INFORMATION SYSTEMS CORPORATION, 465 MAIN STREET, SUITE 700, BUFFALO,
NEW YORK 14203.
By the Order of the Board of Directors,
Mark C. Donadio
Secretary
Dated: July 24, 1997
<PAGE> 23
EXHIBIT A
BARRISTER INFORMATION SYSTEMS CORPORATION
1989 STOCK INCENTIVE PLAN
AS AMENDED
(New material is underlined)
(Old material is bracketed)
1. Purpose of the Plan
This Barrister Information Systems Corporation 1989 Stock Incentive
Plan, as amended, (which will supersede and replace the Barrister
Information Services Corporation 1982 Incentive Stock Option Plan as
amended) is intended to benefit the Company (as hereinafter defined) by
attracting and retaining personnel of outstanding competence and, in
stimulating and rewarding them for their achievements. This Plan is
also intended to encourage stock ownership by such personnel of the
Company so that they may acquire or increase their proprietary interest
in the success of the Company. It is further intended, to the extent
hereinafter set forth, that options issued pursuant to this plan as
"Incentive Stock Options" shall constitute "incentive stock options"
within the meaning of Section 422A of the Internal Revenue Code of
1986, as amended, but that other "Incentive Awards" hereunder shall not
constitute incentive stock options.
2. Definitions
As used in the Plan, the following definitions apply to the terms
indicated below:
(a) "Barrister" means Barrister Information Systems Corporation, a New
York Corporation.
(b) "Board of Directors" or "Board" shall mean the Board of Directors
of Barrister.
(c) "Cause" when used in connection with the termination of a
Participant's employment with the Company, shall mean the termination
of the Participant's employment by the Company on account of
intemperate use of alcohol or addictive drugs while engaged in Company
business, or conviction of a felony, or conviction of any other crime
involving the affairs or interests of the Company, or gross violation
of any duty or obligation to the Company, or substantial evidence of
dishonesty in relation to the property, funds or affairs of the Company
or any other employee thereof or any person dealing therewith.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(e) "Committee" shall mean such committee of the Board of Directors as
the Board of Directors may appoint from time to time to administer the
Plan pursuant to Article 4 hereof.
(f) "Common Stock" shall mean Barrister's common stock, $.24 par value
per share.
(g) "Company" shall mean Barrister and any and all of its Subsidiaries.
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<PAGE> 24
(h) "Disability" shall mean a permanent and total disability within the
meaning of Section 105(d) of the Code.
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(j) "Fair Market Value" of a share of Common Stock shall be (i) the
closing sale price of a share of Common Stock as reported on the
principal securities exchange on which shares of Common Stock are then
listed or admitted to trading on the day as of which such determination
of Fair Market Value is to be made, or if no trading shall have
occurred on such day, then on the latest preceding day on which trading
shall have occurred or (ii) if not so traded, the average of the
closing bid and ask prices as reported on the National Association of
Securities Dealers Automated Quotation System or if not so reported, as
furnished by any member of the National Association of Securities
Dealers, Inc. selected by the Committee, on the day as of which such
determination of Fair Market Value is to be made, or if no sales shall
have occurred on such day, then on the latest preceding day on which
sales shall have occurred. In the event that the price of a share of
Common Stock shall not be reported in any manner described in the
preceding sentence, the Fair Market Value of a share of Common Stock
shall be determined by the Committee in its absolute discretion.
(k) "Incentive Award" shall mean an Option, Tandem Award, share of
Restricted Stock, Stock Bonus or cash bonus or loan granted pursuant to
the terms of the Plan.
(l) "Incentive Stock Option" shall mean an Option which is an
"incentive stock option" within the meaning of Section 422A of the Code
and which is identified as an Incentive Stock Option in the agreement
by which it is evidenced.
(m) "Issue Date" shall mean the date established for the issuance by
Barrister of certificates representing shares of Restricted Stock
pursuant to the terms of Section 7(d) hereof.
(n) "Non-Qualified Stock Option" shall mean an Option which is not an
Incentive Stock Option.
(o) "Option" shall mean an option to purchase shares of Common Stock of
Barrister granted pursuant to Section 6 hereof. Each Option shall be
identified as either an Incentive Stock Option or a Non-Qualified Stock
Option in the agreement by which it is evidenced. If an Option is
granted as part of a Tandem Award, the agreement by which it is
evidenced shall so indicate.
(p) "Participant" shall mean an employee of the Company who is eligible
to participate in the Plan and to whom an Incentive Award is granted
pursuant to the Plan, and, upon his death, his successors, heirs,
executors and administrators, as the case may be. "Participant" shall
also include Directors of the Company with respect to forms of
Incentive Awards other than Incentive Stock Options.
2
<PAGE> 25
(q) "Person" shall mean a "person," as such term is used in Sections
13(d) and 14(d) of the Exchange Act.
(r) "Plan" shall mean this Barrister Information Systems Corporation
1989 Incentive Stock Plan, as it may be amended from time to time.
(s) "Prior Plan" shall mean the Barrister Information Systems
Corporation 1982 Incentive Stock Option Plan, as amended to date.
(t) "Restricted Stock" shall mean a share of Common Stock which is
granted pursuant to the terms of Section 7 hereof and which is subject
to the restrictions set forth in Section 7(c) hereof for so long as
such restrictions continue to apply to such share.
(u) "Securities Act" shall mean the Securities Act of 1933, as amended.
(v) "Stock Bonus" shall mean a grant of a bonus payable in shares of
Common Stock pursuant to Section 9 hereof.
(w) "Subsidiary" shall mean any corporation in which at the time of
reference Barrister owns, directly or indirectly, stock comprising more
than fifty percent of the total combined voting power of all classes of
stock of such corporation.
(x) "Tandem Award" shall mean a combination of shares of Restricted
Stock and Options that are awarded pursuant to Section 8 hereof,
whereunder a specified number of Options expire if a specified number
of related Restricted Shares vest, and a specified number of Restricted
Shares are forfeited if a specified number of related Options are
exercised.
(y) "Vesting Date" shall mean the date established pursuant to the
terms of Section 7 hereof on which a share of Restricted Stock may
vest.
3. Stock Subject to the Plan
Under the Plan, Participants may be granted (i) Options, (ii) shares of
Restricted Stock, (iii) Tandem Awards, (iv) Stock Bonuses, and (v) Cash
Bonuses or Loans.
Subject to adjustment as provided in Section 11 hereof, Options, shares
of Restricted Stock (including Options and shares of Restricted Stock
granted in Tandem Awards), and Stock Bonuses may be granted under the
Plan with respect to a number of shares of Common Stock that in the
aggregate does not exceed [six hundred thousand (600,000)] NINE HUNDRED
THOUSAND (900,000) shares, which number shall include the number of
shares that have been or may be issued upon the exercise of Options
under the Prior Plan. The grant of a cash bonus or Loan shall not
reduce the number of shares of Common Stock with respect to which
Options, shares of Restricted Stock, or Stock Bonuses may be granted
pursuant to the Plan.
In the event that any outstanding Option expires, terminates or is
cancelled for any reason the shares of Common Stock subject to the
unexercised portion of such Option shall again be available for grants
under the Plan, subject to the aggregate limit specified above in this
Article 3. In the event that any shares of Restricted Stock or any
shares of Common Stock
3
<PAGE> 26
granted in a Stock Bonus are forfeited or cancelled for any reason,
such shares shall again be available for grants under the Plan, subject
to the aforesaid aggregate limit.
Shares of Common Stock issued under the Plan may be either newly issued
shares or treasury shares, at the discretion of the Committee.
4. Administration of the Plan
The Plan shall be administered by a Committee appointed by the Board of
Directors. Such Committee will consist of at least two (2) members of
the Board of Directors, and the Board of Directors shall have authority
to remove members from or add members to such Committee, and to fill
all vacancies. All of the directors serving on the Committee shall be
"disinterested persons" within the meaning of Rule 16b-3 promulgated
under the Exchange Act. As hereinafter set forth, any reference to
"Committee" shall, unless expressly stated otherwise, be deemed to
refer to the Board if the Board is acting as a Committee of the whole
in the administration of the Plan.
The Committee will select one of its members as chairperson, and will
hold meetings at such times and places as it may determine. The acts of
a majority of the Committee at which a quorum is present, or acts
reduced to or approved in writing by a majority of the members of the
Committee, will be the valid acts of the Committee. The Committee shall
make determinations regarding those employees to be granted Incentive
Awards, the amount and type of such Awards, and the terms and
conditions thereof subject to the powers and authority in this Plan set
forth. In no event shall any Incentive Award that is an Incentive Stock
Option be awarded to any Director or Officer unless in respect to any
such Participant the Committee and/or the Board of Directors are made
up of such persons as satisfy the requirements of Rule 16b-3
promulgated pursuant to Section 16 of the Exchange Act and the
provisions of this Plan are otherwise in compliance with all applicable
requirements of such rule or any superseding rule or law that may be in
effect from time to time.
The Committee may, in its absolute discretion, recommend the granting
of Incentive Awards to Participants on the condition that such
Participants surrender for cancellation such other Incentive Awards
(including, without limitation, Incentive Awards with higher exercise
prices) as the Committee specifies. Notwithstanding Section 3 herein,
the limits set forth therein shall not be deemed to be exceeded by
Incentive Awards granted pursuant to the preceding sentence of this
Section 4 if such limits would not be exceeded as of immediately after
the surrender of such other Incentive Awards.
The Committee shall have authority to interpret and construe any
provision of the Plan and the terms of any Incentive Award issued under
it, and to adopt such rules and regulations as it deems necessary for
administration of the Plan. Decisions of the Committee on such matters
shall be final and binding on the Company and all Participants.
Anything in the foregoing to the contrary notwithstanding, any act of
the Board that is within the power and authority of the Committee
hereunder shall be valid and binding as if done by the Committee. If at
any time a Committee shall not have been appointed or shall not be
validly constituted, the Board shall act on its behalf.
4
<PAGE> 27
All recommendations of the Committee that are subject to Board approval
shall be valid and effective upon the adoption by the Board of
appropriate resolutions of approval in accordance with the bylaws of
Barrister.
No member of the Committee shall be liable for any action, omission, or
determination relating to the Plan, and Barrister shall indemnify and
hold harmless each member of the Committee and each other director or
employee of the Company to whom any duty or power relating to the
administration or interpretation of the Plan has been or shall be
delegated against any cost or expense (including counsel fees) or
liability (including any sum paid in settlement of a claim with the
approval of the Committee) arising out of any action, omission or
determination relating to the Plan, unless, in either case, such
action, omission or determination was taken or made by such member,
director or employee in bad faith and without reasonable belief that it
was in the best interests of the Company. Nothing in the preceding
sentence shall be construed to limit or restrict any provision of the
certificate of incorporation or bylaws, as respectively amended, of
Barrister, or of applicable law, with respect to immunity of directors
from liability and/or indemnification of directors, and all such
provisions shall be fully applicable with respect to actions, omissions
or determinations under or relating to this Plan.
5. Eligibility
The persons who shall be eligible to receive Incentive Awards shall be
such key employees, Officers, or Directors of the Company who hold
executive or other responsible positions with the Company, provided
that Incentive Stock Options shall not be awarded to Directors and
Officers contrary to the provisions of Section 4. A Participant may
hold more than one Incentive Award, but only on the terms and subject
to the restrictions hereinafter set forth or as may be set forth in
connection with the grant of such Incentive Award pursuant to this
Plan.
6. Options
The Committee may grant Options pursuant to the Plan, which Options
shall be evidenced by written agreements executed by the Company and
the Optionee, in such form as the Committee shall from time to time
approve. Options shall comply with and be subject to the following
terms and conditions:
(a) Identification of Options
-------------------------
All Options granted under the Plan shall be clearly identified in the
agreement evidencing such Options as either Incentive Stock Options or
as Non-Qualified Stock Options, and in the latter case, as part of a
Tandem Award if applicable.
(b) Exercise Price
--------------
The exercise price of any Non-Qualified Stock Option granted under the
Plan shall be such price as the Committee shall recommend on the date
on which such Non-Qualified Stock
5
<PAGE> 28
Option is granted; provided that such price may not be less than the
minimum price, if any, required by applicable law. The exercise price
of any Incentive Stock Option granted under the Plan shall also be as
recommended by the Committee, but in any event shall be not less than
100% of the Fair Market Value of a share of Common Stock on the date on
which such Incentive Stock Option is granted (but not less than 110% of
such Fair Market Value if Section 6(d)(2) applies).
(c) Term and Exercise of Options
----------------------------
(1) Each Option shall be exercisable on such date or dates,
during such period and for such number of shares of Common
Stock as shall be determined by the Board as recommended by
the Committee not later than the day on which such Option is
granted and set forth in the Option agreement with respect to
such Option; provided, however, that no Option shall be
exercisable prior to approval or ratification of this Plan by
the shareholders of Barrister in accordance with its bylaws
and applicable law, nor after the expiration of ten years from
the date such Option shall be granted; and, provided, further
that each Option shall be subject to earlier termination,
expiration or cancellation as provided in accordance with the
Plan.
(2) Each Option shall be exercisable in whole or in part;
provided that no partial exercise of an Option shall be for an
aggregate exercise price of less than $1,000 or, if the
exercise price is less than $10 per share, for fewer than 100
shares. The partial exercise of an Option shall not cause the
expiration, termination or cancellation of the remaining
portion thereof. Upon the partial exercise of an Option, the
agreements evidencing such Option (or Tandem Award of which
such Option is a part) shall be delivered to the Company for
endorsement or notation of such partial exercise and any
consequences thereof in respect of a Tandem Award, and
thereafter, and upon payment of the exercise price, shall be
returned to the Participant exercising such Option together
with the delivery of the certificates representing the shares
of Common Stock issuable upon such exercise. In the case of a
Tandem Award, the Committee shall also take or cause to be
taken such action as is necessary relating to the cancellation
of such unvested shares of Restricted Stock as are affected by
such Option exercise.
(3) An Option shall be exercised by delivering notice to
Barrister's principal office, to the attention of its
Secretary, no less than three business days in advance of the
effective date of the proposed exercise. Such notice shall be
accompanied by the agreements evidencing the Option and any
related Tandem Awards, shall specify the number of shares of
Common Stock with respect to which the Option is being
exercised and the effective date of the proposed exercise and
shall be signed by the Participant. The Participant may
withdraw such notice at any time prior to the close of
business on the business day immediately preceding the
effective date of the proposed exercise, in which case such
agreements shall be returned to him. Payment for shares of
Common Stock purchased upon the exercise of an Option shall be
made on the effective date of such exercise either (i) in
cash, by certified check, bank cashier s check or wire
transfer or (ii) subject to the approval the Committee, in
shares of Common Stock owned by the Participant and valued at
their Fair Market Value on the effective date of such
exercise, or partly in shares of Common Stock with the balance
in cash, by certified check, bank cashier's check or
6
<PAGE> 29
wire transfer. Any payment in shares of Common Stock shall be
effected by the delivery of such shares to the Secretary of
Barrister, duly endorsed in blank or accompanied by stock
powers duly executed in blank, together with any other
documents and evidences as the Secretary of Barrister shall
require from time to time.
In the case of exercise of any Non-Qualified Stock Option, and subject
to the approval of the Committee, the Participant may give notice of a
series of sequential exercise of parts of the Option, all to be
effective as of the same business day, whereby some or all shares of
Common Stock issuable upon a partial exercise shall be deemed to be
tendered in payment for additional shares of Common Stock issuable upon
a subsequent partial exercise of the Option, all as shall be specified
in the Participant's notice, until there shall have been exercised all
or such portions of the Option as the Participant shall elect.
(4) In granting any Option, the Committee may provide that
such Option may be exercised by a broker-dealer acting on
behalf of a Participant if (i) the broker-dealer has received
from the Participant or Barrister a fully and duly endorsed
agreement evidencing such Option and instructions signed by
the Participant requesting Barrister to deliver the shares of
Common Stock subject to such Option to the broker-dealer on
behalf of the Participant and specifying the account into
which such shares should be deposited, (ii) adequate provision
has been made with respect to the payment of any withholding
taxes due upon such exercise and (iii) the broker-dealer and
the Participant have otherwise complied with applicable
provisions (including but not limited to Section 220.3(e)(4))
of Regulation T, 12 CFR Part 220, and have provided the
Secretary of Barrister or other person that the Committee may
designate any evidence of such compliance that the Committee
may reasonably require.
(5) Certificates for shares of Common Stock purchased upon the
exercise of an Option shall be issued in the name of the
Participant and delivered to the Participant as soon as
practicable following the effective date on which the Option
is exercised. If the sale, transfer or other disposition by
the Participant of such shares shall be limited or restricted
pursuant to applicable law or agreement, the Committee shall
have authority to cause a legend to be placed on such
certificate setting forth or giving notice of such limitation
or restriction.
(6) During the lifetime of a Participant, each Option granted
to him shall be exercisable only by him. No Option shall be
assignable or transferable otherwise than by will or by the
laws of descent and distribution.
(d) Limitations on Grant of Incentive Stock Options
-----------------------------------------------
(1) The aggregate Fair Market Value (determined as of the date
of grant of the related Options) of shares of Common Stock
with respect to which Incentive Stock Options are exercisable
for the first time by a Participant during any calendar year
under the Plan and any other stock option plan of the Company
(or any "subsidiary" of Barrister as such term is defined in
Section 425 of the Code) shall not exceed $100,000. In the
event that the aggregate Fair Market Value of shares of Common
Stock with respect to such Incentive Stock Options exceeds
$100,000, then Incentive Stock Options granted hereunder to
such Participant shall, to the extent
7
<PAGE> 30
and in the order required by Regulations promulgated under the
Code (or any other authority having the force of Regulations),
automatically be deemed to be Non-Qualified Stock Options, but
all other terms and provisions of such Incentive Stock Options
shall remain unchanged. In the absence of such Regulations
(and authority), or in the event such Regulations (or
authority) require or permit a designation of the options
which shall cease to constitute Incentive Stock Options,
Incentive Stock Options shall, to the extent of such excess
and in the order in which they were granted, automatically be
deemed to be Non-Qualified Stock Options, but all other terms
and provisions of such Incentive Stock Options shall remain
unchanged.
(2) No Incentive Stock Option may be granted to an individual
if, at the time of the proposed grant, such individual owns
stock possessing more than ten percent of the total combined
voting power of all classes of stock of Barrister or any of
its "subsidiaries" (within the meaning of Section 425 of the
Code), unless (i) the exercise price of such Incentive Stock
Option is at least one hundred and ten percent (110%) of the
Fair Market Value of a share of Common Stock at the time such
Incentive Stock Option is granted and (ii) such Incentive
Stock Option is not exercisable after the expiration of five
years from the date such Incentive Stock Option is granted.
(e) Effect of Termination of Employment
-----------------------------------
(1) In the event that the employment of a Participant with the
Company shall terminate for any reason other than Disability,
death, discharge without cause or retirement, Options granted
to such Participant shall expire at the close of business on
the date of such termination (except as otherwise provided
here); provided, however, that no Option shall be exercisable
after the expiration of its term.
(2) In the event that the employment of a Participant with the
Company shall terminate on account of the Disability of the
Participant, then (except as otherwise provided herein), (i)
Options granted to such Participant, to the extent that they
were exercisable at the time of such termination, shall remain
exercisable until the expiration of one year after such
termination, on which date they shall expire, and (ii) Options
granted to such Participant, to the extent that they were not
exercisable at the time of such termination, shall expire at
the close of business on the date of such termination;
provided, however that no Option shall be exercisable after
the expiration of its term; and provided further that no
Option granted to such Participant shall be deemed to have
been exercisable at the time of such termination if such
Participant had not been employed by the Company for a period
(A) of two years immediately preceding such termination in the
case of Incentive Stock Options, or (B) as the Committee may
specify in the case of Non-Qualified Stock Options.
(3) In the event that the employment of a Participant with the
Company shall terminate on account of the retirement of the
Participant or discharge of the Participant without cause,
then, except as otherwise provided therein, (i) Options
granted to such Participant, to the extent that they were
exercisable at the time of such termination, shall remain
exercisable until the expiration of three months after such
termination, on which date they shall expire, and (ii) Options
granted to such Participant, to the extent that they were not
exercisable at the time of such
8
<PAGE> 31
termination, shall expire at the close of business on the date
of such termination; provided, however that no Option shall be
exercisable after the expiration of its term; and provided,
further that no Option granted to such Participant shall be
deemed to have been exercisable at the time of such
termination if such Participant had not been employed by the
Company for a period (A) of two years immediately preceding
such termination in the case of Incentive Stock Options, or
(B) as the Committee may specify in the case of Non-Qualified
Stock Options. Retirement as used herein shall mean a
termination of employment upon attainment of such age as
constitutes "normal retirement" age under any pension plan of
the Company, or in the absence of any such pension plan,
pursuant to the Company s employment policies.
(4) In the event that the employment of a Participant with the
Company shall terminate on account of the death of the
Participant, or in the event of the Participant s death within
three months after termination of his employment in respect of
any Options that have not at the time of death expired or
terminated (whether or not by virtue of the termination of
employment), then except as otherwise provided herein, (i)
Options granted to such Participant, to the extent that they
were exercisable at the time of such termination, shall remain
exercisable until the expiration of six months after such
termination by the executors or administrators of the
Participant or by any person who acquires the option from the
Participant by bequest or inheritance, on which date they
shall expire, and (ii) Options granted to such Participant, to
the extent that they were not exercisable at the time of such
termination, shall expire at the close of business on the date
of such termination; provided, however that no Option shall be
exercisable after the expiration of its term; and provided,
further that no Option granted to such Participant shall be
deemed to have been exercisable at the time of such
termination if such Participant had not been employed by the
Company for a period (A) of two years immediately preceding
such termination in the case of Incentive Stock Options, or
(B) as the Committee may specify in the case of Non-Qualified
Stock Options.
(5) In the event of the termination of a Participant s
employment for Cause, all outstanding Options granted to such
Participant shall expire at the commencement of business on
the date of such termination.
(6) Anything in the preceding subparagraphs (1) through (4) to
the contrary notwithstanding, the Committee may provide with
respect to any Award of a Non-Qualified Stock Option that such
Option shall not expire until such later time following
termination of the Participant's employment as shall be
specified by the Board.
(f) Additional Features
-------------------
The Committee shall also have authority in connection with the grant of
any award of or including an Option to determine that if payment of the
exercise price with Common Shares is approved, an additional number of
Options of the same nature (i.e. Incentive Stock Options or
Non-Qualified Stock Options) may be granted in an amount not exceeding
the number of Common Shares surrendered in payment (provided that the
aggregate limit of Section 3 shall not be exceeded), exercisable at
such price and upon such terms as the
9
<PAGE> 32
Committee shall establish or based upon any formula that the Committee
may have established and that is otherwise in compliance with
applicable provisions of this Plan.
(g) Cancellation
------------
Without limitation of any other provision relating to cancellation,
termination or forfeiture of Options, the Committee shall have
authority to cancel any unexercised Non-Qualified Stock Option upon the
issuance of a replacement Option having an exercise price no greater
than, covering a number of shares not less than, and that is first
exercisable no later than, the cancelled Option. Any other Option may
be cancelled with the Participant's written consent.
(h) Limitation on Transfer of Certain Option Shares
-----------------------------------------------
Shares acquired pursuant to the exercise of an Option or portion
thereof, by persons subject to Section 16(b) of the Exchange Act, shall
not be sold or transferred for a period of six months after the date of
grant.
7. Restricted Stock
The Committee may grant shares of Restricted Stock pursuant to the
Plan. Each grant of shares of Restricted Stock shall be evidenced by a
written agreement in such form as the Committee shall from time to time
approve. Each grant of shares of Restricted Stock shall comply with and
be subject to the following terms and conditions:
(a) Issue Date and Vesting Date
---------------------------
At the time of the grant of shares of Restricted Stock, an Issue Date
or Issue Dates and a Vesting Date or Vesting Dates with respect to such
shares shall be established. The Committee may divide such shares into
classes and assign a different Issue Date and/or Vesting Date for each
class. Unless the Participant's employment with the Company shall have
terminated prior thereto, upon the occurrence of the Issue Date with
respect to a share of Restricted Stock, a share of Restricted Stock
shall be issued in accordance with the provisions of Section 7(d)
hereof. Provided that all conditions to the vesting of a share of
Restricted Stock imposed pursuant to Section 7(b) hereof are satisfied,
and except as provided in Sections 7(c) hereof, upon the occurrence of
the Vesting Date with respect to a share of Restricted Stock, such
share shall vest and the restrictions of Section 7(c) hereof shall
cease to apply to such share.
(b) Conditions to Vesting
---------------------
At the time of the grant of shares of Restricted Stock, the Committee
may impose such restrictions or conditions, not inconsistent with the
provisions hereof, to the vesting of such shares as it deems
appropriate. By way of example and not by way of limitation, the
Committee may require, as a condition to the vesting of any class or
classes of shares of Restricted Stock, that the Participant or the
Company achieve certain performance criteria, such criteria to be
specified at the time of the grant of such shares, and that the
Participant remain in the employ of the Company (subject to permissible
exceptions if such
10
<PAGE> 33
employment is terminated upon death, Disability, or by the Company
without cause) at the Vesting Date.
(c) Restrictions on Transfer Prior to Vesting
-----------------------------------------
Prior to the vesting of a share of Restricted Stock, no transfer of a
Participant's rights with respect to such share, whether voluntary or
involuntary, by operation of law or otherwise, shall vest the
transferee with any interest or right in or with respect to such share,
but immediately upon any attempt to transfer such rights, such share
shall be forfeited by the Participant and the transfer shall be of no
force or effect.
(d) Issuance of Certificates
------------------------
(1) Except as provided in Section 7(f) hereof, reasonably
promptly after the Issue Date with respect to shares of
Restricted Stock, Barrister shall cause to be issued a stock
certificate, registered in the name of the Participant to whom
such shares were granted, evidencing such shares; provided,
that Barrister shall not cause to be issued such a stock
certificate unless it has received from the Participant a
stock power duly endorsed in blank with respect to such
shares. Each such stock certificate shall bear the following
legend:
The transferability of this certificate and the shares of
stock represented hereby are subject to the restrictions,
terms and conditions (including forfeiture and restrictions
against transfer) contained in the Barrister Information
Systems Corporation 1989 Stock Incentive Plan and an Agreement
entered into between the registered owner of such shares and
Barrister Information Systems Corporation. A copy of the Plan
and Agreement is on file in the office of the Secretary of
Barrister Information Systems Corporation, 45 Oak Street,
Buffalo, NY 14203.
Such legend shall not be removed from the certificate
evidencing such shares until such shares vest pursuant to the
terms hereof.
(2) Each certificate issued pursuant to Section 7(d)(1)
hereof, together with the stock powers relating to the shares
of Restricted Stock evidenced by such certificate, shall be
deposited by the Company with a custodian designated by the
Company, who may be an officer or employee of the Company. The
Company shall cause such custodian to issue to the Participant
a receipt evidencing the certificates held by it which are
registered in the name of the Participant.
(e) Consequences Upon Vesting
-------------------------
Upon the vesting of a share of Restricted Stock pursuant to the terms
hereof, the restrictions of Section 7(c) hereof shall cease to apply to
such share. Reasonably promptly after a share of Restricted Stock vests
pursuant to the terms hereof, Barrister shall cause to be issued and
delivered to the Participant to whom such shares were granted, a
certificate evidencing such shares, free of the legend set forth in
Section 7(d)(1) hereof, and the custodian referenced in Section 7(d)(2)
hereof shall cause the legended certificate theretofore delivered to it
to be delivered to the Secretary of Barrister, transfer agent or other
appropriate person for cancellation.
11
<PAGE> 34
In the case of any shares of Restricted Stock that were issued as part
of a Tandem Award, the issuance of legend-free certificates as provided
in the preceding sentence shall be further subject to the condition
that the Participant shall have delivered to the Company the Agreement
relating to such Tandem Award and any other documents pertaining to the
related Option for endorsement or notation of such adjustments as are
consequent to the vesting of such shares of Restricted Stock.
(f) Rights Subject to Vesting
-------------------------
All issued shares of Restricted Stock shall be deemed to be issued and
outstanding for purposes of dividends and/or distributions thereon in
cash or property, and voting rights, until such time, if any, that a
forfeiture or cancellation of such shares may occur pursuant to this
Plan; provided, however that the Committee shall have the discretion to
determine that any shares of Common Stock or other equity securities
that are issued or distributed in respect of shares of Restricted Stock
that have not vested shall be subject to the restrictions and vesting
conditions applicable to such shares of Restricted Stock.
(g) Effect of Termination of Employment
-----------------------------------
(1) In the event that the employment of a Participant with the
Company shall terminate for any reason other than Cause or the
Participant's voluntary quit or resignation prior to the
vesting of shares of Restricted Stock granted to such
Participant, a proportion of such shares, to the extent not
forfeited or cancelled on or prior to such termination
pursuant to any provision hereof, shall vest on the date of
such termination. The proportion referred to in the preceding
sentence shall be determined by the Committee at the time of
the grant of such shares of Restricted Stock and may be based
on the achievement of any conditions imposed with respect to
vesting of such shares pursuant to Section 7(b). Such
proportion may be equal to zero. Subject to the first sentence
of this paragraph, the Committee shall have authority to
provide for different proportions that shall be applicable
relating to different circumstances of termination.
(2) In the event of the termination of a Participant's
employment for Cause, or a voluntary quit or resignation by
such Participant, all shares of Restricted Stock granted to
such Participant that have not vested as of the date of such
termination shall immediately be forfeited.
(h) Limitation on the Transfer of Restricted Stock
----------------------------------------------
Whether or not such shares are subject to vesting requirements,
Restricted Stock granted to persons subject to Section 16(b) of the
Exchange Act shall not be sold or transferred for a period of six
months after the date of grant.
8. Tandem Awards
(a) The Committee may recommend the granting of Tandem Awards, which
shall consist of a combination of Restricted Stock and Non-Qualified
Stock Options in such amounts as the
12
<PAGE> 35
Committee shall determine, and which shall be subject to such terms and
conditions (including but not limited to exercise price in respect of
Non-Qualified Stock Options and restrictions applicable to vesting of
Restricted Stock) as may otherwise be established under this Plan
subject to the limitations of Sections 8(b) and 8(c).
(b) No Options granted in Tandem Awards shall be Incentive Stock
Options. All Non-Qualified Stock Options granted in Tandem Awards shall
be first exercisable at least ten days prior to the Vesting Date
established therein for related shares of Restricted Stock. The Tandem
Awards and the Agreement relating thereto shall provide that upon the
exercise of a specified number of Options thereunder, a specified
number of shares of Restricted Stock (which need not be the same
number) shall be forfeited and cancelled, and that upon the vesting of
a specified number of shares of Restricted Stock, a specified number of
unexercised Options (which need not be the same number) shall
terminate. As an alternative to the provisions authorized by the
preceding sentence, a Tandem Award may be granted which, in addition to
such other conditions as may be established for the vesting of
Restricted Stock, provides as a condition to the vesting thereof that a
specified number of related Options shall have been exercised and that
the Common Shares issuable upon such exercise shall have been held by
the Participant for a specified period of time.
(c) Upon any circumstance or occurrence that would cause unexercised
Options to terminate or expire pursuant to Section 6(e) of this Plan,
Options that are issued under a Tandem Award shall expire and all
related shares of unvested Restricted Stock issued under such Tandem
Award shall be forfeited and cancelled; provided, however (and
notwithstanding the foregoing) that the Committee shall have authority
to provide that in any case where unexercised Options issued under a
Tandem Award are to remain exercisable for a limited period of time
under Section 6(e)(2), 6(e)(3) (as applied to either or both retirement
or discharge without cause), 6(e)(4) or 6(e)(6), (i) the Option shall
nevertheless expire but the Vesting Date in respect of the related
Restricted Stock shall be advanced to the date of termination of such
Participant's employment, or (ii) the Option shall remain exercisable
as provided in Section 6(e)(2), 6(e)(3), 6(e)(4) or 6(e)(6) as
applicable but the Vesting Date in respect of the related Restricted
Stock shall be advanced to a date, not later than the last day such
Option would be exercisable pursuant to said Section 6(e)(2), 6(e)(3),
6(e)(4) or 6(e)(6), as the Committee shall determine.
13
<PAGE> 36
9. Stock Bonuses
The Committee may recommend the granting of Stock Bonuses in such
amounts as it shall determine from time to time. A Stock Bonus shall be
paid at such time and subject to such conditions as the Committee shall
determine, subject to approval of the Board, at the time of the grant
of such Stock Bonus. Certificates for shares of Common Stock granted as
a Stock Bonus shall be issued in the name of the Participant to whom
such grant was made and delivered to such Participant as soon as
practicable after the date on which such Stock Bonus is required to be
paid. Stock Bonuses granted to persons who are subject to Section 16(b)
of the Exchange Act shall not be sold or transferred for a period of
six months after the date of grant.
10. Bonuses and Loans
The Committee may grant, in connection with any grant of Restricted
Stock or Stock Bonus, or upon the issuance or exercise of a
Non-Qualified Stock Option, or at any time thereafter, of a cash bonus
payable not later than 120 days after the last day of the calendar year
for which the Participant is required to recognize income for federal
income tax purposes in connection with such grant, issue or exercise,
in such amounts as the Committee shall determine from time to time;
provided, however, that in no event shall the amount of a cash bonus
exceed the lesser of (i) the amount resulting from multiplying the
amount of income to be so recognized by the Participant by such
Participant s anticipated marginal federal income tax bracket
(determined in such manner as is satisfactory to the Committee) or (ii)
the amount resulting from multiplying the deduction that will accrue to
the Company for federal income tax purposes by virtue of such grant,
issue or exercise by the Company s anticipated marginal federal income
tax bracket. The Committee may also in connection with any grant
described in the first sentence of this Section 10, grant of a loan for
all or any part of a Participant's anticipated federal income tax
liability as described above and/or, in the case of the exercise of an
Option, all or part of the exercise price thereof. A cash bonus and/or
a loan shall be subject to such conditions as the Committee shall
determine at the time of the grant thereof, including without
limitation, interest and repayment terms of loans.
11. Adjustment Upon Changes in Common Stock
(a) Shares Available for Grants
---------------------------
In the event of any change in the number of shares of Common Stock
outstanding by reason of any stock dividend or split, recapitalization,
merger, consolidation, combination or exchange of shares or similar
corporate change, the maximum aggregate number of shares of Common
Stock with respect to which Options, shares of Restricted Stock, and
Stock Bonuses may be granted shall be appropriately adjusted by the
Committee. In the event of any change in the number of shares of Common
Stock outstanding by reason of any other event or transaction, the
Committee may, but need not, make such adjustments in the number and
class of shares of Common Stock with respect to which Options, shares
of Restricted Stock and Stock Bonuses may be granted as the Committee
may deem appropriate.
(b) Adjustments in Outstanding Shares of Restricted Stock
-----------------------------------------------------
14
<PAGE> 37
The Committee may adjust any grant of shares of Restricted Stock, the
Issue Date with respect to which has not occurred as of the date of the
occurrence of any of the following events, to reflect any dividend,
stock split, recapitalization, merger, consolidation, combination,
exchange of shares or similar corporate change as may be deemed
appropriate to prevent the enlargement or dilution of rights of
Participants under the grant. Any adjustment under any provision of
this Section 11 with respect to Restricted Stock issued or to be issued
pursuant to a Tandem Award shall also result in an appropriate
adjustment in the number of Common Shares that is subject to a related
Option.
(c) Outstanding Options, Increase or Decrease in Issued Shares Without
------------------------------------------------------------------
Consideration
-------------
Subject to any required action by the shareholders of Barrister, in the
event of any increase or decrease in the number of issued shares of
Common Stock resulting from a subdivision or consolidation of shares of
Common Stock or the payment of a stock dividend (but only on the shares
of Common Stock), or any other increase or decrease in the number of
such shares effected without receipt of consideration by Barrister, the
Committee shall proportionally adjust the number of shares of Common
Stock subject to each outstanding Option, and the exercise price per
share of Common Stock of each such Option.
(d) Outstanding Options - Certain Mergers
-------------------------------------
Subject to any required action by the shareholders of Barrister, in the
event that Barrister shall be the surviving corporation in any merger
or consolidation (except a merger or consolidation as a result of which
the holders of shares of Common Stock receive securities of another
corporation), each Option outstanding on the date of such merger or
consolidation shall pertain to and apply to the securities which a
holder of the number of shares of Common Stock subject to such Option
would have received in such merger or consolidation.
(e) Outstanding Options - Certain Other Transactions
------------------------------------------------
In the event of (i) a dissolution or liquidation of Barrister, (ii) a
sale of all or substantially all of Barrister s assets, (iii) a merger
or consolidation involving Barrister in which Barrister is not the
surviving corporation or (iv) a merger or consolidation involving
Barrister in which Barrister is the surviving corporation but the
holders of shares of Common Stock receive securities of another
corporation and/or other property, including cash, the Committee shall
have the power to:
(i) cancel, effective immediately prior to the occurrence of
such event, each Option (including each share of Restricted
Stock under a Tandem Award) outstanding immediately prior to
such event (whether or not then exercisable), and, in full
consideration of such cancellation, pay to the Participant to
whom such Option or Award was granted an amount in cash, for
each share of Common Stock subject to such Option, equal to
the excess of (A) the value, as determined by the Committee,
of the property (including cash) received by the holder of a
share of Common Stock as a result of such event over (B) the
exercise price of such Option; or
(ii) provide for the exchange of each Option (including any
related Restricted Stock under a Tandem Award) outstanding
immediately prior to such event (whether or
15
<PAGE> 38
not then exercisable) for an option on some or all of the
property for which such Option could if fully exercisable be
exchanged and, incident thereto, make an equitable adjustment
as determined upon the basis of a recommendation by the
Committee in the exercise price of the option, or the number
of shares or amount of property subject to the option.
(f) Outstanding Options - Other Changes
-----------------------------------
In the event of any change in the capitalization of Barrister or
corporate change other than those specifically referred to in Sections
11(c), (d) or (e) hereof, the Committee may make such adjustments in
the number of shares subject to Options, outstanding on the date on
which such change occurs and in the per share exercise price of each
such Option, as is considered appropriate to prevent dilution or
enlargement of rights.
(g) No Other Rights
---------------
Except as expressly provided in the Plan, no Participant shall have any
rights by reason of any subdivision or consolidation of shares of stock
of any class, the payment of any dividend, any increase or decrease in
the number of shares of stock of any class or any dissolution,
liquidation, merger or consolidation of Barrister or any other
corporation. Except as expressly provided in the Plan, no issuance by
Barrister of shares of stock of any class, or securities convertible
into shares of stock of any class, shall affect, and no adjustment by
reason thereof shall be made with respect to, the number of shares of
Common Stock subject to an Incentive Award or the exercise price of any
Option.
12. Rights as a Stockholder
No person shall have any rights as a stockholder with respect to any
shares of Common Stock covered by or relating to any Incentive Award
granted pursuant to this Plan until the date of the issuance of a stock
certificate with respect to such shares. Except as otherwise expressly
provided in Section 11 hereof, no adjustment to any Incentive Award
shall be made for dividends or other rights for which the record date
occurs prior to the date such stock certificate is issued.
13. No Special Employment Rights; No Right to Incentive Award
Nothing contained in the Plan or any Incentive Award shall confer upon
any Participant any right with respect to the continuation of his
employment by the Company or interfere in any way with the right of the
Company, subject to the terms of any separate employment agreement to
the contrary, at any time to terminate such employment or to increase
or decrease the compensation of the Participant from the rate in
existence at the time of the grant of an Incentive Award.
No person shall have any claim or right to receive an Incentive Award
hereunder. The granting of an Incentive Award to a Participant at any
time shall neither require the grant of an Incentive Award to such
Participant or any other Participant or other person at any time nor
preclude the Committee from making subsequent grants to such
Participant or any other Participant or other person.
16
<PAGE> 39
14. Securities Matters
(a) The Company shall be under no obligation to effect the registration
pursuant to the Securities Act of any shares of Common Stock to be
issued hereunder or to effect similar compliance under any state laws.
Notwithstanding anything herein to the contrary, the Company shall not
be obligated to cause to be issued or delivered any certificates
evidencing shares of Common Stock pursuant to the Plan unless and until
the Company is advised by its counsel that the issuance and delivery of
such certificates is in compliance with all applicable laws, rules and
regulations of governmental authorities and the requirements of any
securities exchange on which shares of Common Stock are traded. The
Committee may require, as a condition of the issuance and delivery of
certificates evidencing shares of Common Stock pursuant to the terms
hereof, that the recipient of such shares make such covenants,
agreements and representations, and that such certificates bear such
legends, as the Committee, in its sole discretion, deems necessary or
desirable.
(b) The exercise of any Option granted hereunder shall only be
effective at such time as the Company shall have determined (based upon
the advice of counsel or otherwise) that the issuance and delivery of
shares of Common Stock pursuant to such exercise is in compliance with
all applicable laws, rules and regulations of governmental authorities
and the requirements of any securities exchange on which shares of
Common Stock are traded. The Company may, in its sole discretion, defer
the effectiveness of any exercise of an Option granted hereunder in
order to allow the issuance of shares of Common Stock pursuant thereto
to be made pursuant to registration or an exemption from registration
or other methods for compliance available under federal or state
securities laws. The Company shall inform the Participant in writing of
its decision to defer the effectiveness of the exercise of an Option
granted hereunder. During the period that the effectiveness of the
exercise of an Option has been deferred, the Participant may, by
written notice, withdraw such exercise and obtain the refund of any
amount paid with respect thereto.
15. Withholding Taxes
(a) Cash Remittance
---------------
Whenever shares of Common Stock are to be issued upon the
exercise of an Option, upon the occurrence of the Issue Date
or Vesting Date with respect to a share of Restricted Stock,
or upon the payment of a Stock Bonus, the Company shall have
the right to require the Participant to remit to the Company
in cash an amount sufficient to satisfy federal, state and
local withholding tax requirements, if any, attributable to
such exercise, occurrence or payment prior to the delivery of
any certificate or certificates for such shares. In addition,
upon the grant of a Cash Bonus, the Company shall have the
right to withhold therefrom an amount sufficient to satisfy
federal, state and local withholding tax requirements, if any,
attributable to such grant.
(b) Stock Remittance
----------------
17
<PAGE> 40
At the election of the Participant, subject to the approval of the
Committee, when shares of Common Stock are to be issued upon the
exercise of an Option, upon the occurrence of the Issue Date or the
Vesting Date with respect to shares of Restricted Stock, or upon the
grant of a Stock Bonus, in lieu of the remittance required by Section
15(a) hereof, the Participant may tender to the Company such number of
shares of Common Stock (but not Restricted Stock) the Fair Market Value
of which at the tender date the Committee determines to be, together
with any cash to be remitted by such Participant, sufficient to satisfy
the federal, state and local withholding tax requirements, if any,
attributable to such exercise, occurrence or grant.
(c) Stock Withholding
-----------------
At the election of the Participant, subject to the approval of the
Committee, when shares of Common Stock are to be issued upon the
exercise of an Option, upon the occurrence of the Issue Date or the
Vesting Date with respect to shares of Restricted Stock, or upon the
grant of a Stock Bonus, in lieu of the remittance required by Section
15(a) hereof, the Company may withhold a number of such shares the Fair
Market Value of which at the exercise date the Committee determines to
be sufficient to satisfy the federal, state and local withholding tax
requirements, if any, attributable to such exercise, occurrence or
grant.
(d) Participants Subject to Section 16(b)
-------------------------------------
Notwithstanding Section 6(c) hereof, the Company shall hold as
custodian for any Participant who is subject to the provisions of
Section 16(b) of the Exchange Act and who has not made an election
pursuant to Section 83(b) of the Code, stock certificates evidencing
the total number of shares of Restricted Stock until the expiration of
six months following such Vesting Date. Upon the expiration of such
six-month period, the Participant shall remit to the Company in cash an
amount sufficient to satisfy federal, state and local withholding tax
requirements, if any, attributable to such vesting prior to the
delivery of any certificate or certificates for such shares, unless the
Participant has made an approved election pursuant to Section 15(b) or
(c) hereof, in which case the Participant shall tender a number of
shares prior to such delivery, or the Company shall withhold a number
of shares, respectively, determined pursuant to such Section.
(e) Timing and Method of Elections
------------------------------
Notwithstanding any other provisions of the Plan, a Participant who is
subject to Section 16(b) of the Exchange Act may not make an election
pursuant to Section 15(b) or (c) hereof prior to the expiration of six
months after the date on which the applicable Option, share of
Restricted Stock or Stock Bonus is granted, except in the event of the
death or Disability of the Participant. Such elections shall be
irrevocable and shall be made by the delivery to Barrister s principal
office, to the attention of its Secretary, of a written notice signed
by the Participant.
16. Amendment of the Plan
The Committee may at any time suspend or discontinue the Plan or revise
or amend it in any respect whatsoever; provided however, that without
approval of the shareholders no revision or amendment shall (i) except
as provided in Section 11 hereof, increase the number of shares of
Common Stock that may be issued under the Plan, (ii) materially
18
<PAGE> 41
increase the benefits accruing to individuals holding Incentive Awards
granted pursuant to the Plan or (iii) materially modify the
requirements as to eligibility for participation in the Plan; and
provided further that no revision or amendment shall adversely
affect any Incentive Award theretofore granted.
17. No Obligation to Exercise
The grant to a Participant of an Option shall impose no obligation upon
such Participant to exercise such Option.
18. Transfers Upon Death
Upon the death of a Participant, outstanding Incentive Awards granted
to such Participant may be exercised only by the executors or
administrators of the Participant s estate or by any person or persons
who shall have acquired such right to exercise by will or by the laws
of descent and distribution. No transfer by will or the laws of descent
and distribution of any Incentive Award, or the right to exercise any
Incentive Award, shall be effective to bind the Company unless the
Committee shall have been furnished with (a) written notice thereof and
with a copy of the will and/or such evidence as the Committee may deem
necessary to establish the validity of the transfer and (b) an
agreement by the transferee to comply with all the terms and conditions
of the Incentive Award that are or would have been applicable to the
Participant and to be bound by the acknowledgments made by the
Participant in connection with the grant of the Incentive Award.
19. Expenses and Receipts
The expenses of the Plan shall be paid by the Company. Any proceeds
received by the Company in connection with any Incentive Award will be
used for general corporate purposes.
20. Failure to Comply
In addition to the remedies of the Company elsewhere provided for
herein, failure by a Participant to comply with any of the terms and
conditions of the Plan or the Agreement executed by such Participant
evidencing an Incentive Award, unless such failure is remedied by such
Participant within ten days after having been notified of such failure
by the Committee, shall be grounds for the cancellation and forfeiture
of such Incentive Award, in whole or in part, as the Committee may
determine.
21. Effect on Prior Plan
Subject to shareholder approval of this Plan as elsewhere herein
provided, the Prior Plan is hereby superseded and shall be of no
further force and effect, subject to the following:
19
<PAGE> 42
(i) all Options heretofore issued under the Prior Plan shall be taken
into account for purposes of the aggregate limit of Common Shares
subject to this Plan pursuant to Section 3 hereof;
(ii) nothing in this Plan shall change the terms of any option
heretofore granted under the Prior Plan in any respect that is adverse
to any optionee or dilute or diminish the rights or privileges of any
optionee with respect thereto; and
(iii) the Committee shall have authority in its absolute discretion to
determine if any terms of this Plan that may be more favorable to
optionees than any terms of the Prior Plan, in respect of options
heretofore granted thereunder, shall apply to such options, provided
that any such determination shall be made on a non-discriminatory
basis.
22. Effective Date and Term of Plan
The Plan was adopted by the Board of Directors on November 13, 1989,
subject to approval by the shareholders of Barrister at their next
annual meeting during 1990 in accordance with applicable law and the
requirements of Section 422A of the Code. The Plan was approved by the
shareholders of Barrister at the annual meeting of shareholders on
August 14, 1990. The Plan was amended by the Board on July 23, 1991 and
was submitted to and approved by the shareholders of Barrister at the
annual meeting of shareholders on October 9, 1991. The Plan was amended
by the Board on June 28, 1994 and was submitted to and approved by the
shareholders of Barrister at the annual meeting of shareholders on
October 4, 1994. THE PLAN WAS AMENDED BY THE BOARD ON JUNE 25, 1997 AND
WILL BE SUBMITTED FOR APPROVAL BY THE SHAREHOLDERS OF BARRISTER AT THE
NEXT ANNUAL MEETING OF SHAREHOLDERS. No grants may be made under the
Plan after December 31, 1999.
BARRISTER SYSTEMS INFORMATION CORPORATION
By
--------------------------
Mark C. Donadio
Its Secretary
BARRISTER INFORMATION SYSTEMS CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS, SEPTEMBER 4, 1997
20
<PAGE> 43
The undersigned hereby appoints HENRY P. SEMMELHACK and MARK C. DONADIO
as proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated on the reverse side, all the shares
of Common Stock of Barrister Information Systems Corporation held of record by
the undersigned on July 23, 1997 at the Annual Meeting of Shareholders to be
held on September 4, 1997, or any adjournments thereof, upon the matters set
forth in the Proxy Statement and, in their judgment and discretion, upon such
other business as may properly come before the meeting. THIS PROXY WILL BE VOTED
FOR ELECTION OF THE DIRECTORS AND FOR ALL OTHER ITEMS, UNLESS A CONTRARY
INSTRUCTION IS GIVEN, IN WHICH CASE IT WILL BE VOTED IN ACCORDANCE WITH SUCH
INSTRUCTION.
PLEASE FILL IN, DATE AND SIGN ON THE REVERSE SIDE AND RETURN
THIS PROXY IN THE ACCOMPANYING ENVELOPE.
<PAGE> 44
PROXY BALLOT CARD
BARRISTER INFORMATION SYSTEMS CORPORATION
COMMON STOCK
[ ] -------------------------------- --------------------------------
Account Number Common Stock
The Board of Directors recommends that you vote FOR the election of all the
nominees in Proposal 1 and FOR Proposal 2 and 3.
*******************************************************************************
1. ELECTION OF FOR all nominees WITHHOLD
DIRECTORS: listed below (except AUTHORITY to vote
as marked to the for all nominees listed
contrary below)
[ ] [ ]
Class II: Henry P. Semmelhack, James D. Morgan, Richard P. Beyer,
Warren E. Emblidge, Jr.
WITHHOLD AUTHORITY to vote for the following nominees only (write
name(s)):
*******************************************************************************
2. AMENDMENT OF THE COMPANY'S 1989 STOCK INCENTIVE PLAN to increase the number
of shares of the Company's Common Stock available for options and awards under
the Plan by 300,000 shares to a total of 900,000 shares.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
*******************************************************************************
3. RATIFICATION OF SELECTION OF KPMG PEAT MARWICK LLP, Independent auditors for
the current fiscal year ending March 31, 1998.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
*******************************************************************************
<TABLE>
<S> <C>
[ ] Please sign here exactly as name appears to left.
Dated: , 1997
---------------------------
[ ] -----------------------------------------------------
Signature of Shareholder
-----------------------------------------------------
Signature of Shareholder
Persons signing in a representative capacity should
indicate their capacity.
</TABLE>
