EXHIBIT 10.23
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
SCHEDULE 1(a)
SECOND CERTIFICATE OF DESIGNATION
SECOND CERTIFICATE OF DESIGNATION
OF
TOP SOURCE TECHNOLOGIES, INC.
Section 1. Designation, Number of Shares and Stated Value of Series B
Convertible, Redeemable Preferred Stock. There is hereby authorized and
established a series of Preferred Stock that shall be designated as Series B
Convertible, Redeemable Preferred Stock ("Series B Preferred"), and the number
of shares constituting such Series shall be 3,500. Such number of shares may be
increased or decreased, but not to a number less than the number of shares of
Series B Preferred then issued and outstanding, by resolution adopted by the
Board of Directors. The Stated Value per share of the Series B Preferred shall
be equal to $1,000.
Section 2. Definitions. In addition to the definitions set forth elsewhere
herein, the following terms shall have the meanings indicated:
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in Miami, Florida are authorized or obligated
by law or executive order to close.
"Common Stock" shall mean the common stock, par value $0.001 per share,
of the Corporation.
"Conversion Price" shall mean the conversion price per share of Common
Stock into which the Series B Preferred is convertible, as such conversion price
may be adjusted pursuant to the provisions hereof. The Series B Preferred may be
convertible into a number of shares of Common Stock computed by dividing the
Stated Value of the Series B Preferred being converted by 90% of the closing bid
price for the previous trading day and if the conversion occurs on or after
November 1, 1999, by 85% of the closing bid price for the previous trading day.
"Corporation" shall mean Top Source Technologies, Inc.
"Junior Securities" means the Common Stock and any other series of
stock issued by the Corporation ranking junior as to the Series B Preferred upon
liquidation, dissolution or winding up of the Corporation.
"Original Issue Date" shall mean the date on which shares of the Series
B Preferred are first issued.
"Parity Security" means any class or series of stock issued by the
Corporation ranking on a parity with the Series B Preferred upon liquidation,
dissolution or winding up of the Corporation.
"Person" means any individual, corporation, association, partnership,
joint venture, limited liability company, trust, estate, or other entity or
organization, other than the Corporation, any subsidiary of the Corporation, any
employee benefit plan of the Corporation or any subsidiary of the Corporation,
or any entity holding shares of Common Stock for or pursuant to the terms of any
such plan.
"Senior Securities" means any class or series of stock issued by the
Corporation ranking senior to the Series B Preferred upon liquidation,
dissolution or winding up of the Corporation.
Section 3. Dividends and Distributions.
(a) The Series B Preferred shall rank prior to the Common Stock with
respect to dividends. Dividends shall be payable quarterly, when, as and if
declared by the Board of Directors, on April 10, July 10, October 10, and
January 10 in each year (each a "Dividend Payment Date") to holders of record as
of March 31, June 30, September 30 and December 31 in each year (the "Record
Date"). Dividends shall be paid in cash unless the Corporation is unable to do
so as a result of a restriction contained in a loan agreement or other financing
agreement entered into prior to or after the date of this Second Certificate of
Designation or if the agreement to pay cash or the payment of cash results in a
breach of any such agreement. In such case the Corporation shall issue shares of
its Common Stock in lieu of a cash dividend. The number of shares of Common
Stock to be issued as a dividend shall be based upon the Conversion Price then
in effect, and the previous trading day shall be deemed to be as of the
applicable Record Date. Such number shall be increased by 25% and rounded up to
the nearest whole share. By way of example, if a quarterly dividend is $78,750
and the Conversion Price is $1.00, 98,438 shares of Common Stock shall be
issued. The registration rights contained in Section 4(c) of the Stock Purchase
Agreement entered into between the Corporation and the Wilmington Trust Co. &
Xxxxxx Xxxx Xxxxxx, Co-Trustees shall apply to all shares of Common Stock issued
as dividends.
(b) Dividends shall be calculated on the basis of the time elapsed from
and including the date of issuance of such shares to and including the Record
Date or on any final distribution date relating to conversion or redemption or
to a dissolution, liquidation or winding up of the Corporation. Dividends
payable on the shares of Series B Preferred for any period of less than a full
calendar year shall be pro-rated for the partial year on the basis of a 360-day
year.
(c) Dividends payable on each Dividend Payment Date shall be paid to
record holders of the shares of Series B Preferred as they appear on the books
of the Corporation at the close of business on the applicable Record Date
immediately preceding the respective Dividend Payment Date or on such other
record date as may be fixed by the Board of Directors of the Corporation in
advance of a Dividend Payment Date, provided that no such Record Date shall be
less than 10 nor more than 60 calendar days preceding such Dividend Payment
Date.
(d) So long as any shares of Series B Preferred are outstanding, no
dividend or other distribution, whether in liquidation or otherwise, shall be
declared or paid, or set apart for payment on or in respect of, any Junior
Securities, nor shall any Junior Securities be redeemed, purchased or otherwise
acquired for any consideration (or any money be paid to a sinking fund or
otherwise set apart for the purchase or redemption of any such Junior
Securities), unless (i) all dividends have been paid on all outstanding shares
of the Series B Preferred shall have been paid or set apart for payment for all
past dividend periods, and (ii) sufficient funds shall have been set apart for
the payment of the dividend for the then current dividend period with respect to
the Series B Preferred.
Section 4. Certain Covenants and Restrictions.
(a) So long as any shares of Series B Preferred are outstanding.
(i) The Corporation shall at all times reserve and keep
available for issuance upon the conversion of the shares of Series B
Preferred such number of its authorized but unissued shares of Common
Stock as will be sufficient to permit the conversion of all outstanding
shares of Series B Preferred, and all other securities and instruments
convertible into shares of Common Stock, and shall take all reasonable
action within its power required to increase the authorized number of
shares of Common Stock necessary to permit the conversion of all such
shares of Series B Preferred and all other securities and instruments
convertible into shares of Common Stock.
(ii) The Corporation represents, warrants and agrees that all
shares of Common Stock that may be issued upon exercise of the
conversion rights of shares of Series B Preferred will, upon issuance,
be fully-paid and non-assessable.
(iii) The Corporation will endeavor to make the shares of
stock that may be issued upon exercise of the conversion rights of
shares of Series B Preferred eligible for trading upon any national
securities exchange, or any automated quotation system of a registered
securities association, if any, upon or through which the Common Stock
shall then be traded prior to such delivery.
(iv) Prior to the delivery of any securities which the
Corporation shall be obligated to deliver upon redemption or conversion
of the Series B Preferred, the Corporation will endeavor to comply with
all federal and state securities laws and regulations thereunder
requiring the registration of such securities with, or any approval of
or consent to the delivery of such securities by, any governmental
authority.
(v) The Corporation shall pay all taxes and other governmental
charges (other than any income or franchise taxes) that may be imposed
with respect to the issue or delivery of shares of Common Stock upon
conversion of Series B Preferred as provided herein. The Corporation
shall not be required, however, to pay any tax or other charge imposed
in connection with any transfer involved in the issue of any
certificate for shares of Common Stock in any name other than that of
the registered holder of the shares of the Series B Preferred
surrendered in connection with the conversion thereof, and in such case
the Corporation shall not be required to issue or deliver any stock
certificate until such tax or other charge has been paid, or it has
been established to the Corporation's satisfaction that no tax or other
charge is due.
(b) In the event the Corporation proposes to offer, sell or issue any
of its equity securities (including, without limitation, shares of the
Corporation's capital stock or any rights to acquire such shares), excluding (i)
interests issued pursuant to the Corporation's option plans that have been
adopted by the stockholders of the Corporation, (ii) securities issuable
pursuant to a transaction governed by Rule 145 of the Securities Act of 1933, as
amended, and (iii) securities issuable as dividends or upon the exercise or
conversion of other securities outstanding as of the filing of this Second
Certificate of Designation with the Delaware Secretary of State, then the
holders of shares of Series B Preferred shall have the preemptive right to
acquire such securities from the Corporation. In the event that the Corporation
proposes to make any offer, sale or issuance that is subject to this Section
4(b), then and in each such case the Corporation shall at least 15 days prior to
any such event (the "Window"), provide to the Series B Preferred holders written
notice of the Corporation's intention to take such action. Such notice shall
include the number and type of securities, the price, the intended transaction
date, and any other information reasonably requested by the Series B Preferred
holders. Each Series B Preferred holder may exercise this preemptive right, by
providing written notice to the Corporation within eight days (the "Response")
after receipt of the foregoing notice from the Corporation, with respect to a
percentage of the securities to be offered, sold or issued, calculated by
dividing (i) the number of shares of Common Stock then entitled to be received
upon the conversion of all shares of Series B Preferred held by such holder, by
(ii) the total number of shares of Common Stock then entitled to be received
upon the conversion of all shares of Series B Preferred then outstanding. In the
event any holder(s) shall elect not to exercise the preemptive rights as
provided hereunder, then the aggregate shares otherwise entitled to be purchased
by such non-participating holders (the "Non-Subscribed Securities") shall be
available for purchase by each remaining Series B Preferred holder, who shall
accordingly receive notice from the Corporation of such availability within
three days after the expiration of the Response Date, in the proportion that the
number of shares of Common Stock then entitled to be received by such holder
upon conversion of its Series B Preferred shares then held bears to the total
number shares of Common Stock then entitled to be received upon conversion of
the Series B Preferred shares held by all such holders electing to exercise
preemptive rights. The preemptive rights to acquire the Non-Subscribed
Securities shall expire upon the expiration of the Window, at which time the
Corporation may sell or issue any and all securities regarding which the Series
B Preferred holders failed to exercise their preemptive rights hereunder.
Section 5. Redemption of the Company. The Corporation shall have the
option to redeem the Series B Preferred at 110% of Stated Value plus accrued
dividends at any time on or before April 30, 1999 and at a price of 115% of
Stated Value plus accrued dividends for a period of 180-days commencing on May
1, 1999 and expiring at 6:00 p.m., Miami time on October 27, 1999.
Section 6. Reacquired Shares. Any shares of Series B Preferred
repurchased, redeemed, converted or otherwise acquired by the Corporation shall
be retired and canceled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued shares of Preferred
Stock, without designation as to series or class.
Section 7. Voting Rights. Except as otherwise provided in by law, the
holders of the shares of Series B Preferred shall not have the right to vote on
any matters that come before the stockholders of the Corporation.
Section 8. Conversion Rights. Holders of shares of Series B Preferred shall
have the right to convert all or a portion of such shares into Common Stock, as
follows:
(a) Prior to November 1, 1999, the Series B Preferred shall not be
convertible without the express written consent of the Corporation.
(b) Once convertible, the Series B Preferred may be convertible into a
number of shares of Common Stock computed by dividing the Stated Value of the
Series B Preferred (including accrued dividends) being converted by 90% of the
closing bid price for the previous trading day and if the conversion occurs on
or after November 1, 1999 by dividing the Stated Value of the Series B Preferred
(including accrued dividends) being converted by 85% of the closing bid price
for the previous trading day. The closing bid price shall be determined by the
principal market for the Corporation's Common Stock.
(c) Fractional shares shall not be issued and the Corporation shall
issue cash for any fractional shares.
(d) The conversion of any share of Series B Preferred may be effected
by the holder thereof by the surrender of the certificate or certificates
therefor, duly endorsed, at the principal offices of the Corporation or to such
agent or agents of the Corporation as may be designated by the Board of
Directors and by filing written notice to the Corporation that such holder
elects to convert the same.
(e) As promptly as practicable after the surrender of shares of Series
B Preferred for conversion, the Corporation shall issue and deliver or cause to
be issued and delivered to the holder of such shares certificates representing
the number of fully paid and non-assessable share of Common Stock into which
such shares of Series B Preferred has been converted in accordance with the
provisions of this Section 8. Subject to the following provisions of this
Section 8(f), such conversion shall be deemed to have been made as of the close
of business on the date on which the shares of Series B Preferred shall have
been surrendered for conversion in the manner herein provided, so that the
rights of the holder of the shares of Series B Preferred so surrendered shall
cease at such time, and the person or persons entitled to receive the shares of
Common Stock upon conversion thereof shall be treated for all purposed as having
become the record holder or holders thereof for all purposes, at the opening of
business on the next succeeding day on which such transfer books are open.
Section 9. Record Holders. The Corporation may deem and treat the record
holder of any shares of Series B Preferred as the true and lawful owner thereof
for all purposes, and the Corporation shall not be affected by any notice to the
contrary.
Section 10. Notice. Except as may otherwise be provided by law or
provided for herein, all notices referred to herein shall be in writing, and all
notices hereunder shall be deemed to have been given upon receipt, in the case
of a notice of conversion given to the Corporation, or, in all other cases, upon
the earlier of receipt of such notice or two Business Days after the delivery by
overnight courier addressed if to the Corporation, to its principal executive
offices or to any agent of the Corporation designated as permitted hereby, or if
to a holder of the Series B Preferred, to such holder at the address of such
holder of the Series B Preferred as listed in the stock record books of the
Corporation, or to such other address as the Corporation or holder, as the case
may be, shall have designated by notice similarly given.
Section 11. Successors and Transferees. The provisions applicable to
shares of Series B Preferred shall bind and inure to the benefit of and be
enforceable by the Corporation, the respective successors to the Corporation,
and by any record holder of shares of Series B Preferred.
IN WITNESS WHEREOF, the undersigned has signed and executed the
foregoing Second Certificate of Designation on this 17th day of November, 1998.
TOP SOURCE TECHNOLOGIES, INC.
By:_______________________________
Xxxxxxx X. Xxxxxx, Xx., President
WILMINGTON TRUST CO. & XXXXXX XXXX XXXXXX, CO-TRUSTEES U/A DATED
11/25/70 WITH XXXXXX X. XXXXXX FOR XXXX XXXXX XXXXXX
By:
Wilmington Trust Co., Trustee
By:
Xxxxxx Xxxx Xxxxxx, Co-Trustee
Date: November __, 1998
