SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) December 31, 1998
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Base Ten Systems, Inc.
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(Exact Name of Registrant as Specified in Charter)
New Jersey 0-7100 22-1804206
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
One Electronics Drive, Trenton, New Jersey 08619
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (609)586-7010
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Inapplicable
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(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
Item 5. Other Events.
(a) Exchange Agreement
Base Ten Systems, Inc. ("Company") and the holders of the
Company's outstanding Series A, Convertible Preferred Shares ("Series A
Preferred Stock"), entered into an Exchange Agreement dated as of December 31,
1998 ("Exchange Agreement"). Pursuant to the Exchange Agreement, all of the
outstanding shares of Series A Preferred Stock would be exchanged (the
"Exchange") for an equal number of shares of Series B, Convertible Preferred
Shares ("Series B Preferred Stock").
In connection with the Exchange, the holders of Series B
Preferred Stock would receive warrants to purchase 80,000 shares of Class A
Common Stock, at $3.00 per share, for each $1 million of the principal amount of
Series A Preferred Stock held on September 1, 1998 or thereafter converted at a
conversion price of $4.00 or more. The issuance of one-half of the warrants
would be effected by the issuance of additional warrants ("Additional
Warrants"). The issuance of the balance of the warrants would be effected by
modifying certain existing warrants held by the Series A Preferred Stock holders
("Amended Warrants") to, among other things, decrease the exercise price from
$16.25 to $3.00 per share. The Additional Warrants would expire four years from
the date of issuance and the Amended Warrants would expire on December 15, 2001.
Certain other existing warrants held by the Series A Preferred Stock holders
would be modified to allow for a modification of the exercise price in certain
circumstances.
The consummation of the transactions contemplated by the
Exchange Agreement is subject to the satisfaction of certain conditions,
including (i) the conversion by the holder of the Company's 9.01% Convertible
Subordinated Debentures for 2,500,000 shares of Class A Common Stock or the
execution and delivery to the Company of an effective irrevocable direction for
such conversion effective upon the Exchange (see paragraph 5(b) below), and (ii)
the effectiveness of a registration statement covering the resale of the shares
of Class A Common Stock issuable upon conversion of the Series B Preferred Stock
and exercise of the Additional Warrants and the Amended Warrants.
(b) 9.01% Convertible Subordinated Debentures
The holder of the Company's 9.01% Convertible Subordinated
Debentures executed and delivered to the Company an irrevocable consent dated
December 22, 1998 pursuant to which the holder consented to the conversion of
the Debentures upon consummation of the Exchange (see paragraph 5(a) above). The
holder also consented to the modification of the Debentures to decrease the
conversion price at which the Debentures are convertible into Class A Common
Stock from $12.50 to $4.00, as approved by the Company's shareholders at the
Special Meeting held on November 10, 1998, simultaneous with the conversion of
the Debentures. An aggregate of 2,500,000 shares of Class A Common Stock will be
issued to the holder upon conversion of the Debentures.
(c) Description Of Existing Capital Stock
General.
The authorized capital stock of the Company consists of
60,000,000 shares of Class A Common Stock, 2,000,000 shares of Class B Common
Stock and 994,200.9375 shares of Preferred Stock, all of which have a par value
of $1.00 per share. As of January 4, 1999, there were outstanding 18,659,738
shares of Class A Common Stock, and 71,410 shares of Class B Common Stock. The
Company has designated 14,942.17773437 shares of the Preferred Stock as Series A
Preferred Stock, all of which were outstanding as of January 12, 1999. If the
transactions contemplated by the Exchange Agreement (see paragraph 5(a) above)
are consummated, no shares of Series A Preferred Stock would be outstanding and
the Company would designate 14,942.17773437 shares of Preferred Stock as Series
B Preferred Stock.
Common Stock
Dividends. Both classes of the Company's Common Stock have
identical cash and property dividend rights. Cash or property dividends can be
declared and paid on the Class A Common Stock and Class B Common Stock as a
single class. If a dividend is paid, the same amount shall be paid in respect of
each outstanding share of Class A Common Stock or Class B Common Stock.
If at any time a distribution is to be paid in Class A Common
Stock or Class B Common Stock (a "share distribution"), only shares of Class A
Common Stock may be paid to holders of Class A Common Stock and only shares of
Class B Common Stock may be paid to holders of Class B Common Stock. Whenever a
share distribution is paid, the same number of shares shall be paid in respect
of each outstanding share of Class A Common Stock or Class B Common Stock. The
Company cannot combine or subdivide shares of either of such classes without at
the same time making a proportionate combination of shares of the other of such
classes.
Voting Rights. Except for class votes as required by law (and
subject to voting rights that may be granted to any holders of Preferred Stock),
holders of both classes of Common Stock vote or consent as a single class on all
matters, including the election of directors, with each share of Class A Common
Stock and each share of Class B Common Stock having one vote per share.
All directors of the Company previously elected by the holders
of Class A Common Stock as a class and all directors previously elected by the
holders of Class B Common Stock as a class are considered as having been elected
by the holders of Class A Common Stock and Class B Common Stock voting together.
The holders of Class A Common Stock and Class B Common Stock,
voting as a single class, shall be entitled to vote as a separate class on the
removal, for cause, of any director (subject to voting rights of Preferred
Stock).
Conversion. At the option of the holder of record, each share
of Class B Common Stock is convertible at any time into 1 1/2 shares of Class A
Common Stock (subject to adjustment in the event of a capital reorganization,
reclassification, consolidation, merger or sale of all or substantially all of
the Company's assets, as provided in the Certificate of Incorporation). The
Class A Common Stock is not convertible.
Other Rights. Shareholders of the Company's Common Stock have
no preemptive or other rights to subscribe for additional shares. On
liquidation, dissolution or winding up of the Company, all shareholders of
common stock, regardless of class, are entitled to share ratably in any assets
available for distribution. No shares of either class are subject to redemption.
All outstanding shares are fully paid and non-assessable.
Transfer Agent. The transfer agent and registrar for shares of
the Class A Common Stock and Class B Common Stock is American Stock Transfer &
Trust Company, 40 Wall Street, New York, New York 10005.
Preferred Stock
General. The Company's Board of Directors is empowered to fix the
designations, powers, preferences and relative, participating, optional or other
special rights of the Preferred Stock and the qualifications, limitations or
restrictions of those preferences or rights.
Series A Preferred Stock. As of January 12, 1999, the Company had
issued 14,942.17773437 shares of Series A Preferred Stock. Holders of Series A
Preferred Stock have the following rights, privileges and preferences:
Term; Dividends and Illiquidity Payments. The Series A
Preferred Stock mature in December 2000 and pay a cumulative dividend of 8.0%
per annum during any quarter in which the closing bid price for the Class A
Common Stock is less than $8.00 for any 10 consecutive trading days. An
equivalent payment is payable to any holder of Series A Preferred Stock which is
subject during any quarter to a standstill period (as described below) following
a Company underwritten public offering or which is non-convertible because of
the limitations described below. Such dividends and payments are payable only
prior to conversion, and payable in cash or additional shares of Series A
Preferred Stock at the Company's option; however, if the Company elects to pay
the dividend in Series A Preferred Stock, the amount of such payment will be
125% of the cash amount due.
Liquidation Preference. The Series A Preferred Stock has a
liquidation preference of $1,000 plus any accrued and unpaid dividends.
Conversion Rights. The Series A Preferred Stock is convertible
at any time or from time to time into Class A Common Stock, at a conversion
price equal to the lesser of (i) $16.25 per share, or (ii) the Weighted Average
Price of the Class A Common Stock prior to the conversion date. Weighted Average
Price is defined as the volume weighted average price of Class A Common Stock on
Nasdaq (as reported by Bloomberg Financial Markets) over any two trading days in
the 20 trading day period ending on the day prior to the date the holder gives
notice of conversion (excluding the lowest closing bid price in the period). The
holder has the right to select such two days. No more than 3,040,000 shares of
Class A Common Stock shall be issued upon conversion of all of the Series A
Preferred Stock, except for additional shares of Class A Common Stock issuable
pursuant to anti-dilution provisions. Any Series A Preferred Stock remaining
outstanding because of this limitation may be redeemed at the holder's option
for a subordinated 8% promissory note maturing when the Series A Preferred Stock
would have matured.
Company Redemption Right. The Company has the right, at any
time, to redeem all or any part of the outstanding Series A Preferred Stock or
subordinated notes at 130% of their original purchase price.
Mandatory Redemption on Maturity. Any Series A Preferred Stock
or subordinated notes still outstanding in December 2000 must be redeemed in
either cash or at the Company's option, in Class A Common Stock. If the Company
elects to make the redemption in Class A Common Stock, the amount of such
payment will be 125% of the original purchase price.
Voting Rights. The holders of the Series A Preferred Stock
have the same voting rights as the holders of Class A Common Stock, calculated
as if all outstanding shares of Series A Preferred Stock had been converted into
shares of Class A Common Stock on the record date for determination of
shareholders entitled to vote on the matter presented, subject to limitations
applicable to certain holders.
Warrants. For each $1 million of the Series A Preferred Stock
purchased, the purchaser received warrants to purchase 40,000 shares of Class A
Common Stock exercisable at $16.25 per share.
Right of First Refusal. So long as the Series A Preferred
Stock remains outstanding, each holder has the right (with certain exceptions)
to purchase, on five days notice, up to that portion of any future equity
financing by the Company which would be sufficient to enable the holder to
maintain its percentage interest in the Company's equity on a fully diluted
basis.
Five Percent Limitation. The holders of the Series A Preferred
Stock are not entitled to receive shares of Class A Common Stock upon a
conversion to the extent that the sum of (i) the number of shares of Class A
Common Stock beneficially owned by the holder and its affiliates (exclusive of
shares of Class A Common Stock issuable upon conversion of the unconverted
portion of the Series A Preferred Stock and shares of Class A Common Stock
issuable upon conversion or exercise of any other securities of the Company) and
(ii) the number of shares of Class A Common Stock issuable upon conversion of
the Series A Preferred Stock then being converted, would result in beneficial
ownership by the holder and its affiliates of more than 4.9% of the outstanding
Class A Common Stock.
Registration. The Company granted the holders of the Series A
Preferred Stock mandatory registration rights with respect to the resale of the
shares of Class A Common Stock underlying the Series A Preferred Stock
(including any Series A Preferred Stock which may be issued as a dividend) and
the shares of Class A Common Stock underlying the warrants issued to the holders
of the Series A Preferred Stock. The holders of the Series A Preferred Stock
have agreed, if requested by a managing underwriter, to a 90-day standstill
period following any underwritten Company public offering during which period
the holders may not sell the Class A Common Stock underlying both the Series A
Preferred Stock and the warrants issued to the holders, but not in excess of two
such standstills in any 18-month period. In the event a standstill period is
effective, the maturity date of the Series A Preferred Stock would be extended
by the duration of the standstill period.
Series B Preferred Stock. If the transactions contemplated by the
Exchange Agreement (see paragraph 5(a) above) are consummated, all outstanding
shares of Series A Preferred Stock would be exchanged for an equal number of
shares of Series B Preferred Stock. The terms of the Series B Preferred Stock
would be identical to the terms of the Series A Preferred Stock, except for the
following differences:
Term. The Series B Preferred Stock would mature on December
15, 2000.
Mandatory Redemption on Maturity. Any Series B Preferred Stock
still outstanding after December 15, 2000 would be redeemed in either cash or at
the Company's option, in Class A Common Stock. If the Company elects to make the
redemption in Class A Common Stock, the amount of such payment would be 125% of
the original purchase price.
Dividends and Illiquidity Payments. The holders of Series B
Preferred Stock would be entitled to receive dividends when and if declared by
the Board of Directors, out of funds legally available therefor. The holders of
Series B Preferred Stock would be entitled to participate with the holders of
the Class A Common Stock so that the holders of Series B Preferred Stock would
receive with respect to each share of Series B Preferred Stock an amount equal
to (x) the dividend payable with respect to each share of Class A Common Stock
multiplied by (y) the number of shares of Class A Common Stock into which each
share of Series B Preferred Stock is convertible as of the record date for such
dividend. A payment of 8.0% per annum would be payable to any holder of Series B
Preferred Stock which is subject during any quarter to a standstill period
following a Company underwritten public offering or which is non-convertible
because of the limitations described below. Such payment would be payable only
prior to conversion, and payable in cash or additional Series B Preferred Stock
at the Company's option; however, if the Company elects to pay the dividend in
Series B Preferred Stock, the amount of such payment would be 125% of the cash
amount due.
Liquidation Preference. The Series B Preferred Stock would
have a liquidation preference as to principal amount and any accrued and unpaid
dividends.
Conversion Rights. The Series B Preferred Stock would be
convertible at any time or from time to time into Class A Common Stock, at a
conversion price equal to $4.00.
Company Redemption Right. The Company would have the right, at
any time, to redeem all or any part of the outstanding Series B Preferred Stock
at 130% of their original purchase price.
Warrants. For each $1 million of the Series A Preferred Stock
outstanding on September 1, 1998 and thereafter converted at a conversion price
of $4.00 or more, the holders of Series B Preferred Stock would receive
four-year warrants to purchase 80,000 shares of Class A Common Stock exercisable
at $3.00 per share. The issuance of one-half of the warrants would be effected
by modifying certain provisions of existing warrants held by the Series A
Preferred Stock holders. The Company may force the exercise of the warrants if,
among other things, the Class A Common Stock trades at $4.00 or more for 20
consecutive trading days and the aggregate of cash (and cash equivalents) as
shown on the Company's most recent balance sheet is $5,000,000 or more. If there
is a forced exercise, the exercise price of certain other existing warrants held
by the Series B Preferred Stock holders would be modified to the lesser of (i)
market value and (ii) the exercise price then in effect.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
3(g) Certificate of Amendment of Certificate of
Incorporation dated June 30, 1998 filed with the
Treasurer of the State of New Jersey on July 9, 1998
3(h) Certificate of Amendment of Certificate of
Incorporation dated September 30, 1998 filed with the
Treasurer of the State of New Jersey on October 13,
1998.
3(i) Certificate of Amendment of Certificate of
Incorporation dated November 18, 1998 filed with the
Treasurer of the State of New Jersey on November 19,
1998.
3(j) Certificate of Amendment of Certificate of
Incorporation dated January 11, 1999 filed with the
Treasurer of the State of New Jersey on January 11,
1999.
10(xx) Exchange Agreement dated as of December 31, 1998 by
and between Base Ten Systems, Inc. and the holders of
the outstanding Series A, Convertible Preferred
Stock.
10(yy) Form of Certificate of Amendment of Restated
Certificate of Incorporation providing for
designation, preferences and rights of the Convertible
Preferred Shares, Series B (Exhibit A to the Exchange
Agreement dated as of December 31, 1998).
10(zz) Form of Common Stock Purchase Warrant Certificate
(Exhibit B to the Exchange Agreement dated as of
December 31, 1998).
10(aaa) Form of Common Stock Purchase Warrant Certificate
(Exhibit C to the Exchange Agreement dated as of
December 31, 1998).
10(bbb) Irrevocable Consent dated December 22, 1998 by the
holder of the Company's 9.01% Convertible Subordinated
Debentures.
99 Press Release dated January 13, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BASE TEN SYSTEMS, INC.
WILLIAM F. HACKETT
Dated: January 13, 1999 By: _______________________________
William F. Hackett
Senior Vice President,
Chief Financial Officer and Secretary
<PAGE>
EXHIBIT INDEX
3(g) Certificate of Amendment of Certificate of
Incorporation dated June 30, 1998 filed with the
Treasurer of the State of New Jersey on July 9, 1998
3(h) Certificate of Amendment of Certificate of
Incorporation dated September 30, 1998 filed with the
Treasurer of the State of New Jersey on October 13,
1998.
3(i) Certificate of Amendment of Certificate of
Incorporation dated November 18, 1998 filed with the
Treasurer of the State of New Jersey on November 19,
1998.
3(j) Certificate of Amendment of Certificate of
Incorporation dated January 11, 1999 filed with the
Treasurer of the State of New Jersey on January 11,
1999.
10(xx) Exchange Agreement dated as of December 31, 1998 by
and between Base Ten Systems, Inc. and the holders of
the outstanding Series A, Convertible Preferred
Stock.
10(yy) Form of Certificate of Amendment of Restated
Certificate of Incorporation providing for
designation, preferences and rights of the Convertible
Preferred Shares, Series B (Exhibit A to the Exchange
Agreement dated as of December 31, 1998).
10(zz) Form of Common Stock Purchase Warrant Certificate
(Exhibit B to the Exchange Agreement dated as of
December 31, 1998).
10(aaa) Form of Common Stock Purchase Warrant Certificate
(Exhibit C to the Exchange Agreement dated as of
December 31, 1998).
10(bbb) Irrevocable Consent dated December 22, 1998 by the
holder of the Company's 9.01% Convertible Subordinated
Debentures.
99 Press Release dated January 13, 1999.
BASE TEN SYSTEMS, INC.
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
BASE TEN SYSTEMS, INC.
Base Ten Systems, Inc., a corporation (the "Corporation")
organized under the laws of the State of New Jersey, to amend its Certificate of
Incorporation in accordance with Section 14A:7-2 and 14A:7-18 of Chapter 7 of
the New Jersey Business Corporation Act, hereby certifies:
FIRST: The name of the Corporation is Base Ten Systems, Inc.
SECOND: The Board of Directors of the Corporation, by unanimous written
consent dated June 30, 1998, adopted resolutions (attached as Appendix A hereto)
providing for the cancellation of 125 shares of the Company's Convertible
Preferred Shares, Series A and the related reduction of the authorized number of
Preferred Shares and Convertible Preferred Shares, Series A; and the issuance of
458.4375 shares of Convertible Preferred Shares, Series A and the related
increase in the authorized number of Convertible Preferred Shares, Series A.
THIRD: After giving effect to the cancellation of 125 shares of the
Corporation's Convertible Preferred Shares, Series A, the total number of shares
that the Corporation is authorized to issue is 42,999,375 and the aggregate par
value of all such shares is $42,999,375. Forty million of the shares shall be
Class A Common shares of a par value of $1.00 each. Two million of the shares
shall be Class B Common shares of a par value of $1.00 each. Nine hundred
ninety-nine thousand three hundred seventy-five of the shares shall be Preferred
shares of a par value of $1.00 each. After giving effect to the issuance of
458.4375 shares of the Corporation's Convertible Preferred Shares, Series A,
19,308.437 of the Preferred shares shall be Convertible Preferred Shares, Series
A.
FOURTH: Article 6(d)(J) of the Certificate of Incorporation states that
any Convertible Preferred Shares, Series A, which are converted, purchased,
redeemed or otherwise acquired by the Corporation, shall be retired and canceled
by the Corporation promptly thereafter, and that no such shares shall upon their
cancellation be reissued.
FIFTH: The Corporation's Certificate of Incorporation is amended as
follows:
Article 6(a) of the Certificate of Incorporation of the Company be
amended to read, in its entirety, as follows:
"(a) This corporation is authorized to issue three classes of shares of
stock to be designated "Class A Common," "Class B Common," and
"Preferred." The total number of shares that this corporation is
authorized to issue is 42,999,375 and the aggregate par value of all
such shares is $42,999,375. Forty million of the shares shall be Class
A Common shares of a par value of $1.00 each. Two million of the shares
shall be Class B Common shares of a par value of $1.00 each. Nine
hundred ninety-nine thousand three hundred seventy-five of the shares
shall be Preferred shares of a par value of $1.00 each."
Article 6(d)(A) of the Certificate of Incorporation of the Company be
amended to read, in its entirety, as follows:
"(d) A. Designation and Amount. The shares of this series of Preferred
Shares shall be designated as "Convertible Preferred Shares, Series A"
and the number of shares constituting such series shall be 19,308.437,
with a par value of $1.00 per share. Fractional Preferred Shares shall
be permitted. The number of Preferred Shares may be increased, subject
to and in accordance with the New Jersey Business Corporation Act,
without approval of the existing holders of Preferred Shares, solely
for the purposes of issuance pursuant to Section C(1) hereof."
SIXTH: The action of the Board of Directors in amending Article 6(a) of
the Certificate of Incorporation is made pursuant to Section 14A:7-18(1), and
the action of the Board of Directors in amending Article 6(d)(A) of the
Certificate of Incorporation is made pursuant to Section 14A:7-2(2), in each
case by unanimous written consent of the Board of Directors.
SEVENTH: This Certificate of Amendment shall become effective upon
filing.
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IN WITNESS WHEREOF, Base Ten Systems, Inc. has caused its duly
authorized officer to execute this Certificate on this 30th day of June, 1998.
BASE TEN SYSTEMS, INC.
THOMAS E. GARDNER
By:_______________________________
Name: Thomas E. Gardner
Title: President and
Chief Executive Officer
Attest:
WILLIAM F. HACKETT
By:______________________________
Name: William F. Hackett
Title: Secretary
<PAGE>
APPENDIX A
RESOLUTIONS
1. RESOLVED, that the Board hereby approves the cancellation of 125 shares
of the Company's Convertible Preferred Shares, Series A, reacquired by
the Company by the conversion thereof, and the reduction of the
authorized number of Preferred Shares from 999,500 to 999,375, and the
reduction of the authorized number of Convertible Preferred Shares,
Series A, from 18,975 to 18,850; and be it
FURTHER RESOLVED, that Article 6(a) of the Certificate of Incorporation
of the Company be amended to read, in its entirety, as follows:
"(a) This corporation is authorized to issue three classes of shares of
stock to be designated "Class A Common," "Class B Common," and
"Preferred." The total number of shares that this corporation is
authorized to issue is 42,999,375 and the aggregate par value of all
such shares is $42,999,375. Forty million of the shares shall be Class
A Common shares of a par value of $1.00 each. Two million of the shares
shall be Class B Common shares of a par value of $1.00 each. Nine
hundred ninety-nine thousand three hundred seventy-five of the shares
shall be Preferred shares of a par value of $1.00 each."
2. WHEREAS, 125 shares of the Company's Convertible Preferred Shares,
Series A, have been canceled, thereby reducing the authorized number of
Preferred Shares from 999,500 to 999,375 and reducing the authorized
number of Convertible Preferred Shares, Series A, by 125 shares; and
WHEREAS, the Board proposes to pay dividends due on June 30, 1998 on
the Company's Convertible Preferred Shares, Series A, in Convertible
Preferred Shares, Series A, in accordance with Article 6, Section C(1)
of the Certificate of Incorporation, which would have the effect of
increasing the authorized number of Convertible Preferred Shares,
Series A, by 458.4375 shares; and
WHEREAS, the net effect of (i) canceling 125 shares of the Convertible
Preferred Shares, Series A, and the related reduction in the authorized
number of Convertible Preferred Shares, Series A, and (ii) paying
dividends on the Convertible Preferred Shares, Series A, in 458.4375
shares thereof and the related increase in the authorized number of
Preferred Shares, Series A, is the increase of the authorized number of
Convertible Preferred Shares, Series A, from 18,975 to 19,308.437
shares; and be it
RESOLVED, that the Board hereby approves the payment of dividends due
on June 30, 1998 on the Company's Convertible Preferred Shares, Series
A, payable in Convertible Preferred Shares, Series A, in accordance
with Article 6, Section C(1) of the Certificate of Incorporation, and
the increase in the authorized number of Convertible Preferred Shares,
Series A, by 458.4375 shares; and be it
FURTHER RESOLVED, that Article 6(d)(A) of the Certificate of
Incorporation of the Company be amended to read, in its entirety, as
follows:
"(d) A. Designation and Amount. The shares of this series of Preferred
Shares shall be designated as "Convertible Preferred Shares, Series A"
and the number of shares constituting such series shall be 19,308.437,
with a par value of $1.00 per share. Fractional Preferred Shares shall
be permitted. The number of Preferred Shares may be increased, subject
to and in accordance with the New Jersey Business Corporation Act,
without approval of the existing holders of Preferred Shares, solely
for the purposes of issuance pursuant to Section C(1) hereof."
3. RESOLVED, that the Board hereby authorizes, directs and empowers each
of Thomas E. Gardner and William F. Hackett, to act individually or
jointly on behalf of the Company to execute and deliver the amendment
to the Certificate of Incorporation of the Company to effect the
foregoing resolutions.
BASE TEN SYSTEMS, INC.
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
BASE TEN SYSTEMS, INC.
Base Ten Systems, Inc., a corporation (the "Corporation")
organized under the laws of the State of New Jersey, to amend its Certificate of
Incorporation in accordance with Section 14A:7-2 and 14A:7-18 of Chapter 7 of
the New Jersey Business Corporation Act, hereby certifies:
FIRST: The name of the Corporation is Base Ten Systems, Inc.
SECOND: The Board of Directors of the Corporation, by unanimous written
consent dated September 30, 1998, adopted resolutions (attached as Appendix A
hereto) providing for the cancellation of 1,574.0625 shares of the Company's
Convertible Preferred Shares, Series A and the related reduction of the
authorized number of Preferred Shares and Convertible Preferred Shares, Series
A; and the issuance of 443.359375 shares of Convertible Preferred Shares, Series
A and the related increase in the authorized number of Convertible Preferred
Shares, Series A.
THIRD: After giving effect to the cancellation of 1,574.0625 shares of
the Corporation's Convertible Preferred Shares, Series A, the total number of
shares that the Corporation is authorized to issue is 42,997,800.9375 and the
aggregate par value of all such shares is $42,999,800.9375. Forty million of the
shares shall be Class A Common shares of a par value of $1.00 each. Two million
of the shares shall be Class B Common shares of a par value of $1.00 each.
997,800.9375 of the shares shall be Preferred shares of a par value of $1.00
each. After giving effect to the issuance of 443.359375 shares of the
Corporation's Convertible Preferred Shares, Series A, 18,177.734375 of the
Preferred shares shall be Convertible Preferred Shares, Series A.
FOURTH: Article 6(d)(J) of the Certificate of Incorporation states that
any Convertible Preferred Shares, Series A, which are converted, purchased,
redeemed or otherwise acquired by the Corporation, shall be retired and canceled
by the Corporation promptly thereafter, and that no such shares shall upon their
cancellation be reissued.
FIFTH: The Corporation's Certificate of Incorporation is amended as
follows:
Article 6(a) of the Certificate of Incorporation of the Company be
amended to read, in its entirety, as follows:
"(a) This corporation is authorized to issue three classes of shares of
stock to be designated "Class A Common," "Class B Common," and
"Preferred." The total number of shares that this corporation is
authorized to issue is 42,997,800.9375 and the aggregate par value of
all such shares is $42,997,800.9375. Forty million of the shares shall
be Class A Common shares of a par value of $1.00 each. Two million of
the shares shall be Class B Common shares of a par value of $1.00 each.
997,800.9375 of the shares shall be Preferred shares of a par value of
$1.00 each."
Article 6(d)(A) of the Certificate of Incorporation of the Company be
amended to read, in its entirety, as follows:
"(d) A. Designation and Amount. The shares of this series of Preferred
Shares shall be designated as "Convertible Preferred Shares, Series A"
and the number of shares constituting such series shall be
18,177.734375, with a par value of $1.00 per share. Fractional
Preferred Shares shall be permitted. The number of Preferred Shares may
be increased, subject to and in accordance with the New Jersey Business
Corporation Act, without approval of the existing holders of Preferred
Shares, solely for the purposes of issuance pursuant to Section C(1)
hereof."
SIXTH: The action of the Board of Directors in amending Article 6(a) of
the Certificate of Incorporation is made pursuant to Section 14A:7-18(1), and
the action of the Board of Directors in amending Article 6(d)(A) of the
Certificate of Incorporation is made pursuant to Section 14A:7-2(2), in each
case by unanimous written consent of the Board of Directors.
SEVENTH: This Certificate of Amendment shall become effective upon
filing.
<PAGE>
IN WITNESS WHEREOF, Base Ten Systems, Inc. has caused its duly
authorized officer to execute this Certificate on this 30th day of September,
1998.
BASE TEN SYSTEMS, INC.
THOMAS E. GARDNER
By:_______________________________
Name: Thomas E. Gardner
Title: President and
Chief Executive Officer
Attest:
WILLIAM F. HACKETT
By:______________________________
Name: William F. Hackett
Title: Secretary
<PAGE>
APPENDIX A
RESOLUTIONS
1. RESOLVED, that the Board hereby approves the cancellation of 1,574.0625
shares of the Company's Convertible Preferred Shares, Series A,
reacquired by the Company by the conversion thereof, and the reduction
of the authorized number of Preferred Shares from 999,375 to
997,800.9375, and the reduction of the authorized number of Convertible
Preferred Shares, Series A, from 19,308.435 to 17,734.375; and be it
FURTHER RESOLVED, that Article 6(a) of the Certificate of Incorporation
of the Company be amended to read, in its entirety, as follows:
"(a) This corporation is authorized to issue three classes of shares of
stock to be designated "Class A Common," "Class B Common," and
"Preferred." The total number of shares that this corporation is
authorized to issue is 42,997,800.9375 and the aggregate par value of
all such shares is $42,997,800.9375. Forty million of the shares shall
be Class A Common shares of a par value of $1.00 each. Two million of
the shares shall be Class B Common shares of a par value of $1.00 each.
997,800.9375 of the shares shall be Preferred shares of a par value of
$1.00 each."
2. WHEREAS, 1,574.0625 shares of the Company's Convertible Preferred
Shares, Series A, have been canceled, thereby reducing the authorized
number of Preferred Shares from 999,375 to 997,800.9375 and reducing
the authorized number of Convertible Preferred Shares, Series A, by
1,574.0625 shares; and
WHEREAS, the Board proposes to pay dividends due on September 30, 1998
on the Company's Convertible Preferred Shares, Series A, in Convertible
Preferred Shares, Series A, in accordance with Article 6, Section C(1)
of the Certificate of Incorporation, which would have the effect of
increasing the authorized number of Convertible Preferred Shares,
Series A, by 443.359375 shares; and
WHEREAS, the net effect of (i) canceling 1,574.0625 shares of the
Convertible Preferred Shares, Series A, and the related reduction in
the authorized number of Convertible Preferred Shares, Series A, and
(ii) paying dividends on the Convertible Preferred Shares, Series A, in
443.359375 shares thereof and the related increase in the authorized
number of Preferred Shares, Series A, is the decrease of the authorized
number of Convertible Preferred Shares, Series A, from 19,308.437 to
18,177.734375 shares; and be it
RESOLVED, that the Board hereby approves the payment of dividends due
on September 30, 1998 on the Company's Convertible Preferred Shares,
Series A, payable in Convertible Preferred Shares, Series A, in
accordance with Article 6, Section C(1) of the Certificate of
Incorporation, and the increase in the authorized number of Convertible
Preferred Shares, Series A, by 443.359375 shares; and be it
FURTHER RESOLVED, that Article 6(d)(A) of the Certificate of
Incorporation of the Company be amended to read, in its entirety, as
follows:
"(d) A. Designation and Amount. The shares of this series of Preferred
Shares shall be designated as "Convertible Preferred Shares, Series A"
and the number of shares constituting such series shall be
18,177.734375, with a par value of $1.00 per share. Fractional
Preferred Shares shall be permitted. The number of Preferred Shares may
be increased, subject to and in accordance with the New Jersey Business
Corporation Act, without approval of the existing holders of Preferred
Shares, solely for the purposes of issuance pursuant to Section C(1)
hereof."
3. RESOLVED, that the Board hereby authorizes, directs and empowers each
of Thomas E. Gardner and William F. Hackett, to act individually or
jointly on behalf of the Company to execute and deliver the amendment
to the Certificate of Incorporation of the Company to effect the
foregoing resolutions.
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
BASE TEN SYSTEMS, INC.
Base Ten Systems, Inc., a New Jersey corporation, to amend its
Certificate of Incorporation in accordance with Section 14A:9-2(4) of the New
Jersey Business Corporation Act, hereby certifies:
FIRST: The name of the corporation is Base Ten Systems, Inc.
SECOND: Article 6(a) of the Certificate of Incorporation of the
corporation is amended to read in its entirety, as follows:
(a) This corporation is authorized to issue three classes of shares of
stock to be designated "Class A Common," "Class B Common," and
"Preferred." The total number of shares that this corporation is
authorized to issue is 62,997,800.9375 and the aggregate par value of
all such shares is $62,997,800.9375. Sixty million of the shares shall
be Class A Common shares of a par value of $1.00 each. Two million of
the shares shall be Class B Common shares of a par value of $1.00 each.
997,800.9375 of the shares shall be Preferred shares of a par value of
$1.00 each.
THIRD: The amendment to the Certificate of Incorporation set forth in
Paragraph SECOND of this Certificate was adopted by the shareholders of the
corporation on November 10, 1998.
FOURTH: The designation and number of shares of each class or series
entitled to vote on the amendment to the Certificate of Incorporation set forth
in Paragraph SECOND of this Certificate is as follows:
<TABLE>
<CAPTION>
Class or Series Number of Shares
<S> <C>
Class A Common Stock 10,477,221
Class B Common Stock 77,236
Series A Preferred Stock 18,177.734375
</TABLE>
FIFTH: The number of shares of each class or series voting together as
a group (each share of Class A Common Stock and each share of Class B Common
Stock having one vote per share; each share of Series A Preferred Stock having
one vote per share, calculated as if all shares of Series A Preferred Stock had
been converted into shares of Class A Common Stock on the record date, subject
to limitations applicable to certain holders) voted for or against the amendment
to Article 6(a) of the Certificate of Incorporation set forth in Paragraph
SECOND of this Certificate is as follows:
<TABLE>
<CAPTION>
For Against
Class or Series Shares Votes Shares Votes
------------------ --------- --------- ------ ------
<S> <C> <C> <C>
Class A Common Stock 9,723,254 9,723,254 286,494 286,494
Class B Common Stock 54,096 54,096 1,883 1,883
Series A Preferred Stock 527 84,320 0 0
</TABLE>
SIXTH: This Certificate of Amendment shall become effective upon
filing.
<PAGE>
IN WITNESS WHEREOF, Base Ten Systems, Inc. has caused its duly
authorized officer to execute this Certificate on this 18th day of November,
1998.
BASE TEN SYSTEMS, INC.
THOMAS E. GARDNER
By:_______________________________
Thomas E. Gardner, President and
Chief Executive Officer
BASE TEN SYSTEMS, INC.
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
BASE TEN SYSTEMS, INC.
Base Ten Systems, Inc., a corporation (the "Corporation")
organized under the laws of the State of New Jersey, to amend its Certificate of
Incorporation in accordance with Section 14A:7-2 and 14A:7-18 of Chapter 7 of
the New Jersey Business Corporation Act, hereby certifies:
FIRST: The name of the Corporation is Base Ten Systems, Inc.
SECOND: The Board of Directors of the Corporation, at a meeting of the
Board of Directors duly held on January 11, 1999, adopted resolutions (attached
as Appendix A hereto) providing for the cancellation of 3,600 shares of the
Company's Convertible Preferred Shares, Series A and the related reduction of
the authorized number of Preferred Shares and Convertible Preferred Shares,
Series A; and the issuance of 364.443359375 shares of Convertible Preferred
Shares, Series A and the related increase in the authorized number of
Convertible Preferred Shares, Series A.
THIRD: After giving effect to the cancellation of 3,600 shares of the
Corporation's Convertible Preferred Shares, Series A, the total number of shares
that the Corporation is authorized to issue is 62,994,200.9375 and the aggregate
par value of all such shares is $62,994,200.9375. Sixty million of the shares
shall be Class A Common shares of a par value of $1.00 each. Two million of the
shares shall be Class B Common shares of a par value of $1.00 each. 994,200.9375
of the shares shall be Preferred shares of a par value of $1.00 each. After
giving effect to the issuance of 364.443359375 shares of the Corporation's
Convertible Preferred Shares, Series A, 14,942.17773437 of the Preferred shares
shall be Convertible Preferred Shares, Series A.
FOURTH: Article 6(d)(J) of the Certificate of Incorporation states that
any Convertible Preferred Shares, Series A, which are converted, purchased,
redeemed or otherwise acquired by the Corporation, shall be retired and canceled
by the Corporation promptly thereafter, and that no such shares shall upon their
cancellation be reissued.
FIFTH: The Corporation's Certificate of Incorporation is amended as
follows:
Article 6(a) of the Certificate of Incorporation of the Company be
amended to read, in its entirety, as follows:
"(a) This corporation is authorized to issue three classes of shares of
stock to be designated "Class A Common," "Class B Common," and
"Preferred." The total number of shares that this corporation is
authorized to issue is 62,994,200.9375 and the aggregate par value of
all such shares is $62,994,200.9375. Sixty million of the shares shall
be Class A Common shares of a par value of $1.00 each. Two million of
the shares shall be Class B Common shares of a par value of $1.00 each.
994,200.9375 of the shares shall be Preferred shares of a par value of
$1.00 each."
Article 6(d)(A) of the Certificate of Incorporation of the Company be
amended to read, in its entirety, as follows:
"(d) A. Designation and Amount. The shares of this series of Preferred
Shares shall be designated as "Convertible Preferred Shares, Series A"
and the number of shares constituting such series shall be
14,942.17773437, with a par value of $1.00 per share. Fractional
Preferred Shares shall be permitted. The number of Preferred Shares may
be increased, subject to and in accordance with the New Jersey Business
Corporation Act, without approval of the existing holders of Preferred
Shares, solely for the purposes of issuance pursuant to Section C(1)
hereof."
SIXTH: The action of the Board of Directors in amending Article 6(a) of
the Certificate of Incorporation is made pursuant to Section 14A:7-18(1), and
the action of the Board of Directors in amending Article 6(d)(A) of the
Certificate of Incorporation is made pursuant to Section 14A:7-2(2), in each
case at a meeting of the Board of Directors duly held on January 11, 1999.
SEVENTH: This Certificate of Amendment shall become effective upon
filing.
<PAGE>
IN WITNESS WHEREOF, Base Ten Systems, Inc. has caused its duly
authorized officer to execute this Certificate on this 11th day of January,
1999.
BASE TEN SYSTEMS, INC.
THOMAS E. GARDNER
By:_______________________________
Thomas E. Gardner
President and Chief Executive Officer
Attest:
WILLIAM F. HACKETT
By:______________________________
William F. Hackett
Secretary
<PAGE>
APPENDIX A
RESOLUTIONS
1. RESOLVED, that the Board hereby approves the cancellation of 3,600
shares of the Company's Convertible Preferred Shares, Series A,
reacquired by the Company by the conversion thereof, and the reduction
of the authorized number of Preferred Shares from 997,800.9375 to
994,200.9375, and the reduction of the authorized number of Convertible
Preferred Shares, Series A, from 18,177.734375 to 14,577.734375; and be
it
FURTHER RESOLVED, that Article 6(a) of the Certificate of Incorporation
of the Company be amended to read, in its entirety, as follows:
"(a) This corporation is authorized to issue three classes of shares of
stock to be designated "Class A Common," "Class B Common," and
"Preferred." The total number of shares that this corporation is
authorized to issue is 62,994,200.9375 and the aggregate par value of
all such shares is $62,994,200.9375. Sixty million of the shares shall
be Class A Common shares of a par value of $1.00 each. Two million of
the shares shall be Class B Common shares of a par value of $1.00 each.
994,200.9375 of the shares shall be Preferred shares of a par value of
$1.00 each."
2. WHEREAS, 3,600 shares of the Company's Convertible Preferred Shares,
Series A, have been canceled, thereby reducing the authorized number of
Preferred Shares from 997,800.9375 to 994,200.9375 and reducing the
authorized number of Convertible Preferred Shares, Series A, by 3,600
shares; and
WHEREAS, the Board proposes to pay dividends due on December 31, 1998
on the Company's Convertible Preferred Shares, Series A, in Convertible
Preferred Shares, Series A, in accordance with Article 6, Section C(1)
of the Certificate of Incorporation, which would have the effect of
increasing the authorized number of Convertible Preferred Shares,
Series A, by 364.443359375 shares; and
WHEREAS, the net effect of (i) canceling 3,600 shares of the
Convertible Preferred Shares, Series A, and the related reduction in
the authorized number of Convertible Preferred Shares, Series A, and
(ii) paying dividends on the Convertible Preferred Shares, Series A, in
364.443359375 shares thereof and the related increase in the authorized
number of Preferred Shares, Series A, is the decrease of the authorized
number of Convertible Preferred Shares, Series A, from 18,177.734375 to
14,942.17773437 shares; and be it
RESOLVED, that the Board hereby approves the payment of dividends due
on December 31, 1998 on the Company's Convertible Preferred Shares,
Series A, payable in Convertible Preferred Shares, Series A, in
accordance with Article 6, Section C(1) of the Certificate of
Incorporation, and the increase in the authorized number of Convertible
Preferred Shares, Series A, by 364.443359375 shares; and be it
FURTHER RESOLVED, that Article 6(d)(A) of the Certificate of
Incorporation of the Company be amended to read, in its entirety, as
follows:
"(d) A. Designation and Amount. The shares of this series of Preferred
Shares shall be designated as "Convertible Preferred Shares, Series A"
and the number of shares constituting such series shall be
14,942.17773437, with a par value of $1.00 per share. Fractional
Preferred Shares shall be permitted. The number of Preferred Shares may
be increased, subject to and in accordance with the New Jersey Business
Corporation Act, without approval of the existing holders of Preferred
Shares, solely for the purposes of issuance pursuant to Section C(1)
hereof."
3. RESOLVED, that the Board hereby authorizes, directs and empowers each
of Thomas E. Gardner and William F. Hackett, to act individually or
jointly on behalf of the Company to execute and deliver the amendment
to the Certificate of Incorporation of the Company to effect the
foregoing resolutions.
EXCHANGE AGREEMENT
EXCHANGE AGREEMENT (this "Agreement"), dated as of December 31, 1998,
by and among Base Ten Systems, Inc., a New Jersey corporation (the "Company"),
and the holders of the Series A Preferred Shares (as defined below), set forth
on the signature pages hereto (the "Holders").
WHEREAS:
A. The Company and the Holders are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 under Regulation D ("Regulation D") as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 Act");
B. The Company and the Holders entered into a Securities Purchase
Agreement, dated as of December 4, 1997 (the "Purchase Agreement"), pursuant to
which the Holders (i) purchased the Company's Convertible Preferred Shares,
Series A (the "Series A Preferred Shares"), which are convertible into Class A
Common Shares, $1.00 par value per share, of the Company (the "Common Stock"),
upon the terms and subject to the limitations and conditions set forth in the
Certificate of Amendment of Restated Certificate of Incorporation Providing for
Designation, Preferences and Rights of the Convertible Preferred Shares, Series
A (the "Series A Certificate of Designation") and (ii) in consideration for the
purchase of the Series A Preferred Shares, received Class A Common Stock
Purchase Warrants to purchase shares of Common Stock (the "Series A Warrants");
C. In connection with the Purchase Agreement, the Company and the
Holders entered into a Registration Rights Agreement, dated as of December 4,
1997 (the "Registration Rights Agreement");
D. The Company has authorized a new series of preferred stock,
designated as Series B Convertible Preferred Stock (together with any Series B
Preferred Stock issued in replacement thereof or as a dividend thereon or
otherwise with respect thereto in accordance with the terms thereof, the "Series
B Preferred Shares"), having the rights, preferences and privileges set forth in
the Certificate of Amendment of Restated Certificate of Incorporation Providing
for Designation, Preferences and Rights of the Convertible Preferred Shares,
Series B, attached hereto as Exhibit "A" (the "Series B Certificate of
Designation"), which are convertible into shares of Common Stock upon the terms
and subject to the limitations and conditions set forth in the Series B
Certificate of Designation (the "Conversion Shares");
E. The Company has authorized the issuance to the Holders of additional
Class A Common Stock Purchase Warrants, in the form attached hereto as Exhibit
"B", to purchase shares of Common Stock (the "Additional Warrants");
F. The Company desires to amend the terms of the Series A Warrants in
accordance with the terms of this Agreement by issuing new warrants, in the
forms attached hereto as Exhibit "B" and Exhibit "C", containing such amended
terms in exchange for the outstanding Series A Warrants (collectively, the
"Amended Warrants" and together with the Additional Warrants, the "Warrants").
The shares of Common Stock issuable upon exercise of the Warrants are referred
to herein as the "Warrant Shares";
G. The Company desires to (i) have each Holder exchange the number of
Series A Preferred Shares identified on the signature pages hereto as being held
by such Holder and all Series A Preferred Shares hereafter issued to such
Holders, for Series B Preferred Shares, (ii) amend the terms of certain of the
outstanding Series A Warrants held by each Holder by issuing to each Holder a
number of Amended Warrants, in the form attached hereto as Exhibit "B," equal to
the number of Series A Warrants received by the Holders in consideration for the
purchase of the Series A Preferred Shares being exchanged for Series B Preferred
Shares and for certain Series A Preferred Shares held and thereafter converted
prior to the date hereof, (iii) amend the terms of certain of the outstanding
Series A Warrants held by each Holder by issuing to each Holder a number of
Amended Warrants, in the form attached hereto as Exhibit "C," equal to the
number of Series A Warrants held by the Holders but not included in clause (ii)
of this Recital G, and (iv) issue to each Holder Additional Warrants, each upon
the terms and conditions stated in this Agreement;
H. Each Holder wishes to (i) exchange the number of Series A Preferred
Shares identified on the signature pages hereto as being held by such Holder and
all Series A Preferred Shares hereafter issued to such Holders, for Series B
Preferred Shares, (ii) amend the terms of the Series A Warrants held by such
Holder on the Closing Date (as defined below) by exchanging such Series A
Warrants for an equal number of Amended Warrants, and (iii) receive a number of
Additional Warrants, each upon the terms and conditions stated in this
Agreement;
I. All capitalized terms used but not defined in this Agreement shall
have the meanings ascribed to them in either the Purchase Agreement, the Series
A Certificate of Designation or the Registration Rights Agreement. The Series B
Preferred Shares, the Warrants, the Conversion Shares and the Warrant Shares are
collectively referred to herein as the "Securities".
NOW THEREFORE, the Company and each of the Holders severally (and not
jointly) hereby agree as follows:
1. EXCHANGE OF SERIES A PREFERRED SHARES FOR SERIES B
PREFERRED SHARES; AMENDMENT OF WARRANTS; AND ISSUANCE OF ADDITIONAL WARRANTS.
a. Exchange of Series A Preferred Shares for Series B
Preferred Shares. On the Closing Date (as defined below), (i) the Company shall
issue to each Holder a number of Series B Preferred Shares (or fractions
thereof) having an aggregate Purchase Price (as defined in the Series B
Certificate of Designation) equal to the Aggregate Exchange Value (as defined
herein) of the Series A Preferred Shares identified on the signature pages
hereto as being held by such Holder and (ii) each Holder shall deliver all of
such outstanding Series A Preferred Shares to the Company in exchange for such
number of Series B Preferred Shares determined in accordance with clause (i) of
this Section 1(a). For purposes hereof, the "Aggregate Exchange Value" of the
outstanding Series A Preferred Shares held by a Holder shall equal the sum of
(x) the aggregate Purchase Price (as defined in the Series A Certificate of
Designation) of such Series A Preferred Shares, plus (y) any accrued and unpaid
dividends on such Series A Preferred Shares through the Closing Date, plus (z)
any accrued and unpaid Illiquidity Payments, Conversion Default Payments, Late
Registration Payments, Delay Compensation and Delisting Payments (as each such
term is defined in the Series A Certificate of Designation) with respect to such
Series A Preferred Shares through the Closing Date.
b. Amendment of the Series A Warrants by Issuance of
the Amended Warrants. On the Closing Date (as defined below), (i) the Company
shall amend 40,000 Series A Warrants for each 1,000 Series A Preferred Shares
(or a portion thereof for less than 1,000 shares) identified on the signature
pages hereto as being held by each Holder, hereafter issued to such Holder, and
held by such Holder on September 1, 1998 and thereafter converted at a Variable
Conversion Price (as defined in the Series A Certificate of Designation) of
$4.00 (or more) prior to November 9, 1998, by issuing to each Holder
certificates representing the number of Amended Warrants, in the form attached
hereto as Exhibit "B", equal to the number of such Series A Warrants exchanged
by such Holder and (ii) the Company shall amend all other Series A Warrants held
by each Holder which are not included in clause (i) of this Section (1)(b), by
issuing to each Holder certificates representing the number of Amended Warrants,
in the form attached hereto as Exhibit "C", equal to the number of such Series A
Warrants exchanged by such Holder. Each Holder shall surrender all Series A
Warrants then held by such Holder in exchange for certificates representing an
equal number of Amended Warrants in the form attached hereto as Exhibit "B" or
Exhibit "C", as applicable.. The certificates for the Amended Warrants, which
shall be in the form attached hereto as Exhibit "B", shall contain the same
terms as the Series A Warrants but shall include the following amendments:
(i) The Exercise Price (as defined in the
Series A Warrants) shall be reduced from $16.25 to $3.00;
(ii) The Holder shall be permitted to effect
a Cashless Exercise pursuant to Section 1(b) of the Series A Warrants only when
(x) the prospectus included in the Registration Statement (as defined herein)
includes an untrue statement of material fact or omits to state a material fact
required to be stated therein or necessary to make the statement therein, in
light of the circumstances under which they were made, not misleading, or (y)
sales cannot be made pursuant to the Registration Statement in compliance with
the securities laws for any other reason; and
(iii) The Company shall be entitled on any
day occurring on or after the first anniversary of the Closing Date on which the
Closing Bid Price (as defined in the Series B Certificate of Designation) of the
Common Stock on each trading day during the twenty (20) consecutive trading day
period ending on the trading day immediately preceding such date (such twenty
(20) consecutive trading day period being referred to herein as the "Calculation
Period") is equal to or greater than $4.00 per share, to deliver a written
notice to the Holder requiring such Holder to exercise the Amended Warrants in
accordance with the terms thereof on the date which is ten (10) trading days
following the date of such notice (the "Exercise Date"); provided, however, that
the Company shall have such right if and only if (x) for a period of thirty (30)
consecutive trading days prior to the beginning of such Calculation Period and
(y) at all times during such Calculation Period and continuing through the
Exercise Date, the Warrant Shares are (1) authorized and reserved for issuance,
(2) listed for trading on each principal exchange or market on which the shares
of Common Stock of the Company were then traded and (3) registered for resale
pursuant to an effective registration statement under the 1933 Act; provided,
further, however, that the Holder shall not be required to exercise the Amended
Warrants with respect to any such notice unless the Closing Bid Price of the
Common Stock on the trading day immediately preceding the Exercise Date is at
least equal to $3.90 and the aggregate of cash (and cash equivalents) as shown
on the most recent balance sheet of the Company filed by the Company with the
Securities and Exchange Commission pursuant to Section 15 (d) of the Securities
Exchange Act of 1934, is less than $5,000,000.
The certificates for the Amended Warrants,
which shall be in the form attached hereto as Exhibit "C", shall contain the
same terms as the Series A Warrants but shall be amended to provide that in the
event the Holder thereof is also the Holder of Amended Warrants in the form
attached hereto as Exhibit "B", and the Company shall be entitled under the
terms thereof to deliver a written notice to the Holder requiring such Holder to
exercise such Amended Warrants in the form attached hereto as Exhibit "B", and
the Company gives such notice, and the conditions to require such exercise have
been met, then the Exercise Price for such Amended Warrants in the form attached
hereto as Exhibit "C" shall thereafter equal the lesser of (i) the Exercise
Price then in effect under such Amended Warrants in the form attached hereto as
Exhibit "C" and (ii) the Closing Bid Price of the Common Stock on the trading
day immediately preceding the Exercise Date with respect to the Amended Warrants
in the form attached hereto as Exhibit "B."
c. Issuance of Additional Warrants. On the Closing
Date (as defined below), the Company shall issue to each Holder Forty Thousand
(40,000) Additional Warrants for each One Million Dollars ($1,000,000) of
Aggregate Exchange Value (or a portion thereof for less than $1,000,000) of
Series A Preferred Shares being exchanged by such Holder on the Closing Date or
held by such Holder on September 1, 1998 and thereafter converted at a Variable
Conversion Price (as defined in the Series A Certificate of Designation) of
$4.00 (or more) prior to November 9, 1998. The Additional Warrants shall be
identical to the Amended Warrants in the form attached hereto as Exhibit "B"
except that the term of the Additional Warrants shall be four years from the
date of issuance of the Additional Warrants.
d. Closing Date. Subject to the satisfaction (or
waiver) of the conditions thereto set forth in Section 6 and Section 7 below,
the date and time of the exchange of the Series A Preferred Shares and Series A
Warrants and issuance of the Series B Preferred Shares, the Amended Warrants and
the Additional Warrants pursuant to this Agreement (the "Closing Date") shall be
12:00 noon Eastern Standard Time within five (5) business days after the date on
which the conditions set forth in Sections 7(i) and 7(j) are met or such other
mutually agreed upon time; provided that the Closing (as defined herein) shall
occur no later than March 15, 1999. The closing of the transactions contemplated
by this Agreement (the "Closing") shall occur on the Closing Date at the offices
of the Company, One Electronics Drive, Trenton, New Jersey 08619, or at such
other location as may be agreed to by the parties.
2. HOLDERS' REPRESENTATIONS AND WARRANTIES. Each Holder
severally (and not jointly) represents and warrants to the Company solely as to
such Holder that:
a. Authorization; Enforcement. This Agreement has
been duly and validly authorized. This Agreement has been duly executed and
delivered on behalf of the Holder, and this Agreement constitutes a valid and
binding agreement of the Holder enforceable in accordance with its terms.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Holder that:
a. Organization and Qualification. The Company and
each of its subsidiaries, if any, is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated, with full power and authority (corporate and other) to own, lease,
use and operate its properties and to carry on its business as and where now
owned, leased, used, operated and conducted. The Company and each of its
subsidiaries is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which its ownership or use of property or
the nature of the business conducted by it makes such qualification necessary
except where the failure to be so qualified or in good standing would not have a
Material Adverse Effect. "Material Adverse Effect" means any material adverse
effect on (i) the Securities, (ii) the business, operations, assets, financial
condition or prospects of the Company and its subsidiaries, if any, taken as a
whole, or (iii) on the transactions contemplated hereby or by the agreements or
instruments to be entered into in connection herewith.
b. Authorization; Enforcement. (i) The Company has
all requisite corporate power and authority to file and perform its obligations
under the Series B Certificate of Designation and to enter into and perform this
Agreement and the Warrants and to consummate the transactions contemplated
hereby and thereby and to issue the Securities, in accordance with the terms
hereof and thereof, (ii) the execution and delivery of this Agreement and the
Warrants by the Company and the consummation by it of the transactions
contemplated hereby and thereby (including without limitation, the issuance of
the Series B Preferred Shares and the Warrants and the issuance and reservation
for issuance of the Conversion Shares and Warrant Shares issuable upon
conversion or exercise thereof) have been duly authorized by the Company's Board
of Directors and no further consent or authorization of the Company, its Board
of Directors, or its shareholders, including any approval required by Rule
4460(i) of the National Association of Securities Dealers, Inc., is required
(other than the approval of the holders of Series A Preferred Shares effected
pursuant to Section 8(e)(i) hereof), (iii) this Agreement has been duly executed
and delivered by the Company, and (iv) this Agreement constitutes, and upon
execution and delivery by the Company of the Warrants and the execution and
filing of the Series B Certificate of Designation, each of such agreements and
instruments will constitute, a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms.
c. Issuance of Shares. The Series B Preferred Shares,
upon issuance in accordance with the terms of this Agreement, will be duly
authorized and validly issued, fully paid and non-assessable, and free from all
taxes, liens, claims and encumbrances with respect to the issue thereof and
shall not be subject to preemptive rights or other similar rights of
shareholders of the Company and will not impose personal liability upon the
holder thereof. The Conversion Shares and Warrant Shares are duly authorized and
reserved for issuance, and, upon conversion of the Series B Preferred Shares and
exercise of the Warrants in accordance with the terms thereof, will be validly
issued, fully paid and non-assessable, and free from all taxes, liens, claims
and encumbrances and will not be subject to preemptive rights or other similar
rights or shareholders of the Company and will not impose personal liability
upon the holder thereof.
d. Series of Preferred Shares. The terms,
designations, powers, preferences and relative, participating and optional or
special rights, and the qualifications, limitations and restrictions of each
series of preferred stock of the Company (other than the Series B Preferred
Shares) are as stated in the Certificate of Incorporation, filed on or prior to
the date hereof, and the Bylaws. The terms, designations, powers, preferences
and relative, participating and optional or special rights, and the
qualifications, limitations and restrictions of the Series B Preferred Shares
are as stated in the Series B Certificate of Designation.
e. No Conflicts. The execution, delivery and
performance of this Agreement and the Warrants by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
(including, without limitation, the filing of the Series B Certificate of
Designation and the issuance and reservation for issuance of the Conversion
Shares and Warrant Shares) will not (i) conflict with or result in a violation
of any provision of the Certificate of Incorporation or By-laws (each as defined
in the Purchase Agreement) or (ii) violate or conflict with, or result in a
breach of any provision of, or constitute a default (or an event which with
notice or lapse of time or both could become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture, patent, patent license or instrument to which the Company
or any of its subsidiaries is a party, or (iii) result in a violation of any
law, rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations and regulations of any self-regulatory
organizations to which the Company or its securities are subject) applicable to
the Company or any of its subsidiaries or by which any property or asset of the
Company or any of its subsidiaries is bound or affected (except for such
conflicts, defaults, terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect). Neither the Company nor any of its subsidiaries is in violation
of its Certificate of Incorporation, By-laws or other organizational documents
and neither the Company nor any of its subsidiaries is in default (and no event
has occurred which with notice or lapse of time or both could put the Company or
any of its subsidiaries in default) under, and neither the Company nor any of
its subsidiaries has taken any action or failed to take any action that would
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its subsidiaries is a party or by which any property or assets of the
Company or any of its subsidiaries is bound or affected, except for possible
defaults as would not, individually or in the aggregate, have a Material Adverse
Effect. The businesses of the Company and its subsidiaries, if any, are not
being conducted, and shall not be conducted so long as a Holder owns any of the
Securities, in violation of any law, ordinance or regulation of any governmental
entity. Except as specifically contemplated by this Agreement and as required
under the 1933 Act and any applicable state securities laws, the Company is not
required to obtain any consent, authorization or order of, or make any filing or
registration with, any court, governmental agency, regulatory agency, self
regulatory organization or stock market or any third party in order for it to
execute, deliver or perform any of its obligations under this Agreement, or the
Warrants in accordance with the terms hereof or thereof or to issue the Series B
Preferred Shares and Warrants in accordance with the terms hereof and to issue
the Conversion Shares upon conversion of the Series B Preferred Shares and the
Warrant Shares upon exercise of the Warrants. All consents, authorizations,
orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the date hereof. The Company is not in violation of the continued listing
requirements of the Nasdaq National Market ("Nasdaq") and does not reasonably
anticipate that the Common Stock will be delisted by the Nasdaq in the
foreseeable future. The Company and its subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.
f. Disclosure. All information relating to or
concerning the Company or any of its subsidiaries set forth in this Agreement
and provided to the Holders in connection with the transactions contemplated
hereby is true and correct in all material respects and the Company has not
omitted to state any material fact necessary in order to make the statements
made herein or therein, in light of the circumstances under which they were
made, not misleading. No event or circumstance has occurred or exists with
respect to the Company or any of its subsidiaries or its or their business,
properties, prospects, operations or financial conditions, which, under
applicable law, rule or regulation, requires public disclosure or announcement
by the Company but which has not been so publicly announced or disclosed
(assuming for this purpose that the Company's reports filed under the 1934 Act
(as defined in the Purchase Agreement) are being incorporated into an effective
registration statement filed by the Company under the 1933 Act).
g. Acknowledgment Regarding Holders' Purchase of
Securities. The Company acknowledges and agrees that the Holders are acting
solely in the capacity of arm's length purchasers with respect to this Agreement
and the transactions contemplated hereby. The Company further acknowledges that
no Holder is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any statement made by any Holder or any of their
respective representatives or agents in connection with this Agreement and the
transactions contemplated hereby is not advice or a recommendation and is merely
incidental to the Holders' purchase of the Securities. The Company further
represents to each Holder that the Company's decision to enter into this
Agreement has been based solely on the independent evaluation of the Company and
its representatives.
h. No Integrated Offering. Neither the Company, nor
any of its affiliates, nor any person acting on its or their behalf, has
directly or indirectly made any offers or sales in any security or solicited any
offers to buy any security under circumstances that would require registration
under the 1933 Act of the issuance of the Securities to the Holders. The
issuance of the Securities to the Holders will not be integrated with any other
issuance of the Company's securities (past, current or future) for purposes of
any shareholder approval provisions applicable to the Company or its securities
other than the issuance of the Series A Preferred Shares.
i. Recent Sale of Common Stock. After November 9,
1998, the Company issued, in a private placement, 6,666,666 shares of its Common
Stock for an aggregate of $19,999,998, together with the issuance of warrants to
purchase 1,000,000 shares of Common Stock at an exercise price of $3.00 per
share.
4. COVENANTS.
a. Best Efforts. The parties shall use their best
efforts to satisfy timely each of the conditions described in Sections 6 and 7
of this Agreement.
b. Additional Equity Capital. Subject to the
exceptions described below, during the Lock-up Period (as defined below) the
Company will not, without the prior written consent of a majority-in-interest of
the Holders, negotiate or contract with any party to obtain additional equity
financing (including debt financing with an equity component) that involves (A)
the issuance of Common Stock at a discount to the market price of the Common
Stock on the date of issuance (taking into account the value of any warrants or
options to acquire Common Stock issued in connection therewith) or (B) the
issuance of convertible securities that are convertible into an indeterminate
number of shares of Common Stock or (C) the issuance of Common Stock upon the
conversion of a security convertible into, or exercisable for, Common Stock
based on a conversion or exercise price which was fixed at the time of issuance
of the security being converted or exercised at a discount to the market price
of the Common Stock on the date of issuance of such convertible or exercisable
security (the limitations referred to in this sentence are collectively referred
to as the "Capital Raising Limitations"). The "Lock-up Period" is the period
beginning on the date hereof and ending three hundred sixty-five (365) days from
the Closing Date (plus any days in which sales cannot be made under the
Registration Statement (as defined below)). The Capital Raising Limitations
shall not apply to any transaction involving (i) issuances of securities in a
firm commitment underwritten public offering (excluding a continuous offering
pursuant to Rule 415 under the 1933 Act), (ii) issuances of securities as
consideration for a merger, consolidation or purchase of assets, or in
connection with any strategic partnership or joint venture (the primary purpose
of which is not to raise equity capital), or in connection with the disposition
or acquisition of a business, product or license by the Company, or (iii) the
issuance of Common Stock upon the conversion of a security convertible into or
exercised for, Common Stock based on a conversion or exercise price which was
fixed at the time of issuance of the security being converted or exercised at a
price equal to or greater than the market price of the Common Stock on the date
of issuance of such convertible or exercisable security. The Capital Raising
Limitations also shall not apply to the issuance of securities upon exercise or
conversion of the Company's options, warrants or other convertible securities
outstanding as of the date hereof or to the grant of additional options or
warrants, or the issuance of additional securities, under any Company stock
option or restricted stock plan approved by the shareholders of the Company.
c. Expenses. Each of the parties to this Agreement
shall bear their own expenses.
d. Reservation of Shares. The Company shall at all
times have authorized, and reserved for the purpose of issuance, a sufficient
number of shares of Common Stock to provide for the full conversion or exercise
of the outstanding Series B Preferred Shares and Warrants and issuance of the
Conversion Shares and Warrant Shares in connection therewith (based on the
Conversion Price of the Series B Preferred Shares or Exercise Price of the
Warrants in effect from time to time). The Company shall not reduce the number
of shares of Common Stock reserved for issuance upon conversion of Series B
Preferred Shares and exercise of the Warrants without the consent of each Holder
then owning any shares of Series B Preferred Shares or Warrants. The Company
shall use its best efforts at all times to maintain the number of shares of
Common Stock so reserved for issuance at no less than the number that is then
actually issuable upon full conversion of the Series B Preferred Shares and
exercise of the Warrants (based on the Conversion Price of the Series B
Preferred Shares or Exercise Price of the Warrants in effect from time to time).
If at any time the number of shares of Common Stock authorized and reserved for
issuance is below the number of Conversion Shares and Warrant Shares issued and
issuable upon conversion of the Series B Preferred Shares and exercise of the
Warrants (based on the Conversion Price of the Series B Preferred Shares or
Exercise Price of the Warrants then in effect), the Company will promptly take
all corporate action necessary to authorize and reserve a sufficient number of
shares, including, without limitation, calling a special meeting of shareholders
to authorize additional shares to meet the Company's obligations under this
Section 4(d), in the case of an insufficient number of authorized shares, and
using its best efforts to obtain shareholder approval of an increase in such
authorized number of shares.
e. No Integration. The Company shall not make any
offers or sales of any security (other than the Securities) under circumstances
that would require registration of the Securities being offered or sold
hereunder under the 1933 Act or cause the offering of Securities to be
integrated with any other offering of securities by the Company for the purpose
of any shareholder approval provision applicable to the Company or its
securities.
f. Integration of Certain Covenants of the Purchase
Agreement. The agreements and covenants set forth in Sections 2.6, 2.7, 4.2,
4.3, 4.4, 4.5 and 4.6 and Article V of the Purchase Agreement shall be
incorporated herein and shall be applicable as if the terms "Securities",
"Preferred Shares", "Warrants," "Common Shares" and "Warrant Shares" set forth
in the Purchase Agreement are deemed to include the Securities, Series B
Preferred Shares, Warrants, Common Shares and Warrant Shares, respectively.
References in such sections of the Purchase Agreement to the "Agreement" shall
be deemed to mean this Agreement.
5. REGISTRATION RIGHTS.
a. Registration Rights. On or before January 13,
1999, the Company shall file a registration statement (the "Registration
Statement") with the Securities and Exchange Commission (the "SEC") covering the
resale by the Holders of (i) the Conversion Shares issuable upon conversion of
the Series B Preferred Shares and (ii) the Warrant Shares issuable upon exercise
of the Warrants.
b. Incorporation of Registration Rights Agreement.
The terms, rights and obligations set forth in the Registration Rights Agreement
shall be incorporated herein subject to the following amendments:
(i) The term "Registrable Securities" shall
be deemed to include (i) the Conversion Shares issuable upon conversion of the
Series B Preferred Shares, (ii) the Warrant Shares issuable upon exercise of the
Warrants and (iii) the Common Stock issued upon conversion of the Series A
Preferred Shares;
(ii) The time periods required for filing
the Registration Statement and the Required Effective Date (as defined in the
Registration Rights Agreement) set forth in Section 2(a) of the Registration
Rights Agreement shall not apply to the Registration Statement and the number of
shares of Common Stock initially included in the Registration Statement shall be
no less than the sum of (i) 1.5 times the number of Conversion Shares and (ii)
the number of Warrant Shares, as determined on the date of filing of the
Registration Statement (assuming, for purposes of such determination, that such
date of filing is the Closing Date such that all of the Amended Warrants and
Additional Warrants have been issued and all of the Series A Preferred Shares
then outstanding have been exchanged for Series B Preferred Shares); and
(iii) Section 2(b) of the Registration
Rights Agreement shall not apply to the Registrable Securities.
c. Acknowledgement Regarding Registration of Common
Stock Underlying Series A Preferred Shares. The shares of Common Stock issued
upon conversion of the Series A Preferred Shares are registered under the
Company's Registration Statement on Form S-3, File No. 333-46095. The Company
acknowledges that it is obligated to keep such Registration Statement effective
and to keep such shares registered until the earlier of (i) the date on which
all of such shares have been sold, or (ii) the date on which such shares may be
immediately sold without registration pursuant to Rule 144(k) under the 1933
Act.
6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The
obligation of the Company hereunder to exchange the Series A Preferred Shares
for the Series B Preferred Shares, to amend the Series A Warrants by issuance of
the Amended Warrants and to issue the Additional Warrants to a Holder at the
Closing is subject to the satisfaction, at or before the Closing Date of each of
the following conditions thereto, provided that these conditions are for the
Company's sole benefit and may be waived by the Company at any time in its sole
discretion:
a. The applicable Holder shall have executed this
Agreement and delivered the same to the Company.
b. The applicable Holder shall have delivered Series
A Preferred Shares and Series A Warrants in accordance with Section 1 above.
c. The Series B Certificate of Designation shall have
been accepted for filing with the Secretary of State of the State of New Jersey.
d. The representations and warranties of the
applicable Holder shall be true and correct in all material respects as of the
date when made and as of the Closing Date as though made at that time (except
for representations and warranties that speak as of a specific date), and the
applicable Holder shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the applicable Holder
at or prior to the Closing Date.
e. No litigation, statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by or in any court or governmental authority of
competent jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this Agreement.
7. CONDITIONS TO EACH HOLDER'S OBLIGATION TO PURCHASE. The
obligation of each Holder hereunder to exchange the Series A Preferred Shares
for the Series B Preferred Shares, and to exchange the Series A Warrants for the
Amended Warrants at the Closing is subject to the satisfaction, at or before the
Closing Date of each of the following conditions, provided that these conditions
are for such Holder's sole benefit and may be waived by such Holder at any time
in its sole discretion:
a. The Company shall have executed this Agreement and
delivered the same to the Holder.
b. The Company shall have delivered to such Holder
duly executed certificates (in such denominations as the Holder shall request)
representing the Series B Preferred Shares, Additional Warrants and Amended
Warrants in accordance with Section 1 above.
c. The Series B Certificate of Designation shall have
been accepted for filing with the Secretary of State of the State of New Jersey,
and a copy thereof certified by such Secretary of State shall have been
delivered to such Holder.
d. The Irrevocable Transfer Agent Instructions (as
defined in the Purchase Agreement), in form and substance satisfactory to a
majority-in-interest of the Holders, shall have been delivered to and
acknowledged in writing by the Company's transfer agent.
e. The representations and warranties of the Company
set forth in this Agreement shall be true and correct in all material respects
as of the date when made and as of the Closing Date as though made at such time
and the Company shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this
Agreement to be performed (including those incorporated herein by reference to
the Purchase Agreement), satisfied or complied with by the Company at or prior
to the Closing Date. The representations and warranties of the Company set forth
in Sections 3.3, 3.6, 3.7, 3.8, 3.11, 3.15, 3.16, 3.17, 3.18, 3.19, 3.20 and
3.21 of the Purchase Agreement shall be true and correct in all material
respects as of the Closing Date as though made at such time and shall be
applicable as if the terms "Securities", "Preferred Shares", "Warrants", "Common
Shares" and "Warrant Shares" set forth in the Purchase Agreement are deemed to
include the Securities, Series B Preferred Shares, Warrants, Common Shares and
Warrant Shares, respectively and any references to "Agreement" in such sections
shall be deemed to mean this Agreement. References in such sections of the
Purchase Agreement to "SEC Documents" shall be deemed to refer to reports filed
by the Company with the Securities and Exchange Commission after January 1,
1998. The Holder shall have received a certificate or certificates, executed by
the chief executive officer of the Company, dated as of the Closing Date, to the
foregoing effect and as to such other matters as may be reasonably requested by
such Holder including, but not limited to certificates with respect to the
Company's Certificate of Incorporation, By-laws and Board of Directors'
resolutions relating to the transactions contemplated hereby.
f. No litigation, statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by or in any court or governmental authority of
competent jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this Agreement.
g. The Conversion Shares and the Warrant Shares shall
have been authorized for quotation on Nasdaq and trading in the Common Stock on
Nasdaq shall not have been suspended by the SEC or Nasdaq.
h. The Holder shall have received an opinion of the
Company's counsel, dated as of the Closing Date, in form, scope and substance
reasonably satisfactory to the Holder and in substantially the same form as
Exhibit "D" attached hereto.
i. The Registration Statement filed by the Company
pursuant to Article V covering the resale of the Registrable Securities
underlying the Series B Preferred Shares and the Warrants shall be effective and
no stop order shall have been issued in respect thereof.
j. The Holders of $10,000,000 of the Company's 9.01%
Convertible Subordinated Debentures (the "Debentures") have exchanged the
Debentures for Two Million Five Hundred Thousand (2,500,000) shares of Common
Stock, or shall have executed and delivered to the Company an effective
irrevocable direction for such exchange effective upon the exchange of the
Series A Preferred Shares for the Series B Preferred Shares, and the exchange of
the Series A Warrants for the Amended Warrants.
8. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law. This Agreement shall be governed by
and interpreted in accordance with the laws of the State of New York without
regard to the principles of conflict of laws. The parties hereto hereby submit
to the exclusive jurisdiction of the United States Federal Courts located in
Borough of Manhattan in the State of New York with respect to any dispute
arising under this Agreement, the agreements entered into in connection herewith
or the transactions contemplated hereby or thereby.
b. Counterparts; Signatures by Facsimile. This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party.
This Agreement, once executed by a party, may be delivered to the other party
hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
c. Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
d. Severability. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction.
e. Consents to Transaction. Subject to the Closing of
the transactions contemplated by this Agreement, the Holders consent to (i) the
creation, establishment and issuance of the Series B Preferred Shares in
accordance with the terms hereof; (ii) the exchange or conversion of the
Debentures for Two Million Five Hundred Thousand (2,500,000) shares of Common
Stock; (iii) the issuance of options to purchase Common Stock in accordance with
the 1998 Stock Option and Stock Award Plan, Employee Stock Purchase Plan and
1998 Director's Stock Award Plan of the Company as amended and approved by the
shareholders of the Company, and the issuance of Common Stock upon exercise of
such options.
f. Entire Agreement; Amendments. This Agreement and
the instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Holder
makes any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other than by
an instrument in writing signed by the party to be charged with enforcement.
g. Notices. Any notices required or permitted to be
given under the terms of this Agreement shall be sent by certified or registered
mail (return receipt requested) or delivered personally or by courier (including
a recognized overnight delivery service) or by facsimile and shall be effective
five days after being placed in the mail, if mailed by regular United States
mail, or upon receipt, if delivered personally or by courier (including a
recognized overnight delivery service) or by facsimile, in each case addressed
to a party. The addresses for such communications shall be:
If to the Company:
Base Ten Systems, Inc.
One Electronics Drive
Trenton, New Jersey 08619
Attention: Chief Executive Officer
Facsimile: (609) 586-1593
With copy to:
Pitney, Hardin, Kipp & Szuch
P.O. Box 1945
Morristown, New Jersey 07962
Facsimile: (973) 966-1550
Attention: Joseph Lunin
If to a Holder: To the address set forth immediately below such
Holder's name on the signature pages hereto.
Each party shall provide notice to the other parties of any change in
address.
h. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their successors and
assigns. Neither the Company nor any Holder shall assign this Agreement or any
rights or obligations hereunder without the prior written consent of the other.
Notwithstanding the foregoing, subject to Section 2.6 of the Purchase Agreement,
any Holder may assign its rights hereunder to any person that purchases
Securities in a private transaction from a Holder or to any of its "affiliates,"
as that term is defined under the 1934 Act, without the consent of the Company.
i. Third Party Beneficiaries. This Agreement is
intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.
j. Survival. The representations and warranties of
the Company and the agreements and covenants set forth in Sections 3, 4, 5 and 8
(including the covenants integrated from the Purchase Agreement pursuant to
Section 4(f) of this Agreement) shall survive the closing hereunder
notwithstanding any due diligence investigation conducted by or on behalf of the
Holders. The Company agrees to indemnify and hold harmless each of the Holders
and all their officers, directors, employees and agents for loss or damage
arising as a result of or related to any breach or alleged breach by the Company
of any of its representations, warranties and covenants set forth in Sections 3,
4 and 5 hereof (including the covenants integrated from the Purchase Agreement
pursuant to Section 4(f) of this Agreement) or any of its covenants and
obligations under this Agreement or the Registration Rights Agreement, including
advancement of expenses as they are incurred.
k. Publicity. The Company and each of the Holders
shall have the right to review a reasonable period of time before issuance of
any press releases, SEC, NASDAQ or NASD filings, or any other public statements
with respect to the transactions contemplated hereby; provided, however, that
the Company shall be entitled, without the prior approval of each of the
Holders, to make any press release or SEC, NASDAQ or NASD filings with respect
to such transactions as is required by applicable law and regulations (although
each of the Holders shall be consulted by the Company in connection with any
such press release prior to its release and shall be provided with a copy
thereof and be given an opportunity to comment thereon).
l. Further Assurances. Each party shall do and
perform, or cause to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
m. No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.
<PAGE>
IN WITNESS WHEREOF, the undersigned Holders and the Company
have caused this Agreement to be duly executed as of the date first above
written.
BASE TEN SYSTEMS, INC.
THOMAS E. GARDNER
By:-------------------------------------------
Name: Thomas E. Gardner
Title: Chairman and Chief Executive Officer
<PAGE>
Number of
Series A
Preferred
Shares held by
Holder.
ELARA LTD.
By: GEOFFREY TIRMAN 540.046875
--------------------------------
Geoffrey Tirman
Talisman Capital
President, Elara Ltd.
JMG CAPITAL PARTNERS,
LP.
By: JONATHAN GLASER 413.4453125
--------------------------------
Jonathan Glaser
President,
JMG Capital
Management, Inc.
General Partner
JMG Capital Partners,
L.P.
TRITON CAPITAL INVESTMENTS, LTD.
JONATHAN GLASER
By: 413.4453125
--------------------------------
Jonathan Glaser
RGC INTERNATIONAL
INVESTORS, LDC
By: Rose Glen Capital
Management, L.P.,
Investment Manager
By: RGC General Partner Corp.,
as General Partner
GARY S. KAMINSKY
--------------------------------
By: Gary S. Kaminsky 3,307.5625
Managing Director
<PAGE>
Number of
Series A
Preferred
Shares held by
Holder.
SHEPHERD INVESTMENTS
INTERNATIONAL, LTD.
MICHAEL A. ROTH
By: -------------------------------- 2,964.1171875
Name: Michael A. Roth
Managing Member,
Staro Asset
Management, LLC
Investment Manager
Shepherd Investments
International, Ltd.
STARK INTERNATIONAL
MICHAEL A. ROTH
By: -------------------------------- 2,964.1171875
Name: Michael A. Roth
Managing Member,
Staro Asset
Management, LLC
Investment Manager,
Stark International
SOCIETE GENERALE
FRANCOIS BARTHELEMY
By: --------------------------------
Francois Barthelemy
FVP
GUILLAUME POLLET
By: -------------------------------- 3,975
Guillaume Pollet
FVP
Exhibit A
BASE TEN SYSTEMS, INC.
CERTIFICATE OF AMENDMENT OF
RESTATED CERTIFICATE OF INCORPORATION
PROVIDING FOR DESIGNATION,
PREFERENCES AND RIGHTS OF THE
CONVERTIBLE PREFERRED SHARES, SERIES B
(Par Value $1.00 Per Share)
of
BASE TEN SYSTEMS, INC.
Base Ten Systems, Inc., a corporation (the "Corporation") organized
under the laws of the State of New Jersey, to amend its Restated Certificate of
Incorporation in accordance with Chapter 9 of the New Jersey Business
Corporation Act, hereby certifies:
FIRST: The name of the Corporation is Base Ten Systems, Inc.
SECOND: The Board of Directors of the Corporation, at a meeting held on
November 24, 1998, pursuant to Section 14A:7-2 of the New Jersey Business
Corporation Act and the authority vested in the Board of Directors by the
Restated Certificate of Incorporation, as amended, adopted the following
resolution providing for the issuance of a new series of the Corporation's
Preferred Shares, par value $1.00 per share, consisting of up to [exact initial
number of shares determined immediately prior to filing] shares of Convertible
Preferred Shares, Series B:
RESOLVED, that pursuant to the authority vested in
this Board of Directors in accordance with the provision of
the Corporation's certificate of incorporation, as amended, a
new series of Preferred Shares of the Corporation known as
Convertible Preferred Shares, Series B, be, and hereby is,
created, classified, authorized and the issuance thereof
provided for, and that the designation and number of shares,
and relative rights, preferences and imitations thereof are
hereby fixed, and Article 6 of the Certificate of
Incorporation of the Corporation, as amended, is hereby
amended by adding Article 6(e) thereto, to read, in its
entirety, as follows:
(e) A. Designation and Amount. The shares of this series of
Preferred Shares shall be designated as "Convertible Preferred Shares, Series B"
and the number of shares constituting such series shall be [exact initial number
of shares determined immediately prior to filing], with a par value of $1.00
per share. Fractional B Preferred Shares shall be permitted.
B. Definitions. As used in this Article 6(e), the
following terms shall have the following meanings.
"Article 6(e)" means this Subsection (e) of Article 6 of the
Certificate of Incorporation establishing the B Preferred Shares as the same may
be amended, supplemented or modified from time to time in accordance with the
terms hereof and pursuant to applicable law.
"B Preferred Shares" means the Convertible Preferred Shares, Series B.
"Board of Directors" means the board of directors of the Corporation.
"Business Day" means any day, other than a Saturday, a Sunday or a day
on which banking institutions in the City of New York, New York are authorized
or obligated by law or executive order to close.
"Capital Stock" means any and all shares, rights to purchase, warrants,
options, convertible securities, participation or other equivalents of or
interests (other than security interests) in (however designated and whether
voting or nonvoting) corporate stock.
"Conversion Default Payments" has the meaning set forth in Section H(2)
hereof.
"Closing Bid Price" means, for any security as of any date, the closing
bid price of such security on the principal securities exchange or trading
market where such security is listed or traded, as reported at the close of
normal trading hours, New York time, by Bloomberg Financial Markets or a
comparable reporting service of national reputation selected by the Corporation
and reasonably acceptable to holders of the B Preferred Shares then holding a
majority of the then outstanding B Preferred Shares ("Majority Holders") if
Bloomberg Financial Markets is not then reporting closing bid prices of such
security (collectively, "Bloomberg"), or if the foregoing does not apply, the
last reported sale price of such security in the over-the-counter market on the
electronic bulletin board of such security as reported by Bloomberg, or, if no
sale price is reported for such security by Bloomberg, the average of the bid
prices of any market makers for such security as reported in the "pink sheets"
by the National Quotation Bureau, Inc. If the Closing Bid Price cannot be
calculated for such security on such date on any of the foregoing bases, the
Closing Bid Price of such security on such date shall be the fair market value
as reasonably determined by an investment banking firm selected by the
Corporation and reasonably acceptable to the Majority Holders, with the costs of
such appraisal to be borne by the Corporation.
"Common Shares" means the Class A Common Shares, par value $1.00 per
share, of the Corporation and all shares hereafter authorized of any class of
Common Shares of the Corporation, and, in the case of a reclassification,
recapitalization or other similar change in such Common Shares or in the case of
a consolidation or merger of the Corporation with or into another Person, such
consideration to which a holder of a share of Common Shares would have been
entitled upon the occurrence of such event. Common Shares shall not include the
Corporation's Class B Common Shares, par value $1.00 per share.
"Conversion Date" has the meaning set forth in Section H(2) hereof.
"Conversion Notice" has the meaning set forth in Section H(2) hereof.
"Conversion Price" has the meaning set forth in Section H(1) hereof.
"Default Redemption Amount" has the meaning set forth in Section F(4)
hereof.
"Delay Compensation" has the meaning set forth in Section 3(f) of the
Registration Rights Agreement.
"Delisting Payments" has the meaning set forth in Section 4.5 of the
Securities Purchase Agreement.
"Dividend Payment Date" has the meaning set forth in Section C(1)
hereof.
"DTC" has the meaning set forth in Section H(11) hereof.
"Exchange Agreement" means that certain Exchange Agreement, dated as of
December XX, 1998, by and among the Corporation and all holders of the
Convertible Preferred Shares, Series A, a copy of which is on file in the
offices of the Corporation and available for inspection by shareholders of the
Corporation.
"Fiscal Quarter" means a calendar quarter ended on March 31, June 30,
September 30 or December 31, as the case may be.
"Five Percent Limitation" has the meaning set forth in Section H(1)
hereof.
"Illiquidity Payment" has the meaning set forth in Section C(1) hereof.
"Junior Stock" means Common Shares and any other class or series of
Capital Stock of the Corporation now or hereafter issued and outstanding that
ranks junior as to dividends and/or liquidation to the B Preferred Shares.
"Mandatory Redemption Price" has the meaning set forth in Section F(2)
hereof.
"Market Value" as of any date means the average Closing Bid Price of
Common Shares for the ten consecutive Trading Days ending on the date prior to
such date.
"Maturity Date" means December 15, 2000, [To be extended by the number
of days (if any) required to be added to the Series A Preferred Stock prior to
the Effective Date] provided, however, that such Maturity Date shall be extended
by a number of Trading Days equal to the aggregate number of Trading Days during
the period from the effective date of the Amendment to the Certificate of
Incorporation establishing the B Preferred Shares to and including the Maturity
Date during which the holders of B Preferred Shares are restricted from selling
Common Shares by reason of (x) Section 2(d) of the Registration Rights
Agreement, (y) any Delay Period(s) (as defined in Section 3(f) of the
Registration Rights Agreement), but only if the total number of days in any
Delay Period(s) within a twelve-month period exceed thirty (30) days, or (z) any
Redemption Event.
"NASDAQ" means the National Association of Securities Dealers Automated
Quotation System.
"Person" means an individual, a corporation, a partnership, a joint
venture, an association, a joint-stock company, a trust, a business trust, a
government or any agency or any political subdivision, any unincorporated
organization, or any other entity.
"Purchase Price" shall mean $1,000 per B Preferred Share.
"Redemption Date" means any date on which shares of B Preferred Shares
are to be redeemed pursuant to Section F hereof.
"Redemption Event" means any one of the following:
(i) the Common Shares (including any of the Common Shares
issuable upon conversion of the B Preferred Shares or required from time to time
to be reserved pursuant hereto) are suspended from trading on, or are not listed
(and authorized) for trading on, the NASDAQ Small Cap Market, the NASDAQ
National Market System, the American Stock Exchange, or the New York Stock
Exchange for an aggregate of thirty (30) Trading Days in any eighteen (18) month
period;
(ii) the Company fails at any time during the Registration
Period (as defined in the Registration Rights Agreement), to cause the holders
of B Preferred Shares to be able to utilize the Registration Statement required
to be filed pursuant to Section 5 of the Exchange Agreement for the resale of
all of their Registrable Securities (as defined in the Registration Rights
Agreement and the Exchange Agreement), unless the Company is using its best
efforts to remedy such inability to utilize such registration statement, subject
to the Company's Board of Directors having determined in their good faith
business judgment by resolution that the continued effectiveness of such
registration statement would have a material adverse effect on the Company's
ability to consummate a financing, acquisition, merger or joint venture, the
failure of which to consummate would have a material adverse effect on the
Company's financial condition, results of operations or future prospects;
provided that in no event shall such failure exist for a total of more than
thirty (30) Trading Days in any eighteen (18) month period;
(iii) The Company fails to (x) issue Common Shares to a holder
of the B Preferred Shares upon exercise by the holder of its conversion rights
in accordance with the terms hereof; (y) transfer or to cause its transfer agent
to transfer any certificate for Common Shares issued to a holder upon conversion
of the B Preferred Shares as and when required hereby, by the Exchange
Agreement, or by the Registration Rights Agreement; or (z) remove any
restrictive legend on any certificate for any Common Shares issued to a holder
of the B Preferred Shares upon conversion of the B Preferred Shares as and when
required hereby, by the Securities Purchase Agreement, by the Exchange
Agreement, or by the Registration Rights Agreement; and any such failure
described above shall continue uncured for ten (10) Business Days; or
(iv) The Corporation fails to pay to a holder of B Preferred
Shares any amounts due hereunder or pursuant to the Securities Purchase
Agreement, the Exchange Agreement, or the Registration Rights Agreement
(including but not limited to dividends, Illiquidity Payments, Conversion
Default Payments, and Delay Compensation thereon) when due and any such failure
shall continue uncured (after written notice and demand to cure from the holder
of B Preferred Shares) for ten (10) Business Days.
"Redemption Price" means the Optional Redemption Price, the Mandatory
Redemption Price or the Default Redemption Price, as the case may be, each of
which terms shall have the respective meanings set forth in Section F hereof.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of December 4, 1997 between the Corporation and the initial purchasers
of the Convertible Preferred Shares, Series A of the Corporation, as amended by
and incorporated by reference in the Exchange Agreement, a copy of which is on
file in the offices of the Corporation and available for inspection by
shareholders of the Corporation.
"Securities Purchase Agreement" means the Securities Purchase Agreement
dated as of December 4, 1997 between the Corporation and the initial purchasers
of the Convertible Preferred Shares, Series A, as amended by and incorporated by
reference in the Exchange Agreement, a copy of which is on file in the offices
of the Corporation and available for inspection by shareholders of the
Corporation.
"Trading Day" means, with respect to the Common Shares: (i) if any
series of Common Shares is quoted on the NASDAQ National Market System, any
similar system of automated dissemination of quotations of securities prices, or
the National Quotation Bureau Incorporated, each day on which quotations may be
made on such system; or (ii) if any series of Common Shares is listed or
admitted for trading on any national securities exchange, days on which such
national securities exchange is open for business; or (iii) if the Corporation's
Common Shares are not quoted on any system or listed or admitted for trading on
any securities exchange, a Business Day.
"Underwriter's Lock-Up" has the meaning set forth in Section 2(d) of
the Registration Rights Agreement.
C. Dividends and Certain Other Payments. The holders
of the B Preferred Shares shall be entitled to receive, when and as declared by
the Board of Directors, out of funds legally available therefor, dividends and
certain other payments as set forth in this Section C.
(1) If a holder of B Preferred Shares is subject to
an Underwriter's Lock-Up, that holder (but not any other holder) shall be
entitled to receive a payment (an "Illiquidity Payment") at the rate of $20.00
per Preferred Share for each Fiscal Quarter in which such event occurs or is
continuing. Illiquidity Payments shall be payable at the option of the Board of
Directors (x) in cash, or (y) if the Market Value is equal to, or in excess of,
$4.00, in a number of B Preferred Shares (which may include fractional B
Preferred Shares) equal to the product of (A) the cash amount of such
Illiquidity Payment, as the case may be, multiplied by (B) 1.25, divided by (C)
the Purchase Price per Preferred Share.
(2) The holders of B Preferred Shares shall be
entitled to participate with the holders of Common Shares in any dividends paid
or set aside for payment with respect to the Common Shares so that the holders
of B Preferred Shares shall receive with respect to each B Preferred Share an
amount equal to (x) the dividend payable with respect to each Common Share
multiplied by (y) the number of Common Shares (and fraction of a Common Share,
if any) into which such B Preferred Share is convertible as of the record date
for such dividend.
(3) Dividends and Illiquidity Payments shall accrue
(whether or not declared) from and including the first day of the relevant
Fiscal Quarter to and including the date on which the Redemption Price is paid
on such shares or on which such shares are converted or redeemed and, to the
extent not paid for any relevant Fiscal Quarter, will be cumulative. Dividends
and Illiquidity Payments on the B Preferred Shares, to the extent payable, shall
be payable quarterly, in arrears, on the last day of each relevant Fiscal
Quarter (each such date, a "Dividend Payment Date"), except that if any such
date is not a Business Day, then such dividend or Illiquidity Payment shall be
paid on the next succeeding Business Day. Each such dividend or Illiquidity
Payment shall be payable to holders of B Preferred Shares at the close of
business on the Dividend Payment Date. Dividends on the B Preferred Shares shall
accrue on a daily basis during the relevant quarterly period whether or not the
Corporation shall have earnings or surplus at the time.
D. Voting Rights. The holders of B Preferred Shares
shall have the following voting rights:
(1) Each holder of B Preferred Shares shall be
entitled to such number of votes for the B Preferred Shares held on all matters
submitted to a vote of the Corporation's shareholders as shall be equal to the
largest number of whole Common Shares into which all of the B Preferred Shares
held are then convertible (after giving effect to, and subject to, the Five
Percent Limitation, and any other then applicable limitations set forth in
Section (H)(1));
(2) Except as otherwise provided herein or by law,
the holders of B Preferred Shares, the holders of Common Shares, and the holders
of Class B Common Shares of the Corporation shall vote together as one class on
all matters submitted to a vote of the Corporation's shareholders.
(3) So long as any B Preferred Shares are
outstanding, the Corporation shall not, without first obtaining the approval of
the holders of two-thirds of the B Preferred Shares:
(i) alter or change the rights, preferences
or privileges of the B Preferred Shares;
(ii) issue any other class or series of
Capital Stock having rights upon liquidation or
rights as to dividends which are senior to or pari
passu with the rights of the holders of B Preferred
Shares; or
(iii) issue any additional B Preferred
Shares in excess of the B Preferred Shares issued
pursuant to the Exchange Agreement, other than any
additional B Preferred Shares which may be issued
pursuant to Section C(1) hereof.
E. Liquidation Preference. In the event of any
liquidation, dissolution, or winding up of the Corporation, either voluntary or
involuntary, after the payment or the setting apart of payment to the holders of
any class or series of Capital Stock of the Corporation hereafter issued and
outstanding that ranks senior as to dividends and/or liquidation to the B
Preferred Shares, the holders of B Preferred Shares shall be entitled to receive
out of assets of the Corporation available for distribution to shareholders, an
amount equal to the Mandatory Redemption Price of such shares, before any
payment shall be made or any assets distributed to the holders of Junior Stock.
If the assets and funds to be distributed to the holders of the B Preferred
Shares, and the holders of any other Capital Stock ranking pari passu with the B
Preferred Shares, shall be insufficient to permit the payment to all such
holders of their full preferential amount, the assets and funds legally
available shall be distributed ratably, among the holders of such other Capital
Stock ranking pari passu with the B Preferred Shares, in proportion to the full
preferential amount each such holder is otherwise entitled to receive. Neither
the consolidation or merger of the Corporation with or into any other entity nor
the sale or transfer by the Corporation of all or substantially all of its
assets shall, for the purposes hereof, be deemed to be a liquidation,
dissolution or winding up of the Corporation.
F. Redemption.
(1) Optional Redemption by the Company. While a
Registration Statement (as defined in the Registration Rights Agreement) is
effective with respect to the Common Shares issuable on conversion of the B
Preferred Shares and so long as no Redemption Event has occurred and is
continuing, the Corporation may, at its option at (i) any time within 45 days
prior to or 15 days after the commencement of a firm commitment public offering
of its equity securities, or (ii) at any time or from time to time after
December 15, 1998, redeem for cash, out of funds legally available therefor, all
or any part of (but not less than 1,400 B Preferred Shares in any single
redemption) the outstanding B Preferred Shares at a price per Preferred Share
equal to the greater of (x) 130% of the then applicable Mandatory Redemption
Price per B Preferred Share or (y) (A) the then applicable Mandatory Redemption
Price per B Preferred Share, divided by (B) the then effective Conversion Price
of the B Preferred Shares on the Redemption Date, multiplied by (C) the Market
Value of the Common Shares into which each B Preferred Share is convertible on
the Redemption Date (the "Optional Redemption Price").
(2) Mandatory Redemption by the Company. The
Corporation shall redeem all outstanding B Preferred Shares on the Maturity Date
at a price per share equal to the sum of (x) the Purchase Price, (y) any accrued
and unpaid dividends thereon through the date of final distribution to
shareholders, whether or not declared, and any Illiquidity Payments and
conversion Default Payments thereon, and (z) any Delay Compensation and
Delisting Payments thereon (collectively, the "Mandatory Redemption Price"). All
Conversion Default Payments, Delay Compensation and Conversion Default Payments
shall be payable on the Maturity Date in cash, out of funds legally available
therefor. The balance of the Mandatory Redemption Price (the "Remaining
Redemption Amount") shall be payable on the Maturity Date at the option of the
Board of Directors (x) in cash, out of funds legally available therefor; or (y)
while a Registration Statement (as defined in the Registration Rights Agreement)
is effective with respect to the Common Shares issuable on redemption of the B
Preferred Shares, in Common Shares having an aggregate Market Value on the
Maturity Date equal to (A) the Remaining Redemption Amount multiplied by (B)
1.25.
(3) Procedures for Redemption by the Company.
(i) At least 30 days (45 days if the Redemption Price
is to be paid in Common Shares) but not more than 60 days before the
applicable Redemption Date, the Corporation or its transfer agent shall
mail a notice of redemption by first-class mail postage prepaid to each
holder of B Preferred Shares, addressed to such holders at their last
addresses shown on the stock transfer books of the Corporation. Such
notice shall indicate that B Preferred Shares are to be redeemed and
shall, among other things, state:
(a) the Redemption Date;
(b) the number of B Preferred Shares being
redeemed;
(c) the Optional Redemption Price or
Mandatory Redemption Price, as the case may be, including the
amount of unpaid dividends, Illiquidity Payments, Conversion
Default Payments, Delay Compensation and Delisting Payments
with respect to such shares;
(d) that the B Preferred Shares called for
redemption must be surrendered to the Corporation to collect
the Redemption Price;
(e) that B Preferred Shares called for
redemption may be converted at any time before the close of
business on the first Business Day preceding the Redemption
Date.
Failure to give notice or any defect in the notice to any holder shall
not affect the validity of the notice given to any other holder.
(ii) As long as the Corporation has complied with the
requirements set forth in this Section F, from and after the applicable
Redemption Date, dividends on, and Illiquidity Payments, Conversion
Default Payments, Delay Compensation and Delisting Payments with
respect to the shares of B Preferred Shares so called for redemption
shall cease to accrue as of the applicable Redemption Date, such shares
shall be canceled and shall no longer be deemed to be outstanding, and
all rights of the holders thereof as shareholders of the Corporation
(except the right to receive from the Corporation the Redemption Price)
shall cease.
(4) Optional Redemption By Holder. (i) Upon the
occurrence of a Redemption Event, each holder of B Preferred Shares shall have
the right to elect at any time and from time to time by delivery of a Default
Redemption Notice (as defined herein) to the Corporation while such Redemption
Event continues, to require the Corporation to purchase for cash, out of funds
legally available therefor, for an amount per share equal to the Default
Redemption Amount (as defined herein), any or all of the then outstanding shares
of B Preferred Shares held by such Holder. The "Default Redemption Amount" with
respect to each B Preferred Share means an amount equal to the greater of (i)
1.25 times the then effective Mandatory Redemption Price per share of each B
Preferred Share for which a demand for redemption is being made or (ii) (x) the
then effective Mandatory Redemption Price of each B Preferred Share for which a
demand for redemption is being made, divided by (y) the then effective
Conversion Price, multiplied by (z) the Market Value of the Common Shares.
(ii) If the Corporation fails to pay any holder the
Default Redemption Amount with respect to any B Preferred Shares within five (5)
Business Days of its receipt of a notice requiring such redemption (a "Default
Redemption Notice"), then the holder delivering such Default Redemption Notice
shall be entitled to interest on the Default Redemption Amount at a per annum
rate equal to the lower of (x) the sum of prime rate published from time to time
by the Wall Street Journal plus five percent (5%) and (y) the highest interest
rate permitted by applicable law from the date of the Default Redemption Notice
until the date of redemption hereunder. In the event the Corporation is not able
to redeem all of the shares of B Preferred Shares subject to Default Redemption
Notices because of insufficient shareholders equity, restrictions under
applicable law or pursuant to agreements, or lack of cash, the Corporation shall
redeem shares of B Preferred Shares from each holder, to the maximum extent, pro
rata, based on the total number of shares of B Preferred Shares included by such
holder in the Default Redemption Notice relative to the total number of shares
of B Preferred Shares in all of the Default Redemption Notices.
G. Consolidation, Merger and Sale of Assets, etc. The
Corporation shall not consolidate with or merge into, or transfer all or
substantially all of its assets to, another Person unless (i) in the case of a
merger or consolidation, the Corporation is the surviving entity and the rights
and preferences of the B Preferred Shares are not modified, or (ii) (A) the
surviving, resulting or acquiring Person is a Person organized under the laws of
the United States, any state thereof or the District of Columbia, or a Person
organized under the laws of a foreign jurisdiction whose equity securities are
listed on a national securities exchange in the United States or authorized for
quotation on NASDAQ, and (B) the Corporation shall make effective provision such
that, upon consummation of such transaction, the holders of B Preferred Shares
shall receive preferred stock of the surviving entity having substantially
identical terms and registration rights as the B Preferred Shares.
H. Conversion of B Preferred Shares.
(1) Right of Conversion of B Preferred Shares. Each B
Preferred Share shall be convertible at the option of the holder thereof, at any
time or from time to time, into a number of fully paid and nonassessable Common
Shares equal to the then applicable Mandatory Redemption Price of such B
Preferred Share, divided by $4.00 (the "Conversion Price"); provided, however,
that in no event shall any holder of B Preferred Shares be entitled to receive
Common Shares upon a conversion to the extent that the sum of (x) the number of
Common Shares beneficially owned by that holder and its affiliates (exclusive of
shares issuable upon conversion of the unconverted portion of any B Preferred
Shares or the unexercised or unconverted portion of any other securities of the
Corporation subject to a limitation on conversion or exercise analogous to the
limitations contained herein) and (y) the number of Common Shares issuable upon
the conversion of the B Preferred Shares with respect to which the determination
of this subclause is being made, would result in beneficial ownership by the
holder and its affiliates of more than 4.9% of the outstanding Common Shares
(the "Five Percent Limitation"), and for purposes of this subclause, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13 D-G thereunder, except as
otherwise provided in clause (x) above. To the extent the Five Percent
Limitation applies, the determination of whether B Preferred Shares shall be
convertible (vis-a-vis other securities owned by a holder) shall be in the sole
discretion of the holder and submission of a Conversion Notice shall be deemed
to be the holder's determination of whether the B Preferred Shares are
convertible in whole or in part, subject to such aggregate Five Percent
Limitation. No prior inability to convert the B Preferred Shares pursuant to
this clause shall have any effect on the applicability of the provisions of this
clause with respect to any subsequent determination of ability to convert. The
provisions of this clause may be amended and/or implemented in a manner
otherwise than in strict conformity with the terms of this clause with the
approval of the Board of Directors of the Company and the affected Holder; the
provisions of this clause may be waived by the affected holder upon ninety (90)
days prior written notice from such holder to the Company. The limitations
contained in this clause shall apply to a successor holder concurrently with its
acquisition of such B Preferred Shares, such election to be promptly confirmed
in writing to the Company (provided no transfers to a successor holder or
holders shall be used by a holder to evade the limitations contained herein).
(2) Conversion Procedures. In order to exercise the
conversion privilege, the holder of any B Preferred Shares to be converted in
whole or in part shall give written notice to the Corporation ("Conversion
Notice") by courier delivery (with receipt acknowledged), by personal delivery,
registered or certified mail (with receipt acknowledged) or, by facsimile
transmission (such facsimile transmission will be deemed received by the
Corporation on the date and at the time it was sent by the holder so long as (i)
the holder's facsimile machine confirms that the transmission was received prior
to 5:30 p.m., New York time on the Business Day on which it was sent and (ii)
the Corporation receives the original thereof (together with a copy of the
facsimile confirmation) by courier within 2 Business Days following such
facsimile transmission), that the holder elects to convert such shares or the
portion thereof specified in such Conversion Notice into shares of Common Shares
and shall, within five (5) Business Days after the Business Day on which the
Conversion Notice was so given, surrender the certificate or certificates
evidencing such shares to the Corporation. The Conversion Notice shall specify
the effective date of such conversion, which shall be no earlier than the
Business Day on which the Conversion Notice was properly given in accordance
with this Section H(2) and no later than 30 days following such giving of the
Conversion Notice, and shall also state the name or names (with address) in
which the certificates for Common Shares which shall be issuable upon such
conversion shall be issued. Each certificate evidencing B Preferred Shares
surrendered for conversion shall, unless the shares issuable on conversion are
to be issued in the same name as the registration of such B Preferred Shares, be
duly endorsed by, or be accompanied by instruments of transfer in form
satisfactory to the Corporation duly executed by, such holder or its duly
authorized attorney.
Within three (3) Business Days after the Business Day on which
the Conversion Notice was properly given in accordance with this Section H(2),
but not prior to the specified effective date of conversion, and following (and
in no event prior to) surrender of the certificate or certificates evidencing
the B Preferred Shares relating thereto, the Corporation shall issue and deliver
to such holder (or upon the written order of such holder) a certificate or
certificates for the number of full Common Shares issuable upon the conversion
of such B Preferred Shares or portion thereof in accordance with the provisions
of this Section H, and a check or cash in respect of any fractional Common
Shares issuable upon such conversion, as provided in Section H(3). If the
Corporation fails to issue certificates upon any such conversion of B Preferred
Shares, the Corporation shall pay to any holders of such converted B Preferred
Shares an amount equal to (i) 1% of the Conversion Price per day multiplied by
the number of Common Shares issuable upon conversion of the B Preferred Shares
subject to the applicable Conversion Notice for the first 30 days after the
scheduled delivery date of such certificates, and (ii) thereafter, 2% of the
Conversion Price per day multiplied by the number of Common Shares issuable upon
conversion of the B Preferred Shares subject to the applicable Conversion Notice
("Conversion Default Payments"). Notwithstanding the foregoing, if the
Corporation's failure to issue such certificates is a result of an error made by
its transfer agent, such amount shall not accrue until after the third day
following the scheduled delivery date of such certificate. In the event that
less than all the B Preferred Shares represented by a certificate are to be
converted, the Corporation shall issue and deliver or cause to be issued and
delivered to (or upon the written order of) the holder of the B Preferred Shares
so surrendered, without charge to such holder, a new certificate or certificates
representing a number of B Preferred Shares equal to the unconverted portion of
the surrendered certificate.
Each conversion shall be deemed to have been effected as of
the date (the "Conversion Date") specified in the applicable Conversion Notice,
or if no date is specified, as of the Business Day on which a Conversion Notice
with respect to B Preferred Shares shall have been received by the Corporation,
as described above, but only if the certificate or certificates evidencing B
Preferred Shares shall have been surrendered to the Corporation or its transfer
agent within five (5) Business Days after the Business Day on which the
Conversion Notice relating thereto was properly given in accordance with this
Section H(2) and, if such certificate or certificates shall not have been
surrendered within such time period, such Conversion Notice shall be ineffective
and void ab initio. Any Person in whose name any certificate or certificates for
Common Shares shall be issuable upon conversion shall be deemed to have become
the holder of record of the shares represented thereby on the Conversion Date;
provided, however, that the receipt of a Conversion Notice on any date when the
share transfer books of the Corporation shall be closed shall constitute the
Person in whose name the certificates are to be issued as the record holder
thereof for all purposes on the next succeeding day on which such share transfer
books are open, but such conversion shall be at the Conversion Rate in effect on
the Conversion Date.
Except as otherwise provided in this Section H, no payment or
adjustment will be made for dividends or other distributions with respect to any
Common Shares issuable upon conversion of B Preferred Shares as provided herein.
Full payment shall be made by the Corporation to any holder of B Preferred
Shares surrendered for conversion in respect of dividends accrued since the last
preceding Dividend Payment Date on the B Preferred Shares surrendered for
conversion; the dividend due on such Dividend Payment Date shall be payable with
respect to such B Preferred Shares notwithstanding such conversion, and such
dividend (whether or not punctually paid or duly provided for) shall be paid to
the holder of such shares as of the close of business on such record date.
(3) Cash Payments in Lieu of Fractional Shares. No
fractional Common Shares or scrip representing fractional shares shall be issued
upon conversion of B Preferred Shares. If any fractional Common Share would, but
for this Section H, be issuable upon the conversion of any B Preferred Shares,
the Corporation shall make a payment therefor in cash on the third Business Day
immediately following the Conversion Date equal to the Conversion Price of such
fractional share.
(4) Adjustment of Conversion Privileges. The
Conversion Price shall be adjusted from time to time by the Corporation as
follows:
(i) In case the Corporation shall (A) declare a
dividend, or make a distribution, in shares of any series of its Common
Shares, on any series of its Common Shares, (B) subdivide or reclassify
any series of its outstanding Common Shares into a greater number of
shares, (C) combine any series of its outstanding Common Shares into a
smaller number of shares, (D) pay a dividend or make a distribution on
any series of its Common Shares in shares of any series of its Capital
Stock other than Common Shares, or (E) issue by reclassification of any
series of its Common Shares of any series of its Capital Stock, the
conversion privilege and the Conversion Price in effect immediately
prior thereto shall be adjusted so that the holder of any shares of B
Preferred Shares thereafter surrendered for conversion shall be
entitled to receive the number of Common Shares or other Capital Stock
of the Corporation which such holder would have owned or have been
entitled to receive after the happening of any of the events described
above had such B Preferred Shares been converted immediately prior to
the happening of such event. An adjustment made pursuant to this
Section H(4) shall become effective immediately after the record date
in the case of a dividend or distribution and shall become effective
immediately after the effective date in the case of subdivision,
combination or reclassification. Such adjustment shall be made
successively whenever any event referred to above shall occur. In the
event such dividend, distribution, subdivision, reclassification or
combination is not so made, the conversion privilege then in effect
shall be readjusted to the conversion privilege which would then be in
effect if such dividend, distribution, subdivision, reclassification or
combination had not been declared or made, but such readjustment shall
not affect the number of Common Shares or other Capital Stock delivered
upon any conversion prior to the date such readjustment is made.
(ii) In case the Corporation shall distribute to all
holders of any series of its Common Shares any of its assets or debt
securities, or rights, options, warrants or convertible or exchangeable
securities of the Corporation (including securities for cash, but
excluding distributions of Capital Stock referred to in Section H(4)(i)
above, if the adjustment to the Conversion Price under that Section
would be greater than an adjustment under this Section), then in each
such case, the Conversion Price shall be adjusted to equal the
Conversion Price in effect immediately prior to such distribution less
an amount equal to the then fair market value (as reasonably determined
by the Board of Directors, in good faith and as described in a
resolution of the Board of Directors) of the portion of the assets or
debt securities of the Corporation so distributed or of such rights,
options, warrants or convertible or exchangeable securities applicable
to one share of Common Shares. Such adjustment shall become effective
immediately after the record date for the determination of shares
entitled to receive such distribution. Notwithstanding the foregoing,
no adjustment of the Conversion Price shall be made upon the
distribution to holders of any series of Common Shares of such rights,
options, warrants, convertible securities, assets or debt securities if
the plan or arrangement under which such rights, options, warrants,
convertible securities, assets or debt securities are issued provides
for their issuance to holders of shares of B Preferred Shares in the
same pro rata amounts upon conversion thereof. Such adjustment shall be
made successively whenever any event listed above shall occur.
(iii) Anything in this Section H(4) to the contrary
notwithstanding, the Corporation shall be entitled to make such
reductions in the Conversion Price, in addition to those required by
this Section H(4), as it in its reasonable discretion shall determine
to be advisable in order that any stock dividends, subdivision of
shares, distribution of rights to purchase stock or securities, or
distribution of securities convertible into or exchangeable for stock
hereafter made by the Corporation to its shareholders, shall not be
taxable.
(iv) Whenever the Conversion Price is adjusted as
provided in this Section H(4), or the B Preferred Shares becomes
convertible into shares of stock, securities, property or assets
pursuant to Section H(5) below, or the Corporation reduces the
Conversion Price pursuant to Section H(6) below, the Corporation shall
prepare a notice of such adjustment of the Conversion Price setting
forth the adjusted Conversion Price and the date on which such
adjustment becomes effective, and setting forth in reasonable detail
the facts requiring such adjustment and the calculation of such
adjustment, and shall mail such notice of adjustment to all holders of
B Preferred Shares at their last addresses appearing on the share
transfer books of the Corporation.
(v) In any case in which this Section H(4) provides
that an adjustment shall become effective immediately after a record
date for an event, the Corporation may defer until the occurrence of
such event (i) issuing to the holder of any B Preferred Shares
converted after such record date and before the occurrence of such
event the additional Common Shares issuable upon such conversion by
reason of the adjustment required by such event over and above the
Common Shares issuable upon such conversion before giving effect to
such adjustment, and (ii) paying to such holder any amount in cash in
lieu of any fractional Common Shares pursuant to Section H(3).
(vi) For purposes of any computations pursuant to
this Section H(4), respecting consideration received, the following
shall apply:
(a) in the case of the issuance of shares of
Capital Stock for cash, the consideration shall be the amount
of such cash, provided that in no case shall any deduction be
made for any commissions, discounts or other expenses incurred
by the Corporation for any underwriting of the issue or
otherwise in connection therewith;
(b) in the case of the issuance of shares of
Capital Stock for a consideration in whole or in part other
than cash, the consideration other than cash shall be deemed
to be the fair market value thereof as reasonably determined
in good faith by the Board of Directors or a duly authorized
committee thereof (irrespective of the accounting treatment
thereof), and described in a resolution of the Board of
Directors or such committee; and
(c) in the case of the issuance of
securities convertible into or exchangeable or exercisable for
shares of Capital Stock, the aggregate consideration received
therefor shall be deemed to be the consideration received by
the Corporation for the issuance of such securities plus the
additional minimum consideration, if any, to be received by
the Corporation upon the conversion or exchange thereof (the
consideration in each case to be determined in the same manner
as provided in clauses (a) and (b) of this Section).
(vii) If after an adjustment a holder of B Preferred
Shares may, upon conversion of such security, receive shares of two or
more classes of Capital Stock of the Corporation, the Corporation shall
determine on a fair basis the allocation of the adjusted Conversion
Price between the classes of Capital Stock. After such allocation, the
conversion privilege and the Conversion Price of each class of Capital
Stock shall thereafter be subject to adjustment on terms comparable to
those applicable to Common Shares in this Section H.
(viii) In no event shall an adjustment pursuant to
this Section H(4) or any other provision of this Certificate of
Amendment reduce the Conversion Price below the then par value, if any,
of the Common Shares issuable upon conversion of B Preferred Shares.
(5) Effect of Reclassification, Consolidation, Merger
or Sale. If any of the following events occur, namely (i) any reclassification
or change of outstanding Common Shares issuable upon conversion of B Preferred
Shares (other than a change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a subdivision or combination),
(ii) any consolidation or merger of the Corporation with another Person shall be
effected as a result of which holders of Common Shares issuable upon conversion
of B Preferred Shares shall be entitled to receive stock, securities or other
property or assets (including cash) with respect to or in exchange for such
Common Shares, or (iii) any sale or conveyance of the properties and assets of
the Corporation as, or substantially as, an entirety to any other Person, then
the Corporation or such successor or purchasing Person, as the case may be,
shall make provisions in its certificate or articles of incorporation or other
constituent documents to establish that each Preferred Share then outstanding
shall be convertible into the kind and amount of shares of stock and other
securities or property or assets (including cash) receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a holder
of the number of Common Shares issuable upon conversion of such B Preferred
Shares immediately prior to such reclassification, change, consolidation,
merger, sale or conveyance. Such provisions shall provide for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Section H.
If this Section H(5) applies with respect to a transaction,
Section H(4) shall not apply with respect to that transaction. The above
provisions of this Section H(5) shall similarly apply to successive
reclassifications, consolidations, mergers and sales.
(6) Voluntary Adjustment. Subject to the Ownership Limitation,
the Corporation at any time may reduce the Conversion Price by any amount and
for any period of time, provided that such period is not less than twenty (20)
Business Days. Whenever the Conversion Price is reduced pursuant to this Section
8(f), the Corporation shall mail to the Holders, a notice of the reduction at
least 15 days before the date the reduced Conversion Price takes effect and such
notice shall state the reduced Conversion Price and the period it will be in
effect.
(7) Taxes on Shares Issued. The issuance of share certificates
upon conversion or transfer of B Preferred Shares shall be made without charge
to the converting holder for any tax in respect of the issuance thereof.
(8) Reservation Of Shares; Shares To Be Fully Paid; Compliance
With Governmental Requirements. The Corporation shall reserve, free from
preemptive rights, out of its authorized but unissued shares, or out of shares
held in its treasury, sufficient Common Shares to provide for the conversion at
any time or from time to time, and/or redemption at the Maturity Date at the
then applicable Mandatory Redemption Price, of all B Preferred Shares from time
to time outstanding. The Corporation covenants that all Common Shares which may
be issued upon conversion of B Preferred Shares will upon issuance be fully paid
and nonassessable by the Corporation and free from all taxes, liens and charges
with respect to the issuance thereof.
(9) Notice to Holders Prior to Certain Actions. In the event:
(i) that the Corporation shall take any action that would
require an adjustment in the Conversion Price pursuant to clauses (i),
(ii) or (iii) of Section H(4) above; or
(ii) that any event described in Section H(5) shall occur; or
(iii) of the voluntary or involuntary dissolution, liquidation
or winding-up of the Corporation;
the Corporation shall cause notice of such proposed action or event to be mailed
to each holder of record of B Preferred Shares at its address appearing on the
stock transfer books of the Corporation, as promptly as possible but in any
event at least thirty (30) days prior to the record date for such proposed
action or the effective date of such event; provided, however, that in the event
that the Corporation provides public notice of such proposed action or event
specifying the information set forth below at least ten (10) days prior to the
proposed record date or effective date, the Corporation shall be deemed to have
satisfied its obligation to provide notice pursuant to this Section H(9). In any
event, such notice shall specify (A) the date on which a record is to be taken
for the purpose of such action, or, if a record is not to be taken, the date as
of which the holders of record of Common Shares are to be determined, or (B) the
date on which such proposed event is expected to become effective, and the date
as of which it is expected that holders of record of Common Shares shall be
entitled to exchange their Common Shares for securities or other property
deliverable upon such event. Failure to give such notice, or any defect therein,
shall not affect the legality or validity of such action or event.
(10) Conversion Disputes. In the case of any dispute with
respect to a conversion, the Corporation shall promptly issue such number of
Common Shares as are not disputed in accordance with Section H hereof. If such
dispute involves the calculation of the Conversion Price, the Corporation shall
submit the disputed calculations, and shall permit any holder to simultaneously
submit its data and views, to a "Big Six" independent accounting firm selected
by the Corporation via facsimile within two (2) business days of receipt of the
Conversion Notice. The accounting firm shall audit the calculations and notify
the Corporation and the holder of the results no later than two (2) business
days from the date it receives the disputed calculations. The accounting firm's
calculation shall be deemed conclusive, absent manifest error. The Company shall
then issue the appropriate number of Common Shares in accordance with Section
H(2) hereof.
(11) Electronic Transmission. In lieu of delivering physical
certificates representing the Common Shares issuable upon the conversion of B
Preferred Shares, provided the Corporation's transfer agent is participating in
the Depository Trust Company ("DTC") Fast Automated Securities Transfer program,
upon the written request of a holder who shall have previously instructed such
holder's prime broker to confirm such request to the Corporation's transfer
agent, the Corporation shall use its commercially reasonable efforts to cause
its transfer agent to electronically transmit the Common Shares issuable upon
conversion to the holder by crediting the account of holder's prime broker with
DTC through its Deposit Withdrawal Agent Commission ("DWAC") system.
I. Transfers; Replacement Of Certificates.
(1) Transfers. Subject to any restrictions on transfer under
applicable securities or other laws, B Preferred Shares may be transferred on
the books of the Corporation by the surrender to the Corporation of the
certificate therefor properly endorsed or accompanied by a written assignment
and power of attorney properly executed, with transfer stamps (if necessary)
affixed, and such proof of the authenticity of signature as the Corporation or
its transfer agent may reasonably require.
(2) Replacement of Certificates. If any mutilated certificate
representing B Preferred Shares is surrendered to the Corporation, or if a
holder claims the certificate representing B Preferred Shares has been lost,
destroyed or willfully taken, the Corporation shall issue a replacement
certificate of like tenor and date if (i) the holder provides an indemnity bond
or other security sufficient, in the reasonable judgment of the Corporation, to
protect the Corporation and any authenticating agent and any of their officers,
directors, employees or representatives from any loss which any of them may
suffer if a certificate representing B Preferred Shares is replaced, and (ii)
the holder satisfies any other reasonable requirements of the Corporation.
J. Reacquired Shares. Any B Preferred Shares which are
converted, purchased, redeemed or otherwise acquired by the Corporation, shall
be retired and canceled by the Corporation promptly thereafter. No such shares
shall upon their cancellation be reissued as B Preferred Shares.
K. Consideration. The Purchase Price of $1,000 per B Preferred
Share shall be paid for by exchange of one share of Convertible Preferred
Shares, Series A in accordance with the terms of the Exchange Agreement. In lieu
of physical delivery of certificates representing Convertible Preferred Shares,
Series A, all shares of Convertible Preferred Shares, Series A to be exchanged,
shall be and become a like number of B Preferred Shares. Each share certificate
representing the Convertible Preferred Shares, Series A, outstanding immediately
prior to the exchange shall, upon effectiveness of the exchange pursuant to the
Exchange Agreement, be deemed to evidence a like number of B Preferred Shares.
The Company shall issue new certificates to each holder requesting B Preferred
Share certificates upon the surrender of certificates previously representing
Convertible Preferred Shares, Series A.
THIRD: That the Corporation's Restated Certificate of Incorporation is
amended so that the designation and number of shares of the B Preferred Shares
acted upon in the foregoing resolution, and the relative rights, preferences and
limitations of such series, are as stated in the foregoing resolution.
FOURTH: This Certificate of Amendment shall become effective upon
filing.
IN WITNESS WHEREOF, Base Ten Systems, Inc. has caused its duly
authorized officer to execute this Certificate on this ____ day of ___________,
1998.
BASE TEN SYSTEMS, INC.
By:__________________________________
THOMAS E. GARDNER, President
and Chief Executive Officer
Exhibit B
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, (THE "SECURITIES ACT") OR THE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES REPRESENTED HEREBY MAY
NOT BE OFFERED OR SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS OR
UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THOSE LAWS.
COMMON STOCK PURCHASE WARRANT CERTIFICATE
Dated: ___________, 1999
to Purchase _________ Shares of Common Stock of
BASE TEN SYSTEMS, INC.
BASE TEN SYSTEMS, INC., a New Jersey corporation (the "Company"),
hereby certifies that _______________, its permissible transferees, designees,
successors and assigns (collectively, the "Holder"), for value received, is
entitled to purchase from the Company at any time commencing on __________, 1999
and terminating on __________, [2003 as to Additional Warrants; December 15,
2001 as to Amended Warrants] up to _________________________(_________) shares
(each a "Share" and collectively the "Shares") of the Company's common stock
(the "Common Stock"), at an exercise price of $3.00 per Share (the "Exercise
Price"). The number of Shares purchasable hereunder and the Exercise Price are
subject to adjustment as provided in Section 4 hereof.
1. Exercise of Warrants.
(a) Upon presentation and surrender of this Common Stock
Purchase Warrant Certificate ("Warrant Certificate" or "Certificate"), or Lost
Certificate Affidavit, accompanied by a completed Election to Purchase in the
form attached hereto as Exhibit A (the "Election to Purchase") duly executed, at
the principal office of the Company at One Electronics Drive, Trenton, NJ 08619,
Attn: Mr. Thomas E. Gardner, together with a check payable to the Company in the
amount of the Exercise Price multiplied by the number of Shares being purchased,
the Company or the Company's Transfer Agent as the case may be, shall, within
two (2) trading days of receipt of the foregoing, deliver to the Holder hereof,
certificates of fully paid and non-assessable Common Stock which in the
aggregate represent the number of Shares being purchased; provided, however,
that the Holder may elect, with the written consent of the Company which may be
granted or withheld in the Company's sole discretion (except that such consent
will not be required if (i) the prospectus included in an effective registration
statement covering resale of the Shares includes an untrue statement of material
fact or omits to state a material fact required to be stated therein or
necessary to make the statement therein, in light of the circumstances under
which they were made, not misleading, or (ii) resales of the Shares cannot be
made pursuant to an effective registration statement in compliance with the
securities laws for any other reason), to utilize the cashless exercise
provisions set forth below in lieu of tendering the Exercise Price in cash. The
certificates so delivered shall be in such denominations as may be reasonably
requested by the Holder and shall be registered in the name of the Holder or
such other name as shall be designated by the Holder. All or less than all of
the Warrants represented by this Certificate may be exercised and, in case of
the exercise of less than all, the Company, upon surrender hereof, will at the
Company's expense deliver to the Holder a new Warrant Certificate or
Certificates (in such denominations as may be requested by the Holder) of like
tenor and dated the date hereof entitling said holder to purchase the number of
Shares represented by this Certificate which have not been exercised and to
receive Registration Rights with respect to such Shares, and all other rights
with respect to the shares which the Holder has on the date hereof.
(b) Cashless Exercise. Notwithstanding the foregoing provision
regarding payment of the Exercise Price in cash, the Holder may elect, subject
to the provisions of Section 1(a), to receive a reduced number of Shares in lieu
of tendering the Exercise Price in cash. In such case, the number of Shares to
be issued to the Holder shall be computed using the following formula:
X = Y(A-B)
------
A
where: X = the number of Shares to be issued to the Holder;
Y = the number of Shares to be exercised under this Warrant Certificate;
A = the Market Value (defined below) of one share of Common Stock; and
B = the Exercise Price.
(c) Mandatory Exercise. The Company shall be entitled on any
day occurring on and after [the first anniversary of the closing date] on which
the closing bid price of the Common Stock on each trading day during the twenty
(20) consecutive trading day period ending on the trading day immediately
preceding such date (such twenty (20) consecutive trading day period being
referred to herein as the "Calculation Period") is equal to or greater than
$4.00 per share (the "Trigger Price"), to deliver a written notice to the Holder
requiring such Holder to exercise all of the Warrants represented by this
Certificate on the date which is ten (10) trading days following the date of
such notice (the "Exercise Date"); provided, however, that the Company shall
have such right if, and only if, (x) for a period of thirty (30) consecutive
trading days prior to the beginning of such Calculation Period and (y) at all
times during such Calculation Period and continuing through the Exercise Date,
the Shares are (1) authorized and reserved for issuance, (2) listed for trading
on each principal exchange or market on which the shares of Common Stock were
then traded, and (3) registered for resale pursuant to an effective registration
statement under the Securities Act; provided, further, however, that the Holder
shall not be required to exercise the Warrants represented by this Certificate
with respect to any such notice unless the closing bid price of the Common Stock
on the trading day immediately preceding the Exercise Date is at least equal to
$3.90 (the "Threshold Price") and the aggregate of cash (and cash equivalents)
as shown on the most recent balance sheet of the Company filed by the Company
with the Securities and Exchange Commission pursuant to Section 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") is less than
$5,000,000.
As used in this Section 1, "Market Value" refers to the Current Market Value of
the Common Stock on the day before the Election to Purchase and this Warrant
Certificate are duly surrendered to the Company for a full or partial exercise
hereof.
2. Exchange, Transfer and Replacement. (a) At any time prior to the
exercise hereof, this Certificate may be exchanged upon presentation and
surrender to the Company, alone or with other Certificates of like tenor of
different denominations registered in the name of the same Holder, for another
Certificate or Certificates of like tenor in the name of such Holder exercisable
for the aggregate number of Shares as the Certificate or Certificates
surrendered.
(b) Replacement of Warrant Certificate. Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft, destruction,
or mutilation of this Warrant Certificate and, in the case of any such loss,
theft, or destruction, upon delivery of an indemnity agreement reasonably
satisfactory in form and amount to the Company (collectively, a "Lost
Certificate Affidavit"), or, in the case of any such mutilation, upon surrender
and cancellation of this Warrant Certificate, the Company, at its expense, will
execute and deliver in lieu thereof, a new Warrant Certificate of like tenor.
(c) Cancellation; Payment of Expenses. Upon the surrender of
this Warrant Certificate in connection with any transfer, exchange or
replacement as provided in this Section 2, this Warrant Certificate shall be
promptly canceled by the Company. The Company shall pay all taxes (other than
securities transfer taxes) and all other expenses (other than legal expenses, if
any, incurred by the Holder or transferees) and charges payable in connection
with the preparation, execution and delivery of Warrant Certificates pursuant to
this Section 2.
(d) Warrant Register. The Company shall maintain, at its
principal executive offices (or at the offices of the transfer agent for the
Warrant Certificate or such other office or agency of the Company as it may
designate by notice to the holder hereof), a register for this Warrant
Certificate (the "Warrant Register"), in which the Company shall record the name
and address of the person in whose name this Warrant Certificate has been
issued, as well as the name and address of each permitted transferee and each
prior owner of this Warrant Certificate.
3. Rights and Obligations of Holders of this Certificate. The Holder of
this Certificate shall not, by virtue hereof, be entitled to any rights of a
stockholder in the Company, either at law or in equity; provided, however, that
in the event any certificate representing shares of Common Stock or other
securities is issued to the holder hereof upon exercise of some or all of the
Warrants, such holder shall, for all purposes, be deemed to have become the
holder of record of such Common Stock on the date on which this Certificate,
together with a duly executed Purchase Form, was surrendered and payment of the
aggregate Exercise Price was made, irrespective of the date of delivery of such
share certificate.
4. Adjustments.
(a) Stock Dividends, Reclassifications, Recapitalizations,
Etc. In the event the Company: (i) pays a dividend in Common Stock or makes a
distribution in Common Stock, (ii) subdivides its outstanding Common Stock into
a greater number of shares, (iii) combines its outstanding Common Stock into a
smaller number of shares or (iv) increases or decreases the number of shares of
Common Stock outstanding by reclassification of its Common Stock (including a
recapitalization in connection with a consolidation or merger in which the
Company is the continuing corporation), then (1) the Exercise Price, the Trigger
Price and the Threshold Price on the record date of such division or
distribution or the effective date of such action shall be adjusted by
multiplying such Exercise Price, Trigger Price and Threshold Price, as
applicable, by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately before such event and the denominator of
which is the number of shares of Common Stock outstanding immediately after such
event, and (2) the number of shares of Common Stock for which this Warrant
Certificate may be exercised immediately before such event shall be adjusted by
multiplying such number by a fraction, the numerator of which is the Exercise
Price, the Trigger Price or the Threshold Price, as applicable, immediately
before such event and the denominator of which is the Exercise Price, the
Trigger Price or the Threshold Price, as applicable, immediately after such
event.
(b) Cash Dividends and Other Distributions. In the event that
at any time or from time to time the Company shall distribute to all holders of
Common Stock (i) any dividend or other distribution of cash, evidences of its
indebtedness, shares of its capital stock or any other properties or securities
or (ii) any options, warrants or other rights to subscribe for or purchase any
of the foregoing (other than in each case, (w) the issuance of any rights under
a shareholder rights plan, (x) any dividend or distribution described in Section
4(a), (y) any rights, options, warrants or securities described in Section 4(c)
and (z) any cash dividends or other cash distributions from current earnings),
then the number of shares of Common Stock issuable upon the exercise of each
Warrant Certificate shall be increased to a number determined by multiplying the
number of shares of Common Stock issuable upon the exercise of such Warrant
Certificate immediately prior to the record date for any such dividend or
distribution by a fraction, the numerator of which shall be such Current Market
Value (as hereinafter defined) per share of Common Stock on the record date for
such dividend or distribution, and the denominator of which shall be such
Current Market Value per share of Common Stock on the record date for such
dividend or distribution less the sum of (x) the amount of cash, if any,
distributed per share of Common Stock and (y) the fair value (as determined in
good faith by the Board of Directors of the Company, whose determination shall
be evidenced by a board resolution, a copy of which will be sent to the Holders
upon request) of the portion, if any, of the distribution applicable to one
share of Common Stock consisting of evidences of indebtedness, shares of stock,
securities, other property, warrants, options or subscription or purchase
rights; and the Exercise Price shall be adjusted to a number determined by
dividing the Exercise Price immediately prior to such record date by the above
fraction. Such adjustments shall be made whenever any distribution is made and
shall become effective as of the date of distribution, retroactive to the record
date for any such distribution. No adjustment shall be made pursuant to this
Section 4(b) which shall have the effect of decreasing the number of shares of
Common Stock issuable upon exercise of each Warrant Certificate or increasing
the Exercise Price.
(c) Rights Issue. In the event that at any time or from time
to time the Company shall issue rights, options or warrants entitling the
holders thereof to subscribe for shares of Common Stock, or securities
convertible into or exchangeable or exercisable for Common Stock to all holders
of Common Stock (other than in connection with the adoption of a shareholder
rights plan by the Company) without any charge, entitling such holders to
subscribe for or purchase shares of Common Stock at a price per share that as of
the record date for such issuance is less than the then Current Market Value per
share of Common Stock, the number of shares of Common Stock issuable upon the
exercise of each Warrant Certificate shall be increased to a number determined
by multiplying the number of shares of Common Stock theretofore issuable upon
exercise of each Warrant Certificate by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding on the date of issuance of
such rights, options, warrant or securities plus the number of additional shares
of Common Stock offered for subscription or purchase or into or for which such
securities that are issued are convertible, exchangeable or exercisable, and the
denominator of which shall be the number of shares of Common Stock outstanding
on the date of issuance of such rights, option, warrants or securities plus the
total number of shares of Common Stock which the aggregate consideration
expected to be received by the Company (assuming the exercise or conversion of
all such rights, options, warrants or securities) would purchase at the then
Current Market Value per share of Common Stock. In the event of any such
adjustment, the Exercise Price shall be adjusted to a number determined by
dividing the Exercise Price immediately prior to such date of issuance by the
aforementioned fraction. Such adjustment shall be made immediately after such
rights, options or warrants are issued and shall become effective, retroactive
to the record date for the determination of stockholders entitled to receive
such rights, options, warrants or securities. No adjustment shall be made
pursuant to this Section 4(c) which shall have the effect of decreasing the
number of shares of Common Stock purchasable upon exercise or each Warrant
Certificate or of increasing the Exercise Price.
(d) Combination: Liquidation. (i) Except as provided in
Section 4(d)(ii) below, in the event of a Combination (as defined below), each
Holder shall have the right to receive upon exercise of the Warrant Certificates
the kind and amount of shares of capital stock or other securities or property
which such Holder would have been entitled to receive upon or as a result of
such Combination had such Warrant Certificate been exercised immediately prior
to such event (subject to further adjustment in accordance with the terms
hereof). Unless paragraph (ii) is applicable to a Combination, the Company shall
provide that the surviving or acquiring Person (the "Successor Company") in such
Combination will assume by written instrument the obligations under this Section
4 and the obligations to deliver to the Holder such shares of stock, securities
or assets as, in accordance with the foregoing provisions, the Holder may be
entitled to acquire. The provisions of this Section 4(d)(i) shall similarly
apply to successive Combinations involving any Successor Company. "Combination"
means an event in which the Company consolidates with, mergers with or into, or
sells all or substantially all of its assets to another Person, where "Person"
means any individual, corporation, partnership, joint venture, limited liability
company, association, joint stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity,
but shall not include the sale of substantially all of the assets of the
Government Technology Division of the Company.
(ii) In the event of (x) a Combination where consideration to
the holders of Common Stock in exchange for their shares is payable solely in
cash or (y) the dissolution, liquidation or winding-up of the Company, the
Holders shall be entitled to receive, upon surrender of their Warrant
Certificates, distributions on an equal basis with the holders of Common Stock
or other securities issuable upon exercise of the Warrant Certificates, as if
the Warrant Certificates had been exercised immediately prior to such event,
less the Exercise Price. In case of any Combination described in this Section
4(d)(ii), the surviving or acquiring Person and, in the event of any
dissolution, liquidation or winding-up of the Company, the Company, shall
deposit promptly following the consummation of such combination or at the time
of such dissolution, liquidation or winding-up with an agent or trustee for the
benefit of the Holders of the funds, if any, necessary to pay to the Holders the
amounts to which they are entitled as described above. After such funds and the
surrendered Warrant Certificates are received, the Company is required to
deliver a check in such amount as is appropriate (or, in the case of
consideration other than cash, such other consideration as is appropriate) to
such Person or Persons as it may be directed in writing by the Holders
surrendering such Warrant Certificates.
(e) Notice of Adjustment. Whenever the Exercise Price, the
Trigger Price or the Threshold Price, or the number of shares of Common Stock
and other property, if any, issuable upon exercise of the Warrant Certificates
is adjusted, as herein provided, the Company shall deliver to the holders of the
Warrant Certificates in accordance with Section 10 a certificate of the
Company's Chief Financial Officer setting forth, in reasonable detail, the event
requiring the adjustment and the method by which such adjustment was calculated
(including a description of the basis on which (i) the Board of Directors
determined the fair value of any evidences of indebtedness, other securities or
property or warrants, options or other subscription or purchase rights and (ii)
the Current Market Value of the Common Stock was determined, if either of such
determinations were required), and specifying the Exercise Price, the Trigger
Price and the Threshold Price, as applicable, and number of shares of Common
Stock issuable upon exercise of Warrant Certificates after giving effect to such
adjustment.
(f) Purchase Price Adjustment. In the event that the Company
issues or sells any Common Stock or securities which are convertible into or
exchangeable for its Common Stock or any convertible securities, or any warrants
or other rights to subscribe for or to purchase or any options for the purchase
of its Common Stock or any such convertible securities (other than shares or
options issued or which may be issued pursuant to the Company's employee or
director option plans or shares issued upon exercise of options, warrants or
rights outstanding on the date of the Agreement and listed in the Company's most
recent periodic report filed under the Exchange Act or disclosed in Schedule 3.3
to the Purchase Agreement) and other than the Second Closing (as defined in the
Purchase Agreement) at an effective purchase price per share which is less than
the Current Market Value of the Common Stock on the trading day next preceding
such issue or sale, then in each such case, the Exercise Price in effect
immediately prior to such issue or sale shall be reduced effective concurrently
with such issue or sale to an amount determined by multiplying the Exercise
Price then in effect by a fraction, (x) the numerator of which shall be the sum
of (1) the number of shares of Common Stock outstanding immediately prior to
such issue or sale, plus (2) the number of shares of Common Stock which the
aggregate consideration received by the Company for such additional shares would
purchase at such Current Market Value then in effect; and (y) the denominator of
which shall be the number of shares of Common Stock of the Company outstanding
immediately after such issue or sale.
For the purposes of the foregoing adjustment, in the case of the issuance of any
convertible securities, warrants, options or other rights to subscribe for or to
purchase or exchange for, shares of Common Stock ("Convertible Securities"), the
maximum number of shares of Common Stock issuable upon exercise, exchange or
conversion of such Convertible Securities shall be deemed to be outstanding,
provided that no further adjustment shall be made upon the actual issuance of
Common Stock upon exercise, exchange or conversion of such Convertible
Securities.
The number of shares which may be purchased hereunder shall be increased
proportionately to any reduction in Exercise Price pursuant to this paragraph
4(d), so that after such adjustments the aggregate Exercise Price payable
hereunder for the increased number of shares shall be the same as the aggregate
Exercise Price in effect just prior to such adjustment.
In the event of any such issuance for a consideration which is less than such
fair market value and also less than the Exercise Price then in effect, than
there shall be only one such adjustment by reason of such issuance, such
adjustment to be that which results in the greatest reduction of the Purchase
Price computed as aforesaid.
(g) Notice of Certain Transactions. In the event that the
Company shall propose (a) to pay any dividend payable in securities of any class
to the holders of its Common Stock or to make any other non-cash dividend or
distribution to the holders of its Common Stock, (b) to offer the holders of its
Common Stock rights to subscribe for or to purchase any securities convertible
into shares of Common Stock or shares of stock of any class or any other
securities, rights or options, (c) to effect any capital reorganization,
reclassification, consolidation or merger affecting the class of Common Stock,
as a whole, or (d) to effect the voluntary or involuntary dissolution,
liquidation or winding-up of the Company, the Company shall, within the time
limits specified below, send to each Holder a notice of such proposed action or
offer. Such notice shall be mailed to the Holders at their addresses as they
appear in the Warrant Register (as defined in Section 2(d)), which shall specify
the record date for the purposes of such dividend, distribution or rights, or
the date such issuance or event is to take place and the date of participation
therein by the holders of Common Stock, if any such date is to be fixed, and
shall briefly indicate the effect of such action on the number of shares of
Common Stock and on the number and kind of any other shares of stock and on
other property, if any, and the number of shares of Common Stock and other
property, if any, issuable upon exercise of each Warrant Certificate and the
Exercise Price after giving effect to any adjustment pursuant to Section 4 which
will be required as a result of such action. Such notice shall be given as
promptly as possible and (x) in the case of any action covered by clause (a) or
(b) above, at least 10 days prior to the record date for determining holders of
the Common Stock for purposes of such action or (y) in the case of any other
such action, at least 20 days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of Common Stock,
whichever shall be the earlier.
(h) Current Market Value. "Current Market Value" per share of
Common Stock or any other security at any date means (i) if the security is not
registered under the Exchange Act, (a) the value of the security, determined in
good faith by the Board of Directors of the Company and certified in a board
resolution, based on the most recently completed arm's-length transaction
between the Company and a Person other than an affiliate of the Company or
between any two such Persons and the closing of which occurs on such date or
shall have occurred within the six-month period preceding such date, or (b) if
no such transaction shall have occurred within the six-month period, the value
of the security as determined by an independent financial expert or (ii) if the
security is registered under the Exchange Act, the average of the daily closing
bid prices (or the equivalent in an over-the-counter market) for each day on
which the Common Stock is traded for any period on the principal securities
exchange or other securities market on which the Common Stock is being traded
(each, a "Trading Day") during the period commencing ten (10) Trading Days
before such date and ending on the date one day prior to such date, or if the
security has been registered under the Exchange Act for less than ten (10)
consecutive Trading Days before such date, the average of the daily closing bid
prices (or such equivalent) for all of the Trading Days before such date for
which daily closing bid prices are available; provided, however that if the
closing bid price is not determinable for at least five (5) Trading Days in such
period, the "Current Market Value" of the security shall be determined as if the
security were not registered under the Exchange Act.
(i) Other Adjustments. If the event of any other transaction
of the type contemplated by this Section 4, but not expressly provided for by
the provisions hereof, the Board of Directors of the Company will make
appropriate adjustment in the Exercise Price, the Trigger Price and the
Threshold Price so as to equitably protect the rights of the Holder.
(j) No Impairment of Holder's Rights. The Company will not, by
amendment of its certificate of incorporation or bylaws or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, except as contemplated hereby,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant Certificate, but will at all times in good faith assist in the carrying
out of all such terms and in the taking of all action as may be necessary or
appropriate in order to protect the rights of the Holder against dilution or
other impairment. Without limiting the generality of the foregoing, the Company
will not increase the par value of any shares of Common Stock receivable upon
exercise of this Warrant above the Exercise Price then in effect.
5. Company's Representations. The representations, warranties and
agreements of the Company contained in Sections 3 and 4 of the Securities
Purchase Agreement dated December 4, 1997 ("Purchase Agreement") among the
Company, the initial Holder and the other parties thereto are incorporated by
reference herein. The representations, warranties and agreements of the Company
contained in Sections 3 and 4 of the Exchange Agreement dated ___________
("Exchange Agreement") among the Company, the initial Holder and the other
parties thereto are incorporated by reference herein.
6. Registration Rights. The initial Holder is entitled to the benefit
of such registration rights in respect of the Shares as are set forth in the
Registration Rights Agreement dated as of December 4, 1997 by and between the
Company, the Holder and the other parties thereto, including the right to assign
such rights to certain assignees as set forth therein. The initial Holder is
entitled to the benefit of such registration rights in respect of the Shares as
are set forth in Section 5 of the Exchange Agreement.
7. Issuance of Certificates. Within two (2) trading days of receipt of
a duly completed Election to Purchase form, together with this Certificate and
payment of the Exercise Price, the Company, at its expense, will cause to be
issued in the name of and delivered to the Holder of this Warrant, a certificate
or certificates for the number of fully paid and non-assessable shares of Common
Stock to which that holder shall be entitled on such exercise. In the event the
shares of Common Stock are not timely delivered to the Holder, the Company
agrees to (a) indemnify Holder for all damages, including consequential and
special damages, lost profits and expenses, including legal fees, and (b)
beginning on the fifth (5th) day following the Company's receipt of a duly
completed Election to Purchase form, pay a default premium of 2% per day of the
value of underlying shares (based on the highest closing price during the two
(2) day period preceding the date of surrender of the Warrant Certificate). In
lieu of issuance of a fractional share upon any exercise hereunder, the Company
will pay the cash value of that fractional share, calculated on the basis of the
Exercise Price. Prior to registration of the resale of the shares of Common
Stock underlying this Warrant Certificate, all such certificates shall bear a
restrictive legend to the effect that the Shares represented by such certificate
have not been registered under the Securities Act, and that the Shares may not
be sold or transferred in the absence of such registration or an exemption
therefrom, such legend to be substantially in the form of the bold-face language
appearing at the top of Page 1 of this Warrant Certificate.
8. Disposition of Warrants or Shares. The Holder of this Warrant
Certificate, each transferee hereof and any holder and transferee of any Shares,
by his or its acceptance thereof, agrees that no public distribution of Warrants
or Shares will be made in violation of the provisions of the Securities Act.
Furthermore, it shall be a condition to the transfer of the Warrants that any
transferee thereof deliver to the Company his or its written agreement to accept
and be bound by all of the relevant terms and conditions contained in this
Warrant Certificate.
9. Merger or Consolidation. The Company will not merge or consolidate
with or into any other corporation, or sell or otherwise transfer its property,
assets and business substantially as an entirety to another corporation, unless
the corporation resulting from such merger or consolidation (if not the
Company), or such transferee corporation, as the case may be, shall expressly
assume, by supplemental agreement reasonably satisfactory in form and substance
to the Holder, the due and punctual performance and observance of each and every
covenant and condition of this Warrant Certificate to be performed and observed
by the Company.
10. Notices. Except as otherwise specified herein to the contrary, all
notices, requests, demands and other communications required or desired to be
given hereunder shall only be effective if given in writing by certified or
registered U.S. mail with return receipt requested and postage prepaid; by
private overnight delivery service (e.g. Federal Express); by facsimile
transmission (if no original documents or instruments must accompany the
notice); or by personal delivery. Any such notice shall be deemed to have been
given (a) on the business day immediately following the mailing thereof, if
mailed by certified or registered U.S. mail as specified above; (b) on the
business day immediately following deposit with a private overnight delivery
service if sent by said service; (c) upon receipt of confirmation of
transmission if sent by facsimile transmission; or (d) upon personal delivery of
the notice. All such notices shall be sent to the following addresses (or to
such other address or addresses as a party may have advised the other in the
manner provided in this Section 10):
If to the Company:
Base Ten Systems, Inc.
One Electronics Drive
Trenton, NJ 08619
Telephone: (609) 586-7010
Telecopy: (609) 586-1593
Attention: Mr. Thomas E. Gardner
<PAGE>
with a copy to:
Pitney, Hardin, Kipp & Szuch
200 Campus Drive
P.O. Box 1945
Morristown, New Jersey 07962-1945
Telephone: (973) 966-6300
Telecopy: (973) 966-1550
Attention: Joseph Lunin
If to _______________:
___________________
___________________
Telephone: (___) __________
Telecopy: (___) ___________
Attention: ________________
in each case with a copy to:
Shoreline Pacific Institutional Finance
3 Harbor Drive, Suite 211
Sausalito, CA 94965
Telephone: (415) 332-7800
Telecopy: (415) 332-7808
Attention: General Counsel
and:
Cowen & Co.
1 Financial Square
New York, NY 10005
Telephone: (212) 495-3950
Telecopy: (212) 495-8305
Attention: Mr. Bill Smith
Notwithstanding the time of effectiveness of notices set forth in this Section,
an Election to Purchase shall not be deemed effectively given until it has been
duly completed and submitted to the Company together with the original Warrant
Certificate to be exercised and payment of the Exercise Price in a manner set
forth in this Section.
11. Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the Company's jurisdiction of incorporation (in
respect of matters of corporation law) and the laws of the State of New York (in
respect of all other matters) applicable to contracts made and to be performed
in the State of New York. The parties hereto irrevocably consent to the
jurisdiction of the United States federal courts and state courts located in the
Borough of Manhattan in the State of New York in any suit or proceeding based on
or arising under this Agreement or the transactions contemplated hereby and
irrevocably agree that all claims in respect of such suit or proceeding may be
determined in such courts. The Company and the Holder irrevocably waives the
defense of an inconvenient forum to the maintenance of such suit or proceeding
in such forum. The Company and the Holder further agree that service of process
upon the Company or the Holder, as applicable, mailed by the first class mail in
accordance with Section 10 shall be deemed in every respect effective service of
process upon the Company or the Holder in any suit or proceeding arising
hereunder. Nothing herein shall affect the Holder's right to serve process in
any other manner permitted by law. The parties hereto agree that a final
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner. The parties hereto irrevocably waive any right to trial by jury
under applicable law.
12. Limitations on Holdings. The Warrant shall not be exercisable by a
Holder to the extent (but only to the extent) that, if exercised by such Holder,
the Holder would beneficially own in excess of 4.9% (the "Applicable
Percentage") of the shares of Common Stock. To the extent the foregoing
limitation applies, the determination of whether this Warrant Certificate shall
be exercisable (vis-a-vis other securities owned by such Holder) shall be in the
sole discretion of the Holder and submission of an Election to Purchase shall be
deemed to be the Holder's determination of whether the Warrant Certificate is
exercisable in whole or in part, subject to such aggregate percentage
limitation. No prior inability to exercise the Warrant Certificate pursuant to
this Section shall have any effect on the applicability of the provisions of
this Section with respect to any subsequent determination of ability to
exercise. For the purposes of this Section, beneficial ownership and all
calculations, including without limitation, with respect to calculations of
percentage ownership shall be determined in accordance with Section 13(d) of the
Exchange Act, and Regulation 13D-G thereunder. The provisions of this Section
may be amended and/or implemented in a manner otherwise than in strict
conformity with the terms of this Section with the approval of the Board of
Directors of the Company and the affected Holder: (i) to cure any ambiguity
herein, to correct this subsection (or any portion thereof) which may be
defective or inconsistent with the intended Applicable Percentage beneficial
ownership limitation herein contained or to make changes or supplements
necessary or desirable to properly give effect to such Applicable Percentage
limitation; and (ii) with respect to any other matter, with the further consent
of the holders of majority of the then outstanding shares of Common Stock; the
provisions of this Section may be waived with the approval of the affected
Holder upon ninety (90) days prior written notice from such Holder to the
Company. The limitations contained in this Section shall apply to a successor
Holder of this Warrant if, and to the extent, elected by such successor Holder
concurrently with its acquisition of this Warrant, such election to be promptly
confirmed in writing to the Company (provided no transfer or series of transfers
to a successor Holder or Holders shall be used by a Holder to evade the
limitations contained herein).
13. Successors and Assigns. This Warrant Certificate shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
14. Headings. The headings of various sections of this Warrant
Certificate have been inserted for reference only and shall not affect the
meaning or construction of any of the provisions hereof.
15. Severability. If any provision of this Warrant Certificate is held
to be unenforceable under applicable law, such provision shall be excluded from
this Warrant Certificate, and the balance hereof shall be interpreted as if such
provision were so excluded.
16. Modification and Waiver. This Warrant Certificate and any provision
hereof may be amended, waived, discharged or terminated only by an instrument in
writing signed by the Company and the Holder.
17. Specific Enforcement. The Company and the Holder acknowledge and
agree that irreparable damage would occur in the event that any of the
provisions of this Warrant Certificate were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Warrant Certificate and to enforce
specifically the terms and provisions hereof, this being in addition to any
other remedy to which either of them may be entitled by law or equity.
18. Assignment. This Warrant Certificate may be transferred or
assigned, in whole or in part, at any time and from time to time by the then
Holder by submitting this Warrant to the Company together with a duly executed
Assignment in substantially the form and substance of the Form of Assignment
which accompanies this Warrant Certificate and, upon the Company's receipt
hereof, and in any event, within three (3) business days thereafter, the Company
shall issue a Warrant Certificate to the Holder to evidence that portion of this
Warrant Certificate, if any as shall not have been so transferred or assigned.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed, manually or by facsimile, by one of its officers thereunto
duly authorized.
BASE TEN SYSTEMS, INC.
Date: By:------------------------------
Name:
Title:
<PAGE>
ELECTION TO PURCHASE
To Be Executed by the Holder
in Order to Exercise the Common Stock
Purchase Warrant Certificate
The undersigned Holder hereby elects to exercise _______ of the
Warrants represented by the attached Common Stock Purchase Warrant Certificate,
and to purchase the shares of Common Stock issuable upon the exercise of such
Warrants, and requests that certificates for securities be issued in the name
of:
---------------------------------------------
(Please type or print name and address)
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
(Social Security or Tax Identification Number)
and delivered to:---------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please type or print name and address if different from above)
If such number of Warrants being exercised hereby shall not be all the Warrants
evidenced by the attached Common Stock Purchase Warrant Certificate, a new
Common Stock Purchase Warrant Certificate for the balance of such Warrants shall
be registered in the name of, and delivered to, the Holder at the address set
forth below.
[In full payment of the purchase price with respect to the Warrants
exercised and transfer taxes, if any, the undersigned hereby tenders payment of
$______________ by check, money order or wire transfer payable in United States
currency to the order of BASE TEN SYSTEMS, INC.] or [The undersigned elects
cashless exercise in accordance with Sections 1(a) and 1(b) of the Common Stock
Purchase Warrant Certificate.]
HOLDER:
Dated: By:-------------------------------------
Name:
Title:
Address:
AGREED TO BY BASE TEN SYSTEMS, INC.
- ---------------------------------------
By: Name:
Title:
<PAGE>
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers unto
_______________ the right represented by the within Warrant to purchase
____________ shares of Common Stock of BASE TEN SYSTEMS, INC., a New Jersey
corporation, to which the within Warrant relates, and appoints _____________
Attorney to transfer such right on the books of BASE TEN SYSTEMS, INC., a New
Jersey corporation, with full power of substitution of premises.
Dated: By:------------------------------------------
Name:
Title:
(signature must conform to
name of holder as specified on
the fact of the Warrant)
Address:
Signed in the presence of:
Exhibit C
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, (THE "SECURITIES ACT") OR THE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES REPRESENTED HEREBY MAY
NOT BE OFFERED OR SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS OR
UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THOSE LAWS.
COMMON STOCK PURCHASE WARRANT CERTIFICATE
Dated: ___________, 1999
to Purchase _________ Shares of Common Stock of
BASE TEN SYSTEMS, INC.
BASE TEN SYSTEMS, INC., a New Jersey corporation (the "Company"),
hereby certifies that _______________, its permissible transferees, designees,
successors and assigns (collectively, the "Holder"), for value received, is
entitled to purchase from the Company at any time commencing on __________, 1999
and terminating on December 15, 2001 up to _________________________(_________)
shares (each a "Share" and collectively the "Shares") of the Company's common
stock (the "Common Stock"), at an exercise price of $16.25 per Share (the
"Exercise Price"). The number of Shares purchasable hereunder and the Exercise
Price are subject to adjustment as provided in Section 4 hereof.
1. Exercise of Warrants.
(a) Upon presentation and surrender of this Common Stock
Purchase Warrant Certificate ("Warrant Certificate" or "Certificate"), or Lost
Certificate Affidavit, accompanied by a completed Election to Purchase in the
form attached hereto as Exhibit A (the "Election to Purchase") duly executed, at
the principal office of the Company at One Electronics Drive, Trenton, NJ 08619,
Attn: Mr. Thomas E. Gardner, together with a check payable to the Company in the
amount of the Exercise Price multiplied by the number of Shares being purchased,
the Company or the Company's Transfer Agent as the case may be, shall, within
two (2) trading days of receipt of the foregoing, deliver to the Holder hereof,
certificates of fully paid and non-assessable Common Stock which in the
aggregate represent the number of Shares being purchased; provided, however,
that the Holder may elect, with the written consent of the Company which may be
granted or withheld in the Company's sole discretion (except that such consent
will not be required if (i) the prospectus included in an effective registration
statement covering resale of the Shares includes an untrue statement of material
fact or omits to state a material fact required to be stated therein or
necessary to make the statement therein, in light of the circumstances under
which they were made, not misleading, or (ii) resales of the Shares cannot be
made pursuant to an effective registration statement in compliance with the
securities laws for any other reason), to utilize the cashless exercise
provisions set forth below in lieu of tendering the Exercise Price in cash. The
certificates so delivered shall be in such denominations as may be reasonably
requested by the Holder and shall be registered in the name of the Holder or
such other name as shall be designated by the Holder. All or less than all of
the Warrants represented by this Certificate may be exercised and, in case of
the exercise of less than all, the Company, upon surrender hereof, will at the
Company's expense deliver to the Holder a new Warrant Certificate or
Certificates (in such denominations as may be requested by the Holder) of like
tenor and dated the date hereof entitling said holder to purchase the number of
Shares represented by this Certificate which have not been exercised and to
receive Registration Rights with respect to such Shares, and all other rights
with respect to the shares which the Holder has on the date hereof.
(b) Cashless Exercise. Notwithstanding the foregoing provision
regarding payment of the Exercise Price in cash, the Holder may elect, subject
to the provisions of Section 1(a), to receive a reduced number of Shares in lieu
of tendering the Exercise Price in cash. In such case, the number of Shares to
be issued to the Holder shall be computed using the following formula:
X = Y(A-B)
------
A
where: X = the number of Shares to be issued to the Holder;
Y = the number of Shares to be exercised under this Warrant Certificate;
A = the Market Value (defined below) of one share of Common Stock; and
B = the Exercise Price.
As used in this Section 1, "Market Value" refers to the Current Market Value of
the Common Stock on the day before the Election to Purchase and this Warrant
Certificate are duly surrendered to the Company for a full or partial exercise
hereof.
2. Exchange, Transfer and Replacement. (a) At any time prior to the
exercise hereof, this Certificate may be exchanged upon presentation and
surrender to the Company, alone or with other Certificates of like tenor of
different denominations registered in the name of the same Holder, for another
Certificate or Certificates of like tenor in the name of such Holder exercisable
for the aggregate number of Shares as the Certificate or Certificates
surrendered.
(b) Replacement of Warrant Certificate. Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft, destruction,
or mutilation of this Warrant Certificate and, in the case of any such loss,
theft, or destruction, upon delivery of an indemnity agreement reasonably
satisfactory in form and amount to the Company (collectively, a "Lost
Certificate Affidavit"), or, in the case of any such mutilation, upon surrender
and cancellation of this Warrant Certificate, the Company, at its expense, will
execute and deliver in lieu thereof, a new Warrant Certificate of like tenor.
(c) Cancellation; Payment of Expenses. Upon the surrender of
this Warrant Certificate in connection with any transfer, exchange or
replacement as provided in this Section 2, this Warrant Certificate shall be
promptly canceled by the Company. The Company shall pay all taxes (other than
securities transfer taxes) and all other expenses (other than legal expenses, if
any, incurred by the Holder or transferees) and charges payable in connection
with the preparation, execution and delivery of Warrant Certificates pursuant to
this Section 2.
(d) Warrant Register. The Company shall maintain, at its
principal executive offices (or at the offices of the transfer agent for the
Warrant Certificate or such other office or agency of the Company as it may
designate by notice to the holder hereof), a register for this Warrant
Certificate (the "Warrant Register"), in which the Company shall record the name
and address of the person in whose name this Warrant Certificate has been
issued, as well as the name and address of each permitted transferee and each
prior owner of this Warrant Certificate.
3. Rights and Obligations of Holders of this Certificate. The Holder of
this Certificate shall not, by virtue hereof, be entitled to any rights of a
stockholder in the Company, either at law or in equity; provided, however, that
in the event any certificate representing shares of Common Stock or other
securities is issued to the holder hereof upon exercise of some or all of the
Warrants, such holder shall, for all purposes, be deemed to have become the
holder of record of such Common Stock on the date on which this Certificate,
together with a duly executed Purchase Form, was surrendered and payment of the
aggregate Exercise Price was made, irrespective of the date of delivery of such
share certificate.
4. Adjustments.
(a) Stock Dividends, Reclassifications, Recapitalizations,
Etc. In the event the Company: (i) pays a dividend in Common Stock or makes a
distribution in Common Stock, (ii) subdivides its outstanding Common Stock into
a greater number of shares, (iii) combines its outstanding Common Stock into a
smaller number of shares or (iv) increases or decreases the number of shares of
Common Stock outstanding by reclassification of its Common Stock (including a
recapitalization in connection with a consolidation or merger in which the
Company is the continuing corporation), then (1) the Exercise Price on the
record date of such division or distribution or the effective date of such
action shall be adjusted by multiplying such Exercise Price by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately before such event and the denominator of which is the number of
shares of Common Stock outstanding immediately after such event, and (2) the
number of shares of Common Stock for which this Warrant Certificate may be
exercised immediately before such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the Exercise Price immediately
before such event and the denominator of which is the Exercise Price immediately
after such event.
(b) Cash Dividends and Other Distributions. In the event that
at any time or from time to time the Company shall distribute to all holders of
Common Stock (i) any dividend or other distribution of cash, evidences of its
indebtedness, shares of its capital stock or any other properties or securities
or (ii) any options, warrants or other rights to subscribe for or purchase any
of the foregoing (other than in each case, (w) the issuance of any rights under
a shareholder rights plan, (x) any dividend or distribution described in Section
4(a), (y) any rights, options, warrants or securities described in Section 4(c)
and (z) any cash dividends or other cash distributions from current earnings),
then the number of shares of Common Stock issuable upon the exercise of each
Warrant Certificate shall be increased to a number determined by multiplying the
number of shares of Common Stock issuable upon the exercise of such Warrant
Certificate immediately prior to the record date for any such dividend or
distribution by a fraction, the numerator of which shall be such Current Market
Value (as hereinafter defined) per share of Common Stock on the record date for
such dividend or distribution, and the denominator of which shall be such
Current Market Value per share of Common Stock on the record date for such
dividend or distribution less the sum of (x) the amount of cash, if any,
distributed per share of Common Stock and (y) the fair value (as determined in
good faith by the Board of Directors of the Company, whose determination shall
be evidenced by a board resolution, a copy of which will be sent to the Holders
upon request) of the portion, if any, of the distribution applicable to one
share of Common Stock consisting of evidences of indebtedness, shares of stock,
securities, other property, warrants, options or subscription or purchase
rights; and the Exercise Price shall be adjusted to a number determined by
dividing the Exercise Price immediately prior to such record date by the above
fraction. Such adjustments shall be made whenever any distribution is made and
shall become effective as of the date of distribution, retroactive to the record
date for any such distribution. No adjustment shall be made pursuant to this
Section 4(b) which shall have the effect of decreasing the number of shares of
Common Stock issuable upon exercise of each Warrant Certificate or increasing
the Exercise Price.
(c) Rights Issue. In the event that at any time or from time
to time the Company shall issue rights, options or warrants entitling the
holders thereof to subscribe for shares of Common Stock, or securities
convertible into or exchangeable or exercisable for Common Stock to all holders
of Common Stock (other than in connection with the adoption of a shareholder
rights plan by the Company) without any charge, entitling such holders to
subscribe for or purchase shares of Common Stock at a price per share that as of
the record date for such issuance is less than the then Current Market Value per
share of Common Stock, the number of shares of Common Stock issuable upon the
exercise of each Warrant Certificate shall be increased to a number determined
by multiplying the number of shares of Common Stock theretofore issuable upon
exercise of each Warrant Certificate by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding on the date of issuance of
such rights, options, warrant or securities plus the number of additional shares
of Common Stock offered for subscription or purchase or into or for which such
securities that are issued are convertible, exchangeable or exercisable, and the
denominator of which shall be the number of shares of Common Stock outstanding
on the date of issuance of such rights, option, warrants or securities plus the
total number of shares of Common Stock which the aggregate consideration
expected to be received by the Company (assuming the exercise or conversion of
all such rights, options, warrants or securities) would purchase at the then
Current Market Value per share of Common Stock. In the event of any such
adjustment, the Exercise Price shall be adjusted to a number determined by
dividing the Exercise Price immediately prior to such date of issuance by the
aforementioned fraction. Such adjustment shall be made immediately after such
rights, options or warrants are issued and shall become effective, retroactive
to the record date for the determination of stockholders entitled to receive
such rights, options, warrants or securities. No adjustment shall be made
pursuant to this Section 4(c) which shall have the effect of decreasing the
number of shares of Common Stock purchasable upon exercise or each Warrant
Certificate or of increasing the Exercise Price.
(d) Combination: Liquidation. (i) Except as provided in
Section 4(d)(ii) below, in the event of a Combination (as defined below), each
Holder shall have the right to receive upon exercise of the Warrant Certificates
the kind and amount of shares of capital stock or other securities or property
which such Holder would have been entitled to receive upon or as a result of
such Combination had such Warrant Certificate been exercised immediately prior
to such event (subject to further adjustment in accordance with the terms
hereof). Unless paragraph (ii) is applicable to a Combination, the Company shall
provide that the surviving or acquiring Person (the "Successor Company") in such
Combination will assume by written instrument the obligations under this Section
4 and the obligations to deliver to the Holder such shares of stock, securities
or assets as, in accordance with the foregoing provisions, the Holder may be
entitled to acquire. The provisions of this Section 4(d)(i) shall similarly
apply to successive Combinations involving any Successor Company. "Combination"
means an event in which the Company consolidates with, mergers with or into, or
sells all or substantially all of its assets to another Person, where "Person"
means any individual, corporation, partnership, joint venture, limited liability
company, association, joint stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity,
but shall not include the sale of substantially all of the assets of the
Government Technology Division of the Company.
(ii) In the event of (x) a Combination where consideration to
the holders of Common Stock in exchange for their shares is payable solely in
cash or (y) the dissolution, liquidation or winding-up of the Company, the
Holders shall be entitled to receive, upon surrender of their Warrant
Certificates, distributions on an equal basis with the holders of Common Stock
or other securities issuable upon exercise of the Warrant Certificates, as if
the Warrant Certificates had been exercised immediately prior to such event,
less the Exercise Price. In case of any Combination described in this Section
4(d)(ii), the surviving or acquiring Person and, in the event of any
dissolution, liquidation or winding-up of the Company, the Company, shall
deposit promptly following the consummation of such combination or at the time
of such dissolution, liquidation or winding-up with an agent or trustee for the
benefit of the Holders of the funds, if any, necessary to pay to the Holders the
amounts to which they are entitled as described above. After such funds and the
surrendered Warrant Certificates are received, the Company is required to
deliver a check in such amount as is appropriate (or, in the case of
consideration other than cash, such other consideration as is appropriate) to
such Person or Persons as it may be directed in writing by the Holders
surrendering such Warrant Certificates.
(e) Call by Company of Certain Other Warrants. In the event
that (i) the Company delivers a written notice to the Holder requiring such
Holder to exercise certain other warrants issued to such Holder pursuant to the
Exchange Agreement (as defined below) (the "Forced Exercise Notice"), and (ii)
the conditions to require such exercise have been met, then the Exercise Price
shall thereafter be adjusted to equal the lesser of (A) the Exercise Price then
in effect hereunder, and (B) the closing bid price of the Common Stock on the
trading day immediately preceding the exercise date set forth in the written
notice referred to in clause (i) of this Section 4(e).
(f) Notice of Adjustment. Whenever the Exercise Price or the
number of shares of Common Stock and other property, if any, issuable upon
exercise of the Warrant Certificates is adjusted, as herein provided, the
Company shall deliver to the holders of the Warrant Certificates in accordance
with Section 10 a certificate of the Company's Chief Financial Officer setting
forth, in reasonable detail, the event requiring the adjustment and the method
by which such adjustment was calculated (including a description of the basis on
which (i) the Board of Directors determined the fair value of any evidences of
indebtedness, other securities or property or warrants, options or other
subscription or purchase rights and (ii) the Current Market Value of the Common
Stock was determined, if either of such determinations were required), and
specifying the Exercise Price and number of shares of Common Stock issuable upon
exercise of Warrant Certificates after giving effect to such adjustment.
(g) Purchase Price Adjustment. In the event that the Company
issues or sells any Common Stock or securities which are convertible into or
exchangeable for its Common Stock or any convertible securities, or any warrants
or other rights to subscribe for or to purchase or any options for the purchase
of its Common Stock or any such convertible securities (other than shares or
options issued or which may be issued pursuant to the Company's employee or
director option plans or shares issued upon exercise of options, warrants or
rights outstanding on the date of the Agreement and listed in the Company's most
recent periodic report filed under the Exchange Act or disclosed in Schedule 3.3
to the Purchase Agreement) and other than the Second Closing (as defined in the
Purchase Agreement) at an effective purchase price per share which is less than
the Current Market Value of the Common Stock on the trading day next preceding
such issue or sale, then in each such case, the Exercise Price in effect
immediately prior to such issue or sale shall be reduced effective concurrently
with such issue or sale to an amount determined by multiplying the Exercise
Price then in effect by a fraction, (x) the numerator of which shall be the sum
of (1) the number of shares of Common Stock outstanding immediately prior to
such issue or sale, plus (2) the number of shares of Common Stock which the
aggregate consideration received by the Company for such additional shares would
purchase at such Current Market Value then in effect; and (y) the denominator of
which shall be the number of shares of Common Stock of the Company outstanding
immediately after such issue or sale.
For the purposes of the foregoing adjustment, in the case of the issuance of any
convertible securities, warrants, options or other rights to subscribe for or to
purchase or exchange for, shares of Common Stock ("Convertible Securities"), the
maximum number of shares of Common Stock issuable upon exercise, exchange or
conversion of such Convertible Securities shall be deemed to be outstanding,
provided that no further adjustment shall be made upon the actual issuance of
Common Stock upon exercise, exchange or conversion of such Convertible
Securities.
The number of shares which may be purchased hereunder shall be increased
proportionately to any reduction in Exercise Price pursuant to this paragraph
4(d), so that after such adjustments the aggregate Exercise Price payable
hereunder for the increased number of shares shall be the same as the aggregate
Exercise Price in effect just prior to such adjustment.
In the event of any such issuance for a consideration which is less than such
fair market value and also less than the Exercise Price then in effect, than
there shall be only one such adjustment by reason of such issuance, such
adjustment to be that which results in the greatest reduction of the Purchase
Price computed as aforesaid.
(h) Notice of Certain Transactions. In the event that the
Company shall propose (a) to pay any dividend payable in securities of any class
to the holders of its Common Stock or to make any other non-cash dividend or
distribution to the holders of its Common Stock, (b) to offer the holders of its
Common Stock rights to subscribe for or to purchase any securities convertible
into shares of Common Stock or shares of stock of any class or any other
securities, rights or options, (c) to effect any capital reorganization,
reclassification, consolidation or merger affecting the class of Common Stock,
as a whole, or (d) to effect the voluntary or involuntary dissolution,
liquidation or winding-up of the Company, the Company shall, within the time
limits specified below, send to each Holder a notice of such proposed action or
offer. Such notice shall be mailed to the Holders at their addresses as they
appear in the Warrant Register (as defined in Section 2(d)), which shall specify
the record date for the purposes of such dividend, distribution or rights, or
the date such issuance or event is to take place and the date of participation
therein by the holders of Common Stock, if any such date is to be fixed, and
shall briefly indicate the effect of such action on the number of shares of
Common Stock and on the number and kind of any other shares of stock and on
other property, if any, and the number of shares of Common Stock and other
property, if any, issuable upon exercise of each Warrant Certificate and the
Exercise Price after giving effect to any adjustment pursuant to Section 4 which
will be required as a result of such action. Such notice shall be given as
promptly as possible and (x) in the case of any action covered by clause (a) or
(b) above, at least 10 days prior to the record date for determining holders of
the Common Stock for purposes of such action or (y) in the case of any other
such action, at least 20 days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of Common Stock,
whichever shall be the earlier.
(i) Current Market Value. "Current Market Value" per share of
Common Stock or any other security at any date means (i) if the security is not
registered under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), (a) the value of the security, determined in good faith by the Board of
Directors of the Company and certified in a board resolution, based on the most
recently completed arm's-length transaction between the Company and a Person
other than an affiliate of the Company or between any two such Persons and the
closing of which occurs on such date or shall have occurred within the six-month
period preceding such date, or (b) if no such transaction shall have occurred
within the six-month period, the value of the security as determined by an
independent financial expert or (ii) if the security is registered under the
Exchange Act, the average of the daily closing bid prices (or the equivalent in
an over-the-counter market) for each day on which the Common Stock is traded for
any period on the principal securities exchange or other securities market on
which the Common Stock is being traded (each, a "Trading Day") during the period
commencing ten (10) Trading Days before such date and ending on the date one day
prior to such date, or if the security has been registered under the Exchange
Act for less than ten (10) consecutive Trading Days before such date, the
average of the daily closing bid prices (or such equivalent) for all of the
Trading Days before such date for which daily closing bid prices are available;
provided, however that if the closing bid price is not determinable for at least
five (5) Trading Days in such period, the "Current Market Value" of the security
shall be determined as if the security were not registered under the Exchange
Act.
(j) Other Adjustments. If the event of any other transaction
of the type contemplated by this Section 4, but not expressly provided for by
the provisions hereof, the Board of Directors of the Company will make
appropriate adjustment in the Exercise Price so as to equitably protect the
rights of the Holder.
(k) No Impairment of Holder's Rights. The Company will not, by
amendment of its certificate of incorporation or bylaws or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, except as contemplated hereby,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant Certificate, but will at all times in good faith assist in the carrying
out of all such terms and in the taking of all action as may be necessary or
appropriate in order to protect the rights of the Holder against dilution or
other impairment. Without limiting the generality of the foregoing, the Company
will not increase the par value of any shares of Common Stock receivable upon
exercise of this Warrant above the Exercise Price then in effect.
5. Company's Representations. The representations, warranties and
agreements of the Company contained in Sections 3 and 4 of the Securities
Purchase Agreement dated December 4, 1997 ("Purchase Agreement") among the
Company, the initial Holder and the other parties thereto are incorporated by
reference herein. The representations, warranties and agreements of the Company
contained in Sections 3 and 4 of the Exchange Agreement dated ___________
("Exchange Agreement") among the Company, the initial Holder and the other
parties thereto are incorporated by reference herein.
6. Registration Rights. The initial Holder is entitled to the benefit
of such registration rights in respect of the Shares as are set forth in the
Registration Rights Agreement dated as of December 4, 1997 by and between the
Company, the Holder and the other parties thereto, including the right to assign
such rights to certain assignees as set forth therein. The initial Holder is
entitled to the benefit of such registration rights in respect of the Shares as
are set forth in Section 5 of the Exchange Agreement.
7. Issuance of Certificates. Within two (2) trading days of receipt of
a duly completed Election to Purchase form, together with this Certificate and
payment of the Exercise Price, the Company, at its expense, will cause to be
issued in the name of and delivered to the Holder of this Warrant, a certificate
or certificates for the number of fully paid and non-assessable shares of Common
Stock to which that holder shall be entitled on such exercise. In the event the
shares of Common Stock are not timely delivered to the Holder, the Company
agrees to (a) indemnify Holder for all damages, including consequential and
special damages, lost profits and expenses, including legal fees, and (b)
beginning on the fifth (5th) day following the Company's receipt of a duly
completed Election to Purchase form, pay a default premium of 2% per day of the
value of underlying shares (based on the highest closing price during the two
(2) day period preceding the date of surrender of the Warrant Certificate). In
lieu of issuance of a fractional share upon any exercise hereunder, the Company
will pay the cash value of that fractional share, calculated on the basis of the
Exercise Price. Prior to registration of the resale of the shares of Common
Stock underlying this Warrant Certificate, all such certificates shall bear a
restrictive legend to the effect that the Shares represented by such certificate
have not been registered under the Securities Act, and that the Shares may not
be sold or transferred in the absence of such registration or an exemption
therefrom, such legend to be substantially in the form of the bold-face language
appearing at the top of Page 1 of this Warrant Certificate.
8. Disposition of Warrants or Shares. The Holder of this Warrant
Certificate, each transferee hereof and any holder and transferee of any Shares,
by his or its acceptance thereof, agrees that no public distribution of Warrants
or Shares will be made in violation of the provisions of the Securities Act.
Furthermore, it shall be a condition to the transfer of the Warrants that any
transferee thereof deliver to the Company his or its written agreement to accept
and be bound by all of the relevant terms and conditions contained in this
Warrant Certificate.
9. Merger or Consolidation. The Company will not merge or consolidate
with or into any other corporation, or sell or otherwise transfer its property,
assets and business substantially as an entirety to another corporation, unless
the corporation resulting from such merger or consolidation (if not the
Company), or such transferee corporation, as the case may be, shall expressly
assume, by supplemental agreement reasonably satisfactory in form and substance
to the Holder, the due and punctual performance and observance of each and every
covenant and condition of this Warrant Certificate to be performed and observed
by the Company.
10. Notices. Except as otherwise specified herein to the contrary, all
notices, requests, demands and other communications required or desired to be
given hereunder shall only be effective if given in writing by certified or
registered U.S. mail with return receipt requested and postage prepaid; by
private overnight delivery service (e.g. Federal Express); by facsimile
transmission (if no original documents or instruments must accompany the
notice); or by personal delivery. Any such notice shall be deemed to have been
given (a) on the business day immediately following the mailing thereof, if
mailed by certified or registered U.S. mail as specified above; (b) on the
business day immediately following deposit with a private overnight delivery
service if sent by said service; (c) upon receipt of confirmation of
transmission if sent by facsimile transmission; or (d) upon personal delivery of
the notice. All such notices shall be sent to the following addresses (or to
such other address or addresses as a party may have advised the other in the
manner provided in this Section 10):
If to the Company:
Base Ten Systems, Inc.
One Electronics Drive
Trenton, NJ 08619
Telephone: (609) 586-7010
Telecopy: (609) 586-1593
Attention: Mr. Thomas E. Gardner
with a copy to:
Pitney, Hardin, Kipp & Szuch
200 Campus Drive
P.O. Box 1945
Morristown, New Jersey 07962-1945
Telephone: (973) 966-6300
Telecopy: (973) 966-1550
Attention: Joseph Lunin
If to _______________:
___________________
___________________
Telephone: (___) __________
Telecopy: (___) ___________
Attention: ________________
in each case with a copy to:
Shoreline Pacific Institutional Finance
3 Harbor Drive, Suite 211
Sausalito, CA 94965
Telephone: (415) 332-7800
Telecopy: (415) 332-7808
Attention: General Counsel
and:
Cowen & Co.
1 Financial Square
New York, NY 10005
Telephone: (212) 495-3950
Telecopy: (212) 495-8305
Attention: Mr. Bill Smith
Notwithstanding the time of effectiveness of notices set forth in this Section,
an Election to Purchase shall not be deemed effectively given until it has been
duly completed and submitted to the Company together with the original Warrant
Certificate to be exercised and payment of the Exercise Price in a manner set
forth in this Section.
11. Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the Company's jurisdiction of incorporation (in
respect of matters of corporation law) and the laws of the State of New York (in
respect of all other matters) applicable to contracts made and to be performed
in the State of New York. The parties hereto irrevocably consent to the
jurisdiction of the United States federal courts and state courts located in the
Borough of Manhattan in the State of New York in any suit or proceeding based on
or arising under this Agreement or the transactions contemplated hereby and
irrevocably agree that all claims in respect of such suit or proceeding may be
determined in such courts. The Company and the Holder irrevocably waives the
defense of an inconvenient forum to the maintenance of such suit or proceeding
in such forum. The Company and the Holder further agree that service of process
upon the Company or the Holder, as applicable, mailed by the first class mail in
accordance with Section 10 shall be deemed in every respect effective service of
process upon the Company or the Holder in any suit or proceeding arising
hereunder. Nothing herein shall affect the Holder's right to serve process in
any other manner permitted by law. The parties hereto agree that a final
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner. The parties hereto irrevocably waive any right to trial by jury
under applicable law.
12. Limitations on Holdings. The Warrant shall not be exercisable by a
Holder to the extent (but only to the extent) that, if exercised by such Holder,
the Holder would beneficially own in excess of 4.9% (the "Applicable
Percentage") of the shares of Common Stock. To the extent the foregoing
limitation applies, the determination of whether this Warrant Certificate shall
be exercisable (vis-a-vis other securities owned by such Holder) shall be in the
sole discretion of the Holder and submission of an Election to Purchase shall be
deemed to be the Holder's determination of whether the Warrant Certificate is
exercisable in whole or in part, subject to such aggregate percentage
limitation. No prior inability to exercise the Warrant Certificate pursuant to
this Section shall have any effect on the applicability of the provisions of
this Section with respect to any subsequent determination of ability to
exercise. For the purposes of this Section, beneficial ownership and all
calculations, including without limitation, with respect to calculations of
percentage ownership shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended, and Regulation 13D-G thereunder.
The provisions of this Section may be amended and/or implemented in a manner
otherwise than in strict conformity with the terms of this Section with the
approval of the Board of Directors of the Company and the affected Holder: (i)
to cure any ambiguity herein, to correct this subsection (or any portion
thereof) which may be defective or inconsistent with the intended Applicable
Percentage beneficial ownership limitation herein contained or to make changes
or supplements necessary or desirable to properly give effect to such Applicable
Percentage limitation; and (ii) with respect to any other matter, with the
further consent of the holders of majority of the then outstanding shares of
Common Stock; the provisions of this Section may be waived with the approval of
the affected Holder upon ninety (90) days prior written notice from such Holder
to the Company. The limitations contained in this Section shall apply to a
successor Holder of this Warrant if, and to the extent, elected by such
successor Holder concurrently with its acquisition of this Warrant, such
election to be promptly confirmed in writing to the Company (provided no
transfer or series of transfers to a successor Holder or Holders shall be used
by a Holder to evade the limitations contained herein).
13. Successors and Assigns. This Warrant Certificate shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
14. Headings. The headings of various sections of this Warrant
Certificate have been inserted for reference only and shall not affect the
meaning or construction of any of the provisions hereof.
15. Severability. If any provision of this Warrant Certificate is held
to be unenforceable under applicable law, such provision shall be excluded from
this Warrant Certificate, and the balance hereof shall be interpreted as if such
provision were so excluded.
16. Modification and Waiver. This Warrant Certificate and any provision
hereof may be amended, waived, discharged or terminated only by an instrument in
writing signed by the Company and the Holder.
17. Specific Enforcement. The Company and the Holder acknowledge and
agree that irreparable damage would occur in the event that any of the
provisions of this Warrant Certificate were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Warrant Certificate and to enforce
specifically the terms and provisions hereof, this being in addition to any
other remedy to which either of them may be entitled by law or equity.
18. Assignment. This Warrant Certificate may be transferred or
assigned, in whole or in part, at any time and from time to time by the then
Holder by submitting this Warrant to the Company together with a duly executed
Assignment in substantially the form and substance of the Form of Assignment
which accompanies this Warrant Certificate and, upon the Company's receipt
hereof, and in any event, within three (3) business days thereafter, the Company
shall issue a Warrant Certificate to the Holder to evidence that portion of this
Warrant Certificate, if any as shall not have been so transferred or assigned.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed, manually or by facsimile, by one of its officers thereunto
duly authorized.
BASE TEN SYSTEMS, INC.
Date: By:--------------------------------
Name:
Title:
<PAGE>
ELECTION TO PURCHASE
To Be Executed by the Holder
in Order to Exercise the Common Stock
Purchase Warrant Certificate
The undersigned Holder hereby elects to exercise _______ of the
Warrants represented by the attached Common Stock Purchase Warrant Certificate,
and to purchase the shares of Common Stock issuable upon the exercise of such
Warrants, and requests that certificates for securities be issued in the name
of:
---------------------------------------------
(Please type or print name and address)
---------------------------------------------
---------------------------------------------
---------------------------------------------
(Social Security or Tax Identification Number)
and delivered to:
(Please type or print name and address if different from above)
If such number of Warrants being exercised hereby shall not be all the Warrants
evidenced by the attached Common Stock Purchase Warrant Certificate, a new
Common Stock Purchase Warrant Certificate for the balance of such Warrants shall
be registered in the name of, and delivered to, the Holder at the address set
forth below.
[In full payment of the purchase price with respect to the Warrants
exercised and transfer taxes, if any, the undersigned hereby tenders payment of
$______________ by check, money order or wire transfer payable in United States
currency to the order of BASE TEN SYSTEMS, INC.] or [The undersigned elects
cashless exercise in accordance with Sections 1(a) and 1(b) of the Common Stock
Purchase Warrant Certificate.]
HOLDER:
Dated: By:----------------------------------------
Name:
Title:
Address:
AGREED TO BY BASE TEN SYSTEMS, INC.
- ---------------------------------------
By: Name:
Title:
<PAGE>
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers unto
_______________ the right represented by the within Warrant to purchase
____________ shares of Common Stock of BASE TEN SYSTEMS, INC., a New Jersey
corporation, to which the within Warrant relates, and appoints _____________
Attorney to transfer such right on the books of BASE TEN SYSTEMS, INC., a New
Jersey corporation, with full power of substitution of premises.
Dated: By:--------------------------------------
Name:
Title:
(signature must conform to
name of holder as specified on
the fact of the Warrant)
Address:
Signed in the presence of:
December 22, 1998
Base Ten Systems, Inc.
One Electronics Drive
Trenton, NJ 08619
Re: Base Ten Systems, Inc. (the "Company")
9.01% Convertible Subordinated Debenture
The undersigned holder of (i) the Company's 9.01% Convertible
Subordinated Debenture in the principal sum of $4,500,000, dated August 12, 1996
and due August 31, 2003, and (ii) the Company's 9.01% Convertible Subordinated
Debenture in the principal sum of $5,500,000, dated August 22, 1996 and due
August 31, 2003, (collectively referred to as the "9.01% Debenture"), hereby
consents to the following:
1. The undersigned holder irrevocably consents to the conversion of the
entire 9.01% Debenture upon, and only upon, the exchange of all of the Company's
Series A, Convertible Preferred Shares outstanding as of December 1, 1998 into
the Company's Series B, Convertible Preferred Shares. The original 9.01%
Debenture is being forwarded to the Company under separate cover in anticipation
of the aforementioned conversion.
2. The undersigned holder consents to the modification of the 9.01%
Debenture to decrease the conversion price at which the 9.01% Debenture is
convertible into shares of Class A Common Stock from $12.50 to $4.00 (as
approved by the Company's shareholders at the Special Meeting held on November
10, 1998), simultaneous with the conversion of the 9.01% Debenture by the
undersigned in accordance with paragraph 1 above.
3. The undersigned holder hereby directs that the Company effect the
conversion of the 9.01% Debenture upon, and only upon, the exchange of all of
the Company's Series A, Convertible Preferred Shares outstanding as of December
1, 1998 into the Company's Series B, Convertible Preferred Shares.
Very truly yours,
TRUST C OF THE
CONSTANCE J. UPCHURCH FAMILY TRUST
JESSE L. UPCHURCH
------------------------------------------
Jesse L. Upchurch, Trustee
Contact:
William F. Hackett
Base Ten Systems, Inc.
609-586-7010 Ext. 2310
BASE TEN REACHES AGREEMENT WITH HOLDERS OF
PREFERRED SHARES AND DEBENTURE
TRENTON, N.J. January 13, 1999 - Base Ten Systems, Inc. (Nasdaq: BASEA) today
announced that it had signed a definitive agreement dated December 31, 1998 with
all holders of the Company's Series A Convertible Preferred Shares to exchange
these shares for new Series B Convertible Preferred Shares. The principal
differences between the two series of preferred stock are that with the Series B
Shares the price for converting preferred shares to common stock is fixed at
$4.00 per share of common stock instead of being based on the market price of
the common stock. Conversion features contained in the Series A Shares that
would have resulted in debt and debt service have been eliminated, and there is
no dividend payment due based on the price of Class A common stock. The Company
will, upon consummation of the exchange, issue warrants to purchase 40,000
shares of Class A Common Stock, at $3.00 per share, for each $1 million of
Series A Shares held on September 1, 1998 or thereafter converted at a
conversion price of $4.00 or more, and will modify existing warrants to purchase
40,000 shares to, among other things, decrease the exercise price from $16.25 to
$3.00.
"Fixing the conversion price and eliminating the debt and debt service
components bring the interests of the holders of the Company's preferred stock
and the common equity shareholders into alignment," commented William F.
Hackett, senior vice president and chief financial officer of Base Ten. "Through
this agreement, we believe we have structured the balance sheet more
appropriately for a Company our size. Management can now focus more of our
efforts on customer-related issues," Mr. Hackett added.*
Base Ten also announced that it received a commitment from the holder of the
Company's 9.01% Convertible Debenture in the principal amount of $10,000,000 to
convert the Debenture, upon the exchange of Series A Preferred Shares for Series
B Preferred Shares. The conversion price of the Debenture will be reduced from
$12.50 to $4.00 per share. Both transactions will be consummated upon the
effectiveness of a related filing of a registration statement on Form S-3 with
the Securities and Exchange Commission.
Base Ten shareholders approved the exchange of the Series A Preferred Shares for
Series B Preferred Shares, the issuance of the related warrants, and the lower
conversion price of the Debenture at a Special Meeting of Shareholders on
November 10, 1998.
Base Ten Systems is a leading software technology company, focused on execution
systems and services for the pharmaceutical, fine chemicals and medical products
industries. Through installation of BASE10(TM) software, the company's customers
around the world can enjoy more effective regulatory compliance, improved
manufacturing flexibility and reduced production cycle time. BASE10(TM)
execution systems are readily integrated with complementary software partners as
manufacturers consolidate their operations into global supply chain processes.
You can learn more about Base Ten Systems by visiting web site at
www.base10.com.
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* Forward Looking Statements
The foregoing contains "forward looking information" within the meaning of The
Private Securities Litigation Reform Act of 1995. Such forward looking
statements may be identified by an asterisk ("*") or by such forward looking
terminology as "may", "will", "believe", "anticipate", "expect" or similar words
or variations thereof. Such forward looking statements involve certain
significant risks and uncertainties. Important factors that the Company believes
may cause actual results to differ materially from such forward looking
statements are discussed in the "Risk Factors", "Business" and "MD&A" sections
of the Company's current S-3 registration statements and annual and quarterly
reports on file with the Securities and Exchange Commission. Additional risk
factors include the effectiveness of the software and ability of the software to
operate without "bugs" in the technology, acceptance of the release by customers
and actual rollout as a result of the release. In assessing such forward looking
statements you are urged to read carefully those reports and other filings. The
Company does not undertake to publicly update or revise its forward looking
statements even if experience or future changes indicate that any such results
or event (expressed or implied) will not be realized.
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