NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF
TOP SOURCE TECHNOLOGIES, INC.
To All Stockholders:
The Annual Meeting of the Stockholders of Top Source Technologies, Inc.
(the "Company") will be held at 12:00 P.M. on Friday, April 3, 1998 in the
Boardroom of the American Stock Exchange at 86 Trinity Place, New York, New York
for the following purposes:
1. To elect those members who are up for election to the
Board of Directors of the Company to serve until the Company's next annual
meeting.
2. To ratify the appointment of Arthur Andersen LLP as independent
auditors for the fiscal year ended September 30, 1998.
3. For the transaction of other lawful business that may properly come
before the meeting.
The Board of Directors has fixed the close of business on February 4,
1998 as the record date for a determination of stockholders entitled to notice
of, and to vote at, this annual meeting or any adjournment thereof.
Please vote, date, sign and mail the enclosed proxy card promptly in
the enclosed return envelope.
By Order of the Board of Directors
Dated: February 5, 1998
By: David Natan
Vice President, Chief Financial Officer
and Secretary
<PAGE>
TOP SOURCE TECHNOLOGIES, INC.
PROXY STATEMENT
The enclosed proxy is solicited by Stuart Landow, William C. Willis, Jr and
David Natan and on behalf of the Board of Directors of Top Source Technologies,
Inc. (the "Company") for use at the Annual Meeting of Stockholders to be held on
April 3, 1998 (the "1998 Annual Meeting"). This meeting as noted in the
Company's Form 10-K for the fiscal year ended September 30, 1997, was originally
scheduled to be held on April 23, 1998. Proxies are solicited to give all
stockholders who are entitled to vote on the matters that come before the
meeting the opportunity to vote, whether or not they choose to attend the
meeting in person. Such solicitation is being made by mail, and the Company may
also use its officers to solicit proxies from stockholders either in person or
by telephone or letter without extra compensation. All expenses of this
solicitation will be paid by the Company. Since proxies are being solicited by
management and management serves at the will of the Board of Directors,
management may have a conflict of interest in recommending how stockholders vote
for the proposals.
Only stockholders of record at the close of business on February 4,
1998 are entitled to notice of, and to vote at, the meeting. Each share of
common stock outstanding on the record date is entitled to one vote on all
proposals. As of the close of business on February 4, 1998, there were
28,561,477 shares of common stock of the Company outstanding. Shares cannot be
voted unless a signed proxy card is returned or other specific arrangements are
made to have shares represented at the meeting. A proxy may be revoked at any
time before it is voted at the meeting by taking one of the three following
actions: (i) by giving a written notice of revocation to the principal office of
the Company; (ii) by executing and delivering a proxy with a later date; or
(iii) by voting in person at the meeting. If a stockholder wishes to give a
proxy to someone other than management, he or she may cross out the names
appearing on the enclosed proxy card, insert the name of some other person and
sign and give the proxy card to that person for use at the meeting.
A majority of the outstanding shares entitled to vote, present in
person or represented by proxy, shall constitute a quorum. A plurality of the
votes cast at the meeting is required to elect Directors. The affirmative vote
of the majority of the shares of stock present in person or by proxy and
entitled to vote is required for ratification of the appointment of Arthur
Andersen LLP. Proxies which abstain on one or more proposals and "broker
non-votes" will be deemed present for quorum purposes for all proposals to be
voted on at the meeting. Broker non-votes occur where a broker holding stock in
street name votes the shares on some matters but not others. The missing votes
are broker non-votes. Client directed abstentions are not broker non-votes. With
regard to all proposals presented to the stockholders, abstentions will be
counted as a vote against the proposal and broker non-votes will be treated as
not entitled to vote and therefore will not be counted as either a vote for or
against the proposals. Stockholders whose shares are in street name and do not
return a proxy are not counted for any purpose and are neither an abstention nor
a broker non-vote. Stockholders who sign, date and return a proxy but do not
indicate how their shares are to be voted are giving management full authority
to vote their shares as they deem best for the Company.
This proxy statement and the accompanying proxy and notice of meeting
are first being mailed to stockholders on or about February 5, 1998.
<PAGE>
Voting Securities and Principal Holders
The following table sets forth the number of shares of the Company's
common stock beneficially owned as of January 27, 1998 by (i) owners of more
than 5% of the Company's common stock, (ii) by each Director and (iii) all
Directors and Named Executive Officers of the Company as a group.
<TABLE>
<S> <C> <C> <C>
- --------------------- -------------------------------------------- ------------------------ -------------------
Title of Class Name and Address of Beneficial Owner Amount and Nature of Percent of Class
Beneficial Ownership
- --------------------- -------------------------------------------- ------------------------ -------------------
Common Stock STUART LANDOW(1)
and Vested 7108 Fairway Drive, Suite 200 771,300 2.6%
Options Palm Beach Gardens, FL 33418
- --------------------- -------------------------------------------- ------------------------ -------------------
Common Stock WILLIAM C. WILLIS, JR. (2) 18,500 *
7108 Fairway Drive, Suite 200
Palm Beach Gardens, FL 33418
- --------------------- -------------------------------------------- ------------------------ -------------------
Common Stock DAVID NATAN(3) 97,275 *
and Vested 7108 Fairway Drive, Suite 200
Options Palm Beach Gardens, FL 33418
- --------------------- -------------------------------------------- ------------------------ -------------------
Common Stock RONALD P. BURD(4),(5) 181,750 *
and Vested 251 Linden Lane
Options Merion Station, PA 19066
- --------------------- -------------------------------------------- ------------------------ -------------------
Common Stock CLINTON D. LAUER(6) 49,250 *
and Vested 4053 Hidden Woods Drive
Options Bloomfield Hills, MI 48301
- --------------------- -------------------------------------------- ------------------------ -------------------
Common Stock G. JEFF MENNEN(7) 10,000 *
TMF Investments
25B Hanover Road
Florham Park, NJ 07932
- --------------------- -------------------------------------------- ------------------------ -------------------
Common Stock PAUL F. MOORE(8) 47,250 *
and Vested 325 N. Cliften Rd.
Options Bloomfield Hills, MI 48301
- --------------------- -------------------------------------------- ------------------------ -------------------
Common Stock L. KERRY VICKAR(9) 7,500 *
19010 Mary Ardrey Circle
Cornelios, NC 28031
- --------------------- -------------------------------------------- ------------------------ -------------------
Common Stock and CHRISTER ROSEN(10) 505,500 1.7%
Vested Options 205 Commodore Drive
Jupiter, FL 33477
- --------------------- -------------------------------------------- ------------------------ -------------------
Common Stock RICHARD RAGAN(11) 0 *
8510 Pine Cove Rd.
Commerce Township, MI 48382
- --------------------- -------------------------------------------- ------------------------ -------------------
Common Stock MELLON PRIVATE ASSET MGMT. (12) 2,079,700 7.3%
and Vested 2875 N.E. 191st Street, Penthouse I
Options N. Miami Beach, FL 33130
- ------------------------------------------------------------------ ------------------------ -------------------
All Directors and Named Executive Officers of the Company as a 1,688,325 5.6%
group (10 persons)(1)(2)(3)(4)(5)(6)(7)(8)(9)(10) (11),
*Less than 1% of class
- ------------------------------------------------------------------ ------------------------ -------------------
</TABLE>
<PAGE>
(1) Includes 600,000 vested options exercisable at approximately $2.0625 per
share held by Mr. Landow.
(2) Includes 18,500 shares held by Mr. Willis.
(3) Includes 78,125 vested options held by Mr. Natan exercisable at
approximately $6.9375 per share and 10,000 vested options at approximately
$7.75 per share, 8,150 shares held by Mr. Natan and 1,000 shares held by
Mr. Natan's wife.
(4) Includes 25,000 vested options exercisable at approximately $3.38 per
share, 40,000 vested options exercisable at approximately $1.78 per share
and 30,000 vested options exercisable at approximately $6.25 and 1,250
vested options exercisable at approximately $1.75 held by Mr. Burd.
(5) Includes 82,000 shares held jointly by Mr. Burd and his wife and 3,500
shares gifted by Mr. Burd to the Devereux Foundation, of which Mr. Burd is
President and Chief Executive Officer.
(6) Includes 30,000 vested options exercisable at approximately $8.75 per
share, 10,000 vested options exercisable at approximately $2.50 per share
and 1,250 vested options exercisable at approximately $1.75 per share, and
8,000 shares held by Mr. Lauer.
(7) Includes 10,000 shares held indirectly by Mr. Mennen in the name of
Wilmington Trust Company and George Jeff Mennen co-trustee for
Christina M. Andrea and John Henry Mennen.
(8) Includes 30,000 vested options exercisable at approximately $3.125 per
share, 15,000 vested options at approximately $7.125 per share, 1,250
vested options at approximately $1.75 per share and 1,000 shares held by
Mr. Moore.
(9) Includes 7,500 shares held by Mr. Vickar.
(10) Includes 5,500 shares and 500,000 vested options held by Mr. Rosen
exercisable at approximately $.53 per share.
(11) The Company believes Mr. Ragan has no common stock holdings, however,
this can not be confirmed since Mr. Ragan did not respond to a certified
letter from the Company requesting this information.
(12) Mellon Trust of Florida, a subsidiary of Mellon Bank Corp. ("Mellon")
formerly Ganz Capital Management, Inc. beneficially owns 2,079,700 shares
of common stock of the Company as of December 31, 1997. This represents
beneficial ownership of 7.3% of the Company's outstanding shares.
BOARD OF DIRECTORS
The business of the Company is managed under the direction of the Board of
Directors. It has responsibility for establishing broad corporate policies and
for the overall performance of the Company. It is not, however, involved in the
operating details on a day to day basis. The Board is kept advised of the
Company's business through regular written communications and discussions with
management.
Compensation of Directors
Prior to June 25, 1997, the Company's outside Directors each received a
fee of $2,500 per board meeting attended. In order to reduce the Company's
expenses, effective June 25, 1997, the outside Directors agreed to receive a
reduced fee of $1,000 per Board meeting attended, and each year on June 25th,
they receive 7,500 stock options subject to a three-year vesting schedule. They
are also reimbursed for expenses incurred in attending such meetings.
All non-employee Directors automatically receive grants of 30,000
non-qualified options upon election or appointment to the Board and an
additional grant every three year anniversary thereafter. The options vest
semi-annually over a three-year period.
<PAGE>
Board Meetings and Committees
The Board of Directors of the Company held six meetings during the fiscal
year ended September 30, 1997. On many occasions throughout the year, the Board
took action by unanimous consent in lieu of holding a meeting.
The Company has a Compensation Committee comprised of Messrs. Burd,
Lauer, and Moore; an Audit Committee comprised of Messrs. Burd, and Lauer;
a Nominating Committee comprised of Messrs. Landow, Willis and Mennen.
Proposal 1. Election of Directors
The Company has a classified Board of Directors which provides for three
classes of Directors each of which serves a three-year term. One class is
elected each year. One Director was elected at the 1997 Annual Meeting and the
person elected will hold office until his term expires in the year 2000 and
until his successor has been elected and qualified. The Company's by-laws
provide that the Board of Directors shall consist of no less than three and no
more than nine members, with the actual number to be established by resolution
of the Board of Directors. The current Board of Directors has by resolution
established the number of Directors at seven.
<TABLE>
Current and Fiscal 1997
Board of Directors
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------- ------- ------------------------------------ ---------- ------------ ------------ ------------
NAME AGE POSITION WITH COMPANY SINCE TERM ENDING CLASS
- ----------------------------- ------- ------------------------------------ ---------- ------------ ------------ ------------
Stuart Landow(1) 51 Chairman of the Board of Directors 1990 2000 C
Three Years
- ----------------------------- ------- ------------------------------------ ---------- ------------ ------------ ------------
William C. Willis, Jr.(1) 46 President, Chief Executive Officer 1997 -- 2001 A
and Director
- ----------------------------- ------- ------------------------------------ ---------- ------------ ------------ ------------
Ronald P. Burd(2)(3) 51 Director 1992 1999 B
Three Years
- ----------------------------- ------- ------------------------------------ ---------- ------------ ------------ ------------
Clinton D. Lauer(2)(3) 71 Director 1994 1999 B
Three Years
- ----------------------------- ------- ------------------------------------ ---------- ------------ ------------ ------------
G. Jeff Mennen(1) 57 Director 1998 Three Years 2000 C
- ----------------------------- ------- ------------------------------------ ---------- ------------ ------------ ------------
Paul F. Moore(3) 71 Director 1993 1999 B
Three Years
- ----------------------------- ------- ------------------------------------ ---------- ------------ ------------ ------------
L. Kerry Vickar 40 Director 1998 2001 A
--
- ----------------------------- ------- ------------------------------------ ---------- ------------ ------------ ------------
</TABLE>
(1) Member of the Nominating Committee
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
<PAGE>
Mani Sadeghi, who served on the Company's Board of Directors from September
1993 to January 1998 resigned effective January 26, 1998 due to the time
constraints of his employment with AT&T Capital. Mr. Vickar, a current nominee
for re-election, was appointed to fill Mani Sadeghi's position on the Board.
The nominees for the election are set forth below. The proxy holders
intend to vote all proxies received by them for the nominee for Directors listed
below unless instructed otherwise. In the event the nominee is unable or
declines to serve as a Director at the time of the annual meeting, the proxies
will be voted for any nominee who shall be designated by the present Board of
Directors to fill the vacancy. In the event that additional persons are
nominated for election as Directors, the proxy holders intend to vote all
proxies received by them for the nominee listed below unless instructed
otherwise. As of the date of this Proxy Statement, the Board of Directors is not
aware that any nominee is unable or will decline to serve as a Director.
<TABLE>
Nominees for Election at the 1998 Annual Meeting:
<S> <C> <C> <C> <C> <C>
- ---------------------------- --------------- -------------------------- ------------ ------------------ -------------------
Name Age Position With The Company Since New Term Term Ending
- ---------------------------- --------------- -------------------------- ------------ ------------------ -------------------
William C. Willis, Jr. 46 President, Chief 1997 Three Years 2001
Executive Officer and
Director
- ---------------------------- --------------- -------------------------- ------------ ------------------ -------------------
L. Kerry Vickar 40 Director 1998 Three Years 2001
- ---------------------------- --------------- -------------------------- ------------ ------------------ -------------------
</TABLE>
Present Board Members:
William C. Willis, Jr. - Mr. Willis has been President, Chief Executive Officer
and a member of the Board of Directors since May, 1997. As President and Chief
Executive Officer of the Company, Mr. Willis is responsible for the overall
management of the business, with an emphasis on business strategy and long-term
planning. Prior to joining the Company, Mr. Willis was Chairman and CEO of
Willis & Associates, a management consulting firm assisting small and medium
sized technology, health care and consumer products companies. From 1994 to
1995, Mr. Willis was President and Chief Operating Officer of MBf USA, Inc., a
marketer and distributor of latex products. Mr. Willis oversaw a 30 percent
increase in volume and a significant increase in stock value and market
capitalization. From 1990 to 1994, Mr. Willis was President and CEO of
Insituform Technologies, Inc., a state of the art provider of technologies for
the reconstruction of pipelines and infrastructure. During his tenure, Mr.
Willis increased annual revenues from $22 million to over $100 million and
increased operating income from $1.2 million to $12 million. From 1985 to 1990,
Mr. Willis was President of The Paper Art Company, Inc., a subsidiary of the The
Mennen Company. Under Mr. Willis' leadership, the Paper Art Company's sales
increased significantly.
Stuart Landow - Mr. Landow has been Chairman of the Board of Directors since
October 2, 1991, a Board member since 1990 and was the President and Chief
Executive Officer of the Company from July 1990 until May 1997. Mr. Landow
introduced the oil analysis concept to the Company. In addition, Mr. Landow
introduced the licensing through MIT of the ARCS technology and of the EFECS
Technology, the latter of which was subsequently sold subject to a royalty
agreement by the Company in 1995. Presently, Mr. Landow's primary efforts are
concentrated on the marketing, and development of strategic relationships for
the Company's products and technologies.
Ronald P. Burd - Mr. Burd has been a Director of the Company since March 1992.
From 1984 through the present, Mr. Burd has been President and Chief Executive
Officer of the Devereux Foundation. Devereux, founded in 1912, is a nationwide,
private, not-for-profit organization that treats individuals of all ages who
have a wide range of emotional disorders and/or developmental disabilities.
Headquartered in Devon, Pennsylvania, Devereux operates residential, day and
community-based treatment programs located in 13 states and the District of
Columbia.
<PAGE>
Clinton D. Lauer - Mr. Lauer was appointed a Director of the Company in March
1994. From January 1992 to present, Mr. Lauer has been President of Lauer and
Associates, a consulting firm working with automotive supplier companies. From
1987 to January 1992, Mr. Lauer held the position of Vice President, Purchasing
and Supply with Ford Motor Company. In January 1992 he retired from the Ford
Motor Company after 36 years with that company.
G. Jeff Mennen - was appointed a Director of the Company in October 1997.
Currently, Mr. Mennen is President of Peak Management, a consulting firm which
he founded in 1989. Also, Mr. Mennen is a Managing Partner of TMF Investment
Holdings, a family investment firm. From 1981 until 1992, Mr. Mennen was Vice
Chairman of The Mennen Company where he served until the company was sold to
Colgate-Palmolive. From 1977 until 1981, Mr. Mennen was President of Mennen
International. Mr. Mennen holds Directorships in Corbin, Ltd. and MBf USA, Inc.
Paul F. Moore - Mr. Moore was appointed a Director of the Company in September
1993. Currently, Mr. Moore is President and CEO of P.F. Moore & Associates, a
consulting engineering company. From 1991 to 1994, Mr. Moore was President of
Advanced Vehicle Concepts, a Michigan based company which builds prototype
vehicles. From 1986 through 1991, Mr. Moore was chief executive officer of
American Professional Services which was later acquired by First Technology PLC
of Great Britain. Mr. Moore spent 25 years as a senior executive with Chrysler
Corporation and retired from Chrysler in 1981.
L. Kerry Vickar - Mr. Vickar was appointed a Director of the Company in January
1998. Mr. Vickar has a Bachelor of Law degree from the University of Manitoba
and has extensive experience with divestitures, acquisitions, operations and
financial re-structuring. Currently, Mr. Vickar is Chairman and CEO of Vickar
Industries LLC, which recently acquired two printing companies with annual
volume in excess of $30 million. In 1994, Mr. Vickar negotiated the sale of
Gravure International Corp. to ACX Technologies, Inc., where he remained until
1995 as Executive Vice President and Chief Operating Officer of Flexible
Division of Graphic Packaging (a subsidiary of ACX Technologies, Inc.). From
1983 through 1994, Mr. Vickar held various positions, including President and
Chief Operating Officer with Gravure International Corp. During Mr. Vickar's
twelve years with Gravure, a $15 million privately-owned company grew to over
$100 million in volume.
Non-Director Executive Officers
David Natan - Mr. Natan, a CPA, joined the Company in June of 1995 and
brings nearly 20 years of management and analytical experience to his
responsibilities as Vice President and Chief Financial Officer of the Company.
Prior to joining the Company, from November 1992 through June 1995, Mr. Natan
was Chief Financial Officer of MBf USA, Inc., which is a NASDAQ listed
subsidiary of MBf Holdings Berhad, a four-billion-dollar multi-national
conglomerate. From August 1987 through October 1992, Mr. Natan was Treasurer and
Controller for Jewelmasters, Inc., an American Stock Exchange listed company. In
January 1996, Mr. Natan became a Director of IMX Corporation ("IMX") in Boca
Raton, Florida, a NASDAQ listed distributor of pharmaceutical products.
Executive Officer Compensation
The following table sets forth certain summary information concerning the
compensation awarded to, earned by, or paid to the Chief Executive Officer and
the other four most highly compensated current and former executive officers of
the Company whose combined salary and bonus for the fiscal year ended September
30, 1997 exceeded $100,000 (collectively, the "Named Executive Officers") for
the years indicated.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
---------------------------------------------------------- ---- ----------------------------------
Annual Compensation Long-Term Compensation
Awards Payouts
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------- --------- ---------- -------------------- --------------- -------------- ------------ --------- ---------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- ---------------- -------- --------- ------------------ --------------- --------------- ------------ ---------- ---------
Name and Principal Securities
Position Other Annual Restricted Underlying LTIP All Other
Year Salary ($) Bonus ($) Compensation Stock Option/SARs Payouts Compensation
($)(1) Award(s)($) (#) ($) ($)(4)
- ---------------------- ------- --------------- --------------- --------------- -------------- ----------- ----------- ----------
Stuart Landow 1997 $211,200 $178,405(6) $15,600(2) $0 $0 $0 $22,132
Chairman of the Board 1996 $211,200 $238,535(6) $14,400(2) 525,000(5) $0 $0 $33,002
1995 $202,794 $189,688(6) $7,200 $0 $0 $0 $14,213
- ----------------------- ---------------------- --------------- --------------- ----------------- ---------- --------- ----------
William C. Willis, Jr. 1997 $109,231(7) $0 $4,369 $0 500,000 $0 $982
President, CEO and 1996 N/A N/A N/A N/A N/A N/A N/A
Director 1995 N/A N/A N/A N/A N/A N/A N/A
- --------------------- ------- -------------- --------------- ------------- ----------------- ------------ ------------ ----------
David Natan 1997 $125,000 $25,000 $11,298 $0 7,000 $0 $3,511
Vice President,CFO 1996 $125,000 $25,000 $10,914 $0 10,000 $0 $5,448
Secretary 1995 N/A N/A N/A N/A N/A N/A N/A
- --------------------- -------- --------------- --------------- ------------- ----------------- --------------- -------- --------
Christer Rosen 1997 $200,000 $25,000 $9,454(3) $0 0 $0 $2,496
Former Executive Vice 1996 $200,560 $25,000 $19,592(3) $0 0 $0 $7,837
President 1995 $180,940 $25,000 $14,064(3) $0 0 $0 $4,419
- ---------------------- -------- ------------- --------------- -------------- ----------------- --------------- --------- --------
Richard Ragan 1997 $194,951 $0 $14,285 $0 0 $0 $0
Former CEO of Top 1996 N/A N/A N/A N/A N/A N/A N/A
Source Instrupments, 1995 N/A N/A N/A N/A N/A N/A N/A
Inc.
- --------------------- --------- ------------ --------------- -------------- ----------------- --------------- --------- ---------
</TABLE>
<PAGE>
(1) Amounts consist principally of automobile allowances paid by the Company.
The Company's policy is to provide executive officers with an automobile
allowance of $600 per month and a maintenance allowance of $400 intended to
cover the cost of all other expenses of operating the vehicle such as
insurance, maintenance, repairs and gasoline costs.
(2) In the case of Mr. Landow, additional compensation of $3,600 is
attributable to the usage of Company owned vehicles which he purchased in
December 1997.
(3) In the case of Mr. Rosen, the amounts for 1997, 1996 and 1995 also
include $0, $8,792, and $4,407 in club membership dues paid by the
Company, respectively.
(4) These amounts, as follows, represent group term life insurance
premiums paid by the Company, the Company's match of the Retirement
Salary Saving Plan - 401(k) and reimbursement of out-of-pocket medical,
dental, etc. expenses not covered by the Company's insurance:
(a) The 1997 group term life insurance premiums was as
follows: Mr. Landow $7,919 and Mr. Willis $413.
(b) The 1997 employer match of the Retirement Salary Savings
Plan - 401(K) was as follows: Mr. Landow $1,980,
Mr. Natan $2,012 and Mr. Rosen $1,378.
(c) The 1997 reimbursement of out-of pocket medical, dental,
etc. not covered by the Company's insurance was as
follows: Mr. Landow $12,233, Mr. Willis $156, Mr.
Natan $1,499 and Mr. Rosen $1,118.
(5) In prior years, Mr. Landow had deferred vesting of 100,000 shares that
were granted to him in 1990. In July 1996, Mr. Landow agreed to the
full vesting of the 100,000 shares, which was valued at $525,000 based
on $5.25, the closing stock price of the Company's common stock on the
American Stock Exchange at July 17, 1996.
(6) Pursuant to an employment agreement in fiscal 1995, Mr. Landow received
an incentive compensation payment of 1% of net sales totaling $189,688,
of which $163,037 had been paid at fiscal year-end and $26,651 was
accrued. In fiscal 1997 and 1996, Mr. Landow was paid $178,405 and
$238,535, respectively, in incentive compensation payments based on a
percentage of net sales as defined in his employment agreement.
Included in the fiscal 1996 payments was $27,568 relating to the sale
of the United Testing Group, Inc. assets .
(7) Mr. Willis' salary is only for the partial year from May 21, 1997
through September 30, 1997.
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
SEPTEMBER 30, 1997
<TABLE>
Potential Realizable Value at Assumed
Annual Rates of Stock Price Appreciation
Individual Grants for Option Term(1)
- --------------------------------------------------------------------------------- -------------------------------------
<S> <C> <C> <C> <C> <C>
- ----------------- ----------------- ------------ ------------- ------------- ------------- -----------------
(a) (b) (c) (d) (e) (f) (g)
- ----------------- ----------------- ------------- -------------- ------------ -------------- -----------------
Number of % of Total
Name securities Options/SARs
underlying Granted to Exercise
options/SARs employees in or Base
granted (#) Fiscal Year Price
($/Share) Expiration Date 5% ($) 10%($)
- -------------------- ------------- -------------- ----------- ---------------- ------------------ ------------
- -------------------- ------------- ------------- ----------- ---------------- ------------------- -------------
Stuart Landow 0 N/A N/A N/A N/A N/A
- --------------------- ----------------- ------------ ----------- --------------- ------------------ --------------
William C.Willis,Jr. 500,000 54.2% $2.00 5/21/2007 628,895(2) 1,593,742(3)
- -------------- --------------- -------------- ---------- --------------- ------------------ --------------
David Natan 7,000 .8% $1.5625 7/15/2007 6,879(4) 17,432(5)
- ---------------- ------------ ---------------- --------- ------------ ------------------ ---------------
Christer Rosen 0 N/A N/A N/A N/A N/A
- ------------------- ------------ ---------------- --------- ------------- ----------------- ---------------
Richard Ragan 0 N/A N/A N/A N/A N/A
- ------------------- ------------- ----------- -------- ------------- ---------------- ---------------
</TABLE>
(1) The values shown are based on indicated assumed annual rates of
appreciation compounded annually through the applicable expiration
date. Actual gains realized, if any, on stock option exercises and
common stock holdings are dependent on the future performance of the
common stock and overall market conditions. There can be no assurance
that the values shown on this table will be achieved.
(2) Represents an assumed market price per share of common stock of $3.26.
(3) Represents an assumed market price per share of common stock of $5.19.
(4) Represents an assumed market price per share of common stock of $2.55.
(5) Represents an assumed market price per share of common stock of $4.05.
<PAGE>
The following table sets forth certain information with respect to the
exercise of options to purchase common stock and SARs during the fiscal year
ended September 30, 1997, and the unexercised options held and the value thereof
at that date, by each of the Named Executive Officers.
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END(1) OPTION/SAR VALUES
<S> <C> <C> <C> <C>
- ------------------- --------------------- ------------------ ---------------------------------- -----------------------------
(a) (b) (c) (d) (e)
-----------------------------
- ------------------- --------------------- ------------------ ---------------------------------- Value of Unexercised
Number of Securities Underlying In-the-Money
Unexercised Options/SARs at Options/SARS
Fiscal Year End (#) at Fiscal Year End ($) (2)
- ------------------- --------------------- ------------------ --------------- ------------------- -----------------------------
Shares Acquired on
Exercise Value Realized
Name (#)(1) ($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------- --------------------- -------------------- --------------- -------------------- ------------ -------------
Stuart Landow 0 N/A 600,000 0 $0 $0
- -
- ------------------- ------------------ -------------------- --------------- ----------------------- --------------- ---------------
William C. Willis, Jr. 0 N/A 0 500,000 $0 $0
- -------------------- ----------------- -------------------- --------------- ----------------------- --------------- ---------------
David Natan 0 N/A 88,125 22,625 $0 $3,063
- -------------------- ----------------- -------------------- --------------- ----------------------- --------------- ---------------
Christer Rosen 0 N/A 500,000 0 $735,000 $0
- --------------------- --------------- ------------------- --------------- ----------------------- --------------- ---------------
Richard Ragan 0 N/A 0 0 $0 $0
- --------------------- ---------------- -------------------- --------------- ----------------------- --------------- ---------------
(1) All options were granted at 100% of fair market value.
(2) Based on the difference between the closing market price of the Company's stock on the American Stock Exchange at September
30, 1997 of $2.00 and the option exercise price.
</TABLE>
<PAGE>
Executive Compensation Agreements
William C. Willis, Jr.
In May 1997, the Company entered into an employment agreement
("Agreement") with, William C. Willis, Jr., the new President and Chief
Executive Officer ("CEO") of the Company. The term of this Agreement is three
years through May 21, 2000 ("Employment Period"). The Agreement provides for a
base salary of $300,000 ("Annual Base Salary"). Mr. Willis receives an
automobile allowance of $600 per month and an automobile maintenance and
gasoline allowance of $400 per month. Mr. Willis shall also be eligible to
receive a cash bonus ("Performance Bonus") as described below for each
successive period of four fiscal quarters (prorated for any partial period)
during the Employment Period, as defined in the Agreement, in an amount of
between zero and 100% of the Annual Base Salary. The Performance Bonus, if any,
for each successive four-quarter period shall be paid within 60 days after the
end of such period. The Performance Bonus shall consist of the following two
components:
(A) The first component of the Performance Bonus shall be an amount of
between zero and 50% of the Annual Base Salary based on the Company
meeting annual earnings per share targets of between $.01 and $.05 as
defined in the Agreement.
(B) The second component of the Performance Bonus shall be an amount of
between zero and 50% of the Annual Base Salary based on the Company
achieving five annual performanced based targets for each period of
four fiscal quarters during the Employment Period. As of September 30,
1997, Mr. Willis had not earned any bonuses.
The Earnings Per Share targets and five performanced based targets for
each succeeding four quarter period during the Employment Period shall be reset
and established annually by the Compensation Committee in its sole and absolute
discretion. The Compensation Committee shall notify Mr. Willis promptly in
writing upon its determination of such subsequent targets
In addition to the payments provided above, on May 21, 1997, the
Compensation Committee granted to Mr. Willis, outside of the stock option plan
as described in Note 15. Stock and Stock Option Plans, of the September 30, 1997
Form 10-K, options to purchase 500,000 shares of the Company's Common Stock,
with the purchase price upon exercise of such options equal to $2.00 per share
(i.e., the closing price of the Common Stock on the American Stock Exchange on
the date of such grant). The options shall vest as follows: (a) 100,000 options
will become exercisable on the first anniversary of the date of this Agreement;
(b) 100,000 options will become exercisable on the second anniversary of the
date of this Agreement; (c) 100,000 options will become exercisable on the third
anniversary of the date of this Agreement; (d) 100,000 options will become
exercisable when the closing price for the Company's common stock on the
American Stock Exchange (or such other exchange or trading system that
constitutes the primary trading market for the Company's common stock) is $7.00
per share or higher for 30 consecutive days; and (e) 100,000 options will become
exercisable when the closing price for the Company's common stock on the
American Stock Exchange is $9.00 per share or higher for 30 consecutive trading
days; provided, however, that the vesting of such options shall be accelerated
in the event of a change in control.
Also, under the terms of the Agreement, Mr. Willis was given a one-time
$45,000 moving allowance to cover his out-of-pocket expenses associated wtih the
sale of his home and his relocation to the Florida area. In addition, the
Company agreed to pay Mr. Willis' federal income tax liability associated with
any reimbursement he would receive from the Company.
For the period from October 1, 1997 through December 31, 1997, Mr. Willis
was reimbursed $45,000 by the Company for out-of-pocket expenses and was
credited with $26,942 in federal income tax paid on his behalf by the Company.
Effective in August 1997, the Company began providing Mr. Willis with
a $1,000,000 life insurance policy.
<PAGE>
Stuart Landow
In Fiscal 1993, Mr. Landow, the Former President and Chief Executive
Officer and the current Chairman of the Board of Directors of the Company,
entered into an employment agreement with the Company. The term of this
employment agreement was five years through August 18, 1998. (The Employment
Agreement was extended until June 1, 1999 due to a breach in the terms of his
original employment agreement, see below.) The agreement provides for a base
annual salary of $200,000 per year subject to a review by the Company's
Compensation Committee in which Mr. Landow's base salary during the term, and
may be increased, but not decreased. Additionally, the agreement calls for
incentive compensation payments based upon the following: (1) revenue (at the
rate of 1% of quarterly revenue, for quarterly revenue up to $6.25 million and
descending downward to the rate of .75% of quarterly revenue if it is between
$6.25 million to $12.5 million and .5% of quarterly revenue if quarterly revenue
is over $12.5 million), and (2) profitability (incentive amount based on revenue
if net income is 8% of net sales, up to a rate of twice the incentive amount
based on revenue if net income is 20% or greater) of the Company during the
term, payable after the end of each of the Company's fiscal quarters according
to specific formulas contained in the agreement. The incentive cash compensation
expense for fiscal 1997 was $178,406. In the event of termination without cause
or if Mr. Landow resigns for "good reason", as defined in the agreement, the
Company is required to make 36 consecutive monthly payments equal to his base
and incentive compensation. Mr. Landow will also continue to receive medical,
life and disability insurance coverage during the 36 month term. Mr. Landow also
receives an automobile allowance of $600 per month and an automobile maintenance
allowance of $400 per month.
As a result of the hiring of a new CEO, a breach in the terms of the
original agreement occurred, thus, Mr. Landow could have requested that the
"Good Reason" clause of his contract be triggered effective July 1, 1997. This
clause was waived by Mr. Landow with the approval of the Board of Directors as
it was determined to be in the best interests of the Company to retain Mr.
Landow for a minimum period of one year. This waiver, ("Standstill") is
effective until July 1, 1998 or earlier, if elected by Mr. Landow at which time
the terms of the original employment agreement will remain in effect with the
exception of the incentive payments which will be calculated based on the
previous sales for the period from July 1, 1996 through July 1, 1997.
Additionally, effective in October 1993, the Company began providing
of Mr. Landow with a $950,000 term life insurance policy.
David Natan
Mr. David Natan, Vice President and Chief Financial Officer, receives an
annual salary of $125,000 pursuant to an employment agreement, a car allowance
of $600 per month and an automobile maintenance and gasoline allowance of $400
per month. Mr. Natan received performance based bonuses of $25,000 in December
1996 and $25,000 in August 1997. In July 1997, Mr. Natan was granted 7,000
options to purchase the Company's stock at $1.5625 per share.
Christer Rosen
Mr. Christer Rosen, Executive Vice President and Secretary, who resigned as
an executive officer of the Company in July 1997, received an annual salary of
$200,000. Mr. Rosen also received an automobile allowance of $600 per month and
an automobile maintenance and gasoline allowance of $400 per month.
Additionally, Mr. Rosen received a performance-based bonus payment of $25,000 in
December 1996. In July 1997, Mr. Rosen resigned as an employee and entered into
an agreement with the Company to be available to provide consulting services.
The term of the contract is for 13 months and expires August 14, 1998. Mr. Rosen
will be paid a monthly salary of $16,667 as compensation for his services.
<PAGE>
Richard Ragan
Mr. Richard Ragan was Chief Executive Officer of Top Source Instruments, Inc.
("TSI") from October 1996 to June 1997. Mr. Ragan resigned as an executive
officer of the Company in June 1997 to pursue other interests. Mr. Ragan, prior
to his resignation, received an annual salary of $200,000 per year and an
automobile allowance of $600 per month and a $400 automobile maintenance and
gasoline allowance per month. Pursuant to this employment agreement, he received
severance compensation of $50,000 for the period ended September 30, 1997 and
$33,333 in additional severance for the period ended December 31, 1997.
Retirement Salary Savings Plan
In October 1993, the Company established a 401(k) Retirement Salary
Savings Plan (the "Plan"). All current employees, including executive officers,
were eligible to participate as of October 1, 1993. Any individuals employed
thereafter must complete three months of service to meet the eligibility
requirements. Employees may voluntarily contribute from 1% to 15% of their pay
each plan year although certain requirements may limit the contribution levels
of highly compensated employees. During fiscal 1997, the Company contributed
matching dollars equal to 25% of every dollar invested in the Plan on the first
6% of salary savings. The cost the Company incurred for matching employee
contributions and administrative costs during fiscal 1997 was approximately
$41,637. The Plan provides that the Company's matching contribution may change
from year to year and that the Company may declare additional matching dollars
at year-end. Any forfeited non-vested amounts contributed are used to reduce
required Company matching contributions. All participants employed with the
Company who enrolled on or before October 1, 1993 were immediately 100% vested
for all future employer matching contributions. All employees hired after
October 1, 1993 vest ratably over a five-year term.
Certain Relationships and Related Transactions
On June 9, 1995, the Company entered into an agreement with advisory
clients of Ganz Capital Management, Inc., now Mellon Private Asset Management
("Mellon"), whereby the holders would purchase $3,020,000 in Senior Subordinated
Convertible Notes (the "Notes") from the Company. The Notes are subject to an
Indebtedness to Equity ratio that cannot exceed 1.5 to 1.0. As of September 30,
1997, the Company was in compliance with the ratio. However, due to the
Company's historic losses and due to the uncertainty on the timing of OSA
revenues, there is a possibility that the Company will exceed this ratio during
fiscal 1998. In the event the ratio is not met and the Company is unable to
receive a waiver from Mellon, G. Jeff Mennen, a Director, has agreed to
guarantee sufficient capital infusion into the Company to maintain compliance of
this ratio through October 1, 1998 or refinance the notes to the satisfaction of
Mellon. In consideration for this guarantee, the Company issued 50,000 ten-year
warrants exercisable at $2.00 per share to Mr. Mennen and agreed to register the
underlying shares of common stock at its sole expense.
In June, 1997, the Company was authorized by the Board of Directors to
lend, Mr. Willis, the President/CEO up to $30,000 evidenced by a three- year
promissory note payable to the Company bearing interest of 9% . At September 30,
1997, the note payable balance with interest was $30,685. The accrued interest
was paid in October, 1997.
The Chairman, Mr. Landow, was also authorized by the Board to borrow
$75,000 from the Company and delivered a 9% promissory note dated June 1, 1997
with interest due quarterly. The principal and all accrued interest is due and
payable on August 6, 2001. In the event that Mr. Landow or the Company elects
not to extend Mr. Landow's employment with the Company beyond July 1, 1998, the
principal and interest is required to be repaid in 36 equal installments
commencing July 1, 1998. The accrued interest was paid in October 1997. In
addition to the long term $75,000 note, during 1997. Mr. Landow was allowed to
borrow and partially repay varying amounts from the Company as long as this
indebtedness to the Company did not exceed a cap of $30,000. Mr. Landow paid
interest on these borrowings at the rate of 9% per annum. As of September 30,
1997, his short-term indebtedness was $27,233 and as of December 1997 was
$23,764.
In December 1997, Mr. Landow purchased two used vehicles from the
Company for $30,000 which approximated their fair market value at the date of
this transaction.
Repricing of Options
In fiscal year ended September 30, 1997, the Company did not adjust or amend the
exercise price of stock options previously granted to any of the Named Executive
Officers.
Report on Executive Compensation by the Compensation Committee
The primary objective of the compensation policy of the Company is to
align executive compensation in a way that will encourage enhanced shareholder
value, while concurrently allowing the Company to attract, retain and
satisfactorily reward all employees who contributed to the Company's long-term
growth and economic success. The main principles of the compensation program are
(1) the development of incentive plans, (2) the attainment of both the Company's
short-term and long-term growth operational goals and strategic initiatives (3)
the development of competitive compensation packages that will enable the
Company to attract retain and motivate high caliber employees without depleting
the Company's resources, and (4) to provide incentives to the Company's
executives and other employees to share in appreciation of the price of the
Company's stock, thereby aligning their interests with those of the Company's
stockholders. The compensation program for Company's executives includes an
annual based salary, appropriate fringe benefits, some of which are standard
Company policy for all employees and some of which may be negotiated for
management, the potential for an annual cash bonus and grants of long-term stock
option incentives, which in the case of the Company's Chief Executive Officer,
are in large part performance based.
During fiscal 1997, the Company initiated a company-wide restructuring
which included number of executive management changes, the most significant of
which was naming William C. Willis, Jr., on May 21, 1997 after an extensive
search by the Company's Board of Directors, as President and Chief Executive
Officer. Mr. Stuart Landow, the Company's former President and Chief Executive
Officer remained with the Company as its Chairman of the Board of Directors and
devotes his time to special projects.
Chief Executive Officer
William C. Willis, Jr.
Mr. Willis' compensation negotiated package was finalized after
extensive discussions by the Compensation Committee. Korn/Ferry International, a
leading international search firm which specializes in the placement of high
level senior executives. Mr. Willis' package meets the company's compensation
goals as stated above. The Compensation Committee believes that Mr. Willis' base
salary at $300,000, his bonus and stock option incentives represent compensation
commensurate to attract an executive of Mr. Willis's experience and background.
At the same time his agreement ties a large portion of any future bonus payment
or stock option appreciation to performance. The number of options granted to
Mr. Willis (500,000) was not based on any formula or general Company policy.
However, the terms of the grant, which provides for automatic vesting of 300,000
of the options over a three-year period and vesting of the remaining 200,000
options based on increased stock price, is based on the Company's stock reaching
and remaining at a specific price, is in accordance with the Company's goal of
creating a financial incentive for executives to increase shareholder value.
Similarly, a large portion of his performance bonus is tied to future
profitability. As of September 30, 1997, no bonuses had been earned by Mr.
Willis under the terms of his contract.
<PAGE>
Current Executive Officer
David Natan
In July 1997, Mr. Natan, the Company's Chief Financial Officer, was granted
7,000 options at $1.56 per share exercisable in one year. Additionally, the
following month, in August 1997, Mr. Natan received a discretionary bonus of
$25,000. Mr. Natan was awarded this bonus in recognition of his efforts in the
securing of bank financing for the Company on favorable terms in July 1997, his
successful financial and management restructuring of the Company and to
compensate him for additional responsibilities undertaken by him upon completion
of the restructuring.
Former Executive Officers
Stuart Landow
As previously described, in June 1997, the Board of Directors and the
new President and CEO, Mr. Willis, determined that it would be in the best
interest of the Company to retain the services of Mr. Landow for a minimum
period of one year to help ensure the continuity of several on-going OSA
programs in process, and to utilize Mr. Landow's extensive knowledge of oil
analysis and related industries. On July 1, 1997, Mr. Landow agreed to waive
until July 1, 1998, a potential breach in his employment contract which could
have been triggered with the hiring of Mr. Willis; and signed a one year
standstill agreement which preserved all of his rights under his initial
contract. Under this standstill agreement, the Company adopted the terms of Mr.
Landow's Employment Agreement accordingly. The compensation paid to Mr. Landow
during fiscal 1997, was the same amount that would have been paid to him,
whether or not, the standstill waiver had been signed.
Christer Rosen
In July 1997 as part of the Company-wide restructuring, Mr. Christer
Rosen resigned as Executive Vice President and Secretary of the Company.
Concurrent with his resignation, the Company and Mr. Rosen entered into a
13-month agreement to ensure Mr. Rosen's availability to provide consulting
services and work for the Company and work on special projects as assigned by
Mr. Willis. The intent of this consulting agreement is to ensure that Mr.
Rosen's long established contacts in the Detroit, Michigan OEM market will
continue to benefit the Company. The consulting agreement expires on August 14,
1998 and pays Mr. Rosen monthly compensation of $16,667.
Richard Ragan
Mr. Richard Ragan resigned as Chief Executive Officer of Top Source
Instruments, Inc. in June 1997 to pursue other interests. In order to attract
qualified individuals to work for the Company and to create a competitive
compensation package with the marketplace, the Company's long established policy
is to provide for severance payments to its executive officers in the event of
termination, or in some cases for resignations. During fiscal 1997, Mr. Ragan
received $50,000 in severance, an additional $33,333 was paid for the period
October 1, 1997 through December 15, 1997.
This report is submitted by the Compensation Committee.
Compensation Committee
Ronald P. Burd
Clinton D. Lauer
Paul F. Moore
<PAGE>
Performance Graph
The following Performance Graph assumes that $100 was invested in the
Company, the AMEX Market Index and the Peer Group Index on October 1, 1992.
Information on prices at which the Company's stock traded prior to that date are
not readily available. The Performance Graph further assumes all dividends were
reinvested. However, the Company has never paid any dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, PEER GROUP AND BROAD MARKET
[OBJECT OMITTED]
COMPANY 1992 1993 1994 1995 1996 1997
------- ---- ---- ---- ---- ---- ----
Top Source
Technologies, Inc. 100 200.00 430.77 542.31 288.46 123.08
Peer Group 100 165.91 149.30 187.72 228.85 310.13
Broad Market 100 117.39 119.64 144.16 150.03 182.45
The Broad Market Index chosen was:
American Stock Exchange
The Peer Group is made up of the following securities:
Gentex Corp.
Johnson Controls, Inc.
Magna Internat Inc.
Source: Media General Financial Services
P. O. Box 85333e
Richmond, VA 23293
Phone: 1-800-446-7922
Fax: 1-804-649-6097
<PAGE>
Proposal 2. Appointment of Auditors
Arthur Andersen LLP ("Arthur Andersen"), independent public
accountants, currently acts as the independent auditors of the Company. Unless
directed to vote no, proxies being solicited will be voted in favor of the
election of Arthur Andersen as independent auditors for the Company's fiscal
year ended September 30, 1998. Arthur Andersen acted as auditors for the Company
for the fiscal year ended September 30, 1997. A representative of Arthur
Andersen will be present at the meeting, be available to respond to appropriate
questions, and have the opportunity to make statements should they desire to do
so.
Ratification of the appointment of Arthur Andersen as the Company's
independent accountants for fiscal 1998 will require the affirmative vote of at
least a majority of the shares of the Company's common stock represented in
person or by proxy at the annual meeting and entitled to vote. Proxies solicited
by management will be voted for the proposal unless instructed otherwise.
Proposal 3. Other Matters
Proposals
The Board has no knowledge of any other matters which may come before
the meeting and does not intend to present any other matters. However, if any
other matters shall properly come before the meeting or any adjournment thereof,
the persons soliciting proxies will have the discretion to vote as they see fit
unless directed otherwise.
If you do not plan to attend the meeting, in order that your shares may
be represented and in order to assure the required quorum, please sign, date and
return your proxy promptly. In the event you are unable to attend the meeting,
at your request, the Company will cancel the proxy.
Stockholders' Proposals
Any stockholder of the Company who wishes to present a proposal to be
considered at the 1999 Annual Meeting of the stockholders of the Company and who
wishes to have such proposal presented in the Company's proxy statement for such
meeting must deliver such proposal in writing to the Company no later than
September 25, 1998. In addition, the Company's by-laws preclude a stockholder
from otherwise introducing business unless less than 75 days notice is given to
the Company of the meeting (or prior public disclosure of the date of the
meeting) (collectively the "Notice Date") in which event notice must be given to
the Company within 15 days of such Notice Date.
The Company will furnish, without charge to any stockholder submitting
a written request a copy of the Company's annual report on Form 10-K as filed
with the Securities and Exchange Commission including financial statements and
schedules thereto. Such written request should be directed to Maggie DeLutri,
Corporate Communications Coordinator, 7108 Fairway Drive, Suite 200, Palm Beach
Gardens, Florida 33418.
By the Order of the Board of Directors
-------------------
David Natan
Vice President, Chief Financial Officer
and Secretary
<PAGE>
APPENDIX
1. Election of Director __ FOR nominees __ WITHHOLD AUTHORITY to vote
(see reverse side) listed below for nominee(s) listed below
*EXCEPTIONS __
Nominees: William C. Willis, Jr.
L. Kerry Vickar
(INSTRUCTIONS: To withhold authority to vote for the individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided below.)
*Exceptions __________________________________________________________________
2. I hereby ratify the appointment 3. I hereby authorize the transaction of
Arthur Andersen LLP as independent of any other lawful business that
auditors for the fiscal year ended may come before the Annual September 30,
1998. Meeting of Stockholders.
FOR __ AGAINST__ ABSTAIN __ FOR __ AGAINST __ ABSTAIN __
Change of Address or
Comments Mark Here __
The form must be signed by the
person in whose name the relevant
Receipt is registered on the books
of the Depository. In the case of a
Corporation the Form should be
executed by a duly authorized
Officer or Attorney.
Dated: ___________________, 1998
----------------------------------
Signature of Stockholder
----------------------------------
Typed or Printed Name of Stockholder
-----------------------
Number of Shares Owned
Shares cannot be voted unless this
proxy issued and returned, or
specific arrangements Votes MUST be indicated
are made to have the shares (x) in Black or Blue Ink.
represented at the Meeting.
<PAGE>
[OBJECT OMITTED] TOP SOURCE TECHNOLOGIES, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF TOP SOURCE TECHNOLOGIES, INC.
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON APRIL 3, 1998.
The undersigned hereby appoints Stuart Landow, William C. Willis, Jr.
and David Natan as my proxy with power of substitution for and in the name of
the undersigned to vote all shares of common stock of Top Source Technologies,
Inc. (the "Company") which the undersigned would be entitled to vote at the
Annual Meeting of Stockholders of the Company to be held in the Boardroom of the
American Stock Exchange at 86 Trinity Place, New York, New York, and at any
adjournment thereof, upon such business as may properly come before the meeting,
including the items set forth on the reverse side.
Each share of common stock outstanding on the record date is entitled
to one vote on all proposals.
If no direction is indicated, this Proxy will be voted as recommended by the
Board of Directors for the Directors, William C. Willis, Jr. and L. Kerry
Vickar, and for all other proposals. If no direction is indicated, this Proxy
will be voted as recommended by the Board of Directors for all proposals.
(Continued and to be dated and signed
on the reverse side.)
TOP SOURCE TECHNOLOGIES, INC.
P.O. BOX 11080
NEW YORK, N.Y. 10203-0080
