SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [ x ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11( c ) ss. 240.14-a-12
- ------------------------------------------------------------------------------
TOP SOURCE TECHNOLOGIES, INC.
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
-----------------------------------------------------------
2. Aggregate number of securities to which transaction applies:
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3. Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount of which the filing fee
is calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
- -----------------------------------------------------------------------------
5. Total fee paid: ______________________________________________
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed
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<PAGE>
November 4, 1999
Dear Stockholder:
On behalf of the Board of Directors of Top Source Technologies, Inc. (the
"Company"), I am extending you a cordial invitation to attend the annual meeting
of stockholders of the Company (the "Annual Meeting"), which will be held at
12:00 NOON, Eastern Standard Time at the American Stock Exchange, 86 Trinity
Place, New York, New York, 10006, at 12:00 Noon, EST. on December 14, 1999. I
look forward to greeting as many stockholders as possible at the Annual Meeting.
At the Annual Meeting, you will be asked to vote on four proposals; (i) to
elect two directors for three-year terms ending in 2002; (ii) to approve an
amendment to the Company's 1993 Stock Option Plan increasing by 500,000 the
number of shares covered thereunder; (iii) to approve an amendment of our
Certificate of Incorporation changing our name from Top Source Technologies,
Inc. to Global Technovations, Inc.; and (iv) to ratify the appointment of Arthur
Andersen LLP as independent auditors for the year ended September 30, 1999, and
any other matters that may properly come before the Annual Meeting. (Details
concerning the proposals are included in the enclosed Proxy Statement.)
AT THE BOARD OF DIRECTORS' MEETINGS HELD TO CONSIDER THE PROPOSALS, THE
DIRECTORS OF THE COMPANY CAREFULLY CONSIDERED AND UNANIMOUSLY APPROVED THE
PROPOSALS AS BEING IN THE BEST INTEREST OF THE COMPANY AND ITS STOCKHOLDERS. THE
COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" PROPOSALS NO. 1, 2, 3 AND 4
It is important that your shares be represented at the Annual Meeting
whether or not you are able to attend. Accordingly, you are urged to sign, date
and mail the enclosed proxy card promptly. If you later decide to attend the
Annual Meeting, you may revoke your proxy and vote in person.
Thank you for your time and consideration.
Sincerely,
William C. Willis, Jr.
Chairman, President and CEO
<PAGE>
[OBJECT OMITTED]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 14, 1999
To All Stockholders:
The annual meeting of the Stockholders (the "Annual Meeting") of Top Source
Technologies, Inc. (the "Company") will be held at 12:00 Noon, EST. on December
14, 1999 at the American Stock Exchange, 86 Trinity Place, New York, New York,
10006, for the following purposes:
1. To elect two persons to the Board of Directors of the Company to serve
three-year terms ending in 2002;
2. To ratify the appointment of Arthur Andersen LLP as independent auditors for
the fiscal year ended September 30, 1999;
3. To approve or disapprove an amendment to the Company's 1993 Stock Option Plan
increasing by 500,000 the number of shares covered thereunder,
4. To approve or disapprove an amendment to the Company's Certificate of
Incorporation, as amended, changing the Company's name from Top Source
Technologies, Inc. to Global Technovations, Inc., and;
5. For the transaction of any other lawful business that may properly come
before the Annual Meeting.
The Board of Directors has fixed the close of business on November 4, 1999
as the record date for a determination of stockholders entitled to notice of,
and to vote at, this Annual Meeting or any adjournment thereof.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" PROPOSALS NUMBERS 1, 2, 3, AND NO. 4.
Please vote, date, sign and mail the enclosed proxy card promptly in the
enclosed return envelope. It is extremely important that you vote. If we do not
have enough proxy cards returned, we will not have a quorum, resulting in
unnecessary expense to you, the stockholder. Help us help you.
By Order of the Board of Directors Dated:
November 4, 1999
By: David Natan
Vice President, Chief Financial Officer and Secretary
<PAGE>
TOP SOURCE TECHNOLOGIES, INC.
PROXY STATEMENT
--------------------
This proxy statement (the "Proxy Statement") is sent to the holders of
shares of Common Stock, par value $.001 per share (the "Common Stock") of Top
Source Technologies, Inc. ("Top Source" or the "Company"), a Delaware
corporation, in connection with the solicitation of proxies by our Board of
Directors (the "Board") for use at the Annual Meeting of Stockholders (the
"Annual Meeting") to be held at 12:00 Noon, EST. on December 14, 1999 at The
American Stock Exchange, 86 Trinity Place, New York, New York, 10006, for the
following purposes:
1. To elect two members to our Board to serve a three-year term ending 2002;
2. To ratify the appointment of Arthur Andersen LLP as our independent
accountants for the year ending September 30, 1999;
3. To approve an amendment to our 1993 Stock Option Plan increasing by 500,000
the number of shares of common stock covered thereunder;
4. To approve amendment of the Company's Certificate of Incorporation as
amended, changing its name from Top Source Technologies, Inc. to Global
Technovations, Inc.; and
5. For the transaction of such other matters as may properly come before the
Annual Meeting.
Our Board is sending this Proxy Statement to holders of Common Stock in
connection with the solicitation of proxies for use at the Annual Meeting, and
any adjournments thereof. With this Proxy Statement, we are also mailing or
delivering to Top Source stockholders a proxy card, the notice of Annual
Meeting, and a copy of our Form 10-K/A No. 3 for the year ended September 30,
1998 ("Form 10-K").
<PAGE>
All properly executed proxy cards delivered pursuant to this solicitation
and not revoked will be voted at the Annual Meeting in accordance with the
directions given. In voting by proxy with regard to the election of directors,
you may vote in favor of all nominees, withhold your votes as to all nominees or
withhold your votes as to specific nominees. With regard to other proposals, you
may vote in favor of each proposal or against each proposal, or in favor of some
proposals and against others, or you may abstain from voting on any or all
proposals. You should specify your respective choices on the accompanying proxy
card. If you do not give specific instructions with regard to the matters to be
voted upon, the shares of Common Stock represented by your signed proxy card
will be voted "FOR" Proposal Nos. 1, 2, 3, 4 and 5, listed on the proxy card. If
any other matters properly come before the Annual Meeting, the persons named as
proxies will vote for or against these matters according to their judgment.
The presence, in person or by proxy, of a majority of the 29,799,281
outstanding shares of Common Stock or 14,899,641 as of the record date of
November 4, 1999 is necessary to constitute a quorum at the Annual Meeting. Each
of the proposals set forth in this Proxy Statement will be voted upon separately
at the Annual Meeting. The affirmative vote of the holders of a plurality of
shares of Common Stock present in person or represented by proxy at the Annual
Meeting will be required to elect each of the directors to our Board pursuant to
Proposal No. 1. The vote of the holders of a majority of shares of Common Stock
present in person or represented by proxy and entitled to vote at the Annual
Meeting will be required to ratify the appointment of Arthur Andersen LLP
pursuant to Proposal No. 2 and to approve and adopt Proposal Nos. 3 and 5. The
vote of the holders of a majority of the outstanding shares is required in order
to approve and adopt Proposal No. 4. For these reasons, it is important that all
shares are represented at the Annual Meeting, either in person or by proxy.
You may revoke your proxy and reclaim your right to vote up to and
including the day of the Annual Meeting by giving written notice to the
Secretary of the Company, by delivering a proxy card dated after the date of the
proxy or by voting in person at the Annual Meeting. All written notices of
revocation and other communications with respect to revocations of proxies
should be addressed to: Top Source Technologies, Inc., 7108 Fairway Drive, Suite
200, Palm Beach Gardens, Florida, 33418-3757, Attention: Mr. David Natan,
Secretary.
Proxies will initially be solicited by Top Source by mail, but our
directors, officers and selected employees may solicit proxies from stockholders
personally or by telephone, facsimile or other forms of communication. These
directors, officers and employees will not receive any additional compensation
for such solicitation. We are also requesting that brokerage houses, nominees,
fiduciaries and other custodians send soliciting materials to beneficial owners.
We will reimburse them for their reasonable expenses incurred in doing so. All
expenses incurred in connection with the solicitation of proxies will be paid by
us.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSALS
NO. 1, 2, 3, 4 AND 5.
Our Common Stock is listed on the American Stock Exchange ("AMEX") under
the symbol "TPS". On October 27, 1999, the last sale price for the Common Stock
as reported by the AMEX was $1.19 per share.
This Proxy Statement and the accompanying proxy card are being mailed to
our stockholders on or about November 4, 1999.
The date of this Proxy Statement is November 4, 1999.
<PAGE>
Security Ownership of Certain Beneficial Owners
The following table sets forth the number of shares of our Common Stock
beneficially owned as of September 30, 1999 by (i) owners of more than 5% of our
Common Stock, (ii) by each director, and (iii) all of our directors and named
executive officers as a group.
<TABLE>
<S> <C> <C> <C>
Amount and Nature
of Beneficial Percent of
Title of Class Name and Address of Beneficial Owner Ownership Class
========================= ========================================================== ===================== ===============
Common Stock and Vested William C. Willis, Jr.(1) 391,666 1.30%
Options 7108 Fairway Drive, Ste. 200
Palm Beach Gardens, FL 33418
========================= ========================================================== ===================== ===============
Common Stock and Vested David Natan(2) 163,382 *
Options 7108 Fairway Drive, Ste. 200
Palm Beach Gardens, FL 33418
========================= ========================================================== ===================== ===============
Common Stock and Vested Ronald P. Burd(3),(4) 208,000 *
Options 251 Linden Lane
Merion Station, PA 19066
========================= ========================================================== ===================== ===============
Common Stock, Vested G. Jeff Mennen(5) (6) 4,328,325 12.72%
Options, and Warrants TMF Investments
25B Hanover Road
Florham Park, NJ 07932
========================= ========================================================== ===================== ===============
Common Stock and Vested L. Kerry Vickar(7) 31,562 *
Options 19010 Mary Ardrey Circle
Cornelius, NC 28031
========================= ========================================================== ===================== ===============
Common Stock and Vested Mellon Bank CorportionN(8) 1,694,011 5.68%
Options 2875 N.E. 191st Street, Penthouse I
N. Miami Beach, FL 33130
==================================================================================== ===================== ===============
All directors and named executive officers of the Company as a group 5,122,935 14.80%
(5 persons) (1)(2)(3)(4)(5)(6)(7)
*Less than 1% of class
==================================================================================== ===================== ===============
</TABLE>
(1) Includes 200,000 vested options held by Mr. Willis at approximately
$2.00 per share, 50,000 vested options at approximately $.88 per share,
50,000 vested options at $1.00 per share, 16,666 vested options at
$1.32 per share and 75,000 shares of Common Stock held by Mr. Willis.
(2) Includes 75,000 vested options held by Mr. Natan exercisable at
approximately $3.00 per share, 7,000 vested options exercisable at
approximately $1.56 per share and 25,000 vested options at
approximately $1.38 per share, 41,666 vested options at $1.00 per
share, 2,166 vested options at $1.32 per share, 11,550 shares of
Common Stock held by Mr. Natan and 1,000 shares of Common Stock held
by Mr. Natan's wife.
(3) 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,
5,000 vested options exercisable at approximately $1.75, 15,000 options
exercisable at approximately $1.31 per share and 2,500 options
exercisable at $.75 per share held by Mr. Burd.
(4) Includes 87,000 shares of Common Stock held jointly by Mr. Burd and his
wife and 3,500 shares of Common Stock gifted by Mr. Burd to the
Devereux Foundation, of which Mr. Burd is President and Chief Executive
Officer.
(5) Includes 110,000 shares of Common Stock beneficiary owned by Mr.
Mennen, which are held of record by the Wilmington Trust Company and
George Jeff Mennen, Co-Trustees for Christina M. Andrea and John Henry
Mennen. Also includes the shares of Common Stock reserved for exercise
of presently exercisable Options and Warrants beneficially owned by Mr.
Mennen as follows:
<TABLE>
<S> <C> <C> <C>
No. of Type of Approximate
Shares Security Exercise Record Owner
Price
2,500 Options $ .75 G. Jeff Mennen
20,000 Options $1.38 G. Jeff Mennen
3,333 Options $2.00 G. Jeff Mennen
50,000 Warrants $ .875 G. Jeff Mennen
50,000 Warrants $1.75 G. Jeff Mennen, Trustee for
George S. Mennen
150,000 Warrants $1.94 G. Jeff Mennen, Trustee for
George S. Mennen
200,000 Warrants $1.94 Wilmington Trust Company and
George Jeff Mennen, Co-Trustees for
John Henry Mennen
25,000 Warrants $2.00 G. Jeff Mennen
107,142 Warrants $2.38 G. Jeff Mennen, Trustee for
George S. Mennen
142,858 Warrants $2.38 Wilmington Trust Company and
George Jeff Mennen, Co-Trustees for
John Henry Mennen
</TABLE>
(6) Includes 3,467,492 shares of Common Stock reserved in the event
of exercise of $3,500,000 dollars of 9% Series B Convertible
Preferred Stock beneficially owned by Mr. Mennen. The 9% Series B
Preferred Stock maybe converted into shares of Common Stock at any
time after January 1, 2001 at 85% of the closing bid price. For
purposes of this footnote, we have assumed that the closing bid
price is at $1.19 per share. A total of $2,000,000 of the preferred
Stock is held by The Wilmington Trust Company and George Jeff Mennen,
Co-Trustees for John Henry Mennen and the remaining $1,500,000
is held by G. Jeff Mennen, Trustee for George S. Mennen.
(7) Includes 12,500 shares held by Mr. Vickar, 16,562 vested options
exercisable at approximately $1.13 per share, and 2,500 vested options
at $.75 per share..
(8) To the best of the Company's knowledge based on public filings, Mellon
Bank Corporation ("Mellon") formerly Ganz Capital Management, Inc.
beneficially owns 1,694,011 shares of Common Stock of the Company as of
February 4, 1999. This represents beneficial ownership of 5.68% of the
Company's outstanding shares. The Company has no more current
information
<PAGE>
PROPOSAL 1. ELECTION OF DIRECTORS
Board of Directors
Our business is managed under the direction of the Board. The Board is
responsible for establishing broad corporate policies and for our overall
performance. It is not, involved in the operating details on a day-to-day basis.
Management advises the Board of the status of Top Source business through
quarterly Board meetings and regular written communications and discussions.
Top Source has a classified Board, which provides for three classes of
directors each of which serves a three-year term. One class is elected each
year. Two directors were elected at the 1998 Annual Meeting and each person
elected will hold office until his term expires in the year 2001 and until his
successor has been elected and qualified. Two directors are up for election at
the 1999 Annual Meeting. Our by-laws provide that the Board 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. The current Board has by resolution
established the number of directors at seven. There are currently two vacancies
on the Board. Top Source does not intend to fill them at this time.
Compensation of Directors
Our outside directors each receive a fee of $1,000 per Board meeting
attended. Additionally, annually, they receive 7,500 options ("Options") in lieu
of higher cash attendance fees. All outside directors also automatically receive
grants of 30,000 Options upon election or appointment to the Board and an
additional grant every three-year anniversary thereafter. They are reimbursed
for expenses incurred in attending Board and Committee meetings. Except as
otherwise disclosed in this Proxy Statement, all Options vest semi-annually over
a three-year period subject to continued service with the Company. Options are
exercisable for 10 years from the date of grant.
Board Meetings and Committees
The Board held five meetings during the fiscal year ended September 30,
1998. All directors were present at each of the meetings. On several occasions
throughout the year, the Board took action by unanimous consent in lieu of
holding a meeting.
The Board has a Compensation Committee comprised of Messrs. Willis,
Mennen and Vickar; an Audit Committee comprised of Messrs. Burd, and Vickar; and
a Nominating Committee comprised of Messrs. Willis, Mennen, and Vickar, which
met two, one and one times, respectively, during the year ended September 30,
1998.
<TABLE>
Current Board of Directors
<S> <C> <C> <C> <C> <C>
- ------------------------------- -------- ---------------------------------------- --------- ---------- ------------- ---------
Name Age Position With Company Since Term Ending Class
- ------------------------------- -------- ---------------------------------------- --------- ---------- ------------- ---------
- ------------------------------- -------- ---------------------------------------- --------- ---------- ------------- ---------
William C. Willis, Jr.(11)(12) 47 Chairman, President, and 1997 Three 2001 A
Chief Executive Officer
- ------------------------------- -------- ---------------------------------------- --------- ---------- ------------- ---------
- ------------------------------- -------- ---------------------------------------- --------- ---------- ------------- ---------
David Natan 46 Vice-President, Chief Financial 1995 Three 1999 B
Officer
- ------------------------------- -------- ---------------------------------------- --------- ---------- ------------- ---------
- ------------------------------- -------- ---------------------------------------- --------- ---------- ------------- ---------
Ronald P. Burd(12)(13) 52 Director 1995 Three 1999 B
- ------------------------------- -------- ---------------------------------------- --------- ---------- ------------- ---------
- ------------------------------- -------- ---------------------------------------- --------- ---------- ------------- ---------
G. Jeff Mennen(11)(12) 59 Director 1998 Two 2000 C
- ------------------------------- -------- ---------------------------------------- --------- ---------- ------------- ---------
- ------------------------------- -------- ---------------------------------------- --------- ---------- ------------- ---------
L. Kerry Vickar(11)(12)(13) 42 Director 1998 Three 2001 A
- ------------------------------- -------- ---------------------------------------- --------- ---------- ------------- ---------
</TABLE>
(11) Member of the Nominating Committee
(12) Member of the Compensation Committee.
(13) Member of the Audit Committee.
The two nominees for the election are set forth below. If you give us
your proxy vote all proxies for the nominees for directors listed below unless
you tell us to vote differently. In the event a 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 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
nominees listed below unless instructed otherwise. As of the date of this Proxy
Statement, the Board is not aware that any nominee is unable or will decline to
serve as a director.
Nominees for Election at the 1999 Annual Meeting
<TABLE>
<S> <C> <C> <C> <C> <C>
- ------------------------------- -------- ---------------------------------------- --------- ---------- -------------
Name Age Position With Company Since New Term Term Ending
- ------------------------------- -------- ---------------------------------------- --------- ---------- -------------
- ------------------------------- -------- ---------------------------------------- --------- ---------- -------------
Ronald P. Burd(12)(13) 52 Director 1992 Three 2002
Years
- ------------------------------- -------- ---------------------------------------- --------- ---------- -------------
David Natan 46 Vice-President, Chief Financial 1998 Three 2002
Officer, Secretay and Director Years
- ------------------------------- -------- ---------------------------------------- --------- ---------- -------------
</TABLE>
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 Villanova, Pennsylvania, Devereux is the largest
non-profit provider of residential, day and community-based treatment programs
located in 13 states and the District of Columbia.
David Natan - was appointed a director of the Company on April 16, 1998
in order to fill a vacancy. Currently, Mr. Natan, a CPA, has been Vice President
and Chief Financial Officer of the Company since June 1995 and Secretary from
August 1997. Mr. Natan previously served on the Company's Board from June 1995
to January 1997. Mr. Natan brings nearly 20 years of management and analytical
experience to his responsibilities. 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 multi-national
conglomerate. From August 1987 through October 1992, Mr. Natan was Treasurer and
Controller for Jewelmasters, Inc., an AMEX listed company.
Other Board Members
William C. Willis, Jr. - Mr. Willis has been President, Chief Executive
Officer and a member of the Board since May 1997. Since July 1, 1998, Mr. Willis
has served as Chairman of the Board. 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. Mr.
Willis also actively supervises the marketing of the Company's OSA-IIs. Prior to
joining the Company, Mr. Willis was Chairman 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 whose common stock is traded on Nasdaq. From 1990
to 1994, Mr. Willis was President and Chief Executive Officer of Insituform
Technologies, Inc., a state of the art provider of technologies for the
reconstruction of pipelines and infrastructure. From 1985 to 1990, Mr. Willis
was President of The Paper Art Company, Inc., a subsidiary of The Mennen
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 that company was
sold to Colgate-Palmolive. From 1977 until 1981, Mr. Mennen was President of
Mennen International. Mr. Mennen is a director of Corbin, Ltd. and MBf USA, Inc.
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
Chief Executive Officer of CorrFlex Graphics, LLC, a privately held packaging
company. 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.
Executive Officer Compensation
The following table sets forth certain summary information concerning
the compensation we paid to the Chief Executive Officer and our other four most
highly compensated executive officers of the Company whose combined salary and
bonus for the fiscal year ended September 30, 1999 exceeded $100,000
(collectively, the "Named Executive Officers") for the years indicated.
Summary Compensation Tabale
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
========================= =================================================== ============================= ===============
Annual Compensation Long-Term Compensation
Awards
========================= =================================================== ============================= ===============
(a) (b) (c) (d) (e) (f) (g) (i)
========================= ======== ============= ============ =============== ============= =============== ===============
Securities
Other Annual Restricted Underlying All Other
Name and Principal Compensation Stock Options/SARs Compenstion
Position Year Salary($) Bonus($) ($)(14) Award(s)($) (#) ($)(15)
========================= =================================================== ============================= ===============
EXECUTIVE OFFICERS
- ---------------------------------------------------------------------------------------------------------------------------
- ------------------------- -------- ------------- ------------ --------------- ------------- --------------- ---------------
William C. Willis, Jr. 1999 $319,725 $300,000 $12,000 $0 150,000 $ 5,306
1998 $303,750 $0 $12,000 $0 100,000 $ 11,543
1997 $109,231(16) $0 $ 4,369 $0 500,000 $ 569
- ------------------------- -------- ------------- ------------ --------------- ------------- --------------- ---------------
- ------------------------- -------- ------------- ------------ --------------- ------------- --------------- ---------------
David Natan 1999 $135,417 $55,000 $12,000 $0 38,000 $ 6,706
1998 $126,667 $0 $12,000 $0 100,000 $ 6,117
1997 $125,000 $25,000 $11,298 $0 7,000 $ 3,511
- ------------------------- -------- ------------- ------------ --------------- ------------- --------------- ---------------
</TABLE>
(14) 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.
(15) 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 1999 group term life insurance premiums were as follows: Mr. Willis
$1,652 and Mr. Natan $2,300.
(b) The 1999 employer match of the Retirement Salary Savings Plan - 401(K) was
as follows: Mr. Willis $2,604 and Mr. Natan $2,208.
(c) The 1999 reimbursement of out-of pocket medical and dental expenses not
covered by the Company's insurance was as follows: Mr. Willis $1,050,and
Mr. Natan $2,198.
(16) Mr. Willis' salary is only for the partial year from May 21, 1997 through
September 30, 1997.
Stock Option Information
The following table sets forth certain information regarding options
granted during fiscal 1999 to the executive officers named in the Summary
Compensation table above
Option/SAR Grants During The Fiscal Year
Ended September 30, 1999
<TABLE>
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------- ---------------------------------
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for Option
Individual Grants Term(17)
- ---------------------------------------------------------------------------------------- ---------------------------------
- ----------------------- ---------------- --------------- ---------------- -------------- ----------------- ---------------
(a) (b) (c) (d) (e) (f) (g)
- ----------------------- ---------------- --------------- ---------------- -------------- ----------------- ---------------
- ----------------------- ---------------- --------------- ---------------- -------------- ----------------- ---------------
Name Number of % of Total
securities Options/SARs Exercise or
Underlying Granted to Base
Options/SARs Employees Price Expiration
Granted in Fiscal Year ($/Share) Date 5%($) 10%($)
- --------------------------------------------------------------------------------------------------------------------------
EXECUTIVE
- ----------------------- ---------------- --------------- ---------------- -------------- ----------------- ---------------
William C. Willis, Jr. 50,000 11.4% $1.00 12/10/2008 $31,445 (18) $ 79,687 (19)
100,000 22.8% $1.32 5/17/2009 $83,014 (20) $210,374 (21)
- ----------------------- ---------------- --------------- ---------------- -------------- ----------------- ---------------
David Natan 25,000 5.7% $1.00 12/10/2008 $15,722 (18) $39,844 (19)
13,000 2.9% $1.32 5/17/2009 $10,792 (20) $27,3349 (21)
- ----------------------- ---------------- --------------- ---------------- -------------- ----------------- ---------------
</TABLE>
(17) 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 assurances
that the values shown on this table will be achieved.
(18) Represents an assumed market price per share of Common Stock of $1.63.
(19) Represents an assumed market price per share of Common Stock of $2.59.
(20) Represents an assumed market price per share of Common Stock of $2.15.
(21) Represents an assumed market price per share of Common Stock of $3.42.
The following table sets forth certain information with respect to the
exercise of Options to purchase Common Stock and SARs during the fiscal year
ended September 30, 1999, and the unexercised Options held and the value thereof
at that date, by each of the executive officers named in the Summary
Compensation Table.
<PAGE>
<TABLE>
Aggregated Option/SAR Exercises In Last Fiscal Year 1999
And Fiscal Year-End Option/SAR Values
<S> <C> <C> <C> <C>
- ------------------- ------------- ----------------- -------------------------------- ---------------------------------
(a) (b) (c) (d) (e)
- ------------------- ------------- ----------------- -------------------------------- ---------------------------------
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at Fiscal Year In-the-Money Options/SARs
End(#) at Fiscal Year End($)(22)
- ------------------- ------------- ----------------- ------------- ------------------ ---------------- ----------------
Shares
Acquired Value Realized
Name On Exercise ($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ------------------- ------------- ----------------- ------------- ------------------ ---------------- ----------------
William C.Willis, Jr. 0 N/A 274,999 275,001 22,229 36,646
- ------------------- ------------- ----------------- ------------- ------------------ ---------------- ----------------
- ------------------- ------------- ----------------- ------------- ------------------ ---------------- ----------------
David Natan 0 N/A 138,332 81,668 9,114 14,323
- ------------------- ------------- ----------------- ------------- ------------------ ---------------- ----------------
</TABLE>
(22) Based on the difference between the closing market price of the Company's
Common Stock on the AMEX at September 30, 1999 of $1.31 and the Option
exercise price.
(23) All Options were granted at 100% of fair market value.
Executive Compensation Agreements
William C. Willis, Jr.
In May 1997, the Company entered into an employment agreement with
William C. Willis, Jr., its then new President and Chief Executive Officer of
the Company. The term of this employment agreement is three years through May
21, 2000 ("Employment Period"). The employment agreement provides for a base
salary of $300,000 ("Annual Base Salary"). Effective July 1, 1998 Mr. Willis'
Annual Base Salary increased to $315,000. 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 employment 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 employment 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 performance based targets
for each period of four fiscal quarters during the Employment
Period. In June 1998, the Company granted Mr. Willis 100,000
Options initially exercisable over a three-year term at $.875
per share in exchange for his waiving his earned Performance
Bonus of approximately $127,500.
The earnings per share targets and five performance-based targets for
each succeeding four- quarter period during the Employment Period shall be reset
and established annually by the Compensation Committee. In December 1998, Mr.
Willis was awarded a $50,000 bonus and 50,000 stock options at an exercise price
of $1.00 per share. The bonus and options were granted in recognition of Mr.
Willis' performance in bringing the new OSA-II technology to the marketplace,
and for attracting new capital to the Company on favorable terms, thus enabling
the Company to pay-off senior debt at a significant discount.
In May 1999, Mr. Willis waived a cash Performance Bonus of $157,500,
which he was entitled to receive. In May 1999, Mr. Willis received a 4% salary
increase from $315,000 to $327,600 and 100,000 stock options at an exercise
price of $1.315.
On September 29, 1999, the Compensation Committee awarded Mr. Willis a
bonus of $250,000. The payment of this bonus to Mr. Willis will be made after
the receipt of the $6,500,000 note payable by Onkyo America, Inc. to Top Source
Automotive, Inc.("TSA") due on October 31, 1999. This note arose pursuant to
the Company's divestiture of substantially all of the assets of its
automotive subsidiary, TSA. The Committee awarded this bonus to Mr. Willis based
upon his ability to quickly locate a viable back-up buyer, and to consummate a
favorable transaction. The Committee also considered Mr. Willis' negotiation
efforts in the very difficult aspects of the transaction.
In the event Mr. Willis' employment is terminated by the Company for
other than cause, death or disability or Mr. Willis terminates his employment
for good reason, all as defined in his employment agreement, the Company is
obligated to pay Mr. Willis (1) his annual base salary for 12 months, (2) a lump
cash sum paid within 30 days equal to accrued obligations consisting of any owed
but unpaid Performance Bonus, vacation pay and other monetary payments Mr.
Willis was entitled to on the date of his termination, and (3) continued medical
coverage for Mr. Willis and his dependents for 12 months following termination.
The Company also pays the premiums on a $1,000,000 life insurance
policy on Mr. Willis where he is the beneficiary. Additionally, the Company is
the beneficiary on a $5,000,000 key-man policy on Mr. Willis.
David Natan
Mr. David Natan, Vice President and Chief Financial Officer, joined Top
Source on June 30, 1995 at an annual salary of $125,000. In August 1998, Mr.
Natan's salary was increased to $135,000. Mr. Natan's employment agreement
provides for 12 months of severance benefits which include salary, medical and
dental benefits in the event of a qualifying termination of Mr. Natan, defined
as (1) a material adverse change to his job duties and responsibilities; (2) a
material reduction in his salary, compensation or eligibility to participate in
Top Source benefit programs; or (3) an unwilling relocation to a location
greater than 50 miles away from his current work location. The Company also pays
the premiums on a $1,000,000 life insurance policy on Mr. Natan, which he is
the beneficiary.
In January 1998, Top Source granted Mr. Natan new Options in exchange for
cancellation of higher priced mostly vested Options as follows:
<PAGE>
<TABLE>
<S> <C> <C> <C>
----------------------- ------------------- ---------------- ----------------------------
Number of
Options Exercise Price Number Vested
----------------------- ------------------- ---------------- ----------------------------
Cancelled Options 93,750 $6.94 78,175
10,000 $7.75 10,000
----------------------- ------------------- ---------------- ----------------------------
New Grant 75,000 $3.00 75,000
----------------------- ------------------- ---------------- ----------------------------
</TABLE>
In December 1998, Mr. Natan was awarded 25,000 stock options at an
exercise price of $1.00 per share. In May 1999, he received 13,000 stock options
at an exercise price of $1.315. Both sets of options were awarded to Mr. Natan
for his efforts in maintaining the Company's liquidity during a period of time
when the Company's resources were strained due to delays by a proposed buyer in
raising the funds necessary to purchase TSA.
On September 1, 1999, Mr. Natan's salary increased from $135,000 to
$140,000 and he received a $5,000 bonus. On September 29, 1999, the Compenstion
Committee awarded Mr. Natan a bonus of $50,000 for his efforts in closing the
TSA transaction. This bonus payment will be made after the receipt of the
$6,500,000 note payable by Onkyo America, Inc. to TSA due on October 31, 1999,
as previously described.
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 and be at least 21 years old to
meet the eligibility requirements. The enrollment dates are the first day of
each quarter. 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 1998, 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 during fiscal 1998 was approximately $28,442. The Plan provides
that the Company's matching contribution may change from year to year and that
the Company may declare additional matching dollars at year-end. All employees
vest ratably over a five-year term. Any forfeited non-vested amounts contributed
are used to reduce required Company matching contributions.
Repricing of Options
Repricing of Options held by a Named Executive Officer during the
fiscal year ended September 30, 1999 and information on all repricing of Options
held by any executive officer during the last 10 fiscal years is provided in the
following table:
TEN-YEAR OPTION/SAR REPRICINGS
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ------------------- ------------ ------------------ ------------------ ---------------- ----------- -------------------------
(a) (b) (c) (d) (e) (f) (g)
Number of
Securities Market Price Exercise
Underlying of Stock at Price at Length of Original
Options/SARs Time Time of New Option Term
Repriced or Repricing or Repricing or Exercise Remaining at Date
Amended Amendment Amendment Price or Repricing or
Name Date (#) ($) ($) ($) Amendment
- ------------------- ------------ ------------------ ------------------ ---------------- ----------- -------------------------
David Natan 1/28/98 75,000(25) $1.375 $6.94 $3.00 7 years and 5 months
- ------------------- ------------ ------------------ ------------------ ---------------- ----------- -------------------------
</TABLE>
(24) The repricing was in consideration of the cancellation of 103,750 Options
and the start of a new vesting period for all repriced options.
Report on Executive Compensation by the Compensation and Stock Option Committees
The primary objective of the compensation policy of the Company is to
align executive compensation in a way that will encourage enhanced stockholder
value, while concurrently allowing us to attract, retain and satisfactorily
reward all employees who contributed to our 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 our short-term and long-term
growth operational goals and strategic initiatives (3) the development of
competitive compensation packages that will enable us to attract retain and
motivate high caliber employees without depleting our resources, and (4) to
provide incentives to our executives and other employees to share in
appreciation of the price of our Common Stock, thereby aligning their interests
with those of our stockholders. The compensation program for our 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 our Chief Executive Officer, are
in large part performance based.
Chief Executive Officer
William C. Willis, Jr.
Mr. Willis' compensation package was finalized in 1997 after extensive
discussions by the Compensation Committee with the assistance of 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' initial base salary at $300,000 (now $327,600 as of
May 25, 1999), his bonus and 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 Option appreciation to performance. The 500,000 Options granted to Mr. Willis
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 the
Company's Common 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 stockholder value. Similarly, a large portion of his
Performance Bonus is tied to future profitability. By meeting certain
performance targets, Mr. Willis was entitled to a $127,500 bonus through May
1998. At his suggestion, the Compensation Committee agreed to issue him 100,000
Options exercisable at $.875 per share, which was the fair market value of the
Company's Common Stock. See "Executive Compensation Agreements". Issuance of the
Options conserved the Company's cash and furthered the goal of creating a
long-term equity incentive. In December 1998, Mr. Willis was awarded a $50,000
bonus and 50,000 stock options at an exercise price of $1.00 per share. The
bonus and options were granted in recognition of Mr. Willis' performance in
bringing the new OSA-II technology to the marketplace, and for attracting new
capital to the Company on favorable terms, thus enabling the Company to pay-off
senior debt at a significant discount.
In May 1999, Mr. Willis waived a cash performance bonus of $157,500,
which he was entitled to receive. In lieu of this bonus,, Mr. Willis received a
4% salary increase from $315,000 to $327,600 and 100,000 stock options at an
exercise price of $1.315.
On September 29, 1999, the Compensation Committee awarded Mr. Willis a
bonus of $250,000. The payment of this bonus to Mr. Willis will be made after
the receipt of the $6,500,000 note payable by Onkyo America, Inc. to TSA due on
October 31, 1999. This note arose pursuant to the Company's divestiture of
substanially all of the assets of its automotive subsidiary, TSA. The
Committee awarded this bonus to Mr. Willis based upon his ability to quickly
locate a viable back-up buyer, and to consummate a favorable transaction. The
Compansation Committee also considered Mr. Willis' negotiation efforts in the
very difficult aspects of the transaction.
David Natan
Mr. David Natan, Vice President and Chief Financial Officer, joined the
Company on June 30, 1995 at an annual salary of $125,000. In August 1998, Mr.
Natan's salary was increased to $135,000. He also receives 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's employment
agreement provides for 12 months of severance benefits which include salary,
medical and dental benefits in the event of a qualifying termination of Mr.
Natan, defined as (1) a material adverse change to his job duties and
responsibilities; (2) a material reduction in his salary, compensation or
eligibility to participate in Company benefit programs; or (3) an unwilling
relocation to a location greater than 50 miles away from his current work
location.
In January 1998, the Company granted Mr. Natan 75,000 new Options in
exchange for cancellation of 103,750 higher priced mostly vested Options for the
following reasons:
Mr. David Natan was hired as Vice President and Chief Financial Officer
of the Company in June 1995. During 1995, Mr. Natan was granted 103,750 Options.
At that time, the Company's stock was trading at prices substantially higher
than current levels. Between 1995 and 1998, the Company reported significant
operating losses. During this time period, except for Mr. Natan, substantially
the entire executive-management group and Board of Directors were replaced.
The Compensation Committee, consisting of Messrs. William C. Willis, G.
Jeff Mennen and L. Kerry Vickar, believes that despite the Company's losses, Mr.
Natan's quality performance in maintaining the Company's liquidity during this
period, arranging for difficult financings and continuing current performance,
justified a repricing. In order to incentivize Mr. Natan, reduce Company share
dilution, and to encourage Mr. Natan's ongoing employment with the Company, his
Options were repriced. As a precondition of the repricing, the Compensation
Committee requested that Mr. Natan forfeit 28,750 Options and re-vest the new
Options over a one-year period. On January 28, 1998, the Company cancelled
103,750 Options above fair market value held by Mr. Natan, and regranted to Mr.
Natan 75,000 new option shares exercisable at $3.00 per share, which was $1.625
above market value on January 28, 1998. See "Repricing of Options".
In December 1998, Mr. Natan was awarded 25,000 stock options at an
exercise price of $1.00 per share. In May 1999, he received 13,000 stock options
at an exercise price of $1.315. Both sets of options were awarded to Mr. Natan
for his efforts in maintaining the Company's liquidity during a period of time
when the Company's resources were strained due to long delays by a proposed
buyer in raising the funds necessary to purchase TSA.
On September 1, 1999, Mr. Natan's salary increased from $135,000 to
$140,000 and he received a $5,000 bonus. On September 29, 1999, the Committee
awarded Mr. Natan a bonus of $50,000 for his efforts in closing the TSA
transaction. This bonus payment will be made after the receipt of the
$6,500,000 note payable by Onkyo America, Inc. to TSA due on October 31, 1999,
as previously described. The Committee believes that Mr. Natan's efforts in
negotiating the difficult and often-precarious TSA transaction, while managing
the Company's limited cash resources, justifies this recent award.
This report is submitted by the following Compensation Committee
members.
William C. Willis, Jr.
G. Jeff Mennen
L. Kerry Vickar
<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, 1993.
Information on prices at which the Company's Common Stock traded prior to that
date is 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 1994 1995 1996 1997 1998 1999
Top Source
Technologies, Inc. 100 125.89 66.96 28.57 11.61 18.75
Peer Group 100 125.36 150.36 205.98 192.01 229.37
Broad Market 100 120.49 125.40 152.50 133.20 155.13
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
Richmond, VA 23293
Phone: 1-800-446-7922
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On June 9, 1995, the Company sold $3,020,000 in notes to advisory clients
of Mellon Bank Corporation. The notes are subject to indebtedness to equity
ratio that cannot exceed 1.5 to 1.0. As of June 30, 1998, the Company was in
compliance with the ratio as the result of receiving the initial payment of
$1,450,000 from the Buyer. However, due to the Company's historic losses and due
to the uncertainty on the timing of OSA-II revenues, there was a possibility
that the Company would exceed this ratio in fiscal 1998. In order to assure it
would not violate the covenant, in January 1998, G. Jeff Mennen, a director of
the Company, agreed to infuse sufficient capital into the Company to maintain
compliance of this ratio through October 1, 1998 or refinance the notes. In
consideration for this guarantee, the Company issued to Mr. Mennen 50,000
10-year warrants exercisable at $2.00 per share and agreed to register the
underlying shares of Common Stock at its sole expense.
On November 17, 1998, the Company sold $3,500,000 of its Series B
Convertible Preferred Stock ("Series B Preferred") to two trusts in which Mr. G.
Jeff Mennen, a director of the Company, is one of the co-trustees and sole
trustee, respectively, and the beneficiaries are members of Mr. Mennen's
immediate family (the "Mennen Trusts"). The Series B Preferred is convertible on
or after January 1, 2001 into a number of shares of Common Stock computed by
dividing the stated value of $1,000 per share (the "Stated Value") by 85% of the
closing bid price of the Common Stock on the previous trading day (the
"Conversion Price"). The Company has the option to redeem the Series B Preferred
at a price of 115% of Stated Value plus accrued dividends, which option expires
on January 1, 2001. The Series B Preferred pays a dividend of 9% per annum in
cash or, if the Company is unable to pay cash, in shares of Common Stock. The
number of shares of Common Stock to be issued in such event shall equal to the
sum of: (A) the amount of the dividend divided by the Conversion Price plus (B)
25% of the amount obtained in clause (A). As additional consideration, the
Company issued to the Mennen Trusts 350,000 warrants to purchase the Company's
Common Stock exercisable over a 10-year period at a price of $1.94 per share
(which is equivalent to $1.00 above the closing price on the day of consummation
of the Series B Preferred sale transaction). Additionally, since the Series B
Preferred was not redeemed or converted into Common Stock on or before May 1,
1999 (which conversion required the Company's consent), the Company issued to
the Mennen Trusts an additional 50,000 10-year warrants exercisable at a price
of $1.75, $.50 per share above the closing price of the Company's Common Stock
on April 30, 1999. The Company consummated this transaction after diligently and
actively seeking alternative financing sources and concluding that the proposal
was superior to competing offers available in strict arms-length transactions.
The Board of Directors voted unanimously to approve the sale of the Series B
Preferred with Mr. Mennen abstaining.
Under the original terms of the Preferred B, the Company agreed to file a
registration statement by November 30, 1999 to cover the public sale of the
shares of Common Stock issuable on conversion of the Series B Preferred Stock
and exercise of the warrants. On October 21, 1999, the Mennen Trusts, holders of
$3,500,000 of the Company's Series B, 9% Convertible Preferred Stock ("Preferred
Stock") agreed to allow the Company to delay filing a registration statement
until January 1, 2001 to cover the potential public sale of the shares of the
Company's common stock issuable upon conversion of the Preferred Stock and
warrants. Additionally, under the terms of the agreement reached, the Mennen
Trusts received 250,000 warrants at a strike price of $2.38. In return, the
Company maintained its 15% redemption right and was allowed to extend the
required registration or redemption until January 1, 2001.
On August 13th, 1999, a trust in which Mr. G. Jeff Mennen, a director of
the Company, is one of the trustees (the "Trust") provided the Company a
six-month short-term unsecured loan of $500,000 at a 10% interest rate. The loan
can be prepaid without penalty at anytime during the first six months. In the
event the Company does not repay the loan before February 13, 2000, the Company
will be required to file a registration statement by February 13, 2000. The
registration statement will allow the Trust to convert the loan to Common Stock
at 90% of the market price. As consideration, the Trust received 50,000 warrants
at the market price of $.875 exercisable immediately, and 50,000 warrants at the
market price of $.875 exercisable in one year. The value of these warrants
utilizing the Black Scholes Option Pricing Model in accordance with SFAS No. 123
will be deducted from amounts available to common stockholders in the fourth
quarter of the fiscal year 1999. The Company consummated this transaction after
diligently and actively seeking alternative financing sources and concluding
that the proposal was superior to competing offers available in strict
arms-length transactions. The Board of Directors voted unanimously to approve
the unsecured loan with Mr. Mennen abstaining.
PROPOSAL 2. APPOINTMENT OF AUDITORS
Arthur Andersen LLP ("Arthur Andersen"), independent public
accountants, currently acts as our independent auditors. Unless directed to vote
no, proxies being solicited will be voted in favor of the election of Arthur
Andersen as our independent auditors for fiscal year ended September 30, 1999.
Arthur Andersen acted as our auditors for the Company for the fiscal year ended
September 30, 1998. 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 our independent
accountants for fiscal year 1999 requires 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. AMENDMENT OF 1993 STOCK OPTION PLAN
Our 1993 Stock Option Plan (the "1993 Plan") covers 1,650,000 shares of
Common Stock. The 1993 Plan provides: (a) our officers and other employees
opportunities to purchase stock in the Company pursuant to Options granted
hereunder which qualify as ISOs; and (b) our directors, officers, employees and
consultants opportunities to purchase stock in the Company pursuant to
Non-Qualified Options.
A committee of non-employee directors administers the 1993 Plan. The
committee, subject to certain restrictions in the 1993 Plan, has the authority
to (i) determine the employees of the Company to whom ISOs may be granted, and
determine to whom Non-Qualified Options may be granted; (ii) determine the time
or times at which Options may be granted; (iii) determine the exercise price of
shares subject to Options; (iv) determine whether Options granted shall be ISOs
or Non-Qualified Options; (v) determine the time or times when the Options shall
become exercisable, the duration of the exercise period and when the Options
shall vest; (vi) determine whether restrictions such as repurchase Options are
to be imposed on shares subject to Options and the nature of such restrictions,
if any, and (vii) interpret the 1993 Plan and promulgate and rescind rules and
regulations relating to it.
The 1993 Plan also provides for the automatic grant of 30,000
Non-Qualified Options to any director who is not an employee of the Company.
These Options vest in increments of 5,000 Options per director every June 30 and
December 31, provided that they are still serving as a director at that time.
However, in the event any director resigns prior to full vesting, the Options
will vest on a pro-rata basis.
In December 1998 the Board approved an additional increase of 500,000
Options. Ratification and approval by the stockholders is being sought for the
increase of 500,000 Options under the 1993 Plan. A copy of the proposed
amendment is attached to this Proxy Statement as Exhibit A. Pursuant to new
rules recently promulgated by the Securities and Exchange Commission stockholder
approval is not required for amendment of a company's stock option Plan
including an amendment to increase the size of the 1993 Plan. However, the
Internal Revenue Service Code requires stockholder approval if the Options to be
granted are treated as ISOs rather than non-qualified Options. Management
believes it is in the best interest of our employees to grant ISOs whenever
possible because no tax to the employee is recognized upon exercise of the ISOs.
An affirmative vote of the holders of at least a majority of the votes
represented in person or by proxy at the annual meeting is required to approve
the proposed amendment to the Plan. Proxies solicited by management will be
voted for the proposal unless instructed otherwise.
PROPOSAL 4. CHANGE OF COMPANY NAME
The Company is seeking stockholder approval to amend its certificate of
incorporation, as amended and thereby change its name from Top Source
Technologies, Inc. to Global Technovations, Inc. The Company believes that the
name change will be in the best interests of the Company in that it more
accurately reflects the Company's increased focus on its goal of internationally
marketing its OSA-IIs and further location and developing technologies to serve
the transportation industry.
Consistent with this proposed name change the Company has developed a
new logo depicted below:
[GRAPHIC OMITTED]
The Company's old logo was stylized version of an overhead sound bar,
which business has recently been sold.
Proxies being solicited will be voted in favor of the change of the
Company's name unless instructed otherwise. An affirmative vote of the holders
of at least a majority of the shares of the Common Stock represented in person
or by proxy and entitled to vote at the 1999 Annual Meeting is required to
approve the change of the Company's name from Top Source Technologies, Inc. to
Global Technovations, Inc.
PROPOSAL 5. 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, we will cancel the proxy.
Stockholders' Proposals
Any of our stockholders who wish to present a proposal to be considered
at the 2000 Annual Meeting of stockholders of the Company and who wishes to have
that proposal included in the Company's proxy statement for that meeting must
deliver their proposal in writing to the Company no later than November 30,
2000. In addition, Top Source by-laws state that its stockholders from otherwise
introducing business unless less than 75 days written notice is given to us 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 us
within 15 days of such Notice Date.
We will send, without charge to any stockholder submitting a written
request, a copy of our annual report on Form 10-K/A No. 2 as filed with the
Commission including financial statements and schedules thereto. Your written
request should be sent to Ms. 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>
EXHIBIT "A"
PROPOSED
EIGHTH AMENDMENT TO THE
1993 STOCK OPTION PLAN OF
TOP SOURCE TECHNOLOGIES, INC.
I. Paragraph 4 is hereby deleted and replaced with the following:
4. Stock. The
stock subject to Options shall be authorized but unissued shares of common
stock, par value $.001 per share (the "Common Stock"), or shares of Common Stock
reacquired by the Company in any manner. The aggregate number of shares of
Common Stock which may be issued pursuant to the Plan is 2,150,000. The number
of shares issuable pursuant to this Plan and the maximum number of Options which
can be granted to any person are not more than 600,000 Options, subject to
adjustment as provided in Paragraph 14. Any such shares may be issued as ISOs or
Non-Qualified Options so long as the number of shares so issued does not exceed
the limitations in this paragraph. If any Option granted under the Plan shall
expire or terminate for any reason without having been exercised in full or
shall cease for any reason to be exercisable in whole or in part the unexercised
shares subject to such Options shall again be available for grants of Options
under the Plan.
<PAGE>
[OBJECT OMITTED]
Oil analysis is akin to a blood test used to diagnose a broad range of
medical conditions that help physicians determine the course of treatment to
cure or prevent illness. Similarly, an oil sample contains information about
contaminants, engine wear, coolant leaks, and transmission faults that, when
compared to an extensive normal wear curve database, can provide early warning
of potential engine failures, thus allowing time for repairs or preventative
maintenance.
Top Source Technologies, Inc. has been offering used transmission and
engine oil analysis via the Internet. In response to many requests from its
shareholders, auto enthusiasts and other interested parties, to utilize Top
Source's MotorCheck(TM) On-Site Analyzer ("OSA-II"), the Company has made this
analysis available via accessing its Web Site. Specifically, you simply click on
www.Topsource.com to access the Company's Web Site, and then click on the
patented MotorCheck(TM) On-Site Analyzer symbol to purchase an OSA-II mail-in
oil analysis kit. Users will receive the same five-minute results as if the test
was conducted on-site. The report will contain meaningful information regarding
the condition of the respondent's engine or transmission and will be mailed to
you immediately. If an urgent problem is indicated, you will be notified by
phone.
If you do not have access to a computer, you may fill out the form below
and send it to Top Source Technologies, Inc. along with your payment.
MOTORCHECK(TM) USED OIL ANALYSIS KIT
NAME: _____________________________________________
ADDRESS: __________________________________________
__________________________________________
PHONE: ________________________
Quantity: ______________
@ $14.95 per kit _________________
Shipping/Handling per kit:
U.S. $2.95 _________________
International $5.00 _________________
TOTAL _________________
**Please make your checks payable to Top Source Technologies, Inc.:
*** Mail your checks to:
Top Source Technologies, Inc.
7108 Fairway Drive, Ste. 200
Palm Beach Gardens, FL 33418
If you have any questions, please call (561) 775-5756
<PAGE>
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF
TOP SOURCE TECHNOLOGIES, INC.
FOR THE ANNUAL MEETING OF STOCKHOLDERS
December 14, 1999 - 12:00 NOON, E.S.T.
To Be Held At The
AMERICAN STOCK EXCHANGE, 86 TRINITY PLACE, NEW YORK, NEW YORK, 10006
The undersigned hereby appoints 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 at the American Stock Exchange, 86
Trinity Place, New York, New York, 10006 , and at any adjournment thereof, upon
such business as may properly come before the meeting, including the items set
forth below:
Each share of common stock outstanding on the record date is entitled to one
vote on all proposals.
1. I hereby elect the following individuals to serve on the board of
directors of the Company for a three year term until the Company's annual
meeting in 2002.
Name Yes No
a) Ronald P. Burd ____ ____
b) David Natan ____ ____
2. I hereby ratify the appointment of the Arthur Andersen LLP as
independent auditors for the fiscal year ended September 30, 1999.
Yes______ No_____ Abstain_______
3. I hereby approve amendment of the Company's 1993 Stock Option Plan
increasing by 500,000 the number of shares of Company's covered
thereunder.
Yes______ No_____ Abstain_______
4. I hereby approve amendment of the Company's Certificate of
Incorporation and thereby change its name from Top Source
Technologies, Inc. to Global Technovations, Inc.
Yes No _____ Abstain_______
5. I hereby authorize the transaction of any other lawful business
that may properly come before th annual meeting of stockholders.
Yes _____ No _____ Abstain _____
(Shares cannot be voted unless this proxy is signed and returned,
or specific arrangements are made to have the shares
represented at the meeting).
If no direction is indicated, this Proxy will be voted as recommended by the
Board of Directors for all proposals.
Dated:_____________________________ __________________________________
Signature of Stockholder
_____ Number of Shares Owned: Printed Name:
