SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) December 9, 1997
Base Ten Systems, Inc.
- -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
New Jersey 0-7100 22-1804206
- -------------------------------------------------------------------------------
(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification
incorporation) No.)
One Electronics Drive, Trenton, New Jersey 08619
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(609) 586-7010
- -------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
- -------------------------------------------------------------------------------
(Former Name or Former Address, If Changed Since Last Report.)
666427.1
ITEM 5 Other Events.
In order to assure that what the Company believes will be adequate
financial resources are available for continued marketing and development
efforts by the MTD, the Board of Directors authorized, and the Company
consummated on December 9, 1997, the first installment of the sale of up to $19
million of convertible preferred stock ("Preferred Stock") and Class A Stock
purchase warrants (the "Warrants"). A total of $9.375 million of Preferred Stock
and Warrants were sold and issued as of December 5, 1997, to several
institutional investors. The Company is obligated to sell and issue, and the
existing holders of the Preferred Stock are required to purchase, an additional
$9.675 million of Preferred Stock and Warrants, following shareholder approval,
which is required by NASDAQ rules. The $9.675 million of Preferred Stock and
Warrants not yet sold are expected to close by early January 1998.
Terms of the Financing
Holders of Preferred Stock have the following rights, privileges and
preferences:
Term; Dividends and Illiquidity Payments. The Preferred Stock has a term of
three years and pays a cumulative dividend of 8.0% per annum during any quarter
in which the closing bid price for the Class A Stock is less than $8.00 for any
10 consecutive trading days. An equivalent payment is payable to any holder of
Preferred Stock which is subject during any quarter to a standstill period (as
described below) following a Base Ten underwritten public offering or which is
non-convertible because of the limitations described below. Such dividends and
payments are payable only prior to conversion, and payable in cash or additional
Preferred Stock at Base Ten's option; however, if Base Ten elects to pay the
dividend in Preferred Stock, the amount of such payment will be 125% of the cash
amount due.
Liquidation Preference. The Preferred Stock has a liquidation preference as
to its principal amount and any accrued and unpaid dividends.
Conversion Rights. The Preferred Stock is convertible at any time or from
time to time into Class A Stock, at a conversion price equal to the lesser of
(i) $16.25 per share or (ii) the Weighted Average Price of the Class A Stock
prior to the conversion date. Weighted Average Price is defined as the volume
weighted average price of Class A Stock on Nasdaq (as reported at the close of
trading by Bloomberg Financial Markets) over any two trading days in the 20
trading day period ending on the day prior to the date the holder gives notice
of conversion (excluding the lowest closing bid price in that period). The
holder has the right to select such two days. In any event, no more than
3,040,000 shares of Class A Stock shall be issued upon conversion of all of the
Preferred Stock. Any Preferred Stock remaining outstanding because of this
limitation may be redeemed at the holder's option for a subordinated 8%
promissory note maturing when the Preferred would have matured.
Company Redemption Right. Base Ten has the right, at any time, to redeem
all or any part of the outstanding Preferred Stock or subordinated notes at 130%
of their original purchase price.
666427.1
Mandatory Redemption on Maturity. Any shares of Preferred Stock or
subordinated notes still outstanding three years after issuance must be redeemed
in either cash or at Base Ten's option, in Class A Stock. If Base Ten elects to
make the redemption in Class A Stock, the amount of such payment will be 125% of
the original purchase price.
Voting Rights. The holders of the Preferred Stock have the same voting
rights as the holders of Class A Stock, calculated as if all outstanding shares
of Preferred Stock had been converted into shares of Class A Stock on the record
date for determination of shareholders entitled to vote on the matter presented.
Warrants. For each $1 million of Preferred Stock purchased, purchasers
received five-year warrants to purchase 40,000 shares of Class A Stock
exercisable at $16.25 per share.
Right of First Refusal. So long as shares of the Preferred Stock remain
outstanding, each holder has the right (with certain exceptions) to purchase, on
five days notice, up to that portion of any future equity financing by Base Ten
which would be sufficient to enable the holder to maintain its percentage
interest in Base Ten equity on a fully diluted basis.
Registration. Base Ten is required to file a registration statement
("Registration Statement") with the Securities and Exchange Commission ("SEC")
registering for resale the Class A Stock underlying the Preferred Stock,
including any Preferred Stock which may be issued as a dividend, and the
Warrants, which must be effective no later than March 2, 1998. In the event the
Registration Statement is not declared effective by the SEC by such date, Base
Ten will be required to pay the holders of the Preferred an amount equal to
11/2% of the original purchase price for each month until the Registration
Statement has been declared effective. The holders have agreed, if requested by
a managing underwriter, to a maximum 90-day standstill period following any
underwritten Base Ten public offering, but not in excess of two such standstills
(or more than 90 days)in any 18-month period. In the event a standstill period
is effective, the maturity date of the Preferred Stock would be extended by the
duration of the standstill period.
Use of Proceeds
The proceeds of the sale of the Preferred are expected to be used for
continued development of the Company's PHARMASYST(R) family of products,
increased marketing activities, working capital, and acquisition financing.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
99.1 Securities Purchase Agreement
99.2 Registration Rights Agreement
99.3 Certificate of Amendment of Restated Certificate of
Incorporation Providing for Designation, Preferences
and Rights of the Convertible Preferred Shares, Series A
666427.1
99.4 Common Stock Purchase Warrant Certificate
99.5 Press Release, dated as of December 9, 1997
666427.1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BASE TEN SYSTEMS, INC.
Date: December 18, 1997 By:/s/ Thomas E. Gardner
------------------------------------
Name: Thomas E. Gardner
Title: President and Chief
Executive Officer
666427.1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BASE TEN SYSTEMS, INC.
Date: December 18, 1997 By: ___________________________________
Name: Thomas E. Gardner
Title: President and Chief
Executive Officer
666427.1
1