SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 2000
COMMISSION FILE NO. 2-70345-NY
SunGlobe Fiber Systems Corporation
(Exact name of Registrant as specified in its Charter)
Nevada 88-0182534
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(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
1550 Sawgrass Corporate Parkway, Suite 370
Sunrise, Florida 33323
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(954) 838-0527
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TimeOne, Inc.
(Former name)
631 N. Stephanie Street, #378, Henderson, Nevada 89014
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(Former Address of principal executive offices) (Zip Code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filled by Section 13 or 15(d) of the Securities Exchange Act during the
past 12 months (or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days.
(1) Yes: X No:
(2) Yes: X No:
Number of Shares Outstanding as of July 31, 2000
15,849,592 shares of common stock
(Indicate Number of Shares Outstanding of Each Class of Common
Stock as of the end of the Quarter
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS REQUIRED BY FORM 10-QSB
SunGlobe Fiber Systems Corporation, formerly known as TimeOne, Inc., (the
"Registrant" or "Company") files herewith an unaudited balance sheet of the
Registrant as of June 30, 2000 and the related statements of income and cash
flows for the three and six month periods ended June 30, 2000 and June 30, 1999.
The unaudited financial statements included in this report on Form 10-QSB have
been prepared by the Company and have not been the subject of independent
review. In the opinion of the management of the Company, the financial
statements fairly present the financial condition of the Company.
2
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SunGlobe Fiber Systems Corporation
(A Development Stage Company)
Balance Sheet
June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
Current Assets
<S> <C>
Cash $ 1,550,148
Receivables 200,000
-----------------
TOTAL ASSETS $ 1,750,148
=================
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Accounts Payable $ 0
-----------------
Total Current Liabilities 0
Stockholders Equity
Capital Stock, Common, $.001 par value 826
Additional paid-in capital 1,229,336
Retained Earnings 569,986
-----------------
Total Stockholders Equity 1,800,148
-----------------
Treasury stock, at cost, 500,000 shares (50,000)
-----------------
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 1,750,148
=================
</TABLE>
3
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SunGlobe Fiber Systems Corporation
(A Development Stage Company)
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
------------- ------------- -------------- -------------
Revenues
<S> <C> <C> <C> <C>
Gain on Sale of Securities $ 0 $ 240,626 $ 0 $ 501,293
Interest and Dividends 31,585 12,790 53,777 18,506
Gain on Property Sale 21,948 0 21,948 102
Unrealized Gain on Securities (1,614) 47,558 0 184,223
------------- ------------- -------------- -------------
Total Revenue 51,919 300,974 75,725 704,124
Costs and Expenses
Interest 0 911 0 7,427
Professional Fees 126,175 46,587 157,681 80,387
Legal and Accounting 35,144 650 47,043 1,249
Office and Travel 35,192 28,062 66,007 40,446
------------- ------------- -------------- -------------
Total Cost And Expenses 196,511 76,210 270,731 129,509
------------- ------------- -------------- -------------
NET INCOME (LOSS) BEFORE TAXES (144,592) 224,764 (195,006) 574,615
Income Taxes 0 15 0 15
------------- ------------- -------------- -------------
NET INCOME (LOSS) FROM
CONTINUING OPERATIONS (144,592) 224,749 (195,006) 574,600
NET GAIN (LOSS) FROM
DISCONTINUED OPERATIONS 0 0 0 21,375 (1)
------------- ------------- -------------- ----------
NET INCOME (LOSS) $ (144,592) $ 224,749 $ (195,006) $ 595,975
============= ============= ============== =============
(1) Adjustment to income taxes previously accrued.
</TABLE>
4
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SunGlobe Fiber Systems Corporation
(A Development Stage Company)
Statement of Stockholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Additional Retained
Common Stock Paid-in Earnings
Shares Amount Capital (Deficit)
------------------ ----------------- ----------------- ------------------
<S> <C> <C> <C> <C>
Balances at December 31, 1995 6,113,900 $ 611 $ 1,120,692 $ 121,417
Stock issued for assets 2,000,000 200 124,800
Restricted stock issued to employees 350,000 35 32,776
Net Income for year ended
December 31, 1996 107,831
------------------ ----------------- ----------------- ------------------
Balances at December 31, 1996 8,463,900 846 1,278,268 229,248
Cancel Treasury stock (109,000) (11) (48,941)
Net Income for year ended
December 31, 1997 64,209
------------------ ----------------- ----------------- ------------------
Balances at December 31, 1997 8,354,900 835 1,229,327 293,457
Net Income for year ended
December 31, 1998 274,691
------------------ ----------------- ----------------- ------------------
Balances at December 31, 1998 8,354,900 835 1229,327 568,148
Cancel Company stock (88,600) (9) 9
Net income for
year ended 12/31/99 196,844
------------------ ----------------- ----------------- ------------------
Balances 12/31/99 8,266,300 826 1,229,336 764,992
Net Income (Loss) for six months ended
June 30, 2000 (195,006)
------------------ ----------------- ----------------- ------------------
Balances at June 30, 2000 8,266,300 $ 826 $ 1,229,336 $ 569,986
================== ================= ================= ==================
</TABLE>
5
<PAGE>
SunGlobe Fiber Systems Corporation
(A Development Stage Company)
Statement of Cashflows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
------------- ------------- -------------- -------------
OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net Income (Loss) $ (144,592) $ 224,749 $ (195,006) $ 595,975
Adjustments to reconcile net income to net cash
provided by operating activities:
Non-Cash Proceeds from Land Sale (50,000) 0 (50,000) 0
Cost of Land Sold 56,589 0 56,589 0
Decrease in Deposits 2,501 0 2,501 0
Unrealized Gain on Government Securities 1,614 (47,558) 0 (184,223)
(Increase) Decrease in Receivables 0 (199,611) 300,000
(Increase) Decrease in Prepaid Expenses 15,744 0 15,744 0
Increase (Decrease) in Accounts Payroll & Payroll Tax (55,840) 0 (105,840) 0
------------- ------------- -------------- -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES (173,984) 177,191 (475,623) 711,752
INVESTING ACTIVITIES
Cost of Government Securities Sold 597,636 1,244,381 4,407,418 2,612,660
Purchase of Government Securities 0 (1,312,278) (2,802,693) (2,876,221)
------------- ------------- -------------- -------------
NET CASH USED BY INVESTING ACTIVITIES 597,636 (67,897) 1,604,725 (263,561)
------------- ------------- -------------- -------------
INCREASE IN CASH & CASH EQUIVALENTS 423,652 109,294 1,129,102 448,191
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 1,126,496 961,305 421,046 622,408
------------- ------------- -------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,550,148 $ 1,070,559 $ 1,550,148 $ 1,070,599
============= ============= ============== =============
</TABLE>
6
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SunGlobe Fiber Systems Corporation
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These financial statements present the financial position of SunGlobe Fiber
Systems Corporation (formerly TimeOne, Inc.) as of June 30, 2000, and the
results of its operations for the three and six month periods ending June 30,
2000 and 1999.
Revenue Recognition
Interest income is accrued as earned. Gains or losses on the sale of Government
securities are recorded as of the trade date.
Income Taxes
No federal income taxes were due for the year ended December 31, 1999. At
December 31, 1999, the Company had prepaid income taxes of $15,744.
Cash and Cash Equivalents
For financial statement purposes, the Company considers all highly liquid
investments with an original maturity of three months or less when purchased to
be cash equivalents.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues, and expenses
during the reporting period. Estimates also affect the disclosure of contingent
assets and liabilities at the date of the financial statements. Actual results
could differ from these estimates. Such estimates of significant accounting
sensitivity are allowance for doubtful accounts and reserves for obsolete
inventory.
NOTE B - DEVELOPMENT STAGE COMPANY
The Company re-entered the development stage on January 1, 1999, after the sale
of its sole operating activity "Buffs-N-Puffs" carwash
NOTE C - MONTANA LAND
In September, 1994, Daniel Pentelute, the Majority stockholder of the Company,
purchased 21 acres of land in Montana. Three days later, the Company purchased a
50% interest in the land from Mr. Pentelute at his cost (50%). The other 50%
interest was purchased by Desert Land Enterprises whose sole stockholder is
Daniel Pentelute. The cost of the 50% interest was $56,589. A parcel consisting
of 1/3 of the land was sold during the quarter ended June 30, 2000 for the
amount of $28,537. The Company's 50% interest in remaining parcels was sold to
Mr. Pentelute on June 30, 2000 in exchange for 500,000 shares of common stock,
with an agreed-upon value of $50,000.
NOTE D - FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash and cash equivalents, accounts payable, and accrued
expenses approximate fair value due to the short maturity periods of these
instruments.
NOTE E - SUBSEQUENT EVENTS
On July 3, 2000 the Company completed a merger with SG FiberCo., acquiring all
of its outstanding capital stock in exchange for 8,083,292 newly issued shares
of the Company's common stock. The name of TimeOne, Inc. was changed to SunGlobe
Fiber Systems Corporation effective on July 6, 2000.
NOTE F - NOTE RECEIVABLE
Note receivable from a private corporation represents an unsecured loan of
$200,000 dated March 16, 2000 with interest accruing at the published prime rate
in the Wall Street Journal. The due date of the note was May 31, 2000. The note
was cancelled as part of the transaction on July 3, 2000 described in Note E.
NOTE G - RELATED PARTY TRANSACTIONS
During 1994, Daniel Pentelute, the major shareholder of the Company, purchased
21 acres of land in Montana and three (3) days later sold a one-half interest to
the Company at his cost. The other one-half interest is owned by Desert Land
Enterprises, whose sole shareholder is Daniel Pentelute. See Note C regarding
disposition of the land.
7
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PART I
FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
OPERATING RESULTS
All references to "we", "us", the "company" and "SunGlobe" mean
SunGlobe Fiber Systems Corporation, including subsidiaries and predecessors,
except where it is clear that the term refers only to SunGlobe Fiber Systems
Corporation.
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
Statements contained in the following "Management's Discussion and
Analysis or Plan of Operations" and elsewhere herein that are not statements or
descriptions of historical facts are forward-looking statements that are subject
to risks and uncertainties. Words such as "expect," "intends," "believes,"
"plans," "anticipates" and "likely" also identify forward-looking statements.
All forward-looking statements are based on current facts and analyses. Actual
results may differ materially from those currently anticipated due to a number
of factors including, but not limited to, future capital needs, competition, the
need for market acceptance, dependence upon third parties, disruption of vital
infrastructure, government regulation and other risks. See the section entitled
"MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION - Risk Factors" for a
discussion of some of those risks. Additional information on factors that may
affect our business and financial results can be found in our filings with the
Securities and Exchange Commission. All forward- looking statements are made
pursuant to the Private Securities Litigation Reform Act of 1995. The following
discussion and analysis should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this report.
OVERVIEW
Subsequent to the sale of our carwash business on October 20, 1998 and
prior to the Merger (as defined below) which was consummated on July 3, 2000, we
have had no operating business. Comparing operating results from previous years
is not meaningful.
On June 29, 2000, we entered into a Merger Agreement (the "Merger
Agreement"), among ourselves, SunGlobe Acquisition, Inc., a Delaware corporation
and our wholly-owned subsidiary (the "Subsidiary"), and SG Fiber Co. (formerly
known as SunGlobe Fiber Systems Corporation), a Delaware corporation, pursuant
to which the Subsidiary would merge with and into SG Fiber Co. (the "Merger"),
with SG Fiber Co. as the surviving corporation. Prior to the Merger, SG Fiber
Co. was a wholly-owned subsidiary of SunGlobe Telecom, Inc., a Florida
corporation ("Telecom"), 71% of the capital stock of which is owned by Barry H.
Pasternak. Pursuant to the terms of the Merger Agreement, we issued to Telecom
8,083,292 newly issued shares of our common stock in exchange for all of the
capital stock of SG Fiber Co. The transaction resulted in SG Fiber Co. owning a
majority of our outstanding capital stock and thereby gaining voting control of
the company.
On June 30, 2000, as a condition to the closing of, the Merger, we sold
our interest in a parcel of real property located in Montana to Daniel Pentelute
("Pentelute"), the majority stockholder and co-owner of the Montana property
through his wholly-owned company, in exchange for 500,000 shares of our common
stock owned by Pentelute, which shares became treasury stock. The purchase price
for the property was negotiated at arms-length between the parties.
SG Fiber Co. has recently entered into an agreement with the Maya-1
Cable System ("Maya-1") pursuant to which it has agreed to purchase a 0.67%
ownership interest in the Maya-1 fiber cable system and to contribute to the
development costs of the system based on its ownership interest percentage.
Maya-1 is a development-stage fiber optic submarine cable system designed to
provide telecommunications capacity in the Caribbean region. The Maya-1 system
is currently in its final stages of construction. When completed, it is expected
to provide fiber optic cable links among the United States, Mexico, Honduras,
Costa Rica, Panama, Colombia and the Cayman Islands. The system is currently
scheduled to become operational in the third quarter of 2000.
The only other asset of SG Fiber Co. is all of the capital stock of
Island Sun Communications Corp., a corporation organized under the laws of the
Commonwealth of Puerto Rico ("Island Sun"). Island Sun=s only asset was a
ten-year lease and option agreement for a largely undeveloped tract of land in
Puerto Rico. The lease permits Island Sun to use the property for office space
and for the proposed installation and operation of telecommunications antennas
and related facilities. Island Sun has an option to extend the lease for two
five-year renewal terms and also has an option to purchase the property for
$250,000.
CHANGES IN FINANCIAL CONDITION
As of June 30, 2000, we had current assets of $1,750,148 compared to $2,041,904
as of December 31, 1999. Cash increased $1,129,102 from $421,046 as of December
31, 1999 to $1,550,148 as of June 30, 2000. The increase is due to sale of
Government securities and collection of receivables. Current liabilities
decreased $105,840 as of December 31, 1999 to $0 as of June 30, 2000. The
decrease is due to payment of income taxes and accounts payable.
CHANGES IN THE RESULTS OF OPERATIONS
We are no longer in the carwash business, so comparing operating results from
previous quarters is not meaningful. We currently derive all revenue from sales
of assets, interest, and dividends earned. Our revenues for the six months ended
June 30, 2000 were $75,725.
8
<PAGE>
We incurred costs and expenses of $270,731 for the six months ended June 30,
2000. The majority of these expenses consisted of office expenses, travel, and
consulting fees.
We had a net loss of $(195,006) for the six months ended June 30, 2000. Net loss
per share was $(.02) for the period.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2000, we had cash and government securities of $1,550,148.
It is anticipated that, subsequent to the closing of the Merger, we will incur
significant expenses in the areas of contributions to the Maya-1 project,
operations and website development geared towards expanding our business and
increasing revenues. These efforts will require us to secure additional
financing sources. Additionally, we cannot be sure that we will generate
sufficient revenues to ever achieve or sustain profitability.
RISK FACTORS
Early Stage Company; Risk of Unsuccessful Business Development
We have no business other than SG Fiber Co. SG Fiber Co., was formed in
February 2000, and has no significant operating history to review in evaluating
its business. We have no assets other than the minimum investment units
purchased in connection with Maya-1 and, through Island Sun, the lease of the
Puerto Rico site. We may not succeed in the development of the business
opportunities described above due to many factors including, but not limited to,
the inability to market bandwidth and capacity, the inability to properly
develop the Puerto Rico site, the failure to obtain the proper permits and
regulatory licenses and approvals, the inability to raise additional capital
required to support development of facilities, the inability to attract an
adequate management team and the other factors mentioned below.
Uncertainty of Future Profitability
We have no revenues to date from the Maya-1 project. We expect to
continue to incur significant development, construction, sales and marketing,
and administrative expenses before any significant revenues are achieved. There
can be no assurance that our business strategy will be successful or that it
will ever achieve significant revenues or profitability. In the event we can
achieve significant revenues or profitability, there can be no assurance that it
will be able to consistently sustain or increase such revenues on a quarterly or
annual basis in the future.
Need for Future Capital; Uncertainty of Additional Funding
The development of our business opportunities will require substantial
capital expenditures, in particular a required capital contribution to the
Maya-1 project with respect to our purchase of an ownership percentage in Maya-1
and further construction expenditures. In addition, we may incur expenses for
the construction of a teleport in Puerto Rico, obtaining the appropriate
licenses and permits, and marketing services to customers. Finally, we may
consider the acquisition of other telecommunications assets or companies, and
any such acquisition would increase our capital requirements. We expect to incur
negative cash flow from operations for the foreseeable future. We may not be
able to obtain adequate financing to fund our development and operations, and
any additional financing it obtains may be on terms that are not favorable to
us. If adequate funds are not available, we may be required to delay, reduce or
eliminate one or more of our development opportunities or to enter into
collaborative arrangements on terms that are not favorable to us. Any of these
events would adversely affect our business.
Dependence upon Network Infrastructure; Risk of System Failure; Security Risks
Our success in marketing our services to other users requires that we
provide superior reliability, capacity and security via our transmission assets.
Our transmission assets will be subject to physical damage, power loss, capacity
limitations, software defects, breaches of security (by computer virus,
break-ins or otherwise) and other factors, certain of which may cause
interruptions in service or reduced capacity for the customers. Interruptions in
service, capacity limitations or security breaches could have a material adverse
effect on our business.
Dependence on Rights-of-Way and Other Third Party Agreements
In order to market telecommunication services, we must obtain rights to
utilize underground conduit and aerial pole space and other rights-of-way, as
well as, fiber and satellite capacity from other entities. There can be no
assurance that we will be able to obtain such rights and contractual
arrangements with third parties needed to implement our business plan on
acceptable terms. The inability to obtain such rights-of-way or secure such
third party arrangements would have a material adverse effect our business.
Effect of Regulation
To develop our telecommunications business opportunities, we will be
subject to substantial federal, state and local regulation in the U.S. and
abroad. There can be no assurance that we will be able to obtain the proper
permits, authorizations, licenses and consents required for our planned
operations.
9
<PAGE>
Competition
We intend to operate in a highly competitive environment. Most of our
actual and potential competitors have substantially greater financial,
technical, marketing and other resources (including brand name recognition) than
we possess. Also, the continuing trend toward business alliances in the
telecommunications industry and the absence of substantial barriers to entry in
the data and Internet service markets could give rise to significant new
competition. There can be no assurance that we will either identify or be able
to consummate the right strategic alliances with other participants,
particularly those with greater resources and longer operating histories, in the
competitive market.
Impact of Technological Change
The telecommunications industry is subject to rapid and significant
technological change that could materially affect the continued use of fiber
optic cable, satellites or the electronics that we intend to utilize. Future
technological changes, including changes related to the emerging wireline and
wireless transmission and switching technologies and Internet-related services
and technologies, could have a material adverse effect on our business.
The market for telecommunications services is characterized by rapidly
changing technology, evolving industry standards, emerging competition and
frequent new product and service introductions. There can be no assurance that
we will successfully identify new service opportunities and develop and bring
new services to market. Our pursuit of necessary technological advances may
require substantial time and expense, and there can be no assurance that we will
succeed in adapting our business to alternate access devices, conduits and
protocols.
Management of Growth
Subject to the sufficiency of our cash resources, we intend to expand
our business rapidly. Our future performance will depend, in large part, upon
our ability to implement and manage our growth effectively. Our growth may place
a significant strain on our administrative, operational and financial resources.
We anticipate that, if successful in expanding our business, we will be required
to recruit and hire successfully a substantial number of new managerial,
finance, accounting and support personnel and to integrate our new managers and
staff. Failure to retain and attract additional management personnel who can
manage our growth effectively would have a material adverse effect on our
growth. To manage our growth successfully, we will also have to improve and
upgrade operational, financial, accounting and information systems, controls and
infrastructure as well as expand, train and manage our employee base. In the
event we are unable to do so, our business could be materially adversely
affected.
PART II.
OTHER INFORMATION
ITEM 5. OTHER MATTERS
On July 3, 2000, we completed the Merger, and subsequently relocated
our principal place of business from Henderson, Nevada to Sunrise, Florida, the
principal place of business of SG Fiber Co. On the same date, we also entered
into an employment agreement with Barry H. Pasternak, the president and chief
executive officer of SG Fiber Co., to serve in the same capacity with our
company.
On July 6, 2000 we changed our legal name from TimeOne, Inc. to
SunGlobe Fiber Systems Corporation.
ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Employment Agreement, dated July 3, 2000 between
TimeOne, Inc. and Barry H. Pasternak.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the
quarter for which this report is filed.
10
<PAGE>
Exhibit Index
10.1 Employment Agreement, dated July 3, 2000 between
TimeOne, Inc. and Barry H. Pasternak.
11
<PAGE>
SIGNATURE
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 thereunto duly authorized.
SunGlobe Fiber Systems Corporation
(A Development Stage Company)
Date: August 14, 1999 By:
--------------------------
Barry H. Pasternak
President and CEO
(Acting Chief Financial Officer)
11
<PAGE>
EXHIBIT 10.1
Execution Copy
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement") dated as of July 3,
2000, between TimeOne, Inc., a Delaware corporation with its principal office
located as of the date hereof at 631 North Stephanie Street, #378, Henderson,
Nevada 89014 (the "Company"), and Barry H. Pasternak, an individual resident of
the State of Florida, (the "Executive").
WHEREAS, the Company pursuant to the Merger Agreement, dated as
of June 29, 2000 (the "Merger Agreement"), has acquired, effective
simultaneously with the execution hereof, all of the issued and outstanding
shares of capital stock of SunGlobe Fiber Systems Corporation (the "Target"), a
Delaware corporation, of which Executive was, prior to such acquisition, the
President and Chief Executive Officer; and
WHEREAS, the Company desires to retain the services of the
Executive as its Chief Executive Officer, and the Executive desires to be
employed by the Company, on the terms and subject to the conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual
agreements set forth herein and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties agree as
follows:
1. Employment. The Company hereby employs the Executive, and the
Executive accepts such employment and agrees to perform services for the
Company, for the period and upon the other terms and conditions set forth in
this Agreement.
2. Term. Unless terminated at an earlier date in accordance with
Section 5 of this Agreement, the term of the Executive's employment hereunder
shall be for a period of three years, commencing as of the date hereof.
Thereafter, the term of this Agreement shall be automatically extended for
successive one-year periods unless either party elects by written notice to the
other party given at least 30 days prior to the expiration of the then-current
initial or extension term, not to extend the term of this Agreement.
3. Position and Duties. During Executive's employment under this
Agreement, Executive (i) shall serve as an Executive of the Company with the
title and position of President and Chief Executive Officer, reporting to the
Board of Directors of the Company, (ii) shall have general supervisory
responsibility in such capacity over the business and affairs of the Company, as
well as such other responsibilities as may be specified from time to time by the
Board of Directors of the Company, consistent with the Executive's position and
general area of experience and skills, provided, that in all cases Executive
shall be subject to the oversight and supervision of the Board of Directors of
the Company in the performance of his duties, (iii) upon the request of the
Board of Directors of the company, shall serve as an officer and/or director of
any of the Company's subsidiaries, and (iv) shall render all services reasonably
incident to the foregoing. Executive hereby accepts such employment, agrees to
serve the Company in the capacities indicated, and agrees to use Executive's
best efforts in, shall devote Executive's full skill and energies to the
advancement of the interests of the Company and its subsidiaries and the
performance of Executive's duties and responsibilities hereunder, and shall
devote such of Executive's working time and attention to the performance of the
foregoing as Executive may determine to be reasonable from time to time. Such
duties will be performed from, and the Company agrees that it shall promptly
relocate its executive offices to, the executive offices of the Target
(currently located at 1550 Sawgrass Corporate Parkway, Suite 370, Sunrise, FL
33323). The Company acknowledges that Executive is currently, and intends to
remain as, the President and Chief Executive Officer of SunGlobe Telecom, Inc.
("Telecom"), that the performance of Executive's duties to Telecom shall require
a substantial amount of his working time and attention on an ongoing basis, and
that Telecom engages in and may in the future engage in activities which are
substantially similar to the proposed business activities of the Company; and
the Company agrees that Executive shall be required to devote to the Company
only such of his working time and attention to the interests of the Company and
the performance of his duties and responsibilities hereunder as he reasonably
believes from time to time is consistent with the interests of each of the
Company and Target and his duties and responsibilities to each of the Company
and Target. Nothing herein shall be construed as preventing Executive from
engaging in religious, charitable or other community or non-profit activities
that do not impair Executive's ability to fulfill Executive's duties and
responsibilities under this Agreement.
4. Compensation.
(a) Base Salary. As compensation in full for all services to be
rendered by the Executive under this Agreement, the Company shall pay to the
Executive a base salary of $150,000, less deductions and withholdings, which
salary shall be paid on a monthly basis in arrears in accordance with the
Company's normal payroll procedures and policies. The compensation payable to
the Executive during each year after the first year of the Executive's
employment shall be established by the Company's Board of Directors following an
annual performance review, but in no event shall the salary for any subsequent
year be less than the salary in effect for the prior year as adjusted for
increases based on a cost of living factor to be calculated by
<PAGE>
the Company. The cost-of-living factor shall consist of a fraction, the
numerator of which shall be the most recently determined cost-of-living index
when the calculation is made, and the denominator of which shall be the most
recently determined cost-of-living index prior to the date hereof. The
cost-of-living indices required for this calculation shall be obtained from the
Consumer Price Index published by the Bureau of Labor Statistics of the United
States Department of Labor. In any year in which such index is not available,
the parties shall mutually agree on some similar criterion consistent with the
intent of this provision.
(b) Incentive Compensation. In addition to the base salary, the
Executive shall be eligible to participate in any bonus or incentive
compensation plans that may be established by the Board of Directors of the
Company from time to time applicable to the Executive.
(c) Stock Options. As soon as practicable after the closing of the
Merger, the Company shall grant to the Executive, for no additional
consideration, an option to purchase a number of shares equal to 2.5% of the
Company's issued and outstanding common stock on a fully-diluted basis,
immediately after the effective date of the Merger, at an exercise price of
$[5.00] per share. Such options shall vest, subject to Section 5(e) hereof, in
equal proportions over the three-year period commencing as of the date hereof.
All vested options shall be exercisable, subject to Section 5(e) hereof, at any
time prior to the expiration of 10 years hereof, and shall otherwise be subject
to such terms and conditions as shall be reasonably acceptable to the Executive
and consistent with the provisions hereof.
(d) Participation in Benefit Plans. While the Executive is
employed by the Company, the Executive shall also be eligible to participate in
all employee benefit plans or programs of the Company to the extent that the
Executive meets the requirements for each individual plan. The Company provides
no assurance as to the adoption or continuance of any particular employee
benefit plan or program, and the Executive's participation in any such plan or
program shall be subject to the provisions, rules and regulations applicable
thereto. Notwithstanding any provisions of the Company's benefit plans or
programs to the contrary, the Executive shall be entitled to a vacation period
of four weeks and two weeks per year as sick leave, during which period all
salary, compensation and benefits, and other rights to which Executive is
entitled hereunder, shall be provided in full.
(e) Expenses. The Company will pay or reimburse the Executive for
all reasonable and necessary out-of-pocket expenses incurred by him in the
performance of his duties under this Agreement, subject to the Company's normal
policies for expense verification.
5. Termination of Employment.
-------------------------
(a) Grounds for Termination. The Executive's employment shall
terminate prior to the expiration of the initial term set forth in Section 2 or
any extension thereof in the event that at any time:
(i) The Executive dies,
(ii) The Executive becomes "disabled," so that he
cannot perform the essential functions of
his position with or without reasonable
accommodation,
(iii) The Board of Directors of the Company elects
to terminate this Agreement for "cause" and
notifies the Executive in writing of such
election,
(iv) The Board of Directors of the Company elects
to terminate this Agreement without "cause"
and notifies the Executive in writing of
such election, or
(v) The Executive elects to terminate this
Agreement and notifies the Company in
writing of such election.
If this Agreement is terminated pursuant to clause (i), (ii) or (iii) of this
Section 5(a), such termination shall be effective immediately. If this Agreement
is terminated pursuant to clause (iv) or (v) of this Section 5(a), such
termination shall be effective 30 days after delivery of the notice of
termination.
<PAGE>
(b) "Cause" Defined. "Cause" means:
(i) The Executive has engaged in willful and
material misconduct, including willful and
material failure to perform the Executive's
duties as an officer or employee of the
Company and has failed to cure such default
within 30 days after receipt of written
notice of default from the Company,
(ii) The Executive has committed fraud,
misappropriation or embezzlement in
connection with the Company's business, or
(iii) The Executive has been convicted or has
pleaded nolo contendere to criminal
misconduct (except for parking violations
and occasional minor traffic violations).
(c) "Disabled" Defined. "Disabled" means any mental or
physical condition that renders the Executive unable to perform the essential
functions of his position, with or without reasonable accommodation, for a
period in excess of six months.
(d) Salary Continuation. If the Executive's employment by the
Company is terminated by the Company pursuant to clause (ii) or (iv) of Section
5(a), the Company shall continue to pay to the Executive his base salary (less
any payments received by the Executive from any disability income insurance
policy provided to him by the Company) and shall continue to provide health
insurance benefits for the Executive through the earlier of (a) the date that
the Executive has obtained other full-time employment, or (b) twelve months from
the date of termination of employment. If this Agreement is terminated pursuant
to clauses (i), (iii) or (v) of Section 5(a), the Executive's right to base
salary and benefits shall immediately terminate, except as may otherwise be
required by applicable law. In either event, if the Executive's employment by
the Company terminates within six months of the end of any fiscal year of the
Company, the Executive shall also be entitled to receive a pro rata portion
(based on the number of days of employment during that fiscal year) of any bonus
payment that would have been payable to him for that fiscal year pursuant to
Section 4(b) if the Executive had been in the employ of the Company for the full
fiscal year. No bonus will be payable to the Executive with respect to any
fiscal year in which the Executive was employed by the Company for less than six
months or with respect to any fiscal year after the fiscal year in which the
Executive's employment terminated.
(e) Exercise of Stock Options. If the Executive's employment
by the Company is terminated by the Company pursuant to clause (i), (ii) or (iv)
of Section 5(a), all options granted to the Executive shall vest immediately on
such date of termination. In the event the Executive's employment by the Company
is terminated pursuant to clause (iii) or (v) of Section 5(a), all options
granted to the Executive which have vested as of the date of termination shall
terminate one year after the date of such termination.
6. Miscellaneous.
(a) Indemnification. The Company shall indemnify, defend and
hold harmless the Executive from and against all claims, losses, expenses, fees
(including attorneys' and expert witnesses' fees), costs and judgments, to the
extent such costs are not covered by the Company's directors and officers
insurance policy, that may be asserted against the Executive (a) that result
from any acts or omissions of the Company or the Executive solely in his role as
president and chief executive officer of the Company and (b) that are not
related to any act of gross negligence or malfeasance on the part of the
Executive.
(b) Disability Insurance. The Company shall obtain a
disability insurance policy. The Executive shall be covered by this disability
insurance policy.
(c) Directors and Officer Insurance. The Company shall obtain
a director and officer insurance policy. The Executive shall be covered by the
director and insurance policy.
(d) Entire Agreement. This Agreement (including the exhibits,
schedules and other documents referred to herein) contains the entire
understanding between the parties hereto with respect to the subject matter
hereof and supersedes any prior understandings, agreements or representations,
written or oral, relating to the subject matter hereof.
(e) Counterparts. This Agreement may be executed in separate
counterparts, each of which will be an original and all of which taken together
shall constitute one and the same agreement, and any party hereto may execute
this Agreement by signing any such counterpart.
(f) Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law but if any provision of this Agreement is held to be
invalid, illegal or unenforceable under any applicable law or rule, the
validity, legality and enforceability of the other provision of this Agreement
will not be affected or impaired thereby. In furtherance and not in limitation
of the foregoing, should the duration or geographical extent of, or business
activities covered by, any provision of this Agreement be in excess of that
which is valid and enforceable under applicable law, then such provision shall
be construed to cover only that duration, extent or activities which may validly
and enforceably be covered. The Executive acknowledges the uncertainty of the
law in this respect and
<PAGE>
expressly stipulates that this Agreement be given the construction which renders
its provision valid and enforceable to the maximum extent (not exceeding its
express terms) possible under applicable law.
(g) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
personal representatives and, to the extent permitted by subsection (e),
successors and assigns.
(h) Assignability. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall be
assignable (including by operation of law) by either party without the prior
written consent of the other party to this Agreement, except that the Company
may, without the consent of the Executive, assign its rights and obligations
under this Agreement to any corporation, firm or other business entity with or
into which the Company may merge or consolidate, or to which the Company may
sell or transfer all or substantially all of its assets, or of which 50% or more
of the equity investment and of the voting control is owned, directly or
indirectly, by, or is under common ownership with, the Company. After any such
assignment by the Company, the Company shall be discharged from all further
liability hereunder and such assignee shall thereafter be deemed to be the
Company for the purposes of all provisions of this Agreement including this
Section 11.
(i) Modification, Amendment, Waiver or Termination. No
provision of this Agreement may be modified, amended, waived or terminated
except by an instrument in writing signed by the parties to this Agreement. No
course of dealing between the parties will modify, amend, waive or terminate any
provision of this Agreement or any rights or obligations of any party under or
by reason of this Agreement. No delay on the part of the Company in exercising
any right hereunder shall operate as a waiver of such right. No waiver, express
or implied, by the Company of any right or any breach by the Executive shall
constitute a waiver of any other right or breach by the Executive.
(j) Notices. All notices, consents, requests, instructions,
approvals or other communications provided for herein shall be in writing and
delivered by personal delivery, overnight courier, mail, electronic facsimile or
e-mail addressed to the receiving party at the address set forth herein. All
such communications shall be effective when received.
TimeOne, Inc. Barry H. Pasternak
631 North Stephanie Street, #378 c/o SunGlobe Fiber Systems Corporation
Henderson, Nevada 89014 1550 Sawgrass Corporate Parkway
Attention: Chairman of the Suite 370
Board of Directors Sunrise, FL 33323
Any party may change the address set forth above by notice to each
other party given as provided herein.
(k) Headings. The headings and any table of contents contained
in this Agreement are for reference purposes only and shall not in any way
affect the meaning or interpretation of this Agreement.
(l) Governing Law. ALL MATTERS RELATING TO THE INTERPRETATION,
CONSTRUCTION, VALIDITY AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE
OF LAW PROVISIONS THEREOF.
(m) Third-Party Benefit. Nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights, remedies,
obligations or liabilities of any nature whatsoever.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph.
TIMEONE, INC.
By:_____________________________
Roy Molina, President
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BARRY H. PASTERNAK
