<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14A-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Trans Global Services, Inc.
(Name of Registrant as Specified In Its Charter)
N.A.
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)
(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] 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:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on 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:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE> 2
Trans Global Services, Inc.
1393 Veterans Memorial Highway
Hauppauge, New York 11788
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
August 13, 1998
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders (the "Annual
Meeting") of Trans Global Services, Inc., a Delaware corporation (the
"Company"), will be held at the offices of the Company, 1393 Veterans Memorial
Highway, Hauppauge, New York 11788 on August 13, 1998, at 9:00 A.M. local time,
for the purpose of considering and acting upon the following matters:
(1) The election of five (5) directors to serve until the 1999 Annual Meeting
of Stockholders and until their successors shall be elected and qualified;
(2) The approval of an amendment to the Company's certificate of incorporation
to decrease the number of shares of authorized preferred stock, par value $.01
per share, from 20,000,000 shares to 5,000,000 shares and to decrease the number
of shares of authorized common stock, par value $.01 per share, from 50,000,000
shares to 25,000,000 shares.
(3) The approval of the 1998 Long-Term Incentive Plan.
(4) The approval of Moore Stephens, P.C. as the Company's independent certified
public accountants for the year ending December 31, 1998; and
(5) The transaction of such other and further business as may properly come
before the meeting.
The Board of Directors of the Company has fixed the close of business on June
22, 1998 as the record date (the "Record Date") for the determination of
stockholders entitled to notice of and to vote at the 1998 Annual Meeting. A
list of stockholders eligible to vote at the 1998 Annual Meeting will be
available for inspection during normal business hours for purposes germane to
the meeting during the ten days prior to the meeting at the offices of the
Company, 1393 Veterans Memorial Highway, Hauppauge, New York 11788.
The enclosed Proxy Statement contains information pertaining to the matters
to be voted on at the Annual Meeting. A copy of the Company's Annual Report
to Stockholders for 1997 is being mailed with this Proxy Statement.
By order of the Board of Directors
Glen R. Charles
Hauppauge, New York
July 8, 1998
THE MATTERS BEING VOTED ON AT THE ANNUAL MEETING ARE IMPORTANT TO THE COMPANY,
AND CERTAIN OF THE MATTERS REQUIRE THE APPROVAL OF THE HOLDERS OF A MAJORITY OF
THE OUTSTANDING SHARES OF COMMON STOCK. IN ORDER THAT YOUR VOTE IS COUNTED AT
THE ANNUAL MEETING, PLEASE EXECUTE, DATE AND PROMPTLY MAIL THE ENCLOSED PROXY
CARD IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON AT
THE ANNUAL MEETING IF THE PROXY IS REVOKED IN THE MANNER SET FORTH IN THE PROXY
STATEMENT
<PAGE> 3
PROXY STATEMENT
1998 Annual Meeting of Stockholders
GENERAL INFORMATION
The accompanying proxy and this Proxy Statement are furnished in connection with
the solicitation by the Board of Directors of Trans Global Services, Inc., a
Delaware corporation (the "Company"), of proxies for use at the Company's 1998
Annual Meeting of Stockholders (the "Annual Meeting") to be held at the offices
of the Company, 1393 Veterans Memorial Highway, Hauppauge, New York 11788, on
August 13, 1998 at 9:00 A.M. or at any adjournment thereof. This Proxy Statement
and the related proxy and the 1996 Annual Report to Stockholders (the "Annual
Report") are being mailed to stockholders of the Company on or about July 10,
1998.
At the Annual Meeting, stockholders will vote on (a) the election of five (5)
directors to serve until the 1999 Annual Meeting of Stockholders and until their
successors shall be elected and qualified, (b) the approval of an amendment to
the Company's certificate of incorporation to decrease the number of shares of
authorized preferred stock, par value $.01 per share, from 20,000,000 shares to
5,000,000 shares and to decrease the number of shares of authorized common
stock, par value $.01 per share, from 50,000,000 shares to 25,000,000 shares,
(c) the approval of the 1998 Long-Term Incentive Plan, (d) the approval of Moore
Stephens, P.C. as the Company's independent certified public accountants for the
year ending December 31, 1998, and (e) the transaction of such other and further
business as may properly come before the meeting. The Board of Directors does
not know of any other matters which will be voted upon at the Annual Meeting.
Stockholders are encouraged to review the detailed discussion presented in this
Proxy Statement and either return the completed and executed proxy or attend the
Annual Meeting.
Record Date; Outstanding Shares; Voting Rights and Proxies
Stockholders of record at the close of business on June 22, 1998 (the "Record
Date"), are entitled to notice and to vote at the Annual Meeting. As of the
close of business on the Record Date there were outstanding 3,819,716 shares of
common stock of the Company ("Common Stock"). The holders of the Common Stock
are entitled to one vote for each share owned of record on the Record Date.
The presence in person or by proxy of holders of a majority of the shares of
voting stock of the Company entitled to be voted will constitute a quorum for
the transaction of business at the Annual Meeting. If a stockholder files a
proxy or attends the Annual Meeting, his or her shares are counted as being
present at the Annual Meeting for purposes of determining whether there is a
quorum, even if the stockholder abstains from voting on all matters. The vote
required for the election of directors and approval of other proposals is set
forth in the discussion of each proposal.
Each stockholder of the Company is requested to complete, sign, date and return
the enclosed proxy without delay in order to ensure that his or her shares are
voted at the Annual Meeting. The return of a signed proxy will not affect a
stockholder's right to attend the Annual Meeting and vote in person. Any
stockholder giving a proxy has the right to revoke it at any time before it is
exercised by executing and returning a proxy bearing a later date, by giving a
written notice of revocation to the Secretary of the Company, or by attending
the Annual Meeting and voting in person. There is no required form for a proxy
revocation. All properly executed proxies not revoked will be voted at the
Annual Meeting in accordance with the instructions contained therein.
<PAGE> 4
If a proxy is signed and returned, but no specification is made with respect to
any or all of the proposals listed therein, the shares represented by such proxy
will be voted for all the proposals, including the Election of Directors.
Abstentions and broker non-votes are not counted as votes "for" or "against" a
proposal, but where the affirmative vote on the subject matter is required for
approval, abstentions and broker non-votes are counted in determining the number
of shares present or represented.
Anticipated Vote of Principal Stockholders
SIS Capital Corp. ("SISC"), the Company's principal stockholder, and Mr. Joseph
G. Sicinski, president and chief executive officer of the Company, hold, in the
aggregate, 1,804,993 shares of Common Stock, representing 47.25% of the
outstanding Common Stock on the Record Date. Such stockholders have advised the
Company that they intend to vote their shares in favor of all of the proposals
submitted by the Board of Directors at the Annual Meeting. SISC is a
wholly-owned subsidiary of Consolidated Technology Group Ltd. ("Consolidated"),
which is a public corporation. See "Beneficial Ownership of Securities and
Security Holdings of Management"
Cost of Solicitation
The Company will bear the costs of soliciting proxies. In addition to the
solicitation of proxies by mail, directors, officers and employees of the
Company, who will receive no compensation in addition to their regular salary,
may solicit proxies by mail, telecopier, telephone or personal interview. The
Company will request that brokers and other custodians, nominees and fiduciaries
forward proxy material to the beneficial holders of the Common Stock held of
record by such persons, where appropriate, and will, upon request, reimburse
such persons for their reasonable out-of-pocket expenses incurred in connection
therewith.
BENEFICIAL OWNERSHIP OF SECURITIES AND SECURITY HOLDINGS OF MANAGEMENT
Set forth below is information as of May 31, 1998, as to each person owning of
record or known by the Company, based on information provided to the Company by
the persons named below, to own beneficially at least 5% of the Company's Common
Stock and all officers and directors as a group.
<PAGE> 5
<TABLE>
<CAPTION>
Beneficial Ownership of Securities and Security Holdings of Management
[Continued]
<S> <C> <C>
Name and Address-1 Shares Percent of Outstanding
Common Stock
SIS Capital Corp.
Consolidated Technology Group Ltd.
160 Broadway
New York, NY 10038 1,529,994 40.1%
Joseph G. Sicinski
1393 Veterans Memorial Highway
Hauppauge, NY 11788 609,944-2 14.7%
Lewis S. Schiller
249 Saw Mill River Road
Elmsford, NY 10523 316,668-3 8.0%
James L. Conway 2,000 *
Edwart D. Bright -- --
Donald Chaifetz -- --
Seymour Richter -- --
All directors and officers as
a group (three individuals owning
stock or warrants) 648,610-2,4 16.0%
* Less than 1%.
1 Unless otherwise indicated, each person has the sole voting and sole
investment power and direct beneficial ownership of the shares.
2 Represents (a) 274,999 shares of Common Stock owned by Mr. Sicinski, (b)
184,945 shares of Common Stock issuable pursuant to stock options held by Mr.
Sicinski to the extent that such options are presently exercisable, and (b)
150,000 shares issuable upon exercise of a warrant held by Mr. Sicinski.
3 Includes 158,333 shares issuable upon the exercise of warrants held by Mr.
Schiller. Does not include any shares owned by DLB, Inc., which is owned by Mr.
Schiller's wife. Mr. Schiller disclaims beneficial interest in DLB, Inc. or any
securities owned by DLB, Inc.
4 Includes 36,666 shares of Common Stock issuable upon exercise of an incentive
stock option held by one other officer.
</TABLE>
<PAGE> 6
ELECTION OF DIRECTORS
Directors of the Company are elected annually by the stockholders to serve until
the next annual meeting of stockholders and until their respective successors
are duly elected. The bylaws of the Company provide that the number of directors
comprising the whole board shall be determined from time to time by the Board of
Directors. The Board of Directors has established the size of the board for the
ensuing year at five directors and is recommending that the five incumbent
directors of the Company be re-elected. If any nominee becomes unavailable for
any reason, a situation which is not anticipated, a substitute nominee may be
proposed by the Board of Directors, and any share represented by proxy will be
voted for any substitute nominee, unless the Board reduces the number of
director.
The Board of Directors is presently comprised of five individuals, Messrs.
Joseph G. Sicinski, Edward D. Bright, Donald Chaifetz, James L. Conway and
Seymour Richter. Mr. Sicinski was elected at the 1997 Annual Meeting of
Stockholders, for which proxies were solicited. Messrs. Bright, Chaifetz and
Richter were elected to the board in April 1998, effective upon the resignation
of Messrs. Lewis S. Schiller, Norman J. Hoskin and E. Gerald Kay, who were
elected at the 1997 Annual Meeting. Mr. Conway was elected to the board in June
1998.
The following table sets forth certain information concerning the nominees for
director:
<TABLE>
<CAPTION>
<S> <C> <C>
Name Age Position with the Company
Joseph G. Sicinski 66 President, chief executive officer
and director
Edward D. Bright-1 61 Chairman of the board and director
Donald Chaifetz-1 65 Director
James L. Conway-2 49 Director
Seymour Richter-1,2 61 Director
1 Member of the compensation committee.
2 Member of the audit committee.
Mr. Joseph G. Sicinski has been president and a director of the Company and its
predecessor since September 1992 and chief executive officer since April 1998.
For more than eight years prior thereto, he was executive vice president of
corporate marketing for Interglobal Technical Services, Inc., which was engaged
in providing technical temporary staffing services. Mr. Sicinski is also a
director of Netsmart Technologies, Inc. ("Netsmart"), a publicly-held company
that markets medical information systems of which SISC, the Company's principal
stockholder, is a major stockholder.
</TABLE>
<PAGE> 7
Mr. Edward D. Bright has been a director of the Company since April 1998. In
April 1998, Mr. Bright was also elected as chairman, secretary, treasurer and a
director of Consolidated, the parent company of SISC, and a director of
Netsmart. Consolidated, through SISC, is the principal stockholder of the
Company and, through another subsidiary, offers telecommunications services.
From January 1996 until April 1998, Mr. Bright was an executive officer of or
advisor to Creative Socio Medics Corp. ("CSM"), a subsidiary of Netsmart which
was acquired by Netsmart from Advanced Computer Techniques, Inc. ("ACT") in June
1994. From June 1994 until January 1996, he was chief executive officer of
Netsmart. He was a senior executive officer and a director of CSM and ACT for
more than two years prior to June 1994.
Mr. Donald Chaifetz has been a director of the Company since April 1998. Mr.
Chaifetz is a principal of Maldon Co., Inc., an importing company. Mr. Chaifetz
has been in the importing business for more than the past five years. He was
also elected as a director of Consolidated in April 1998.
Mr. James L. Conway has been a director of the Company since June 1998. He has
been president and a director of Netsmart since January 1996 and chief executive
officer of Netsmart since April 1998. From 1993 until April 1998, he was
president of S-Tech Corporation, which, until April 1998, was a wholly-owned
subsidiary of Consolidated which manufactures specialty vending equipment for
postal, telecommunication and other industries. From 1990 to 1993, he was a
consultant to General Aero Products Corp., a Long Island based defense
manufacturing firm as debtor in possession following its filing under Chapter 11
of the Federal Bankruptcy Act in 1989.
Mr. Seymour Richter has been a director of the Company since April 1998. In
April 1998, he was also elected president, acting chief executive officer and a
director of Consolidated and a director of Netsmart. From July 1995 until April
1998, Mr. Richter was employed by Patterson Travis Operating Account Inc., a
private company that makes investments for its own account. For more than five
years prior thereto, he was the chief executive officer of Touch Base Ltd., an
independent selling organization in the apparel industry.
During 1997, Mr. Lewis Schiller, Consolidated and SISC did not file Form 4 or
Form 5 pursuant to Section 16(a) of the Securities Exchange Act of 1934 with
respect to their acquisition of certain securities. Mr. Schiller is no longer a
director or officer of the Company.
The Company's certificate of incorporation provides that, to the fullest extent
permitted under Delaware law, a director of the Company shall not be personally
liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty of a director. These provisions do not affect the liability of
any director under Federal or applicable state securities laws.
Approval Required
Provided that a quorum is present at the Annual Meeting, the five directors
receiving the most votes are elected as directors for a term of one year and
until their successors are elected and qualified.
The Board of Directors recommends a vote FOR the nominees listed above.
Meetings, Committees of the Board of Directors and Directors Compensation
In 1997, the Board of Directors created audit and compensation committees. The
audit committee has the authority to approve the Company's audited financial
statements, to meet with the Company's independent auditors, to review with the
auditors and with management any management letter issued by the auditors and to
generally exercise the power normally accorded an audit committee of a public
corporation.
<PAGE> 8
In addition, any transactions between the Company or its subsidiaries, on
the one hand, and any officer, director or principal stockholder or any
affiliate of any officer, director or principal stockholder, on the other hand,
requires the prior approval of the audit committee.
The compensation committee serves as the stock option committee for the
Company's stock option plans and reviews and approves any changes in
compensation for the Company's executive officers.
During 1997, the compensation committee had one meeting and the audit committee
did not have any meetings.
Excluding actions by unanimous written consent, during 1997 the Board of
Directors held three meetings. Mr. Joseph G. Sicinski, the only current director
who was a director during 1997, attended all of such meetings.
During 1997, the Company paid those directors who are not employees of the
Company or its subsidiaries a fee of $500 per month, which rate is continuing in
effect during 1998. See "Approval of the 1998 Long Term Incentive Plan" for
information as to options granted to directors who are not employed by the
Company.
EXECUTIVE OFFICERS
Set forth below are the executive officers of the Company and information
concerning those officers who are not also directors of the Company.
Name Position
- ---- --------
Joseph G. Sicinski President and chief executive officer
Edward D. Bright Chairman of the Board
Glen R. Charles Chief financial officer, treasurer and secretary
Frank J. Vincenti Vice President
Mr. Glen R. Charles, 44, has been chief financial officer and treasurer of the
Company and its predecessor since November 1994 and secretary of the Company
since April 1998. From 1992 to November 1994, he was engaged in the private
practice of accounting. For more than five years prior thereto, he was chief
financial officer of Telephone Support Systems, Inc., a manufacturer of
telecommunications peripheral equipment.
Mr. Frank Vincenti, 45, has been vice president of the Company since June 1998.
From 1997 until May 1998, he was regional vice president for Actuim, Inc., an
information technology company. For eleven years prior thereto he was vice
president of CDI Corporation, technical temporary staffing and information
technology company.
EXECUTIVE COMPENSATION
Set forth below is information with respect to compensation paid or accrued by
the Company for 1997, 1996 and 1995 to its chief executive officer and to each
other officer whose compensation exceeded $100,000 for 1997.
<PAGE> 9
Summary Compensation Table
Annual Compensation Long-Term
Compensation (Awards)
Name and Principal Restricted Stock Options,SARS
Position Year Salary Bonus Awards (Dollars) (Number)
Lewis S. Schiller,
CEO-1 1997 -- -- -- 25,000-2
1996 -- -- -- 92,499-2
1995 -- -- -- --
Joseph G. Sicinski,
President 1997 243,000 96,000 -- 90,000-3
1996 195,500 -- -- 199,999-3
1995 178,000 -- -- 41,666-3
1 Mr. Schiller resigned as an officer and director of the Company in April 1998.
Mr. Schiller has received no compensation from the Company. During the years
ended December 31, 1997, 1996 and 1995, the total compensation paid or accrued
by Consolidated to Mr. Schiller was $974,000, $340,000 and $250,000,
respectively.
2 Represents, in 1997, an incentive stock option to purchase 25,000 shares of
Common Stock at $3.875 per share. Represents, in 1996, warrants to purchase
66,666 shares of Common Stock at $7.50 per share, an incentive stock option to
purchase 25,000 shares of Common Stock at $6.75 per share and a non-qualified
stock option to purchase 833 shares at $6.186 per share. Such options and
warrants were granted at the fair market value on the date of grant. In April
1998, in connection with his resignation as an officer and director of the
Company, the options held by Mr. Schiller were canceled. The warrants held by
Mr. Schiller were not affected by his resignation.
3 Represents, in 1997, an incentive stock option to purchase 90,000 shares of
Common Stock at $3.875 per share. Represents, in 1996, warrants to purchase
66,666 shares of Common Stock at $7.50 per share and a non-qualified stock
option to purchase 133,333 shares of Common Stock at $6.75 per share.
Represents, in 1995, an incentive stock option to purchase 41,666 shares of
Common Stock at $12.75 per share. The options granted in 1995 were canceled in
connection with the grant of stock options in 1996. Such options and warrants
were granted at the fair market value on the date of grant.
Employment Contracts, Compensation Agreements and Termination of Employment and
Change in Control Arrangements
In October 1997, Mr. Joseph G. Sicinski entered into a five-year employment
agreement with the Company pursuant to which he received annual compensation of
$260,000, subject to an annual cost of living increase. In addition, he is
entitled to a bonus of 5% of the Company's income before taxes, all non-cash
adjustments and all payments to Consolidated, provided, that such bonus shall
not exceed 200% of his annual salary. The Company also provides Mr. Sicinski
with an automobile which he may use for personal use. This agreement replaced
his prior employment agreement dated September 1, 1996, which provided him with
an annual base salary of $234,000 and a bonus of 5% of the Company's income
before income taxes, but not more than 200% of his salary. The September 1996
agreement replaced an employment agreement dated January 1995, which provided
him with an annual base salary of $180,000 and a bonus of 5% of the Company's
income before income taxes, but not more than 200% of his salary.
<PAGE> 10
The annual salary payable by Consolidated to Mr. Schiller pursuant to his
employment agreement with Consolidated was $250,000, subject to a cost of living
increase, prior to September 1, 1996. Effective September 1, 1996, Mr.
Schiller's annual salary from Consolidated was increased to $500,000. In
addition, Mr. Schiller's employment agreement provided him with incentive
compensation from Consolidated based on the results of Consolidated's operations
and Mr. Schiller owned 10% of Consolidated's or SISC's equity interest in each
of their operating subsidiaries and investments. Mr. Schiller has received 10%
of SISC's equity interest in the Company for nominal consideration. Mr. Schiller
has also received 10% of other securities owned by SISC, including securities of
other subsidiaries of SISC. In April 1998, in connection with his resignation as
an officer and director of Consolidated and its subsidiaries, including the
Company, Consolidated purchased Mr. Schiller's employment contract, as a result
of which the agreement is no longer in effect.
Option Exercises and Outstanding Options
The following table sets forth information concerning the exercise of options
and warrants during the year ended December 31, 1997 and the year-end value of
options held by the Company's officers named in the Summary Compensation Table.
No stock appreciation rights ("SARs") have been granted.
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option Value
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Number of
Securities Value of
Underlying Unexercised In-
Unexercised the- Money
Options at Fiscal Options at Fiscal
Year End -1 Year End-2
Shares Acquired Value Exercisable/ Exercisable/
Name Upon Exercise Realized Unexercisable Unexercisable
- ---- ------------- -------- ------------- -------------
Lewis S. Schiller -- -- 209,166-3 $ 53,000/
-- --
Joseph G. Sicinski -- -- 334,945-4/ 110,000/
38,388 82,000
1 Includes options which became exercisable on January 1, 1998.
2 Based on the closing price per share of Common Stock on December 31, 1997,
which was $6.00.
3 Represents warrants to purchase 158,333 shares of Common Stock at $7.50 per
share, incentive stock options to purchase 25,000 shares of Common Stock at
$6.75 per share and 25,000 shares at $3.875 per share, and non-qualified stock
options to purchase 833 shares of Common Stock at $6.186 per share. The stock
options were canceled in April 1998. The warrants owned by Mr. Schiller include
warrants transferred to him by SISC.
4 Represents warrants to purchase 150,000 shares of Common Stock at $7.50 per
share, a non-qualified stock option to purchase 133,333 shares of Common Stock
at $6.75 per share, and an incentive stock option to purchase 51,612 shares of
Common Stock at $3.875 per share.
</TABLE>
<PAGE> 11
See "Approval of the 1998 Long-Term Incentive Plan" for information concerning
the Company's stock option plans, including option grants made subsequent to
December 31, 1997.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company holds 1,000 shares of a series of preferred stock of Consolidated
(the "Consolidated Preferred Stock"), which were issued by Consolidated in
September 1995 in connection with the transfer by the Company to SISC of the
stock of WWR Technology, Inc. ("WWR"), which was a subsidiary of the Company in
a business not related to the Company's principal business. The shares of
Consolidated Preferred Stock were issued by Consolidated to the Company in
satisfaction of obligations of approximately $2.1 million due by WWR to the
Company. At December 31, 1997, such shares of Consolidated Preferred Stock were
automatically convertible at September 30, 2000 into such number of shares of
Consolidated's common stock as has a value on such date of $2.1 million. In
April 1998, the terms of the Consolidated Preferred Stock were amended, with the
consent of the Company, to eliminate the provision for an automatic conversion
and to provide Consolidated with the right to redeem the Consolidated Preferred
Stock for $2.1 million and give the Company the right to require Consolidated to
redeem the Consolidated Preferred Stock for $2.1 million. As of the date of this
Proxy Statement, neither Consolidated nor the Company has taken any action
relating to the redemption of such preferred stock.
The Company has from time to time made advances to three subsidiaries of SISC
which are not owned or controlled by the Company (the ASISC Affiliates@). Such
advances were approximately $1.7 million and $1.5 million at December 31, 1997
and 1996, respectively. The amounts outstanding on such dates represent the
largest amounts outstanding during the respective periods ending on such dates.
The Company cannot estimate whether or when the SISC Affiliates will pay the
amounts due the Company because of their lack of available working capital, and,
accordingly, are treated as long term receivables. Advances to the SISC
Affiliates may continue, although the Company has no plans to make any such
advances and has not made any such advances during 1998. In addition, during
1997, the Company paid the compensation and benefits of certain non-executive
employees who perform services for both the Company one of the SISC Affiliates
which shared common space with the Company. The amount allocated to such SISC
Affiliate, which is approximately $150,000 per annum, is included in the amount
due from the SISC Affiliates. As of December 31, 1997, the Company was no longer
providing such services.
The Company has an agreement dated January 1, 1995 with Consolidated, through a
subsidiary, pursuant to which the Company paid such subsidiary $10,000 per month
during 1997 for management services. Effective February 1, 1998, the monthly
payment was increased to $15,000. Neither SISC, Consolidated nor any of their
employees, including Mr. Lewis S. Schiller, who was chairman of the board and
chief executive officer of the Company until his resignation in April 1998,
received any compensation from the Company.
In July 1997, SISC sold 258,333 shares of Common Stock to Mr. Sicinski for
$1.625 per share, which was the market price on the date of sale. Mr. Sicinski
issued his five-year non-recourse promissory note in payment of the shares. In
August 1997, SISC transferred to Mr. Sicinski a warrant to purchase 83,334
shares of Common Stock at $7.50 per share. SISC and Mr. Sicinski also canceled,
ab initio, an option granted by SISC to Mr. Sicinski to purchase 133,333 shares
of Common Stock from SISC at $1.50 per share.
<PAGE> 12
In July 1997, SISC also transferred 85,006 shares of Common Stock to three key
employees of Consolidated and certain of its subsidiaries, including Mr. Lewis
S. Schiller, who was then chairman of the board and chief executive officer of
the Company and Consolidated, who received 24,172 shares, and Ms. Grazyna B.
Wnuk, who was then the secretary of the Company and secretary and a director of
Consolidated, who received 35,834 shares of Common Stock.
In connection with the resignation in April 1998 of Mr. Lewis S. Schiller as an
officer and director, Messrs. Norman J. Hoskin and E. Gerald Kay as directors
and Ms. Grazyna B. Wnuk as secretary, the Company and such persons exchanged
general releases.
Conflicts of Interest
Messrs. Edward D. Bright, Donald Chaifetz and Seymour Richter, who are directors
of the Company, are the only directors of Consolidated. The Consolidated
Preferred Stock, which is owned by the Company, may be redeemed by Consolidated
for $2.1 millions by action by Consolidated's board of directors and redemption
may be demanded by the Company by action of its Board of Directors. In addition,
of the money owed by the SISC Affiliates, approximately $340,000 is owed by
Consolidated directly and approximately $1.1 million is owed by Arc Networks,
Inc. ("Arc"), a subsidiary of Consolidated which had a negative working capital
at March 31, 1998 and does not presently have the funds to make such payment. As
a result, such individuals have the power to determined when and whether the
Consolidated Preferred Stock is redeemed by Consolidated or redemption is
demanded by the Company as well as the timing of payment of the money due to the
Company by Consolidated on its own behalf of on behalf of Arc.
Performance Graph
The following graph, based on data provided by the Center for Research in
Security Prices, shows changes in the value of $100 invested in February 1994,
when the Company completed its initial public offering, of: (a) shares of
Company Common Stock; (b) the Nasdaq stock index (US companies); and (c) an SIC
peer group consisting of companies in the personnel supply services industry.
The year-end values of each investment are based on compounded daily returns
that include all dividends. Total stockholder returns from each investment can
be calculated from the year-end investment values shown beneath the graph
provided below.
<TABLE>
<CAPTION>
COMPARATIVE 5-YEAR CUMULATIVE TOTAL RETURNS
<S> <C> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996 1997
Trans Global Services, Inc. 57.7 32.1 32.01 17.1
Nasdaq Market Index 85.7 98.4 96.2 136.0 167.3 205.4
Peer Group Index 101.9 92.9 101.7 156.1 202.6 239.2
The index level for all indices was set at 100.0 on February 15, 1994.
</TABLE>
<PAGE> 13
APPROVAL OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION
The Board of Directors has proposed an amendment to the Company's certificate of
incorporation which would amend the Company's certificate of incorporation by
decreasing the number of authorized shares of preferred stock, par value $.01
per share, from 20,000,000 shares to 5,000,000 shares and decreasing the number
of authorized shares of Common Stock, par value $.01 per share, from 50,000,000
shares to 25,000,000 shares. The adoption of the amendment would not effect any
change in the Company's outstanding Common Stock.
Financial Statements
The audited financial statements for the year ended December 31, 1997 and 1996
together with the related Management's Discussion and Analysis of Financial
Condition and Results of Operations, which are included in the Annual Report,
and unaudited financial statements together with the related Management's
Discussion and Analysis of Financial Condition and Results of Operations, which
are included in the Company's Form 10-Q Quarterly Report for the three months
ended March 31, 1998, are incorporated by reference in this Proxy Statement
Vote Required
The amendment to the certificate of incorporation requires the approval of the
holders of a majority of the outstanding shares of Common Stock.
Discussion of the Amendment
At the 1997 Annual Meeting of Stockholders, the stockholders also approved a
one-for-six reverse split of the Common Stock, which became effective in June
1997 and reduced the number of outstanding shares of Common Stock from
22,918,331 shares to 3,819,716 shares and the number of shares of Common Stock
reserved for issuance was reduced from approximately 7,700,000 shares to
approximately 1,300,000 shares. There are presently no shares of Preferred Stock
outstanding, and the Company has no commitments or understandings with respect
to the issuance of any shares of Preferred Stock or the creation of any series
of Preferred Stock. The Board of Directors believes that the reduced number of
authorized shares of Preferred Stock and Common Stock will provide it with
sufficient shares of Common Stock to satisfy its presently anticipated
requirements for Common Stock. In the event that the board deems it appropriate
to issue shares of Preferred Stock in excess of 5,000,000 or shares of Common
Stock in excess of the 25,000,000 authorized shares, it will seek stockholder
approval for such increase.
In addition, the Board of Directors believes that the reduction in authorized
shares of Common Stock could provide the Company with considerable savings in
franchise taxes.
The rights of the holders of Common Stock will not be affected by the amendment.
The Board of Directors recommends a vote FOR the amendment to the Company's
certificate of incorporation.
<PAGE> 14
APPROVAL OF THE 1998 LONG-TERM INCENTIVE PLAN
The Board of Directors believes that in order to attract and retain the services
of executive and other key employees, it is necessary for the Company to have
the ability and flexibility to provide a compensation package which compares
favorably with those offered by other companies. Accordingly, in June 1998, the
Board of Directors adopted, subject to stockholder approval, the 1998 Long-Term
Incentive Plan (the "1998 Plan"), covering 350,000 shares of Common Stock.
The Company has three other stock option plans, two of which have been
terminated. In 1993, the Company adopted the 1993 Stock Incentive Plan (the
"1993 Plan"), covering an aggregate of 25,000 shares of Common Stock. Options to
purchase 20,683 shares of Common Stock were granted at exercise prices of $18.00
as to 9,083 shares, $30.00 as to 2,433 shares and $30.00 as to 9,166 shares. The
exercise price of all of such options was reduced to $13.50 per share in
February 1995. As of December 31, 1997, options to purchase 1,691 shares had
expired unexercised. No options under the 1993 Plan had been exercised. The 1993
Plan was terminated in June 1998. In January 1995, the Board of Directors
adopted the 1995 Stock Incentive Plan (the "1995 Plan"), pursuant to which stock
options and stock appreciation rights can be granted with respect to 50,833
shares of Common Stock. At December 31, 1997, options to purchase 48,333 shares
of Common Stock were granted pursuant to the 1995 Plan, of which options to
purchase 42,500 shares had been exercised and options to purchase 5,833 shares
at an exercise price of $3.00 per share were outstanding. The 1995 Plan was
terminated in June 1998. The termination of the 1993 Plan and the 1995 Plan did
not affect any options which were outstanding under the plans.
In May 1995, the Board of Directors adopted, and, in March 1996, the
stockholders approved the 1995 Long-Term Incentive Plan (the "1995 Incentive
Plan"), initially covering 83,333 shares of Common Stock. In April 1996, the
Board of Directors approved, and in November 1996, the stockholders approved, an
amendment to the 1995 Incentive Plan which increased the number of shares of
Common Stock currently subject to the 1995 Incentive Plan to 434,333 shares. The
number of shares of Common Stock subject to the 1995 Incentive Plan
automatically increased by 5% of any shares of Common Stock issued by the
Company other than shares issued pursuant to the 1995 Incentive Plan. At
December 31, 1997, options to purchase 434,333 shares of Common Stock were
outstanding under the 1995 Incentive Plan. During 1998, options to purchase
50,833 shares of Common Stock, which were held by Mr. Lewis S. Schiller,
formerly chairman of the board and chief executive officer of the Company, were
canceled, and options to purchase 50,000 shares of Common Stock were granted.
The Company's stock option plans are administered by a committee (the
"Committee") of at least two non-employee directors appointed by the board. The
compensation committee serves as the Committee under the various stock option
plans. Any member or alternate member of the Committee shall not be eligible to
receive options or stock under the 1995 Incentive Plan (except as to the annual
automatic grant of options to directors) or the 1998 Plan (except for the
initial option grants as provided in the 1998 Plan and the annual automatic
grant of options to non-employee directors). The Committee has broad discretion
in determining the persons to whom stock options or other awards are to be
granted and the terms and conditions of the award, including the type of award,
the exercise price and term and restrictions and forfeiture conditions. If no
Committee is appointed, the functions of the Committee shall be performed by the
Board of Directors. The compensation committee consists of Messrs. Edward D.
Bright, Donald Chaifetz and Seymour Richter.
<PAGE> 15
Set forth below is a summary of the 1998 Plan, but this summary is qualified in
its entirety by reference to the full text of the 1998 Plan, as amended, a copy
of which is included as Exhibit A to this Proxy Statement. The Plan, which
expires in June 2008 unless terminated earlier by the Board of Directors, gives
the Board of Directors broad authority to modify the Plan, and, in particular,
to eliminate any provisions which are not required in order to meet the
requirements of Rule 16b-3 of the Securities and Exchange Commission pursuant
with the Securities Exchange Act of 1934, as amended.
The 1998 Plan is authorized for 350,000 shares of the Common Stock. If shares
subject to an option under the 1998 Plan cease to be subject to such option, or
if shares awarded under the 1998 Plan are forfeited or otherwise terminate
without a payment being made to the participant in the form of stock, such
shares will again be available for future issuance under the 1998 Plan. The 1998
Plan imposes no limit on the number of officers and other key employees to whom
awards may be made.
Awards under the 1998 Plan may be made to key employees, including officers and
directors of the Company and its subsidiaries, consultants and others who
perform services for the Company and its subsidiaries, except that directors who
are not employed by the Company or its subsidiaries or are not otherwise engaged
by the Company are not eligible for options under the 1998 Plan, except that the
1998 Plan provides for (i) the grant on June 3, 1998, the date the 1998 Plan was
adopted by the Board of Directors, to each non-employee director other than the
chairman of the board of a non-qualified stock option to purchase 10,000 shares
of Common Stock, (ii) the grant on June 3, 1998 to the chairman of the board of
a non-qualified stock option to purchase 20,000 shares of Common Stock, and
(iii) the automatic grant to each non-employee directors of a nonqualified
options to purchase 5,000 shares of Common Stock on April 1st of each year,
commencing April 1, 1999. The options granted to non-employee directors as well
as the options to be granted pursuant to the annual grant have a term of five
years from the date of grant and become exercisable as to 50% of the shares of
Common Stock subject to the option six months from the date of grant and as to
the remaining shares of Common Stock twelve months from the date of grant. The
options granted to the non-employee directors on June 3, 1998 have an exercise
price of $4.00 per share, which was the fair market value such date. Messrs.
Edward D. Bright, Donald Chaifetz, James L. Conway and Seymour Richter are the
directors who qualify as non-employee directors under the 1998 Plan as of the
date of this Proxy Statement.
In June 1998, incentive stock options to purchase 115,000 shares at $4.00 per
share were granted under the 1998 Plan (65,000 shares) and the 1995 Incentive
Plan (50,000 shares), of which options to purchase an aggregate of 40,000 shares
were granted to two officers, and a non-qualified stock option to purchase
60,000 shares of Common Stock at $4.00 per share was granted to Mr. Joseph G.
Sicinski, president, chief executive officer and a directorof the Company. All
such options become exercisable as to 50% of the shares of Common Stock subject
to the option six months from the date of grant and as to the remaining shares
of Common Stock twelve months from the date of grant.
Both the initial option grants and the annual automatic option grants to
non-employee directors are non-qualified stock options and have a term of five
years and become fully exercisable six months from the date of grant provided
that the option holder is a director on such date, except that they become
immediately exercisable if a change of control, as defined in the 1998 Plan,
should occur.
<PAGE> 16
The Committee has the authority to grant the following types of awards under the
1998 Plan: incentive or nonqualified stock options; stock appreciation rights;
restricted stock; deferred stock; stock purchase rights and/or other stockbased
awards. The 1998 Plan is designed to provide the Company with broad discretion
to grant incentive stockbased rights.
Tax consequences of awards provided under the 1998 Plan are dependent upon the
type of award granted. The grant of an incentive or non-qualified stock options
does not result in any taxable income to the recipient or deduction to the
Company. Upon exercise of a non-qualified stock option, the recipient recognizes
income in the amount by which the fair market value on the date of exercise
exceeds the exercise price of the option, and the Company receives a
corresponding tax deduction. In the case of an incentive stock option, no income
is recognized to the employee, and no deduction is available to the Company, if
the stock issued upon exercise of the option is not transferred within two years
from the date of grant or one year from the date of exercise, whichever occurs
later. However, the exercise of an incentive stock option may result in
additional taxes through the application of the alternative minimum tax. In the
event of a sale or other disqualifying transfer of stock issued upon exercise of
an incentive stock option, the employee realizes income, and the Company
receives a tax deduction, equal to the amount by which the lesser of the fair
market value at the date of exercise or the proceeds from the sale exceeds the
exercise price. The issuance of stock pursuant to a stock grant results in
taxable income to the recipient at the date the rights to the stock become
nonforfeitable, and the Company receives a deduction in such amount. However, if
the recipient of the award makes an election in accordance with the Internal
Revenue Code of 1986, as amended, the amount of his or her income is based on
the fair market value on the date of grant rather than the fair market value on
the date the rights become nonforfeitable. When compensation is to be recognized
by the employee, appropriate arrangements may be required to be made with
respect to the payment of withholding tax.
The following table sets forth information concerning options granted during the
year ended December 31, 1997 pursuant to the Company's 1995 Incentive Plan. No
SARs were granted.
<TABLE>
<CAPTION>
Option Grants in Year Ended December 31, 1997
<S> <C> <C> <C> <C>
Percent of
Number of Total Options
Shares Grant to
Underlying Employees in Exercise Price
Name Options Granted Fiscal Year Per Share Expiration Date
Lewis S Schiller 25,000 11.4% $3.875 10/28/02
Joseph G.Sicinski 90,000 41.2% 3.875 10/28/02
All current executive
officers-1 110,000 50.3% 3.875 10/28/02
All non-officer directors-2 2,499 1.1% 6.186 1/31/07
All other employees 81,000 37.1% 3.875 10/28/02
1 Includes Mr. Sicinski and does not include Mr. Schiller, who resigned on April
2, 1998.
2 These options were automatically granted pursuant to the 1995 Incentive Plan.
None of such non-officer directors is currently a director of the Company.
</TABLE>
<PAGE> 17
The following table sets forth information concerning options granted pursuant
to the 1998 Plan as of June 30, 1998. No SARs were granted.
<TABLE>
<CAPTION>
1998 Long-Term Incentive Plan
<S> <C> <C>
Number of Shares Exercise Price Per
Name and Position Underlying Options Granted Share
- ----------------- -------------------------- ------------------
Joseph G. Sicinski, president 60,000 $4.00
and chief executive officer
All current executive officers 100,000 4.00
Edward D. Bright 20,000 4.00
Donald Chaifetz 10,000 4.00
James L. Conway 10,000 4.00
Seymour Richter 10,000 4.00
All other employees-1 75,000 4.00
1 Includes options to purchase 50,000 shares of Common Stock issued pursuant to
the 1995 Incentive Plan contemporaneously with the grant of options pursuant to
the 1998 Plan.
Vote Required
The proposal to approve the 1998 Plan requires the approval of a majority of the
shares of Common Stock present and voting, provided that a quorum is present.
The Board of Directors recommends a vote FOR the proposal.
SELECTION OF INDEPENDENT AUDITORS
It is proposed that the stockholders approve the selection of Moore Stephens,
P.C. as the independent public accountants for the Company for the year ending
December 31, 1998. The Board of Directors has approved the selection of Moore
Stephens, P.C. as the Company's independent public accountants. However, in the
event approval of the proposal is not obtained, the selection of the independent
auditors will be reconsidered by the Board of Directors.
Moore Stephens, P.C., previously named Mortenson and Associates, P.C., has been
the independent certified public accountants for the Company and its
predecessors since December 1992, and their report is included in the Annual
Report. At no time since their engagement have they had any direct or indirect
financial interest in or any connection with the Company or any of its
subsidiaries other than as independent accountants.
Representatives of Moore Stephens, P.C. are expected to be present at the Annual
Meeting with the opportunity to make a statement if they so desire. Such
representatives are also expected to be available to respond to appropriate
questions.
Vote Required
The proposal to approve the selection of Moore Stephens, P.C., as the Company's
independent accountants requires the approval of a majority of the shares of
Common Stock present and voting, provided that a quorum is present.
The Board of Directors recommends a vote FOR the proposal.
</TABLE>
<PAGE> 18
INCORPORATION BY REFERENCE
The Company incorporates into this Proxy Statement the audited financial
statements for the years ended December 31, 1997 and 1996 together with the
related Management's Discussion and Analysis of Financial Condition and Results
of Operations, which are included in the Annual Report, and unaudited financial
statements for the quarter ended March 31, 1998, together with the related
Management's Discussion and Analysis of Financial Condition and Results of
Operations, which are included in the Company's Form 10-Q for the three months
ended March 31, 1998. A copy of the Annual Report is being mailed to
stockholders of record on the Record Date concurrently with the mailing of this
Proxy Statement. Additional copies of the Annual Report and copies of the Form
10-Q will be provided by the Company without charge upon request. Requests for
copies of the Annual Report or Form 10-Q should be made as provided under "Other
Matters."
OTHER MATTERS
Any proposal which a stockholder wishes to present at the 1999 Annual Meeting of
Stockholders must be received by the Company at its executive offices at 1393
Veterans Memorial Highway, Hauppauge, New York 11788, not later than March 31,
1999.
Copies of the Company's Form 10-K for the year ended December 31, 1997 and Form
10-Q for the quarter ended March 31, 1998, without exhibits, may be obtained
without charge by writing to Mr. Glen R. Charles, Chief Financial Officer, Trans
Global Services, Inc., 1393 Veterans Memorial Highway, Hauppauge, New York
11788. Exhibits will be furnished upon request and upon payment of a handling
charge of $.25 per page, which represents the Company's reasonable cost on
furnishing such exhibits.
The Board of Directors does not know of any other matters to be brought before
the meeting. If any other matters are properly brought before the meeting, the
persons named in the enclosed proxy intend to vote such proxy in accordance with
their best judgment on such matters.
By Order of the Board of Directors
Joseph G. Sicinski
President
July 8, 1998
<PAGE> 19
EXHIBIT A
TRANS GLOBAL SERVICES, INC.
1998 Long-Term Incentive Plan
1. Purpose; Definitions.
The purpose of the Trans Global Services, Inc. 1998 Long-Term Incentive Plan
(the "Plan") is to enable Trans Global Services, Inc. (the "Company") to
attract, retain and reward key employees of the Company and its Subsidiaries and
Affiliates, and others who provide services to the Company and its Subsidiaries
and Affiliates, and strengthen the mutuality of interests between such key
employees and such other persons and the Company's stockholders, by offering
such key employees and such other persons incentives and/or other equity
interests or equity-based incentives in the Company, as well as
performance-based incentives payable in cash.
For purposes of the Plan, the following terms shall be defined as set forth
below:
(a) "Affiliate" means any corporation, partnership, limited liability company,
joint venture or other entity, other than the Company and its Subsidiaries, that
is designated by the Board as a participating employer under the Plan, provided
that the Company directly or indirectly owns at least 20% of the combined voting
power of all classes of stock of such entity or at least 20% of the ownership
interests in such entity.
(b) "Board" means the Board of Directors of the Company.
(c) "Book Value" means, as of any given date, on a per share basis (i) the
stockholders' equity in the Company as of the last day of the immediately
preceding fiscal year as reflected in the Company's consolidated balance sheet,
subject to such adjustments as the Committee shall specify at or after grant,
divided by (ii) the number of then outstanding shares of Stock as of such
year-end date, as adjusted by the Committee for subsequent events.
(d) "Cause" means a felony conviction of a participant, or the failure of a
participant to contest prosecution for a felony, or a participant's willful
misconduct or dishonesty, or breach of trust or other action by which the
participant obtains personal gain at the expense of or to the detriment of the
Company or, if the participant has an employment agreement with the Company, a
Subsidiary or Affiliate, an event which constitutes "cause" as defined in such
employment agreement.
(e) "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.
(f) "Commission" means the Securities and Exchange Commission or any successor
thereto.
(g) "Committee" means the Committee referred to in Section 2 of the Plan. If at
any time no Committee shall be in office, then the functions of the Committee
specified in the Plan shall be exercised by the Board.
(h) "Company" means Trans Global Services, Inc., a Delaware corporation, or any
successor corporation.
(i) "Deferred Stock" means an award made pursuant to Section 8 of the Plan of
the right to receive Stock at the end of a specified deferral period.
A-1
<PAGE> 20
(j) "Disability" means disability as determined under procedures established by
the Committee for purposes of the Plan.
(k) "Early Retirement" means retirement, with the express consent for purposes
of the Plan of the Company at or before the time of such retirement, from active
employment with the Company and any Subsidiary or Affiliate pursuant to the
early retirement provisions of the applicable pension plan of such entity.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as amended, from
time to time, and any successor thereto.
(m) "Fair Market Value" means, as of any given date, the market price of the
Stock as determined by or in accordance with the policies established by the
Committee in good faith; provided, that, in the case of an Incentive Stock
Option, the Fair Market Value shall be determined in accordance with the Code
and the Treasury regulations under the Code.
(n) "Incentive Stock Option" means any Stock Option intended to be and
designated as an "Incentive Stock Option" within the meaning of Section 422 of
the Code.
(o) "Non-Employee Director" shall have the meaning set forth in Rule 16b-3 of
the Commission pursuant to the Exchange Act or any successor definition adopted
by the Commission; provided that in the event that said rule (or successor rule)
shall not have such a definition, the term Non-Employee Director shall mean a
director of the Company who is not otherwise employed by the Company or any
Subsidiary or Affiliate.
(p) "Non-Qualified Stock Option" means any Stock Option that is not an Incentive
Stock Option.
(q) "Normal Retirement" means retirement from active employment with the Company
and any Subsidiary or Affiliate on or after age 65.
(r) "Other Stock-Based Award" means an award under Section 10 of the Plan that
is valued in whole or in part by reference to, or is otherwise based on, Stock.
(s) "Plan" means this Trans Global Services, Inc. 1998 Long-Term Incentive Plan,
as hereinafter amended from time to time.
(t) "Restricted Stock" means an award of shares of Stock that is subject to
restrictions under Section 7 of the Plan.
(u) "Retirement" means Normal Retirement or Early Retirement.
(v) "Stock" means the Common Stock, par value $.01 per share, of the Company or
any class of common stock into which such common stock may hereafter be
converted or for which such common stock may be exchanged pursuant to the
Company's certificate of incorporation or as part of a recapitalization,
reorganization or similar transaction.
A-2
<PAGE> 21
(w) "Stock Appreciation Right" means the right pursuant to an award granted
under Section 6 of the Plan to surrender to the Company all (or a portion) of a
Stock Option in exchange for an amount equal to the difference between (i) the
Fair Market Value, as of the date such award or Stock Option (or such portion
thereof) is surrendered, of the shares of Stock covered by such Stock Option (or
such portion thereof), subject, where applicable, to the pricing provisions in
Paragraph 6(b)(ii) of the Plan and (ii) the aggregate exercise price of such
Stock Option or base price with respect to such award (or the portion thereof
which is surrendered).
(x) "Stock Option" or "Option" means any option to purchase shares of Stock
(including Restricted Stock and Deferred Stock, if the Committee so determines)
granted pursuant to Section 5 of the Plan.
(y) "Stock Purchase Right" means the right to purchase Stock pursuant to Section
9 of the Plan.
(z) "Subsidiary" means any corporation or other business association, including
a partnership (other than the Company) in an unbroken chain of corporations or
other business associations beginning with the Company if each of the
corporations or other business associations (other than the last corporation in
the unbroken chain) owns equity interests (including stock or partnership
interests) possessing 50% or more of the total combined voting power of all
classes of equity in one of the other corporations or other business
associations in the chain.
In addition, the terms "Change in Control," "Potential Change in Control" and
"Change in Control Price" shall have meanings set forth, respectively, in
Paragraphs 11(b), (c) and (d) of the Plan.
2. Administration.
(a) The Plan shall be administered by a Committee of not less than two
Non-Employee Directors, who shall be appointed by the Board and who shall serve
at the pleasure of the Board. If and to the extent that no Committee exists
which has the authority to so administer the Plan, the functions of the
Committee specified in the Plan shall be exercised by the Board. Notwithstanding
the foregoing, in the event that the Company is not subject to the Exchange Act
or in the event that the administration of the Plan by a Committee of
Non-Employee Directors is not required in order for the Plan to meet the test of
Rule 16b-3 of the Commission under the Exchange Act, or any subsequent rule,
then the Committee need not be composed of Non-Employee Directors.
(b) The Committee shall have full authority to grant, pursuant to the terms of
the Plan, to officers and other persons eligible under Section 4 of the Plan:
Stock Options, Stock Appreciation Rights, Restricted Stock, Deferred Stock,
Stock Purchase Rights and/or Other Stock-Based Awards. In particular, the
Committee shall have the authority:
(i) to select the officers and other eligible persons to whom Stock Options,
Stock Appreciation Rights, Restricted Stock, Deferred Stock, Stock Purchase
Rights and/or Other Stock-Based Awards may from time to time be granted pursuant
to the Plan;
A-3
<PAGE> 22
(ii) to determine whether and to what extent Incentive Stock Options,
Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock,
Deferred Stock, Stock Purchase Rights and/or Other Stock-Based Awards, or any
combination thereof, are to be granted pursuant to the Plan, to one or more
eligible persons;
(iii) to determine the number of shares to be covered by each such award granted
pursuant to the Plan;
(iv) to determine the terms and conditions, not inconsistent with the terms of
the Plan, of any award granted under the Plan, including, but not limited to,
the share price or exercise price and any restriction or limitation, or any
vesting, acceleration or waiver of forfeiture restrictions regarding any Stock
Option or other award and/or the shares of Stock relating thereto, based in each
case on such factors as the Committee shall, in its sole discretion, determine;
(v) to determine whether, to what extent and under what circumstances a Stock
Option may be settled in cash, Restricted Stock and/or Deferred Stock under
Paragraph 5(b)(x) or (xi) of the Plan, as applicable, instead of Stock;
(vi) to determine whether, to what extent and under what circumstances Option
grants and/or other awards under the Plan and/or other cash awards made by the
Company are to be made, and operate, on a tandem basis with other awards under
the Plan and/or cash awards made outside of the Plan in a manner whereby the
exercise of one award precludes, in whole or in part, the exercise of another
award, or on an additive basis;
(vii) to determine whether, to what extent and under what circumstances Stock
and other amounts payable with respect to an award under this Plan shall be
deferred either automatically or at the election of the participant, including
any provision for any determination or method of determination of the amount (if
any) deemed be earned on any deferred amount during any deferral period;
(viii) to determine the terms and restrictions applicable to Stock Purchase
Rights and the Stock purchased by exercising such Rights; and
(ix) to determine an aggregate number of awards and the type of awards to be
granted to eligible persons employed or engaged by the Company and/or any
specific Subsidiary, Affiliate or division and grant to management the authority
to grant such awards, provided that no awards to any person subject to the
reporting and short-swing profit provisions of Section 16 of the Exchange Act
may be granted awards except by the Committee.
(c) The Committee shall have the authority to adopt, alter and repeal such
rules, guidelines and practices governing the Plan as it shall, from time to
time, deem advisable; to interpret the terms and provisions of the Plan and any
award issued under the Plan and any agreements relating thereto, and otherwise
to supervise the administration of the Plan.
(d) All decisions made by the Committee pursuant to the provisions of the Plan
shall be made in the Committee's sole discretion and shall be final and binding
on all persons, including the Company and Plan participants.
A-4
<PAGE> 23
3. Stock Subject to Plan.
(a) The total number of shares of Stock reserved and available for distribution
under the Plan shall be three hundred fifty thousand (350,000) shares of Common
Stock. In the event that awards are granted in tandem such that the exercise of
one award precludes the exercise of another award then, for the purpose of
determining the number of shares of Stock as to which awards shall have been
granted, the maximum number of shares of Stock issuable pursuant to such tandem
awards shall be used.
(b) Subject to Paragraph 6(b)(v) of the Plan, if any shares of Stock that have
been optioned cease to be subject to a Stock Option, or if any such shares of
Stock that are subject to any Restricted Stock or Deferred Stock award, Stock
Purchase Right or Other Stock-Based Award granted under the Plan are forfeited
or any such award otherwise terminates without a payment being made to the
participant in the form of Stock, such shares shall again be available for
distribution in connection with future awards under the Plan.
(c) In the event of any merger, reorganization, consolidation, recapitalization,
stock dividend, stock split, stock distribution, reverse split, combination of
shares or other change in corporate structure affecting the Stock, such
substitution or adjustment shall be made in the aggregate number of shares
reserved for issuance under the Plan, in the base number of shares, in the
number and option price of shares subject to outstanding Options granted under
the Plan, in the number and purchase price of shares subject to outstanding
Stock Purchase Rights under the Plan, and in the number of shares subject to
other outstanding awards granted under the Plan as may be determined to be
appropriate by the Committee, in its sole discretion, provided that the number
of shares subject to any award shall always be a whole number. Such adjusted
option price shall also be used to determine the amount payable by the Company
upon the exercise of any Stock Appreciation Right associated with any Stock
Option.
4. Eligibility.
(a) Officers and other key employees and directors of, and consultants and
independent contractors to, the Company and its Subsidiaries and Affiliates (but
excluding, except as to Paragraph 4(b) of the Plan, Non-Employee Directors) who
are responsible for or contribute to the management, growth and/or profitability
of the business of the Company and/or its Subsidiaries and Affiliates are
eligible to be granted awards under the Plan.
(b) (i) On the date of the adoption of the Plan, there shall be granted (A) to
each person who is a Non- Employee Director, other than the chairman of the
board of the Company, a non-qualified stock option to purchase ten thousand
(10,000) shares of Common Stock and (B) to the chairman of the board a
non-qualified stock option to purchase twenty thousand (20,000) shares of Common
Stock. Such options shall have an exercise price per share equal to the Fair
Market Value of one share of Common Stock on the date of grant.
(ii) On each April 1 of each year, commencing April 1, 1999, each person who is
a Non-Employee Director on such date shall automatically be granted a
nonqualified option to purchase five thousand (5,000) shares of Common Stock (or
such lesser number of shares of Common Stock as remain available for grant at
such date under
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the Plan, divided by the number of Non-Employee Directors at such date). Such
options shall be exercisable at a price per share equal to the greater of the
Fair Market Value on the date of grant or the par value of one share of Common
Stock.
(iii) The non-qualified options granted pursuant to Paragraphs 4(b)(i) and (ii)
of the Plan shall become exercisable cumulatively as to fifty percent (50%) of
the shares of Common Stock subject to the option six (6) months from the date of
grant and shall become exercisable as to the remaining fifty percent (50%) of
such shares twelve (12) months from the date of grant, and shall expire on the
earlier of (i) five years from the date of grant, or (ii) twelve (12) months
from the date such Non-Employee Director ceases to be a director of the Company
if such Non-Employee Director ceases to be a director because of his death or
Disability or (iii) seven (7) months from the date such Non-Employee Director
ceases to be a director if such Non-Employee Director ceases to be a director
other than as a result of his death or Disability. The provisions of this
Paragraph 4(b) may not be amended more than one (1) time in any six (6) month
period other than to comport with changes in the Code or the Employee Retirement
Income Security Act ("ERISA") or the rules thereunder.
5. Stock Options.
(a) Administration. Stock Options may be granted alone, in addition to or in
tandem with other awards granted under the Plan and/or cash awards made outside
of the Plan. Any Stock Option granted under the Plan shall be in such form as
the Committee may from time to time approve. Stock Options granted under the
Plan may be of two types: (i) Incentive Stock Options and (ii) Non-Qualified
Stock Options. The Committee shall have the authority to grant to any optionee
Incentive Stock Options, Non-Qualified Stock Options, or both types of Stock
Options (in each case with or without Stock Appreciation Rights).
(b) Option Grants. Options granted under the Plan shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Committee, in
its sole discretion, shall deem desirable:
(i) Option Price. The option price per share of Stock purchasable under a Stock
Option shall be determined by the Committee at the time of grant.
(ii) Option Term. The term of each Stock Option shall be fixed by the Committee,
but no Stock Option shall be exercisable more than ten (10) years after the date
the Option is granted.
(iii) Exercisability. Stock Options shall be exercisable at such time or times
and subject to such terms and conditions as shall be determined by the Committee
at or after grant. If the Committee provides, in its sole discretion, that any
Stock Option is exercisable only in installments, the Committee may waive such
installment exercise provisions at any time at or after grant in whole or in
part, based on such factors as the Committee shall, in its sole discretion,
determine.
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(iv) Method of Exercise.
(A) Subject to whatever installment exercise provisions apply under Paragraph
5(b)(iii) of the Plan, Stock Options may be exercised in whole or in part at any
time during the option period, by giving written notice of exercise to the
Company specifying the number of shares to be purchased. Such notice shall be
accompanied by payment in full of the purchase price, either by check, note or
such other instrument, securities or property as the Committee may accept. As
and to the extent determined by the Committee, in its sole discretion, at or
after grant, payments in full or in part may also be made in the form of Stock
already owned by the optionee or, in the case of the exercise of a Non-Qualified
Stock Option, Restricted Stock or Deferred Stock subject to an award hereunder
(based, in each case, on the Fair Market Value of the Stock on the date the
option is exercised, as determined by the Committee).
(B) If payment of the option exercise price of a Non-Qualified Stock Option is
made in whole or in part in the form of Restricted Stock or Deferred Stock, the
Stock issuable upon such exercise (and any replacement shares relating thereto)
shall remain (or be) restricted or deferred, as the case may be, in accordance
with the original terms of the Restricted Stock award or Deferred Stock award in
question, and any additional Stock received upon the exercise shall be subject
to the same forfeiture restrictions or deferral limitations, unless otherwise
determined by the Committee, in its sole discretion, at or after grant.
(C) No shares of Stock shall be issued until full payment therefor has been
received by the Company. In the event of any exercise by note or other
instrument, the shares of Stock shall not be issued until such note or other
instrument shall have been paid in full, and the exercising optionee shall have
no rights as a stockholder until such payment is made.
(D) Subject to Paragraph 5(b)(iv)(C) of the Plan, an optionee shall generally
have the rights to dividends or other rights of a stockholder with respect to
shares subject to the Option when the optionee has given written notice of
exercise, has paid in full for such shares, and, if requested, has given the
representation described in Paragraph 14(a) of the Plan.
(v) Non-Transferability of Options. No Stock Option shall be transferable by the
optionee otherwise than by will or by the laws of descent and distribution, and
all Stock Options shall be exercisable, during the optionee's lifetime, only by
the optionee.
(vi) Termination by Death. Subject to Paragraph 5(b)(ix) of the Plan with
respect to Incentive Stock Options, if an optionee's employment by the Company
and any Subsidiary or Affiliate terminates by reason of death, any Stock Option
held by such optionee may thereafter be exercised, to the extent such option was
exercisable at the time of death or on such accelerated basis as the Committee
may determine at or after grant (or as may be determined in accordance with
procedures established by the Committee), by the legal representative of the
estate or by the legatee of the optionee under the will of the optionee, for a
period of one year (or such other period as the Committee may specify at grant)
from the date of such death or until the expiration of the stated term of such
Stock Option, whichever period is the shorter.
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(vii) Termination by Reason of Disability or Retirement. Subject to Paragraph
5(b)(ix) of the Plan with respect to Incentive Stock Options, if an optionee's
employment by the Company and any Subsidiary or Affiliate terminates by reason
of a Disability or Normal or Early Retirement, any Stock Option held by such
optionee may thereafter be exercised by the optionee, to the extent it was
exercisable at the time of termination or on such accelerated basis as the
Committee may determine at or after grant (or as may be determined in accordance
with procedures established by the Committee), for a period of one year (or such
other period as the Committee may specify at grant) from the date of such
termination of employment or until the expiration of the stated term of such
Stock Option, whichever period is the shorter; provided, however, that, if the
optionee dies within such one-year period (or such other period as the Committee
shall specify at grant), any unexercised Stock Option held by such optionee
shall thereafter be exercisable to the extent to which it was exercisable at the
time of death for a period of one year from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter. In the event of termination of employment by reason of Disability or
Normal or Early Retirement, if an Incentive Stock Option is exercised after the
expiration of the exercise periods that apply for purposes of Section 422 of the
Code, such Stock Option will thereafter be treated as a Non-Qualified Stock
Option.
(viii) Other Termination. Unless otherwise determined by the Committee (or
pursuant to procedures established by the Committee) at or after grant, if an
optionee's employment by the Company and any Subsidiary or Affiliate terminates
for any reason other than death, Disability or Normal or Early Retirement, the
Stock Option shall thereupon terminate; provided, however, that if the optionee
is involuntarily terminated by the Company or any Subsidiary or Affiliate
without Cause, including a termination resulting from the Subsidiary, Affiliate
or division in which the optionee is employed or engaged, ceasing, for any
reason, to be a Subsidiary, Affiliate or division of the Company, such Stock
Option may be exercised, to the extent otherwise exercisable on the date of
termination, for a period of three months (or seven months in the case of a
person subject to the reporting and short-swing profit provisions of Section 16
of the Exchange Act) from the date of such termination or until the expiration
of the stated term of such Stock Option, whichever is shorter.
(ix) Incentive Stock Options.
(A) Anything in the Plan to the contrary notwithstanding, no term of the Plan
relating to Incentive Stock Options shall be interpreted, amended or altered,
nor shall any discretion or authority granted under the Plan be so exercised, so
as to disqualify the Plan under Section 422 of the Code, or, without the consent
of the optionee(s) affected, to disqualify any Incentive Stock Option under such
Section 422.
(B) To the extent required for "incentive stock option" status under Section
422(d) of the Code (taking into account applicable Treasury regulations and
pronouncements), the Plan shall be deemed to provide that the aggregate Fair
Market Value (determined as of the time of grant) of the Stock with respect to
which Incentive Stock Options are exercisable for the first time by the optionee
during any calendar year under the Plan and/or any other stock option plan of
the Company or any Subsidiary or parent corporation (within the meaning of
Section 425 of the Code) shall not exceed $100,000. If Section 422 is hereafter
amended to delete the requirement now in Section 422(d) that the plan text
expressly provide for the $100,000 limitation set forth in Section 422(d), then
this Paragraph 5(b)(ix)(B) shall no longer be operative and the Committee may
accelerate the dates on which the incentive stock option may be exercised.
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(C) To the extent permitted under Section 422 of the Code or the applicable
regulations thereunder or any applicable Internal Revenue Service pronouncement:
(I) If (x) a participant's employment is terminated by reason of death,
Disability or Retirement and (y) the portion of any Incentive Stock Option that
is otherwise exercisable during the post-termination period specified under
Paragraphs 5(b)(vi) and (vii) of the Plan, applied without regard to the
$100,000 limitation contained in Section 422(d) of the Code, is greater than the
portion of such option that is immediately exercisable as an "incentive stock
option" during such post-termination period under Section 422, such excess shall
be treated as a Non-Qualified Stock Option; and
(II) if the exercise of an Incentive Stock Option is accelerated by reason of a
Change in Control, any portion of such option that is not exercisable as an
Incentive Stock Option by reason of the $100,000 limitation contained in Section
422(d) of the Code shall be treated as a Non-Qualified Stock Option.
(x) Buyout Provisions. The Committee may at any time offer to buy out for a
payment in cash, Stock, Deferred Stock or Restricted Stock an option previously
granted, based on such terms and conditions as the Committee shall establish and
communicate to the optionee at the time that such offer is made.
(xi) Settlement Provisions. If the option agreement so provides at grant or is
amended after grant and prior to exercise to so provide (with the optionee's
consent), the Committee may require that all or part of the shares to be issued
with respect to the spread value of an exercised Option take the form of
Deferred or Restricted Stock which shall be valued on the date of exercise on
the basis of the Fair Market Value (as determined by the Committee) of such
Deferred or Restricted Stock determined without regard to the deferral
limitations and/or forfeiture restrictions involved.
6. Stock Appreciation Rights.
(a) Grant and Exercise.
(i) Stock Appreciation Rights may be granted in conjunction with all or part of
any Stock Option granted under the Plan. In the case of a Non-Qualified Stock
Option, such rights may be granted either at or after the time of the grant of
such Stock Option. In the case of an Incentive Stock Option, such rights may be
granted only at the time of the grant of such Stock Option.
(ii) A Stock Appreciation Right or applicable portion thereof granted with
respect to a given Stock Option shall terminate and no longer be exercisable
upon the termination or exercise of the related Stock Option, subject to such
provisions as the Committee may specify at grant where a Stock Appreciation
Right is granted with respect to less than the full number of shares covered by
a related Stock Option.
(iii) A Stock Appreciation Right may be exercised by an optionee, subject to
Paragraph 6(b) of the Plan, in accordance with the procedures established by the
Committee for such purpose. Upon such exercise, the optionee shall be entitled
to receive an amount determined in the manner prescribed in said Paragraph 6(b).
Stock Options relating to exercised Stock Appreciation Rights shall no longer be
exercisable to the extent that the related Stock Appreciation Rights have been
exercised.
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(b) Terms and Conditions. Stock Appreciation Rights shall be subject to such
terms and conditions, not inconsistent with the provisions of the Plan, as shall
be determined from time to time by the Committee, including the following:
(i) Stock Appreciation Rights shall be exercisable only at such time or times
and to the extent that the Stock Options to which they relate shall be
exercisable in accordance with the provisions of this Section 6 and Section 5 of
the Plan; provided, however, that any Stock Appreciation Right granted to an
optionee subject to Section 16(b) of the Exchange Act subsequent to the grant of
the related Stock Option shall not be exercisable during the first six months of
its term, except that this special limitation shall not apply in the event of
death or Disability of the optionee prior to the expiration of the six-month
period. The exercise of Stock Appreciation Rights held by optionees who are
subject to Section 16(b) of the Exchange Act shall comply with Rule 16b-3
thereunder to the extent applicable.
(ii) Upon the exercise of a Stock Appreciation Right, an optionee shall be
entitled to receive an amount in cash and/or shares of Stock equal in value to
the excess of the Fair Market Value of one share of Stock over the option price
per share specified in the related Stock Option multiplied by the number of
shares in respect of which the Stock Appreciation Right shall have been
exercised, with the Committee having the right to determine the form of payment.
When payment is to be made in shares of Stock, the number of shares to be paid
shall be calculated on the basis of the Fair Market Value of the shares on the
date of exercise. When payment is to be made in cash, such amount shall be based
upon the Fair Market Value of the Stock on the date of exercise, determined in a
manner not inconsistent with Section 16(b) of the Exchange Act and the rules of
the Commission thereunder.
(iii) Stock Appreciation Rights shall be transferable only when and to the
extent that the underlying Stock Option would be transferable under Paragraph
5(b)(v) of the Plan.
(iv) Upon the exercise of a Stock Appreciation Right, the Stock Option or part
thereof to which such Stock Appreciation Right is related shall be deemed to
have been exercised only to the extent of the number of shares issued under the
Stock Appreciation Right at the time of exercise based on the value of the Stock
Appreciation Right at such time.
(v) In its sole discretion, the Committee may grant Stock Appreciation Rights
that become exercisable only in the event of a Change in Control and/or a
Potential Change in Control, subject to such terms and conditions as the
Committee may specify at grant; provided that any such Stock Appreciation Rights
shall be settled solely in cash.
(vi) The Committee, in its sole discretion, may also provide that, in the event
of a Change in Control and/or a Potential Change in Control, the amount to be
paid upon the exercise of a Stock Appreciation Right shall be based on the
Change in Control Price, subject to such terms and conditions as the Committee
may specify at grant.
7. Restricted Stock.
(a) Administration. Shares of Restricted Stock may be issued either alone, in
addition to or in tandem with other awards granted under the Plan and/or cash
awards made outside of the Plan. The Committee shall determine
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the eligible persons to whom, and the time or times at which, grants of
Restricted Stock will be made, the number of shares to be awarded, the price (if
any) to be paid by the recipient of Restricted Stock, subject to Paragraph 7(b)
of the Plan, the time or times within which such awards may be subject to
forfeiture, and all other terms and conditions of the awards. The Committee may
condition the grant of Restricted Stock upon the attainment of specified
performance goals or such other factors as the Committee may, in its sole
discretion, determine. The provisions of Restricted Stock awards need not be the
same with respect to each recipient.
(b) Awards and Certificates.
(i) The prospective recipient of a Restricted Stock award shall not have any
rights with respect to such award unless and until such recipient has executed
an agreement evidencing the award and has delivered a fully executed copy
thereof to the Company, and has otherwise complied with the applicable terms and
conditions of such award.
(ii) The purchase price for shares of Restricted Stock may be equal to or less
than their par value and may be zero.
(iii) Awards of Restricted Stock must be accepted within a period of 60 days (or
such shorter period as the Committee may specify at grant) after the award date,
by executing a Restricted Stock Award Agreement and paying the price, if any,
required under Paragraph 7(b)(ii).
(iv) Each participant receiving a Restricted Stock award shall be issued a stock
certificate in respect of such shares of Restricted Stock. Such certificate
shall be registered in the name of such participant, and shall bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such award.
(v) The Committee shall require that (A) the stock certificates evidencing
shares of Restricted Stock be held in the custody of the Company until the
restrictions thereon shall have lapsed, and (B) as a condition of any Restricted
Stock award, the participant shall have delivered a stock power, endorsed in
blank, relating to the Restricted Stock covered by such award.
(c) Restrictions and Conditions. The shares of Restricted Stock awarded pursuant
to this Section 7 shall be subject to the following restrictions and conditions:
(i) Subject to the provisions of the Plan and the award agreement, during a
period set by the Committee commencing with the date of such award (the
"Restriction Period"), the participant shall not be permitted to sell, transfer,
pledge or assign shares of Restricted Stock awarded under the Plan. Within these
limits, the Committee, in its sole discretion, may provide for the lapse of such
restrictions in installments and may accelerate or waive such restrictions in
whole or in part, based on service, performance and/or such other factors or
criteria as the Committee may determine, in its sole discretion.
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(ii) Except as provided in this paragraph 7(c)(ii) and Paragraph 7(c)(i) of the
Plan, the participant shall have, with respect to the shares of Restricted
Stock, all of the rights of a stockholder of the Company, including the right to
vote the shares and the right to receive any regular cash dividends paid out of
current earnings. The Committee, in its sole discretion, as determined at the
time of award, may permit or require the payment of cash dividends to be
deferred and, if the Committee so determines, reinvested, subject to Paragraph
14(e) of the Plan, in additional Restricted Stock to the extent shares are
available under Section 3 of the Plan, or otherwise reinvested. Stock dividends,
splits and distributions issued with respect to Restricted Stock shall be
treated as additional shares of Restricted Stock that are subject to the same
restrictions and other terms and conditions that apply to the shares with
respect to which such dividends are issued, and the Committee may require the
participant to deliver an additional stock power covering the shares issuable
pursuant to such stock dividend, split or distribution. Any other dividends or
property distributed with regard to Restricted Stock, other than regular
dividends payable and paid out of current earnings, shall be held by the Company
subject to the same restrictions as the Restricted Stock.
(iii) Subject to the applicable provisions of the award agreement and this
Section 7, upon termination of a participant"s employment with the Company and
any Subsidiary or Affiliate for any reason during the Restriction Period, all
shares still subject to restriction will vest, or be forfeited, in accordance
with the terms and conditions established by the Committee at or after grant.
(iv) If and when the Restriction Period expires without a prior forfeiture of
the Restricted Stock subject to such Restriction Period, certificates for an
appropriate number of unrestricted shares, and other property held by the
Company with respect to such Restricted Shares, shall be delivered to the
participant promptly.
(d) Minimum Value Provisions. In order to better ensure that award payments
actually reflect the performance of the Company and service of the participant,
the Committee may provide, in its sole discretion, for a tandem Stock Option or
performance-based or other award designed to guarantee a minimum value, payable
in cash or Stock to the recipient of a Restricted Stock award, subject to such
performance, future service, deferral and other terms and conditions as may be
specified by the Committee.
8. Deferred Stock.
(a) Administration. Deferred Stock may be awarded either alone, in addition to
or in tandem with other awards granted under the Plan and/or cash awards made
outside of the Plan. The Committee shall determine the eligible persons to whom
and the time or times at which Deferred Stock shall be awarded, the number of
shares of Deferred Stock to be awarded to any person, the duration of the period
(the "Deferral Period") during which, and the conditions under which, receipt of
the Stock will be deferred, and the other terms and conditions of the award in
addition to those set forth in Paragraph 8(b). The Committee may condition the
grant of Deferred Stock upon the attainment of specified performance goals or
such other factors or criteria as the Committee shall, in its sole discretion,
determine. The provisions of Deferred Stock awards need not be the same with
respect to each recipient.
(b) Terms and Conditions. The shares of Deferred Stock awarded pursuant to this
Section 8 shall be subject to the following terms and conditions:
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(i) Subject to the provisions of the Plan and the award agreement referred to in
Paragraph 8(b)(vi) of the Plan, Deferred Stock awards may not be sold, assigned,
transferred, pledged or otherwise encumbered during the Deferral Period. At the
expiration of the Deferral Period (or the Elective Deferral Period referred to
in Paragraph 8(b)(v) of the Plan, where applicable), share certificates
representing the shares covered by the Deferred Stock award shall be delivered
to the participant or his legal representative.
(ii) Unless otherwise determined by the Committee at grant, amounts equal to any
dividends declared during the Deferral Period with respect to the number of
shares covered by a Deferred Stock award will be paid to the participant
currently, or deferred and deemed to be reinvested in additional Deferred Stock,
or otherwise reinvested, all as determined at or after the time of the award by
the Committee, in its sole discretion.
(iii) Subject to the provisions of the award agreement and this Section 8, upon
termination of a participant's employment with the Company and any Subsidiary or
Affiliate for any reason during the Deferral Period for a given award, the
Deferred Stock in question will vest, or be forfeited, in accordance with the
terms and conditions established by the Committee at or after grant.
(iv) Based on service, performance and/or such other factors or criteria as the
Committee may determine, the Committee may, at or after grant, accelerate the
vesting of all or any part of any Deferred Stock award and/or waive the deferral
limitations for all or any part of such award.
(v) A participant may elect to further defer receipt of an award (or an
installment of an award) for a specified period or until a specified event (the
"Elective Deferral Period"), subject in each case to the Committee's approval
and to such terms as are determined by the Committee, all in its sole
discretion. Subject to any exceptions adopted by the Committee, such election
must generally be made at least twelve months prior to completion of the
Deferral Period for such Deferred Stock award (or such installment).
(vi) Each award shall be confirmed by, and subject to the terms of, a Deferred
Stock agreement executed by the Company and the participant.
(c) Minimum Value Provisions. In order to better ensure that award payments
actually reflect the performance of the Company and service of the participant,
the Committee may provide, in its sole discretion, for a tandem Stock Option or
performance-based or other award designed to guarantee a minimum value, payable
in cash or Stock to the recipient of a deferred stock award, subject to such
performance, future service, deferral and other terms and conditions as may be
specified by the Committee.
9. Stock Purchase Rights.
(a) Awards and Administration. The Committee may grant eligible participants
Stock Purchase Rights which shall enable such participants to purchase Stock
(including Deferred Stock and Restricted Stock):
(i) at its Fair Market Value on the date of grant;
(ii) at a percentage of such Fair Market Value on such date, such percentage to
be determined by the Committee in its sole discretion;
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(iii) at an amount equal to Book Value on such date; or
(iv) at an amount equal to the par value of such Stock on such date.
The Committee shall also impose such deferral, forfeiture and/or other terms and
conditions as it shall determine, in its sole discretion, on such Stock Purchase
Rights or the exercise thereof. The terms of Stock Purchase Rights awards need
not be the same with respect to each participant. Each Stock Purchase Right
award shall be confirmed by, and be subject to the terms of, a Stock Purchase
Rights Agreement.
(b) Exercisability. Stock Purchase Rights shall generally be exercisable for
such period after grant as is determined by the Committee not to exceed sixty
(60) days. However, the Committee may provide, in its sole discretion, that the
Stock Purchase Rights of persons potentially subject to Section 16(b) of the
Exchange Act shall not become exercisable until six months and one day after the
grant date, and shall then be exercisable for ten trading days at the purchase
price specified by the Committee in accordance with Paragraph 9(a) of the Plan.
10. Other Stock-Based Awards.
(a) Administration.
(i) Other awards of Stock and other awards that are valued in whole or in part
by reference to, or are otherwise based on, Stock ("Other Stock-Based Awards"),
including, without limitation, performance shares, convertible preferred stock
(to the extent a series of preferred stock has been or may be created by, or in
accordance with a procedure set forth in, the Company's certificate of
incorporation), convertible debentures, warrants, exchangeable securities and
Stock awards or options valued by reference to Fair Market Value, Book Value or
performance of the Company or any Subsidiary, Affiliate or division, may be
granted either alone or in addition to or in tandem with Stock Options, Stock
Appreciation Rights, Restricted Stock, Deferred Stock or Stock Purchase Rights
granted under the Plan and/or cash awards made outside of the Plan.
(ii) Subject to the provisions of the Plan, the Committee shall have authority
to determine the persons to whom and the time or times at which such award shall
be made, the number of shares of Stock to be awarded pursuant to such awards,
and all other conditions of the awards. The Committee may also provide for the
grant of Stock upon the completion of a specified performance period. The
provisions of Other Stock-Based Awards need not be the same with respect to each
recipient.
(b) Terms and Conditions. Other Stock-Based Awards made pursuant to this Section
10 shall be subject to the following terms and conditions:
(i) Subject to the provisions of the Plan and the award agreement referred to in
Paragraph 10(b)(v) of the Plan, shares of Stock subject to awards made under
this Section 10 may not be sold, assigned, transferred, pledged or otherwise
encumbered prior to the date on which the shares are issued, or, if later, the
date on which any applicable restriction, performance or deferral period lapses.
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(ii) Subject to the provisions of the Plan and the award agreement and unless
otherwise determined by the Committee at grant, the recipient of an award under
this Section 10 shall be entitled to receive, currently or on a deferred basis,
interest or dividends or interest or dividend equivalents with respect to the
number of shares covered by the award, as determined at the time of the award by
the Committee, in its sole discretion, and the Committee may provide that such
amounts (if any) shall be deemed to have been reinvested in additional Stock or
otherwise reinvested.
(iii) Any award under Section 10 and any Stock covered by any such award shall
vest or be forfeited to the extent so provided in the award agreement, as
determined by the Committee, in its sole discretion.
(iv) In the event of the participant's Retirement, Disability or death, or in
cases of special circumstances, the Committee may, in its sole discretion, waive
in whole or in part any or all of the remaining limitations (if any) imposed
with respect to any or all of an award pursuant to this Section-10.
(v) Each award under this Section 10 shall be confirmed by, and subject to the
terms of, an agreement or other instrument by the Company and by the
participant.
(vi) Stock (including securities convertible into Stock) issued on a bonus basis
under this Section 10 may be issued for no cash consideration.
11. Change in Control Provisions.
(a) Impact of Event. In the event of a "Change in Control," as defined in
Paragraph 11(b) of the Plan, or a "Potential Change in Control," as defined in
Paragraph 11(c) of the Plan, except to the extent otherwise determined by the
Committee or the Board at or after grant (subject to any right of approval
expressly reserved by the Committee or the Board at the time of such
determination), the following acceleration and valuation provisions shall apply:
(i) Any Stock Appreciation Rights outstanding for at least six months and any
Stock Options awarded under the Plan not previously exercisable and vested shall
become fully exercisable and vested.
(ii) The restrictions and deferral limitations applicable to any Restricted
Stock, Deferred Stock, Stock Purchase rights and Other Stock-Based Awards, in
each case to the extent not already vested under the Plan, shall lapse and such
shares and awards shall be deemed fully vested.
(iii) The value of all outstanding Stock Options, Stock Appreciation Rights,
Restricted Stock, Deferred Stock, Stock Purchase Rights and Other Stock-Based
Awards, in each case to the extent vested, shall be purchased by the Company
("cashout") in a manner determined by the Committee, in its sole discretion, on
the basis of the "Change in Control Price" as defined in Paragraph 11(d) of the
Plan as of the date such Change in Control or such Potential Change in Control
is determined to have occurred or such other date as the Committee may determine
prior to the Change in Control.
(b) Definition of "Change in Control". For purposes of Paragraph 11(a) of the
Plan, a "Change in Control" means the happening of any of the following:
(i) When any "person" (as defined in Section 3(a)(9) of the Exchange Act and as
used in Sections 13(d) and 14(d) of the Exchange Act, including a "group" as
defined in Section 13(d) of the Exchange Act, but
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excluding the Company and any Subsidiary and any employee benefit plan sponsored
or maintained by the Company or any Subsidiary and any trustee of such plan
acting as trustee) directly or indirectly becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act, as amended from time to time), of
securities of the Company representing twenty percent or more of the combined
voting power of the Company's then outstanding securities; provided, however,
that a Change of Control shall not arise if such acquisition is approved by the
board of directors or if the board of directors or the Committee determines that
such acquisition is not a Change of Control or if the board of directors
authorizes the issuance of the shares of Common Stock (or securities convertible
into Common Stock or upon the exercise of which shares of Common Stock may be
issued) to such persons; or
(ii) When, during any period of twenty-four consecutive months during the
existence of the Plan, the individuals who, at the beginning of such period,
constitute the Board (the "Incumbent Directors") cease for any reason other than
death, Disability or Retirement to constitute at least a majority thereof,
provided, however, that a director who was not a director at the beginning of
such 24-month period shall be deemed to have satisfied such 24-month requirement
(and be an Incumbent Director) if such director was elected by, or on the
recommendation of, or with the approval of, at least two-thirds of the directors
who then qualified as Incumbent Directors either actually (because they were
directors at the beginning of such 24-month period) or by prior operation of
this Paragraph 11(b)(ii); or
(iii) The occurrence of a transaction requiring stockholder approval for the
acquisition of the Company by an entity other than the Company or a Subsidiary
through purchase of assets, or by merger, or otherwise.
(c) Definition of Potential Change in Control. For purposes of Paragraph 11(a)
of the Plan, a "Potential Change in Control" means the happening of any one of
the following:
(i) The approval by stockholders of an agreement by the Company, the
consummation of which would result in a Change in Control of the Company as
defined in Section 11(b) of the Plan; or
(ii) The acquisition of beneficial ownership, directly or indirectly, by any
entity, person or group (other than the Company or a Subsidiary or any Company
employee benefit plan or any trustee of such plan acting as such trustee) of
securities of the Company representing five percent or more of the combined
voting power of the Company's outstanding securities and the adoption by the
Board of Directors of a resolution to the effect that a Potential Change in
Control of the Company has occurred for purposes of the Plan.
(d) Change in Control Price. For purposes of this Section 11, "Change in Control
Price" means the highest price per share paid in any transaction reported on the
principal stock exchange on which the Stock is traded or the average of the
highest bid and asked prices as reported by NASDAQ, or paid or offered in any
bona fide transaction related to a potential or actual Change in Control of the
Company at any time during the sixty-day period immediately preceding the
occurrence of the Change in Control (or, where applicable, the occurrence of the
Potential Change in Control event), in each case as determined by the Committee
except that, in the case of Incentive Stock Options and Stock Appreciation
Rights relating to Incentive Stock Options, such price shall be based only on
transactions reported for the date on which the optionee exercises such Stock
Appreciation Rights or, where applicable, the date on which a cashout occurs
under Paragraph 11(a)(iii).
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12. Amendments and Termination.
(a) The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made which would impair the rights of an
optionee or participant under a Stock Option, Stock Appreciation Right (or
Limited Stock Appreciation Right), Restricted or Deferred Stock award, Stock
Purchase Right or Other Stock-Based Award theretofore granted, without the
optionee's or participant's consent, and no amendment will be made without
approval of the stockholders if such amendment requires stockholder approval
under state law or if stockholder approval is necessary in order that the Plan
comply with Rule 16b-3 of the Commission under the Exchange Act or any
substitute or successor rule or if stockholder approval is necessary in order to
enable the grant pursuant to the Plan of options or other awards intended to
confer tax benefits upon the recipients thereof.
(b) The Committee may amend the terms of any Stock Option or other award
theretofore granted, prospectively or retroactively, but no such amendment shall
impair the rights or any holder without the holder's consent. The Committee may
also substitute new Stock Options for previously granted Stock Options (on a one
for one or other basis), including previously granted Stock Options having
higher option exercise prices.
(c) Subject to the provisions of Paragraphs 12(a) and (b) of the Plan, the Board
shall have broad authority to amend the Plan to take into account changes in
applicable securities and tax laws and accounting rules, as well as other
developments, and, in particular, without limiting in any way the generality of
the foregoing, to eliminate any provisions which are not required to included as
a result of any amendment to Rule 16b-3 of the Commission pursuant to the
Exchange Act.
13. Unfunded Status of Plan.
The Plan is intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to a participant or
optionee by the Company, nothing contained in this Plan shall give any such
participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Stock or payments in lieu of or with respect to awards under
this Plan; provided, however, that, unless the Committee otherwise determines
with the consent of the affected participant, the existence of such trusts or
other arrangements shall be consistent with the "unfunded" status of the Plan.
14. General Provisions.
(a) The Committee may require each person purchasing shares pursuant to a Stock
Option or other award under the Plan to represent to and agree with the Company
in writing that the optionee or participant is acquiring the shares without a
view to distribution thereof. The certificates for such shares may include any
legend which the Committee deems appropriate to reflect any restrictions on
transfer. All certificates or shares of Stock or other securities delivered
under the Plan shall be subject to such stock-transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations,
and other requirements of the Commission, any stock exchange upon which the
Stock is then listed, and any applicable Federal or state securities law, and
the Committee may cause a legend or legends to be put on any such certificates
to make appropriate reference to such restrictions.
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<PAGE> 36
(b) Nothing contained in this Plan shall prevent the Board from adopting other
or additional compensation arrangements, subject to stockholder approval if such
approval is required; and such arrangements may be either generally applicable
or applicable only in specific cases.
(c) Neither the adoption of the Plan nor the grant of any award pursuant to the
Plan shall confer upon any employee of the Company or any Subsidiary or
Affiliate any right to continued employment with the Company or a Subsidiary or
Affiliate, as the case may be, nor shall it interfere in any way with the right
of the Company or a Subsidiary or Affiliate to terminate the employment of any
of its employees at any time.
(d) No later than the date as of which an amount first becomes includible in the
gross income of the participant for Federal income tax purposes with respect to
any award under the Plan, the participant shall pay to the Company, or make
arrangements satisfactory to the Committee regarding the payment of, any
Federal, state, or local taxes of any kind required by law to be withheld with
respect to such amount. Unless otherwise determined by the Committee,
withholding obligations may be settled with Stock, including Stock that is part
of the award that gives rise to the withholding requirement. The obligations of
the Company under the Plan shall be conditional on such payment or arrangements
and the Company and its Subsidiaries or Affiliates shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment of
any kind otherwise due to the participant.
(e) The actual or deemed reinvestment of dividends or dividend equivalents in
additional Restricted Stock (or in Deferred Stock or other types of Plan awards)
at the time of any dividend payment shall only be permissible if sufficient
shares of Stock are available under Section 3 of the Plan for such reinvestment
(taking into account then outstanding Stock Options, Stock Purchase Rights and
other Plan awards).
15. Effective Date of Plan.
The Plan shall be effective as of the date the Plan is approved by the Board,
subject to the approval of the Plan by a majority of the votes cast by the
holders of the Company's Common Stock at the next annual or special meeting of
stockholders. Any grants made under the Plan prior to such approval shall be
effective when made (unless otherwise specified by the Committee at the time of
grant), but shall be conditioned on, and subject to, such approval of the Plan
by such stockholders.
16. Term of Plan.
Stock Option, Stock Appreciation Right, Restricted Stock award, Deferred Stock
award, Stock Purchase Right or Other Stock-Based Award may be granted pursuant
to the Plan, until ten (10) years from the date the Plan was approved by the
Board, unless the Plan shall be terminated by the Board, in its discretion,
prior to such date, but awards granted prior to such termination may extend
beyond that date.
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<PAGE> 37
PROXY
TRANS GLOBAL SERVICES, INC.
1998 Annual Meeting of Stockholders -- August 13, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Joseph G. Sicinski and Glen R. Charles or either
one of them acting in the absence of the other, with full power of substitution
or revocation, proxies for the undersigned, to vote at the 1998 Annual Meeting
of Stockholders of Trans Global Services, Inc. (the "Company"), to be held at
9:00 a.m., local time, on Thursday, August 13, 1998, at the offices of the
Company, 1393 Veterans Memorial Highway, Hauppauge, New York 11788, and at any
adjournment or adjournments thereof, according to the number of votes the
undersigned might cast and with all powers the undersigned would possess if
personally present.
(1) To elect the following five (5) directors:
Joseph G. Sicinski, Edward D. Bright, Donald Chaifetz, James L. Conway and
Seymour Richter
[ ] FOR all nominees listed above (except as marked to the contrary below).
[ ] Withhold authority to vote for all nominees listed above.
INSTRUCTION: To withhold authority to vote for any individual nominee,
print that nominee's name below.
(2) To approve an amendment to the Company's certificate of incorporation to
decrease the number of shares of authorized preferred stock, par value $.01 per
share, from 20,000,000 shares to 5,000,000 shares and to decrease the number of
shares of authorized common stock, par value $.01 per share, from 50,000,000
shares to 25,000,000 shares.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(3) To approve the 1998 Long-Term Incentive Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(4) To approve the selection of Moore Stephens, P.C. as the independent
certified public accountants of the Company for the year ending December 31,
1998:
all as set forth in the Proxy Statement, dated July 8, 1998.
<PAGE> 38
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
PROXY STATEMENT [Continued]
The shares represented by this proxy will be voted on Items 1, 2, 3 and 4 as
directed by the stockholder, but if no direction is indicated, will be voted FOR
Items 1, 2, 3 and 4.
If you plan to attend the meeting please indicate below:
I plan to attend the meeting [ ]
Dated: , 1998
- --------------------------------------
- --------------------------------------
(Signature(s))
Please sign exactly as name(s) appear hereon. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
Please date, sign and mail this proxy in the enclosed envelope, which requires
no postage if mailed in the United States.
