<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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14A-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 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>
Trans Global Services, Inc.
1393 Veterans Memorial Highway
Hauppauge, New York 11788
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 25, 2000
NOTICE IS HEREBY GIVEN that the 2000 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 Thursday, May 25, 2000, 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 2001 annual meeting of
Stockholders and until their successors shall be elected and qualified;
(2) The approval of the 1999 Long-Term Incentive Plan.
(3) The approval of Moore Stephens, P.C. as the Companys independent certified
public accountants for the year ending December 31, 2000; and
(4) 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 April
17 2000, as the record date (the Record Date) for the determination of
stockholders entitled to notice of and to vote at the annual meeting. A list of
stockholders eligible to vote at the 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 Companys Annual Report to
Stockholders for 1999 is being mailed with this proxy statement.
By order of the board of directors
Glen R. Charles
Secretary
Hauppauge, New York
April 21, 2000
THE MATTERS BEING VOTED ON AT THE ANNUAL MEETING ARE IMPORTANT TO THE COMPANY.
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>
TRANS GLOBAL SERVICES, INC.
PROXY STATEMENT
2000 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, of proxies for use at our 2000 annual meeting of
stockholders to be held at our executive offices, 1393 Veterans Memorial
Highway, Hauppauge, New York 11788, on Thursday, May 25, 2000 at 9:00 A.M. or at
any adjournment thereof. We are mailing this proxy statement and the related
proxy and our 1999 annual report to stockholders on or about April 21, 2000.
At the annual meeting, you will be asked to (a) elect five (5) directors to
serve until the 2001 annual meeting of stockholders and until their successors
shall be elected and qualified, (b) approve our 1999 Long-Term Incentive Plan,
(c) approve the appointment of Moore Stephens, P.C. as our independent certified
public accountants for 2000, and (d) transact such other and further business as
may properly come before the meeting. Our board of directors does not know of
any other matters which will be voted upon at the annual meeting.
We encourage you 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 April 17, 2000, which is the
record date for the annual meeting, are entitled to notice and to vote at the
annual meeting. As of the close of business on the April 17, 2000, we had
2,889,716 shares of common stock outstanding. You are entitled to one vote for
each share you owned of record on the record date.
We require the presence in person or by proxy of holders of a majority of the
shares of common stock that were outstanding on the record date in order to
conduct the annual meeting. If you file a proxy or attend the annual meeting,
your shares are counted as being present at the annual meeting for purposes of
determining whether there is a quorum, even if you abstain 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.
You are requested to complete, sign, date and return the enclosed proxy without
delay in order to ensure that your shares are voted at the annual meeting. If
you return a signed proxy, you may still attend the annual meeting and vote in
person. If you give a proxy, you have the right to revoke it at any time before
it is exercised by executing and returning a proxy bearing a later date, by
giving us written notice that you have revoked your proxy 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 stockholders instructions.
<PAGE>
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.
Cost of Solicitation
We will bear the costs of soliciting proxies. We may solicit proxies by mail,
and our directors, officers and employees may solicit proxies by mail,
telecopier, telephone or personal interview. They will not receive any
additional compensation for these services. We 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 them for their reasonable
out-of-pocket expenses.
BENEFICIAL OWNERSHIP OF SECURITIES AND
SECURITY HOLDINGS OF MANAGEMENT
The following table and discussion provides information as to the shares of
common stock beneficially owned of April 17, 2000 by:
each director and each nominee for director;
each officer named in the summary compensation table;
each person owning of record or known by us, based on information provided to us
by the persons named below, to own beneficially at least 5% of our common stock;
and
all officers and directors as a group.
Name and Address Shares Percent
- ---------------- ------ -------
Joseph G. Sicinski 793,332 23.3%
1393 Veterans Memorial Highway
Hauppauge, New York 11788
Naval Kapoor 270,000 9.3%
Four Armstrong Road
Shelton, Connecticut 06484
i-engineering.com, Inc. 270,000 9.3%
Four Armstron Road
Shelton, Connecticut 06484
Glen R. Charles 108,198 3.6%
James L. Conway 37,000 1.3%
Frank Vincenti 35,000 1.2%
Edward D. Bright 20,000 *
Murray Rosen -- --
All present directors and officers
as a group (five individuals) 968,530 27.0%
* Less than 1%
Each of the persons listed has the sole right to vote and dispose of the shares
except as described in the following discussion.
<PAGE>
In connection with his purchase of 258,333 shares of common stock at $1.625 per
share from SIS Capital Corp. in 1997, Mr. Sicinski issued his five-year
non-recourse promissory note for $419,791 in payment of the purchase price of
the shares. The note provides that SIS Capitals only recourse shall be against
the shares purchased by Mr. Sicinski. SIS Capital, which was then our principal
stockholder, is a wholly-owned subsidiary of The Sagemark Companies Ltd., which
was then known as Consolidated
Technology Group Ltd.
Mr. Kapoor is the president and chief executive officer of i-engineering.com,
Inc. As a result, the shares of common stock owned by i-engineering.com are
attributed to Mr. Kapoor.
The number of shares owned by our directors and officers shown in the table
includes shares of common stock which are issuable upon exercise of options and
warrants that are exercisable at March 31, 2000 or will become exercisable
within 60 days after that date. Set forth below is the number of shares issuable
upon exercise of those options for each of our directors and the officers named
in the summary compensation table.
Name Shares
Joseph G. Sicinski 518,333
Glen R. Charles 107,998
Frank Vincenti 35,000
Edward D. Bright 20,000
James L. Conway 35,000
All officers and directors as a group 691,333
Mr. Sicinski's options and warrants include 150,000 shares of common stock
issuable upon exercise of warrants and 368,333 shares of common stock issuable
upon exercise of options. All other officers and directors only hold options.
ELECTION OF DIRECTORS
Our directors are elected annually by our stockholders to serve until our next
annual meeting of stockholders and until their successors are duly elected. Our
bylaws give the board of directors the power to determine the number of
directors comprising the whole board. The board of directors has established the
size of the board for the ensuing year at six directors and is recommending that
the four incumbent directors of the Company be re-elected and that Mssrs. Mr.
Naval Kapoor and Murry Rosen be elected as a director. If any nominee becomes
unavailable for any reason, a situation which we do not anticipate, a substitute
nominee may be proposed by the board of directors, and any shares represented by
proxy will be voted for any substitute nominee, unless the board reduces the
number of directors.
The board of directors is presently comprised of four individuals, Messrs.
Joseph G. Sicinski, Edward D. Bright, James L. Conway and Glen R. Charles.
Messrs. Sicinski, Bright and Conway were elected at the 1998 annual meeting, for
which proxies were solicited. Mr. Charles was elected to the board in April
1999, upon the resignation of Mr. Donald Chaifetz, who was elected at the 1998
annual meeting.
<PAGE>
The following table sets forth certain information concerning the nominees for
director:
Name Age Position with the Company
Joseph G. Sicinski 68 President, chief executive officer and director
Edward D. Bright-1 62 Chairman of the board and director
Glen R. Charles 46 Chief financial officer and director
James L. Conway-1 51 Director
Naval Kapoor-1 47 Nominee for director
Murray Rosen- 1 73 Nominee for director
1 Member of the audit and compensation committees. Messrs. Kapoor and Rosen will
be appointed to these committees if they are elected as directors.
Mr. Joseph G. Sicinski has been president and a director of us and our
predecessor since September 1992 and our 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., a publicly-held company that markets
medical information systems.
Mr. Edward D. Bright has been a director since April 1998. From January 1996
until April 1998, Mr. Bright was an executive officer of or advisor to Creative
Socio Medics Corp., a subsidiary of Netsmart. From June 1994 until January 1996,
he was chief executive officer of Netsmart.
Mr. Glen R. Charles has been chief financial officer and treasurer of us and our
predecessor since November 1994 and secretary since April 1998. From 1992 to
November 1994, he was engaged in the private practice of accounting.
Mr. James L. Conway has been a director 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.
Mr. Naval Kapoor is president, chairman of the board, chief executive officer
and a director of i-engineering.com, Inc., a privately-held company that
developed and is preparing to introduce a global engineering internet portal
website, a position he has held since i-engineerings organization in July 1999.
Mr. Kapoor is also president of Universal International of Orlando, Inc., a
staffing company. From July 1997 until July 1999, he was president and chief
operating officer of Vero International, Inc., which is a software division of
VI Group, Plc. From 1993 until July 1997, he was president of 3D Technology,
Inc., a CAD/CAM, laser scanning and computer design service company that was a
subsidiary of Consolidated.
Mr. Murray Rosen has been the sole proprietor of a financial planning practice
and an employee benefit consultant since 1964. During that time, has been a
consultant to he American Association of University Professors and to the
Technical Advisory Service for Attorneys. He is a contributing author to
Personal Financial Planning, and The Money Encyclopedia. Mr. Rosen was an
Associate Professor at The College of Insurance for 1964 to 1990.
<PAGE>
Our certificate of incorporation provides that, to the fullest extent permitted
under Delaware law, our directors are not personally liable to us or our
stockholders for monetary damages for breach of their fiduciary duty. 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 1999, the board of directors created audit and compensation committees.
The audit committee is to consist of three independent directors. The audit
committee presently consists of Messrs. Edward D. Bright and James L. Conway
with one vacancy. If Mr. Kapoor is elected as a director, he will become a
member of the audit committee. The audit committee is charged with the following
responsibilities:
* Recommend to the board the selection of the independent accountants.
* Review the scope of the audit with the independent accountants.
* Review the annual and quarterly financial statements with the independent
accountants prior to the filing of the Form 10-K and 10-Q.
* Review any issues relating to the independence of the independent accountants.
* Review with the independent accountants and the board of directors any matters
raised in any management letters issued by the independent accountants.
* Review any material transactions between us and any of its officers and
directors, other than employment agreements and other matters which are
subject to approval of the compensation committee or any stock option
committee.
The compensation committee serves as the stock option committee for our stock
option plans and reviews and approves any employment agreements with mangement
and changes in compensation for our executive officers.
Excluding actions by unanimous written consent, during 1999, the board of
directors held five meetings, the compensation committee one meeting and the
audit committee did not meet. The audit committee met with our independent
accountants and chief financial officer prior to filing of the Form 10-K for
1999 to review the 1999 audited financial statements with the independent
auditors. During 1999, all or our present directors attended at least 80% of the
meetings of the board and any committee of which they are members.
During 1999, we paid directors who are not also employees a fee of $500 per
month, which rate is continuing in effect during 2000. See Approval of the 1999
Long-Term Incentive Plan for information as to options granted to our directors
who are not employees.
<PAGE>
EXECUTIVE OFFICERS
Set forth below are our executive officers and information concerning the one
officer who is not also a director.
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. Frank Vincenti, 48, has been a vice president 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
us for 1999, 1998 and 1997 to our chief executive officer and to each other
officer whose compensation exceeded $100,000 for 1999.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term
Compensation (Awards)
Name and Principal Restricted Stock Options,SARS
Position Year Salary Bonus Awards (Dollars) (Number)
Joseph G. Sicinski,
president and chief
executive officer 1999 $265,957 -- -- 85,000
1998 267,173 $48,800 -- 60,000
1997 243,000 96,000 -- 90,000
Frank Vincenti,
vice president 1999 139,200 5,000 -- 20,000
1998 82,718 -- -- 15,000
Glen R.Charles,chief
financial officer 1999 115,366 -- -- 46,332
1998 104,472 -- -- 25,000
1997 88,908 -- -- 20,000
On December 27, 1999, the exercise price of the outstanding options held by our
officers, directors and employees, including the options referred to in the
Summary Compensation Table, were repriced at $.53 per share, which was the fair
market value of our common stock on that day. For more information, see Approval
of 1999 Long-Term Incentive Plan.
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 us pursuant to which he received minimum annual compensation of
$260,000, subject to an annual increase equal to the greater of the increase in
the cost of living index or 5%. The term of the agreement was amended in March
1999 to extend the term until September 30, 2005. In addition, Mr. Sicinski is
<PAGE>
entitled to a bonus of 5% of the Companys income before taxes, all non-cash
adjustments and all payments to our former parent, provided, that his maximum
bonus is 200% of his annual salary. We also provide Mr. Sicinski with an
automobile which he may use for personal use. Mr. Sicinski is also entitled to
severance payments in the event of a termination of his employment following a
change of control, which would equal the greater of five times his annual
compensation or his annual compensation multiplied by the number of years
remaining in the term.
In May 1998, Mr. Frank Vincenti entered into a five-year employment agreement
with us, pursuant to which he receives an annual base salary of $135,200 and a
performance bonus. The annual salary is subject to periodic review.
In September 1997, Mr. Glen R. Charles entered into a four-year employment
agreement with us, pursuant to which he receives a minimum base salary of
$90,000, subject to an annual increase not to exceed 5%.
Option Exercises and Outstanding Options
The following table sets forth information concerning the exercise of options
during 1999 and the year-end value of options and warrants held by our officers
named in the Summary Compensation Table. No stock appreciation rights 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
- ---- ------------- -------- ------------- -------------
Joseph G. Sicinski -- -- 518,333/-- --/--
Frank Vincenti -- -- 35,000/-- --/--
Glen R. Charles -- -- 107,998/-- --/--
</TABLE>
Options warrants are considered in the moneyif their exercise price was less
than last reported sales price ofour common stock on December 31, 1999, which
was $.50 per share. The options held by Messrs. Sicinski, Vincenti and Charles
reflect the repricing of options in December 1999 to $.53 per shsare, as
described under "Approval of the 1999 Long-Term Incentive Plan."
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of February 25, 1999, The Sagemark Companies, Ltd., which was formerly known
as Consolidated Technology Group Ltd., through its subsidiary, SIS Capital
Corp., owned approximately 40.1% of our outstanding common stock. On February
25, 1999, we and Sagemark entered into an agreement pursuant to which Sagemark
transferred to us 1,150,000 shares of our common stock in satisfaction of (i)
Sagemark's obligations to pay the redemption price of $2,100,000 payable with
respect to the Sagemark Series G 2% Cumulative Redeemable Preferred Stock owned
by us together with accrued dividends of approximately $140,000 and
(ii)Sagemark's obligation to pay us $325,952 in respect of advances made by us
to certain of Sagemark's subsidiaries. At December 31, 1999, Arc Networks, Inc.,
a former Sagemark subsidiary, owed us approximately $1.2 million. This note,
which was guaranteed by Sagemark and others, became due on December 31, 1999.
Pursuant to an agreement dated February 7, 2000 with Arc Networks, Sagemark and
the other guarantors, Sagemark transferred 50,000 shares of our common stock to
us, and we agreed to extend the maturity date of the note from Arc Networks to
April 2000. Neither Sagemark nor Arc were our affiliates either at December 31,
1999 or on the date of this proxy statement.
Mr. Naval Kapoor is president and the 51% stockholder of Universal International
of Orlando, Inc., of which we own 49%. Universal International is a staffing
corporation for which we provide management services. We receive a fee of 5% of
certain of Universal international's revenue for our services. In 1999, we
received $26,000 from Universal International.
We entered into an restated agreement dated as of January 21, 2000 with
i-engineering.com, Inc., pursuant to which:
We lent i-engineering $500,000, for which it issued its 10% promissory notes
which are due on the earlier 120 days from the date of issuance in January and
February 2000 or the first to occur of (i) the date i-engineering receives gross
proceeds of at least $5,000,000 from a private placement or public offering of
its securities, or (ii) the date i-engineering obtains bank or other debt
financings or credit lines or other credit facility or facilities of at least
$750,000.
We agreed to provide i-engineering with services to assist it in developing its
business.
I-engineering issued to us i-engineerings common stock equal to approximately
10% of the then outstanding i-engineering common stock.
We issued to i-engineering 270,000 shares of our common stock.
I-engineering elected Mr. Joseph G. Sicinski, our president and chief executive
officer, as a director, and we agreed to include Mr. Naval Kapoor,
i-engineerings president and chief executive officer, as one of our board of
directors nominees for director at this annual meeting.
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 on December 31,
1994, 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
<PAGE>
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>
D E C E M B E R 3 1,
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
Trans Global Services, Inc. 100.0 55.6 55.6 29.7 8.7 2.5
Nasdaq Market Index 100.0 141.3 173.9 213.1 300.4 556.0
Peer Group Index 100.0 153.5 198.0 233.9 207.2 171.2
</TABLE>
The index level for all indices was set at 100.0 on December 31, 1994.
APPROVAL OF THE 1999 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 1999, the
board of directors adopted, subject to stockholder approval, the 1999 Long-Term
Incentive Plan, covering 130,000 shares of common stock.
We have two other stock option plans, the 1995 Long-Term Incentive Plan and the
1998 Long-Term Incentive Plan, which cover an aggregate of 784,300 shares of
common stock. As of March 31, 2000, no shares of common stock had been issued
pursuant to these plans and [how many?] shares of common stock were subject to
outstanding options. Thus, at March 31, 2000, we could grant options to purchase
[how many?] under these plans. Any shares which are subject to outstanding
options which expire unexercised will also be available for grant under these
plans.
Our stock option plans are administered by a committee of at least two
non-employee directors appointed by the board. The compensation committee serves
as the committee under all of our stock option plans. Any member or alternate
member of the committee is not eligible to receive options or stock under these
plans except for the annual option grant and certain options grants which were
approved by the stockholders in connection with the approval of the 1998 plan.
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 are performed by the board of directors. The compensation committee
consists of Messrs. Edward D. Bright and James L. Conway.
Set forth below is a summary of the 1999 Plan, but this summary is qualified in
its entirety by reference to the full text of the 1999 plan, a copy of which is
included as Exhibit A to this proxy statement. The plan, which expires in June
2009 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.
<PAGE>
The 1999 plan is authorized for 130,000 shares of common stock. If an option
under the 1999 plan expires or terminates without being exercised in full or if
shares awarded under the 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 plan. The plan imposes no limit
on the number of officers and other key employees to whom awards may be made.
Awards under the 1999 plan may be made to key employees, including officers and
directors of us and our subsidiaries, and consultants and others who perform
services for us and our subsidiaries, except that directors who are not employed
by us or our subsidiaries or are not otherwise engaged by us are not eligible
for options under the 1999 plan, except that the 1999 plan provides for (i) the
grant on June 14, 1999, the date the 1999 plan was adopted by the board of
directors, to each non-employee director of a non-qualified stock option to
purchase 10,000 shares of common stock, and (ii) the automatic grant to each
non-employee directors of a non-qualified option to purchase 5,000 shares of
common stock on April 1st of each year, commencing April 1, 2000. 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 14, 1998 have an exercise price of $.7812 per share, which was
the fair market value such date. Messrs. Edward D. Bright and James L. Conway
are the directors who qualify as non-employee directors under the 1999 plan as
of the date of this proxy statement, and Mr. Kapoor will qualify as a
non-employee director if he is elected.
No options were granted under the 1999 plan except for the options to our
non-employee directors, Mr. James L. Conway and Edward D. Bright, who were
granted options to purchase 10,000 shares of common stock at $.7812 in June 1999
and who received options to purchase 5,000 shares of common stock at $1.00 per
share pursuant to the automatic option grant provisions of the plan. In
addition, Mr. Seymour Richter, who was a director in June 1999, received an
option to purchase 10,000 shares of common stock in June 1999. All of these
option grants are subject to stockholder approval of the 1999 plan.
The option grants to non-employee directors are non-qualified stock options and
have a term of five years and become fully exercisable three 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 1999 plan, should occur. These options terminate seven months after
termination of service if such termination is for cause.
The committee has the authority to grant the following types of awards under the
1999 plan: incentive or non-qualified stock options; stock appreciation rights;
restricted stock; deferred stock; stock purchase rights and/or other stock-based
awards. The 1999 plan is designed to provide us with broad discretion to grant
incentive stock-based rights.
Tax consequences of awards provided under the 1999 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 us. 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 we receive a corresponding tax deduction. In
<PAGE>
the case of an incentive stock option, no income is recognized to the employee,
and no deduction is available to us, 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 we receive 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 we receive 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
1999 pursuant to our plans. No stock appreciation rights were granted.
Option Grants in Year Ended December 31, 1999
<TABLE>
<CAPTION>
Option Grants in Year Ended December 31, 1997
<S> <C> <C> <C> <C> <C> <C>
Percent of Potential Realizable Value
Number of Total Options an Annual Rates of Stock
Shares Grant to Price Appreciation for
Underlying Employees in Exercise Price Option Term
Name Options Granted Fiscal Year Per Share Expiration Date 5% 10%
Joseph G. Sicinski 338,333 45.8% $ .53 10/02-3/06 $60,915 $125,227
Frank Vincenti 35,000 4.7% .53 6/03-6/04 4,089 8,856
Glen R. Charles 107,998 14,6% .53 3/01-6/04 9,687 22,882
</TABLE>
All of the options granted in 1999 as well as all options previously granted to
our present employees and directors were repriced in December 1999 at $.53 per
share, which was the market price on the date of the repricing.
The following table sets forth information concerning options granted pursuant
to the 1999 plan as of April 1, 2000. No stock appreciation rights were granted.
<PAGE>
1999 Long-Term Incentive Plan
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Shares Exercise Price Per
Name and Position Underlying Options Granted Share
- ----------------- -------------------------- ------------------
Edward D.Bright 15,000 $.53 - $1.00
James L. Conway 15,000 .53 - $1.00
One former director 10,000 .53
</TABLE>
On December 27, 1999, the board approved the repricing of the stock options to
purchase 739,163 shares of common stock held by directors and employees,
including options held by Messrs. Sicinski, Vincenti and Charles. We has
previously repriced options held by Mr. Sicinski. The repricing of the options
was based on our projected improvement in our operations in 2000,
notwithstanding the decline in the stock price. Set forth below is information
concerning the repricing of options since we became a reporting company in 1995
with respect to each of the officers who is named in the summary compensation
table.
OPTION REPRICING TABLE
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Number of
Securities
Underlying Market Price of Exercise Price
Options Stock at Time of at Time of New Length of ORiginal Term
Repriced or Repricing or Repricing or Exercise Remaining at Date of
Name Date Amended Amendment Amendment Price Repricing or Amendment
- ---- ---- ----------- ---------------- -------------- -------- -----------------------
Joseph G. Sicinski 12/27/99 85,000 $ .53 $ .80 $ .53 Four years, six months
Joseph G. Sicinski 12/27/99 60,000 .53 1.25 .53 Three years, six months
Joseph G. Sicinski 12/27/99 90,000 .53 3.875 .53 Two years, ten months
Joseph G. Sicinski 12/27/99 133,333 .53 6.75 .53 Six years, three months
Frank Vincenti 12/27/99 20,000 .53 .80 .53 Four years, six months
Frank Vincenti 12/27/99 15,000 .53 1.25 .53 Three years, six months
Glen R. Charles 12/27/99 46,332 .53 .80 .53 Four years, six months
Glen R. Charles 12/27/99 25,000 .53 1.25 .53 Three years, six months
Glen R. Charles 12/27/99 20,000 .53 3.875 .53 Two years, ten months
Glen R. Charles 12/27/99 16,666 .53 6.75 .53 One year, three months
Joseph G. Sicinski 11/23/98 60,000 1.25 4.00 1.25 Four years, seven months
Glen R. Charles 11/23/98 25,000 1.25 4.00 1.25 Four years, seven months
Frank Vincenti 11/23/98 15,000 1.25 4.00 1.25 Four years, seven months
Joseph G. Sicinski 3/18/96 41,666 6.75 12.75 6.75 Five years, five months
</TABLE>
Vote Required
The proposal to approve the 1999 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.
<PAGE>
SELECTION OF INDEPENDENT AUDITORS
---------------------------------
It is proposed that the stockholders approve the selection of Moore Stephens,
P.C. as our independent public accountants for the year ending December 31,
2000. The board of directors has approved the selection of Moore Stephens, P.C.
as our 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. has been our independent certified public accountants and
its predecessors since December 1992, and its 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 us or any of our subsidiaries other
than as independent accountants.
Representatives of Moore Stephens, P.C. are not expected to be present at the
annual meeting, but will be available by conference telephone call to respond to
appropriate questions.
Vote Required
The proposal to approve the selection of Moore Stephens, P.C., as our
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.
INCORPORATION BY REFERENCE
The Company incorporates into this proxy statement the audited financial
statements for the years ended December 31, 1999 and 1998 together with the
related Managements Discussion and Analysis of Financial Condition and Results
of Operations, which are included in the annual report. 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
will be provided by us without charge upon request. Requests for copies of the
annual report should be made as provided under Other Matters.
OTHER MATTERS
Any proposal which a stockholder wishes to present a proposal at the 2001 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
December 31, 2000.
Copies of the Companys Form 10-K for the year ended December 31, 1999, 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 our
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
April 10, 2000 President
<PAGE>
EXHIBIT A
1999 Long-Term Incentive Plan
Exhibit A
TRANS GLOBAL SERVICES, INC.
1999 Long-Term Incentive Plan
1. Purpose; Definitions.
The purpose of the Trans Global Services, Inc. 1999 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.
A-1<PAGE>
EXHIBIT A
1999 Long-Term Incentive Plan
(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.
(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) "ther 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. 1999 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>
EXHIBIT A
1999 Long-Term Incentive Plan
(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>
EXHIBIT A
1999 Long-Term Incentive Plan
(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 theparticipant, 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>
EXHIBIT A
1999 Long-Term Incentive Plan
3. Stock Subject to Plan.
(a) The total number of shares of Stock reserved and available for distribution
under the Plan shall be one hundred thirty thousand (130,000) 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 to each
person who is a Non- Employee Director a Non-Qualified Stock Option to purchase
ten thousand (10,000) shares of Common Stock. Such Stock 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, 2000, each person who is
a Non-Employee Director on such date shall automatically be granted a
Non-Qualified Stock 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 the Plan, divided by the number of Non-Employee
Directors at such date). Such Stock 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.
A-5
<PAGE>
EXHIBIT A
1999 Long-Term Incentive Plan
(iii) The Non-Qualified Stock Options granted pursuant to Paragraphs 4(b)(i) and
(ii) of the Plan shall become exercisable as to all of the shares subject
thereto three (3) months from the date of grant, and shall expire (i) five years
from the date of grant, or (ii) 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 for Cause. 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 comply 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.
(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).
A-6
<PAGE>
EXHIBIT A
1999 Long-Term Incentive Plan
(B) If payment of the option exercise price of a Non-Qualified Stock Option is
made in (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.
(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
A-7
<PAGE>
EXHIBIT A
1999 Long-Term Incentive Plan
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 profit1 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.
(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
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EXHIBIT A
1999 Long-Term Incentive Plan
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.
(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:
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EXHIBIT A
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(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 the eligible
persons to whom, and the time or times at which, grants of Restricted Stock will
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EXHIBIT A
1999 Long-Term Incentive Plan
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.
(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
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EXHIBIT A
1999 Long-Term Incentive Plan
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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EXHIBIT A
1999 Long-Term Incentive Plan
(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;
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EXHIBIT A
1999 Long-Term Incentive Plan
(ii) at a percentage of such Fair Market Value on such date, such percentage to
be determined by the Committee in its sole discretion;
(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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EXHIBIT A
1999 Long-Term Incentive Plan
(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, regardless of whether the amendment to the
Plan pursuant to which such Stock Options shall have been granted shall have
been approved by stockholders; provided, however, that if such stockholder
approval shall not have been obtained prior to a Change of Control or a
Potential Change of Control, any Incentive Stock Options may, with the consent
of the holders thereof, be treated as Non-Qualified Stock Options.
(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, regardless of whether the
amendment to the Plan pursuant to which such Stock Options shall have been
granted shall have been approved by stockholders.
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EXHIBIT A
1999 Long-Term Incentive Plan
(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 (including such rights which shall
have become vested pursuant to Paragraphs 11(a)(i) and (ii) of the Plan), 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, unless the Committee
shall, contemporaneously with or prior to any particular Change of Control or
Potential Change of Control, determine that this Paragraph 11(a)(iii) shall not
be applicable to such Change in Control or Potential 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 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-five 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:
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EXHIBIT A
1999 Long-Term Incentive Plan
(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).
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.
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EXHIBIT A
1999 Long-Term Incentive Plan
(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.
(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
A-18
<PAGE>
EXHIBIT A
1999 Long-Term Incentive Plan
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.
A-19
<PAGE>
PROXY
TRANS GLOBAL SERVICES, INC.
2000 Annual Meeting of Stockholders May 25, 2000
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 2000 Annual Meeting
of Stockholders of Trans Global Services, Inc. (the Company), to be held at 9:00
a.m., local time, on Thursday, May 25, 2000, 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 six (6) directors:
Joseph G. Sicinski, Edward D. Bright, Glen R. Charles, James L. Conway, Naval
Kapoor and Murray Rosen
[ ] 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 nominees name below.
(2) To approve the 1999 Long-Term Incentive Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(3) To approve the selection of Moore Stephens, P.C. as the independent
certified public accountants of the Company for the year ending December 31,
2000:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(4) In their discretion, upon the transaction of such other business as may
properly come before the meeting;
all as set forth in the Proxy Statement, dated April 21, 2000.
The shares represented by this proxy will be voted on Items 1, 2 and 3 as
directed by the stockholder, but if no direction is indicated, will be voted FOR
Items 1, 2 and 3.
If you plan to attend the meeting please indicate below:
I plan to attend the meeting [ ]
Dated: , 2000
---------------------------
(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.
<PAGE>
To Our Stockholders:
Fiscal year 1999 was a tough year for us. Our revenue is derived principally
from the aircraft and aerospace industries. In 1999, revenue from these clients
totaled $36 million. This reflected a decrease of 46.4% from revenue in 1998,
resulting in an operating loss of $1.4 million.The aircraft and aerospace
industries have a history of being cyclic and we experienced a down trend cycle
commencing the last quarter of 1998 with a major impact through 1999 and
continuing, to a lesser degree, through the first quarter of 2000. While the
decline in our revenue from Boeing had the largest impact on our revenue
decline, Lockheed Martin and Northrop Grumman also contributed to the decline.At
this time we are hopeful that the negative trend is behind us. Current published
indicators support our belief that the industry has commenced on an upward cycle
in both the commercial and military segments. For example, in February 2000,
Boeing announced in the Wall Street Journal its commitment to proceed in
development and production of two new long-range versions of its 777 airliner.
In July 1999, we signed a letter of intent to merge with IT Staffing, Ltd.
(recently renamed Thinkpath), a Canadian-based provider of information
technology staffing. Although a merger agreement was signed in November 1999, it
was terminated in February 2000 by mutual consent.In late 1999, we became
involved in addressing information technology for i-engineering.com, Inc., a
global internet portal website. This involvement resulted in a agreement
wherein, among other things, we received an equity interest in i-engineering, we
lent i-engineering $500,000 on a short-term basis, we agreed to provide some
support services to i-engineering, and we issued 270,000 shares of our common
stock to i-engineering. We believe that i-engineering will provide us with the
availability of a global internet portal for job posting and recruiting of
technical personnel around the world and that this portal can represent a
powerful tool to support our need in the rapidly expanding world of internet
communication and business development.We are seeking to expand our information
technology business segment. We believe that current and future growth of the
internet will support a continued demand for the services we offer in this
business segment.In summary, management is venturing into the new millenium in a
positive mode concentrating on serving our prestigious client base as we focus
on developing new business segments. We appreciate and thank our loyal employees
and stockholders for past, present and ongoing support.
Sincerely
Joseph G. Sicinski
President and CEO
<PAGE>
TRANS GLOBAL SERVICES, INC.
1393 Veterans Memorial Hwy
Hauppauge, New York 11788
March 30, 2000
Securities and Exchange Commission
450 5th Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Dear Sirs:
Pursuant to regulations of the Securities and Exchange Commission, submitted
herewith for filing on behalf of Trans Global Services, Inc. (the "Company") is
the Company's Annual Report on Form 10-K for the year ended December 31, 1999.
This filing is being effected by direct transmission to the Commission's
EDGAR System.
Very truly yours,
Glen R. Charles
Chief Financial Officer
<PAGE>
Trans Global Services, Inc.
Form 10-K 12/31/99
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______ TO ________
Commission File No. 0-23382
Trans Global Services, Inc.
(Exact name of Company as Specified in its Charter)
Delaware 62-1544008
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1393 Veterans Memorial Hwy.,
Hauppauge, New York 11788
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (631) 724-0006
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class
Common Stock, par value .01 per share
Indicate by a check mark whether the Company (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or such shorter period that the Company was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Company's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock as of March 28, 2000: $2,691,625
State the number of shares outstanding of each of the Company's classes of
common stock as of March 30, 2000: 2,619,716 shares of Common Stock, par value
$.01 per share.
DOCUMENTS INCORPORATED BY REFERENCE
Item III is incorporated by reference from the Registrant's definitive proxy
statement relating to its 2000 Annual Meeting of Stockholders.
<PAGE> 2
PART I
Item 1. Business.
Trans Global Services, Inc. is engaged in providing technical Temporary staffing
services. In performing such services, we address the current trend of major
corporations in "downsizing" and "outsourcing" by providing engineers, designers
and technical personnel on a temporary contract assignment basis pursuant to
contracts with major corporations. The engagement may relate to a specific
project or may cover an extended period based on the client's requirements. We
believe that the market for outsourcing services such as those offered by the
Company results from the trend in employment practices by major corporations
principally in the aircraft and aerospace industries as well as the electronics,
energy, telecommunications, banking and computer science industries and public
utilities industries to reduce their permanent employee staff and to supplement
their staff with temporary personnel on an as-needed basis. We seek to offer our
clients a cost-effective means of work force flexibility and the elimination of
the inconvenience associated with the employment of temporary personnel, such as
advertising, initial interviewing, fringe benefits and record keeping. Although
the employees provided by the Company are on temporary contract assignment, they
work with the client's permanent employees; however, they may receive different
compensation and benefits than permanent employees.
In providing our services, we engage the employees, pay the payroll and related
costs, including FICA, worker's compensation and similar Federal and state
mandated insurance and related payments. We charge our clients for services
based upon the hourly payroll cost of the personnel. Each temporary employee
submits to us a weekly time sheet with work hours approved by the client. The
employee is paid on the basis of such hours, and the client is billed for those
hours at agreed upon billing rates.
We also offer our clients a range of integrated logistical support services
which are performed at our facilities. These services, which are ancillary to a
project, can include the management of technical documents involving technical
writing, preparation of engineering reports, parts provisioning documents and
test equipment support documents, establishing maintenance concepts and
procedures, and providing manpower and personnel support. To date, the
integrated logistics support business has not generated more than nominal
revenue, we cannot give any assurance that we will generate any significant
revenue or profit from such services.
Our strategy has been directed at increasing our customer base and providing
additional services, such as integrated logistics support, to our existing
customer base. We believe that the key to profitability is to provide a range of
services to an increased customer base. In this connection, we are increasing
our marketing effort both through our own personnel and in marketing efforts
with other companies that offer complementary services.
<PAGE> 3
Item 1. Business [Continued]
Our Organization
We are a Delaware corporation which was incorporated in September 1993 under the
name Concept Technologies Group, Inc. ("Concept"). Our executive offices are
located at 1393 Veterans Memorial Hwy., Hauppauge, New York 11788, telephone
(631) 724-0006.
Our operations are conducted through our two subsidiaries, Avionics Research
Holdings, Inc. and Resource Management International, Inc.
References to us refer to us and our subsidiaries, unless the context indicates
otherwise.
As of February 25, 1999, The Sagemark Companies, Ltd., which was formerly known
as Consolidated Technology Group Ltd., through its subsidiary SIS Capital Corp.
owned approximately 40.1% of our outstanding common stock. On February 25, 1999,
we and Sagemark entered into an agreement pursuant to which Sagemark transferred
to us 1,150,000 shares of our common stock in satisfaction of (i) Sagemark's
obligations to pay the redemption price of $2,100,000 payable with respect to
the Sagemark Series G 2% Cumulative Redeemable Preferred Stock owned by us
together with accrued dividends of approximately $140,000 and (ii)Sagemark's
obligation to pay us $325,952 in respect of advances made by us to certain of
Sagemark's subsidiaries. At December 31, 1999, Arc Networks, Inc., a former
Sagemark subsidiary, owed us approximately $1.2 million. This note, which was
guaranteed by Sagemark and others, became due. Pursuant to an agreement dated
February 7, 2000 agreement with ARC Networks, Sagemark and other guarantors,
Sagemark transferred 50,000 shares of our common stock to us and we agreed to
extend the maturity date of the note from Arc Networks to April 24, 2000.
Forward Looking Statements
The statements in this Form 10-K Annual Report that are not descriptions of
historical facts may be forward looking statements that are subject to risks and
uncertainties. In particular, statements in this Form 10-K Annual Report,
including any material incorporated by reference in this Form 10-K, that state
our intentions, beliefs, expectations, strategies, predictions or any other
statements relating to our future activities or other future events or
conditions are "forward-looking statements." Forward-looking statements are
subject to risks, uncertainties and other factors, including, but not limited
to, those identified under "Risk Factors," those described in Management's
Discussion and Analysis of Financial Conditions and Results of Operations and
those described in any other filings with the Securities and Exchange
Commission, as well as general economic conditions, any one or more of which
could cause actual results to differ materially from those stated in such
statements.
Risk Factors
Our clients are concentrated in the aircraft and aerospace industries, which has
resulted in a downturn in our business because of the downturn in business from
these industries
Our three largest clients for 1999 and 1998 were in the aircraft and aerospace
industries, accounting for revenue of approximately $17 million, or 47% of
revenue, in 1999 and $40 million, or 60.1% of revenue, in 1998. Revenue from The
<PAGE> 4
Boeing Company, which was our largest client in 1998, declined from $ 16.3
million, or 24.4% of revenue, in 1998 to $4.6 million, or 12.8% of revenue, in
1999. These decreases can be attributed to the slowdown in the aircraft and
aerospace industries. This trend has continued, and the reduced level of revenue
from our major clients has continued during the first quarter of 2000. We cannot
predict when or whether the trend will change.
We require financing for our operations, we are in default under our loan
agreement and our loan agreement will not be renewed.
At December 31, 1999, we had working capital deficiency of $156,000, and we were
in default under three of the financial covenant under our agreement with our
asset-based lender. Although the lender has agreed to waive these defaults as of
December 31, 1999, it has advised us that it will not renew the agreement when
it becomes due in April 2000. If we are not able to obtain a credit facility,
our ability to conduct our business will be severely impaired. In January 2000,
we raised $1.0 million from a group of accredited investors, to whom we issued
our notes in the principal amount of $1.0 million. In connection with theses
notes, we issued warrants to purchase an aggregate of 250,000 shares of common
stock at $.35 per share to the investors and others who assisted us in the
transaction.
We incurred losses during 1999 and our losses are continuing.
As a result of the decline in business from our clients in the aircraft and
aerospace industries, we sustained a loss of $1.9 million, or $.61 per share
(basic and diluted) for 1999. Our losses are continuing, and we expect to incur
losses at least through the first and second quarters of 2000. We cannot assure
you that we will be able to generate profits in the future.
We lent $500,000 to a newly-formed company, and we cannot give assurance that
these notes will be paid.
In connection with the $1.0 million loan from investors, we lent $500,000 to
i-engineering.com, Inc., a newly formed company, as part of a transaction
pursuant to which we received an equity position in i-engineering.com and we
issued 270,000 shares of our common stock to i-engineering.com. The notes from
i-engineering.com are due in June 2000. If i-engineering.com does not receive
financing, it may not be able to pay the notes, which could impair our financial
position.
Because of our financial position, we may have difficulty generating business in
a highly competitive industry.
The temporary technical staffing business is highly competitive with respect to
both employers and employees. In order to attract both clients and employees, we
must show that we have the financial capability to perform and we must offer
employees benefits that our competitors offer. Our financial position has in the
past limited our ability to grow. Our current financial position may increase
the difficulty in both retaining existing clients and obtaining new clients.
<PAGE> 5
Item 1. Business [Continued]
We need to offer direct payroll deposit to our employees.
At present, because of our financial position, we do not offer our employees a
direct deposit payroll program by which we deposit the employees' compensation
directly into their bank accounts so that the employee's money will be
immediately available. Employees believe that direct payroll deposit is an
important element to consider in evaluating employment opportunities. In order
to offer this service, we require significant additional funds, and these funds
are not available to us. We believe that our ability to attract new clients will
be impaired if we cannot offer employees direct payroll deposit.
We need to attract qualified employees to service our clients.
We are dependent upon both our ability to obtain contracts with clients and to
provide those clients with qualified employees. The market for qualified
personnel is highly competitive, and we compete with other companies in
obtaining contracts with potential clients and in attracting employees.
We may be held liable for the actions of our employees when on assignment.
Although our client agreements disclaim responsibility for the conduct of our
employees, we may be exposed to liability with respect to actions taken by our
employees while on assignment, such as damages caused by their errors, misuse of
client proprietary information or theft of client property. We do not maintain
insurance coverage against this risk. Due to the nature of our assignments, we
cannot assure you that we will not be exposed to liability as a result of our
employees being on assignment.
Our common stock has been delisted from the Nasdaq SmallCap Market.
On March 16, 2000, our common stock was delisted from the Nasdaq SmallCap Market
because we failed to hold a stockholders meeting in 1999. Although we have
appealed the decision, we cannot assure you that our common stock will be
relisted on the Nasdaq SmallCap Market. Our common stock may become subject to
the SEC's penny-stock rules, which impose additional sales practice requirements
on broker-dealers which sell our stock to persons other than established
customers and institutional accredited investors. These rules may affect the
ability of broker-dealers to sell our common stock and may affect the ability of
our stockholders to sell any common stock they may own.
We are dependent upon our management.
Our business is dependent upon our senior executive officers, principally Mr.
Joseph G. Sicinski, president and chief executive officer, who is responsible
for the Company's operations, including marketing and business development.
Although we have an employment agreement with Mr. Sicinski and other officers,
the agreements do not guarantee that the officers will continue in their
employment with us. Our business may be adversely affected if any of our key
officers left our employ.
<PAGE> 6
Item 1. Business [Continued]
We do not anticipate paying dividends on our common stock.
We presently intend to retain future earnings, if any, in order to provide funds
for use in the operation and expansion of our business and, accordingly, we do
not anticipate paying cash dividends on our Common Stock in the foreseeable
future.
The rights of the holders of common stock may be impaired by the potential
issuance of preferred stock.
Our certificate of incorporation gives our board of directors the right to
create new series of preferred stock. As a result, the board of directors may,
without stockholder approval, issue preferred stock with voting, dividend,
conversion, liquidation or other rights which could adversely affect the voting
power and equity interest of the holders of common stock. The preferred stock,
which could be issued with the right to more than one vote per share, could be
utilized as a method of discouraging, delaying or preventing a change of
control. The possible impact on takeover attempts could adversely affect the
price of our common stock. Although we have no present intention to issue any
additional shares of preferred stock or to create any series of preferred stock,
we may issue such shares in the future. If we issue preferred stock in a manner
which dilutes the voting rights of the holders of the common stock, we may not
be able to list our common stock on The Nasdaq SmallCap Market.
Shares may be issued pursuant to options and warrants.
We may issue stock upon the exercise of options to purchase up to an aggregate
299,192 shares of common stock pursuant to our long-term incentive plans and
warrants to purchase an aggregate of 1,066,662 shares, including warrants to
purchase 250,000 shares of common stock which were issued in connection with our
January 2000 placement of $1.0 million in 18-month notes.
Markets and Marketing
The market for our services is comprised of major corporations in such
industries as aircraft, aerospace, electronics, energy, engineering, computer
services and telecommunications, where "downsizing" and "outsourcing" have
become an increasingly important method of cost reduction. Typically, a client
enters into an agreement with one or a small number of companies to serve as
employer of record for its temporary staff, and its agreements are terminable by
the client without significant notice.
We maintain a computerized data base of technical personnel based upon their
qualifications and experience. The data base, which contains more than 100,000
names, is generated through employees previously employed by us, referrals and
responses to advertisements placed by us in the media, including newspapers,
yellow pages, magazines and trade publications. Part of our responsibilities for
any engagement is the recruitment and initial interviewing of potential
employees, with the client conducting any final interviews it deems necessary.
The majority of work performed by our employees is performed at the client's
premises and under the client's direction, although we is the employer of
record.
We market our services to potential clients through our officers, management and
recruitment personnel who seek to provide potential clients with a program
designed to meet the client's specific requirements. The marketing effort
utilizes referrals from other clients, sales calls, mailings and telemarketing.
<PAGE> 7
Item 1. Business [Continued]
We also conduct an ongoing program to survey and evaluate the clients' needs and
satisfaction with our services, which we use as part of our marketing effort.
Although we have six offices, including our main office in Long Island, New
York, throughout the United States, there is no limited geographic markets for
our services. We have in the past established offices in new locations when we
receive a contract in the area and we cannot effectively service such contract
from our existing offices. We intend to continue to establish new offices as
necessary to meet the needs of our customers.
A client will utilize contract engineering services such as those provided by us
when it requires a person with specific technical knowledge or capabilities
which are not available from the client's permanent staff or to supplement its
permanent staff for a specific project or to meet peak load requirements. When
the client requires personnel, it provides us with a detailed job description.
We then conduct an electronic search in our computerized resume data base for
candidates matching the job description. In addition, each branch office
maintains a file of active local resumes for candidates available for assignment
in the vicinity of the branch office. The candidates are then contacted by
telephone by our recruiters, who interview interested candidates. If a candidate
is acceptable to us and interested in the position, we refer the candidate to
the client. An employment agreement is executed with us prior to the
commencement of employment.
We serve primarily the aircraft and aerospace industries as well as the
electronics, energy, telecommunications, banking and computer science industries
and public utilities along with numerous manufacturing companies. We are
expanding our effort to address the general trend of "downsizing" and
"outsourcing" by major corporations on a national basis. To meet this goal, we
have commenced a national sales campaign addressing a broad spectrum of Fortune
500 companies, offering a managed staffing service to those companies in the
process of downsizing and outsourcing specific functions. Since a company
engaged in downsizing seeks to focus on its core business needs with its
in-house staff, we seek to identify and address the needs of a specific task or
department not part of the core business for which outsourcing would be an
appropriate method of addressing those needs. In addressing these needs, we have
conducted marketing efforts with Manpower International, Inc., Adecco and Olsten
Corporation.
Our contracts are generally terminable by the client on short notice.
The following table shows the revenue and the percentage of our total revenue
from our largest clients in 1999:
Client Revenue Percent
Lockheed-Martin $7.3 million 20.2%
Bell Helicopter Textron 4.9 million 13.7%
Boeing 4.6 million 12.8%
Gulfstream Aerospace 3.0 million 8.2%
Northrop Grumman 2.8 million 7.9%
CDI Corp. 2.4 million 6.7%
<PAGE> 8
Item 1. Business [Continued]
The following table shows the revenue and the percentage of our total revenue
from our largest clients in 1998:
Client Revenue Percent
Boeing $16.3 million 24.4%
Lockheed-Martin 12.2 million 18.3%
Northrop Grumman 11.6 million 17.4%
Gulfstream Aerospace 4.2 million 9.0%
Bell Helicopter Textron 6.0 million 6.3%
Competition
The business of providing employees on either a permanent or temporary basis is
highly competitive and is typically local in nature. We compete with numerous
technical service organizations, a number of which are better capitalized,
better known, have more extensive industry contacts and conduct extensive
advertising campaigns aimed at both employers and job applicants than we have.
We believe that the ability to demonstrate a pattern of providing reliable
qualified employees is an important aspect of developing new business and
retaining existing business. Furthermore, our ability of to generate revenue is
dependent not only upon its ability to obtain contracts with clients, but also
to provide its clients with qualified employees. The market for qualified
personnel is highly competitive, and we compete with other companies in
attracting employees. Our ability to increase our business with existing clients
or to attract other clients will be affected by our working capital.
Accordingly, our failure to increase our working capital may adversely effect
our ability to expand our business. In addition, our failure to offer employees
the direct deposit of their payroll may affect their willingness to be employed
by us.
Government Regulations
The technical temporary staffing industry, in which we are engaged, does not
require licensing as a personnel or similar agency. However, as a provider of
personnel for other corporations, we are subject to Federal and state
regulations concerning the employment relationship, including those relating to
wages and hours and unemployment compensation. We also maintain a 401(k) plan
for our employees and we are subject to regulations concerning such plan.
We do not have contracts with any government agencies. However, our clients
include major defense contractors, that have contracts with government agencies.
Our contracts with our clients are based on hourly billing rates for each
technical discipline. Many of the clients' contracts with government agencies
are subject to renegotiation or cancellation for the convenience of the
government. Since the manpower needs of each of our clients are based on the
clients own requirements and the clients' needs are affected by any modification
in requirements, any reduction in staffing by a client resulting from
cancellation or modification of government contracts could adversely impact our
business.
<PAGE> 9
Item 1. Business [Continued]
Employees
At December 31, 1999, we had 365 employees, of which 333 were contract service
employees who performed services on the clients' premises and 32 were executive
and administrative employees. Each of our offices is staffed by recruiters and
sales managers. Each contract service employee enters into a contract with us
which sets forth the client for whom and the facility at which the employee's
services are to be performed and the rate of pay. If an employee ceases to be
required by our clients for any reason, we have no further obligation to the
employee. Although assignments can be for as short as 90 days, in some cases,
they have been for several years. The average assignment is in the range of six
to nine months. Our employees are not represented by a labor union, and we
consider our employee relationships to be good.
Executive Officers of the Company
The following are the executive officers of the Company as of March 31, 2000:
Name Age Position with the Company
----- ---- -------------------------
Joseph G. Sicinski 68 Chief Executive Officer, President and Director
Edward D. Bright 62 Chairman of the Board
Glen R. Charles 46 Chief Financial Officer, Secretary, Treasurer and
Director
Frank J. Vincenti 48 Vice President
Mr. Joseph G. Sicinski has been our president and a director since May 1995 and
our chief executive officer since April 1998. He served in the same capacities
for our predecessors since 1992. 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., which
markets medical information systems.
Mr. Edward Bright has been a director since April 1998. In April 1998, Mr.
Bright was also elected as chairman, secretary, treasurer and a director of
Sagemark, which was then known as Consolidated Technology Group Ltd., and a
director of Netsmart. From January 1996 until April 1998, Mr. Bright was an
executive officer of or advisor to a subsidiary of Netsmart which was acquired
by Netsmart in June 1994. From June 1994 until January 1996, he was chief
executive officer of Netsmart.
Mr. Glen R. Charles has been our chief financial officer and treasurer since May
1995 and of our predecessor since January 1995. He has been secretary of the
Company since April 1998 and a director since May 1999. Mr. Charles served as
chief financial officer of one of our subsidiaries since its acquisition
November 1994. From 1992 to November 1994, he was engaged in the private
practice of accounting.
<PAGE> 10
Item 1. Business [Continued]
Mr. Frank J. Vincenti has been vice president since May 1998. Mr. Vincenti has
approximately 25 years of experience in the contract engineering industry with
direct experience in staffing, recruiting, sales and marketing. Mr. Vincenti was
previously employed by CDI, a leading competitor of the Company, where he served
as vice president of regional operations in the information technology division.
Item 2. Description of Property.
We lease approximately 7,500 square feet of office facilities in Hauppauge, New
York, where we maintain our executive offices. We also rent modest office space
in Phoenix Arizona, Arlington Texas, Los Angeles California, Seattle Washington
and Orlando Florida. Our aggregate annual rent is approximately $200,000, which
is subject to annual increases. We believe that our present office space is
adequate for our present needs and that additional office space is readily
available on commercially reasonable terms.
Item 3. Legal Proceedings.
In November 1997, an action was commenced in the Supreme Court of the State of
New York, County of Suffolk, by Ralph Corace against RMI seeking damages of
approximately $1.1 million for an alleged breach of contract by us. Mr. Corace
was the president of Job Shop Technical Services, Inc., from which we, through
one of our present subsidiaries, purchased assets in November 1994. We believe
that the action is without merit, we are contesting this matter and we have
filed counterclaims against Mr. Corace.
In December 1999, an action was commenced in the Supreme Court of the State of
New York, County of Suffolk, by Vero International, Inc. against Trans Global
Services, Inc. seeking damages of approximately $45,000 for goods sold and
delivered for an agreed price and for reasonable value. We believe that we have
valid defenses to the claims.
Item 4. Submission of Matters to a vote of Security Holders.
No matters were voted upon during the fourth quarter of 1999.
<PAGE> 11
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
Our common stock is traded on OTC Bulletin Board Market under the symbol TGSI.
Prior to March 16, 2000, our common stock was traded on the Nasdaq SmallCap
Market. On March 16, 2000, our common stock was delisted from the Nasdaq
SmallCap Market for failing to hold a stockholders meeting in 1999.
The high and low closing price for the Company's Common Stock since January 1998
are as follows:
Common Stock
---------------
High Low
1998
First Quarter 6-1/8 5
Second Quarter 5-3/4 4-1/16
Third Quarter 5 3
Fourth Quarter 4/3/4 1-1/16
1999
First Quarter 1-7/8 3/4
Second Quarter 1-3/4 3/4
Third Quarter 1-3/8 11/16
Fourth Quarter 25/32 13/32
2000
First Quarter (through March 28th) 2 5/8 9/16
The closing price for the common stock on March 28, 2000 was $1.20. These
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions.
As of February 29, 2000, we believe that there were approximately 2,000
beneficial holders of record of our common stock.
We have not paid dividends on our common stock since inception, and we do not
expect to pay any dividends for the foreseeable future.
<PAGE> 12
Item 6. Selected Financial Data.
TRANS GLOBAL SERVICES, INC.
SELECTED FINANCIAL DATA
(In thousands, except per share amounts)
Set forth below is selected financial data with respect to the Company for the
years ended December 31, 1999, 1998, 1997, 1996 and 1995. The selected financial
data for the years ended December 31, 1999, 1998 and 1997 have been derived from
the financial statements which appear elsewhere in this Report. The data for the
years ended December 31, 1996 and 1995 have been derived from our audited
financial statements which are not included in this report. This data should be
read in conjunction with the financial statements of the Company and the related
notes which are included elsewhere in this Report.
Statement of Operations Data 1:
- ------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C>
Year Ended December 31,
-----------------------------------------------------------
1999 1998 1997 1996 1995
Revenue $ 36,015 $67,244 $75,725 $62,594 $63,152
Net (loss)/income from
continuing operations ( 1,853) 805 1,023 (681) (4,413)
Net (loss)/income ( 1,853) 805 1,023 (681) (4,696)
Net (loss)/income per share
of common stock ( .61) .21 .27 ( .27) (8.88)
Weighted average number of
shares of common stock
outstanding 3,048 3,820 3,820 2,530 529
Balance Sheet Data:
December 31,
-----------------------------------------------------
1999 1998 1997 1996 1995
Working capital
(deficiency) $ ( 156) $ 972 $ 257 $ (755) $(2,401)
Total assets 7,365 12,597 13,942 13,100 12,763
Total liabilities 2,818 3,630 5,943 6,274 8,511
Accumulated deficit (5,813) (3,959) (4,765) (5,788) (5,106)
Stockholders' equity 4,547 8,967 7,999 6,826 4,252
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations
Years ended December 31, 1999, 1998 and 1997
Revenue from technical temporary staffing services is based on the hourly cost
of payroll plus a percentage. The success of our business will be dependent upon
our ability to generate sufficient revenue to enable it to cover our fixed costs
and other operating expenses, and to reduce our variable costs. Under our
agreements with our clients, we are required to pay our employees and pay all
applicable Federal and state withholding and payroll taxes prior to the receipt
of payment from the clients. Furthermore, the Company's payments from our
clients are based upon the hourly rate paid to the employee, without regard to
when payroll taxes are payable with respect to the employee.
</TABLE>
<PAGE> 13
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations [Continued].
Accordingly, our cost of services are greater during the first part of the year,
when Federal Social Security taxes and state unemployment and related taxes,
which are based on a specific level of compensation, are due. Thus, until we
satisfy our payroll tax obligations, we will have a lower gross margin than
after such obligations are satisfied. Furthermore, to the extent that we
experience turnover in employees, our gross margin will be adversely affected.
For example, in 2000, Social Security taxes are payable on the first $76,200 of
compensation. Once that level of compensation is paid with respect to any
employee, there is no further requirement for us to pay Social Security tax for
such employee. Since most of our employees receive compensation in excess of
that amount, our costs with respect to any employee are significantly higher
during the period when we are required to pay Social Security taxes than it is
after such taxes have been paid.
Our revenue is derived principally from the aircraft and aerospace Industries.
In 1999 revenue from these clients totaled $36 million. This reflected a
decrease of 46.4% from the revenue in 1998. In 1998, we experienced an 11%
decrease from the revenue in 1997. The decrease over the past two years can be
attributed to the slowdown in the aircraft and aerospace industries. During
1999, approximately $17 million, or 47% of our revenue, was generated from our
three largest clients, Lockheed-Martin, Bell Helicopter Textron and Boeing, and
69.5% was generated from our six largest clients. In 1998, approximately $40
million, or 60.1%, of our revenue was derived from our three largest clients,
Boeing, Lockheed-Martin and Northrop-Grumman, and 75.4% of our revenue was
generated from our five largest clients. In 1997, approximately 65% of our
revenue was derived from our three largest clients, Boeing, Lockheed-Martin and
Northrop-Grumman, and approximately 79% of such revenue was derived form our
five largest clients. The reduction in business from these clients has had a
material impact on our business. This trend has continued through the first
quarter of 2000.
Our gross margins were 8.2% for 1999, 9.2% for 1998 and 8.8% for 1997. The
decrease in the gross margin from 1998 to 1999 can be attributed to the loss of
some of our higher gross margin business. The increase in gross margin from 1997
to 1998 reflected our efforts to expand the customer base with higher gross
margin business.
Selling, general and administrative expenses, exclusive of related party
expenses and amortization of intangibles, in 1999 decreased by 18.5% from 1998
which reflected a 5.2% increase over 1997. These selling, general and
administrative expenses were $4.1 million in 1999, $5.0 million in 1998, and
$4.8 million in 1997. The decline reflects principally the effects of our cost
reduction program which was implemented in 1999 as a result of the reduced
revenue level that we experienced. We began to implement our cost reduction
program during 1998, although the effects of this program were not fully
reflected until 1999.
As a result of the decrease in both revenue and gross margin, in 1999, our gross
profit was not sufficient to cover our selling, general and administrative
expenses, resulting in an operating loss of $1.4 million.
Interest expense, which was $257,000 for 1999, decreased by 50% from $517,000 in
1998, which had decreased by 33% from $775,000 in 1997. This decrease is
attributable to both the lower financing rates payable through the Company's
credit facility with Citizens for the full year as well as the reduced borrowing
reflecting a reduced level of revenue and accounts receivable.
<PAGE> 14
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations [Continued].
Our net loss before income tax expense was $1.6 million in 1999, compared with
net income before income tax benefit of $469,000 for 1998 and $748,000 for 1997.
We recognized a tax benefit from the use of our tax loss carryforwards of
$336,000 in 1998 and $275,000 in 1997. The Company's net loss was $1.8 million,
or $.61 per share, in 1999 as compared with net income of $805,000, or $.21 per
share, for 1998, and $1.0 million, or $.27 per share, in 1997. The per share
loss for 1999 was affected by a reduction in our outstanding common stock as a
result of the transfer by Sagemark to us of 1,150,000 shares of common stock in.
We are continuing to operate at a loss, and we anticipate that we will incur a
loss for at least the first and second quarters of 2000.
Liquidity and Capital Resources
At December 31, 1999, we had a working capital deficiency of approximately
$156,000. During 1999, our operations generated cash flow of $153,000. Our
principal source of cash during 1999 was our credit facility with our
asset-based lender. Our agreement with our asset-based lender expires in April
2000, and the lender has advised us that it will not renew the agreement.
Although we are seeking alternative lending sources, we cannot give assurance
that we will be successful in obtaining an agreement with a lender, which could
severely impair our ability to conduct business. We borrow from our asset-based
lender in order to pay our payroll, and we reduce our borrowings when we are
paid by our client. Without a lending agreement, we would have difficulty in
meeting our payroll obligations.
Under our present credit agreement, we can borrow up to 85% of our qualified
accounts receivables at an interest rate of prime plus 3/4% with a maximum
availability of $3,000,000. Additional costs associated with the financing
arrangement include an unused line fee equal to 1/4 of one percent of the unused
line and a monthly fee of $2,000. The borrowings under this agreement are
secured by a security interest in all of our assets. At December 31, 1999 such
borrowings were approximately $2.1 million, as compared with $2.6 million at
December 31, 1998.
We are presently in default of three of our financial covenants in our agreement
with our asset-based lender. These covenants relate to the requirements for a
minimum tangible capital base, a ratio of cash flow to debt service and
profitability. The asset-based lender has agreed to waive these defaults through
December 31, 1999, provided that the interest rate be increased to 1 1/2% over
the prime rate and we maintain with the lender a minimum balance of $200,000.
In January 2000, we raised $1.0 million through the issuance of our 10%
subordinated promissory notes due 18 months from the date of issuance. In
connection with this financing we issued warrants to purchase 250,000 shares of
our common stock at $.35 per share to the investors and others who performed
services relating to the financing.
In accordance with our agreement relating to the issuance of the notes, we lent
$500,000 of the proceeds to i-engineering.com, Inc. for a term of 120 days at an
interest rate of 10%. In addition, we acquired an equity interest in
i-engineering.com, and issued to i-engineering.com 270,000 shares of our common
stock.
<PAGE> 15
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations [Continued].
At December 31, 2000, Arc Networks was in default on its $1.2 million promissory
note to us. This note is guaranteed by Sagemark and other companies that are not
affiliated with us. In February 2000, we agreed to extend the maturity date of
Arc Networks promissory note until April 24, 2000 in exchange for $15,000 and a
transfer by Sagemark to us of 50,000 shares of our common stock. We are required
to pay the $1.0 million notes we issued in January 2000 when we receive payment
from Arc Networks.
Our working capital is presently sufficient to meet only our present needs. Due
to both our low working capital, after giving effect to the net proceeds from
the issuance of our $1.0 million notes and the termination in April 2000 of our
credit agreement, we must increase revenue, further reduce expenses, collect on
our outstanding promissory notes from Arc and i-engineering when due and secure
additional funding in order to continue our operations. The failure to have
adequate working capital or an ongoing credit facility would impair our ability
to operate.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk.
Not Applicable.
Item 8. Financial Statements.
The Financial Statements begin on Page F-1.
Item 9. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure.
None
PART III
The information required by Part III is incorporated by reference from our
definitive proxy statement for our 2000 Annual Meeting of Stockholders to be
filed with the Securities and Exchange Commission not later than April 30, 2000.
<PAGE> 16
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) Financial Statements.
The following financial statements are filed as part of this Form 10-K:
Trans Global Services, Inc. and Subsidiaries
Report of Independent Certified Public Accountants
Consolidated Balance Sheets as of December 31, 1999 and 1998
Consolidated Statements of Operations for the years ended December 31, 1999,
1998, and 1997
Consolidated Statements of Changes in Stockholders' Equity for the years ended
December 31, 1999, 1998, and 1997
Consolidated Statements of Cash Flows for the years ended December 31, 1999,
1998, and 1997
Notes to Financial Statements
(b) Financial Statement Schedules.
None
(c) Exhibits
3.1-(1) Restated Certificate of Incorporation.
3.2-(2) By-Laws.
10.1. Employment agreement dated October 15, 1997, between the Company and
Joseph G. Sicinski, as amended.
10.2 (4) 1995 Long-Term Incentive Plan.
10.4 -(5) 1998 Long-Term Incentive Plan
10.4 (2) Form of Series A Common Stock Purchase Warrants.
10.6 (2) Form of Series D common Stock Purchase Warrants.
10.7 (6) Credit Agreement dated April 23, 1998 between the Company and Citizens
Business Credit Company.
10.8 Restated Agreement between Trans Global Services, Inc. and
i-engineering.com
<PAGE> 17
Part IV [Continued]
11.1 Computation of (loss)income per share.
21.1(7 ) Subsidiaries of the Registrant
24.1 Consent of Moore Stephens, P.C.
25.1 Powers of attorney (See Signature Page).
27.1 Financial data schedule.
1. Filed as an exhibit to the Company's registration statement on Form S-1,
File No. 333-14289, and incorporated herein by reference.
2. Filed as an exhibit to the Company's Annual Report on Form 10-KSB for the
year ended December 31, 1995 and incorporated herein by reference.
3. Filed as an exhibit to the Company's definitive proxy material for its
special meeting of stockholders for November 1996 and incorporated herein
by reference.
4. Filed as an exhibit to the Company's definitive proxy material for its annual
meeting of stockholders for August 1998 and incorporated herein by reference.
5. Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1998 and incorporated herein by reference.
6. Filed as an exhibit to the Company's Annual Report on Form 10-K for the
year ended December 31, 1996 and incorporated herein by reference.
(d) Reports on Form 8-K
None
<PAGE> 18
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
as amended, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
TRANS GLOBAL SERVICES, INC.
Date: March 30, 2000 By:
Joseph G. Sicinski
President, Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed by the following persons on behalf of the Company
and in the capacities and on the dates indicated. Each person whose signature
appears below hereby authorizes Joseph G. Sicinski as his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities to sign any
and all amendments to this report, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission.
Signature Title Date
Joseph G. Sicinski President, Chief Executive March 30, 2000
Officer and Director
(Principal Executive Officer)
Glen R. Charles Chief Financial Officer (Principal March 30, 2000
Financial and Accounting Officer)
and Director
Edward D. Bright Director March 30, 2000
James Conway Director March 30, 2000
<PAGE> 19
INDEX TO FINANCIAL STATEMENTS
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES PAGE
Report of Independent Certified Public Accounts
Consolidated Balance Sheets as of December 31, 1999 and 1998 F-3
Consolidated Statements of Operations for the years ended
December 31, 1999, 1998 and 1997 F-5
Consolidated Statements of Changes in Stockholders' Equity
for the years ended December 31, 1999, 1998,and 1997 F-7
Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997 F-10
Notes to Consolidated Financial Statements F-13
<PAGE> 20
INDEPENDENT AUDITOR'S REPORT
To the Stockholders and Board of Directors of Trans Global Services, Inc.
Hauppauge, New York
We have audited the accompanying consolidated balance sheets of Trans Global
Services, Inc. and its subsidiaries as of December 31, 1999 and 1998, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 1999. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Trans
Global Services, Inc. and its subsidiaries as of December 31, 1999 and 1998, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 1999, in conformity with generally accepted
accounting principles.
MOORE STEPHENS, P.C.
Certified Public Accountants
Cranford, New Jersey
February 11, 2000
<PAGE> 21
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
1 9 9 9 1 9 9 8
<S> <C> <C>
Assets:
Current Assets:
Cash $ 43,141 $ 234,917
Accounts Receivable - Net 2,518,343 3,922,843
Loans Receivable - Officer -0- 5,000
Deferred Tax Asset-Current Portion -0- 144,000
Deferred Loan Costs -0- 82,266
Prepaid Expenses and Other Current Assets 100,865 214,323
---------- ----------
Total Current Assets 2,662,349 4,603,349
---------- ---------
Property and Equipment - Net 162,820 171,123
---------- ---------
Other Assets:
Due from Affiliates* 1,171,673 1,615,035
Customer Lists 2,163,655 2,388,607
Goodwill - Net 678,392 726,968
Deferred Acquisition Costs -0- 235,560
Deferred Tax Asset-Non Current 490,000 578,000
Other Assets 36,373 41,407
Investment in Preferred Stock of Affiliate -0- 2,237,230
---------- --------
Total Other Assets 4,540,093 7,822,807
Total Assets $ 7,365,262 12,597,279
================ ==========
See Notes to Consolidated Financial Statements.
</TABLE>
* Arc Networks was not an affiliate at 12/31/99.
F-3
<PAGE> 22
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
1 9 9 9 1 9 9 8
<S> <C> <C>
Liabilities and Stockholders' Equity:
Current Liabilities:
Accounts Payable and Accrued Expenses $ 402,735 $ 314,625
Accrued Income Taxes Payable -0- 13,496
Accrued Payroll and Related Taxes and Expenses 359,295 528,574
Loans Payable - Asset-Based Lender 2,056,372 2,647,244
Note Payable - Other -0- 126,767
--------- --------
Total Current Liabilities 2,818,402 3,630,706
--------- --------
Commitments and Contingencies [10] -- --
--------- --------
Stockholders' Equity:
Common Stock $.01 Par Value, 25,000,000
Shares authorized. 1999: 3,819,716 issued
2,669,716 outstanding. 1998: 3,819,716
issued and outstanding 38,197 38,197
Capital in Excess of Par Value 12,887,851 12,887,851
Accumulated Deficit (5,812,506) (3,959,475)
---------- ---------
7,113,542 8,966,573
---------- --------
Less Treasury Stock, at cost
1,150,000 shares - 1999 (2,566,682) -0-
---------- --------
Total Stockholders' Equity 4,546,860 8,966,573
Total Liabilities and Stockholders' Equity $ 7,365,262 $12,597,279
=========== ===========
See Notes to Consolidated Financial Statements.
</TABLE>
F-4
<PAGE> 23
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Y e a r s e n d e d
D e c e m b e r 31,
1 9 9 9 1 9 9 8 1 9 9 7
<S> <C> <C> <C>
Revenue $ 36,015,273 $ 67,243,713 $ 75,724,759
Cost of Services Provided 33,048,393 61,023,970 69,077,544
---------- ---------- ----------
Gross Profit 2,966,880 6,219,743 6,647,215
---------- ---------- ----------
Operating Expenses:
Selling, General and
Administrative Expenses 4,109,663 5,040,121 4,791,674
Related Party Administrative Expenses -0- 55,000 120,000
Amortization - Intangibles 273,528 273,537 333,995
--------- --------- -------
Total Operating Expenses 4,383,191 5,368,658 5,245,669
--------- --------- ---------
Operating (Loss) Profit (1,416,311) 851,085 1,401,546
--------- --------- ---------
Other Income (Expenses):
Interest Expense (257,039) (516,698) (775,437)
Related Party-Interest Income 119,708 130,000 130,000
Other (Expense) Income ( 67,389) 4,611 ( 8,591)
--------- -------- -------
Total Other Expenses - Net (204,720) (382,087) (654,028)
--------- -------- --------
(Loss)Income before Income
Tax (Expense) Benefit (1,621,031) 468,998 747,518
Income Tax (Expense) Benefit ( 232,000) 336,263 275,363
--------- -------- ---------
Net (Loss) Income $(1,853,031) $ 805,261 $1,022,881
========= =========== ===========
Basic (Loss) Earnings Per Share $ (.61) $ .21 $ .27
Weighted Average Number of Shares 3,047,798 3,819,716 3,819,574
Diluted (Loss) Earnings Per Share:
Incremental Shares from Assumed
Conversion of Options and Warrants -0- 11,500 69,415
--------- ---------- ----------
Weighted Average Number of
Shares Assuming Dilution 3,047,798 3,831,216 3,888,989
Diluted (Loss) Earnings Per Share $ (.61) $ .21 $ .26
See Notes to Consolidated Financial Statements
</TABLE>
F-5
<PAGE> 24
Trans Global Services, Inc.
Consolidated Statement of Stockholders' Equity
<TABLE>
<CAPTION>
Shares Amounts
<S> <C> <C>
Common Stock $.01 Par Value Authorized
50,000,000 shares at December 31, 1997 and
25,000,000 at December 31, 1998 and 1999
Balance - December 31, 1996 3,816,883 38,168
Exercise of Common Stock Options 2,833 29
----------- --------
Balance - December 31, 1997 3,819,716 $38,197
--------- -------
Balance - December 31, 1998 3,819,716 $38,197
----------- -------
Balance December 31, 1999 3,819,716 $38,197
=========== =======
Capital in Excess of Par Value
Balance - December 31,1996 12,879,380
Exercise of Common Stock Options 8,471
----------
Balance - December 31, 1997 12,887,851
----------
Balance - December 31, 1998 12,887,851
----------
Balance - December 31, 1999 12,887,851
==========
Accumulated Deficit
Balance - December 31, 1996 (5,787,617)
Net Income 1,022,881
---------
Balance - December 31, 1997 $(4,764,736)
Net Income 805,261
-----------
Balance - December 31, 1998 $(3,959,475)
Net (Loss) (1,853,031)
-----------
Balance - December 31, 1999 $(5,812,506)
===========
Treasury Stock
Purchase of treasury stock - 1999 1,150,000 $(2,566,682)
--------- -----------
Balance December 31, 1999 1,150,000 $(2,566,682)
========= ===========
See Notes to Consolidated Financial Statements
</TABLE>
F-6
<PAGE> 25
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION> AMOUNT
<S> <C>
Deferred Charges
Balance - December 31, 1996 ( 303,473)
Amortization of Deferred Consulting Costs 140,872
--------
Balance - December 31, 1997 ( 162,601)
Amortization of Deferred Consulting Costs 162,601
--------
Balance - December 31, 1998 -0-
--------
Balance - December 31, 1999 -0-
=========
Total Stockholders' Equity
Balance - December 31, 1996 6,826,458
Exercise of Common Stock Options 8,500
Amortization of Deferred Consulting Costs 140,872
Net Income for the Year Ended December 31, 1997 1,022,881
--------
Balance - December 31, 1997 $ 7,998,711
Amortization of deferred Consulting Costs 162,601
Net Income for the Year Ended December 31, 1998 805,261
----------
Balance - December 31, 1998 $ 8,966,573
Purchase of treasury stock (2,566,682)
Net Loss (1,853,031)
----------
Balance - December 31, 1999 $ 4,546,860
==========
</TABLE>
See Notes to Consolidated Financial Statements
F-7
<PAGE> 26
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE> Y e a r s e n d e d
<CAPTION> D e c e m b e r 31,
1 9 9 9 1 9 9 8 1 9 9 7
<S> <C> <C> <C>
Operating Activities:
Net (Loss) Income $(1,853,031) $ 805,261 $1,022,881
Adjustments to Reconcile Net (Loss) Income
to Net Cash Provided By (Used in)
Operations:
Depreciation and Amortization 345,921 393,364 385,351
Charges from Option Exercise -0- 162,601 140,872
Deferred Acquisition Costs 235,560 -0- -0-
Deferred Offering Costs -0- -0- 320,245
Deferred Loan Costs 82,266 -0- -0-
Deferred Income Taxes 232,000 (367,000) (355,000)
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Assets:
Accounts Receivable-Net 1,404,500 1,547,510 (280,297)
Loan Receivable - Officer 5,000 42,500 ( 5,000)
Prepaid Expenses and Other
Current Assets 113,458 ( 37,970) 53,721
Increase (Decrease) in Liabilities:
Accounts Payable and Accrued
Expenses 88,110 ( 276,989) 308,258
Accrued Payroll and Related
Taxes and Expenses (169,279) ( 887,560) (367,927)
Accrued Payroll Tax Penalties -0- -0- ( 77,000)
Accrued Income Taxes Payable ( 13,496) ( 62,861) 76,357
Accrued Voluntary Settlement Agreement -0- ( 150,000) (150,000)
--------- ---------- --------
Total Adjustments 2,324,040 363,595 49,580
---------- --------- ----------
Net Cash - Operating Activities 471,009 1,168,856 1,072,461
---------- --------- ----------
Forward
See Notes to Consolidated Financial Statements.
</TABLE>
F-8
<PAGE> 27
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION> Y e a r s e n d e d
D e c e m b e r 31,
1 9 9 9 1 9 9 8 1 9 9 7
<S> <C> <C> <C>
Net Cash -
Operating Activities Forwarded $ 471,009 $1,168,856 $ 1,072,461
Investing Activities:
Capital Expenditures (64,090) (55,307) (171,288)
Deferred Acquisition Costs -0- (74,915) (160,645)
Repayments from Affiliates 117,410 60,920 -0-
Advances to Affiliates -0- -0- (167,453)
Other, net 5,034 1,825 ( 20,337)
Investments in Preferred Stock
of Affiliate ( 3,500) (136,500) -0-
-------- -------- --------
Net Cash - Investing Activities 54,854 (203,977) (519,723)
---------- ----------- ---------
Financing Activities:
Net Payments to
Asset-Based Lender ( 590,872) (923,584) (120,047)
Deferred Offering Costs -0- -0- (168,938)
Deferred Loan Costs -0- 123,399 -0-
Exercise of Stock Options -0- -0- 8,500
Repayment of Note Payable ( 126,767) (11,463) -0-
--------- --------- ----------
Net Cash -
Financing Activities ( 717,639) (1,058,446) (280,485)
Net(Decrease) Increase in Cash and
Cash Equivalents ( 191,776) ( 93,567) 272,253
Cash and Cash Equivalents
- Beginning of Year 234,917 328,484 56,231
Cash and Cash Equivalents
- End of Year $ 43,141 $ 234,917 $ 328,484
=========== =========== ===========
Supplemental Disclosures of Cash
Flow Information:
Interest $ 257,039 $ 516,698 $ 775,437
Income Taxes $ -0- $ 68,936 $ -0-
Supplementary Disclosure of Non Cash Investing and Financing Activities during
the twelve months ended December 31, 1999.
On May 3, 1999, the Company acquired 1,150,000 shares of Common Stock in
exchange for the Investment in Preferred Stock of an Affiliate, which was held
by the Company in the amount of $2,240,730, and a reduction in Due from
Affiliates in the amount of $325,952.
See Notes to Consolidated Financial Statements.
</TABLE>
F-9
<PAGE> 28
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
[1] Basis of Presentation
Trans Global Services, Inc. (the Company or Trans Global"), a Delaware
corporation, operates through two subsidiaries, Avionics Research Holdings,
Inc., formerly known as ARC Acquisition Group, Inc.["Holdings"] and Resource
Management International, Inc. ["RMI"]. The Company is engaged in providing
technical temporary staffing services throughout the United States, principally
in the aerospace industry.
[2] Summary of Significant Accounting Policies
Principles of Consolidation - The consolidated financial statements include the
accounts of Trans Global Services, Inc. and its subsidiaries. All intercompany
transactions have been eliminated in consolidation.
Cash and Cash Equivalents - The Company considers all highly liquid instruments
purchased with a maturity of three months or less to be cash equivalents. There
were no cash equivalents at December 31, 1999 and 1998.
Prepaid Expenses and Other Current Assets - Prepaid expenses primarily consist
of approximately $93,000 and $172,000 of prepaid insurance at December 31, 1999
and 1998, respectively.
Property and Equipment - Property and Equipment are stated at cost less
accumulated depreciation and amortization. Depreciation and amortization are
computed using straight-line and accelerated methods over the estimated useful
lives of the respective assets. Amortization of leasehold improvements is
provided using the straight-line method over the term of the respective lease or
the useful life of the asset, whichever period is less. Estimated useful lives
range from 3 to 5 years as follows:
Furniture and Fixtures 3 - 5 years
Leasehold Improvements 5 years
Equipment 3 - 5 years
Expenditures for maintenance and repairs, which do not improve or extend the
life of the respective assets are expensed currently while major repairs are
capitalized.
Offering Costs- Deferred offering costs of $ 169,000 were incurred in 1997 with
respect to a proposed public offering which was not completed in 1997. These
costs were expensed to selling, general and administrative expenses in 1997.
F-10
<PAGE> 29
TRANS GLOBAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
Deferred Acquisition Costs - Deferred acquisition costs represent legal,
accounting and other costs associated with the planned business acquisitions by
the Company. Since these acquisitions were not completed those costs were
expensed at December 31, 1999.
Revenue Recognition - The Company records revenue as services are provided.
Stock Options and Similar Equity Instruments - On January 1, 1996, the Company
adopted the disclosure requirements of Statement of Financial Accounting
Standards ["SFAS"] No. 123, "Accounting for Stock-Based Compensation," for stock
options and similar equity instruments [collectively, "Options"] issued to
employees, however, the Company will continue to apply the intrinsic value based
method of accounting for options issued to employees prescribed by Accounting
Principles Board ["APB"] Opinion No. 25, "Accounting for Stock Issued to
Employees" rather than the fair value based method of accounting prescribed by
SFAS No.123. SFAS No. 123 also applies to transactions in which an entity issues
its equity instruments to acquire goods or services from non- employees. Those
transactions must be accounted for based on the fair value of the consideration
received or the fair value of the equity instruments issued, whichever is more
reliably measurable.
Income Taxes - The Company accounts for income taxes under SFAS No. 109,
"Accounting for Income Taxes." Under SFAS No. 109, the asset and liability
method is used to determine deferred tax assets and liabilities based on
differences between financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse.
Earnings Per Share- Earnings per share of Common Stock reflects the weighted
average number of shares outstanding for each year. On June 20, 1997, the
Company effected a one-for-six reverse split in its common stock. All share and
per share information in these financial statements gives effect, retroactively,
to such reverse split.
The Financial Accounting Standards Board has issued SFAS No.128, "Earnings Per
Share," which is effective for financial statements issued for periods ending
after December 15, 1997. Accordingly, earnings per share data in the financial
have been calculated in accordance with SFAS No. 128.
F-11
<PAGE> 30
TRANS GLOBAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
SFAS No. 128 supercedes APB Opinion No.15, "Earnings Per Share," and replaces
its primary earnings per share with a new basic earnings per share representing
the amount of earnings for the period available to each share of common stock
outstanding during the reporting period. SFAS No.128 also requires a dual
presentation of basic and diluted earnings per share on the face of the
statement of operations for all companies with complex capital structures.
Diluted earnings per share reflects the amount of earnings for the period
available to each share of common stock outstanding during the reporting period,
while giving effect to all dilutive potential shares of common stock that were
outstanding during the period, such as common stock that could result from the
potential exercise or conversion of securities into common stock.
The computation of diluted earnings per share does not assume conversion,
exercise or contingent issuance of securities that would have an antidulutive
effect on earnings per share (i.e. increasing earnings per share or reducing
loss per share). The dilutive effect of outstanding options and warrants and
their equivalents are reflected in dilutive earnings per share by the
application of the treasury stock method which recognizes the use of proceeds
that could be obtained upon the exercise of options and warrants in computing
diluted earnings per share. It assumes that any proceeds would be used to
purchase common stock at the average market price during the period. Options and
warrants will have a dilutive effect only when the average market price of the
common stock during the period exceeds the exercise price of the options or
warrants.
Securities that could potentially dilute earnings per share in the future are
disclosed in Notes 13 and 14.
Impairment - The Company reviews certain long-lived assets, including goodwill
and other intangibles for impairment whenever events or changes in circumstances
indicate that the carrying amount of such assets may not be recoverable pursuant
to guidance established in SFAS No. 121, "Accounting for the impairment of
long-lived assets and for long-lived assets to be disposed of." [See Note 5]
Estimates - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
F-12
<PAGE> 31
TRANS GLOBAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
[2] Summary of Significant Accounting Policies [Continued]
Concentration of Credit Risk - The Company extends credit to customers which
results in accounts receivable arising from its normal business activities. The
Company does not require collateral or other security to support financial
instruments subject to credit risk. It routinely assesses the financial strength
of its customers and believes that its accounts receivable credit risk exposure
is limited. Such estimate of the financial strength of such customers may be
subject to change in the near term. For each of the years ended December 31,
1999, and 1998, a significant portion of the Company's receivables were derived
from three customers [See Note 12].
Due to the nature of its operations, the Company deposits, on a monthly basis,
amounts in excess of the federally insured limit in financial institutions for
the payment of payroll costs. Such amounts are reduced below the federally
insured limit as payroll checks are presented for payment. Such reduction
generally occurs over three to four business days. At December 31, 1999, the
Company had amounts on deposit with two financial institutions which exceeded
the federally insured limit by approximately $65,000. The Company has not
experienced any losses and believes it is not exposed to any significant credit
risk from cash and cash equivalents.
[3] Accounts Receivable and Loan Payable - Asset Based Lender
Receivables are shown net of an allowance for doubtful accounts of $62,500 at
December 31, 1999 and 1998. The Company is presently in its final stage of its
two-year revolving credit agreement with an asset-based lender. Pursuant to the
credit agreement, the Company can borrow up to 85% of its qualified accounts
receivables at an interest rate of prime plus 3/4% with a maximum availability
of $3,000,000. Additional costs associated with the financing arrangement
include an unused line fee equal to 1/4 of one percent of the unused line and a
monthly fee of $2,000. The borrowings are secured by a security interest in all
of the Company's assets. At December 31, 1999 and 1998, such borrowings were
approximately $2.1 million and $2.6 million, respectively. At December 31, 1999,
the Company was in default of three of its financial covenants in its credit
agreement. These covenants relate to a minimum tangible capital base, a ratio of
cash flow to debt service and profitability. The asset-based lender has agreed
to waive these defaults as of December 31, 1999, provided that the interest rate
is increased to 1 1/2% over the prime rate and a minimum balance of $200,000 is
maintained. The bank's prime rate was 8 1/4% at December 31, 1999. The
asset-based lender has advised the Company that it will not renew the agreement
when it expires on April 23, 2000. The Company is presently negotiating with
several asset-based lenders, although it has not yet reached an agreement with
any successor lender.
F-13
<PAGE> 32
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
[4] Property and Equipment
Property and equipment at December 31, 1999 and 1998 is as follows:
<TABLE>
<S> <C> <C>
1 9 9 9 1 9 9 8
Equipment $ 454,214 $ 393,873
Furniture and Fixtures 197,107 196,071
Leasehold Improvements 100,510 97,797
--------- ---------
Totals - At Cost 751,831 687,741
Less: Accumulated Depreciation 589,011 516,618
--------- ---------
Totals $ 162,820 $ 171,123
</TABLE>
Depreciation expense charged to operations was $72,393 in 1999, and $78,694 in
1998 and $51,359 in 1997.
[5] Intangibles
The Company acquired its subsidiaries during 1994. As part of the purchase
agreements, the Company acquired customer lists, a restrictive covenant and
goodwill. The intangible assets acquired and the related amortization on the
straight-line method are summarized as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Accumulated Amortization Net of Amortization
Life December 31, December 31,
Years Cost 1999 1998 1999 1998
Customer Lists 15 $3,374,477 $1,210,822 $ 985,870 $2,163,655 $2,388,607
Goodwill 20 $ 971,623 $ 293,231 $ 244,655 $ 678,392 $ 726,968
</TABLE>
Goodwill represents the excess of the acquisition costs over the fair value of
net assets of business acquired. Amortization expense is calculated on a
straight-line basis over twenty years. Other intangibles are Customer Lists and
Covenants Not-to-Compete. Customer Lists represent listings of customers
obtained through acquisitions to which the Company can market its services.
Customer Lists are recorded at cost and are amortized on a straight- line basis
over the estimated useful life of fifteen years. The Company reviews Goodwill
and other intangibles to assess recoverability from future operations using
undiscounted cash flows. If the review indicates impairment, the Company will
incur a charge against operations to the extent that carrying value exceeds fair
value. Management has determined that fair value exceeds carrying value as of
December 31, 1999.
F-14
<PAGE> 33
TRANS GLOBAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
[6] Related Party Transactions
The Company had a management services agreement with a wholly-owned subsidiary
of The Sagemark Companies Ltd., then known as Consolidated Technology Group Ltd.
(Sagemark)pursuant to which the Company paid a monthly fee of $10,000 through
January 1998. Commencing February 1998 such fee was increased to $15,000. The
Company terminated the management services agreement effective April 30, 1998.
In July 1997, a subsidiary of Sagemark sold 258,333 shares of common stock to
the president of the Company for $1.625 per share, which was the market price on
the date of sale. The President issued his five-year non-recourse promissory
note in payment of the shares. In August 1997, a Sagemark subsidiary transferred
to the President a warrant to purchase 83,334 shares of common stock at $7.50
per share. The Sagemark subsidiary and the president also canceled, ab initio,
an option granted by the subsidiary to the president to purchase 133,333 shares
of common stock from at $1.50 per share.
The Company has from time to time made advances to three subsidiaries of
Sagemark [the "Sagemark Subsidiaries"] which are not owned or controlled by the
Company. The aggregate amount of such advances outstanding on December 31,1999
and 1998 was $1,172,000 and $1,615,000, respectively. The Company has recorded
interest income from these subsidiaries of $120,000, $130,000 and $130,000 for
the three years ended December 31, 1999, 1998,and 1997 respectively.
The advances to the Sagemark Subsidiaries include an obligation from Arc
Networks, Inc., (ARC Networks) which is represented by Arc Networks' 10%
installment promissory note due August 31, 2003 in the principal amount of
$1,216,673 (the "Arc Note"), and an obligation from Sagemark with respect to
$325,952. On December 31, 1999, Arc Networks was in default on the Arc Note. The
Arc Note is guaranteed by Sagemark and others. In February 2000, the Company
agreed to extend the maturity date of the Arc Note until April 24, 2000 in
exchange for $15,000 and a transfer to the Company of 50,000 shares of common
stock from Sagemark. At December 31, 1999, Arc Networks was no longer an
affiliate of the Company.
On May 3, 1999, Sagemark, through a subsidiary, transferred 1,150,000 shares of
the Company's common stock to the Company in consideration of the cancellation
of shares of Sagemarks Series G 2% Cumulative Redeemable Preferred Stock owned
by the Company, including accrued dividends, and certain other obligations due
to the Company. The transfer of the 1,150,000 shares to the Company reduced
Sagemark's holdings in the Company to 379,994 shares, or approximately 14.2% of
its outstanding common stock. Prior to the transfer, Sagemark owned 40.1% of the
Company's outstanding common stock. The effect of this transaction is the
elimination of the investment in preferred stock of affiliate and the reduction
of the amount due from affiliates by $325,952, and an increase in Treasury Stock
of approximately $2.6 million, which resulted in a reduction in stockholders
equity for the same amount.
F- 15
<PAGE> 34
TRANS GLOBAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENT
[7] Note Payable - Other
At December 31, 1998, a note payable to former stockholders of an acquired
subsidiary due September 1996 with interest at 7% remained outstanding. The
payment of principal and interest on this note was suspended until the outcome
of the Government Printing Office contingency was resolved. The note was paid in
full by December 31, 1999.
[8] Income Taxes
Deferred income taxes reflect the net tax effects of (a) temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes, and (b) operating loss
carryforwards. The tax effects of significant items comprising the Company's net
deferred tax asset as of December 31, 1999 and 1998 are as follows:
December 31,
1999 1998
<TABLE>
<S> <C> <C>
Deferred Tax Liabilities $ -- $ --
-------- ---------
Deferred Tax Assets:
Allowance for Doubtful Accounts not
Currently Deductible 25,000 25,000
Net Operating Loss Carryforwards 1,748,000 1,296,000
---------- ---------
Totals 1,773,000 1,321,000
Valuation Allowance 1,283,000 599,000
--------- ---------
Net Deferred Tax Asset 490,000 722,000
Net Deferred Tax Asset - Current Portion -0- 144,000
--------- ---------
Net Deferred Tax Asset - Non Current $ 490,000 $ 578,000
</TABLE>
The Company has recorded a net deferred tax asset of $490,000 at December 31,
1999. The realization of the net deferred tax asset is dependent on the Company
generating sufficient taxable income in future years. Although realization is
not assured, management believes it is more likely than not that all of the net
deferred tax asset will be realized. The amount of the net deferred tax asset
considered realizable, however, could be reduced in the near term if estimates
of future taxable income are reduced.
The Company's deferred tax asset valuation allowance was $1,283,000 and $599,000
as of December 31, 1999 and 1998, respectively. The valuation allowance
represents the tax effects of net operating loss carryforwards and other
temporary differences which the Company does not expect to realize. The increase
(decrease) in the valuation allowance amounted to $684,000 and $(553,000) for
the years ended December 31, 1999 and 1998, respectively.
F-16
<PAGE> 35
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
The current and deferred income tax components of the provision [benefit] for
income taxes consist of the following:
Years ended December 31,
1999 1998 1997
----- ---- -----
<TABLE>
<S> <C> <C> <C>
Current:
Federal $ -0- $ 149,009 $ 227,080
State -0- 49,965 79,637
Tax Benefit of Net Operating
Loss Carryforwards -0- (168,237) (227,080)
-------- ------- -------
Totals $ -0- $ 30,737 $ 79,637
Deferred:
Federal $ 181,424 $(286,994) $ (277,610)
State 50,576 ( 80,006) ( 77,390)
--------- --------- --------
Totals $ 232,000 $(367,000) $ (355,000)
-------- ---------- --------
Totals $ 232,000 $(336,263) $ (275,363)
========== ========== ========
</TABLE>
A reconciliation of the federal statutory rate to the Company's effective tax
rate is as follows:
Years Ended December 31,
1999 1998 1997
<TABLE> ---- ---- ----
<S> <C> <C> <C>
Federal Statutory Rate (34%) 34% 34%
State Income Taxes, net of
federal tax ( 7%) 7% 7%
Federal tax benefit of net operating
loss carryforwards -0- (32%) (30%)
(Decrease )Increase in valuation allowance 55% (81%) (48%)
----- ----- -----
Effective tax rate 14% (72%) (37%)
===== ===== =====
The following summarizes the operating loss carryforwards by year of expiration:
Amount Expiration Date
$ 80,000 December 31, 2009
2,163,000 December 31, 2010
189,000 December 31, 2011
438,000 December 31, 2012
1,500,000 December 31, 2014
---------
$4,370,000
==========
</TABLE>
F-17
<PAGE> 36
TRANS GLOBAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
[9] Commitments
The Company leases office space and several office machines under operating
leases which expire in 2002. The following is an analysis of future minimum
lease commitments as of December 31, 1999:
1999 202,802
2000 174,066
2001 155,660
2002 14,955
2003 -0-
--------
Total $ 547,483
Rent expense amounted to $202,802, $225,198 and $211,503 for the years ended
December 31, 1999, 1998 and 1997, respectively.
[10] Contingencies
In November 1997, an action was commenced in the Supreme Court of the State of
New York, County of Suffolk, by Ralph Corace against RMI seeking damages of
approximately $1.1 million for an alleged breach of contract by us. Mr. Corace
was the president of Job Shop Technical Services, Inc., from which we, through
one of our present subsidiaries, purchased assets in November 1994. We believe
that the action is without merit, we are contesting this matter and we have
filed counterclaims against Mr. Corace.
In December 1999, an action was commenced in the Supreme Court of the State of
New York, County of Suffolk, by Vero International, Inc. against Trans Global
Services, Inc. seeking damages of approximately $45,000 for goods sold and
delivered for an agreed price and for reasonable value. We believe that we have
valid defenses to the claims.
Due to the uncertainties in the legal process it is reasonably possible that
management's view of the outcome of the above matters may change in the near
term.
[11] Fair Value of Financial Instruments
Effective December 31, 1995, the Company adopted SFAS No. 107, which requires
disclosing fair value to the extent practicable for financial instruments which
are recognized or unrecognized in the balance sheet. The fair value of the
financial instruments disclosed therein is not necessarily representative of the
amount that could be realized or settled, nor does the fair value amount
consider the tax consequences or realization or settlement. The following table
summarizes financial instruments by individual balance sheet accounts as of
December 31, 1999 and 1998:
Carrying Amount Fair Value
December 31, December 31,
1 9 9 9 1 9 9 8 1 9 9 9 1 9 9 8
<TABLE>
<S> <C> <C> <C> <C>
Investment in Preferred Stock
of Affiliate $ -0- $2,237,230 $ -0- $2,237,230
Debt Maturing Within One Year $2,056,372 $2,774,011 $2,056,372 $2,774,011
- ---------------------------
</TABLE>
F-18
<PAGE> 37
TRANS GLOBAL SERVICES,INC.
NOTES TO FINANCIAL STATEMENTS
For certain financial instruments, including cash and cash equivalents, trade
receivables and payables, and short-term debt, it was assumed that the carrying
amount approximated fair value because of the near term maturities of such
obligations. The investment in preferred stock of affiliate is based upon the
fair value of the guarantee of fair value issued by such affiliate.
[12] Economic Dependency
In 1999, three customers accounted for revenue of approximately $17 million, or
47% of the Company's total revenue. Accounts receivable of $670,000 were due
from these customers collectively at December 31, 1999. In 1998, three customers
accounted for approximately $40 million, or 60% of the Company's total revenue.
Accounts receivable of $1,720,000 were due from these customers collectively at
December 31, 1998. In 1997, three customers of the Company, accounted for
approximately $48 million, or 63% of revenue. Accounts receivable of $2,700,000
were due from these customers collectively at December 31, 1997.
Revenues for the twelve
months ended December 31
<TABLE>
<S> <C> <C> <C>
1999 1998 1997
Lockheed-Martin 7,300,000 12,200,000 13,200,000
Bell Helicopter Textron 4,900,000
Boeing 4,600,000 16,300,000 19,600,000
Northrop Grumman 11,600,000 15,100,000
--------- ---------- ----------
16,800,000 40,100,000 47,900,000
</TABLE>
[13] Stockholders Equity
At December 31, 1999, the authorized capital stock of the Company consisted of
5,000,000 shares of preferred stock, par value $.01 per share, and 25,000,000
shares of common stock, par value $.01 per share. The Board of Directors has the
right to create and to define the rights, preferences and privileges of the
holders of one or more series of Preferred Stock.
At December 31, 1999, 1998 and 1997 there were no shares of any series of
preferred stock outstanding.
F-19
<PAGE> 38
TRANS GLOBAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
At December 31, 1999, there were outstanding warrants to purchase 892,312 shares
of Common Stock at prices ranging from $7.50 - $21.00 per share.
A summary of warrant activity is as follows:
1999 1998 1997
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Outstanding-Beginning
of Years 901,485 $ 9.07 913,359 $9.36 1,137,434 $13.92
Granted or Sold
during the years -- -- -- -- -- --
Cancelled during
the years -- -- -- -- -- --
Expired during
the years 9,173 50.70 11,874 30.95 224,075 32.51
Exercised during
the years -- -- -- -- -- --
Outstanding-
End of Years 892,312 8.64 901,485 9.07 913,359 9.36
======= ==== ========= ===== ======= =====
Exercisable -
End of Years 816,662 7.50 825,835 7.98 837,109 8.31
======= ==== ========= ===== ======= =====
</TABLE>
The following table summarizes warrant information as of December 31, 1999
Weighted Avg. Weighted Avg.
Range of Exercise Price Remaining Exercise
Shares Contractual Life Price
<TABLE>
<S> <C> <C> <C>
7.50 816,662 1.3 Years 7.50
21.00 75,650 (A) 21.00
-------
892,312
</TABLE>
(A) These warrants are exercisable immediately upon issuance and expire 45 days
after a registration statement covering the shares of Common Stock is declared
effective by the Securities and Exchange Commission.
[14] Stock Option Plans
The Company has four stock option plans. In 1993, the Company adopted the 1993
Stock Incentive Plan [the "1993 Plan"], covering an aggregate of 25,000 shares
of Common Stock. In January 1995, the board of directors adopted the 1995 Stock
F-20
<PAGE> 39
TRANS GLOBAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
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. 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 and November 1996, the board of directors and 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 415,388 shares. The
number of shares of common stock subject to the 1995 Incentive Plan
automatically increases by 5% of any shares of Common Stock issued by the
Company other than shares issued pursuant to the 1995 Incentive Plan.
In October 1997, the committee granted incentive stock options to purchase an
aggregate of 216,000 shares of common stock at $3.875 per share, being the fair
market value on the date of grant. Such options were granted to Mr. Joseph G.
Sicinski, president of the Company, who received an option to purchase 90,000
shares of common stock, Mr. Lewis S. Schiller, chairman of the board of the
Company, at that time, who received an option to purchase 25,000 shares of
common stock, one other officer, who received an option to purchase 20,000
shares of common stock and twenty other employees who received options to
purchase an aggregate of 81,000 shares of common stock. All options have a 5
year term.
During 1998, the Company adopted the 1998 Long-Term Incentive Plan (the "1998
Plan"), covering 350,000 shares of common stock. In June 1998, the committee
granted stock options to purchase an aggregate of 215,000 shares of common stock
at $4.00 per share, being the fair market value on the date of grant. In
December 1998, these options were repriced to $1.25 per share of common stock,
the fair market value on that date. All options are fully vested as of December
31, 1998. Such options were granted to Mr. Joseph G. Sicinski, president and CEO
of the Company, who received an option to purchase 60,000 shares of common
stock, two other officers who received options to purchase an aggregate of
40,000 shares of common stock, the chairman of the board received options to
purchase 20,000 shares of common stock, the three other directors of the Company
each received options to purchase 10,000 shares of common stock and seven other
employees who received options to purchase an aggregate of 65,000 shares of
common stock. All options have a five year term.
F-21
<PAGE> 40
TRANS GLOBAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
In June 1999, the committee granted stock options to purchase an aggregate of
254,332 shares of common stock at $.80 per share, being the fair market value on
the date of grant.
In December 1999, the board of directors repriced all of the outstanding stock
options held by present employees and directors to $.53, the fair market value
on that date.
No compensation cost was recognized for stock-based employee awards.
A summary of the activity under the Company's stock option plans is as
follows:
<TABLE>
<S> <C> <C> <C> <C>
1993 1995 1995 1998
Plan Plan Incentive Plan Incentive Plan
Options Outstanding
and Exercisable
- December 31, 1996 18,992 5,833 218,333 --
Weighted Average Exercise
Price $ 13.50 $ 5.28 $ 6.75 --
Granted -- -- 216,000 --
Exercised -- -- -- --
Canceled -- -- -- --
Options Outstanding
and Exercisable
- December 31, 1997 18,992 5,833 434,333 --
Weighted Average Exercise
Price $ 13.50 $ 5.28 $ 5.39 --
Granted -- -- -- 215,000
Exercised -- -- -- --
Canceled -- -- (141,169) --
Options Outstanding and
Exercisable
- December 31, 1998 18,992 5,833 293,164 215,000
Weighted Average Exercise
Price $ 13.50 $ 5.28 $ 5.39 $ 1.25
Granted -- -- 122,224 132,108
Exercised -- -- -- -0-
Canceled -- -- -- (10,000)
Options Outstanding and
Exercisable
- December 31, 1999 18,992 5,833 415,388 337,108
Weighted Average Remaining
Contractual Life .16 years .08 years 4.42 years 4.0 years
</TABLE>
F-22
<PAGE> 41
TRANS GLOBAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
The following table summarizes option information as of December 31, 1999
Weighted Avg. Weighted Avg.
Range of Exercise Price Remaining Exercise
Shares Contractual Life Price
<TABLE>
<S> <C> <C> <C>
.53 337,108 4.0 Years .53
.53 415,388 4.42 Years .53
5.28 5,833 .08 Years 5.28
13.50 18,992 .16 Years 13.50
</TABLE>
If the Company had accounted for the issuance of all options and compensation
based warrants pursuant to the fair value based method of SFAS No. 123, the
Company would have recorded compensation expense totaling $ 135,441, $168,439,
and $538,460 for the years ended December 31, 1999, 1998 and 1997, respectively,
and the Company's net income (loss) and net income (loss) per share would have
been as follows:
Years ended
December 31,
1 9 9 9 1 9 9 8 1 9 9 7
<TABLE>
<S> <C> <C> <C>
Net(Loss) Income as Reported $(1,853,031) $ 805,261 $1,022,881
========== ========= ===========
Pro Forma Net(Loss) Income $(1,988,472) 636,822 484,421
========== ========= ===========
Basic (Loss) Earnings
Per Share as Reported $ (.61) .21 .27
========== ========= ===========
Pro Forma Basic (Loss) Earnings
Per Share $ (.65) $ .17 $ .13
========= =========== ============
The fair value of options and warrants [See Note 13] at date of grant was
estimated using the fair value based method with the following weighted average
assumptions:
1999 1998 1997
Expected Life [Years] 4 5 5
Interest Rate 6.4% 4.67% 6.0%
Annual Rate of Dividends 0% 0% 0%
Volatility 120.53% 71.99% 87.61%
</TABLE>
The weighted average fair value of options at date of grant using the fair value
based method during 1999, 1998, and 1997 is estimated at $0.44, $0.78 and $2.79
respectively.
[15] Employment Benefit Plans
The Company sponsors a Qualified Retirement Plan under section 401(k) of the
Internal Revenue Code. Employees become eligible for participation after
completing three months of service and attaining the age of twenty-one. The
Company has the option to make a matching contribution to the Plan for the years
ended December 31, 1999, 1998 and 1997, however, it has not made any matching
contributions to the Plan.
F-23
<PAGE> 42
TRANS GLOBAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
[16] New Authoritative Accounting Pronouncements
The Financial Accounting Standards Board (FASB) has had on its agenda a project
to address certain practice issues regarding Accounting Principles Board (APB)
Opinion No. 25, Accounting for Stock Issued to Employees. The FASB plans on
issuing various interpretations of APB Opinion No.25 to address these practice
issues. The proposed effective date of these interpretations would be in the
issuance date of the final Interpretation, which is expected to be in 2000. If
adopted, the Interpretation would be applied prospectively but would be applied
to plan modification and grants that occur after December 15, 1998. The FASB's
tentative interpretations are as follows:
The FASBs tentative conclusions relating to its project addressing certain
practice issues regarding APB Opinion No. 25, Accounting for Stock Issued to
Employees, was to limit the definition of an employee to individuals who met the
common law definition of an employee. Thus, anyone who did not meet this
definition, including outside members of the Board of Directors, would be
excluded from the scope of APB Opinion No.25. Accordingly, the cost of issuing
stock options to outside members of the Board of Directors would have had to be
determined in accordance with FASB Statement No. 123, Accounting for Stock-Based
Compensation, usually resulting in an expense in the period of the grant (the
service period could be prospective, however see EITF 96-18). At its August 11,
1999 Board meeting however, the FASB decided to reverse its prior tentative
conclusion in this regard and to continue to extend APB Opinion No. 25
accounting treatment to options granted to outside directors for their services
as directors. Accordingly, as long as the stock option exercise price is equal
to or greater than the fair value of the underlying stock at the measurement
date (usually date of grant), no expense needs to be recorded for the issuance
of stock options to outside members of the Board of Directors.
The FASB, however, is apparently not reversing itself on requiring companies
that reprice their employee fixed stock options to expense any subsequent
increases in the value of those options (i.e., variable grant accounting).
(17) Subsequent Events
To provide additional working capital, the Company raised $1,000,000 in January,
2000. This money was raised through the issuance of a 10% subordinated
promissory note due 18 months from the date of issuance, or earlier upon the
Companys receipt of payment of the Arc Note. In connection with these notes, the
Company issued warrants to purchase 250,000 shares of the Company's common stock
at $.35 per share to the investors and others who assisted the Company in the
financing.
The Company has utilized $500,000 of the proceeds as a loan to
i-engineering.com, Inc. with an interest rate of 10% for a period of 120 days.
In connection with the loan to i-engineering.com, the Company acquired an equity
interest in i-engineering and agreed to issue 270,000 shares of common stock to
i-engineering.
(18) Subsequent Events - Unaudited
On March 16, 2000, our common stock was delisted from the Nasdaq SmallCap Market
because we failed to hold a stockholders meeting in 1999. Although we have
appealed the decision, we cannot assure you that our common stock will be
relisted on the Nasdaq SmallCap Market. Our common stock may become subject to
the SEC's penny-stock rules, which impose additional sales practice requirements
on broker-dealers which sell our stock to persons other than established
customers and institutional accredited investors. These rules may affect the
ability of broker-dealers to sell our common stock and may affect the ability of
our stockholders to sell any common stock they may own.
F-24
<PAGE> 43
EXHIBIT 10.1
Employment agreement dated October 15, 1997, between the Company and Joseph G.
Sicinski
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT made this 15th day of October 1997, by and among TRANS GLOBAL
SERVICES, INC., (TGS) and its subsidiary companies, Avionics Research
Corporation, Avionics Research Corporation of Fl., and Resource Management
International, Inc., collectively referred to as TGS (hereinafter referred to as
TGS) and Joseph G. Sicinski (hereinafter referred to as the ("Executive').
Whereas, TGS desires to retain the employ of the Executive as the President and
Chief Operating Officer of TGS and Executive is willing to perform the service
hereafter described upon the terms and conditions hereinafter set forth;
Now, therefore, it is mutually agreed as follows:
1.0 TERM:
The Company (TGS) hereby retains the employ of the Executive for a period of
five (5) years commencing as of the date of this Agreement and expires September
15, 2002.
2.0 DUTIES:
2.1 The Executive shall have the title of President and Chief Operating Officer
of TGS.
2.2 The Executive shall have and exercise such duties, responsibilities,
privileges, powers, and authority as are established by statute, as are set
forth in TGS by-laws and corporate minutes and as may be assigned to him by
TGS's Board of Directors; provided that such duties are reasonably consistent
with the Executive's education, experience and background.
2.3 The Executive agrees to devote substantially all of his business time,
attention, skill and efforts to the business conducted by TGS. The Executive
shall report to the Board of Directors of TGS. 2.4 As a condition of the
employment of the Executive pursuant to this Agreement, TGS agrees that all
decisions relating to distributions or dividends or other major expenditures
must be approved by the Executive as well as by a majority of the Board of
Directors of TGS.
2.5 At all times during the term of this Agreement, the Executive shall perform
his designated duties at TGS offices located in the county of Suffolk in the
State of New York.
3.0 COMPENSATION:
In consideration for the Executive entering into and executing this Agreement
and for providing services hereunder, the Executive shall be entitled to receive
the following compensation plus such additional increases in salary,
compensation or benefits as the Board of Directors may direct:
<PAGE> 44
EXHIBIT 10.1
Employment agreement dated October 15, 1997, between the Company and Joseph G.
Sicinski
Page 2
3.1 A Minimum base annual salary of $ 260,000 per year payable in equal weekly
installments and shall increase annually by the greater of 5% or the increase in
cost of living index.
3.2 In addition to the base salary and annual increases set forth herein, the
Executive shall be entitled to an annual bonus of not less than 5% of the net
income before tax and all non-cash adjustments and expenses including charges
and fees paid to Consolidated Technology Group, Ltd., its subsidiary and
associated companies, for TGS and its wholly or partially owned subsidiaries,
currently owned and acquired during the terms of this Agreement provided that
such annual bonus shall not exceed 200% of Executive's gross income.
3.3 REIMBURSEMENT OF ENPENSES:
The Executive is authorized to incur reasonable expenses for performing his
duties pursuant to this Agreement and TGS shall reimburse him for all actual
expenses, including entertainment, travel and other miscellaneous expenses
reasonably incurred in promoting the business of TGS and in performing his
duties as described herein.
3.4 VACATION:
The Executive shall be entitled to annual vacation time with full pay in
accordance with the TGS's policies but not less than four (4) weeks per year,
which shall be accrued if not utilized in full.
3.5 The Executive shall be provided with a company automobile. Said compensation
shall be made by payment of monthly lease or car loan payment, insurance, gas,
service and maintenance costs. At the end of the lease or loan period and at the
discretion of TGS, the car will be transferred to the Executive at a fair and
reasonable market value or lease buy back value or at the option of TGS will
lease or finance another new car comparable to the initial car provided under
this provision.
4.0 BENEFITS:
4.1 Nothing contained in this Agreement shall be construed to impair or limit
the Executive's rights to participate in all employee benefit plans of TGS of
every nature, and he shall , in fact, be entitled to participate in and be a
member of all such benefits plans in proportion to his total compensation
hereunder. "Benefit plans " shall include:
Holidays
Life Insurance
Hospitalization
Medical and Major Medical (family)
Dental insurance (family)
Stock option (s)
Stock purchase or bonus plans
Retirement programs
<PAGE> 45
EXHIBIT 10.1
Employment agreement dated October 15, 1997, between the Company and Joseph G.
Sicinski
Page 3
4.2 SPECIAL LIFE INSURANCE:
TGS shall maintain at its expense a life insurance policy upon the life of the
Executive in the face amount of $2,000,000; half of which is payable to TGS
($1,000,000) and the remaining ($1,000,000) payable to such beneficiary as the
Executive shall designate from time to time, in writing, and in the absence of
such designation to his estate. Such insurance may be part of such group
insurance as TGS maintains for the benefit of salaried employees generally of
the rank and status of the Executive.
5.0 TERMINATION AND SEVERANCE:
5.1 Nothing herein is intended to prohibit TGS from terminating this Agreement
for serious and willful misconduct on the part of the Executive, provided, that
in the event that the Executive's employment is terminated for cause by TGS,
nevertheless the Executive shall be entitled to receive such benefits under
TGS's employee benefit plans, in which he is a participant, or as are provided
by this Agreement.
5.2 If the employee shall become totally and permanently disabled and is unable
to work by reason of temporary or permanent disability, TGS will continue his
base salary for the full term of this Agreement at the rate as provided above
inclusive of all bonuses and incentives, including full payment of medical and
life insurance for the full term of this Agreement.
5.3 If during the term of this Agreement, TGS's Board of Directors appoints a
person other than the Executive to the position of President currently held by
the Executive at TGS, or to a position with similar duties, powers and
responsibilities, the Executive shall have the night to retire from full-service
from TGS and to render only such part-time consulting and advisory services as
TGS may reasonably request. Any such services and the conditions under which
they shall be performed shall be fully in keeping with the position or positions
the Executive held under this Agreement. The Executive shall continue to be
entitled to receive the full compensation provided for in this Agreement
including salary, bonuses and benefits for the full term of this Agreement.
5.4 Termination at will. The Board of Directors may not terminate the
Executive's employment by TGS or diminish his duties, powers and
responsibilities pursuant to this Agreement without cause as set forth herein.
5.5 Any dispute or difference of opinion between the Executive and TGS as to the
latter's right to terminate this Agreement shall be submitted to and determined
by arbitration in accordance with the provisions of Section 7.4 hereof set forth
below. TGS shall notify the Executive of said actions in writing and provide at
least 30 days to remedy such failures.
<PAGE> 46
EXHIBIT 10.1
Employment agreement dated October 15, 1997, between the Company and Joseph G.
Sicinski
Page 4
5.6 Non-Curable Termination For Cause: Executive's employment with TGS may be
terminated "immediately" for cause if the Executive is determined to (1)
repeatedly have acted dishonestly or engaged in deliberate misconduct; (2)
repeatedly breached a fiduciary trust for the purpose of gaining personal
profit; (3) repeatedly neglected to perform customary duties of his position
after 30 days due written notice of said omission from the President or Board of
Directors; or (4) have been convicted of the commission of a felony.
In the event of termination, the President or Board of Directors is required to
give 10 days notice in writing to the Executive, by certified or registered
mail, mailed to the Executive's last known address and the same notice by
ordinary mail or courier to the Executive's principal office at TGS.
6.0 NOTICE OF CHANGE (S) AND/OR REVISIONS(S):
Any notice, request or other communication required or permitted pursuant to
this Agreement shall be in writing and shall be deemed dully given when received
by the party to whom it shall be deemed dully given when received by the party
to whom it shall be given or three days after being mailed by certified,
registered or express mail, postage prepaid, address as follows:
If to the Company:
TRANS GLOBAL SERVICES, INC.
1393 Veterans Memorial Highway
Hauppauge, New York 11788
If to the Executive:
Joseph G. Sicinski
3 8 Woodhollow Rd.
Great River, N.Y. 11739
Any party may change the address to which communications are to be mailed given
notice of such change on the manner provided above.
7.0 SPECIAL TERMS AND CONDITIONS:
7.1 The Board of Directors of TGS reserves the right to increase the
compensations and benefits specified in this contract at any time hereafter and
no such increase (s) or adjustments(s) shall operate as cancellation of this
Agreement but merely as an amendment hereto.
7.2 REORGANIZATION:
If the Company shall at any time be merged or consolidated substantially all
assets of TGS are transferred to another corporation or entity, the provisions
of this Agreement shall survive any such transaction and shall be binding upon
and inure to the benefit of the corporation resulting from such merger or
consolidation.
<PAGE> 47
EXHIBIT 10.1
Employment agreement dated October 15, 1997, between the Company and Joseph G.
Sicinski
Page 5
7.3 Nothing herein contained shall in any manner modify, imperil or affect
existing or future rights or interests of the Executive to receive any employee
benefits to which he would otherwise be entitled or as a participant in the
present or any future incentive, profit-sharing or bonus plan of TGS providing
for his participation, or in any present or future stock option plan of TGS, to
the extent such plans are applicable generally to salaried employees, it being
understood and agreed that the rights and interests of the Executive to any
employee benefits or as a participant or beneficiary in or under any or all said
plans, respectively, shall not be adversely affected hereby.
7.4 ARBITRATION:
Any controversy or claim arising under this Agreement shall be settled by
binding arbitration in accordance with Rules of the American Arbitration
Association then in effect, and such arbitration shall be held either 'in Nassau
or Suffolk County. This shall be the exclusive remedy for the violation of
either party of the terms of this Agreement. The controversy or claim shall be
submitted to three arbitrators, one of whom shall be chosen by TGS, one of whom
shall be chosen by the Executive, and the third of whom shall be chosen by the
two so selected. The party desiring arbitration shall give written notice to the
other party of its desire to arbitrate the particular matter 'in question,
naming the arbitrator selected by it. If the other party shall fail within a
period of 15 days after such notice shall have been given to reply in writing
naming the arbitrator selected by it, then the party not in default may appoint
an arbitrator to fill the place so remaining vacant. The decision of any two of
the arbitrators shall be final and binding upon the parties hereto and shall be
delivered in writing, signed in triplicate by the concurring arbitrators to each
of the parties hereto. Judgment upon the award rendered by the arbitrators may
be entered in any court having jurisdiction thereof.
8.0 MISCELLANEOUS:
8.1 This Agreement shall become effective as of the day and date first above
written.
8.2 The heading or captions of sections or paragraphs are used for convenience
of reference merely and shall be ignored in the interpretation hereof
8.3 As used herein, terms such as "herein:, "hereof', "hereto" and similar
language shall be interpreted to refer to this entire 'instrument as not merely
the paragraph or sentence in which they appear, unless so limited by express
language.
8.4 Neither this Agreement nor any of his rights hereunder may be assigned by
the Executive without the written consent of TGS unless specifically identified
in this Agreement.
8.5 In the event of a suit or claim against the Executive arising out of his
corporate duties, TGS will provide and pay for legal counsel approved by the
Executive, and hold the Executive harmless and indemnify the Executive for any
and all costs, fees, suits, judgments and settlements arising therein.
<PAGE> 48
EXHIBIT 10.1
Employment agreement dated October 15, 1997, between the Company and Joseph G.
Sicinski
Page 6
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
on the day and date first above written:
Trans Global Services, Inc.
Avionics Research Corporation
Avionics Research Corporation of Fl.
Resource Management International, Inc.
by: ______________________________________
LEWIS S. SCHILLER, Chief Executive Officer
by: ______________________________________
Joseph G. Sicinski, Executive
<PAGE> 49
EXHIBIT 10.1
Employment agreement dated October 15, 1997, between the Company and Joseph G.
Sicinski
Page 7
Amendment dated this 23 day of March, 1999, to the employment agreement
(the"Agreement") dated October 15, 1997, between Trans Global Services, Inc., a
Delaware corporation (the "Company") , and its subsidiaries, Avionics Research
Corporation, Avionics Research Corporation of florida and Resource Management
International, Inc., the Company and its subsidiaries being collectively
referred to as "TGS:, and Joseph G. Sicinski ("Executive")
W I T N E S S E T H
WHEREAS, TGS has employed Executive as president and chief operating officer
pursuant to the Agreement; and
WHEREAS, Executive has been elected as TGS' chief executive officer, and
WHEREAS, the parties desire to extend the term of Executive's employment
pursuant to the Agreement and to provide for certain benefits to him in the
event of a change of control;
WHEREFORE, the parties do hereby agree as follows:
1. Paragraph I.0 of the Agreement is hereby amended to extend the terms of
Executive's employment until September 30, 2005.
2. Executive shall hold the positions of president and chief executive officer.
3. The following provisions shall be applicable in the event of a change of
control of the Company.
(a) (i) In the event of a Change of Control Termination, as hereinafter defined,
the Company shall: within thirty (30) days after the date of termination of
employment, pay to Executive, as a severancee payment, an amount equal to the
greater of (A) the Severance Payment, as hereinafter defined, or (B) five (5)
times Executive's Aggregate Annual Compensation, as hereinafter defined, in
effect on the Change of Control Date, as hereinafter defined.
(ii) The payment pursuant to this Paragraph 3(a) shall be (A) in lieu of any
other serverance or other payments due to Executive as a result of the
termination of his employment whether under this Agreement or otherwise and (B)
in addition to any compensation, benefits or other payments due to Executive
which were accrued on, or which relate to period prior to, the effective date of
such termination.
(b) As used in this Paragraph 3, the following terms shall have the meanings set
forth below.
(i) A "Change of Control Termination: shall mean any termination by the Company
or by Executive of Executive's employment (other than a termination by the
Company for cause pursuant to Paragraph 5.6 of the Agreement or a termination as
a result of Executive's death) if the effective date of the termination of
employment is within two (2) years after the Change of Control Date.
<PAGE> 50
EXHIBIT 10.1
Employment agreement dated October 15, 1997, between the Company and Joseph G.
Sicinski
Page 8
(ii) The Change of Control Date" shall mean the date on which a Change of
Control Event occurs.
(iii) A "change of Control Event" shall occur if (A) the assets or controlling
stock of TGS are sold to another entity (B) merged with another entity resulting
in TGS not being the surviving company in control, (C) reorganization resulting
in Executive being removed from position of president and chief executive
officer or director, or (D) during any period of two consecutive years,
individuals who, at the beginning of such period, constitute the Company's board
of the directors cease, for any reason, to constitute at Least a majority
thereof unless the election of each new director was nominated or ratified by at
least two-thirds of the directors then still in office who either (x) were
directors at the beginning of such period or (y) were elected by a vote of board
of directors which included the affirmative vote of all of the directors who
were directors at the beginning of the period.
(iv) The "Severance Payment" shall mean an amount equal to Executive's Aggregate
Annual compensation multiplied by the number of years, rounded to the next
highest one-tenth (1/10) of a year, remaining in the Team.
(v) The "Aggregate Annual Compensation" shall mean one (1) year's Salary at the
annual in effect on the date of termination of employment, the Applicable Bonus,
as hereinafter defined, and the cost or value, as the case may be, of the annual
benefits provided to Executive pursuant to Paragraphs 3.4, 3.5, 4.1 and 4.2 of
the Agreement.
(vi) The "Applicable Bonus" shall mean the highest bonus which either (A) was
paid to Executive during the term of this Agreement, (B) was payable pursuant to
the terms of this Agreement, (C) would be payable to Executive pursuant to this
Agreement if the results of the Company's operations through the end of the
month prior to the date of termination of employment were annualized for the
year, or (D) was authorized (but not paid) prior to the Change of Control Date.
(C) (i) Upon the occurrence of a Change in Control Event, the Company shall pay,
and indemnify Executive against, all costs and expenses, including, without
limitation, the reasonable fees and expenses of attorneys, arbitrators, experts
and witnesses, incurred on or on behalf of Executive in connection with any
arbitration or legal claim or proceeding arising from this Agreement or the
interpretation thereof, if Executive is successful, in whole or in part, on the
merits or otherwise, in any such claim or proceeding. If any such claim is
settled either by any payment to Executive or by any reduction in the amount
claimed by the Company against Executive, Executive shall be deemed to have been
successful.
(ii) The company shall advance all such costs and expenses incurred by or on
behalf of Executive in connection with any such claim or proceeding within
twenty (20) days after the receipt by the Company of a statment or statements
<PAGE> 51
EXHIBIT 10.1
Employment agreement dated October 15, 1997, between the Company and Joseph G.
Sicinski
Page 9
from Executive requesting such advance or advances from time to time, whether
prior to or after final disposition of such claim or proceeding. Such statement
or statements shall reasonably evidence the costs and expenses incurred by
Executive and shall include or be preceded or accompanied by an undertaking by
or on behalf of Executive to repay any costs and expenses advanced if it shall
ultimately be determined that Executive is not entitled to be indemnified
against such costs and expenses.
4. Except as modified by this Amendment, the Agreement shall remain in full
force and effect.
IN WITNESS WHEREOF, the Agreement has been duly executed by the parties on the
day and year first aforesaid.
TRANS GLOBAL SERVICES, INC.
By: Glen R. Charles, Chief Financial Officer
AVIONICS RESEARCH CORPORATION
By: Glen R. Charles, Chief Financial Officer
AVIONICS RESEARCH CORPORATION OF FLORIDA
By: Glen R. Charles, Chief Financial Officer
RESOURCE MANAGEMENT INTERNATIONAL, INC.
By: Glen R. Charles, chief Financial Officer
-------------------------------------
Joseph G. Sicinski
<PAGE> 52
EXHIBIT 10.8 RESTATED AGREEMENT
RESTATED AGREEMENT
RESTATED AGREEMENT, dated as of the 21st day of January, 2000, by and between
i-engineering.com, Inc., a Delaware corporation (the "i-engineering"), and Trans
Global Services, Inc., a Delaware corporation (the "Trans Global").
W I T N E S S E T H:
WHEREAS, i-engineering and Trans Global are parties to an agreement (the "Prior
Agreement") dated as of January 21, 2000, and they desire to amend and restate
the Prior Agreement as of such date; and
WHEREAS,i-engineering has requested Trans Global to make a loan (the "Loan") of
five hundred thousand dollars ($500,000) on the terms and conditions set forth
in this Agreement; and
WHEREAS, in order to induce Trans Global to make the Loan, i-engineering has
agreed to make the representations, warranties and covenants hereinafter set
forth, and to accept the other terms, conditions and provisions hereinafter set
forth; and
WHEREAS, i-engineering desires that Trans Global perform certain services for
i-engineering which i-engineering believes will enhance its business, and Trans
Global is willing to perform such services; and
WHEREAS, Trans Global desires to acquire from i-engineering shares of
i-engineering's common stock, par value $.0001 per share ("i-engineering Common
Stock"); and
WHEREAS, i-engineering desires to acquire from Trans Global shares of Trans
Global's common stock, par value $.01 per share ("Trans Global Common Stock");
and
WHEREAS, i-engineering desires to elect Mr. Joseph G. Sicinski as a director of
i-engineering; and
WHEREAS, Trans Global desires to propose the election of Mr. Naval Kapoor as a
director at its next annual meeting of stockholders;
NOW, THEREFORE, intending to be legally bound, all of the parties hereto agree
as follows:
1. The Loan.
(a) At the Closing, as hereinafter defined, Trans Global shall lend
i-engineering the sum of five hundred thousand dollars ($500,000), which loan is
referred to as the "Loan"; provided, however, that Trans Global may make loans
in advance of the Closing. Each Loan shall be evidenced by i-engineering's 10%
promissory note (the "Note" and collectively, the "Notes") in the form attached
as Exhibit A to this Agreement, appropriately completed on behalf of
i-engineering, dated the date of the advance and in the principal amount of
the Loan.
(b) The Loan shall be made at or prior to a closing (the "Closing") to be held
contemporaneously with the execution of this Agreement at the offices of Trans
Global, 1393 Veterans Memorial Highway, Hauppauge, New York 11788 or at such
other location as may be determined by Trans Global and i-engineering. The date
of the Closing is referred to as the "Closing Date."
<PAGE> 53
EXHIBIT 10.8 RESTATED AGREEMENT
2. Issuance of Common Stock.
(a) At the Closing, i-engineering shall issue to Trans Global or its designees
an aggregate of 1,550,000 shares (the "i-engineering Shares") of its
i-engineering Common Stock. Trans Global acknowledges that the Shares constitute
restricted securities, as defined in Rule 144 of the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Act of 1933, as amended
(the "Securities Act"), and will bear i-engineering's standard investment
legend. The i-engineering Shares are to be issued pursuant to a subscription
agreement between Trans Global and i-engineering dated as of the date of this
Agreement.
(b) As soon as practical after the Closing, but not later than forty five (45)
days after the Closing, Trans Global shall issue to i-engineering an aggregate
of 270,000 shares (the "Trans Global Shares") of Trans Global Common Stock.
i-engineering acknowledges that the Shares constitute restricted securities, as
defined in Rule 144 of the Commission pursuant to the Securities Act, and will
bear Trans Global's standard investment legend.
(c) Trans Global represents and warrants with respect to the i-engineering
Shares, and i-engineering represents with respect to the Trans Global Shares,
that such shares are being acquired for the account of Trans Global or
i-engineering, as the case may be, for investment and not with a view to the
sale of distribution thereof, and that such shares may not be sold or otherwise
transferred except pursuant to an effective registration statement or pursuant
to an exemption to the registration requirements of the Securities Act, and
that, with respect to shares being sold pursuant to an exemption to such
registration requirements other than pursuant to Rule 144 or Rule 144(k) of the
Commission pursuant to the Securities Act, the issuer may require, as a
condition to effecting any such transfer, an opinion of counsel as to the
availability of an exemption. Notwithstanding the foregoing, Trans Global has
advised i-engineering that it has entered it agreements with certain of its
security holders pursuant to which it will transfer to such security holders a
portion of the I-Engineeering Shares issuable to Trans Global.
3. Representations and Warranties of i-engineering. i-engineering represents and
warrants to Trans Global as follows:
(a) i-engineering (i) is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has the power and
authority (corporate and other) to own its properties and to carry on its
business as now being conducted, (ii) is duly qualified to conduct its business
in the State of Connecticut and in each other jurisdiction wherein the conduct
of its business or the ownership of its properties are such as to require such
qualification and the failure to so qualify would have a Material Adverse
Effect, as hereinafter defined, upon its business, prospects or financial
condition, and (iii) has the power to borrow as contemplated by this Agreement
and to execute and perform its obligations under this Agreement and the Note.
i-engineering has no subsidiaries or equity interests in any corporation,
partnership, limited liability company trust or other entity except Vero
Engineering N.V., a Belgian corporation which is more than 99% owned by
i-engineering, and Engineering Software Lab, LLC, a New Jersey limited liability
company which is wholly owned by i-engineering, and Engineering Software Lab PVT
Ltd., an Ahmedabad, India corporation, which is wholly-owned by Engineering
<PAGE> 54
EXHIBIT 10.8 RESTATED AGREEMENT
Software Lab, LLC, all of which entities are collectively referred to as the
"Subsidiaries" and each, individually, as a "Subsidiary." A "Material Adverse
Effect," with respect to either party, shall mean a material adverse effect on
the business, operations, assets, operating results, liabilities, property,
employee and customer relations or prospects of such party or any of its
subsidiaries or would impair the rights of the other party under this Agreement
or, in the case of i-engineering, the Notes.
(b) The execution, delivery and performance by i-engineering of this Agreement,
the borrowing made by i-engineering pursuant to this Agreement, the execution
and delivery of the Notes by i-engineering and the issuance of the i-engineering
Shares and the Director Shares, as hereinafter defined, have been duly
authorized by all requisite corporate action. Neither the execution and delivery
of this Agreement and the Notes by i-engineering nor the issuance and delivery
of the i-engineering Shares or the Director Shares will violate (i) any
provision of law or any governmental rule or regulation applicable to
i-engineering or any Subsidiary or the certificates of incorporation or by-laws
and/or other organizational documents of i-engineering or any Subsidiary, or
(ii) any order of any court or other agency of government binding on
i-engineering or any Subsidiary or any indenture, agreement or other instrument
to which i-engineering or any Subsidiary is a party, or by which i-engineering
or any Subsidiary any of their respectively properties are bound, in either case
where the violation would have a Material Adverse Effect, and will not be in
conflict with, result in a breach of or constitute (with due notice and/or lapse
of time) a default under any such indenture, agreement or other instrument, or
result in the creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of the property or assets of i-engineering or any
Subsidiary. Each of this Agreement and the Note are legal, valid and binding
obligations of i-engineering, enforceable in accordance with their terms.
(c) The i-engineering Shares and the Director Shares have been duly authorized
for issuance and, when issued pursuant to this Agreement, will be duly and
validly authorized and issued, fully paid and non-assessable and not subject to
any preemptive rights or rights of first refusal.
(d) i-engineering has an authorized capital stock consisting of 2,000,000 shares
of preferred stock, par value $.0001 per share, none of which have been issued
or authorized for issuance, and 18,000,000 shares of i-engineering Common Stock,
of which not more than 13,983,332 shares issued and outstanding; 2,400,000
shares are reserved for issuance upon the exercise of options, including a stock
option plan under consideration, excluding the i-engineering Shares and the
Director Shares. Upon issuance of the i-engineering Shares and the Director
Shares there shall be not more than 15,000,000 shares of i-engineering Common
Stock either outstanding or reserved for issuance. Trans Global understands that
additional shares of i-engineering Common Stock may be issued or reserved for
issuance in connection with a proposed private placement by i-engineering.
(e) i-engineering and each Subsidiary has good and marketable title to its
properties and assets, and all such properties and assets are free and clear of
mortgages, pledges, liens, charges and other encumbrances. Neither i-engineering
nor any Subsidiary owns any real property.
<PAGE> 55
EXHIBIT 10.8 RESTATED AGREEMENT
(f) All Intellectual Property Rights used by i-engineering and each Subsidiary
in its business, including all Intellectual Property Rights incorporated in its
website, have been developed by i-engineering or a Subsidiary and is owned by
i-engineering or a Subsidiary, subject to no liens or encumbrances, or has been
licensed to i-engineering or a Subsidiary by a third party who has the right to
grant i-engineering or such Subsidiary such license. Neither i-engineering nor
any Subsidiary pays any royalty to anyone with respect to any Intellectual
Property Rights of any kind and description. Neither i-engineering nor any
Subsidiary has granted any person any license, right or interest, including any
security interest or option, with respect to any Intellectual Property Rights.
None of i-engineering's or the Subsidiaries' rights in and to any Intellectual
Proprietary Rights are or will be affected by the consummation of the
transaction contemplated by this Agreement. There has been no claim asserted or
litigation challenging or threatening to challenge the right, title or interest
of i-engineering or any Subsidiary with respect to any of its Intellectual
Proprietary Rights; and no activity, service or procedure conducted by
i-engineering or any Subsidiary infringes or violates any Intellectual Property
Rights of any other party. As used in this Agreement, the term "Intellectual
Property Rights" shall mean all trade names, trademarks, service marks and trade
marks, patents, patent applications, proprietary products, trade secrets,
software, programs, hardware, firmware, middleware, designs, license rights and
all other intellectual property rights, whether or not any of the foregoing are
registered with the United States Patent and Trademark Office, which are owned
by i-engineering or any Subsidiary as of the date of this Agreement or in which
i-engineering or any Subsidiary has any right or interest or are used by
i-engineering or any Subsidiary in the conduct of its business.
(g) There are no actions, suits or proceedings (whether or not purportedly on
behalf of i-engineering or any Subsidiary) pending or, to the knowledge of
i-engineering, threatened against or affecting i-engineering or any Subsidiary
at law or in equity or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which involve any of the transactions contemplated by this
Agreement or the Note or which, if adversely determined against i-engineering or
the Subsidiary, would have a Material Adverse Effect.
(h) Neither i-engineering nor any Subsidiary is in default with respect to any
judgment, writ, injunction, decree, rule or regulation of any court or federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, which in any instance or in the
aggregate would have a Material Adverse Effect.
(i) Neither i-engineering nor any Subsidiary is a party to any agreement or
instrument or subject to any charter or other corporate restriction, or to any
judgment, order, writ, injunction, decree or regulation materially and adversely
affecting its business, properties or assets, operations or condition (financial
or otherwise). Neither i-engineering nor any Subsidiary is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument to which it is a party in
any manner which would have a Material Adverse Effect.
<PAGE> 56
EXHIBIT 10.8 RESTATED AGREEMENT
(j) To the best of i-engineering's knowledge, i-engineering and the Subsidiaries
are in complete compliance with all of the provisions of ERISA and
i-engineering, the Subsidiaries and each ERISA Affiliate, as hereinafter
defined, have made all payments due with respect to each plan which is subject
to ERISA not later than the date such payments were due, and neither
i-engineering nor any Subsidiary has any liability for any penalties or other
assessments relating to the plans or otherwise under ERISA. No Reportable Event,
as defined in Section 4043(b) of ERISA or the regulations thereunder for which
the thirty (30) days' notice requirement has not been waived by the Pension
Benefit Guaranty Corporation, has occurred with respect to any plan administered
by i-engineering any Subsidiary or any administrator designated by i-engineering
or any Subsidiary or any ERISA Affiliate. There is, and on the Closing Date
there will be, no unfunded liability under any plan. Neither i-engineering, any
Subsidiary nor any ERISA Affiliate has engaged in any prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the Internal
Revenue Code, excluding any transactions which are exempt under Section 408 of
ERISA or Section 4975 of the Internal Revenue Code) with respect to any plan
which i-engineering, any Subsidiary or any ERISA Affiliate maintains, or to
which i-engineering, any Subsidiary or any ERISA Affiliate contributes, which
could subject it or any such other person to any material liability. There are
no material actions, suits or claims pending or, to i-engineering's knowledge,
any material actions, suits or claims which could reasonably be expected to be
asserted, against any plan maintained by i-engineering, any Subsidiary or any
ERISA Affiliate, the assets thereof, or against it in connection with any plan.
i-engineering is not a participant in or contributor to any multi-employer
benefit plan. The term "ERISA Affiliate" shall mean any entity that is a member
of a "controlled group of corporations" with, or is under "common control" with,
or is a member of the same "affiliated service group" with i-engineering as
defined in Section 414(b), 414(c) or 414(m) of the Internal Revenue Code. With
respect to Subsidiaries operating outside of the United States, such
Subsidiaries have made all payments and have otherwise fully complied with all
pension and related obligations under applicable law. As used in this Agreement,
the term "to the best of i-engineering's knowledge" or words of like import
shall mean and include (i) actual knowledge and (ii) that knowledge which a
prudent businessperson would reasonably have obtained in the management of such
person's business affairs after making due inquiry and exercising the due
diligence which a prudent businessperson should have made or exercised, as
applicable, with respect thereto. In connection therewith, the knowledge (both
actual and constructive) of i-engineering shall include knowledge of the chief
executive officer, chief operating offer, chief financial officer, president or
any vice president of i-engineering.
(k) No registration with, or consent or approval of, or other action by, any
federal, state or other governmental authority or regulatory body is required in
connection with the borrowing and guarantee contemplated by this Agreement or
the execution, delivery and performance by i-engineering of this Agreement or
the Note. To the best of i-engineering's knowledge, i-engineering and each
Subsidiary possesses all licenses, permits, certificates, approvals and the like
("Licenses") necessary for the lawful operation of its business. All such
Licenses are in full force and effect and there exists no threat (whether formal
or informal) of a revocation or suspension of any of the Licenses.
<PAGE> 57
EXHIBIT 10.8 RESTATED AGREEMENT
(l) To the best of i-engineering's knowledge, i-engineering and each Subsidiary
are in compliance with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority applicable to them,
including, without limitation, laws, rules and regulations, relating to
hazardous waste, hazardous substances and materials, asbestos and other
environmental matters, health and safety, employment and labor relations,
pension and employee benefit (including ERISA) and all other laws, rules and
regulations the breach of which or noncompliance with which would have a
Material Adverse Effect. Neither i-engineering nor any Subsidiary has received
any formal or informal notice or advice to the effect that i-engineering or any
Subsidiary has become or may become primarily responsible for any environmental
clean-up and remediation work or any similar obligations or responsibilities
which may be imposed subsequent to the date of this Agreement.
(m) i-engineering and each Subsidiary maintain insurance policies in such
amounts and against such risks and with such insurers, as is necessary to
protect their assets and properties.
4. Representations and Warranties of Trans Global. Trans Global represents to
i-engineering as follows:
(a) Trans Global is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has the power and
authority (corporate and other) to own its properties and to carry on its
business as now being conducted.
(b) The execution, delivery and performance by Trans Global of this Agreement
and the issuance of the Trans Global Shares have been duly authorized by all
requisite corporate action. Neither the execution and delivery of this Agreement
by Trans Global nor the issuance and delivery of the Trans Global Shares will
violate (i) any provision of law or any governmental rule or regulation
applicable to Trans Global or the certificate of incorporation or by-law of
Trans Global, or (ii) any order of any court or other agency of government
binding on Trans Global or any indenture, agreement or other instrument to which
Trans Global is a party, or by which Trans Global or any of its properties are
bound, in either case where the violation would have a Material Adverse Effect,
and will not be in conflict with, result in a breach of or constitute (with due
notice and/or lapse of time) a default under any such indenture, agreement or
other instrument, or result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the property or assets of Trans
Global. This Agreement is the legal, valid and binding obligation of Trans
Global and enforceable in accordance with its terms.
(c) The Trans Global Shares have been duly authorized for issuance and, when
issued pursuant to this Agreement, will be duly and validly authorized and
issued, fully paid and non-assessable and not subject to any preemptive rights
or rights of first refusal.
(d) Trans Global has provided i-engineering with a copy of (i) Trans Global's
Form 10-K for the year ended December 31, 1998, (ii) Trans Global's Form 10-Q
for the quarter ended September 30, 1999, and (iii) each of Trans Global's Form
8-K filed with the Commission subsequent to December 31, 1998 (collectively, the
"Trans Global SEC Documents"). Trans Global has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
twelve months prior to the date of this Agreement. The Trans Global SEC
<PAGE> 58
EXHIBIT 10.8 RESTATED AGREEMENT
Documents, as of their respective dates, complied in all material respects with
the requirements of the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission thereunder, and, to the best of Trans
Global's knowledge, none of the Trans Global SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. i-engineering is aware
that Trans Global sustained a loss for the year ended December 31, 1999, and
that losses are continuing.
5. Agreement Concerning Directors.
(a) On the Closing Date, i-engineering shall have elected Joseph G. Sicinski as
a director of i-engineering and shall have issued to him 100,000 shares of
i-engineering Common Stock (the "Director Shares") in connection with his
election as a director. i-engineering agrees to elect Mr. Sicinski as a director
until January 31, 2003; provided, that if i-engineering is subject to the proxy
rules under the Securities Exchange Act of 1934, as amended, i-engineering
shall, during such period, include Mr. Sicinski as one of the board of
directors' nominees for election as a director and use its best efforts to have
him elected as a director.
(b) At its next annual meeting of stockholders, Trans Global will include Naval
Kapoor as one of the board of directors' nominees for election as a director.
6. Conditions of Lending. The obligation of Trans Global to make the Loan is
subject to the following conditions precedent:
(a) The representations and warranties of i-engineering set forth in Paragraph 3
of this Agreement shall be true and correct as of the Closing Date.
(b) i-engineering shall be in compliance with all the terms and provisions set
forth in this Agreement on its part to be observed or performed, and no Event of
Default, as defined in the Note, shall have occurred and be continuing and no
event shall have occurred which, with the giving of notice of the passage of
time, would result in an Event of Default.
(c) i-engineering shall have issued and delivered the i-engineering Shares to
Trans Global.
(d) i-engineering shall have elected Joseph G. Sicinski as a director and shall
have issued and delivered the Director Shares to Mr. Sicinski.
(e) i-engineering shall have delivered to Trans Global on the Closing Date the
following documents in form and substance satisfactory to Trans Global, each
dated (except as otherwise set forth below) as of the Closing Date:
(i) The Notes (to the extent not previously delivered) payable to the order of
Trans Global in the form of Exhibit A to this Agreement duly completed and
executed by i-engineering and dated as of the Closing Date.
(ii) The certificate of the chief executive and financial officers of
i-engineering as to the matter set forth in Paragraphs 5(a) and (b) of this
Agreement.
<PAGE> 59
EXHIBIT 10.8 RESTATED AGREEMENT
(iii) Copies of following supporting documents:
(A) Copies of the certificate of incorporation of i-engineering certified by the
Secretary of State of the State of Delaware;
(B) Certificate of good standing for i-engineering from the Secretary of State
of the State of Delaware and Connecticut;
(C) Certificates of resolution, incumbency and corporate documents for
i-engineering in form and substance satisfactory to Trans Global;
(D) Copies of the by-laws of i-engineering, certified by the corporate
secretary.
7. Use of Proceeds. i-engineering shall use the proceeds of the Loan only for
working capital purposes. No portion of the proceeds of the Loan shall be used
to pay any of i-engineering's loans, indebtedness or other obligations to its
officers, directors and 5% stockholders, provided, however, that working capital
shall include compensation at annual rates acceptable to Trans Global which are
payable after the Closing Date.
8. Services by Trans Global. Trans Global shall provide i-engineering with
services to assist i-engineering in developing its business. These services
include the use by i-engineering of Trans Global's resume data base to solicit
membership and exposure by Trans Global of i-engineering's program to its client
base and related services to the extent that Trans Global deems such services
reasonable.
9. Registration Rights. Trans Global and any person to which it transfers any of
the i-engineering Shares and i-engineering shall be entitled to the registration
rights set forth in registration rights agreements between the parties with the
same force and effect as if such rights were set forth in this Agreement.
10. Miscellaneous.
(a) Any notice, request, demand, statement, authorization, approval or consent
made hereunder shall be in writing and signed by the party giving such notice,
and delivered personally or sent by overnight courier, mail or messenger against
receipt thereof or sent by registered or certified mail, return receipt
requested, or by facsimile transmission or similar means of communication if
receipt is confirmed or if transmission of such notice is confirmed by mail or
overnight courier service as provided in this Paragraph 10(a). Notices shall be
deemed to have been received on the date of receipt. Notices shall be sent to
the parties as follows:
If to i-engineering: i-engineering.com, Inc.
Four Armstrong Road; Building 2
Third floor
Shelton, Connecticut 06484
Attention of Mr. Naval Kapoor, President and CEO
Fax: (203) 402-0800
<PAGE> 60
EXHIBIT 10.8 RESTATED AGREEMENT
With a copy to: Cramer & Anderson LLP
51 Main Street
New Milford, Connecticut 06776
Attention of Mitchell J. Melnick, Esq.
Fax: (860) 355-9460
If to Trans Global: Trans Global Services, Inc.
1393 Veterans Memorial Highway
Hauppauge, New York 11788
Attention of Mr. Joseph G. Sicinski, President
and CEO
Fax: (516) 724-0039
With a copy to: Esanu Katsky Korins & Siger, LLP
605 Third Avenue
New York, New York 10158
Attention of Asher S. Levitsky P.C.
Fax: (212) 953-6899
Any party may, by like notice, change the address, person or fax number to which
notice shall be sent.
(b) All covenants, agreements, representations and warranties made in this
Agreement and in the certificates delivered pursuant to this Agreement shall
survive the making by Trans Global of the Loan and the execution and delivery to
Trans Global of the Note, and shall continue in full force and effect so long as
the Note is outstanding or any amount due thereunder or under this Agreement
remains unpaid.
(c) This Agreement shall be binding upon the parties hereto and their respective
successors and assigns; provided, however, that i-engineering may not assign any
of its rights under this Agreement.
(d) THIS AGREEMENT AND THE NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS EXECUTED
AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE.
(e) Neither any failure nor any delay on the part of Trans Global in exercising
any right, power or privilege under this Agreement or the Note shall operate as
a waiver thereof, nor shall a single or partial exercise thereof preclude any
other or further exercise of any other right, power or privilege.
(f) No modification, amendment or waiver of any provision of this Agreement or
the Note, shall in any event be effective unless the same shall be in writing
and signed by Trans Global and the party against whom enforcement of any such
modification, amendment or waiver is sought, and expressly refers to this
Agreement and states that it is a modification, amendment or waiver, as the case
may be, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on
i-engineering in any case shall entitle i-engineering to any other or further
notice or demand in the same, similar or other circumstances.
<PAGE> 61
EXHIBIT 10.8 RESTATED AGREEMENT
(g) In case any one or more of the provisions contained in this Agreement or the
Note should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein and
therein shall not in any way be affected or impaired thereby.
(h) This Agreement may be executed in two or more counterparts, each of which
shall constitute an original, but all of which, when taken together, shall
constitute but one instrument.
(i) Paragraph headings used herein are for convenience of reference only and are
not to affect the construction of or be taken into consideration in interpreting
this Agreement.
(j) TRANS GLOBAL AND I-ENGINEERING HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR COUNTERCLAIM ARISING
IN CONNECTION WITH, OUT OF OR OTHERWISE RELATING TO THIS AGREEMENT OR THE NOTE,
ANY RIGHTS OR OBLIGATIONS UNDER THIS AGREEMENT OR THE NOTE. EXCEPT AS PROHIBITED
BY LAW, I-ENGINEERING HEREBY WAIVES (i) ANY RIGHT TO ASSERT ANY CLAIM IT MAY
HAVE AGAINST TRANS GLOBAL BY WAY OF A COUNTERCLAIM IN ANY ACTION ON THE NOTE AND
(ii) ANY RIGHT WHICH IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN,
OR IN ADDITION TO, ACTUAL DAMAGES. I-ENGINEERING (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF TRANS GLOBAL HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT TRANS GLOBAL WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT TRANS GLOBAL HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS SET FORTH IN THIS PARAGRAPH 10(j).
(k) All references to any gender shall be deemed to include the masculine,
feminine or neuter gender, the singular shall include the plural, and the plural
shall include the singular.
(l) The parties hereby irrevocably submit to the jurisdiction of any New York
State or Federal court sitting in New York or Suffolk County in any action or
proceeding arising out of or relating to this Agreement, and each of them hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such New York State or Federal court. i-engineering
hereby irrevocably waive the defense of an inconvenient forum to the maintenance
of such action or proceeding. Such service may be made by mailing or delivering
a copy of such process to i-engineering at their respective addresses set forth
in Paragraph 10(a) of this Agreement, including, without limitation, copies of
the summons and complaint and any other process which may be served in any such
action or proceeding. i-engineering agree that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any manner provided by law. Nothing
in this Paragraph 10(l) shall affect the right of Trans Global to serve legal
process in any other manner permitted by law or affect the right of Trans Global
to bring any action or proceeding against i-engineering or their respective
property in the courts of any other jurisdictions. Notwithstanding anything to
the contrary contained herein, in no event shall i-engineering commence any
action relating to this Agreement or the Note except in the Federal or New York
State courts located in New York City or Suffolk County, New York.
<PAGE> 62
EXHIBIT 10.8 RESTATED AGREEMENT
IN WITNESS WHEREOF, i-engineering and Trans Global have executed this Agreement
or has caused this Agreement to be duly executed by its duly authorized officer,
all as of the day and year first above written.
I-ENGINEERING.COM, INC.
By:_____________________________
By:_______________________________
Naval Kapoor, President and CEO
TRANS GLOBAL SERVICES, INC.
By:_____________________________
Joseph G. Sicinski, President and CEO
<PAGE> 63
EXHIBIT 10.8 RESTATED AGREEMENT
i-engineering.cOM, INC.
IO% Promissory Note due June 5, 2000
N-3 New York, New York
$300,000 February 4, 2000
FOR VALUE RECEIVED, i-engineering.com, Inc., a Delaware corporation (the
"Company"), hereby promises to pay to the order of Trans Global Services, Inc.,
a Delaware corporation ("Holder"), the principal amount three hundred thousand
dollars ($300,000), together with interest at the rate of ten percent (10%) per
annum, on June 5, 2000, subject to earlier prepayment as hereinafter provided.
If payment of this Note is due is on a day on not a business day, such payment
shall be made on the next day which is a business day. A business day shall mean
a day other than a day on which banks in the City of New York are permitted or
required to be closed. Payments of principal and interest shall be made in
lawful money of the United States of America. This Note is one of a series of
the Company's 10% promissory notes (collectively, the "Notes") in the maximum
aggregate principal amount of five hundred thousand dollars ($500,000) issued
pursuant to a loan agreement dated January 21, 2000 between the Company and the
Holder.
Article 1. Particular Covenant
(a) Principal and Interest. The Company will duly and punctually pay the
principal amount of this Note and the interest thereon at the time and in the
manner specified in this Note.
(b) Prepayment Under Certain Conditions.
(i) In the event of a Financing Event, as hereinafter defined, the full payment
of principal and interest on this Note shall become immediately due and payable
on the date of the Financing Event.
(ii) A Financing Event shall mean the first to occur of (A) the date the Company
receives gross proceeds (prior to commissions and expenses) of at least
$5,000,000 from a private placement or public offering of its securities, or (B)
the date the Company obtains bank or other debt financings (other than this
Note) or credit lines or other credit facility or facilities of at least
$750,000.
Article 2. Events of Default and Acceleration
(a) Events of Default Defined. The entire unpaid principal amount of this Note,
together with interest thereon shall, on written notice from the Holder,
forthwith become and be due and payable if any one or more Events of Default
shall have occurred (for any reason whatsoever and whether such happening shall
be voluntary or involuntary or be affected or come about by operation of law
pursuant to or in compliance with any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body) and be
continuing. An Event of Default shall occur:
(i) if failure shall be made in the due and punctual payment of the principal of
any of the Notes when and as the same shall become due and payable whether at
maturity or otherwise;
<PAGE> 64
EXHIBIT 10.8 RESTATED AGREEMENT
(ii) if failure shall be made in the due and punctual payment of any installment
of interest on any of the Notes when and as the same shall become due and
payable, and such failure shall have continued for five (5) days from the date
such payment is due;
(iii) if the Company shall consent to the appointment of a receiver, trustee or
liquidator of itself or of a substantial part Of its Property, or shall make a
general assignment for the benefit of creditors, or shall file a voluntary
petition in bankruptcy, or an answer seeking reorganization in a proceeding
under any bankruptcy law (as now or hereafter in effect) or an answer admitting
the material allegations of a petition filed against the Company, voluntary
petition, answer or consent, seek relief under the pro in any such proceeding,
or shall by visions of any other now existing or future bankruptcy or other
similar law providing for the reorganization or winding up of corporations, or
an arrangement, composition, extension or adjustment with its or their
creditors, or shall, in a petition in bankruptcy filed against it or them be
adjudicated a bankrupt, or the Company or its directors or the holders of a
majority of its equity interest shall vote to dissolve or liquidate the Company;
(iv) if a court of competent jurisdiction shall enter an order, judgment or
decree appointing, without consent of the Company, a receiver, trustee or
liquidator of the Company or of all or any substantial part of the property of
the Company, or approving a petition filed against the Company seeking a
reorganization or arrangement of the Company under the Federal bankruptcy laws
or any other applicable law or statute of the United States of America Or any
State thereof, or any substantial part of the property of the Company shall be
sequestered; and such order, judgment or decree shall not be vacated or set
aside within ninety (90) days from the date of the entry thereof, or
(v) if, under the provisions of any law for the relief or aid of debtors, any
court of competent jurisdiction shall assume custody or control of the Company
or of all or any substantial part of the property of the Company and such
custody or control shall not be terminated within ninety (90) days from the date
of assumption of such custody or control.
(b)Rights of Note Holder. Nothing in this Note shall be construed to modify,
amend or limit in any way the right of the holder of this Note to bring an
action against the Company in the event the Company shall fail to pay principal
of or interest on this Note when due.
Article 3. Miscellaneous
(a) Transferability. No transfer of this Note shall be effective unless such
transfer is made in compliance with all applicable Federal and state securities
laws and the Holder shall provide to the Company an opinion of counsel, which
counsel and opinion shall be reasonably acceptable to the Company, as to the
exemption from the registration requirements of the Securities Act of 1933, as
amended, and applicable state securities laws. The Company shall be entitled to
treat as the owner of this Note only the person shown as the Holder on its books
and records, regardless of whether the Company has any contrary knowledge.
<PAGE> 65
EXHIBIT 10.8 RESTATED AGREEMENT
(b)WAIVER OF TRIAL BY JURY. IN ANY LEGAL PROCEEDING TO ENFORCE PAYMENT OF THIS
NOFE-, THE COMPANY AND, BY THE ACCEPTANCE OF THIS NOTE, THE HOLDER, WAIVES TRIAL
BY JURY.
(c)WAIVER OF ANY RIGHT OF COUNTERCLAIM. EXCEPT AS PROHIBITED BY LAW, TH COMPANY
HEREBY WAIVES ANY RIGHT TO ASSERT ANY CLAIM IT MAY HAVE AGAINST THE LENDER WAY
OF A COUNTERCLAIM IN ANY ACTION ON THIS NOTE
(d)Right of Prepayment . The Company may prepay the Notes at whole at any time
or in part from time to time, on not less than three nor more than 20 days'
written notice without payment of any of payment. penalty or premium. Any
prepayment shall be accompanied by payment of accrued interest to the date of
payment.
(e) Usury Saving Provision. All Payment obligations arising under this Note are
subject to the express condition that at no time shall the Company be obligated
or required to pay interest at a rate which could subject the Holder to either
civil or criminal liability as a result of being in excess of the maximum rate
which the Company is permitted by law to contract or agree to pay. If by the
terms of this Note, the Company is at any time required or obligated to pay
interest at a rate in excess of such maximum rate, the applicable rate of
interest shall be deemed to be immediately reduced to such maximum rate, and
interest thus payable shall be computed at such maximum rate, and the port' ion
of all prior interest payments in excess of such maximum rate shall be applied
and shall be deemed to have been payments in reduction of principal.
(f) Notice to Company. Notice to the Company shall be given to the Company at
its principal executive offices, presently located at Four Armstrong Road;
Building 2, Third floor, Shelton, Connecticut 06484, attention of Mr. Naval
Kapoor, president and CEO, or to such other address or person as the Company
may, from time to time, advise the Holder.
(g) Governing Law. This Note shall be governed by the laws of the State of New
York applicable to agreements executed and to be performed wholly within such
State. The Company, and by acceptance of this Note, the Holder, consents to the
exclusive jurisdiction of the United States District Court for the Southern or
Eastern District of New York and Supreme Court of the State of New York in the
County of Suffolk or New York in any action relating to or arising out of this
Note.
(h) Expenses. In the event that the Holder commences a legal proceeding in order
to enforce its rights under this Note, the Company shall pay all reasonable
legal fees and expenses incurred by the holder with respect thereto.
IN WITNESS WHEREOF, the Company has executed this Note on the date and year
first aforesaid.
I-ENGINEERING.COM, INC.
By:
Naval Kapoor, President and CEO
<PAGE> 66
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
EXHIBIT 11.1 - COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Years ended December 31,
1999 1998 1997
Average shares outstanding 3,047,798 3,819,716 3,819,574
Dilutive effect of stock
options and warrants computed
by use of treasury stock
method -0- 11,500 69,415
Computation of Earnings Per
Share=Net Income/Average
common and common share
equivalent shares ( 1,853,031) 805,261 1,022,881
outstanding 3,047,798 3,831,216 3,888.989
--------- --------- ---------
Earnings Per Share $ (0.61) $ 0.21 $ 0.26
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
10-K FINANCIAL DATA SCHEDULE
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF OPERATIONS FILED
AS PART OF THE ANNUAL REPORT ON FORM 10-K AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH ANNUAL REPORT ON FORM 10-K.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 43,141
<SECURITIES> 0
<RECEIVABLES> 2,518,343
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,662,349
<PP&E> 751,831
<DEPRECIATION> 589,011
<TOTAL-ASSETS> 7,365,262
<CURRENT-LIABILITIES> 2,818,402
<BONDS> 0
<COMMON> 38,197
0
0
<OTHER-SE> 4,546,860
<TOTAL-LIABILITY-AND-EQUITY> 7,365,262
<SALES> 36,015,273
<TOTAL-REVENUES> 36,015,273
<CGS> 33,048,393
<TOTAL-COSTS> 33,048,393
<OTHER-EXPENSES> 4,330,872
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 257,039
<INCOME-PRETAX> (1,621,031)
<INCOME-TAX> 232,000
<INCOME-CONTINUING> (1,853,031)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,853,031)
<EPS-BASIC> (.61)
<EPS-DILUTED> (.61)
</TABLE>
