SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 1, 1999
Trans Global Services, Inc.
(Exact name of Registrant as Specified in its Charter)
Delaware 0-23382 62-1544008
(State or other jurisdiction (Commission (IRS Employer
of incorporation File No.) Identification No.)
1393 Veterans Memorial Highway, Hauppauge, New York 11788
(Address of Principal Executive Office)
Registrant's telephone number, including area code: (631) 724-0006
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Item 2. Acquisition or Disposition of Assets.
On November 1, 1999, the Registrant entered into an Agreement and Plan of Merger
(the "Agreement") with IT Staffing Ltd., an Ontario corporation ("ITS"), and ITS
Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of ITS
("ITS Subsidiary"). Pursuant to the Agreement, ITS Subsidiary will be merged
with and into the Registrant, with the result that the Registrant will become a
wholly-owned subsidiary of ITS. Pursuant to the Agreement, when the merger
becomes effective, each share of the Registrant's common stock will be converted
into one-quarter of an ITS common share. The merger is subject to stockholder
approval by both the Registrant and ITS.
The Agreement also contemplates that Mr. Joseph G. Sicinski, the Registrant's
president and chief executive officer and a director, and Mr. Glen R. Charles,
the Registrant's chief financial officer and a director, will enter into
employment agreements pursuant to which, among other things, they will receive,
as additional compensation, one-quarter ITS common stock for each share of the
Registrant's common stock owned by them when the merger becomes effective. In
addition, the exercise price of certain outstanding options held by the
Registrant's officers, directors and employees would be reduced to $.01 per
share.
ITS provides information technology staffing services, primarily by supplying
information technology professionals to clients for short-term and long-term
assignments and for permanent placement with its clients. ITS recently announced
the acquisition of CAD CAM Inc., an engineering services company specializing in
the manufacturing, automotive and public sector markets. ITS' common shares are
traded on the Nasdaq SmallCap Market under the symbol ITST.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
2.1 Agreement and Plan of Merger dated November 1, 1999, by and among IT
Staffing Ltd. and ITS Acquisition Corp. and the Registrant.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TRANS GLOBAL SERVICES, INC.
s/ Joseph G. Sicinski
Date: November 9, 1999 Joseph G. Sicinski
President and CEO
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger ("Agreement") is made as of the 1st day of
November, 1999, by and among IT Staffing Ltd., an Ontario corporation ("Parent")
with a place of business at 55 University Avenue, Suite 505, Toronto, Ontario,
Canada M5J 2H7; ITS Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Subsidiary") whose address is 1209 Orange Street,
Wilmington, Delaware 19801, and Trans Global Services, Inc., a Delaware
corporation ("Trans Global") with a place of business at 1393 Veterans Memorial
Highway, Hauppauge, New York 11788. Parent, Subsidiary and Trans Global are
referred to individually as a "Party" and collectively as the "Parties."
PREAMBLE
WHEREAS, upon the terms and subject to the conditions of this Agreement and in
accordance with the General Corporation Law of the State of Delaware ("Delaware
Law"), Subsidiary will be merged with and into Trans Global (the "Merger"); and
WHEREAS, this Agreement constitutes a plan of merger pursuant to Section 368 of
the Internal Revenue Code of 1986, as amended.
NOW THEREFORE, in consideration of the mutual promises set forth herein and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Parties agree as follows:
ARTICLE 1
THE MERGER
(a) The Merger. Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with Delaware Law, at the Effective Time (as herein
defined) Subsidiary shall be merged with and into Trans Global, the separate
existence of Subsidiary shall cease and Trans Global shall continue as the
surviving corporation of the Merger (the "Surviving Corporation").
(b) Consummation of the Merger. Subject to the satisfaction of the conditions
set forth in Article 8 herein (the "Closing Conditions"), the consummation of
the Merger will take place as promptly as practicable after the satisfaction or
waiver of the Closing Conditions. The closing (the "Closing") shall be held at
the offices of Esanu Katsky Korins & Siger, LLP, 605 Third Avenue, New York, New
York 10158 within five (5) business days after approval of the Merger by the
stockholders of Trans Global and Parent, unless such other time and place is
agreed to in writing by the Parties hereto. The date on which the Closing occurs
is the "Closing Date."
(c) Effective Time. As promptly as practicable after the Closing, the Parties
shall cause the Merger to be consummated by filing, and the Merger shall become
effective immediately upon the filing, of a certificate of merger (the "Merger
Certificate") with the Secretary of State of the State of Delaware in
substantially the form annexed hereto as Exhibit 1, executed in accordance with
the relevant provisions of Delaware Law. The date and time of such filing is
referred to as the "Effective Time." The date on which the Effective Time occurs
is referred to as the "Effective Date."
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(d) Effect of the Merger. At and after the Effective Time, the Merger shall be
effective as provided in the applicable provisions of Delaware Law. The
corporate existence of Trans Global, as the Surviving Corporation, with all of
its purposes and powers, shall continue unaffected and unimpaired by the Merger,
and, as the Surviving Corporation, it shall be governed by the laws of the State
of Delaware and succeed to all rights, assets, liabilities and obligations of
Subsidiary in accordance with Delaware Law. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time, except as otherwise
provided herein, all the property, rights, privileges, powers and franchises of
Trans Global and Subsidiary shall vest in the Surviving Corporation, and all
debts, liabilities and duties of Trans Global and Subsidiary shall become the
debts, liabilities and duties of the Surviving Corporation. The separate
existence and corporate organization of Subsidiary shall cease at the Effective
Time and thereafter Subsidiary and Trans Global shall be a single corporate, to
wit, Trans Global.
(e) Certificate of Incorporation; By-Laws. At and after the Effective Time, the
Certificate of Incorporation and By-Laws of Trans Global, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation and By-Laws of the Surviving Corporation, except that, as provided
in the Certificate of Merger, paragraph 4(a) of Trans Global's Certificate of
Incorporation shall be amended to read as follows:
"(a) The total number of shares of capital stock which the corporation is
authorized to issue is 1,000 shares, all of which shall be shares of Common
Stock and shall have a par value of $.01 per share."
(f) Directors and Officers. At and after the Effective Time, the directors and
officers of the Surviving Corporation shall be the individuals named in Exhibit
2 hereto, until their respective successors shall have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Certificate of Incorporation and By-Laws of the Surviving
Corporation.
(g) Further Actions. If at any time after the Effective Time, the Surviving
Corporation shall consider or be advised that any further assignment or
assurances or any other things are necessary or desirable to vest, perfect or
confirm, of record or otherwise, in the Surviving Corporation, the title to any
property or right of Subsidiary acquired or to be acquired by reason of or as a
result of the Merger, Subsidiary and its officers and directors in office
immediately prior to the Effective Time shall and will execute and deliver all
such proper deeds, assignments and assurances and do all things necessary and
proper to vest, perfect or confirm title to such property or rights in the
Surviving Corporation and otherwise carry out the purpose of this Agreement, and
the officers of the Surviving Corporation are fully authorized in the name of
Subsidiary or otherwise to take any and all such action with the same effect as
if such persons were officers of Subsidiary or otherwise to take any and all
such action with the same effect as if such person were officers of Subsidiary.
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(h) Appraisal Rights. Shares of Trans Global Common Stock that are outstanding
immediately prior to the Effective Date and which are held by stockholders who
shall (I) not have voted in favor of the Merger, (ii) have taken all action
required under Delaware Law to exercise their rights of appraisal in accordance
with Section 262 of the Delaware Law, and (iii) not have withdrawn such demand
or otherwise have forfeited appraisal rights (collectively, the "Dissenting
Shares"), shall not be converted into shares of ITS Common Stock. Such holders
shall be entitled to receive payment of the appraised value of such shares from
Parent, except that all Dissenting Shares held by holders who shall have failed
to perfect or who have effectively withdrawn or lost their rights of appraisal
of such Dissenting Shares, shall thereupon be deemed to have converted into and
have become as of the Effective Time, for the right to receive, without any
interest thereon, shares of ITS Common Stock as provided in Article 2(b) herein,
upon the surrender of the certificates representing such shares as provided in
Article 2 hereof.
ARTICLE 2
CONVERSION OF SHARES
(a) Exchange Ratio Defined. The Exchange Ratio shall mean the number of common
shares, with no par value ("ITS Common Stock"), of Parent issuable with respect
to one (1) share of common stock, par value $.01 per share ("TGSI Common
Stock"), of Trans Global, and the Reciprocal Exchange Ratio shall mean one (1)
divided by the Exchange Ratio. The Exchange Ratio shall be one-fourth (1/4).
(b) Exchange of Shares of TGSI Common Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder thereof:
(i) All shares of Trans Global capital stock which are held in treasury of Trans
Global shall be canceled.
(ii) Each share of TGSI Common Stock which is issued and outstanding at the
Effective Time shall become and be converted into the number of shares of ITS
Common Stock equal to the Exchange Ratio.
(iii) Each issued and outstanding share of common stock, par value $.01 per
share ("Subsidiary Stock"), of Subsidiary, shall become and be converted into
one (1) share of TGSI Common Stock.
(c) Determination of Issued and Outstanding Shares of TGSI Common Stock. For the
purposes of determining the number of shares of TGSI Common Stock issued and
outstanding at the Effective Time:
(i) All shares of TGSI Common Stock which are issuable upon exercise of options
or warrants which have been exercised prior to the close of business on the
Closing Date (or prior to the Effective Time if the Effective Time shall be on a
day subsequent to the Closing Date) shall be deemed issued and outstanding,
regardless of whether (A) any checks issued in respect of such exercise shall
have cleared or (B) any stock certificates shall have been issued, provided,
that no certificate for shares of ITS Common Stock shall be issued in respect of
such shares until Trans Global shall be advised by its bank that the checks have
cleared.
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(ii) All Dissenting Shares shall not be deemed to be issued and outstanding
shares except to the extent that the holders thereof shall withdraw their notice
of appraisal, fail to perfect their rights of appraisal in accordance with
Delaware law or are otherwise not eligible to exercise their rights of
appraisal.
(d) Exchange Ratio of Stock Options and Warrants. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder thereof,
each outstanding option and warrant to purchase one share of TGSI Common Stock
(collectively, the "TGSI Options") shall become and be converted into options
and warrants (collectively, "ITS Options") to purchase such number of shares of
ITS Common Stock as equals the product of the Exchange Ratio multiplied by
number of shares of TGSI Common Stock subject to the TGSI Options at an exercise
price determined by multiplying the exercise price per share of TGSI Common
Stock in effect immediately prior to the Effective Time by the Reciprocal
Exchange Ratio.
ARTICLE 3
EXCHANGE OF CERTIFICATES
(a) Exchange of Certificates. After the Effective Time, each holder of an
outstanding certificate or certificates which, prior thereto, represented one or
more shares of TGSI Common Stock shall be required to surrender the same to
Continental Stock Transfer & Trust Company, New York, New York, as exchange
agent (the "Exchange Agent"), and such holders shall be entitled upon such
surrender to receive in exchange therefor a certificate or certificates
representing the number of whole shares of ITS Common Stock into which the
shares of TGSI Common Stock theretofore represented by the certificate or
certificates so surrendered shall have been converted pursuant to this Article
3, together with cash as set forth in Article 3(b) of this Agreement. Until so
surrendered, each such outstanding certificate which, prior to the Effective
Time, represented shares of TGSI Common Stock shall be deemed for all corporate
purpose, subject to the further provisions of this Article 3, to evidence the
ownership of the number of whole shares of ITS Common Stock into which such
shares of TGSI Common Stock have been so converted. No dividend payable to
holders of shares of ITS Common Stock of record as of any date subsequent to the
Effective Time shall be paid to the holder of any certificate which, prior to
the Effective Time, represented shares of TGSI Common Stock, unless and until
such certificate is surrendered as provided in this Article 3(a).
(b) Cash in Lieu of Fractional Shares. No certificate or scrip representing
fractional shares of ITS Common Stock shall be issued upon the surrender of
certificates representing shares of TGSI Common Stock pursuant to this Agreement
of Merger, and no dividend declaration by the Board of Directors of Parent shall
relate to any such fractional share. Fractional shares shall be rounded to the
nearest one-hundredth of a share. In lieu of such fractional share, Parent will
pay cash to any holder of shares of TGSI Common Stock entitled to a fractional
share of ITS Common Stock. Such cash will be held by the Exchange Agent and
delivered to the initial holder of record of the certificate representing shares
of ITS Common Stock issued in exchange for such shares of TGSI Common Stock,
without interest, only upon presentation for transfer or exchange of
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certificates representing such holder's shares of TGSI Common Stock. Payment for
the fractional share interest will be based upon the last reported sales price
on the Nasdaq SmallCap Market of one (1) share of ITS Common Stock on the
Effective Date, or, if shares of ITS Common Stock shall not be traded on such
market on the Effective Date, the average of the closing bid and asked prices on
such date shall be used.
(c) Full Satisfaction of Rights. All shares of ITS Common Stock into which the
TGSI Common Stock shall have been converted pursuant to this Article 3 shall be
deemed to have been issued in full satisfaction of all rights pertaining to such
converted shares. If any certificate for such shares of ITS Common Stock is to
be issued in a name other than that in which the certificate for TGSI Common
Stock surrendered for exchange is registered, it shall be a condition of such
exchange that the certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the holder of TGSI Common Stock
requesting such exchange shall pay to the Exchange Agent, any transfer or other
taxes required by reason of the issuance of certificate for such shares of ITS
Common Stock in a name other than that of the registered holder of the
certificate surrendered, or establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not applicable.
(d) Cancellation of Certificates. All certificates representing shares of TGSI
Common Stock which shall be converted into shares of ITS Common Stock pursuant
to this Article 3 shall be canceled upon delivery thereof to the Exchange Agent
pursuant to this Agreement.
(e) Closing of Transfer Books. On the Effective Date, the stock transfer book of
TGSI shall be deemed to be closed and no transfer of shares of TGSI Common Stock
shall thereafter be recorded thereon.
(f) TGSI Options. As soon as practical after the Effective Date, Parent shall
give written notice to each holder of a TGSI Option, by first class mail at such
person's address set forth on Trans Global's books and records, as to the number
of shares of ITS Common Stock issuable upon exercise of such holder's TGSI
Options and as to the exercise price of such TGSI Options as adjusted for the
Merger.
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ARTICLE 4
DELIVERIES BY THE PARTIES; CERTAIN DEFINITIONS
(a) Deliveries by the Parties. It shall be a condition to obligations of Parent
and Subsidiary to close that, at the Closing, Trans Global shall have delivered
or caused to be delivered to Parent the closing documents listed in Article 8
herein. It shall be a condition to the obligations of Trans Global to close
that, at the Closing, Parent and Subsidiary shall have delivered or caused to be
delivered to Trans Global the closing documents listed in Article 8 herein.
(b) Further Assurances. At or after the Closing, Trans Global, Parent and
Subsidiary shall prepare, execute, and deliver, such further instruments of
conveyance, sale, assignment or transfer, and shall take or cause to be taken
such other or further action, as any Party shall reasonably request of any other
Party at any time or from time to time in order to consummate, in any other
manner, the terms and provisions of this Agreement.
(c) Certain Defined Terms. In this Agreement:
(i) Any reference to any event, change, condition or effect being "material"
with respect to any entity or group of entities means any material event,
change, condition or effect related to the financial condition, properties,
assets (including intangible assets), liabilities, business, operations or
results of operations of such entity or group of entities. Any agreement,
instrument, lease, note, debenture, indenture, action, proceeding, inquiry or
investigation shall be deemed to be material if disclosure thereof would be
required pursuant to Regulation S-B of the SEC pursuant to the Securities Act of
1933, as amended (the "ecurities Act") or if the filing thereof as an exhibit
is required pursuant to said Regulation S-B.
(ii) Any reference to a "Material Adverse Effect" with respect to any entity or
group of entities shall be broadly construed to mean any event, change or effect
that is materially adverse to the financial condition, properties, assets,
liabilities, business, operations or results of operations of such entity or
group of entities.
(iii) Any reference to a Party's "knowledge" means the actual knowledge of such
Party's executive officers.
(iv) Any reference to "Tax" (and, with correlative meaning, "Taxes" and
"Taxable") means:
(A) any net income, alternative or add-on minimum tax, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll employment, excise, severance, stamp, occupation, property,
environmental or windfall profit tax, custom, duty or other tax governmental fee
or other like assessment or charge of any kind whatsoever together with any
interest or any penalty, addition to tax or additional amount imposed by any
governmental entity (a "Tax Authority") responsible for the imposition of any
such tax (domestic or foreign), and by any governmental entity (a "Tax
Authority") responsible for the imposition of any such tax (domestic or
foreign), and
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(B) any liability for the payment of any amounts of the type described in clause
(A) of this Article 4(c)(iv) as a result of being a member of an affiliated,
consolidated, combined or unitary group for any Taxable period, and
(C) any liability for the payment of any amounts of the type described in
clauses (A) or (B) of this Article 4(c)(iv) as a result of any express or
implied obligation to indemnify any other person.
(v) "Tax Return" shall mean any return, statement, report or form, including,
without limitation, estimated Tax returns and reports, withholding Tax returns
and reports and information reports and returns required to be filed with
respect to Taxes.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF TRANS GLOBAL
Except as set forth in the Schedules to this Agreement, disclosure in any one of
which shall apply to any and all representations and warranties made in this
Agreement, and except as otherwise disclosed in writing to Parent, Trans Global
hereby represents and warrants to Parent and Subsidiary as follows:
(a) Organization, Standing, and Power. Trans Global is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to conduct its business as
presently conducted by it and to enter into and perform this Agreement and to
carry out the transactions contemplated by this Agreement. Trans Global is duly
qualified to do business as a foreign corporation doing business in the each
state in which it owns or leases real property and where the failure to be so
qualified and in good standing would have a Material Adverse Effect. Trans
Global has no subsidiaries except for TGS Services, Inc., a Delaware
corporation, Avionics Research Holdings, Inc., a New York corporation, Resource
Management International, Inc., a Delaware Corporation, Avionics Research
Corporation, a New York corporation, and Avionics Research Corporation of
Florida, a Florida corporation (collectively, the "Trans Global Subsidiaries"
and each a "Trans Global Subsidiary"). Each Trans Global Subsidiary is duly
organized, validly existing and in good standing under the laws of the state of
its incorporation. Each Trans Global Subsidiary has the corporate power to own
its properties and to carry on its business as now being conducted and is duly
qualified to conduct business and is in good standing in each jurisdiction in
which it owns or leases real property and where the failure to be so qualified
and in good standing would have a Material Adverse Effect. Trans Global does not
own any shares of capital stock of any corporation other than stock of Trans
Global Subsidiaries and it does not have any other ownership interest in any
partnership (general or limited), limited liability company or other entity,
whether foreign or domestic (collectively such ownership interests including
capital stock, "Equity Interests" and each an "Equity Interest"). No Trans
Global Subsidiary owns any Equity Interest except for ownership of stock in
other Trans Global Subsidiaries or as otherwise set forth in Schedule 5(a) to
this Agreement.
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(b) Capitalization.
(i) The authorized capital stock of Trans Global consists of 25,000,000 shares
of TGSI Common Stock and 5,000,000 shares of preferred stock, par value $.01 per
share ("TGSI Preferred Stock"). As of the date of this Agreement, there were
3,819,716 issued and 2,669,716 outstanding shares of TGSI Common Stock,
1,150,000 shares of TGSI Common Stock held as treasury shares and no issued or
outstanding shares of TGSI Preferred Stock. Except for 1,804,973 shares of TGSI
Common Stock reserved for issuance (consisting of 912,661 shares of TGSI Common
Stock reserved for issuance upon exercise of options available for grant under
stock options plans, of which options to purchase 130,000 shares of TGSI Common
Stock are issuable pursuant to Trans Global's 1999 Long-Term Incentive Plan,
which is subject to stockholder approval, and 892,312 shares of TGSI Common
Stock reserved for issuance upon exercise of outstanding warrants), no shares of
capital stock have been reserved for issuance to any person, and there are no
other outstanding rights, warrants, options or agreements for the purchase of
capital stock from Trans Global except as provided in this Agreement. No person
is entitled to any preemptive or similar right with respect to the issuance of
any capital stock of Trans Global. The outstanding shares of TGSI Common Stock
are validly issued, fully paid, non-assessable, and have been issued in
compliance with all state and Federal securities laws.
(ii) All of the issued and outstanding capital stock of each of the Trans Global
Subsidiaries is owned by either Trans Global or a Trans Global Subsidiary, and
no Trans Global Subsidiary has issued any options, warrants or convertible
securities upon the exercise or conversion of which, any shares of any class of
capital stock of any Trans Global Subsidiary may be issued. All of the issued
and outstanding capital stock of each of the Trans Global Subsidiaries is
validly issued, fully paid, non-assessable and have been issued in compliance
with all state and Federal securities laws.
(c) Authority for Agreement. The execution, delivery, and performance of this
Agreement by Trans Global has been duly authorized by all necessary corporate
action, and this Agreement constitutes the valid and binding obligation of Trans
Global enforceable against it in accordance with its terms, except as
enforceability may be affected by bankruptcy, insolvency or other laws of
general application affecting the enforcement of creditors' rights. The
execution and consummation of the transactions contemplated by this Agreement
and compliance with its provisions by Trans Global will not violate any
provision of law and will not conflict with or result in any breach of any of
the terms, conditions, or provisions of, or constitute a default under, the
Trans Global's Certificate of Incorporation or By-Laws or, in any material
respect, any indenture, lease, loan agreement or other agreement instrument to
which Trans Global or any Trans Global Subsidiary is a party or by which they or
any of their properties are bound, or any decree, judgment, order, statute, rule
or regulation applicable to Trans Global or any Trans Global Subsidiary except
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to the extent that any breach or violation of any of the foregoing shall not
constitute or result in a Material Adverse Effect.
(d) Governmental Consent. Except as required by the Securities Act and state
securities commissions or as otherwise expressly provided in this Agreement, no
material consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any governmental
authority is required on the part of Trans Global in connection with the
execution and delivery of this Agreement, or the consummation of the
transactions contemplated by this Agreement.
(e) SEC Documents; Financial Statements.
(i) Trans Global has furnished to Parent a true, correct and complete copy of
each statement, report, and other document filed with the United States
Securities and Exchange Commission ("SEC") by Trans Global since December 31,
1998, and Trans Global will furnish Parent a true, correct and complete copy of
any additional documents filed with the SEC by Trans Global prior to the time of
Closing, including but not limited to, any filings in connection with a proxy
statement to its stockholders. The documents filed by Trans Global with the SEC
and delivered to Parent pursuant to this Agreement are referred to as the "TGSI
SEC Documents."
(ii) Trans Global's consolidated balance sheet at December 31, 1998 and 1997 and
its statements of operations, stockholders' equity and cash flows for the years
then ended, together with the related notes (the "Trans Global Audited Financial
Statements"), have been audited by Moore Stephens, P.C. and are included in
Trans Global's Form 10-K for the year ended December 31, 1998. Trans Global's
unaudited consolidated balance sheet at June 30, 1999 and its unaudited
statements of operations and cash flows for the six-month period then ended and
the related notes (the "Trans Global Unaudited Financial Statements") are
included in Trans Global's Form 10-Q for the quarter ended June 30, 1999. The
Trans Global Audited Financial Statements and Trans Global Unaudited Financial
Statements (collectively, the "TGSI Financial Statements") fairly present the
consolidated financial condition of Trans Global and the Trans Global
Subsidiaries as of the balance sheet dates and the results of their consolidated
operations and cash flows for the period ended on such balance sheet dates in
accordance with United States generally accepted accounting principles
consistently applied. The Trans Global Unaudited Financial Statements include
all adjustments (which include only normal recurring adjustments) necessary to
present fairly the information for such period.
(iii) To the knowledge of Trans Global, except as disclosed in the TGSI
Financial Statements and the TGSI SEC Documents, there has been no Material
Adverse Change in the financial condition, operations or businesses of Trans
Global and the Trans Global Subsidiaries since June 30, 1999, except that Parent
is aware that losses are continuing.
(iv) Except as disclosed in the TGSI Financial Statements, neither Trans Global
nor any Trans Global Subsidiary has any material liabilities, contingent or
otherwise, liability for taxes, or commitments extending for over one (1) year
and requiring the expenditure of more than two hundred fifty thousand United
States dollars (US$250,000) in the aggregate.
(f) Litigation. Except as disclosed in the TGSI SEC Documents and the TGSI
Financial Statements, neither Trans Global nor any Trans Global Subsidiaries has
received notice of any material action, suit or proceeding, or governmental
inquiry or investigation, pending or threatened against Trans Global or any
Trans Global Subsidiaries, which, if adversely determined, would have a
Materially Adverse Effect upon Trans Global's consolidated financial position or
results of operations.
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(g) Interested Party Transactions. Neither Trans Global nor any Trans Global
Subsidiary is indebted to any officer or director of Trans Global or any Trans
Global Subsidiary (except for compensation and reimbursement of expenses
incurred in the ordinary course of business), and no such person is indebted to
Trans Global or any Trans Global Subsidiary, except as disclosed or reflected in
the TGSI SEC Documents or the TGSI Financial Statements.
(h) Title to Properties; Liens. Neither Trans Global nor any Trans Global
Subsidiary owns any real property. All of the assets of Trans Global and the
Trans Global Subsidiaries, except those disposed of in the ordinary course of
business, are free and clear of all liens, security interests, charges and
encumbrances, except (i) as disclosed on the TGSI Financial Statements or the
TGSI SEC Documents, (ii) liens for current taxes not yet due and payable, (iii)
liens in favor of Citizens Business Credit Company, a division of Citizens
Leasing Corporation, (iv) liens in favor of any lessor with respect to capital
lease obligations disclosed in Schedule 5(h) to this Agreement, (v) such
imperfections of title or zoning restrictions, easements or encumbrances, if
any, as do not materially interfere with the present use of such property or
assets, and (vi) liens which arise by operation of law.
(i) Material Contracts. Except for (i) agreements that are exhibits to the TGSI
SEC Documents, (ii) contracts with clients and other contracts executed by Trans
Global and the Trans Global Subsidiaries in the ordinary course of business
(iii) employment agreements with officers and other agreements which are not
required to be filed with the SEC and (iv) other material contracts which are
listed on Schedule 5(i) to this Agreement, neither Trans Global nor any Trans
Global Subsidiary is a party to or bound by any material indenture, lease,
license, loan agreement, other agreement or other instrument.
(j) Compliance. Neither Trans Global nor any Trans Global Subsidiary is in
violation of any material term or provision of its Certificates of Incorporation
or By-Laws, or any material term of any instrument, indenture, loan agreement,
other agreement, judgment, decree, order, statute, rule or regulation applicable
to Trans Global or any Trans Global Subsidiaries where, to the knowledge of
Trans Global, the failure of compliance would have a Material Adverse Effect. To
the knowledge of Trans Global, Trans Global and each of the Trans Global
Subsidiaries have complied in all material respects with all laws and
regulations applicable to their businesses, except as otherwise disclosed in
writing to Parent.
(k) Labor Relations. Neither Trans Global nor any Trans Global Subsidiary is a
party to any collective bargaining agreement and, to Trans Global's knowledge,
no organizational efforts are presently being made with respect to any of their
employees. To Trans Global's knowledge, Trans Global and the Trans Global
Subsidiaries have complied in all material respects with all applicable laws
(including, but not limited to, the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and regulations relating to employment matters
including, but not limited to, those relating to wages, hours, discrimination
and payment of social security and similar taxes.
(l) Tax Returns and Payment. Trans Global and the Trans Global Subsidiaries have
filed all material Tax Returns required by them and have paid all Taxes shown
thereon to be due, except as reflected in the TGSI Financial Statements and
except for Taxes being contested in good faith. Except as disclosed in the TGSI
Financial Statements and the TGSI SEC Documents, there is no material claim for
Taxes that is a lien against the property of Trans Global or any Trans Global
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Subsidiary other than liens for taxes not yet due and payable. Neither Trans
Global nor any Trans Global Subsidiary has received notification of any audit of
any Tax Return of Trans Global or any Trans Global Subsidiary being conducted or
pending by a Tax Authority where an adverse determination could have a Material
Adverse Effect, no extension or waiver of the statute of limitations on the
assessment of any taxes has been granted by Trans Global or any Trans Global
Subsidiary which is currently in effect, and neither Trans Global nor any Trans
Global Subsidiary is a party to any agreement, contract or arrangement with any
Tax Authority, which to Trans Global's knowledge, may result in the payment of
any material amount in excess of the amount reflected on the TGSI Financial
Statements.
(m) Intellectual Property. Trans Global and the Trans Global Subsidiaries have
title to all material patents, trademarks or trade secrets, or adequate licenses
and rights to use patents, trademarks, copyrights, trade names and trade secrets
of others necessary to the conduct of their businesses; provided, however, that
neither Trans Global nor any Trans Global Subsidiary claims any rights in, or
makes any representation or warranty with respect to, any intellectual property
developed by its employees pursuant to staffing engagements. The businesses of
Trans Global and the Trans Global Subsidiaries are being carried on without
known conflicts with patents, licenses, trademarks, copyrights, trade names and
trade secrets of others and, to Trans Global's knowledge, no other persons are
conducting their businesses in conflict with patents, licenses, trademarks,
copyrights, trade names and trade secrets used by Trans Global and the Trans
Global Subsidiaries; provided, however, that no representation is made with
respect to any intellectual property used or generated by employees of Trans
Global or any Trans Global Subsidiary pursuant to or in connection with staffing
engagements.
(n) Environmental Matters. To the knowledge of Trans Global: (i) Trans Global
and the Trans Global Subsidiaries have obtained all material permits and
licenses which are required in connection with their businesses under all
applicable laws and regulations relating to pollution or protection of the
environment (the "Environmental Laws") and are in material compliance therewith;
(ii) Trans Global and the Trans Global Subsidiaries have at all times conducted
their businesses in material compliance with all Environmental Laws and neither
Trans Global nor any Trans Global Subsidiary has received any written notice of
any past, present or future events, conditions or circumstances, which would
interfere with or prevent material compliance or continued material compliance
with any Environmental Laws or which form the basis of any material claim,
demand or investigation, based on or related to Trans Global's or any Trans
Global Subsidiary's business or other activities; (iii) there is no civil,
criminal or administrative action or proceeding pending or threatened against
Trans Global and/or Trans Global Subsidiaries, arising under any Environmental
Laws; and (iv) there do not exist, and at no time since Trans Global and Trans
Global Subsidiaries acquired any premises leased or used by them, have there
existed any conditions that Trans Global believes would require remediation by
Trans Global or any Trans Global Subsidiary under any Environmental Laws.
o) Operation since the Balance Sheet Date. Since June 30, 1999, except as
contemplated by this Agreement, the TGSI SEC Documents or the TGSI Financial
Statements, Trans Global and the Trans Global Subsidiaries:
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(i) have operated their businesses substantially as they were operated prior to
that date and only in the ordinary course;
(ii) have not declared or otherwise become liable with respect to any dividend
or distribution of cash, assets or capital stock, except for the issuance of
shares of TGSI Common Stock upon exercise of stock options;
(iii) have maintained or kept current their books, accounts, records, payroll,
and filings in the usual and ordinary course of business, consistent in all
material respects with past practice; and
(iv) have not made any capital expenditure, commitment or investment other than
in the ordinary course of business.
(p) Employment Agreements. Schedule 5(p) to this Agreement lists each employment
agreement between Trans Global or any Trans Global Subsidiary and any director,
officer or employee of Trans Global and copies of all such agreements have been
provided to Parent prior to the date hereof. Except as provided in such
employment agreements, all other employees of Trans Global and Trans Global
Subsidiaries are terminable at will without expense or liability to Trans Global
and/or Trans Global Subsidiaries other than as may be required pursuant to their
staffing agreements with clients or as may be set forth in said Schedule 5(p).
(q) Warranty Claims. To Trans Global's knowledge, there are no pending or
threatened material claims against Trans Global or any Trans Global Subsidiary
for any work performed by any of them for any client, including but not limited
to, any services rendered under any warranties.
(r) Brokers' and Finders' Fees. Neither Trans Global nor any Trans Global
Subsidiary has incurred, nor will any of them incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions or investment
bankers' fees or any similar charges in connection with this Agreement or any
transaction contemplated hereby, except for the fee to be paid by Trans Global
to Stephen J. Drescher ("Drescher") for services rendered in connection with the
Merger pursuant to a fee agreement between Trans Global and Drescher and except
for payments due to the firm providing the fairness opinion and other fees and
expenses related to the consummation of the Merger.
(s) Board Approval. The Board of Directors of Trans Global has approved this
Agreement, subject to stockholder approval.
(t) Full Disclosure. The TGSI SEC Documents, the TGSI Financial Statements and
the representations and warranties of Trans Global contained in this Agreement,
taken together, do not contain any untrue statement of a material fact, or omit
to state a material fact required to be stated herein or therein or necessary to
make the statements herein or therein, in the light of the circumstances under
which they were made, not misleading.
(u) Survival. Each of the foregoing representations, warranties and covenants
shall terminate at the Effective Time.
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBSIDIARY
Except as set forth in the Schedules to this Agreement, disclosure in any one of
which shall apply to any and all representations and warranties made in this
Agreement, and except as otherwise disclosed in writing to Trans Global, Parent
and Subsidiary hereby jointly and severally represent and warrant to Trans
Global as follows:
(a) Organization, Standing, and Power. Parent and Subsidiary are corporations
duly organized, validly existing and in good standing under the laws of the
Province of Ontario and the State of Delaware, respectively, and each of Parent
and Subsidiary has full corporate power and authority to conduct its business as
presently conducted by it and to enter into and perform this Agreement and to
carry out the transactions contemplated by this Agreement. Each of Parent and
Subsidiary is duly qualified to do business as a foreign corporation doing
business in each state and province in which it owns or leases real property and
where the failure to be so qualified and in good standing would have a Material
Adverse Effect. Parent has no subsidiaries except for Subsidiary, Cad Cam, Inc.,
an Ohio corporation, Systemsearch Consulting Services Inc., an Ontario
corporation, Systemsearch PS Inc., an Ontario corporation, and International
Career Specialists Ltd., an Ontario corporation (collectively, the "ITS
Subsidiaries" and each an "ITS Subsidiary"). Each ITS Subsidiary is duly
organized, validly existing and in good standing under the laws of the state or
province of its incorporation. Each ITS Subsidiary has the corporate power to
own its properties and to carry on its business as now being conducted and is
duly qualified to conduct business and is in good standing in each jurisdiction
in which it owns or leases real property and where the failure to be so
qualified and in good standing would have a Material Adverse Effect. Parent does
not own any Equity Interests other than the shares of capital stock of the ITS
Subsidiaries. No ITS Subsidiary owns any Equity Interests.
(b) Capitalization.
(i) The authorized capital stock of Parent consists of 15,000,000 shares of ITS
Common Stock and 1,000,000 shares of preferred stock, no par value per share
("ITS Preferred Stock"). As of the date of this Agreement, there were issued and
outstanding shares of ITS Common Stock and no issued or outstanding shares of
ITS Preferred Stock. Except for 745,000 shares of ITS Common Stock reserved for
issuance, consisting of ______ shares of ITS Common Stock reserved for issuance
upon exercise of options available for grant under stock option plans, ______
shares of ITS Common Stock reserved for issuance upon exercise of warrants, and
_____ shares of ITS Common Stock reserved for issuance upon exercise of non-plan
options, no shares of capital stock of Parent have been reserved for issuance to
any person, and there are no other outstanding rights, warrants, options or
agreements for the purchase of capital stock from Parent except as provided in
this Agreement. No person is entitled to any preemptive or similar right with
respect to the issuance of any capital stock of Parent. The outstanding shares
of ITS Common Stock are validly issued, fully paid, non-assessable, and have
been issued in compliance with all state, Federal, Canadian and provincial
securities laws.
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(ii) The authorized capital stock of Subsidiary consists of 1,000 shares of
Subsidiary Stock. As of the date hereof, there were 1,000 issued and outstanding
shares of Subsidiary Stock, all of which are owned by Parent. No shares of
capital stock of Subsidiary have been reserved for issuance to any person, and
there are no other outstanding rights, warrants, options or agreements for the
purchase of capital stock from Subsidiary. No person is entitled to any
preemptive or similar right with respect to the issuance of any capital stock of
Subsidiary. The outstanding shares of Subsidiary Stock are validly issued, fully
paid, non-assessable, and have been issued in compliance with all state and
Federal securities laws.
(iii) All of the issued and outstanding capital stock of each of the ITS
Subsidiaries is owned by Parent, and no ITS Subsidiary has issued any options,
warrants or convertible securities upon the exercise or conversion of which any
shares of any class of capital stock of any ITS Subsidiary may be issued.
(c) Authority for Agreement. The execution, delivery and performance of this
Agreement by Parent and Subsidiary has been duly authorized by all necessary
corporate action, and this Agreement constitutes a valid and binding obligation
of Parent and Subsidiary enforceable against them in accordance with its terms,
except as enforceability may be affected by bankruptcy, insolvency or other laws
of general application affecting the enforcement of creditors' rights. The
execution and consummation of the transactions contemplated by this Agreement
and compliance with its provisions by Parent and Subsidiary will not violate any
provision of law and will not conflict with or result in any breach of any of
the terms, conditions, or provisions of, or constitute a default under, their
Certificates of Incorporation or their By-Laws or, in any material respect, any
indenture, lease, loan agreement or other agreement instrument to which Parent
or any ITS Subsidiary is a party or by which they or any of their properties are
bound, or any decree, judgment, order, statute, rule or regulation applicable to
Parent or any ITS Subsidiary except to the extent that any breach or violation
of any of the foregoing shall not constitute or result in a Material Adverse
Effect.
(d) Issuance of ITS Securities.
(i) The shares of ITS Common Stock issuable (A) to the holders of TGSI Common
Stock pursuant to this Agreement, (B) to Joseph G. Sicinski and Glen R. Charles
pursuant to the Employment Agreements, as hereinafter defined, (C) upon exercise
of the ITS Options into which the TGSI Options are converted pursuant to Article
2(d) of this Agreement have been duly authorized and reserved for issuance, and,
when issued pursuant to this Agreement and the Employment Agreements as the case
may be, will be duly and validly authorized and issued, fully paid and
non-assessable and not subject to any preemptive rights or other rights of
stockholders of Parent. The shares of ITS Common Stock referred to in this
Article 6(d)(i) are referred to collectively as the "Merger Shares."
(ii) The ITS Options, when issued to the holders of the TGSI Options pursuant to
Article 2(d) of this Agreement, will constitute the valid and binding
obligations of ITS, enforceable in accordance with their respective terms,
except as enforceability may be affected by bankruptcy, insolvency or other laws
of general application affecting the enforcement of creditors' rights.
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(e) Governmental Consent. Except as required by the Securities Act and state
securities commissions or as otherwise expressly provided in this Agreement, no
material consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any governmental
authority is required on the part of Parent or Subsidiary in connection with the
execution and delivery of this Agreement, or the consummation of the
transactions contemplated by this Agreement.
(f) SEC Documents; Financial Statements.
(i) Parent has furnished to Trans Global a true, correct and complete copy of
each statement, report, and other document filed with the SEC by Parent since
December 31, 1998, and Parent will furnish Trans Global a true, correct and
complete copy of any additional documents filed with the SEC by Parent prior to
the time of Closing, including but not limited to, any filings in connection
with a proxy statement to its stockholders. The documents filed by Parent with
the SEC or delivered to Parent pursuant to this Agreement are referred to as the
"ITS SEC Documents."
(ii) Parent's consolidated balance sheet at December 31, 1998 and 1997 and its
statements of operations, stockholders' equity and cash flows for the years then
ended, together with the related notes (the "Parent Audited Financial
Statements"), have been audited by Schwartz Levitsky Feldman, llp, Chartered
Accountants. Parent's unaudited consolidated balance sheet at June 30, 1999 and
its unaudited consolidated statements of operations and cash flows for the
six-month period then ended and the related notes (the "Parent Unaudited
Financial Statements") have been delivered to Trans Global in Schedule 6(f) to
this Agreement. The Parent Audited Financial Statements and the Parent Unaudited
Financial Statements (collectively, the "ITS Financial Statements") fairly
present the consolidated financial condition of Parent and the ITS Subsidiaries
as of the balance sheet dates and the results of their consolidated operations
and cash flows for the periods ended on such balance sheet dates in accordance
with United States generally accepted accounting principles consistently
applied. The Parent Unaudited Financial Statements include all adjustments
(which include only normal recurring adjustments) necessary to present fairly
the information for such period.
(iii) To the knowledge of Parent, except as disclosed in the ITS Financial
Statements and the ITS SEC Documents, there has been no Material Adverse Change
in the financial condition, operations or businesses of Parent or any ITS
Subsidiaries since June 30, 1999.
(g) Litigation. Except as disclosed in the ITS SEC Documents and the ITS
Financial Statements, neither Parent nor any ITS Subsidiary has received notice
of any material action, suit or proceeding, or governmental inquiry or
investigation, pending or threatened against Parent or any ITS Subsidiary,
which, if adversely determined, would have a Materially Adverse Effect upon
Parent's consolidated financial position or results of operations.
(h) Interested Party Transactions. Parent and the ITS Subsidiaries are not
indebted to any officer or director of Parent or of any ITS Subsidiary (except
for compensation and reimbursement of expenses), and no such person is indebted
to Parent or any ITS Subsidiary, except as disclosed in the ITS SEC Documents or
the ITS Financial Statements.
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(i) Title to Properties; Liens. Neither Parent nor any ITS Subsidiary owns any
real property. All of the assets of Parent and the ITS Subsidiaries, except
those disposed of in the ordinary course of business, are free and clear of all
liens, security interests, charges and encumbrances, except (i) as disclosed on
the ITS Financial Statements or the ITS SEC Documents, (ii) liens for current
taxes not yet due and payable, (iii) liens in favor of Toronto-Dominion Bank and
Business Development Bank of Canada, if any, (iv) liens in favor of any lessor
with respect to capital lease obligations disclosed on Schedule 6(i) to this
Agreement, (v) such imperfections of title or zoning restrictions, easements or
encumbrances, if any, as do not materially interfere with the present use of
such property or assets, and (vi) liens which arise by operation of law.
(j) Material Contracts. Except for (i) exhibits to the ITS SEC Documents, (ii)
contracts with clients and other contracts executed by Parent and the ITS
Subsidiaries in the ordinary course of business, (iii) employment agreements
with officers not required to be filed with the SEC, and (iv) other material
contracts which are listed on Schedule 6(j) to this Agreement, neither Parent
nor any ITS Subsidiary is a party to or bound by any material indenture, lease,
license, loan agreement or other agreement or instrument.
(k) Compliance. Neither Parent nor any ITS Subsidiary is in violation of any
material term or provision of their Certificates of Incorporation or By-Laws, or
of any material term of any instrument, indenture, loan agreement, other
agreement, judgment, decree, order, statute, rule or regulation applicable to
Parent or any ITS Subsidiary where, to the knowledge of Parent, the failure of
compliance would have a Material Adverse Effect. To the knowledge of Parent,
Parent and each of the ITS Subsidiaries have complied in all material respects
with all laws and regulations applicable to their businesses, except as
otherwise disclosed in writing to Trans Global.
(l) Labor Relations. Neither Parent nor any ITS Subsidiary is a party to any
collective bargaining agreement and, to Parent's knowledge, no organizational
efforts are presently being made with respect to any of their employees. To
Parent's knowledge, Parent and the ITS Subsidiaries have complied in all
material respects with all applicable laws (including, but not limited to, ERISA
and regulations relating to employment matters including, but not limited to,
those relating to wages, hours, discrimination and payment of social security
and similar taxes.
(m) Tax Returns and Payment. Parent and the ITS Subsidiaries have filed all
material Tax Returns required by them and have paid all Taxes shown thereon to
be due, except as reflected in the ITS Financial Statements and except for Taxes
being contested in good faith. There is no material claim for Taxes that is a
lien against the property of Parent or any ITS Subsidiary other than liens for
taxes not yet due and payable. Neither Parent nor any ITS Subsidiary has
received notification of any audit of any Tax Return of Parent or any ITS
Subsidiary being conducted or pending by a Tax Authority where an adverse
determination could have a Material Adverse Effect, no extension or waiver of
the statute of limitations on the assessment of any taxes has been granted by
Parent or any ITS Subsidiary which is currently in effect, and neither Parent
nor any ITS Subsidiary is a party to any agreement, contract or arrangement with
any Tax Authority, which to Parent's knowledge, may result in the payment of any
material amount in excess of the amount reflected on the ITS Financial
Statement.
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(n) Intellectual Property. Parent and the ITS Subsidiaries have good title to
all material patents, trademarks, trade secrets, or adequate licenses and rights
to use patents, trademarks, copyrights, trade names and trade secrets of others
necessary to the conduct of their businesses; provided, however, that neither
Parent nor any ITS Subsidiary claims any rights in, or makes any representation
or warranty with respect to, any intellectual property developed by its
employees pursuant to staffing engagements. The businesses of Parent and the ITS
Subsidiaries are being carried on without known conflicts with patents,
licenses, trademarks, copyrights, trade names and trade secrets of others and,
to Parent's knowledge, no other persons are conducting their businesses in
conflict with patents, licenses, trademarks, copyrights, trade names and trade
secrets used by Parent and the ITS Subsidiaries; provided, however, that no
representation is made with respect to any intellectual property used or
generated by employees of Parent or any ITS Subsidiary pursuant to or in
connection with staffing engagements.
(o) Environmental Matters. To the knowledge of Parent: (i) Parent and the ITS
Subsidiaries have obtained all material permits and licenses which are required
in connection with their businesses under all applicable Environmental Laws and
are in material compliance therewith; (ii) Parent and the ITS Subsidiaries have
at all times conducted their businesses in material compliance with all
Environmental Laws and neither Parent nor any ITS Subsidiary has received any
written notice of any past, present or future events, conditions or
circumstances, which would interfere with or prevent material compliance or
continued material compliance with any Environmental Laws or which form the
basis of any material claim, demand or investigation, based on or related to
Parent's or any ITS Subsidiary's business or other activities; (iii) there is no
civil, criminal or administrative action or proceeding pending or threatened
against Parent and/or any ITS Subsidiary, arising under any Environmental Laws;
and (iv) there do not exist, and at no time since Parent and the ITS
Subsidiaries acquired any premises leased or used by them (the "Subject
Premises"), have there existed any conditions that Parent believes would require
remediation by Parent or any ITS Subsidiary under any Environmental Laws.
(p) Operation since the Balance Sheet Date. Since June 30, 1999, except as
contemplated by this Agreement, Parent and the ITS Subsidiaries:
(i) have operated their businesses substantially as they were operated prior to
that date and only in the ordinary course;
(iii) have maintained or kept current their books, accounts, records, payroll,
and filings in the usual and ordinary course of business, consistent in all
material respects with past practice; and
(iv) have not made any capital expenditure, commitment or investment other than
in the ordinary course of business.
(q) Employment Agreements. Schedule 6(q) to this Agreement lists each employment
agreement between Parent or any ITS Subsidiary and any director, officer or
employee of Parent and copies of all such agreements have been provided to Trans
Global prior to the date hereof. Except as provided in such employment
agreements, all other employees of Parent and the ITS Subsidiaries are
terminable at will without expense or liability to Parent or the ITS
Subsidiaries other than may be required pursuant to their staffing agreements
with clients or as disclosed in said Schedule 6(q).
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(r) Warranty Claims. To Parent's knowledge, there are no pending or threatened
material claims against Parent or any ITS Subsidiary for any work performed by
any of them for any client, including but not limited to, any services rendered
under any warranties.
(s) Brokers' and Finders' Fees. Neither Parent nor any ITS Subsidiary has
incurred, nor will any of them incur, directly or indirectly, any liability for
brokerage or finders' fees or agents' commissions or investment bankers' fees or
any similar charges in connection with this Agreement or any transaction
contemplated hereby, except for the fee to be paid by Parent to Globe Capital
Corp. ("Globe") for services rendered in connection with the Merger pursuant to
a fee agreement between Parent and Globe and except for payments due to the firm
providing the fairness opinion and other fees and expenses related to the
consummation of the Merger.
(t) Board Approval. The Board of Directors of Parent has approved this
Agreement, subject to stockholder approval.
(u) Full Disclosure. The ITS SEC Documents, the ITS Financial Statements, and
the representations and warranties of Parent contained in this Agreement, taken
together, do not contain any untrue statement of a material fact, or omit to
state a material fact required to be stated herein or therein or necessary to
make the statements herein or therein, in the light of the circumstances under
which they were made, not misleading.
(v) Survival. Each of the foregoing representations, warranties and covenants
shall terminate at the Effective Time.
ARTICLE 7
REGISTRATION STATEMENT; PROXY STATEMENT
(a) Filing of Registration Statement. As soon as practical after the execution
of this Agreement, Parent shall prepare and file with the SEC a registration
statement (the "Registration Statement") on Form F-4 covering the Merger Shares
(other than shares of ITS Common Stock issuable upon exercise of options which
may be registered pursuant to a Form S-8, which Parent agrees to register
pursuant to a registration statement on Form S-8 as soon as possible following
the Effective Date). The Registration Statement shall include the joint proxy
statement for use in connection with Trans Global's 1999 Annual Meeting of
Stockholders and Parent's 1999 Annual Meeting of Stockholders (collectively the
" Annual Meetings" and each, an "Annual Meeting"). Trans Global and Parent shall
submit the Merger for stockholder approval at their respective Annual Meetings.
(b) Mutual Cooperation. Each Party shall provide the other Party and its counsel
all documents, filings and any other relevant material that shall assist in the
filing of the Registration Statement. Each Party represents that all material
contained in the Registration Statement that relates to such Party will be
correct in all material respects and will not contain any untrue statement of a
material fact, or omit to state any material fact necessary in order to make the
statements
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contained therein, in light of the circumstances under which made, not
misleading. The Parties shall seek to file the Registration Statement with the
SEC and to have the Registration Statement declared effective by the SEC as
promptly as possible.
ARTICLE 8
CONDITIONS TO CLOSING
(a) Conditions Precedent to Trans Global's, Parent's and Subsidiary's
Obligations. The obligations of Trans Global, Parent and Subsidiary as provided
in Articles 1, 2 and 3 herein shall be subject to each of the following
conditions precedent, unless waived by Trans Global and Parent:
(i) Consents, Approvals. Parent, Subsidiary and Trans Global shall have obtained
all consents and approvals of their respective Boards of Directors and
stockholders, and all material consents, including any consents and waivers by
the Parties' respective lenders if necessary, to the consummation of the
transaction contemplated by this Agreement shall have been obtained.
(ii) No Stop Order. The Registration Statement shall have been declared
effective by the SEC, and to the knowledge of Parent and Trans Global, no stop
order shall have been issued by the SEC with respect to the Registration
Statement.
(iii) Absence of Certain Litigation. No action or proceeding shall be threatened
or pending before any governmental entity or authority which, in the reasonable
opinion of counsel for Trans Global or Parent, is likely to result in a
restraint, prohibition or the obtaining of damages or other relief in connection
with this Agreement or the consummation of the Merger.
(iv) Employment Agreements. Trans Global and Parent shall have entered into
employment agreements (the "Employment Agreements") with Messrs. Joseph G.
Sicinski and Glen R. Charles in substantially the form of Exhibits 3 and 4 to
this Agreement, respectively.
(b) Conditions Precedent to Parent's and Subsidiary's Obligations. The
obligations of Parent and Subsidiary as provided in Articles 1, 2 and 3 herein
shall be subject to each of the following conditions precedent, unless waived by
Parent:
(i) Representations and Warranties. The representations and warranties by Trans
Global in Article 5 herein shall be true and accurate in all material respects
on and as of the Closing Date with the same force and effect as though such
representations and warranties had been made at and as of the Closing Date,
except to the extent that any changes therein are specifically contemplated by
this Agreement.
(ii) Performance. Trans Global and the Trans Global Subsidiaries shall have
performed and complied in all material respect with all agreements to be
performed or complied with by them pursuant to this Agreement prior to or at the
Closing.
(iii) Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
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satisfactory in substance and form to Parent and its counsel, and Parent and its
counsel shall have received all such counterpart originals (or certified or
other copies) of such documents as they may reasonably request.
(iv) Opinion of Trans Global's Counsel. Parent shall have received from counsel
of Trans Global, an opinion, dated the Closing Date, as to the matters set forth
in Exhibit 5 to this Agreement.
(v) Auditors Comfort Letter. Parent shall have received from Moore Stephens,
P.C., a letter relating to the independence of such firm and Trans Global's
consolidated audited and unaudited financial statements included in the
Registration Statement, which letter shall be reasonably satisfactory in form
and substance to Parent.
(vi) Resignations. Trans Global shall have delivered the resignations of each of
its directors, other than Messrs. Joseph G. Sicinski and Glen R. Charles, as a
director of Trans Global.
(vii) Material Changes; Due Diligence. Since the date of this Agreement, there
shall not have been any Material Adverse Change in the consolidated financial
condition, business, assets or operations of Trans Global and the Trans Global
Subsidiaries, taken as a whole, except as contemplated by this Agreement, the
TGSI SEC Documents or the TGSI Financial Statements.
(viii) Compliance Certificate. Trans Global shall have delivered to Parent the
certificate of its President, Chief Executive Officer or Chief Financial Officer
as to the matters set forth in Articles 6(a)(i), (ii) and (iii) and 6(b)(i) and
(ii) of this Agreement.
(ix) Lock-up Agreements. Joseph G. Sicinski and Glen R. Charles shall have
execute a lock-up agreement satisfactory to Parent and its counsel pursuant to
which each of them will agree not to publicly sell any of the shares of ITS
Common Stock issued to him in the Merger until the earlier of (i) twelve (12)
months from the Closing Date or (ii) such date as any officer, director or five
percent (5%) stockholder of Parent is permitted to sell any of his, her or its
shares of ITS Common Stock by the underwriters of Parent's initial public
offering.
(x) Appraisal Rights. The holders of not more than twenty percent (20%) of the
shares of TGSI Common Stock which are outstanding on the Closing Date shall have
exercised and perfected their rights to appraisal in connection with the Merger.
(c) Conditions Precedent to Trans Global's Obligations. The obligation of Trans
Global on the Closing Date as provided in Articles 1, 2 and 3 hereof shall be
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions precedent, unless waived by Trans Global:
(i) Representations and Warranties. The representations and warranties by Parent
and Subsidiaries in Article 6 herein shall be true and accurate in all material
respects on and as of the Closing Date with the same force and effect as though
such representations and warranties had been made at and as of the Closing Date,
except to the extent that any changes therein are specifically contemplated by
this Agreement.
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(ii) Performance. Parent, Subsidiary and the other ITS Subsidiaries shall have
performed and complied in all material respect with all agreements to be
performed or complied with by them pursuant to this Agreement prior to or at the
Closing.
(iii) Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to Trans Global and its counsel, and Trans
Global and its counsel shall have received all such counterpart originals (or
certified or other copies) of such documents as they may reasonably request.
(iv) Opinion of Parent's Counsel. Trans Global shall have received from counsel
of Parent, an opinion, dated the Closing Date, as to the matters set forth in
Exhibit 6 to this Agreement.
(v) Auditor's Comfort Letter. Trans Global shall have received from Schwartz
Levitsky Feldman, llp, Chartered Accounts, a letter, dated the Closing Date,
relating to the independence of such firm and Parent's consolidated audited and
unaudited financial statements included in the Registration Statement, which
letter shall be reasonably satisfactory in form and substance to Trans Global.
If the Registration Statement includes any financial statements audited by any
other accounting firm, Trans Global shall have received from such firm a letter,
dated the Closing Date, relating to the independence of such firm and audited
financial statements included in the Registration Statement which have been
certified by such firm and the unaudited financial statements relating to such
issuer which have been included in the Registration Statement, which letter
shall be reasonably satisfactory in form and substance to Trans Global.
(vi) Material Changes; Due Diligence. Since the date of this Agreement, there
shall not have been any Material Adverse Change in the consolidated financial
condition, business, assets or operations of Parent and the ITS Subsidiaries
(including Subsidiary), taken as a whole, except as contemplated by this
Agreement, the ITS Financial Statements and the ITS SEC Documents.
(vii) Compliance Certificate. Parent shall have delivered to Trans Global the
certificate of its President, Chief Executive Officer or Chief Financial Officer
as to the matters set forth in Articles 6(a)(i), (ii) and (iii) and 6(c)(i) and
(ii) of this Agreement.
(viii) Election of Directors and Officers of Parent. Joseph G. Sicinski shall
have been elected, as of the Effective Date, a Director of Parent and as
Executive Vice President of Parent.
(ix) Option Grant. Parent shall have granted Joseph G. Sicinski an option to
purchase 37,000 shares of ITS Common Stock during the three (3) year period
following the Effective date at an exercise price of two United States dollars
(US$2.00) per share. Such option shall be fully vested on the Effective Date.
(ix) Option Grant. Parent shall have granted Joseph G. Sicinski an option to
purchase 37,000 shares of ITS Common Stock during the three (3) year period
following the Effective date at an exercise price of two United States dollars
(US$2.00) per share. Such option shall be fully vested on the Effective Date.
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(x) Modification of Trans Global Options. Prior to the Closing, Trans Global
shall have modified all outstanding stock options granted by Trans Global
pursuant to its long-term incentive plans as of the date of the execution of
this Agreement, except those options having an exercise price of six United
States dollars and seventy five cents (US $6.75) per share or more and except
for options granted pursuant to the 1999 Long-Term Incentive Plan, to provide
that the exercise price for the TGSI Common Stock issuable upon the exercise of
the such options (the "Modified Trans Global Options") shall be reduced to one
cent (US$.01) per share.
ARTICLE 9
COVENANTS
(a) Covenants of the Parties. Each Party covenants and agrees that, during the
period from the date of this Agreement until the Closing Date, such Party, which
term, for purposes of this Article 9(a) shall including any subsidiaries of such
Party, shall conduct its business as presently operated and solely in the
ordinary course, and consistent with such operation, and, in connection
therewith, without the written consent of the other Party:
(i) shall not amend their Certificates of Incorporation or By-laws;
(ii) shall not pay or agree to pay to any employee, officer or director
compensation that is in excess of the current compensation level of such
employee, officer or director other than salary increases or payments made in
the ordinary course of business or as otherwise provided in any contracts or
agreements with any such employees or pursuant to staffing agreements with
clients.
(iii) shall not merge or consolidate with any other entity or to acquire or
agree to acquire any other entity (subject to the fiduciary duty of the
directors of Trans Global or Parent);
(iv) shall not sell, transfer, or otherwise dispose of any assets of such Party
required for the operations of such Party's business except in the ordinary
course of business consistent with past practices;
(v) shall not create, incur, assume, or guarantee any indebtedness for money
borrowed except in the ordinary course of business, or create or suffer to exist
any mortgage, lien or other encumbrance on any of their assets, except those in
existence on the date hereof or those granted pursuant to agreements in effect
on the date of this Agreement;
(vi) shall not make any capital expenditure or series of capital expenditures
except in the ordinary course of business;
(vii) shall not declare or pay any dividends on or make any distribution of
any kind with respect to any of such Party's capital stock;
(viii) shall maintain its facilities, assets and properties in reasonable
repair, order and condition, reasonable wear and tear excepted, and to notify
the other Party immediately in the event of any material loss or damage to any
of such Party's material assets;
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(ix) shall maintain in full force and effect all present insurance coverage of
the types and in the amounts as are in effect as of the date of this Agreement;
(x) shall seek to preserve the present employees, reputation and business
organization of such Party and such Party's relationship with its clients and
others having business dealings with it;
(xi) shall not issue any additional shares of the capital stock or take any
action affecting the capitalization of Trans Global or Parent, except that this
covenant shall not preclude the issuance of shares of TGSI Common Stock or ITS
Common Stock upon exercise of options or warrants or the grant by Parent of
options to purchase its common stock pursuant to stock option or incentive plans
in effect on the date of this Agreement;
(xii) shall use commercially reasonable efforts to comply with and not be in
default or violation under any law, regulation, decree or order applicable to
such Party's business, operations or assets where such violation would, in such
Party's judgment, have a Material Adverse Effect.
(xiii) shall not grant any severance or termination pay to any director, officer
or any other employees of such Party, other than pursuant to agreements in
effect on the date of this Agreement or as otherwise disclosed in the documents
delivered pursuant to this Agreement.
(xiv) shall not, other than in the ordinary course of business, make or change
any material election in respect of Taxes, or adopt or change any accounting
method in respect of Taxes;
(xv) shall not terminate or waive any right of substantial value other than in
the ordinary course of business;
(xvi) shall not enter into any material contract or commitment other than in the
ordinary course of business;
(b) Filings under the Exchange Act. Parent shall, commencing not later than the
quarter ending December 31, 1999, file all reports required to be filed by a
domestic corporation registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended.
(c) Fairness Opinion. Within ten (10) business days after the date of this
Agreement, Trans Global and Parent shall each engage a firm to provide an
opinion that the terms of the Merger are fair, from a financial point of view,
to the stockholders of such Party. Such firm (the "Fairness Opinion Issuer")
shall be instructed to consider, in addition to the terms of this Agreement, the
terms of the other agreements being executed pursuant to this Agreement. The
report of such firm shall be described in the Registration Statement.
(d) Tax Matters. The Parties shall use their best efforts to comply with the
provisions of Section 367 of the Internal Revenue Code of 1986.
(e) Annual Meetings. Parent and Trans Global shall schedule their respective
Annual Meetings not later than seventy (70) days after the Effective Date of the
Registration Statement, and will mail their respective proxy statements within
ten (10) business days after such Effective Date.
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(f) Execution of Employment Agreements. At or prior to the Closing, Parent shall
execute the Employment Agreements and grant the options described in Article
8(c)(ix).
(g) Loans to Certain Parties. Parent shall lend up to two hundred fifty thousand
dollars (US$250,000) in the aggregate to Joseph G. Sicinski and Glen R. Charles,
the proceeds of which loan are to be used to pay Tax obligations of such
individuals for payment of Federal and state Tax liability incurred as a result
of their exercise of the Modified Trans Global Options and the issuance to them
of shares of ITS Common Stock pursuant to the Employment Agreements. Such loan
shall be evidenced by a promissory note and shall have the terms set forth on
Exhibit 7 to this Agreement.
ARTICLE 10
TERMINATION
(a) Automatic Termination. This Agreement shall automatically terminate if the
stockholders of either Parent or Trans Global fail to approve the Merger at its
Annual Meeting.
(b) Termination due to Conditions Precedent.
(i) Parent and Subsidiary may terminate this Agreement in the event that any of
the conditions to closing set forth in Articles 6(a) or (b) to this Agreement
shall not have been satisfied within fifteen (15) business days after the second
to occur of the Annual Meetings.
(ii) Trans Global may terminate this Agreement in the event that any of the
conditions to closing set forth in Articles 6(a) or (c) to this Agreement shall
not have been satisfied within fifteen (15) business days after the second to
occur of the Annual Meetings.
(iii) Either Parent or Trans Global may terminate this Agreement if the SEC
fails to declare the Registration Statement effective within one hundred twenty
(120) days after the date the Registration Statement is filed; provided, that no
Party shall be entitled to terminate this Agreement pursuant to this Article
10(b)(iii) if such Party failed to provide any information or documentation
requested by the SEC in connection with the Registration Statement.
(C) Agreement may be terminated by the written consent of both Parent and Trans
Global.
(d) Method of Termination.
(i) Parent may terminate this Agreement at any time prior to the Closing Date by
delivery of written notice to Trans Global in the event of a material breach by
Trans Global or a failure by Trans Global to perform any material obligation on
its part to be performed or a material breach by Trans Global of its
representations and warranties contained in Article 5 of this Agreement, and
such breach or failure continues for a period of fifteen (15) business days
following the giving of notice; provided, however, that if any such breach or
failure cannot be cured during such fifteen (15) business day period, Trans
Global shall have commenced its efforts to cure such breach and shall be
diligently pursuing such cure.
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(ii) Trans Global may terminate this Agreement at any time prior to the Closing
Date by delivery of written notice to Parent in the event of a material breach
by Parent or Subsidiary or a failure by Parent or Subsidiary to perform any
material obligation on its part to be performed or a material breach by Parent
or Subsidiary of its representations and warranties contained in Article 6 of
this Agreement, and such breach or failure continues for a period of fifteen
(15) business days following the giving of notice; provided, however, that if
any such breach or failure cannot be cured during such fifteen (15) business day
period, Parent shall have commenced its efforts to cure such breach and shall be
diligently pursuing such cure.
ARTICLE 11
CONFIDENTIALITY; NON-SOLICITATION
(a) Confidentiality. Parent and Subsidiary, on the one hand, and Trans Global,
on the other hand, will keep confidential all information and documents obtained
from the other which is expressly marked as confidential (except for any
information disclosed to the public pursuant to a press release authorized by
the parties) and in the event the Closing does not occur will promptly return
such documents and all copies of such documents and all notes and other evidence
thereof, including material stored on a computer, and will not use such
information for its own advantage, except to the extent that (i) the information
must be disclosed by law, (ii) the information becomes publicly available by
reason other than disclosure by the party subject to the confidentiality
obligation, (iii) the information is independently developed, (iv) the
information is obtained from another source not obligated to keep such
information confidential, or (v) the information is already publicly known or
known to the receiving party when disclosed. In the event of the termination of
this Agreement either Party for any reason, the Parties shall be bound by the
provisions of the non-disclosure agreement dated June 9, 1999 between Parent
and Trans Global, and the Parties' obligations in this Article 11 shall be in
addition to, and not in lieu of, the obligations under such non-disclosure
agreement.
(b) Non-Solicitation. During to period from the date of this Agreement until the
consummation or termination of this Agreement or the Merger and, in the event of
the termination of this Agreement or the Merger for any reason, during the two
(2) year period following the date of such termination, neither Party shall,
without the consent of the other Party, directly or indirectly (i) solicit the
employment or engagement, as an employee or consultant, any restricted employee
or encourage any restricted employee to leave the employment of the other Party
or any subsidiary of the other Party or (ii) solicit the restricted clients, as
hereinafter defined. A restricted employee shall mean any person who is employed
by the other Party or any of its subsidiaries on the date of this of such
termination or within six (6) months prior thereto. The restricted clients shall
mean all clients of the other Party or any of its subsidiaries who were clients
during the period from August 1, 1998 to the date of such termination.
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ARTICLE 12
MISCELLANEOUS
(a) Expenses. Each of Parent and Subsidiary, on the one hand, and Trans Global,
on the other hand, shall bear its own costs, including attorneys fees and the
fees of the Fairness Opinion Issuer, incurred in negotiating this Agreement and
consummating of the transactions contemplated hereby; provided, however, that
any such expenses of Trans Global which shall have not be paid by the Closing
Date shall be promptly paid by Parent upon submission of an invoice therefor.
(b) Termination of Covenants, Representations and Warranties. All covenants,
representations and warranties contained herein or made in connection with the
transactions contemplated hereby shall terminate at and as of the Effective
Time.
(c) Notices. All notices, requests, consents and other communications herein
shall be in writing and shall be mailed by first class or certified mail,
postage prepaid, or personally delivered or send by overnight courier service
which obtains evidence of delivery to the Party and its counsel as follows:
If to Parent and Subsidiary: IT Staffing Ltd.
55 University Avenue, Suite 505
Toronto, Ontario, Canada M5J 2H7
Attention: Declan French
President and CEO
with a copy to: Gersten, Savage & Kaplowitz, LLP
101 East 52nd Street, 9th Floor
New York, New York 10022
Attention: Arthur S. Marcus, Esq.
If to Trans Global: Trans Global Services, Inc.
1393 Veterans Memorial Highway
Hauppauge, New York 11788
Attention: Joseph G. Sicinski
President and CEO
with a copy to: Esanu Katsky Korins & Siger, LLP
605 Third Avenue
New York, New York 10158
Attention: Asher S. Levitsky P.C.
(d) Entire Agreement; Modifications; Waiver. This Agreement and the documents
and other agreements specifically referred to herein constitutes the final,
exclusive and complete understanding of the Parties with respect to the subject
matter hereof and supersede any and all prior agreements, understandings,
discussions and letters of intent with respect thereto. No amendment or
modification of this Agreement and no waiver of any provision or condition
hereof or granting of any consent contemplated hereby, shall be valid unless it
is in writing, expressly refers to this Agreement and states that it is an
amendment, modification or waiver and signed by all Parties, in the case of an
amendment or modification, or the Party granting the waiver, in the case of a
waiver. No waiver by any Party of any term or condition of this Agreement, in
any one or more instances, shall be deemed or construed as a waiver of the same
term or condition or any other term or condition of this Agreement on any future
occasion.
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(e) Successors and Assigns. All of the terms of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective successor
and assigns of the Parties hereto; provided, that no Party may assign this
Agreement or any of its rights under this Agreement without the written consent
of the other Party.
(f) Execution and Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute one instrument.
(g) Governing Law and Severability. Except to the extent that Delaware Law is
mandatorily applicable to the Merger, this Agreement shall be governed by the
laws of the Province of Ontario as applied to agreements entered into and to be
performed such province. If any provision of this Agreement or any application
thereof is held to be unenforceable, the remainder of the Agreement and any
application of such provision shall not be affected thereby and to the extent
permitted by law, there shall be substituted for the provisions held
unenforceable, provisions which shall, as nearly as possible, have the same
economic effect as the provisions held unenforceable.
(h) Publicity. Except for disclosure required by law, the timing and content of
any announcements and press releases made prior to the Closing concerning the
transactions contemplated by this Agreement shall be determined by joint
consultation of the Parties.
(i) Captions. The captions in this Agreement are for convenience only and shall
not be considered a part of or affect the construction or interpretation of any
provisions of this Agreement.
(j) Schedules and Exhibits. All of the schedules and exhibits to this Agreement
are hereby incorporated in this Agreement and shall be deemed and construed to
be a part of this Agreement for all purposes.
IN WITNESS WHEREOF, each Party executed this Agreement as of the date first
above written.
IT STAFFING LTD.
By:____________________________
Declan French
President and CEO
IT ACQUISITION CORP.
By:_____________________________
Declan French
President
TRANS GLOBAL SERVICES, INC.
By:______________________________
Joseph G. Sicinski
President and CEO
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List of Exhibits
Exhibit Description Article
1 Certificate of Merger 1(c)
2 List of Officers and Directors 1(f)
3 Joseph G. Sicinski Employment Agreement 8(a)(iv)
4 Glen R. Charles Employment Agreement 8(a)(iv)
5 Opinion of Counsel for Trans Global 8(b)(iv)
6 Opinion of Counsel for Parent 8(c)(iv)
7 Form of Promissory Note 9(g)
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Exhibit 1
Certificate of Merger
CERTIFICATE OF MERGER
of
ITS ACQUISITION CORP.,
a Delaware Corporation
into
TRANS GLOBAL SERVICES, INC.,
a Delaware Corporation
Under Section 252 of the General Corporation Law of the State of Delaware
IT HEREBY CERTIFIED THAT:
1. The constituent business corporations participating in the Merger herein
certified are:
(a) ITS Acquisition Corp., which is incorporated under the laws of the
State of Delaware; and
(b) Trans Global Services, Inc., which is incorporated under the laws of
the State of Delaware.
2. An Agreement and Plan of Merger has been approved, adopted, certified,
executed and acknowledged by each of the constituent corporations in accordance
with the requirements of Section 251 of the General Corporation Law of the State
of Delaware.
3. The name of the surviving corporation in the Merger is Trans Global Services,
Inc., which will continue its existence as said surviving corporation under its
present name upon the effective date of said Merger pursuant to the provisions
of the General Corporation Law of the State of Delaware.
4. The Certificate of Incorporation of Trans Global Services, Inc., as now in
force and effect shall continue to be the Certificate of Incorporation of the
Surviving Corporation, except that, paragraph 4(a) of Trans Global Services,
Inc.'s Certificate of Incorporation shall be amended to read as follows:
"4(a) The total number of share of capital stock which the corporation is
authorized to issue is 1,000 shares, all of which shall be shares of Common
Stock and shall have a par value of $.01 per share."
5. The executed Agreement and Plan of Merger is on file at the following
address:
ITS Acquisition Corp.
c/o IT Staffing Ltd.
55 University Avenue, Suite 505
Toronto, Ontario, Canada M5J 2H7
Tel: (416) 364-8800
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6. A copy of the Agreement and Plan of Merger will be furnished by the surviving
corporation, on request, and without cost, to any stockholder of each of the
constituent corporations.
IN WITNESS WHEREOF, each of the each of the constituent corporations has caused
this certificate to be signed by a duly authorized officer this ____ day of
_____, 1999, and affirm as true the foregoing under penalties or perjury.
TRANS GLOBAL SERVICES, INC.
a Delaware Corporation
By:_____________________________
Joseph G. Sicinski
President and CEO
ITS ACQUISITIONS CORP.
a Delaware Corporation
By: _____________________________
Declan French
President and CEO
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Exhibit 2
List of Officers and Directors
The following persons will be the directors and officers of Trans Global at the
effectiveness of the Merger.
Directors Officer Title
Declan French, Chairman Joseph G. Sicinski President and Chief
Executive Officer
Lloyd MacLean, Director Glen R. Charles Chief Financial Officer
Joseph G. Sicinski, Director Lloyd MacLean Treasurer
Glen R. Charles, Director Declan French Secretary
Blair Taylor, Director
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Exhibit 3
Joseph G. Sicinski Employment Agreement
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") made as of this ____ day of _____, 1999
by and among IT STAFFING LTD., an Ontario corporation (hereinafter referred to
as "Company"), TRANS GLOBAL SERVICES, INC.,a Delaware corporation (hereinafter
referred to as "Trans Global") and JOSEPH G. SICINSKI (hereinafter referred to
as "Executive");
W I T N E S S E T H:
WHEREAS, pursuant to an agreement and plan of merger (the "Merger Agreement")
among Company, ITS Acquisition Corp., a Delaware corporation and wholly-owned
subsidiary of Company ("ITS Subsidiary"), and Trans Global, ITS Subsidiary will
merge with and into Trans Global (the "Merger"); and
WHEREAS, Company and Trans Global desire to obtain the benefits of Executive's
knowledge, skill and ability and to employ Executive on the terms and conditions
hereinafter set forth; and
WHEREAS, Executive is willing to provide his services to Company and Trans
Global and to accept employment by Company and Trans Global on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants herein set
forth it is agreed as follows:
1. Employment of Executive. Company hereby employs Executive as its
Executive Vice President and Trans Global employs Executive its Chief Executive
Officer and President, and Executive shall serve in such capacities as
hereinafter defined.
2. Term. This Agreement shall have a term (the "Term") three (3) years
commencing on the effective date of the Merger (the "Commencement Date"). Each
of the twelve (12) month periods commencing on the Commencement Date and each
anniversary of the Commencement Date is referred to as an "Annual Period."
During the Term, Executive shall devote substantially all of his business time
and efforts to Company and Trans Global and their subsidiaries.
3. Duties.
(a) Executive hereby agrees that, throughout the Term, he shall devote his
business time, attention, knowledge and skills, diligently in furtherance of the
business of Company and Trans Global, shall perform the duties assigned to him
by the Board of Directors of Company consistent with his executive position with
Company and Trans Global and shall observe and carry out such rules and
regulations, policies and directions as the Board of Directors of Company may
from time to time establish to the extent consistent herewith. During the term
of this Agreement, Executive shall do such traveling as may be reasonably
required of him in the performance of his duties on behalf of Company and Trans
Global. Executive shall be available to confer and consult with and advise the
officers and directors of Company at such times during business hours that may
be reasonably required by Company. Executive, in his capacity as an employee of
Company, shall report directly and solely to the Chief Executive Officer of
Company.
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(b) Company agrees that Executive will be included as one (1) of the nominees
designated by Company's Board of Directors for election as a Director at each
annual or other meeting of Company at which Directors are elected which takes
place during the Term.
(c) Executive shall not be precluded from engaging in charitable and community
activities, serving as a Director of other corporations and managing his
personal and financial affairs, provided that such activities shall not
interfere in any material way with Executive's duties pursuant to this
Agreement.
4. Compensation.
(a) Salary.
(i) Executive shall be paid two-hundred-sixty-six-thousand United States
dollars ( US$266,000.00) for each Annual Period, less deductions and
withholdings required by applicable law (the "Salary"). Executive shall be paid
periodically in accordance with the policies of Trans Global during the Term,
but not less frequently than weekly. For each Annual Period following the First
Annual Period, Executive shall receive an increase in Salary equal to the cost
of living index. The cost of living index shall mean that "Consumers Price Index
for Urban Wage Earners and Clerical Workers (Revised Series) - New York
Metropolitan Area," published by the Bureau of Labor statistics of the United
States Department of Labor.
(ii) The increase in the cost of living index shall be determined as follow:
Commencing in 2000, the cost of living index, as hereinafter defined, for the
calendar month (the "Applicable Month") prior to the month in which the
Commencement Date occurs, shall be compared with the cost of living index for
the Applicable month of the previous year. The cost of living increase shall
mean the percentage increase in the cost of living index from the Applicable
Month in the previous year to the Applicable Month as of which the computation
is made. Such determination shall be made as soon as possible after the release
of the cost of living index for the Applicable Month as of which the computation
is being made, and Company and Trans Global shall, on the next payroll date, pay
to Executive any additional Salary accrued but not paid pending determination of
the cost of living increase.
(b) Benefits. Executive shall be entitled to participate in and receive the
benefits of all pension, profit-sharing, deferred compensation, retirement,
hospitalization, insurance, medical or dental or other benefit plan or
arrangement generally available to executive employees of Company as may now or
hereafter exist. Executive shall also be entitled to participate in or receive
all other benefits and perquisites generally available to executives of Company
that may be in effect from time to time during the Executive's employment
hereunder. Company shall be under no obligation to institute or continue the
existence of any such employee plan, benefit or prerequisite.
(c) Automobile Allowance. Company shall provide Executive with a monthly
automobile allowance of six hundred United States dollars (US$600.00).
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(d) Stock Compensation. Upon the execution hereof, the Company shall issue to
Executive an option to purchase thirty-seven-thousand (37,000) shares of the
Company's common shares, no par value per share ("Company Stock"), at an
exercise price of two United States dollars (US$2.00) per share. The term of
such option shall be for a period of three (3) years from the Commencement Date
and shall vest immediately upon the execution of this Agreement
(e) Bonus. As an executive officer of Company, Executive is eligible for an
annual bonus, if any, which will be determined by the Board of Directors of the
Company, in its sole discretion. For purposes of determining the annual bonus
payable to Executive, if any, the Board of Directors of the Company shall treat
Trans Global and its subsidiaries as a corporation operated separately from the
Company and its other subsidiaries, with no charges for or allocations of
corporate overhead, unless otherwise agreed by the Company and Executive.
5. Expenses. Company and Trans Global shall reimburse Executive, within thirty
(30) days of his presentation of receipts or vouchers thereof, for all expenses
reasonably incurred by him in connection with the performance of his duties
hereunder and the business of Company and Trans Global, in accordance with
policies of Company and Trans Global from time to time in effect.
6. Vacation. Executive shall be entitled to receive four (4) weeks paid vacation
per calendar year. To the extent Executive shall not have used his vacation time
by December 31 of any year, Company and Trans Global shall pay executive for all
vacation time accrued and not used, based on Executive's Salary in effect on
such date. Executive's right to vacation for any calendar year shall be fully
accrued on January 1st of such year.
7. Stock Issuance.
(a) At the effective time of the Merger, Company shall issue to Executive
one-fourth (1/4) share of Company Stock, for each share of common stock, par
value $.01 per share, of Trans Global, which Executive owns at the effective
time of the Merger. In determining the number of shares of common stock of Trans
Global owned by Executive, shares of common stock of Trans Global which are
issuable upon exercise of Trans Global options or warrants which have been
exercised by Executive prior to the effective time of the Merger shall be deemed
issued and outstanding, regardless of whether (i) any checks issued in respect
of such exercise shall have cleared or (ii) any stock certificates shall have
been issued, provided that no certificates for this be issued in respect of such
shares until Trans Global shall be advised by its bank that the checks have
cleared.
(b) In addition, as payment in full for services rendered by Executive in
connection with Company's acquisition of Cad Cam, Inc., an Ohio corporation,
Company will issue to Executive at the effective time of the Merger, fifty
thousand (50,000) shares of Comp any Stock.
8. Provisions for Income Taxes.
(a) Company recognizes that Executive may incur significant United States
Federal and New York State income tax obligations as a result of the exercise of
options held by him and the issuance of shares of Company Stock pursuant of
Section 7 of this Agreement. Accordingly, Company agrees to lend a maximum of
two hundred fifty thousand United States dollars (US$250,000.00) in the
aggregate to both Executive and Glen R. Charles. To the extent that, at
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Executive's request, Company lends Executive money pursuant to this Section 8,
Executive shall issue a non-recourse promissory note in substantially the form
included as Exhibit 7 to the Merger Agreement.
(b) To the extent that the tax liability of Executive shall exceed the
amount of the loan pursuant to Section 8(a) of this Agreement, or to the extent
that Executive elects to pay any part of such tax through a reduction in the
number shares of Company Stock issuable to him pursuant to Section 7 of this
Agreement, Executive may satisfy his tax liability in whole or in part by a
reduction in the number of shares of Company Stock to be issued to him pursuant
to said Section 7, and the value of such shares of Company Stock, shall be
treated as Federal and/or New York State income tax withheld by Company on the
effective date of the Merger and such value shall be paid to such taxing
authorities when such payment is due. Each share of Company Stock which is used
by Executive as tax payment shall be valued at the price of the Company Stock on
the effective date of the Merger.
(c) Executive shall specify the amount of the loan pursuant to Section 8(a)
of this Agreement and the amount of Federal and New York State taxes to withheld
pursuant to Section 8(b) of this Agreement, by written notice to Company not
later than fifteen (15) days after the Commencement Date.
9. Executive's Representations. Executive represents and warrants that Executive
is not restricted or prohibited, contractually or otherwise, from entering into
and performing this Agreement, and that Executive's execution and performance of
this Agreement is not a violation or breach of any agreement between Executive
and any other person or entity.
10. Non-disclosure of Confidential Information; Ownership of Intellectual
Property Rights; Non Competition; Covenant Not to Compete.
(a) Non-disclosure of Confidential Information. During the term of this
Agreement and for two (2) years thereafter, Executive will keep confidential and
will not directly or indirectly divulge to any one or use or otherwise
appropriate for Executive's own benefit, or on behalf of any other person, firm,
partnership or corporation by whom Executive might subsequently be employed or
otherwise associated or affiliated, any Confidential Information (as defined
herein). For this purpose, "Confidential Information" means any and all trade
secrets or other confidential information of any kind, nature or description
relating to the business of Company provided that such information is not and
does not in the future become known or available to third parties as a result of
a disclosure by Executive or his agents.
(b) Company Materials. All reports and analysis, designs, drawings,
contracts, contractual arrangements, specifications, computer software, computer
hardware and other equipment, computer printouts, computer disks, documents,
memoranda, notebooks, correspondence, files, lists and other records, and the
like, and all photocopies or other reproductions thereof, relating to the
business of Company which Executive shall prepare, use, construct, observe,
possess or control, except Executive's copies of all such documents which
pertain to Executive ("Company Materials"), shall be and remain the sole
property of Company. Upon termination of this Agreement, Executive shall deliver
promptly to Company all such Company Materials.
(c) Certain Restrictions on Business Activities. During the term of this
Agreement, and for a period of two (2) years thereafter, Executive agrees that:
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(i) Business Activities. Executive will not, directly or indirectly, own an
interest in, operate, join, control or participate in, or be connected as an
officer, employee, agent, independent contractor, partner, shareholder or
principal of any corporation, partnership, proprietorship, firm, association,
person or other entity providing services and/or products or a combination
thereof which directly or indirectly compete with Company's business, and he
will not undertake planning for or organization of any business activity
directly competitive with Company's business, or combine or conspire with other
employees or representatives of Company's business for the purpose of organizing
any such competitive business activity, except the purchase of less than five
percent (5%) of the stock of a publicly traded company.
(ii) Solicitation of Employees, Etc. Executive will not, directly or
indirectly or by action in concert with others, induce or influence or seek to
induce or influence any person who is engaged as an employee, agent, independent
contractor or otherwise by Company to terminate his or her employment or
engagement.
(d) Severability. Executive agrees, in the event that any provision of this
Section 8 or any word, phrase, clause, sentence or other portion thereof shall
be held to be unenforceable or invalid for any reason, such provision or portion
thereof shall be modified or deleted in such a manner so as to make this Section
8 as modified legal and enforceable to the fullest extent permitted under
applicable laws. The validity and enforceability of the remaining provisions or
portions thereof shall not be affected thereby and shall remain valid and
enforceable to the fullest extent permitted under applicable laws. A waiver of
any breach of the provisions of this Section 8 shall not be construed as a
waiver of any subsequent breach of the same or any other provision.
11. Termination.
(a) Termination by Company.
(i) Company may terminate this Agreement upon written notice for Cause. For
purposes hereof, "Cause" shall mean (A) engaging by the Executive in conduct
that constitutes activity in direct competition with Company's businesses; (B)
the conviction of Executive for the commission of a felony; (C) the habitual
abuse of alcohol or controlled substances; (D) deliberate actions taken by
Executive to the material detriment of Company; (E) material breach of this
Agreement; and/or (F) the failure of Trans Global to meet the projected numbers
outlined in Exhibit A attached hereto, for any two (2) consecutive quarters
during the Term or any full year during the Term. Notwithstanding anything to
the contrary in this Section 11(a)(i), Company may not terminate Executive's
employment under this Agreement for Cause unless Executive shall have first
received notice from the Board of Directors of the Company advising Executive of
the specific acts or omissions alleged to constitute Cause under Sections
11(a)(i)(A) through 11(a)(i)(E), and such acts or omissions continue after
Executive shall have had a reasonable opportunity (at least twenty (20) days
from the date Executive receives the notice from the Board) to correct the acts
or omissions so complained of. Company may terminate Executives employment under
Section 11(a)(i)(F) without giving notice to Executive.
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(ii) In the event that during the Term, Executive shall become Disabled (as that
term is defined herein), the Company may terminate this Agreement and
Executive's employment hereunder at any time upon ten (10) days' written notice
to Executive and Executive shall be entitled to receive disability payments
during the succeeding 12-month period at a rate equal to one-half of the rate of
the base salary as provided in Section 4(a) to which he was theretofore
entitled, payable in equal installments no less frequently than monthly. For the
purposes of this Agreement, Executive shall be deemed to have become Disabled
when, by reason of his physical or mental incapacity, Executive shall not
perform his duties hereunder for a period of four (4) consecutive months or for
an aggregate of one-hundred-twenty (120) days in any consecutive period of six
(6) months.
(iii) This Employment Agreement and Company's obligations hereunder shall
terminate upon Executive's death. Upon termination for death, Company shall
continue to pay Salary and benefits pursuant to Section 4 of this Agreement to
the surviving spouse of Executive (or if there is none to Executive's estate)
for the succeeding six (6) months.
(b) Termination by Executive. Executive shall have the right to terminate
his employment under this Agreement upon thirty (30) days' notice to Company
given within ninety (90) days following the occurrence of any of the following
events:
(i) Executive's duties and responsibilities and titles hereunder are
reduced so that his duties cease to be those of the Chief Executive Officer and
President of Trans Global and Executive Vice President of Company;
(ii) Executive's Salary is reduced from the level which is payable to
Executive pursuant to Section 4(a) of this Agreement or Executive's other
benefits are materially; or
(ii) A material breach of this Agreement by Company is not cured within
thirty (30) days of written notice of such breach.
(c) Effect of Termination. If Company shall terminate Executive's employment
other than due to his death or disability or for Cause, or if Executive shall
terminate this Agreement under Section 11(b) of this Agreement, Executive shall
continue to be entitled to his Salary and benefits provided for in Section 4 of
this Agreement for the remainder of the Term as it may be extended from time to
time.
12. Governing Law. This Agreement shall be deemed to be made in, and in all
respects shall be interpreted, construed, and governed by and in accordance
with, the laws of the Province of Ontario. No provision of this Agreement shall
be construed against or interpreted to the disadvantage to any party hereto by
any court or other governmental or judicial authority or by any board of
arbitrators by reason of such party or its counsel having or being deemed to
have structured or drafted such provision. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorney's fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
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13. Entire Agreement. This Agreement contains the entire agreement between the
parties with respect to the transactions contemplated herein and supersedes,
effective as of the date hereof, any prior agreement or understanding between
Company, Trans Global and Executive with respect to Executive's employment by
Company and Trans Global. This Agreement may not be amended except by an
agreement in writing signed by all parties, and no provision of this Agreement
may be waived except by a writing signed by the party granting the waiver.
Waiver or failure to exercise any rights provided by this Agreement and in any
respect shall not be deemed a waiver of any further or future rights.
14. Binding Effect. This Agreement shall inures to the benefit of, and is
binding upon, the Company and Trans Global and their respective successors and
assigns, and Executive, together with Executive's executor, administrator,
personal representatives, heirs, and legatees. The financial obligation of
Company and Trans Global are the joint and several obligations of such parties.
15. Survival of Obligations. The covenants in Section 10 of this Agreement shall
survive the termination of Executive's employment for the period set forth
therein.
16. Headings. The section and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
17. Notices. All notices, responses, demands or other communications under this
Agreement shall be in writing and shall be deemed to have been given when (a)
delivered by hand; (b) sent by telefax, (with receipt confirmed), provided that
a copy is mailed by registered or certified mail, return receipt requested, and
provided that the recipient has given the transmitting party a telefax number;
or (c) received by the addressee if sent by express mail or overnight courier
delivery service which obtains acknowledgment of receipt, in each case to the
appropriate addresses, telefax numbers as the party may designate to itself by
notice to the other parties:
(I) if to the Company or Trans Global:
IT Staffing Ltd.
55 University Avenue, Suite 505
Toronto, Ontario, Canada M5J 2H7
Attention: Declan French, Chief Executive Officer
Telefax: (416) 364-2424
With a copy to:
Gersten, Savage & Kaplowitz, LLP
101 East 52nd Street
New York, New York 10022
Attention: Arthur Marcus, Esq.
Telefax: (212) 980-5192
(ii) if to the Executive:
Joseph G. Sicinski
38 Woodhollow Road
Great River, New York 11739
Telefax: None
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18. Severability of Agreement. Should any part of this Agreement for any reason
be declared invalid by a court of competent jurisdiction, such decision shall
not affect the validity of any remaining portion, which remaining provisions
shall remain in full force and effect as if this Agreement had been executed
with the invalid portion thereof eliminated, and it is hereby declared the
intention of the parties that they would have executed the remaining portions of
this Agreement without including any such part, parts or portions which may, for
any reason, be hereafter declared invalid.
19. Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one (1) and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this agreement as of the day
and year first above written.
IT STAFFING LTD.
By:____________________________
Declan French
President and CEO
By: __________________________
Joseph G. Sicinski
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Exhibit 4
Glen R. Charles Employment Agreement
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT(the "Agreement") made as of this ____ day of _____, 1999,
by and between TRANS GLOBAL SERVICES, INC., a Delaware corporation (here inafter
referred to as "Company") and GLEN R. CHARLES, (hereinafter referred to as
"Executive");
W I T N E S S E T H:
WHEREAS, pursuant to an agreement and plan of merger (the "Merger
Agreement") among IT Staffing Ltd., an Ontario Corporation, ("ITS"), ITS
Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of ITS
("ITS Subsidiary"), and Company, ITS Subsidiary will merge with and into Company
(the "Merger"); and
WHEREAS, Company desires to obtain the benefits of Executive's knowledge,
skill and ability and to employ Executive on the terms and conditions
hereinafter set forth; and
WHEREAS, Executive is willing to provide his services to Company and to
accept employment by Company on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein set forth it is agreed as follows:
1. Employment of Executive. Company hereby employs Executive as its Chief
Financial Officer, and Executive shall serve in such capacities as hereinafter
defined.
2. Term. This Agreement shall have a term (the "Term") three (3) years
commencing on the effective date of the Merger (the "Commencement Date"). Each
of the twelve (12) month periods commencing on the Commencement Date and each
anniversary of the Commencement Date is referred to as an "Annual Period."
During the Term, Executive shall devote substantially all of his business time
and efforts to Company and its subsidiaries.
3. Duties.
(a) Executive hereby agrees that, throughout the Term, he shall devote his
business time, attention, knowledge and skills, diligently in furtherance of the
business of Company, shall perform the duties assigned to him by the Board of
Directors of Company consistent with his executive position with Company and
shall observe and carry out such rules and regulations,
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policies and directions as the Board of Directors of Company may from time to
time establish to the extent consistent herewith. Executive shall be available
to confer and consult with and advise the officers and directors of Company at
such times during business hours that may be reasonably required by Company.
Executive, in his capacity as an employee of Company, shall report directly and
solely to the Chief Executive Officer of Company.
(b) Executive shall not be precluded from engaging in charitable and
community activities, serving as a Director of other corporations and managing
his personal and financial affairs, provided that such activities shall not
interfere in any material way with Executive's duties pursuant to this
Agreement.
4. Compensation.
(a) Salary.
(i) Executive shall be paid one hundred twenty seven thousand nine hundred
sixty United States dollars ( US$127,960.00) for each Annual Period, less
deductions and withholdings required by applicable law (the "Salary"). Executive
shall be paid periodically in accordance with the policies of Trans Global
during the Term, but not less frequently than weekly. For each Annual Period
following the First Annual Period, Executive shall receive an increase in Salary
equal to the cost of living index. The cost of living index shall mean that
"Consumers Price Index for Urban Wage Earners and Clerical Workers (Revised
Series) - New York Metropolitan Area," published by the Bureau of Labor
statistics of the United States Department of Labor.
(ii) The increase in the cost of living index shall be determined as
follow: Commencing in 2000, the cost of living index, as hereinafter defined,
for the calendar month (the "Applicable Month") prior to the month in which the
Commencement Date occurs, shall be compared with the cost of living index for
the Applicable month of the previous year. The cost of living increase shall
mean the percentage increase in the cost of living index from the Applicable
Month in the previous year to the Applicable Month as of which the computation
is made. Such determination shall be made as soon as possible after the release
of the cost of living index for the Applicable Month as of which the computation
is being made, and Company and Trans Global shall, on the next payroll date, pay
to Executive any additional Salary accrued but not paid pending determination of
the cost of living increase.
(b) Benefits. Executive shall be entitled to participate in and receive the
benefits of all pension, profit-sharing, deferred compensation, retirement,
hospitalization, insurance, medical or dental or other benefit plan or
arrangement generally available to executive employees of Company as may now or
hereafter exist. Executive shall also be entitled to participate in or receive
all other benefits and perquisites generally available to executives of Company
that may be in effect from time to time during the Term. Company shall be under
no obligation to institute or continue the existence of any such employee plan,
benefit or prerequisite.
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(c) Automobile Allowance. Company shall provide Executive with a monthly
automobile allowance of four hundred United States dollars (US$400.00).
(d) Bonus. As an executive officer of Company, Executive is eligible for an
annual bonus, if any, which will be determined by the Board of Directors of the
Company, in its sole discretion.
5. Expenses. Company shall reimburse Executive, within thirty (30) days of his
presentation of receipts or vouchers thereof, for all expenses reasonably
incurred by him in connection with the performance of his duties hereunder and
the business of Company in accordance with policies of Company from time to time
in effect.
6. Vacation. Executive shall be entitled to receive four (4) weeks paid vacation
per calendar year. To the extent Executive shall not have used his vacation time
by December 31 of any year, Company and Trans Global shall pay executive for all
vacation time accrued and not used, based on Executive's Salary in effect on
such date. Executive's right to vacation for any calendar year shall be fully
accrued on January 1st of such year,
7. Stock Issuance.
(a) At the effective time of the Merger, Company shall issue to Executive
one-fourth (1/4) share of ITS common stock, no par value per share ("ITS
Stock"), for each share of common stock, par value $.01 per share, of Company,
which Executive owns at the effective time of the Merger. In determining the
number of shares of common stock of Company owned by Executive, shares of common
stock of Company which are issuable upon exercise of Company options or warrants
which have been exercised by Executive prior to the effective time of the Merger
shall be deemed issued and outstanding, regardless of whether (i) any checks
issued in respect of such exercise shall have cleared or (ii) any stock
certificates shall have been issued, provided that no certificates for this be
issued in respect of such shares until Company shall be advised by its bank that
the checks have cleared.
8. Provisions for Income Taxes.
(a) ITS and Company recognize that Executive may incur significant United
States Federal and New York State income tax obligations as a result of the
exercise of options held by him and the issuance of shares of ITS Stock pursuant
of Section 7 of this Agreement. Accordingly, ITS agrees to lend a maximum of two
hundred fifty thousand United States dollars (US$250,000.00) in the aggregate to
both Executive and Joseph G. Sicinski. To the extent that, at Executive's
request, ITS lends Executive money pursuant to this Section 8, Executive shall
issue a non-recourse promissory note in substantially the form included as
Exhibit 7 to the Merger Agreement.
(b) To the extent that the tax liability of Executive shall exceed the
amount of the loan pursuant to Section 8(a) of this Agreement, or to the extent
that Executive elects to pay any part of such tax through a reduction in the
number shares of ITS Stock issuable to him pursuant to Section 7 of this
Agreement, Executive may satisfy his tax liability in whole or in part by a
reduction in the number of shares of ITS Stock to be issued to him pursuant to
said Section 7, and the value of such shares of ITS Stock, shall be treated as
Federal and/or New York State income tax withheld by Company on the effective
date of the Merger and such value shall be paid to such taxing authorities when
such payment is due. Each share of ITS Stock which is used by Executive as tax
payment shall be valued at the price of the ITS Stock on the effective date of
the Merger. 44
<PAGE> 45
(c) Executive shall specify the amount of the loan pursuant to Section 8(a)
of this Agreement and the amount of Federal and New York State taxes to withheld
pursuant to Section 8(b) of this Agreement, by written notice to Company not
later than fifteen (15) days after the Commencement Date. Executive understands,
agrees and acknowledges, that if Executive and Joseph G. Sicinski shall request
loans in excess of two hundred fifty thousand United States dollars
(US$250,000.00), loans shall be made to Joseph G. Sicinski, to the extent
requested by him, before any loans are made to Executive.
9. Executive's Representations. Executive represents and warrants that Executive
is not restricted or prohibited, contractually or otherwise, from entering into
and performing this Agreement, and that Executive's execution and performance of
this Agreement is not a violation or breach of any agreement between Executive
and any other person or entity.
10. Non-disclosure of Confidential Information; Ownership of Intellectual
Property Rights; Non Competition; Covenant Not to Compete.
(a) Non-disclosure of Confidential Information. During the term of this
Agreement and for two (2) years thereafter, Executive will keep confidential and
will not directly or indirectly divulge to any one or use or otherwise
appropriate for Executive's own benefit, or on behalf of any other person, firm,
partnership or corporation by whom Executive might subsequently be employed or
otherwise associated or affiliated, any Confidential Information (as defined
herein). For this purpose, "Confidential Information" means any and all trade
secrets or other confidential information of any kind, nature or description
relating to the business of Company provided that such information is not and
does not in the future become known or available to third parties as a result of
a disclosure by Executive or his agents.
(b) Company Materials. All reports and analysis, designs, drawings,
contracts, contractual arrangements, specifications, computer software, computer
hardware and other equipment, computer printouts, computer disks, documents,
memoranda, notebooks, correspondence, files, lists and other records, and the
like, and all photocopies or other reproductions thereof, relating to the
business of Company which Executive shall prepare, use, construct, observe,
possess or control, except Executive's copies of all such documents which
pertain to Executive ("Company Materials"), shall be and remain the sole
property of Company. Upon termination of this Agreement, Executive shall deliver
promptly to Company all such Company Materials.
(c) Certain Restrictions on Business Activities. During the term of this
Agreement, and for a period of two (2) years thereafter, Executive agrees that:
(i) Business Activities. Executive will not, directly or indirectly, own an
interest in, operate, join, control or participate in, or be connected as an
officer, employee, agent, independent contractor, partner, shareholder or
principal of any corporation, partnership, proprietorship, firm, association,
person or other entity providing services and/or products or a combination
thereof which directly or indirectly compete with Company's business, and he
will not undertake planning for or organization of any business activity
directly competitive with Company's business, or combine or conspire with other
employees or representatives of Company's business for the purpose of organizing
any such competitive business activity, except the purchase of less than five
percent (5%) of the stock of a publicly traded company.
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(ii) Solicitation of Employees, Etc. Executive will not, directly or indirectly
or by action in concert with others, induce or influence or seek to induce or
influence any person who is engaged as an employee, agent, independent
contractor or otherwise by Company to terminate his or her employment or
engagement.
(d) Severability. Executive agrees, in the event that any provision of this
Section 8 or any word, phrase, clause, sentence or other portion thereof shall
be held to be unenforceable or invalid for any reason, such provision or portion
thereof shall be modified or deleted in such a manner so as to make this Section
8 as modified legal and enforceable to the fullest extent permitted under
applicable laws. The validity and enforceability of the remaining provisions or
portions thereof shall not be affected thereby and shall remain valid and
enforceable to the fullest extent permitted under applicable laws. A waiver of
any breach of the provisions of this Section 8 shall not be construed as a
waiver of any subsequent breach of the same or any other provision.
11. Termination.
(a) Termination by Company.
(i) Company may terminate this Agreement upon written notice for Cause. For
purposes hereof, "Cause" shall mean (A) engaging by the Executive in conduct
that constitutes activity in direct competition with Company's businesses; (B)
the conviction of Executive for the commission of a felony; (C) the habitual
abuse of alcohol or controlled substances; (D) deliberate actions taken by
Executive to the material detriment of Company; (E) material breach of this
Agreement; and/or (F) the failure of Company to meet the projected numbers as
outlined in Exhibit A attached hereto, for any two (2) consecutive quarters
during the Term or any full year during the Term. Notwithstanding anything to
the contrary in this Section 11(a)(i), Company may not terminate Executive's
employment under this Agreement for Cause unless Executive shall have first
received notice from the Board of Directors of the Company advising Executive of
the specific acts or omissions alleged to constitute Cause under Sections
11(a)(i)(A) through 11(a)(i)(E), and such acts or omissions continue after
Executive shall have had a reasonable opportunity (at least twenty (20) days
from the date Executive receives the notice from the Board) to correct the acts
or omissions so complained of. Company may terminate Executives employment under
Section 11(a)(i)(F) without giving notice to Executive.
(ii) In the event that during the term of his employment with Company,
Executive shall become Disabled (as that term is defined herein), Company may
terminate this Agreement and Executive's employment hereunder at any time upon
ten (10) days' written notice to Executive and Executive shall be entitled to
receive disability payments during the succeeding 12-month period at a rate
equal to one-half of the rate of the base salary as provided in Section 4(a) to
which he was theretofore entitled, payable in equal installments no less
frequently than monthly. For the purposes of this Agreement, Executive shall be
deemed to have become Disabled when, by reason of his physical or mental
incapacity, Executive shall not perform his duties hereunder for a period of
four (4) consecutive months or for an aggregate of one-hundred-twenty (120) days
in any consecutive period of six (6) months.
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(iii) This Employment Agreement and Company's obligations hereunder shall
terminate upon Executive's death. Upon termination for death, Company shall
continue to pay the Salary and benefits pursuant to Section 4 of this Agreement
to the surviving spouse of Executive (or if there is none to Executive's estate)
for the succeeding six (6) months.
(b) Termination by Executive. Executive shall have the right to terminate
his employment under this Agreement upon thirty (30) days' notice to Company
given within ninety (90) days following the occurrence of any of the following
events:
(i) Executive's duties and responsibilities and titles hereunder are
reduced so that his duties cease to be those of the Chief Financial Officer of
Company;
(ii) Executive's Salary is reduced from the level which is payable to
Executive pursuant to Section 4(a) of this Agreement or Executive's other
benefits are materially; or
(ii) A material breach of this Agreement by Company is not cured within
thirty (30) days of written notice of such breach.
(c) Effect of Termination. If Company shall terminate Executive's employment
other than due to his death or disability or for Cause, or if Executive shall
terminate this Agreement under Section 11(b) of this Agreement, Executive shall
continue to be entitled to his Salary and benefits provided for in Section 4 of
this Agreement for the remainder of the Term as it may be extended from time to
time.
12. Governing Law. This Agreement shall be deemed to be made in, and in all
respects shall be interpreted, construed, and governed by and in accordance
with, the laws of the Province of Ontario. No provision of this Agreement shall
be construed against or interpreted to the disadvantage to any party hereto by
any court or other governmental or judicial authority or by any board of
arbitrators by reason of such party or its counsel having or being deemed to
have structured or drafted such provision. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorney's fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
13. Entire Agreement. This Agreement contains the entire agreement between the
parties with respect to the transactions contemplated herein and supersedes,
effective as of the date hereof, any prior agreement or understanding between
Company and Executive with respect to Executive's employment by Company. This
Agreement may not be amended except by an agreement in writing signed by all
parties, and no provision of this Agreement may be waived except by a writing
signed by the party granting the waiver. Waiver or failure to exercise any
rights provided by this Agreement and in any respect shall not be deemed a
waiver of any further or future rights.
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14. Binding Effect. This Agreement shall inures to the benefit of, and is
binding 14. Binding Effect. This Agreement shall inures to the benefit of, and
is binding upon the Company and its respective successors and assigns, and
Executive, together with Executives executor, administrator, personal
representatives, heirs, and legatees.
15. Survival of Obligations. The covenants in Section 10 of this Agreement shall
survive the termination of Executive's employment for the period set forth
therein.
16. Headings. The section and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
17. Notices. All notices, responses, demands or other communications under this
Agreement shall be in writing and shall be deemed to have been given when (a)
delivered by hand; (b) sent by telefax, (with receipt confirmed), provided that
a copy is mailed by registered or certified mail, return receipt requested, and
provided that the recipient has given the transmitting party a telefax number;
or (c) received by the addressee if sent by express mail or overnight courier
delivery service which obtains acknowledgment of receipt, in each case to the
appropriate addresses, telefax numbers as the party may designate to itself by
notice to the other parties:
if to Company:
Trans Global Services, Inc.
1393 Veterans Memorial Highway
Hauppauge, New York 11788
Attention: Joseph G. Sicinski, President
and CEO
Telefax: (516) 724-0039
With a copy to:
Gersten, Savage & Kaplowitz, LLP
101 East 52nd Street
New York, New York 10022
Attention: Christopher J. Kelly, Esq.
Telefax: (212) 980-5192
if to the Executive:
Glen R. Charles
18 Locust avenue
Coram, New York 11727
Telefax: None
18. Severability of Agreement. Should any part of this Agreement for any reason
be declared invalid by a court of competent jurisdiction, such decision shall
not affect the validity of any remaining portion, which remaining provisions
shall remain in full force and effect as if this Agreement had been executed
with the invalid portion thereof eliminated, and it is hereby declared the
intention of the parties that they would have executed the remaining portions of
this Agreement without including any such part, parts or portions which may, for
any reason, be hereafter declared invalid.
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19. Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one (1) and the same instrument.
[Signatures on the following page]
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IN WITNESS WHEREOF, the undersigned have executed this agreement as of the day
and year first above written.
TRANS GLOBAL SERVICES, INC.
By:_____________________________
Joseph G. Sicinski
President and CEO
By:_____________________________
Glen R. Charles
It is agreed and accepted that IT Staffing Ltd. will be bound to Sections 7 and
8 of the forgoing agreement
IT STAFFING LTD.
By:_________________________________
Declan French
President and CEO
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Exhibit 5
Opinion of Counsel to Trans Global
(i) Each of the Trans Global and each TGSI Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation, has the corporate power to own its property and conduct its
business as now being conducted and is qualified to conduct business as a
foreign corporation in each jurisdiction in which, to the best of such counsel's
knowledge, it owns or leases real property.
(ii) This Agreement has been duly executed and delivered by Trans Global,
all corporate or other action necessary for Trans Global to approve this
Agreement and the performance of the terms of this Agreement have been taken,
and this Agreement constitutes the legal, valid and binding obligations of Trans
Global, enforceable in accordance with its terms (except as enforceability may
be limited by applicable bankruptcy, insolvency, moratorium, or similar laws
from time to time in effect which affect creditors' rights generally, and by
legal and equitable limitations on the enforceability of specific remedies);
provided, however, that no opinion is given as to the enforceability or
interpretation of this Agreement under the law of the Province of Ontario.
(iii) Such counsel has no knowledge of any material actions, suits or
proceedings pending or threatened against or affecting Trans Global or any TGSI
Subsidiaries in any court or before any arbitrator of any kind or before or by
any governmental body except as disclosed and provided for in the Agreement. In
rendering such opinion, such counsel may rely as to factual matters on
certificates of officers of the Company and on certificates of governmental
officers.
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Exhibit 6
Opinion of Counsel to Parent
(i) Each of Parent and each ITS Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the state or province of
its incorporation, has the corporate power to own its property and conduct its
business as now being conducted and is qualified to conduct business as a
foreign corporation in each jurisdiction in which, to the best of such counsel's
knowledge, it owns or leases real property.
(ii) This Agreement has been duly executed and delivered by Parent and
Subsidiary all corporate or other action necessary for Parent and Subsidiary to
approve this Agreement and the performance of the terms of this Agreement have
been taken, and this Agreement constitutes the legal, valid and binding
obligations of Parent and Subsidiary, enforceable in accordance with its terms
(except as enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, or similar laws from time to time in effect which affect creditors'
rights generally, and by legal and equitable limitations on the enforceability
of specific remedies).
(iii) The Merger Shares have been duly authorized and reserved for
issuance, and, when issued pursuant to this Agreement, the Employment Agreements
or the Services Agreement, as the case may be, will be duly and validly
authorized and issued, fully paid and non-assessable and not subject to any
preemptive rights or other rights of stockholders of Parent.
(iv) The ITS Options, when issued to the holders of the TGSI Options
pursuant to Article 2(d) of this Agreement, will constitute the valid and
binding obligations of ITS, enforceable in accordance with their respective
terms, except as enforceability may be affected by bankruptcy, insolvency or
other laws of general application affecting the enforcement of creditors'
rights.
(v) Such counsel has no knowledge of any material actions, suits or
proceedings pending or threatened against or affecting Parent or any ITS
Subsidiary in any court or before any arbitrator of any kind or before or by any
governmental body except as disclosed and provided for in the Agreement. In
rendering such opinion, such counsel may rely as to factual matters on
certificates of officers of the Company and on certificates of governmental
officers.
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Exhibit 7
Form of Promissory Note
PROMISSORY NOTE
$___________1999
FOR VALUE RECEIVED, __________ (the "Maker") does hereby promise to pay to
IT Staffing Ltd., an Ontario corporation (alternatively referred to as the
"Holder or the "Company") at 55 University Avenue, Suite 505, Toronto, Ontario
Canada M5J 2H7, or at such other place as may be designated in writing from time
to time by the Holder, the sum of _________ dollars ($_________), in lawful
money of the United States of America, together with interest accrued from the
date hereof at a rate of two percent (2%) in excess of the prime rate of
interest from time to time as reported in The Wall Street Journal, in lawful
money of the United States ("Payment"). Principal and interest may be prepaid at
any time and in any amount with no penalty.
Payment shall be made as follows:
(I) The Maker shall pay the sum of $______ every three (3) months, to the
Holder, commencing three (3) months from the date of execution of this Note.
Thereafter, Payment shall be made no later than the 25th day of every third
month with the first Payment to be made on ______, 2000;
(ii) In the event that the Maker sells any of his shares of the Company's
Common Stock, the proceeds of such sale shall be paid to the Company within
three days of Maker's receipt of such proceeds; and
(iii) On ________, 2002, the Maker shall pay the then outstanding balance
on this Note in a balloon payment.
The Maker's obligations under this Note shall be secured by a pledge of all
of Maker's shares of the Company's Common Stock and Company's options to
purchase shares of the Company's Common Stock (the "Shares").
The Holder's recourse against the Maker under this Note shall be limited to
the Maker's interest in the Shares. Neither the Company nor any subsequent
holder shall have any other claim against the Maker.
The occurrence of any of the following events with respect to Maker shall
constitute an event of default (each an "Event of Default") which shall cause
the entire principal amount of the Note and accrued interest, to become
immediately due and payable without the necessity for any demand on Maker:
(i) If Maker shall make an assignment for the benefit of creditors, or file a
voluntary petition under the Bankruptcy Code, as amended, or any other federal
or state insolvency law, or apply for or consent to the appointment of a
receiver, trustee or custodian of all or part of his property; or
(ii) If Maker shall file an answer admitting the jurisdiction of the court and
the material allegations of an involuntary petition filed against him under the
Bankruptcy Code, as amended, or any other federal or state insolvency law, or
fail to make a motion to have such petition dismissed within twenty (20) days
after its filing, which filing is not dismissed within sixty (60) days from the
date of the filing of the motion to dismiss; or
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(iii) If a proceeding shall be commenced against Maker seeking the appointment
of a trustee, receiver or custodian of all or part of Maker's property and maker
does not file a motion to dismiss such petition within twenty (20) days after
its filing and such proceeding is not dismissed within sixty (60) days after the
motion to dismiss such filing; or
(iv) A judgment or order for the payment of money in excess of fifty thousand
dollars (US$50,000) shall be rendered against Maker and enforcement proceedings
shall have been commenced by any creditor upon such judgment or order.
Failure to exercise the Holder's rights hereunder shall not constitute a waiver
of the right of the right to exercise same in the event of any subsequent
default.
Maker will reimburse Holder, upon demand, for all costs and expenses incurred in
connection with the collection and/or enforcement of this Note (including
reasonable attorneys' fees and expenses), whether or not suit is actually
instituted.
Maker and Holder hereby irrevocably submit to the personal jurisdiction of any
state or Federal court sitting in the State of New York over any suit, action or
proceeding arising out of or relating to this Note. Maker and Holder hereby
irrevocably waive to the fullest extent permitted by applicable law any
objection which they have or hereafter have to laying of the venue of any such
suit, action or proceeding brought in such a court and any claim that any such
suit, action or proceeding brought in such a court has been brought in an
inconvenient forum. Maker and Holder hereby agree to submit to the exclusive
jurisdiction of the courts of the State of New York for the purpose of resolving
any action or claim arising out of the performance of the provisions of this
Note.
This Note shall be construed in accordance with and governed by the laws of the
Province of Ontario.
The Maker expressly waives presentment for payment, demand and protest, notice
of protest and dishonor, and all other notices in connection with the delivery,
acceptance, performance default or enforcement of the payment of this Note.
This Note may not be modified, terminated or discharged, nor shall any waiver
hereunder be effective unless in writing signed by the party against whom the
same is asserted.
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IN WITNESS WHEREOF, the Maker has executed this Note as of the ______day of
______, 1999.
(Name of Maker)
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