AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger ("Agreement") is made as of the
1stday of November, 1999, by and among IT Staffing Ltd., an Ontario corporation
("Parent") with a place of business at 00 Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxx, Xxxxxx X0X 0X0; ITS Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Subsidiary") whose address is 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, and Trans Global Services, Inc., a Delaware
corporation ("Trans Global") with a place of business at 0000 Xxxxxxxx Xxxxxxxx
Xxxxxxx, Xxxxxxxxx, Xxx Xxxx 00000. 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 Xxxxxx & Siger, LLP, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 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."
(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
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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.
(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:
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(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.
(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).
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(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 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 "Securities 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
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by any governmental entity (a "Tax Authority") responsible for the imposition of
any such tax (domestic or foreign), and
(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
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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.
(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 Xxxxx Xxxxxxxx, 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
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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.
(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.
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(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 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
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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:
(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.
12
(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 Xxxxxxx X. Xxxxxxxx ("Xxxxxxxx") for services rendered in
connection with the Merger pursuant to a fee agreement between Trans Global and
Xxxxxxxx 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.
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
13
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.
(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
14
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 Xxxxxx X. Xxxxxxxx and
Xxxx X. Xxxxxxx 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.
(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."
15
(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 Xxxxxxxx Xxxxxxxx Xxxxxxx, 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.
(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,
16
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.
(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
17
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;
(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 ITS 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.
(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).
18
(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
19
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.
Xxxxxx X. Xxxxxxxx and Xxxx X. Xxxxxxx 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.
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(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 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) Auditor's Comfort Letter. Parent shall have received from
Xxxxx Xxxxxxxx, 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. Xxxxxx X. Xxxxxxxx and
Xxxx X. Xxxxxxx, 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. Xxxxxx X. Xxxxxxxx and Xxxx X.
Xxxxxxx 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
21
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.
(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 Xxxxxxxx Xxxxxxxx Xxxxxxx, 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.
22
(viii) Election of Directors and Officers of Parent. Xxxxxx X.
Xxxxxxxx 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 Xxxxxx X.
Xxxxxxxx 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.
(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;
23
(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;
(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;
24
(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.
(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 Xxxxxx X. Xxxxxxxx and
Xxxx X. Xxxxxxx, 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.
25
(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) Termination by Mutual Consent. At any time prior to the Closing,
this 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.
(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
26
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.
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:
27
If to Parent and Subsidiary: IT Staffing Ltd.
00 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Attention: Declan French
President and CEO
with a copy to: Xxxxxxx, Xxxxxx & Xxxxxxxxx, LLP
000 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
If to Trans Global: Trans Global Services, Inc.
0000 Xxxxxxxx Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
President and CEO
with a copy to: Esanu Katsky Xxxxxx & Siger, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx 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.
(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.
28
(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: /s/ Declan French
------------------------------------
Declan French
President and CEO
IT ACQUISITION CORP.
By: /s/ Declan French
------------------------------------
Declan French
President
TRANS GLOBAL SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Xxxxxx X. Xxxxxxxx
President and CEO
29
List of Exhibits
Exhibit Description Article
------- ----------- -------
1 Certificate of Merger 1(c)
2 List of Officers and Directors 1(f)
3 Xxxxxx X. Xxxxxxxx Employment Agreement 8(a)(iv)
4 Xxxx X. Xxxxxxx 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)
30
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."
31
5. The executed Agreement and Plan of Merger is on file at the
following address:
ITS Acquisition Corp.
c/o IT Staffing Ltd.
00 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Tel: (000) 000-0000
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: ____________________________________
Xxxxxx X. Xxxxxxxx
President and CEO
ITS ACQUISITIONS CORP.
a Delaware Corporation
By: ____________________________________
Declan French
President and CEO
Exhibit 2
32
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 Xxxxxx X. Xxxxxxxx President and Chief
Executive Officer
Xxxxx XxxXxxx, Director Xxxx X. Xxxxxxx Chief Financial Officer
Xxxxxx X. Xxxxxxxx, Director Xxxxx XxxXxxx Treasurer
Xxxx X. Xxxxxxx, Director Declan French Secretary
Xxxxx Xxxxxx, Director
33
Exhibit 3
Xxxxxx X. Xxxxxxxx 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 XXXXXX X. XXXXXXXX (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
34
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.
(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.
35
(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).
(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
36
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 Company 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 Xxxx X. Xxxxxxx. To the extent that, at
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.
37
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.
(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
38
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.
(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.
39
(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.
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
40
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.
00 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Attention: Declan French, Chief Executive Officer
Telefax: (000) 000-0000
With a copy to:
Xxxxxxx, Xxxxxx & Xxxxxxxxx, LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxx, Esq.
Telefax: (000) 000-0000
(ii) if to the Executive:
Xxxxxx X. Xxxxxxxx
00 Xxxxxxxxxx Xxxx
Xxxxx Xxxxx, Xxx Xxxx 00000
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
41
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: ____________________________________
Xxxxxx X. Xxxxxxxx
00
Xxxxxxx 0
Xxxx X. Xxxxxxx 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
(hereinafter referred to as "Company") and XXXX X. XXXXXXX, (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,
43
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.
44
(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 Xxxxxx X. Xxxxxxxx. 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.
45
(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.
(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 Xxxxxx X.
Xxxxxxxx shall request loans in excess of two hundred fifty thousand United
States dollars (US$250,000.00), loans shall be made to Xxxxxx X. Xxxxxxxx, 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
46
("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.
(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
47
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.
(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
48
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.
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 Executive's 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.
49
0000 Xxxxxxxx Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, President and CEO
Telefax: (000) 000-0000
With a copy to:
Xxxxxxx, Xxxxxx & Xxxxxxxxx, LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxx, Esq.
Telefax: (000) 000-0000
if to the Executive:
Xxxx X. Xxxxxxx
00 Xxxxxx xxxxxx
Xxxxx, Xxx Xxxx 00000
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.
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]
50
IN WITNESS WHEREOF, the undersigned have executed this agreement as
of the day and year first above written.
TRANS GLOBAL SERVICES, INC.
By: ____________________________________
Xxxxxx X. Xxxxxxxx
President and CEO
By: ____________________________________
Xxxx X. Xxxxxxx
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
51
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.
52
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.
53
Exhibit 7
Form of Promissory Note
PROMISSORY NOTE
$__________ ___________, 1999
FOR VALUE RECEIVED, __________ (the "Maker") does hereby promise to
pay to IT Staffing Ltd., an Ontario corporation (alternatively referred to as
the "Holder or the "Company") at 00 Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxx Xxxxxx X0X 0X0, or at such other place as may be designated in writing
from time to time by the Holder, the sum of _________ dollars ($_________), 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
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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
(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.
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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.
IN WITNESS WHEREOF, the Maker has executed this Note as of the
______day of ______, 1999.
________________________________________
(Name of Maker)
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